Consolidated Financial Statements >
CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES
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| 2012 annual report prysmian group
The most important investment projects in 2012 were:
• the increase in production capacity at the Arco Felice plant
(Naples) needed to fulfil the Western Link HVDC contract;
• production capacity increases at the plants in Sorocaba
(Brazil), Durango (Mexico) and Liverpool (Australia), to
meet growth in local demand by the power distribution,
automotive and mining segments respectively;
• the continuation of investments in Rybinsk (Russia) for
the production of high voltage cables, in Pikkala (Finland)
for the production of direct current submarine cables and
in Gron (France) for the production of high voltage direct
current underground cables;
• production capacity increases at the plants in Sorocaba
(Brazil) for the manufacture of optical fibre and cables and
in Australia for the manufacture of cables using ribbon
technology;
• investments aimed at reducing optical fibre manufacturing
costs at the plants in Battipaglia (Italy) and Douvrin
(France).
Machinery is subject to Euro 18 million in liens in connection
with long-term loans.
When closing the present financial year, the Prysmian Group
reviewed whether there was any evidence that its CGUs
might be impaired, and then tested for impairment those
CGUs potentially at “risk”. This test has led to the partial
impairment of “Plant and Machinery” allocated to the Energy
segment CGUs in Spain (Euro 10 million) and Russia (Euro 1
million).
This impairment has been necessary because of a further
deterioration in business in the above countries during 2012.
In this particular case, the post-tax cash flow forecasts for
2013-2015 have been determined by projecting forward the
cash flows expected by management in 2013.
The WACC (Weighted Average Cost of Capital as defined in
the paragraph “Goodwill impairment test”) used to discount
cash flows for determining value in use of the CGUs tested
for impairment is 9.4% for the Spain CGU and 11.9% for the
Russia CGU.
The perpetuity growth rate (G) projected after 2015 is 2%; this
rate is lower than the growth rate expected in the countries
where the CGUs operate, with the exception of the CGU in
Spain, where account has been taken of the specific local
market situation.
Recoverable amount has been determined on the basis of
value in use.
In addition, impairment losses have been recognised against
the Eschweiler plant in Germany, whose restructuring was
announced in September 2012, as well as against part of the
Wuppertal plant in Germany and other minor impairments.
This has led to the recognition of Euro 13 million in
impairment losses in 2012.
“Buildings” include assets under finance lease with a net
value of Euro 16 million at 31 December 2012 (Euro 20 million
at 31 December 2011).
The maturity dates of finance leases are reported in Note
12. Borrowings from banks and other lenders; such leases
generally include purchase options.
Property, plant and equipment include an increase of Euro 54
million for the first-time consolidation of Telcon Fios e Cabos
para Telecomuniçaoes S.A. and Global Marine Systems Energy
Ltd. and a reduction of Euro 15 million for the deconsolidation
of the investments in Ravin Cables Limited and Power Plus
Cables Co. LLC.
Gross investments in property, plant and equipment amount
to Euro 132 million in 2012.
Around 59% of total investment expenditure related to
projects to increase production capacity, while some 18% of
the total went on projects to improve industrial efficiency.
About 17% of the total related to structural work on buildings
or entire production lines for compliance with the latest
regulations, while the remaining 6% referred to investments
in information technology.
