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CONSOLIDATED FINANCIAL REPORT | EXPLANATORY NOTES
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change over time and which could, therefore, have a significant impact on the current estimates made by
management to prepare the Group consolidated financial statements.
(b) Impairment of assets
Goodwill
In accordance with the accounting standards adopted and related impairment testing procedures, the Group
tests annually whether Goodwill has suffered an impairment loss. Goodwill has been allocated to the
operating segments of Energy Projects, Energy Products and Telecom and tested at this level. The
recoverable amount has been determined by calculating value in use. This calculation requires the use of
estimates.
During 2015, the Prysmian Group increased the value of its assets, recorded as Goodwill, by Euro 157
million; this increase refers to the acquisition of controlling interests in Oman Cables Industry S.A.O.G. (Euro
139 million) and Gulf Coast Downhole Technologies (Euro 18 million).
More details about the impairment test for Goodwill can be found in Note 2. Intangible assets.
Property, plant and equipment and finite-life intangible assets
In accordance with the Group’s adopted accounting standards and impairment testing procedures, property,
plant and equipment and intangible assets with finite useful lives are tested for impairment. Any impairment
loss is recognised by means of a write-down, when indicators suggest it will be difficult to recover the related
net book value through use of the assets. Verification of the existence of these indicators requires
management to make subjective judgements based on the information available within the Group and from
the market, as well as on past experience. If an impairment loss is identified, the Group will determine the
amount of such impairment using those valuation techniques deemed suitable. Correct identification of
indicators of potential impairment, as well as its very estimation, depend on factors which can vary over time,
thus influencing the judgements and estimates made by management.
Prysmian Group has assessed at year end whether there is any evidence that its CGUs might be impaired
and has consequently tested for impairment those CGUs potentially at "risk". Based on this test, the Group
has written down the assets of the Brazil CGU within the Energy Products segment.
The outcome of impairment tests at 31 December 2015 does not mean that future results will be the same,
especially in the event of currently unforeseeable developments in the business environment.
Further information can be found in Note 1. Property, plant and equipment.
(c) Depreciation and amortisation
The cost of property, plant and equipment and intangible assets is depreciated/amortised on a straight-line
basis over the estimated useful lives of the assets concerned. The useful economic life of Group property,
plant and equipment and intangible assets is determined by management when the asset is acquired. This is
based on past experience for similar assets, market conditions and expectations regarding future events that
could impact useful life, including developments in technology. Therefore, actual economic life may differ
from estimated useful life. The Group periodically reviews technological and industry developments to