Consolidated Financial Statements >
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES
174
| 2012 annual report prysmian group
Any dividends arising from investments recorded as available-
for-sale financial assets are recognised as revenue when
the Group’s right to receive payment is established and are
classified in the income statement under “Share of income
from investments in associates and dividends from other
companies”.
The Group assesses at every reporting date if there is objective
evidence of impairment of its financial assets. In the case of
investments classified as available-for-sale financial assets,
a prolonged or significant reduction in the fair value of the
investment below initial cost is treated as an indicator of
impairment. Should such evidence exist, the accumulated loss
relating to the available-for-sale financial assets - calculated
as the difference between their acquisition cost and fair value
at the reporting date, net of any impairment losses previously
recognised in profit or loss - is transferred from equity and
reported in the income statement as “Finance costs”. Such
losses are realised ones and therefore cannot be subsequently
reversed.
For debt securities, the related yields are recognised
using the amortised cost method and are recorded in the
income statement as “Finance income”, together with any
exchange rate effects, while exchange rate effects relating to
investments classified as available-for-sale financial assets
are recognised in the specific equity reserve.
B.10 DERIVATIVES
At the date of signing the contract, derivatives are accounted
for at fair value and, if they are not accounted for as hedging
instruments, any changes in the fair value following initial
recognition are recorded as finance income or costs for the
period, except for fair value changes in metal derivatives.
If derivatives satisfy the requirements for classification as
hedging instruments, the subsequent changes in fair value are
accounted for using the specific criteria set out below.
The Group designates some derivatives as hedging
instruments for particular risks associated with highly
probable transactions (“cash flow hedges”). For each derivative
which qualifies for hedge accounting, there is documentation
on its relationship to the item being hedged, including
the risk management objectives, the hedging strategy
and the methods for checking the hedge’s effectiveness.
The effectiveness of each hedge is reviewed both at the
derivative’s inception and during its life cycle. In general, a
cash flow hedge is considered highly “effective” if, both at
its inception and during its life cycle, the changes in the cash
flows expected in the future from the hedged item are largely
offset by changes in the fair value of the hedge.
The fair values of the various derivatives used as hedges are
disclosed in Note 8. Movements in the “Cash flow hedge
reserve” forming part of equity are reported in Note 11.
The fair value of a hedging derivative is classified as a non-
current asset or liability if the hedged item has a maturity
