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MarketScreener Homepage  >  Equities  >  Italian Stock Exchange  >  Prysmian S.p.A.    PRY   IT0004176001

PRYSMIAN S.P.A.

(PRY)
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Prysmian S p A : ANNUAL REPORT YEAR 2019

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03/20/2020 | 02:14pm EDT

Fostering global evolution

Annual Report

Annual Report

Contents

Disclaimer

This document contains forward-looking statements, specifically in the sections entitled "Significant events after the reporting period" and "Busi- ness outlook", that relate to future events and the operating, economic and financial results of Prysmian Group. By their nature, forward-looking statements involve risk and uncertainty because they depend on the occurrence of future events and circumstances. Actual results may dier materially from those reflected in forward-looking statements due to multiple factors.

LETTER TO

SHAREHOLDERS

page 4

Group Annual Report

01

DIRECTORS'

REPORT

page 11

02

CONSOLIDATED

FINANCIAL

STATEMENTS

page 131

03

EXPLANATORY NOTES

page 139

CERTIFICATION OF

THE CONSOLIDATED

FINANCIAL STATEMENTS

pursuant to art. 81-ter of Consob regulation 11971 dated 14 may 1999 and subsequent amendments and additions

page 262

INDEPENDENT AUDITORS' REPORT

page 263

4

Letter to Shareholders

Valerio Battista

Chief Executive Ocer Prysmian Group

Work to consolidate the integration of General Cable within the Prysmian Group continued during 2019. The resulting generation of synergies worth Euro 140 million has exceeded all expectations.

This integration has helped the Prysmian Group to build a position as the only global leader with a model balanced by business segment and optimal geographical diversification. The absorption of General Cable has also significantly consolidated our ability to innovate and develop new solutions that satisfy the highest expectations of our cus- tomers, generating value for the Group.

Prysmian Group

Annual Report 2019

5

Results for the year

The Prysmian Group achieved satisfactory results in 2019, with strong cash generation, even more than expected, and an adjusted EBITDA in excess of one billion Euro (Euro 1.007 billion). The established profitability objectives were therefore achieved, with a 31.4% increase compared to Euro 767 million in 2018.

EBITDA rose to Euro 907 million (Euro 501 million in 2018, accounting for General Cable from 1 June 2018), including net expenses for corporate reorganisations, non-recurring net expenses and other non-operating net expenses, totalling Euro 100 million (Euro 192 million in 2018). Net profit improved significantly to Euro 296 million from Euro 58 million in 2018 (including General Cable since 1 June 2018). Group revenues totalled Euro 11.519 billion, in line with 2018.

The Energy division performed well, especially in terms of profitability, which increased by 35.9%; in particular, power distribution achieved a solid growth with an improving profitability.

A significant contribution was also made by the Projects business. The order backlog now exceeds Euro 2 billion once again, following the acquisition of major power interconnection work and projects for the cabling of oshore wind farms. These activities allow us to strengthen our position as an enabler of the transition to renewable sources of energy.

The performance of the Telecom business was also good. In this area we introduced a number of important innovations, such as a new cable with 6,912 fibres, the largest number in the industry, allowing ease of use and improved fibre management, and the first fibre in the world that can be bent at will - just 180 micron in diameter - with an unprecedented size reduction that allows for the miniaturisation of cables.

R&D leading innovation in the sector

With 900 professionals and 25 research centres throughout the world, the Prysmian Group is constantly committed to providing customers with the best cable infrastructure solutions. Addressing ever more sophisticated technological requirements, these solutions facilitate the power and data transmission processes while, at the same time, lowering the overall cost of cabling solutions for the customer.

The Group is also striving to develop technological innovations that lower energy and water consumption and reduce the greenhouse gas emissions of our manufacturing facilities. The Design to Cost (DTC) programme is committed to use the best materials, adopting ecient processes and implementing innovative projects to achieve cost savings in excess of Euro 45 million, with over 1,300 projects completed at our manufacturing plants during 2019.

6

R&D investment of Euro 106 million in 2019 was mainly dedicated to the ever more advanced search for EHV electricity transmission systems that can be buried, for longer and more ecient cables that can be laid at ever greater depth and for optical fibre solutions with the largest number of cables in a miniaturised space for easy use in the field. In order to achieve this, the Prysmian Group collaborates with more than 50 research centres and universities and launched about 180 new product families during 2019, not least thanks to the acceleration driven by General Cable from the third quarter onwards. The Group's new products generated Euro 800 million, compared to Euro 496 million in 2018, with a 12.3% ongoing growth - 10.1% in Q3 2018 - led by North America and the Telecom area. Today, the Prys- mian Group holds around 5,900 patents.

We have achieved world leadership in the sector of cables and systems for power distribution and tele- communications, with over 80 new products in the context of innovation and more than 500 new solutions in the product development area.

Integrated sustainability

Sustainability has always been in our DNA, enabling us to direct the strategies of the Prysmian Group towards the provision of concrete help in tackling the greatest global challenges, with a clear and determined action plan.

As a consequence of this, the Group also improved its ranking in the main sustainability indexes during 2019, and was included for the first time - as the only player in the sector - in the Dow Jones Sustainability World and STOXX Global ESG Indexes, reaching the Ecovadis Gold level and confirming the good performance achieved in other ESG indexes, such as CDP Climate Change, Standard Ethics and FTSE4Good.

In addition, a new set of medium-term sustainability goals has been defined and constant eorts are being made to improve the sustainability of production processes, with a view to lowering CO2 emissions by 2-3% by 2022.

In fact, our new ambitious goal is to generate 50% of Group revenues from low carbon-enabling products in 2022, in line with our eort to tightly integrate ESG topics within the growth strategy.

On the People front, the Group makes Diversity & Inclusion a central activity, with a view to raising the percentage of women executives to 14-18% (12% in 2019) and ensuring that 40% of white-collar new hires are women.

In order to further improve the commitment of the entire organisation to achieve the 2022 sustainability goals, the annual and long-term employee incentive plans have been linked to a significant selection of those objectives. We have also launched a share incentive plan for 800 key people within the Group, which includes ESG goals among the four key drivers of value creation. This Plan envisages granting new ordinary shares serviced by a bonus increase in share capital, in order to strengthen the commitment of the company and management to the creation of sustainable value over time for all stakeholders.

Prysmian Group

Annual Report 2019

7

Prysmian for the energy transition

Signature of the new Green Plan by the European Commission in December 2019 seeks to make Europe carbon neutral by 2050, highlighting the priority need for an integrated energy market that is both digitalised and interconnected with renewable sources. That said, the development of renewable energy in Europe, North America and the Asian countries with the largest impact on CO2 emissions is still heavily restricted by the high cost of production and the need for substantial investment.

Accordingly, the Prysmian Group is deeply committed to promoting the development of smarter and more sustainable electricity grids. In order to achieve the ambitious decarbonisation objective set by Europe, the European Commission estimates that oshore wind energy needs will reach 450 GW by 2050. To deliver this, the oshore wind power sector will need an ecient, sustainable and reliable electricity transmission system, capable of supporting the transition to renewable energy at ever more competitive costs.

In practical terms, it will only be possible to achieve the objectives set recently by the European Commission and the UN SDGs for the coming decade if eorts are made to lower the production cost of renewables to the level enjoyed by fossil fuels.

The Prysmian Group seeks to be the go-to technology player in this scenario, facilitating the production and transmission of cleaner, more intelligent, more ecient and competitive energy, so that power can be transferred from the location of renewable production (oshore wind farms) to the place of consumption (communities and urban centres).

Creation of value for our shareholders

Based on the positive results achieved in 2019, we are glad to recommend to the Shareholders' Meeting an increased dividend of Euro 0.5 per share, confirming the ability of the Group to generate value for its shareholders.

8

Group Annual Report

9

01_DIRECTORS' REPORT

11

Directors and Auditors

13

Preface

14

Financial highlights

15

Highlights 2019

18

The Prysmian Group, a global leader

20

Global presence

22

Vision, Mission, Values

24

Business Areas

25

A business model balanced by segment and geographical area

26

Prysmian Group for the energy transition

27

Sustainability in Prysmian Group

31

Corporate Governance

34

Prysmian and the financial markets

48

Significant Events During The Year

56

Business environment

63

Group performance and results

66

Review of Projects Operating Segment

70

Review of Energy Operating Segment

73

Review of Telecom Operating Segment

78

Results by Geographical Area

81

Group Statement of Financial Position

83

Alternative performance indicators

88

Risk factors and uncertainties

96

Sustainable innovation

110

Protection of intellectual property

124

Incentive plans

126

Business outlook

127

Other information

128

Certification pursuant to art. 262 of the Italian

129

Stock Exchange market regulations

02_CONSOLIDATED FINANCIAL STATEMENTS

131

Consolidated Statement of Financial Position

133

Consolidated Income Statement

134

Other Comprehensive Income

134

Consolidated Statement of changes in Equity

135

Consolidated Statement of Cash Flows

136

03_EXPLANATORY NOTES

139

Certification of the Consolidated Financial Statements

pursuant to art. 81-ter of Consob regulation 11971 dated

262

14 May 1999 and subsequent amendments and additions

Independent Auditors' Report

263

01

GROUP ANNUAL REPORT

Directors'

Report

13

Prysmian Group

Directors' Report

Directors and Auditors

BOARD OF DIRECTORS(3)

Chairman

Claudio De Conto(*)(2)

Chief Executive Ocer &

Valerio Battista

General Manager

Directors

Maria Elena Cappello(**)

Monica de Virgiliis(**)(2)

Francesco Gori(**)(1)(4)

Joyce Victoria Bigio(**)(1)

Massimo Battaini

Pier Francesco Facchini

Maria Letizia Mariani(**)(1)

Fabio Ignazio Romeo

Paolo Amato(**)(2)

Mimi Kung(**)

BOARD OF STATUTORY AUDITORS(4)

Chairman

Pellegrino Libroia

Standing Statutory Auditors

Laura Gualtieri

Paolo Francesco Lazzati

Alternative Statutory Auditors

Michele Milano

Claudia Mezzabotta

Independent Auditors(5)EY S.p.A.

(*)

Independent director as per Italian Legislative Decree 58/1998.

(**)

Independent director as per Italian Legislative Decree 58/1998 and Italy's Corporate Governance Code issued by Borsa Italiana S.p.A.

  1. Members of the Control and Risks Committee.
  2. Members of the Compensation, Nominations and Sustainability Committee.
  3. Appointed by the Shareholders' Meeting on 12 April 2018.
  4. Appointed by the Shareholders' Meeting on 5 June 2019.
  5. Appointed by the Shareholders' Meeting on 16 April 2015.

14

Prysmian Group

Annual Report 2019

Preface

In compliance with the provisions of art. 5, par. 3 (b) of Italian Legislative Decree 254/2016, the Group has prepared its Consolidated Non-Financial Statement in a separate document (Sustainability Report 2019). This document, covering environmental, social and personnel-related matters, respect for human rights, and the fight against active and passive corruption, aims to provide its users with an understanding of the Group's business, its performance, results and impact.

The Consolidated Non-Financial Statement 2019, drawn up in accordance with the GRI Sustainability Reporting Standards (published by the GRI - Global Reporting Initiative - in 2016), was approved by the Board of Directors on 5 March 2020. As required by Italian Legislative Decree 254/2016, this document is submitted to a limited review by the independent auditors, in accordance with the International Standard on Assurance Engagement (ISAE 3000 Revised). The document is available on the Group's website at www.prysmiangroup.com.

Prysmian Group

Directors' Report

15

Financial highlights

MAIN FINANCIAL AND OPERATING DATA(*)

(in millions of Euro)

2019

2018

2018(***)

% change

2017

Combined(**)

Combined

Sales

11,519

11,523

10,104

0.0%

7,904

Adjusted EBITDA before share of net profit/

983

708

634

38.9%

694

(loss) of equity-accounted companies

Adjusted EBITDA (1)

1,007

767

693

31.4%

736

EBITDA (2)

907

501

660

Adjusted operating income (3)

689

466

559

Operating income

569

215

424

Profit/(loss) before taxes

444

103

325

Net profit/(loss)

296

58

237

(in millions of Euro)

31.12.2019

31.12.2018 (***)

Change

31.12.2017

Net capital employed

5,236

5,059

177

2,430

Employee benefit obligations

494

463

31

355

Equity

2,602

2,374

228

1,639

of which attributable to non-controlling

187

188

(1)

188

interests

Net financial debt

2,140

2,222

(82)

436

(in millions of Euro)

2019

2018

% change

2017

Net capital expenditure (4)

248

278

-10.8%

254

Of which for acquisition of Huan Shen Huan

-

-

35

assets

Employees (at period-end)

28,714

29,159

-1.5%

21,050

Earnings/(loss) per share

- basic

1.11

0.24

1.14

- diluted

1.11

0.24

1.11

Number of patents (5)

5,881

5,627

4,871

Number of plants

106

112

82

The 2019 figures include the impact of applying IFRS 16 for the first time, with eect from 1 January 2019 using the modified retrospective method, meaning that prior year comparatives are unaected by the new standard. In addition, the 2017 figures reflect no impact from the consolidation of General Cable, eective as from 1 June 2018.

  1. Adjusted EBITDA is defined as EBITDA before income and expense for company reorganisation, non-recurring items and other non-operating income and expense.
  2. EBITDA is defined as earnings/(loss) for the year, before the fair value change in metal derivatives and in other fair value items, amortisation, depreciation and impairment, finance costs and income, dividends from other companies and taxes.
  3. Adjusted operating income is defined as operating income before income and expense for company reorganisation, non-recurring items and other non-operating income and expense, and before the fair value change in metal derivatives and in other fair value items.
  4. Net capital expenditure reflects cash inflow from disposals of Assets held for sale and outflow for additions to Property, plant and equipment and Intangible assets not acquired under specific financing arrangements, meaning that additions of leased assets are excluded.
  5. These are the total number of patents, comprising patents granted plus patent applications pending worldwide.
  1. All percentages contained in this report have been calculated with reference to amounts expressed in thousands of Euro. (**) Results of General Cable consolidated for the period 1 January - 31 December 2018.
    (***) Results of General Cable consolidated with eect from 1 June 2018. The previously published comparative figures have been revised after finalising the General Cable purchase price allocation. More details can be found in the Explanatory Notes: Section C. Restatement of comparative figures.

16

Prysmian Group

Annual Report 2019

SALES 2019 BY GEOGRAPHICAL AREA

€11,519 million

SALES 2019 BY BUSINESS AREA

€11,519 million

54%EMEA(*)

30%North America

8% Latin America

|… 1'!'o!

(*) Europe - MiddleEast - Africa

16% Projects

70% Energy

46% of whichi Energy & Infrastructure

22% of which Industrial

& Network Components

2% of which other

14% Telecom

Source IPCC

Prysmian Group

Directors' Report

17

KEY FINANCIALS

Amounts in millions of Euro - Percentages on sales

SAKES (1)

Organic Growth

-0.9%

2.6%

11,519

10,104

7,904

2017

2018

2019

ADJ.EBITDA (2)

1,007

736

693

9.3%

8.7%

6.9%

2017

2018

2019

ADJ. OPERATING INCOME (3)

689

559

466

7.0%

6.0%

4.6%

2017

2018

2019

NET OPERATING WORKING CAPITAL (4)

749

707

6.3%

6.5%

106

1.3%

2017

2018

2019

NET FINANCIAL

DEBT

2,222

2,140

436

2017

2018

2019

  1. Organic growth is defined as growth in sales calculated net of changes in the scope of consolidation, changes in commodity prices and exchange rate eects. The results of General Cable have been consolidated with eect from 1 June 2018. The previously published figures for 2018 have been revised after finalising the Gen- eral Cable purchase price allocation. More details can be found in the Explanatory Notes: Section C. Restatement of comparative figures.
  2. Adjusted EBITDA is defined as EBITDA before income and expense for company reorganisation, non-recurring items and other non-operating income and expense. The results of General Cable have been consolidated with eect from 1 June 2018.
  3. Adjusted operating income is defined as operating income before income and expense for company reorganisation, non-recurring items and other non-operating income and expense, and before the fair value change in metal derivatives and in other fair value items. The results of General Cable have been consolidated with eect from 1 June 2018.
  4. Net Operating Working Capital is defined as Net Working Capital excluding the eect of derivatives. The percentage is calculated as Net Working Capital/Annual- ised last-quarter sales. The previously published figures for 2018 have been revised after finalising the General Cable purchase price allocation. More details can be found in the Explanatory Notes: Section C. Restatement of comparative figures.

18

Prysmian Group

Annual Report 2019

Highlights 2019

The fingerprint of cables that provides information in real time

PRY-ID is the intelligent, innovative solution launched by Prysmian that provides real- time access to key information about cables and accessories: case type, length, source, components connected. This represents a type of "fingerprint" for cables, which translates into cost savings and enhanced safety by making it easier to locate cables and components reliably within buildings

Intelligent virtual assistant for managing drums and electrical cables

ALESEA is the new IoT solution that provides virtual assistance in the management of drums: this is the first innovation from Corporate Hangar, the innovation hub of Prysmian. An intelligent device is installed on the drum and cloud infrastructure makes it possible to file and process the data, accessible via an intuitive web platform. To date, over 1,000 Alesea devices have been tested in 7 countries.

Innovative technology for monitoring networks

PRY-CAM is proprietary Prysmian technology for monitoring, managing and assessing the condition of electrical systems, innovatively drawing on a series of products to record all key parameters (partial discharges, current, voltage, temper- ature, humidity etc.) and facilitate ecient management using a predictive approach.

A Brand of Prysmian Group

FLEXRIBBON

FlexRibbon is the optical fibre cable with the largest number of fibres in the world: using extremely flexible fibre ribbons, almost 7,000 fibres can be fitted into a low-diameter cable. This makes it possible to insert the largest possible number of fibres into the space available, miniaturising the cable.

The leonardo da vinci, the largest cable-laying ship in the world, has a low environmental impact

Prysmian has begun construction of the "Leonardo da Vinci", the largest cable-laying ship in the world. This vessel is designed to be the most ecient and eective on the market, with increased capacity and greater versatility for the implementation of projects. The ship will be equipped with leading systems for reaching and holding position at sea, while its engines and propulsion systems have been designed specifically to reduce the environmental impact. The new vessel will be fully operational by 2Q 2021.

Prysmian Group

Directors' Report

19

BENDBRIGHTXS 180μm - Revolutionary innovation for broadband

Prysmian has launched the first fibre in the world that can be bent at will, with a diameter of 180 microns that allows cable miniaturisation at a level never before achieved. Optical fibre cables are a crucial part of the global transition to flexible and reliable connectivity. Their large number of fibres and reduced diameter makes installation quicker and cheaper. This innovation confirms the commitment of Prysmian to support the evolution of high density optical networks.

Interconnectionof the Cycladic islands

Prysmian is achieving a new first thanks to a new cable with synthetic sheathing that is about 30% lighter than steel, thus paving the way to new scenarios in which installations at great depth, up to 3,000 metres, will be possible.

The Group is using this new technology for the undersea electrical interconnection of the Cycladic Islands, Evia, Andros and Tinos, involving the design, supply and installation of two high voltage AC cables that will increase energy transmission between the islands, ensuring solidity, reliability and sustainability.

VIKING, THE RECORD-BREAKING CABLE

Prysmian will implement the Viking Link project, the record interconnection that will link the United Kingdom and Denmark. The Group will be responsible for the turnkey design, production and installation of the longest power interconnection in the world, with 1,250 km of submarine cables and about 135 km of terrestrial cables in the United Kingdom.

Dow Jones Sustainability Index 2019: important recognition

The Prysmian Group was included in the Dow Jones Sustainability World for the first time in 2019. This is the largest international index for the assessment of performance in environmental, social and governance (ESG) terms. Inclusion in this index recognises the eorts made by Prysmian to define a sustainable business approach and serve as an enabler in developing the best cable and optical fibre technologies, thus supporting the transition towards a more sustainable use of energy resources, digitalisation and the decarbonisation of economies.

The DJSI is based on the appraisals of RobecoSAM ESG, which awarded Prysmian a score of 84/100 and a Silver Sustainability Yearbook Award 2020.

v

20

Prysmian Group

Annual Report 2019

The Prysmian Group, a global leader

World leader in the supply of power and telecom cables.

With sales in excess of Euro 11.5 billion, approximately 29,000 employees and 106 plants in more than 50 coun- tries, the Group has a consolidated presence in technologically advanced markets. The broadest range of prod- ucts, services, technologies and know how are oered to manufacturers that use cabling systems in the production and distribution of energy and telecommunications.

Established at the end of the 1800s as Pirelli Cables, the Prysmian Group has grown by acquisitions: from absorption of the activities of Siemens and Nokia in the power cables sector, to the more recent acquisition of the Draka group, based in the Netherlands, and, in 2018, to the takeover of General Cable, a US group.

The history of the Group spans the entire cables industry, with aggregations that sustained expansion of the products and services oered, with constant innovations, improving standards and a greater geographical pres- ence, which is a significant strength when serving regional market needs.

Industry leadership extends to business control and a proven ability to identify synergies and lower costs rapid- ly, ensuring operational eciency at the highest level within the sector.

1879

1998

2005

2007

The history of Prysmian

Società Cavi Pirelli began a

n July 2005, Prysmian was

Prysmian was listed on

Group begins with the

series of targeted

established following the

the Milan stock Exchange

Pirelli Group. Società Cavi

acquisitions,

acquisition of the Cables

placing on the Market

Pirelli was founded in Italy

incorporating activities in

and Energy Systems and

46% of the shares held by

as the Cables Divison of

the power cable sectors of

the Cables Telecom and

Goldman Sachs Group.

the recently established

companies such as

Systems businesses of

Pirelli Company.

Siemens, BICC, Metal

Pirelli.

Manufacturers Ltd. and

NFK.

1910

1970

1986

1987

Draka was founded under

The company was

A buyout operation

Then began two decades

the name Hollandsche

bought by Philips and

financed by Parcom and

of worldwide acquisitions,

Draad 8 Kabel Fabriek.

became part of the

Flint Beheer led to the

including concerns such

Wire & Cable Division.

division becoming

as Philips Optical Fiber and

independent and taking

Alcatel.

the name Draka.

2011

The merger of the two market-leading

companies led to 2018 the creation of

the Prysmian Group.

General Cable joined the Prysmian Group.

1927

1990

2005

2007

2012

It was originally

established in New Jersey (USA), incorporating several companies founded in the nineteenth century.

Acquisition of Carol Cable Company and Carol® Brand line, including electrical cords, cords for connectors and industry-leading automotive products.

Acquisition of Silec, leader in the energy and industrial sectors, and Helix/HiTemp, a manufacturer of high-end solutions for corporate networks.

Acquisition of Stabiloy and Nual, two brands of aluminium construction

cables and Colombian company Procables, plus Prestolite Wire, which mainly supplies OEMs and distributors.

Acquisition of Stabiloy and Nual, two brands of aluminium construction cables and Colombian company Procables, plus Prestolite Wire, which mainly supplies OEMs and distributors.

Prysmian Group

Directors' Report

21

A history of innovation

At the start of the 20th century, Prysmian Group laid the first telecommunications cables that linked the Americas and Europe. Cables and optical fibres supplied by Prysmian Group comprise a significant part of the main electricity grids and telecommunications networks around the world, with installations in such iconic buildings as the Burj Khalifa in Dubai, The Shard in London, the World Trade Center in New York and the Guggenheim Museum in Bilbao.

Prysmian submarine cables are integral to numerous key projects of global importance: from the Hudson Transmission Project linking New York and New Jersey to the Empire Wind project, which is one of the first oshore wind farm projects on a commercial scale developed by Equinor in New York State, as well as Vineyard WIND 1, the first large-scale oshore wind farm project in the United States, which is situated more than 15 miles o the coast of Massachusetts.

THE SHARD. LONDRA

HUDSON TRANSMISSION PROJECT. NEW YORK-NEW JERSEY

BURJI KHALIFA. DUBAI

GUGGENHEIM MUSEUM. BILBAO

WTC. NEW YORK

22

Prysmian Group

Annual Report 2019

Global presence

Nogales

Piedras Negras

Durango

Tetla

Saguenay

St. Jerome

St. Maurice

Heredia

Prescott

Lincoln

Manchester

Bogotá

Marion Williamsport

North Dighton

Willimantic

Indianapolis

S. Haven

Bridgewater

Sedalia

Du Quoin

Lawrenceburg

Paragould

Claremont

-!)7-3,2',

Abbeville

Marshall

Jackson

Lexington

Vila Velha

Sorocaba Boa Vista

Poços de Caldas

Sorocaba Eden

Joinville

La Rosa

Santiago

NORTH AMERICA

LATAM

EUROPE

MEAT

APAC

CANADA

ARGENTINA

CZECH REPUBLIC

ANGOLA

AUSTRALIA

U,S,A,

BRAZIL

ESTONIA

IVORY COAST

CHINA

CHILE

FINLAND

OMAN

INDIA

COLOMBIA

FRANCE

TUNISIA

MALAYSIA

COSTA RICA

GERMANY

TURKEY

INDONESIA

ECUADOR

HUNGARY

NEW ZEALAND

MEXICO

ITALY

PHILIPPINES

NORWAY

THAILAND

PORTUGAL

ROMANIA

RUSSIA

SLOVAKIA

SPAIN

SWEDEN

THE NETHERLANDS

U,K,

23

13

50

6

14

plants

plants

plants

plants

plants

Prysmian Group Directors' Report

Oulu

Drammen

Pikkala

Keila Rybinsk

Nassjo

Washington

Wrexham

Nordenham

Emmen

Schwerin

Aberdare

Delft

N. Berger

Berlin

Bishopstoke

Eindhoven

Wuppertal

Velke Mzirici

Calais

Neustadt

Nurnberg

Presov

Amfreville

Douvrin

Montreau

Cornimont

Balassagyarmat

Sainte Geneviève

Paron

Kistelek

Gron

Quattordio

Merlino

Slatina

Chavanoz

Santander

Charvieu

Milcov

Livorno

Manlleu

S. Perpetua

Pignataro M.

Giovinazzo

Arco Felice

Battipaglia

Montcada

Abrera

Villanueva

Morelena

23

Key

Energy

Telecom

Shared

Grombalia

Mudanya

Tianjin

Yixing

Zhongyao

Haixun

Suzhou

Sohar

Wuxi

Cebu

Muscat

Chiplun

Melaka

Abidjian

Cikampek

Luanda

Dee Why

Liverpool

Auckland

+50

106

25

about

3

countries

plants

R&D

29 thousand

ships

centers

employees

equipped

24

Prysmian Group

Annual Report 2019

Vision, Mission, Values

VISION

We believe in the ecient, eective and sustainable supply of energy and information as the main driver for the development of community.

MISSION

The Prysmian Group provides its customers worldwide with superior cable solutions based on pioneering technology and consistent excellence in execution, ultimately delivering sustainable growth and profit.

VALUES

DRIVE. Our objective is to guide the evolution of our sector: we develop our people and our business, following a clear strategy while anticipating customer needs.

TRUST. We intend to create an environment that inspires trust, where diversity and collaboration are recognised and people are empowered to make decisions with integrity.

SIMPLICITY. Our challenge is to simplify all that we can, focusing on activities that generate considerable value and timely decisions that enhance the results achieved by the Group.

Prysmian Group

Directors' Report

25

Business Areas

Following the acquisition of General Cable (2018), the structure of the Group - with applications in over one hundred sectors - was organised into a matrix of reference markets and business units.

Energy

The Energy business area comprises businesses oering a complete and innovative product portfolio designed to meet the many diverse demands of the market. It is organised as follows: Energy & Infrastructure, which includes Trade & Installers, Power Distribution and Overhead Transmission Lines, and Industrial and Network Compo- nents, which includes Oil & Gas, Downhole Technology, Elevators, Automotive, Network Components and Specialties & OEM, serving in turn the following sectors: Cranes, Mining, Railways, Rolling Stock, Marine and Renewables (cables for applications in the solar energy industry and for the operation of wind turbines).

Projects

This business area comprises high-tech and high value-added businesses focused on the design, production and customisation of HV cabling systems for terrestrial and submarine applications. The Group develops pioneering "turnkey" submarine cable systems for installation at depths of up to 3,000 metres, assisted by its cable-laying fleet comprising the Giulio Verne, the Cable Enterprise and the Ulisse. Prysmian Group also oers advanced services for submarine interconnections between countries and between oshore wind farms and the mainland, used for both the generation and distribution of electricity.

Telecom

The Telecom business area comprises businesses devoted to making the cabling systems and connectivity products used in tlc networks. The product portfolio includes optical fibre, optical cables, connectivity components and accessories, OPGW (Optical Ground Wire) and copper cables. The Group is also among the leaders in the production of optical fibre - the essential component of all types of optical cables. A wide range of optical fibres is designed and made using proprietary technology to cater to the broadest possible spectrum of customer applications: single-mode, multimode and specialty fibres. In both cables and connectivity, the Group focuses on the design of products that provided greater density in a smaller diameter, with ease of use and optimal fibre management.

The PROJECT business area generated Euro 1,844 million in 2019, representing 16% of the Group's total reve- nues, while the ENERGY business area generated Euro 8,027 million or 70% of revenues; lastly, the TELECOM business area generated Euro 1,648 million, contributing 14% of revenues.

26

Prysmian Group

Annual Report 2019

A business model balanced

by segment and geographical area

The diversified portfolio of activities is a strength for the Prysmian Group, as the only global leader with a business model balanced among areas with diering profiles, where each segment plays a precise role in the overall strategy, considering stability, growth potential and the generation of opportunities.

Historically, the Energy area has delivered the most stable results, while the Projects and Telecom areas have been marked by greater volatility.

Acquisitions have always fit in with the strategy of maintaining balance: General Cable enabled the Group to diversify geographically, with strong exposure to the North American market, which is structured dierently with more consolidated dynamics.

Additionally, while the positioning of the Prysmian Group as a cable manufacturer remains central, part of its activities make it a network solution provider, drawing on the ability to integrate ever more closely the various components - engineering, installation, network monitoring and after-sales services - in order to provide value-added services that ensure recurring revenue streams and build long-term partnerships with customers.

Alongside this, the Group is also able to identify and develop value-added market niches - such as elevator ca- bles, cables for multimedia applications, solutions produced by Prysmian Electronics - while releasing the synergies needed to be cost-eective and oer end-to-end solutions integrated with advanced digital equipment.

Prysmian Group

Directors' Report

27

Prysmian Group

for the energy transition

The energy transition from fossil fuels to renewable sources is one of the greatest and most urgent challenges faced by humanity.

The production of electricity and heat generates 25% of all global CO2 emissions.

Europe was one of the first economies to make formal commitments, establishing the objectives for 2030: 40% reduction in greenhouse gas emissions with respect to the 1990 level; 32% of energy needs met by renewable sources and an improvement in energy eciency by at least 32.5%1. Signature of the new Green Plan by the Eu- ropean Commission in December 2019 seeks to make Europe carbon neutral by 2050, highlighting the priority need for an integrated energy market that is digitalised and interconnected with renewable sources.

That said, the development of renewable energy in Europe, North America and the Asian countries with the largest impact on CO2 emissions is still heavily restricted by the need for substantial investment.

CO2 EMISSIONS BY SECTOR: TACKLING THE ELECTRICITY SECTOR WILL NOT BE ENOUGH

25%

Electricity and Heat Production

24%

Agriculture, Forestry and Other Land Use

6%

Buildings

14%

Transportation

21%

Industry

10%

Other Energy

Source: IPCC.

Accordingly, the Prysmian Group is deeply committed to supporting the development of smarter and more sustainable electricity grids. In order to achieve the ambitious decarbonisation objective set by Europe, the European Commission estimates that the oshore wind energy needed by 2050 will total 450 GW.

To deliver this, the oshore wind power sector will need an ecient, sustainable and reliable electricity transmission system, capable of supporting the transition to renewable energy at ever more competitive costs

(1) The 2030 climate and energy framework published by the European Commission.

28

Prysmian Group

Annual Report 2019

As the cost of oshore wind has declined. installations have soared

Oshore wind: Global installed capacity (GW. navy bars) vs LCOE in Europe (€/MWh)

27 GW

151

147

144

23 GW

140

122

19 GW

102

86

14 GW

12 GW

78

73

69

62

8 GW

7 GW

4 GW

5 GW

3 GW

2 GW

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Goldman Sachs Global Investment Research. IRENA.

So it is necessary to develop a grid that facilitates a cost-eective energy transition, maintaining adequate resources while, at the same time, enabling system operators to cope with variable models of consumption and demand. In a "No Grid" scenario by 2040, ENTSO-E has shown that failure to invest in the transmission system could increase the marginal price by 3% -29%, depending on the region, and endanger the security of the electricity supply as well.

43

{by 2040

114

{by 2030

EURO

EURO

investments in

BN

extra cost

BN

grid infrastructure

YEAR

of 'no grid'

for transmission

scenario

and storage projects

Data source: ENTSO-E.

In concrete terms, it will only be possible to achieve the objectives set recently by the European Commission and the UN SDGs for the coming decade if eorts are made to lower the production cost of renewables to the level enjoyed by fossil fuels.

The Prysmian Group seeks to be the go-to technology player in this scenario, facilitating the production and transmission of cleaner, more intelligent and more ecient and competitive energy, so that power can be transferred from the location of renewable production (oshore wind farms) to the place of consumption (commu- nities and urban centres).

Cable technology will be decisive in this scenario, making it possible to improve the grids needed for this energy transition, while optical fibre will enable the digitalisation of society as an essential step in the development of a low-carbon economy and a new growth model.

The Prysmian Group promotes cable solutions that support the move towards this low-carbon economy, with positive eects on climate change. Indeed, in 2019, 48% of total Group revenues were attributable, based on the Climate Bond Initiative taxonomy, to products that facilitate achievement of the target set by COP 21 in the 2015 Paris Agreements and, in general, an energy transition that contributes to the decarbonisation of the economy and the digitalisation of networks.

Prysmian Group

Directors' Report

29

THE LARGEST CABLE-LAYING VESSEL IN THE WORLD

The Leonardo da Vinci cable-laying vessel is now under construction. Named after the celebrate genius, inventor and engineer, this ship will strengthen the ability of Prysmian to execute projects and our reputation as a "one-stop-shop" service provider. The Leonardo da Vinci, which joins the current Prysmian fleet of three vessels, will be the best performing cable-laying vessel in the world.

With a length of about 170 m and a beam of about 34 m, the Leonardo da Vinci is designed to guarantee greater capacity and versatility in the execution of projects, due to such advanced functionality as: ability to install at depths of more than 3,000 m, due in part to a new generation of cable technology with lighter shielding; maximum speed in excess of 14 knots; 2 carousels of 7,000 and 10,000 tonnes, representing the greatest capacity available on the market and reducing the plant-site transportation time and, therefore, improving overall project eciency; 2 independent laying lines to increase operational flexibility; pulling force in excess of 180 tonnes that enables complex installation operations to be carried out, supporting a series of burial systems and equipment, such as the submarine plough and the Hydroplow. The ship will be equipped with leading DP3 systems for reaching and holding position at sea, while its engines and propulsion systems have been designed specifically to ensure their reduced environmental impact. All equipment for the handling and installation of cables was designed by Prysmian.

length of about

170m

beam of about

34m

30

Prysmian Group

Annual Report 2019

As an industry leader, we seek to make a stable contribution to the modernisation of the entire sector and to improve Group processes constantly, in a proactive manner, in order to make them more ecient and sustain- able. We achieve this by collaborating with international research centres and universities, with our suppliers throughout the entire production chain and with our customers, with which we have developed long-termco-innovation processes and partnerships.

The Prysmian Group is committed to making constant innovations that enhance the performance of terrestrial and submarine HV cables, which are key to the development of power grids.

Cable technology in support of the energy transition

Cables (especially HV terrestrial and submarine cables) are and will be an essential component in completing the energy transition, as they are responsible for the generation of electricity by oshore wind farms and for the interconnections between systems and countries, thus supporting the implementation of more integrated, ecient and sustainable electricity grids.

More specifically:

cables represent the backbone of electricity grids, the components without which it would not be possible to transmit and transport energy from one country to another;

cables (especially terrestrial and submarine cables) make the entire electricity grid more ecient, facilitating the exchange of energy between dierent countries / consumption areas with dierent consumption models, thus enabling consumers to obtain access to cheaper and cleaner energy;

submarine cables transmit electricity from the sea, where the wind farms are located, to the land, where the primary distribution network is located;

Terrestrial cables transmit electricity from the areas in which it is generated (the landfall of submarine cables) to the places in which it is consumed.

Prysmian roadmap for innovation

In particular, research eorts are focused on a number of main objectives:

cables that can be installed at ever greater depths and in any marine environment, even reaching a depth of 3,000 metres;

ever longer interconnections, to link countries that are far apart;

cables for the wind farms furthest from land (e.g. floating wind farms), located in the most wind- swept areas;

increase the intrinsic reliability of cables, limiting their dispersion, and equipping them with sensors capable of monitoring the system;

increase cable productivity, contributing to a significant reduction in system installation costs. In par- ticular, more productive and reliable cables help to optimise installation costs (fewer trenches and therefore easier access to the permits needed to complete an interconnection).

In the same way, the objective in the optical fibre sector is to ensure ever greater levels of flexibili- ty, without loss of signal quality, and to prepare for the 5G challenge that will require the market to install new infrastructure to an almost unprecedented extent.

Prysmian Group

Directors' Report

31

Sustainability in Prysmian Group

SUSTAINABILITY IS IN OUR DNA

Sustainability plays a central role for the Prysmian Group, committed to promoting a business model that integrates economic, social and environmental responsibility in all aspects and activities of the Group.

The Prysmian Group promotes a business model based on the concept of shared value through a strategic approach that considers the following elements to be key: listening to and actively involving all internal and external stakeholders, dedicating constant attention to the evolving global and industry context, and planning for the future in a responsible manner that considers the environment and society.

The strength of this approach is the constant monitoring of the Group's sustainability performance along the entire value chain, with the aim not only of assessing performance ex post, but also of developing a proactive attitude in decision-making processes, able to anticipate and seize the new opportunities. ESG (Environment, Social and Governance) matters are absolutely integral to the sustainability strategy adopted by the Group, which has four main aspects:

PUBLIC COMPANY

We are a public company and, as such, it is fundamental to align the interests of the Group with those of our stakeholders. We have always maintained open and transparent dialogue with our shareholders, employees,

customers and suppliers, the institutions and the communities in which we work. In order to ensure their confidence and support, we strive to maintain high governance standards and practices: for example, 67% of Board members are independent. As a public company, the shareholders' meetings of the Prysmian Group provide an important opportunity for discussion, involvement and agreement among all shareholders. Participation is

lively and proactive. For example, the meeting held to approve the 2018 financial statements was attended by more than 1,530 shareholders, in person or by proxy, representing 61% of the share capital of Prysmian Group. In addition, our open and transparent relations with the market and investors translate into over 500 meetings each year, as well as other contacts.

Integrity as a corporate value is expressed using a series of instruments: the Code of Ethics, the anti-corruption policy, privacy and data protection, and the Helpline programme for reporting actual, apparent or potential infringements of the law. Prysmian Group is a company made of people: out of 29,000 employees, more than 9,200, owning about 1.5% of the share capital, have subscribed to the "YES" share ownership programme - in-

vesting directly and expressing their confidence in the Company.

67

{

1,530

{approval

%

of Board

Shareholders

who attended the

members are

2018 Financial

Independent

Statements

32

Prysmian Group

Annual Report 2019

ESG IS INTEGRAL TO THE GROUP STRATEGY

We strive to align the management objectives of the Group with the sustainability KPIs and, to this end, we have adopted a scorecard that enables us to manage social, economic and environmental matters as a part of our business activities. The Prysmian Group's scorecard comprises 14 objectives with a business impact. These are clear and measurable objectives identified with reference to 3 parameters: the 17 Sustainable Development Goals for 2030 (SDGs) defined by the United Nations, requests from major International Sustainability Indexes and the needs and expectations of our stakeholders, which are mapped each year via the Group's stakeholder engagement initiatives.

Scorecard 14 objectives

REMUNERATION POLICY ALIGNED WITH ESG CRITERIA

The incentive scheme for all managers within the Prysmian Group is linked to the achievement of objectives for the improvement of our ESG parameters. The 2019 Remuneration Policy adopted by the Group includes a system of variable remuneration based partly on performance on sustainability matters and, in particular, on the positioning of the Group in the three main sustainability indexes - Dow Jones Sustainability Index, CDP In- dex, EcoVadis Index - and partly on the progress made on implementing the action plans for three matters of importance to the business: the level of gender diversity in management, the reduction of CO2 emissions and occupational health and safety.

GENDER BALANCE

EMISSIONS

HEALTH AND SAFETY

Prysmian Group

Directors' Report

33

A CLEAR AND AMBITIOUS ACTION PLAN

The Prysmian Group has implemented concrete actions designed to achieve the sustainability objectives identi- fied in the scorecard. The main actions include:

MAKE CITIES AND HUMAN SETTLEMENTS INCLUSIVE, SAFE, RESILIENT AND SUSTAINABLE

Increase the percentage of cables covered by the carbon footprint calculation: to this end, a platform has been implemented that can calculate the carbon footprint of various types of cable (Common Analysis).

ENSURE ACCESS TO AFFORDABLE, RELIABLE, SUSTAINABLE AND MODERN ENERGY FOR ALL

Develop innovative solutions that contribute actively to the transition towards the use of renewable sources and the digitalisation of networks, such as cables for the production and distribution of solar and wind energy, undersea cables for interconnections between countries and optical fibre cables.

TAKE URGENT ACTION TO COMBAT CLIMATE CHANGE AND ITS IMPACTS, REGULATING EMISSIONS AND PROMOTING THE DEVELOPMENT OF RENEWABLE ENERGY

Increase the number of plants with environmental, health and safety management certification. Investments and other initiatives designed to reduce GHG emissions.

ENSURE SUSTAINABLE CONSUMPTION AND PRODUCTION PATTERNS

Increase third-party audits in specific areas, such as governance, the environment and human resources.

ACHIEVE GENDER EQUALITY AND EMPOWER ALL WOMEN AND GIRLS

Increase the percentage of women in executive positions via the adoption of specific "diversity and inclusion" programmes, such as the "Side-by-Side" project for the promotion of diversity within the business, and the mentoring of female talents, such as the WLP (Women Leadership Programme).

The long-term strategy translates into a search for stable equilibrium, balancing the adoption of innovative and ecient processes [organisation], the responsible management of performance throughout the entire value chain [operations], the safeguarding of personnel and the recognition of talent [people].

Sustainability therefore plays a central role for the Group, which is committed to promoting a business model that integrates economic, social and environmental responsibility in all its aspects.

Our approach recognises the key importance of listening to and actively involving all internal and external stakeholders, dedicating constant attention to the evolution of the global and industry context, and acting responsibly towards the environment and society as a whole.

In this sense, the Prysmian Group recognises the responsibility deriving from our industry leadership role in facilitating the energy and digital transition to a new development model focused on renewable energy and decarbonisation.

As such, the objectives of the Prysmian Group include designing the advanced infrastructure for the transmission and distribution of energy and data needed for the development of economies, and well as for growth and progress in developing countries.

34

Prysmian Group

Annual Report 2019

Corporate Governance

Eective and ecient, in order to create long-term sustainable value and produce a virtuous circle with business integrity at its core.

Prysmian is aware of the importance of a good corporate governance system in order to achieve strategic objectives and create long-term sustainable value, by having a system that is eective in complying with the legal and regulatory framework, ecient in terms of cost-eectiveness, and fair towards all the Group's stakeholders.

Accordingly, Prysmian Group keeps its corporate governance system constantly in line with latest recommendations and regulations, adhering to national and international best practices.

In addition, the Group has adopted principles, rules and procedures that govern and guide the conduct of activities by all its organisational and operating units, as well as ensuring that all business transactions are carried out in an eective and transparent manner.

Once again in 2019, Prysmian continued to abide by the Corporate Governance Code(1). Further information about:

  1. compliance with the principles and recommendations of the Corporate Governance Code and the reasons for any non-compliance with one or more of its provisions and;
  2. any corporate governance practices actually applied by the Company going above and beyond statutory or regulatory obligations;

can be found in the "Report on Corporate Governance and Ownership Structure", approved by the Board of Directors and available in the Investor Relations/Corporate Governance section of the company website at www.prysmiangroup.com.

Corporate Governance Structure

The model of governance and control adopted by Prysmian is the traditional one, with the presence of a general meeting of the shareholders, a Board of Directors and a Board of Statutory Auditors. Prysmian's corporate governance structure is based on the central role of the Board of Directors (as the most senior body responsible for managing the company in the interests of shareholders) in shaping strategy, in ensuring the transparency of the decision-making process and in establishing an eective system of internal control and risk management, including decision-making processes for both internal and external aairs.

  1. "Corporate Governance Code for Listed Companies - Ed. July 2018" - approved by the Corporate Governance Committee and promoted by Borsa Italiana S.p.A., ABI, Ania, Assogestioni, Assonime and Confindustria.

Prysmian Group

Directors' Report

35

An overview of the Company's corporate governance structure now follows, along with a description of its main features.

GOVERNANCE STRUCTURE

SHAREHOLDERS'

MEETING

LEGAL AUDITING FIRM

BOARD OF STATUTORY AUDITORS

EY S.p.A.

P. Libroia (Chairt)

P.F. Lazzati

L. Gualtieri

BOARD OF DIRECTORS

Chair - Independent Director

C. De Conto

Independent

Independent

Executives

Directors

V. Battista

P. Amato

AD e DG

J.V. Bigio

P. F. Facchini

M.E. Cappello

SUPERVISORY BODY

CFO

EXECUTIVES

M. de Virgiliis

F. I. Romeo

RESPONSIBLE FOR

pursuant to Decree 231/01

F. Gori

PREPARING CORPORATE

V.P. Strategy and Dev,

M.L. Mosconi (Chair)

M.L. Mariani

REPORTS

M. Battaini

S. Corbella

M. Kung

A. Brunetti and C. Soprano

A. Nespoli

CEO North America

AUDIT AND RISKS

REMUNERATION, NOMINATIONS AND

COMPLIANCE

COMMITTEE

SUSTAINABILITY COMMITTEE

AND AUDIT OFFICER

F. Gori (Chair)

M. de Virgilis (Chair)

J.V. Bigio

P. Amato

A. Nespoli

M.L. Mariani

C. De Conto

36

Prysmian Group

Annual Report 2019

In compliance with the provisions of art. 14 of the By-laws, the Company is currently managed by a Board of Directors consisting of twelve members - who will remain in oce until the date of the annual general meeting called to approve the financial statements for the year ended 31 December 2020 - of whom eight are non-executive.

Seven of the Directors are men and five women, with five of them in the 45-55 age bracket and seven in the over-55 bracket.

The Board of Directors is vested with the broadest possible powers of ordinary and extraordinary management of the business, except those which by law are the exclusive prerogative of the shareholders in general meet- ing. In line with the recommendations of the Corporate Governance Code, the non-executive Directors are su- ciently numerous and have enough authority to ensure that their judgement carries significant weight in Board decision-making. Seven of the non-executive Directors are independent within the meaning of art. 148, par. 3 of Legislative Decree 58 dated 24 February 1998 (known as the Unified Finance Act) and of art. 3.C.1. and art. 3.C.2. of the Corporate Governance Code, while one non-executive Director is independent within the meaning of art. 148, par. 3 of the Unified Finance Act. The Board of Directors has appointed a Chief Executive Ocer and General Manager from among its members and granted him all the authority and powers of ordinary management of the company necessary or useful for conducting its business.

Management of the business is the responsibility of the Directors, who take the actions necessary to implement the corporate purpose. The Board of Directors is also responsible for the Group's internal control and risk management system, requiring it to verify the system's adequacy and adopt specific guidelines; in so doing the Board acts with the support of other bodies involved in the internal control and risk management system, namely the Control and Risks Committee, the Director in charge of the internal control and risk management system, the Chief Audit & Compliance Ocer, the Board of Statutory Auditors and the Managers responsible for preparing corporate accounting documents.

Completing the Prysmian corporate governance structure is a Compensation, Nominations and Sustainability Committee and a Monitoring Board instituted under Legislative Decree 231/2001.

Further information regarding (i) the corporate governance system of Prysmian S.p.A. (ii) its ownership struc- ture, as required by art.123-bis of the Unified Finance Act and (iii) Directors' disclosures about directorships or statutory auditor appointments held in other listed or relevant companies, can be found in the "Report on Corporate Governance and Ownership Structure", prepared in accordance with art. 123-bis of the Unified Finance Act and available in the Investor Relations/Corporate Governance section of the company website at www.prysmiangroup.com.

38

Prysmian Group

Annual Report 2019

CORPORATE STRUCTURE

The companies consolidated on a line-by-line basis at 31 December 2018 are presented below

Draka

PRYSMIAN S.P.A.

Holding B.V.

100%

100%

Draka Cableteq

100%

100%

100%

100%

100%

100%

Asia Pacific

Holding Pte Ltd.

Prysmian

Fibre Ottiche

Prysmian

Prysmian

Prysmian

Prysmian

100%

Pension Scheme

Cavi e Sistemi

Cavi e Sistemi

PowerLink S.r.l.

Sud - FOS S.r.l.

Treasury S.r.l.

Trustee Ltd.

Italia S.r.l.

S.r.l.

Suzhou Draka

95%

100%

100%

91.844%

Cable Co. Ltd.

Prysmian

Prysmian

Prysmian

99.999985%

PowerLink

Comergy Ltd.

Cabos e Sistemas

Saudi LLC

Electronics S.r.l.

do Brasil S.A.16

Draka Cables

83.746%

67%

100%

100%

(Hong Kong) Ltd.23

Turk Prysmian

Prysmian Tianjin

Prysmian

Prysmian Cables

100%

Kablo Ve

MKM Magyar

Cables Co. Ltd.

Chile S.P.A.

Sistemleri A.S.22

Kabel Muvek KFT

Draka Offshore

59.74%

95%

100%

100%

100%

Asia Pacific Pte Ltd.

99.999991%

Prysmian Energia

40.01%

Prysmian Consultora

Prysmian

Prysmian

Prysmian

Jaguar

70.250172%

Cables y Sistemas

Conductores e

Wuxi Cable

(China) Investment

Hong Kong

Communication

de Argentina S.A.20

Instalaciones SAIC4

Company Ltd.

Company Ltd.

Holding Ltd.

Consultancy Services

MCI-Draka

Private Ltd.8

Cable Co. Ltd.11

50%

100%

100%

100%

100%

100%

Prysmian

Prysmian Cable

Prysmian Cable

Prysmian Technology

Prysmian

Cables and Systems

Sindutch Cable

Systems Pte Ltd.1

(Shanghai) Co. Ltd.

Jiangsu Co. Ltd.

Australia Pty Ltd.

Canada Ltd.

Manufacturer

Sdn Bhd

100%

100%

100%

100%

Prysmian Cables

Prysmian Re

Prysmian

Singapore Cables

Asia-Pacific Pte Ltd.

Company Designated

New Zealand Ltd.

Manufacturers

Activity Company

Pte Ltd.

99.48%

99.9995%

99.995%

100%

100%

P.T. Prysmian 2

Prysmian

Prysmian

Prysmian

Cable Supply and

Cabluri Si Sisteme

Cables Indonesia

5

Kablo s.r.o7

OEKW GmbH

Consulting

S.A.

Company Pte Ltd.

100%

99%

100%

100%

LLC

Limited Liability

50.998%

Prysmian

100%

Prysmian (French)

Company Prysmian

Cables et Systemes

"Rybinskelektrokabel"

RUS6

Auto Cables

France SAS

Holdings S.A.S.

Draka (Malaysia)

Tunisie S.A.

Sdn Bhd

99.970 %

100%

77.7972%

Draka Marketing

Eurelectric

and Services

Tunisie S.A.3

Prysmian Group

Sdn Bhd

Finland OY9

19,93%

51%

SICABLE

100%

100%

100%

Societé Ivoirienne

de Cables S.A.

Prysmian Group

Draka NK Cables

NK Mexico

Baltics AS

(Asia) Pte Ltd.

Holdings S.A. de CV

100%

100%

99.996%

99.999998%

99.9983%

100%

100%

Prysmian Group

Prysmian Group

Draka Mexico

Prysmian

Prysmian

Draka Durango

Cables y Sistemas

Prysmian Group

Holdings

Cables and Systems

Denmark A/S

North Europe AB

22

de Mexico

S. De R.L. de C.V.

S.A. de CV10

18

Norge AS

(US) INC.

S. De R.L.De C.V.

100%

100%

100%

Prysmian Group

Prysmian

Prysmian Cables

Construction

and Systems

Sverige AB

Services Inc

USA LLC

99.9999975%

100%

100%

100%

100%

Draka

Draka Elevator

Draka Elevator

Draka Transport

Draka

Philippines Inc.

France S.A.S.

Products

Products, Inc.

USA, LLC

Incorporated

100%

100%

100%

100%

60%

75%

Draka

Draka Comteq

Draka

P.O.R. S.A.S.

Nantong Zhongyao

Nantong Haixum

Paricable S.A.S

France S.A.S.

Fileca S.A.S.

Draka Elevator

Draka Elevator

Products Co. Ltd.

Products Co. Ltd.

Continues on next page

Prysmian Group

Directors' Report

39

Continues from previous page

Continua nella pag. successiva

100%

100%

100%

100%

100%

100%

100%

100%

Draka Comteq

Draka

Prysmian

Prysmian UK

Draka U.K.

Draka Distribution

Prysmian

Netherlands

Singapore Pte Ltd.

Comteq B.V.

Group Ltd.

Group Ltd.

Aberdeen Ltd.

Draka U.K. Ltd.

Powerlink

Holding B.V.

Services Ltd.

100%

100%

100%

100%

Draka Comteq

Cable

Germany

Draka Comteq

Draka Comteq

Prysmian

75%

Draka Comteq

Verwaltungs

Fibre B.V.

UK Ltd.

Cables & Systems

Makers Properties

Germany GmbH

GmbH

Ltd.

and Services Ltd.

& Co. KG

99.9999454%

55%

100%

Prysmian Cables

Draka Shanghai

Tasfiye Halinde19

100%

Draka Comteq Kablo

Prysmian

(2000) Ltd.

Optical Fibre

Limited Sirketi

Cable Co. Ltd.

Netherlands B.V.

49.352319%

Prysmian

100%

100%

100%

Draka Comteq

Construction

Company Ltd.

Cabos Brasil S.A.17

Draka Kabel

Donne

NKF Vastgoed

B.V.

Draad B.V.

III B.V.24

99%

100%

100%

51.17%

Draka Deutschland

NKF Holding

Zweite

(Deutschland)

Oman Cables

Beteiligungs

GmbH i.L.

Industry (S.A.O.G.)

GmbH

100%

100%

100%

90%

10%

49.9%

Associated

Oman Aluminum

Draka Deutschland

Draka Deutschland

Draka Comteq

Cables PVT Ltd.

Processing

Erste Beteiligungs

GmbH

Berlin GmbH

Industires LLC

GmbH

& Co. KG15

100%

100%

98.52%

Hohn GmbH

Kaiser Kabel

GmbH

Draka

Belgium N.V.12

100%

100%

93.75%

100%

Draka Service

Prysmian Kabel

Draka Deutschland

Wholly owned

Und Systeme

Verwaltungs

Draka Kabely s.r.o.

GmbH

GmbH14

GmbH

100%

Third-party ownership

99%

Prysmian

Italy

Unterstuetzun-

gseinrichtung

UK - Ireland

NKF Vastgoed I

Lynen GmbH

B.V.13

France

100%

100%

Netherlands

Draka Holding, S.L.

Prysmian Cables

(Sociedad

Spain S.A.

Nordics

Unipersonal)

(Sociedad

Unipersonal)

Germany

Spain

Danubian Area

Switzerland

Oceania

ASEAN

China

1.

Prysmian Cables & Systems Ltd. 50%

12.

Draka Kabel B.V. 1.48%

Russia

2.

Prysmian Cavi e Sistemi S.r.l. 0.52%

13.

Prysmian Netherlands B.V. 1%

3.

Prysmian (French) Holdings S.A.S. 0.005%,

14.

Prysmian S.p.A. 6.25%

Prysmian Cavi and Sistemi S.r.l. 0.005%

15.

Prysmian Netherlands B.V. 50.10%

South America

4.

Prysmian Cavi and Sistemi S.r.l. 5%

16.

Prysmian S.p.A. 0.0401%

5.

Prysmian Cavi and Sistemi S.r.l. 0.0005%

Draka Holding B.V. 1.6874%

North America

6.

Prysmian Cavi and Sistemi S.r.l. 1%

Draka Comteq B.V. 6.42828%

7.

Prysmian S.p.A. 0.005%

17.

Prysmian Cabos and Sistemas do Brasil S.A. 50.647681%

Turkey

8.

Prysmian S.p.A. 0,000009%

18.

Draka Mexico Holdings S.A. de CV 0.0017%

9.

Draka Comteq B.V. 2.27%

19.

Prysmian Netherlands B.V. 0.0000546%

Africa

10.

Draka Comteq B.V. 0.000002%

20.

Prysmian Cabos and Sistemas do Brasil S.A. 0,11%

11.

Draka (Malaysia) Sdn Bhd 0.000023%,

21.

Turk Prysmian Kablo Ve Sistemleri A.S. 0.705%

Luxembourg

Sindutch Cable Manufacturer Sdn Bhd 0.000023%,

22.

Draka Holding B.V. 0.004%

Singapore Cables Manufacturers Pte Ltd 0.000023%

23.

Cable Supply and Consulting Co. Pte Ltd. 0.0000015%

Oman

24.

Prysmian Netherlands B.V. 1.00%

40

Prysmian Group

Annual Report 2019

GENERAL CABLE

Structure chart as of 31 December 2018

100%

Continues from previous page

General Cable

Corporation

(US-Delaware)

100%

GK Technologies,

Inc.

(US-New Jersey)

100%

100%

99.995%

100%

99.8%

95.5%

General Cable

General Cable

General Cable

General Cable

General Cable

General de Cable

Caribbean S.r.l.

de Mexico

Holdings

Holdings (UK)

Trinidad Limited

Industries, Inc.

(Dominican

del Norte, S.A.

Netherlands CV

Limited (England)

(Trinidad)

(US-Delaware)

Republic)9

de CV (Mexico)10

100%

(Netherlands)11

100%

GC Global Holdings,

General Cable

Inc.

Services Europe

(US-Delaware)

Limited

(England)

100%

100%

100%

100%

99.8%

80.41734%

Phelps Dodge

Phelps Dodge Enfield

Prestolite Wire

Prestolite de Mexico,

General Cable

General Cable de

International

Technologies

Corporation

Corporation

(Shanghai)

S.A. de CV

Corporation

Mexico S.A. de CV

Co. Ltd. (China)

12

(US-Delaware)

(US-Delaware)

(Mexico)

(US-Delaware)

(Mexico)14

19.58%

100%

69.3%

30.7%

99.998%

Phelps Dodge

National Cables

Servicios

National Cables

Latinoamericanos

(Pty) Ltd

Corporation

GC S.A. de CV

(South Africa)

(US-Delaware)

(Mexico)13

100%

100%

General Cable

General Cable

Botswana

Industries, LLC

(Pty) Ltd.

(US-Delaware)

(Botswana)

100%

General Cable Canada

100%

Holdings LLC

(US-Delaware)

General Cable

Company Ltd.

100%

(Canada)

Diversified

100%

Contractors, Inc.

(inactive)

YA Holdings Ltd.

(US-Delaware)

(Cayman Islands)

66.67%

Phelps Dodge Yantai

China Holdings, Inc.

(Cayman Islands)

Prysmian Group

Directors' Report

41

86.17%

General Cable

Holdings

New Zealand

(New Zealand)8

100%

100%

100%

100%

100%

99.349%

General Cable

General Cable

General Cable

General Cable

Cahosa S.A.

General Cable

Investments,

Phoenix South Africa

Trading

Overseas Holdings,

Holdings (Spain),

SGPS S.A.

(Panama)

Pty. Ltd.

(Mauritius)

LLC (US-Delaware)

S.L. (Spain)6

(Madeira)

(South Africa)

100%

General Cable

New Zealand Limited

(New Zealand)

100%

GC Specialty

  • Automotive (Mauritius)

100%

General Cable

Middle East

(Mauritius)

100%

General Cable Asia

Pacific & Middle

East Company

Limited (Thailand)

93.75%

100%

59.39%

67.14%

100%

Grupo General Cable

General Cable Celcat,

Alambres y Cables

Electroconductores

Cables Electricos

GC Latin America

Energia e

Sistemas, S.L.

de Panama S.A.

de Honduras

Ecuatorianos C.A.

Holding, S.L.

Telecomunicaçoes

S.A. de CV

(Spain)1

S.A. (Portugal)

(Panama)2

CABLEC (Ecuador)

(Spain)

(Honduras)4

78.08%

99.80%

Cobre Cerrillos S.A.

99.80%

73.52%

(Chile)

General Cable Condel,

Conducen, SRL

99.99%

Cabos de Energia

e Telecomunicaçoes

(Costa Rica)5

99.96%

General Cable Brasil

S.A. (Angola)

Industria e Comercio

99%

Productora de Cables

de Condutores Eletricos

Procables S.A.S.

Ltda. (Brazil)3

Proveedora de Cables

(Colombia)7

100%

y Alambres PDCA

Guatemala, S.A.

99.99999%

General Cable

(Guatemala)

Nordic A/S

100%

General Cable Peru

(Norway)

S.A.C.

(Peru)

100%

Alcap Comercial S.A.

(Panama)

General Cable

Italia Sarl

99.95%

(Italy)

Conducen Phelps Dodge

100%

100%

Centroamerica-El

Salvador, S.A. de CV

Norddeutsche

NSW Technology

(El Salvador)

Seekabelwerke

Limited

GmbH

99.998%

(Scotland, UK)

(Germany)

PDIC Mexico,

100%

S.A. de CV

(Mexico)

Wholly owned

Silec Cable, SAS

Third-party ownership

(France)

Italy

UK - Ireland

France

Netherlands

Nordics

Germany

1. GC Latin America Holdings, S.L. 6.25%

2. Cahosa S.A. 21.92%

Spain

3. General Cable Holdings (Spain) S.L. 0.01%

4.

Cahosa S.A. 40.61%

Portugal

5.

Cahosa S.A. 26.48%

6.

General Cable Overseas Holdings, LLC 0.6510%

Oceania

7.

GK Technologies, Incorporated 0.04%

8. General Cable Industries, Inc. (US-Delaware) 12.96%

9.

GC Global Holdings, Inc. (US-Delaware) 0.87%

ASEAN

Diversified Contractors, Inc. 0.005%

10.

General Cable Industries, Inc. (US-Delaware) 0.2%

China

11.

GC Global Holdings, Inc. (US-Delaware) 1%

Phelps Dodge National Cables Corporation (US-Delaware) 3.5%

South America

12.

GK Technologies, Incorporated 0.20%

13.

General Cable Technologies Corporation (US-Delaware) 0.002%

14.

General Cable Technologies Corporation 0.00000015%

North America

GK Technologies, Incorporated 0.00000015%

Africa

42

Prysmian Group

Annual Report 2019

ORGANISATIONAL STRUCTURE(*)

BOARD OF DIRECTORS

Audit and

Compliance

A. Nespoli

CEO

V. Battista

GROUP

Research &

Hr &

Finance Admin

Corporate

Communication

Corporate

Digital

Development

Organization

& Control & It

Aairs

Strategy & Dev.

Innovation

FUNCTIONS

S. Siripurapu

F. Rutschmann

P. F. Facchini

J. Zirulla

L. Caruso

F. Romeo

S. Brandinali

Also reporting

To CFO as CIO

BUSINESS

Energy

Telecom

Projects

AREA

F. Fanciulli

P. Vanhille

H. Ozmen

E&I

Oil & Gas

Industrial

Connectivity

Telecom

High

Specialties

Solutions

Voltage

R. Van Veen

A. I. Fanciulli

C. Biggiogera

G. Imparato

A. Bosch

B. Sehovac

Including

T&I and PD

Elevators

Automotive

Network

Electronics

Mms

Opgw

Optical

Submarine

Components

&Specials

Fiber

S. Lloyd

G. Mazzantini

F. Adamini

R. Candela

L. Roberts

J. M. Macia

E. Stoltz

R. Gil

OPERATIONS

Power Telecom Oshore

Specialties

R. Gil

A. Bhargava M. Tomassini

Operations

A. Pirondini

REGIONS/

UK

North

South(**)

Europe(1)

Europe(2)

COUNTRIES

M. Del Brenna

J. M. Arata

L. Tardif

Cent.East

North

(5)

Europe(3)

America(4)

Latam

F. Persson

M. Battaini

J. Mogollon

Middle East,

China

Osea(6)

Africa

& Turkey

A. Habaj

M. Bavaresco

E. Aydogdu

Intermediate BU

Integrated BU

  1. The organisation chart reflects the organisational structure as from February 2020. (**) France delegated for Aerospace.
  1. NORTH EUROPE: Denimark, Estonia, Finland, Norway, Russia, Sweden, The Netherlands.
  2. SOUTH EUROPE: Belgium, France, Italy, Spain, Portugal, Tunisia, Ivory Coast and Angola.
  3. CENT EAST EUROPE: Austria, Czech Republic, Germany, Hungary, Poland, Romania, Slovakia.
  4. NORTH AMERICA: Canada, USA.
  5. LATAM: Argentina, Brazil, Chile, Mexico, Peru, Central America, Columbia, Ecuador.
  6. OSEA: Australia & New Zeland, Indonesia, Malaysia, Philippines, Singapore, Thailand, India.

44

Prysmian Group

Annual Report 2019

TOP MANAGERS

Directors

VALERIO BATTISTA

Chief Executive Ocer & General Manager.

Chief Executive Ocer Prysmian Group.

Born in Arezzo on 8 January 1957, Valerio Battista holds a degree in Mechanical

Engineering from Florence University.

With more than 30 years of experience, he has extensive knowledge and a deep understanding of the industrial sector, gained first with Pirelli Group and then with Prysmian Group, which he has led since 2005.

He held positions of increasing responsibility within Pirelli Group, including for the restructuring and reorganisation of Pirelli Cavi, transformed between 2002 and 2004 into one of the most profitable and competitive organisations in its industry. In 2005, he played a key role in the creation of Prysmian Group, leading to its listing on the Stock Exchange in 2007.

The Group of which he is currently CEO is world leader in the energy and tel- ecom cables industry, with approximately 29,000 employees and 106 plants worldwide. He has been President of Europacable since June 2014 and a member of the Board of Directors of Brembo S.p.A. since April 2017 serving as Lead Independent Director. He has sat on the Prysmian Board of Directors since De- cember 2005.

He was elected for the current term of oce by the Shareholders' Meeting on 12 April 2018 from the slate submitted by the Board of Directors, which obtained the majority of votes

Prysmian Group

Directors' Report

45

MASSIMO BATTAINI

North America Chief Executive Ocer.

Executive Director Prysmian Group.

Massimo Battaini is Chairman and CEO of Prysmian Group North America (Cana- da and United States), in charge of overseeing the entire North American business and the recent acquisition of General Cable. As part of this role, he focuses on customer relationships, sustainability and promotion of innovation to create new solutions for communities throughout the region and around the world. He has sat on the Prysmian Group Board of Directors since 2014. Before becoming North America CEO in June 2018, he was Senior Vice President and Executive Director of Prysmian Group's Energy Projects business.

Starting his career in Pirelli Group in 1987, he held various positions in R&D and Operations over an 18-year period. In charge of Business Development for the Tyres, Energy Cables and Telecom Cables businesses from 2000 to 2002, he was subsequently appointed Operations Director of Pirelli Group's Energy Cables and Telecom Cables divisions.

Following the creation of Prysmian Group in 2005 with the acquisition of Pirel- li's energy and telecom cables divisions, he was appointed CEO of Prysmian UK. From 2011 to 2014 he served as Prysmian Group's Chief Operating Ocer and later as Senior Vice President Energy Projects and Chairman and CEO of Prysmian PowerLink S.r.l. He became CEO of Prysmian Group North America in June 2018.

Battaini holds a degree in Mechanical Engineering from the Polytechnic University of Milan and an MBA from SDA Bocconi.

PIER FRANCESCO FACCHINI

Chief Financial Ocer.

Executive Director.

Born in Lugo (Ravenna) on 4 August 1967, he obtained a degree in Business Economics from the "Luigi Bocconi" University in Milan in 1991 and then joined Nestlè Italia, where he held dierent posts in the Accounting and Finance department between 1991 and 1995. From 1995 to 2001, he worked for the Panalpina Group where he held the position of Regional Financial Controller for the Asia-Pacific region and CFO of Panalpina Korea (Seoul) and Panalpina Italia Trasporti Internazionali S.p.A.. In April 2001 he was appointed Finance Director of Fiat Auto's Consumer Services business unit, leaving in 2003 to become CFO of the Benetton Group, a post he held until November 2006. He has sat on the Prysmian Board of Directors since February 2007. He was elected for the current term of oce by the Shareholders' Meeting on 12 April 2018 from the slate submitted by the Board of Directors, which obtained the majority of votes.

46

Prysmian Group

Annual Report 2019

FABIO IGNAZIO ROMEO

Chief Strategy and Development Ocer.

Executive Director.

Born in Rho (Milan) on 25 August 1955, he earned a degree in Electronic Engineering from the Polytechnic University of Milan in 1979, later followed by a Master›s degree and a Ph.D. in Electronic Engineering and Computer Sciences from the University of California, Berkeley, awarded in 1986 and 1989 respectively. Mr. Romeo began his career in 1981 at Tema (part of the ENI Group) as a designer of control systems for chemical plants. He moved to Honeywell in 1982 as a member of Technical Staff, later becoming Technical Advisor to the CEO. He joined Magneti Marelli›s Electronics Division in 1989 as Innovation Manager. In 1995, he was appointed Managing Director of the Rearview Mirrors Division, and in 1998 Managing Director of Magneti Marelli›s Electronic Systems Division. In 2001, he moved to Pirelli & C. S.p.A. Group as Director of the Truck Division within the Pirelli Tyre business unit. A year later, he took up the post of Utilities Director at the Pirelli Cables Division. In December 2004, he became Head of Prysmian Group›s Energy Cables and Systems Business Unit, holding this position until December 2013, when he was named Chief Strategy and Development Officer.

He has sat on the Prysmian Board of Directors since February 2007. He was elected for the current term of office by the Shareholders› Meeting on 12 April 2018 from the slate submitted by the Board of Directors, which obtained the majority of votes.

Senior Managers

ANDREA PIRONDINI

Chief Operating Ocer.

Andrea Pirondini has been Chief Operating Ocer of Prysmian Group since Jan- uary 2014.

He holds a degree in Business Administration from the "Luigi Bocconi" University in Milan. He started his career in Pirelli Group in 1989, holding various positions in the UK, Italy, Turkey, Russia and Egypt over a 25-year period, both in the Tyres and Cables & Systems businesses, where he was involved in restructuring the manufacturing footprint of energy cables.

In 2012 he was appointed Chief Commercial Ocer of Pirelli Tyre S.p.A, a position he held until December 2013.

Prysmian Group

Directors' Report

47

FRANCESCO FANCIULLI

Senior Vice President Energy.

Francesco Fanciulli has been Senior Vice President of the Energy segment since February 2018. He holds a degree in Law from the Cattolica University of Milan. In 1988, he joined Procter and Gamble, where he held various leadership roles within sales and marketing, culminating in his appointment as Head of Mass Retail for Italy. He moved to Pirelli in 1998 as Marketing Director for its Tyres division and subsequently held various sales-management positions in this di- vision, eventually becoming Senior Vice President Sales & Marketing. He has been with Prysmian since 2008, contributing his vast experience in sales and marketing and occupying various positions of regional responsibility, such as CEO India, CEO Turkey and CEO Danube Area. Since 2015 - when the Central Eastern Europe region was created - he has been CEO CEE Region, responsible for integration of Germany and the Danube Area and development of the region's industrial footprint.

PHILIPPE VANHILLE

Senior Vice President Telecom.

Philippe Vanhille has been Senior Vice President Telecom since May 2013. After graduating as a Mechanical Engineer in Lyon (France) in 1989, he began his career as a Research Engineer for Renault Formula 1 development, and then moved to the cable industry, joining Alcatel Cable in 1991. Over a 20-year period he held a number of senior Operations and General Management positions within the cable industry for Alcatel and Draka, and subsequently in the energy, copper telecom and optical fibre sectors. He was head of Draka's Optical Fibre Business Unit at the time of the Prysmian merger, holding the same position in Prysmian Group until his appointment as Senior VP Telecom.

HAKAN OZMEN

Senior Vice President Projects.

Hakan Ozmen has been Senior Vice President Projects and Chairman and Chief Executive Ocer of Prysmian PowerLink S.r.l. since June 2018. After graduating as an Industrial Engineer, he began his career in 1993 as Internal Audit Manager and Corporate Secretary at Siemens AS in Istanbul. In August 1999, he received an MBA from Yeditepe University in Istanbul. He joined Pirelli S.p.A. in Septem- ber 1999 as Internal Audit Manager for the EMEA region, completing audits in Germany, Italy, Finland, UK, Turkey, Romania and the Czech Republic. In Janu- ary 2001, he became Chief Financial Ocer & Board Member at Turk Pirelli in Is- tanbul, later becoming Chairman. After holding the position of Global Director of Prysmian Telecom for two years, he served as Chairman and CEO of Prysmian Group North America from 2011 to May 2018.

48

Prysmian Group

Annual Report 2019

Prysmian and the financial markets

OWNERSHIP STRUCTURE

Prysmian Group has been a Public Company to all intents and purposes for many years with a free float of 100% of capital, of which around 70% held by institutional investors.

The listing of Prysmian's ordinary shares, resulting from the sale of 46% of the shares held by the Goldman Sachs Group Inc., took place on 3 May 2007 at a price of Euro 15.0 per share, corresponding to a capitalisation of Euro

2.7 billion. Subsequent to the listing, the Goldman Sachs Group Inc. gradually reduced its interest in the compa- ny, control of which it had acquired in July 2005, by placing the remaining 54% of the shares with institutional and selected investors in several successive stages: i) approx. 22% in November 2007, ii) approx. 14% in Novem- ber 2009, iii) approx. 17% in March 2010. Valerio Battista, Prysmian's Chief Executive Ocer, announced on occa- sion of the last sale that he had purchased 1,500,000 shares, corresponding to around 0.8% of share capital and taking his total shareholding to 1.2%, raised to approximately 1.5% over the course of subsequent years.

At 31 December 2019, the Company's free float was equal to 100% of the outstanding shares and significant shareholdings (in excess of 3%) accounted for approximately 23% of total share capital, meaning there were no majority or controlling interests. Prysmian is now one of Italy's few globally present industrial concerns to have achieved true Public Company status in recent years.

At 31 December 2019, the share capital of Prysmian S.p.A. amounted to Euro 26,814,424.60, comprising 268,144,246 ordinary shares with a nominal value of Euro 0.1 each. The ownership structure at this date is shown below.

SHARE OWNERSHIP BY TYPE AND MAJOR SHAREHOLDERS

71.0%

Institutional investors

4.6%

BlackRock, Inc.

8.3%

Retail

4.6%

Crédit Agricole S.A.

1.8%

Treasury shares

4.5%

Clubtre S.p.A.

18.9%

Others*

3.2%

UBS AG

3.1%

T. Rowe Price Group, Inc.

3.0%

Sun Life Financial, Inc.

2.9%

The Vanguard Group, Inc.

2.5%

Standard Life Aberdeen plc

2.1%

AXA S.A.

69.5%

Others

*Mainly comprises shares held by non-institutional investors and by third-party holders of shares for trading purposes.

Source: Nasdaq, December 2019.

Prysmian Group

Directors' Report

49

INSTITUTIONAL INVESTORS

INSTITUTIONAL INVESTORS

BY GEOGRAPHICAL AREA

BY INVESTMENT STYLE

28%

US

36%

Growth

21%

UK

17%

GARP

13%

Italy

17%

Value

12%

France

16%

Index

3%

Norway

2%

Hedge Fund

3%

Germany

12%

Others

3%

Switzerland

13%

Rest of Europe

4%

Rest of the World

Source: Nasdaq, December 2019.

The geographical ownership structure shows a predominant presence of the United States, which represents 28% of the institutional investor total, followed by the United Kingdom, which accounted for 21%, both basically the same as the previous year. Italy accounted for around 13% of the capital held by institutional investors, down from 2018, while France's share was slightly higher than the year before at about 12%. The proportion of Asian investors (primarily from Japan and Hong Kong) was basically stable.

Approximately 70% of the share capital held by institutional investors is represented by investment funds with Value, Growth or GARP strategies, therefore focused on a medium to long-term investment horizon. The proportion of investors adopting an Index investment strategy, based on the principal stock indexes, was stable compared with 2018, while the Hedge Fund component, focused on a shorter time horizon, decreased in weight to 2% of the total.

50

Prysmian Group

Annual Report 2019

ANNUAL GENERAL MEETING

The Annual General Meeting saw participation by over 61% of share capital, with more than 1,530 shareholders present, in person or by proxy.

The Annual General Meeting of the shareholders of Prysmian S.p.A. was held, in single call, on 5 June 2019 to adopt resolutions on a number of items, including approval of the 2018 financial statements, allocation of profit for the year and declaration of a dividend, appointment of one Director, appointment of the Board of Statutory Auditors and its Chairman for the period 2019-2021, determination of the fees due to members of the Board of Statutory Auditors, authorisation of a share buyback programme, and consultation on remuneration policies. The meeting, attended in person or by proxy by over 1,530 shareholders, representing more than 61% of share capital, approved every item on the agenda by a wide majority.

The Annual General Meeting also approved the declaration of a dividend of Euro 0.43 per share, in line with the amount distributed the previous year. The dividend was paid on 26 June 2019, involving a total pay-out of approximately Euro 113 million.

FINANCIAL CALENDAR

5 March 2020

Approval of the draft financial statements and consolidated financial statements as of 31 December 2019

28 April 2020

Shareholders' Meeting to approve the Annual Report as of 31 December 2019

12 May 2020

Approval of the quarterly financial report as of 31 March 2020

30 July 2020

Approval of the half-year financial report as of 30 June 2020

29 October 2020

Approval of the quarterly financial report as of 30 September 2020

Prysmian Group

Directors' Report

51

SHAREHOLDERS' MEETING: REPRESENTED CAPITAL

Public Company (no controlling shareholders)

70%

60%

50%

40%

30%

20%

10%

0

2008

2009

2010

Jan 2011

Apr 2011

2012

2013

2014

2015

2016

2017

2018

2019

Capital represented in the Shareholders' Meeting Participation of the main shareholder in the Shareholders' Meeting

ASSEMBLEA AZIONISTI: SHAREHOLDERS' MEETING: NUMBER OF PARTICIPANTS PRESENT OR REPRESENTED

Public Company (no controlling shareholders)

1,800

1,600

1,400

1,200

1,000

800

600

400

200

0

2008

2009

2010

Jan 2011

Apr 2011

2012

2013

2014

2015

2016

2017

2018

2019

Number of shareholders attending the meeting

52

Prysmian Group

Annual Report 2019

FINANCIAL MARKET PERFORMANCE

Financial markets had a very positive year in 2019, with the main indexes sharply up, despite the accompanying uncertainties, including Brexit and the US-China trade negotiations.

Prysmian S.p.A. was floated on the Italian Stock Exchange on 3 May 2007 and since September 2007 has been included in the FTSE MIB index, comprising the top 40 Italian companies by capitalisation and stock liquidity. The Prysmian stock has since entered the principal world and sector indexes, including the Morgan Stanley Capital International index and the Stoxx Europe 600, made up of the largest companies by capitalisation, and the FTSE4Good, composed of a select basket of listed companies that demonstrate excellent Environmental, Social and Governance (ESG) practice. In 2019, Prysmian Group was also included for the first time in the Dow Jones Sustainability World, one of the most important international sustainability indexes for tracking the ESG performance of some 2,700 companies.

The main Eurozone stock indexes enjoyed a positive performance in 2019, primarily driven by those in Italy (FTSE MIB +28.3%), followed by France (CAC40 +26.4%) and Germany (DAX30 +25.5%). The indexes in Spain and the UK grew by a more sedate but positive +11.8% (IBEX 35) and +12.1% (FTSE 100) respectively. The US stock market also had a very strong 2019, with all three main indexes sharply up: S&P 500 +28.9%; Nasdaq Composite +35.2% and Dow Jones Industrial +22.3%. Among the major emerging country indexes, the Brazilian market index (Bovespa) recorded a 31.6% increase, supported by encouraging signs of economic rebound and newfound political stability. In China, the Shanghai Composite index climbed by 22.3%, while the Hang Seng index in Hong Kong managed a more subdued +9.1%, reflecting the uncertainty created by the protests aecting the country during the year.

The Prysmian stock gained 27.4% in 2019, closing the year at Euro 21.49 per share compared with Euro 16.87 at the end of 2018. Its performance tracked that of the Italian market and was slightly below that of its sector of reference (Capital Goods Industrial Services), whose STOXX Europe 600/Ind Goods & Svcs index closed 2019 up 32.1%.

The average share price was Euro 18.55 in 2019, down from Euro 22.17 in 2018. Including dividend pay-outs, the Total Shareholder Return (TSR) oered by the Prysmian stock was +30.5% in 2019 and +97.4% since its date of listing. Excluding the contribution of dividends and so just considering the change in price, the performance was +27.4% in 2019 and +48.2% since listing.

Looking at the stock's performance over the four quarters of 2019, the last three quarters saw a steadily rising trend, in contrast with a flat first-quarter (0.0%), partly in response to the technical faults detected in the Western Link in February 2019. More details about the Western Link can be found in "Significant Events during the Year" in the next section of this report.

The Group's solidity, the gradual recognition of the high potential of the General Cable acquisition to create shareholder value, thanks to the synergies achieved and expected, the high geographical complementarity achieved by combining the two companies, and the expectations for growth, have allowed the Prysmian stock to retain its strong market appeal, confirmed by financial analyst recommendations at year end, of which 75% were "Buy" and 19% "Hold".

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53

PERFORMANCE OF PRYSMIAN STOCK SINCE IPO

Price - Euro

Volume - Mln shares

30

20.0

27

18.0

24

16.0

21

14.0

18

12.0

15

10.0

12

8.0

9

6.0

6

4.0

3

2.0

0

0.0

May-07

Nov-07

May-08

Nov-08

May-09

Nov-09

May-10

Nov-10

May-11

Nov-11

May-12

Nov-12

May-13

Nov-13

May-14

Nov-14

May-15

Nov-15

May-16

Nov-16

May-17

Nov-17

May-18

Nov-18

May-19

Nov-19

Volumes

Prysmian

PERFORMANCE OF PRYSMIAN STOCK

220

200

180

160

140

120

100

80

60

40

20

0

May-07

Nov-07

May-08

Nov-08

May-09

Nov-09

May-10

Nov-10

May-11

Nov-11

May-12

Nov-12

May-13

Nov-13

May-14

Nov-14

May-15

Nov-15

May-16

Nov-16

May-17

Nov-17

May-18

Nov-18

May-19

Nov-19

Prysmian

FTSE MIB

EURO STOXX 600 Industrial Goods & Services

During 2019, the stock's liquidity saw average daily trading volumes of approximately 1.7 million shares, with an average daily turnover of Euro 31 million.

54

Prysmian Group

Annual Report 2019

PRYSMIAN STOCK: PRINCIPAL DATA

(€)

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007*

Price at 31

21.49

16.87

27.19

24.40

20.26

15.15

18.71

15.01

9.60

12.75

12.19

11.10

16.89

December

Change over period

27.4%

-38.0%

11.4%

20.4%

33.7%

-19.0%

24.7%

56.4%

-24.7%

4.6%

9.8%

-34.3%

12.6%

Average price

18.55

22.17

26.31

20.93

19.10

16.38

16.68

13.00

12.90

13.13

10.60

13.76

18.36

Maximum price

22.06

28.54

30.00

24.42

22.23

19.54

19.30

15.43

15.95

15.81

13.84

18.54

21.00

Minimum price

14.93

14.97

23.34

16.45

14.43

12.78

14.03

9.77

9.25

11.27

6.10

6.21

15.34

Market capitalization at period end

Average capitalization

Average daily trading volume

Average daily turnover

Number of shares at 31 December

5.762 Mil

4.523 Mil

5.913 Mil

5.288 Mil

4.319 Mil

3.283 Mil

4.015 Mil

3.220 Mil

2.057 Mil

2.321 Mil

2.209 Mil

2.004 Mil

3.040 Mil

4.975 Mil

5.361 Mil

5.701 Mil

4.536 Mil

4.140 Mil

3.521 Mil

3.578 Mil

2.787 Mil

2.701 Mil

2.388 Mil

1.918 Mil

2.482 Mil

3.305 Mil

1.7 Mil

1.3 Mil

1.0 Mil

1.0 Mil

1.4 Mil

1.4 Mil

1.2 Mil

1.5 Mil

2.2 Mil

2.3 Mil

1.9 Mil

1.3 Mil

1.0 Mil

31 Mil

28 Mil

26 Mil

20 Mil

27 Mil

23 Mil

20 Mil

20 Mil

28 Mil

30 Mil

19 Mil

18 Mil

17 Mil

268,144,246

268,144,246

217,482,754

216,720,922

216,720,922

216,712,397

214,591,710

214,508,781

214,393,481

182,029,302

181,235,039

180,546,227

180,000,000

  1. Period of reference: 3 May (stock listing date) - 31 December 2007

Source: data derived from Nasdaq Inc.

Prysmian Group

Directors' Report

55

INVESTOR RELATIONS

Transparency in communication, growth in market confidence in the company and promotion of a long-term investment approach to its stock.

Creating value for shareholders, and other stakeholders, is a key priority for Prysmian, whose policy of strategic and financial communication is based on the highest standards of accuracy, clarity and transparency. Its conduct and procedures are designed to provide the market with credible information, with the goal of boosting market confidence in the group by seeking to encourage a long-term investment approach, avoiding unequal access to information and ensuring eective compliance with the principle that all existing and potential investors have the right to receive the same information so as to make informed investment decisions.

On occasion of the publication of its quarterly results, Prysmian organises conference calls with institutional investors and financial analysts and also invites industry press representatives to take part. In addition, it promptly informs existing and potential shareholders of any action or decision that could have a material impact on their investment.

Intense contact with the financial market during 2019 on more than 500 occasions involved conference calls and one-to-one or group meetings at Prysmian's oces. Prysmian also undertook numerous road shows in the major financial centres of Europe, North America and Asia, and took part in conferences organised by leading international brokers. In addition, the increasing attention paid to the Group's activities by socially responsible investors (SRI) was confirmed by the growing numbers at dedicated SRI meetings and road shows. Lastly, the Group organised several visits during the year for institutional investors and financial analysts to tour its factories and R&D centres, in order to give them a deeper understanding of its products and production pro- cesses.

Coverage of the Prysmian stock remained very high and geographically diversified. There are 19 independent analysts who regularly cover the Prysmian stock: Banca Akros, Banca Profilo, Banca IMI, Barclays Capital, BofA Merrill Lynch, Citi, Credit Suisse, Equita, Exane BNP Paribas, Fidentiis, Goldman Sachs, Hammer Partners, HSBC, Intermonte, JP Morgan, Kepler Cheuvreux, Mediobanca, Morgan Stanley and Société Générale.

The Investor Relations oce has also maintained regular contacts with institutional investors through the group website www.prysmiangroup.com, which contains recordings of conference calls and presentations to the financial community, corporate documents, press releases and all other information concerning the Group, in both English and Italian. The Investor Relations section also includes the financial calendar, documents relating to shareholders' meetings, the Code of Ethics, the contact details of analysts who cover the stock as well as specific sections about Corporate Governance, Risk Factors and Share Performance.

Investor Relations contact details:

Investor Relations

Maria Cristina Bifulco - IR Director

+39 02 6449 1

+39 02 6449 51400

investor.relations@prysmiangroup.commariacristina.bifulco@prysmiangroup.com

56

Prysmian Group

Annual Report 2019

Significant events during the year

MERGERS & ACQUISITIONS

Binding oer from Carlisle Companies Incorporated to acquire the business of Draka Fileca SAS

On 22 October 2019, the Group announced it had received a binding oer of Euro 73 million from Carlisle Companies Incorporated to acquire the business of Draka Fileca SAS (directly or through one of the Carlisle subsidi- aries).

The transaction is subject to consultation with Fileca's employee representative bodies in France and to regulatory clearance.

Fileca was acquired by Prysmian in 2011 as part of the Draka acquisition and is a global supplier of cable solutions for the space and aerospace industries. The company, based in Sainte-Geneviève, France, generated revenues of Euro 44 million and Adjusted EBITDA of around Euro 5 million in 2018.

The transaction is expected to complete by the end of the H1 2020.

FINANCE ACTIVITIES

Mediobanca loan and partial repayment of the Bridge Loan

On 20 February 2019, the Group entered into an agreement with Mediobanca for a Euro 100 million long-term loan for 5 years from the date of signing, with a bullet repayment at maturity. In parallel, a partial repayment of Euro 100 million against the Bridge Loan was instructed on 25 February 2019 and executed on 6 March 2019.

New revolving credit facility agreement

On 3 April 2019, the Group renewed its Euro 1,000 million long-term revolving credit facility with a syndicate of leading Italian and international banks. The five-year credit facility replaces the Syndicated Revolving Credit Facility 2014, which was extinguished at the same time. The funds are available for business and working capital needs, including the refinancing of existing facilities.

Intesa Sanpaolo loan and partial repayment of the Bridge Loan

On 11 October 2019, the Group entered into an agreement with Intesa Sanpaolo for a Euro 150 million long-term loan for 5 years from the date of signing, with a bullet repayment at maturity. A partial repayment of Euro 150 million against the Bridge Loan was made on 18 October 2019. On the same date, the value of interest rate swaps arranged against the Bridge Loan was reduced by Euro 50 million to bring notional value into line with the underlying hedged amount.

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57

CDP Loan

On 28 October 2019, the Group entered into an agreement with Cassa Depositi e Prestiti Spa (CDP) for a Euro 100 million long-term loan for four and a half years from the date of signing, with a bullet repayment at maturity. The purpose of this loan is to finance part of the Group's capital expenditure and expenditure on research, development and innovation in Italy and Europe.

Long-term incentive plan 2018-2020

In light of the eects of the Western Link project on the Group's results, the Board of Directors has decided, as recommended by the Compensation, Nominations and Sustainability Committee, to revoke the long-term incentive plan 2018-2020 approved by the Shareholders' Meeting on 12 April 2018. At the Committee's recom- mendation, the Board will present the forthcoming Shareholders' Meeting with a proposal to adopt a long-term incentive plan structured in accordance with best market practices. As a result of this decision, the 2019 MBO has been recognised in profit or loss for the year since it will no longer be co-invested following the long-term incentive plan's revocation. This has had the result of raising personnel costs by Euro 12 million, reflecting the combined eect of recognising the 2019 MBO of Euro 15 million and reversing the fair value of stock options for Euro 3 million.

NEW INDUSTRIAL PROJECTS AND INITIATIVES

Development of power transmission grid in Washington D.C.

On 6 February 2019, the Group signed an agreement to participate in a project to upgrade the US capital district's power transmission system. The multi-stage project is worth approximately USD 190 million and is scheduled to run between 2019 and 2026.

Contract to develop a new submarine cable system in Canada (Fundy Isles)

On 11 February 2019, the Group was awarded a contract worth Euro 17 million by New Brunswick Power Corporation (NB Power), the largest electric utility in Canada. The so-called Fundy Isles project involves building a new submarine cable link to upgrade the capacity of the existing transmission system in the Passamaquoddy Region of the Bay of Fundy. The new submarine power cable will connect Deer Island, Campobello Island and Grand Manan Island to the Canadian province's mainland power grid.

Contract to develop cable system for the first "floating" oshore wind farm in France

On 19 March 2019, the Group signed a letter of award with PGL (Provence Grand Large), part of EDF Renewables. The project, worth approximately Euro 30 million for the construction of an end-to-end submarine cable solu- tion, is expected to be commissioned in 2021.

58

Prysmian Group

Annual Report 2019

Contract to develop cable system for a "floating" oshore wind farm in the United States

On 16 May 2019, the Group was awarded a contract worth approximately Euro 200 million by Vineyard Wind LLC to develop a submarine power cable system which will deliver renewable energy to the mainland power grid.

The Group will be responsible for the engineering, manufacture, installation and commissioning of an HVAC (High Voltage Alternating Current) cable system composed of two 220 kV three-core cables with extruded XLPE insulation, requiring a total of 134 km in submarine cables which will be manufactured at the Group's centres of excellence in Pikkala (Finland) and Arco Felice (Italy).

Dolwin5 project to connect new wind farms to mainland German grid

On 18 June 2019, the Group was awarded a major contract worth approximately Euro 140 million by the Dutch-German grid operator TenneT for the connection of new oshore wind farms to the mainland German grid.

The end-to-end solution will link the DolWin epsilon oshore converter platform, located approximately 100 km oshore in the German North Sea, to the mainland Emden/Ost converter station, with the purpose of transmitting the renewable energy generated to the German grid.

The Group's centres of excellence in Pikkala (Finland) and Gron (France) will manufacture the submarine and land cables required for this project, which is scheduled for completion by mid-2024.

Successful completion of qualification testing of P-Laser and XLPE HVDC 525 kV cable systems

On 1 July 2019, the Group announced it had successfully completed stringent qualification testing in accordance with international standards, meaning it is now ready to launch two new 525 kV extruded land cable systems, one qualified with P-Laser and the other with XLPE insulation. These cable systems are designed for extra high voltages and have large conductor cross-sectional areas to ensure high power transmission capacity over long distances with less environmental impact on the land crossed.

P-Laser is the first 100% recyclable eco-friendlyhigh-performance cable technology, utilising a 'zero-gas' process which reduces CO2 emissions by up to 30%, while the XLPE qualified system uses a new insulating compound specially for HVDC applications.

Contract for Viking Link project

On 23 July 2019, the Group received a letter of award from National Grid Viking Link Limited and Energinet for the construction of Viking Link, the first submarine cable connection between the United Kingdom and Denmark. Worth close to Euro 700 million, the end-to-end contract involves the engineering, manufacture and installation of the world's longest interconnector, with 1,250 km of cable for the submarine route and approximately 135 km of land cables on the UK side, corresponding to 4 out of the 5 lots awarded. The project is due to be completed by the end of 2023.

Contract for inter-array cables for oshore wind farms in the Netherlands

On 29 July 2019, the Group was awarded a project worth around Euro 30 million by Vattenfall, a leading European energy company, to supply submarine inter-array cable systems for the Hollandse Kust Zuid III and IV oshore wind farms in the Netherlands.

The cables, which will be manufactured at the Prysmian centre of excellence in Nordenham (Germany), are due to be delivered in 2022.

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59

Contract to supply wind turbine cable solutions in 2020

On 21 October 2019, the Group was awarded a global contract by Siemens Gamesa Renewable Energy, world leader in the wind power industry, to supply it with wind turbine tower and nacelle cable solutions. The contract includes products and services from Prysmian Group's wind portfolio of low voltage cable solutions for nacelle platforms, low voltage tower cables and medium voltage tower solutions, specifically designed and optimised to operate under high torsion, mechanical and chemical stress as well as wide temperature swings.

Successful completion of HDVC testing of the submarine COBRAcable linking the Netherlands and Denmark

On 4 November 2019, the Group announced it had successfully completed the HVDC test on the COBRAcable submarine interconnector linking the Netherlands and Denmark.

The announcement was made during COBRAcable's ocial inauguration, held simultaneously in Eemshaven (Netherlands) and Endrup (Denmark), in the presence of Dutch and Danish ocials, confirming successful completion of trial operations by the contractors.

Prysmian had been awarded this project in February 2016 by TenneT TSO B.V. and Energinet SOV, operators of the Dutch and Danish transmission systems respectively.

Successful completion of the DolWin3 oshore wind farm project

On 13 November 2019, the Group announced the successful commissioning of electrical connections for the Dol- Win3 oshore wind farm in the North Sea to the German transmission grid.

The Group had been awarded this contract in February 2013 by Alstom Grid (now GE Grid GmbH) acting on behalf of TenneT, the Dutch-German transmission system operator.

The cables were produced at Prysmian Group's centres of technological and manufacturing excellence in Arco Felice (Italy), Pikkala (Finland) and Delft (Netherlands).

Successful completion of MON.ITA interconnector

On 15 November 2019, the Group announced the inauguration of the MON.ITA interconnector, the contract for which awarded by Terna Rete Italia S.p.A. in October 2012.

Contract to connect an oshore wind farm to the UK electricity grid

On 28 November 2019, the Group announced it had been awarded a contract worth over Euro 100 million by EDF Renewables for the construction of submarine and land cable systems to connect the Neart na Gaoithe (NnG) oshore wind farm to the Scottish mainland power grid. The Group is to provide an end-to-end service comprising the engineering, supply, installation and commissioning of two high voltage three-core extruded submarine export cables connecting the oshore wind farm to Thorntonloch, in East Lothian, Scotland. The Group will also supply two 220 kV extruded land cable circuits linking the point of landfall to the Crystal Rig substation and two 400 kV extruded land cable circuits to connect the Crystal Rig substation to the Scottish Power substation. The project will involve a 38 km submarine section and a 12 km onshore section.

The submarine cables, to be manufactured at the Prysmian centre of excellence in Pikkala (Finland), will be installed in 2021, while the land cables will be produced in Gron (France) and installed in 2020 and 2021. Oshore cable installation will be carried out by one of the Group's state-of-the-artcable-laying vessels. Project completion is scheduled for 2021.

60

Prysmian Group

Annual Report 2019

Agreement for the supply of inter-array cables for the Empire Wind project

On 5 December 2019, the Group and Equinor announced an agreement for the supply of an inter-array submarine cable system for the Empire Wind project, an 816 MW oshore wind farm due to be built in New York State. The Group will be responsible for the engineering, supply and storage of approximately 150 km of inter-array cables, which will transmit power at twice the current industry standard ensured by 33 kV systems. The cables will be manufactured at the Prysmian centres of excellence in Montereau (France) and Nordenham (Germany), with this process scheduled for completion in summer 2022 followed by installation in 2023 and 2024.

Contract with Red Eléctrica de España for a new submarine power cable

On 12 December 2019, the Group was awarded a new contract worth about Euro 27 million by Red Eléctrica de Es- paña (REE), Spain's transmission system operator, to connect two Canary Islands (Lanzarote and Fuerteventura).

The turnkey interconnector project will link Playa Blanca, on the island of Lanzarote, to La Oliva, on the island of Fuerteventura, running along a submarine route of some 14 km and an onshore one of about 2 km.

The submarine and land cables will be produced, respectively, at the Prysmian centres of technological and manufacturing excellence located in Arco Felice (Italy) and Vilanova (Spain). Installation activities will be carried out by one of the Group's state-of-the-art cable laying vessels. Project handover and commissioning are scheduled for 2021.

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61

Agreements with Terna to develop cable systems to upgrade the power grid in preparation for the Cortina Olympics and in Southern Italy

On 19 December 2019, following a public tender, the Group signed two major new cable solution agreements with Terna, through its subsidiary Terna Rete Italia S.p.A..

The first contract, worth Euro 50 million (inclusive of safety costs), is for a 150 kV HVAC cable to link the Zuel and Somprade power stations in the province of Belluno. Installation is scheduled for completion by the end of 2020 in time for the upcoming 2021 Alpine World Ski Championships in Cortina.

The second for a 150 kV HVAC cable is a framework agreement in support of investments to improve the performance and increase the reliability of the power transmission system in Southern Italy. This agreement is worth Euro 26 million, with an option for an additional Euro 26 million.

The cables for both projects will be manufactured at the plants in Pignataro Maggiore (Italy) and Gron (France).

OTHER SIGNIFICANT EVENTS

Western Link

Some faults were detected on 19 February 2019 and 6 April 2019 in the Western Link interconnector, resulting in its temporary switch-o.

In view of these faults and based on assessments by the technical experts, the Board of Directors decided to recognise provisions of Euro 95 million in the financial statements at 31 December 2018. These provisions were against contractual penalties, costs of repair, incidental expenditure, costs of producing an extra length of cable for any future repairs and costs of other repairs that might possibly be necessary in the foreseeable future.

Work to repair the above faults was completed in June 2019.

On 23 November 2019, the Group announced that the customer (National Grid Electricity Transmission and Scot- tish Power Transmission) had taken over operation of the cable.

On 12 January 2020, the Group was informed that the Western HDVC Link had tripped on 10 January 2020. Repairs were successfully completed on 7 February 2020 with the link restored to normal service and once more available to the customer, with whom there is an ongoing exchange to arrive at an acceptable definition of mutual expectations.

Approval of financial statements at 31 December 2018 and dividend distribution

On 5 June 2019, the shareholders of Prysmian S.p.A. approved the financial statements for 2018 and the distribution of a gross dividend of Euro 0.43 per share, for a total of some Euro 113 million. The dividend was paid out from 26 June 2019 to shares outstanding on the record date of 25 June 2019, with the shares going ex-dividend on 24 June 2019.

62

Prysmian Group

Annual Report 2019

Plan to close the Manlleu and Montcada i Reixac production facilities in Spain

On 2 October 2019, it was formally announced that a collective dismissal procedure for organisational and production reasons would be initiated for the entire workforce at the Manlleu and Montcada i Reixac production facilities in Catalonia, Spain.

The process of consulting the unions and negotiating the terms of plant closure commenced on 22 October 2019 with a first formal meeting with a trade union delegation of worker representatives from both sites.

On 22 November, after several meetings, the parties reached an agreement which was ratified the following day by worker assemblies at the two factories, with an overwhelming 98% level of approval.

The total number of workers involved is 487 (of whom 334 in Manlleu and 153 in Montcada i Reixac).

On the basis of the agreements reached so far, the directors have decided to recognise appropriate provisions in the financial statements.

Antitrust: European Commission ruling against Group companies (formerly part of General Cable)

In a ruling handed down on 14 November 2019, the Court of Justice of the European Union dismissed General Cable's appeal against the European Commission's Antitrust decision dated 2 April 2014, thus conclusively con- firming the fine previously imposed under that same decision. As a result, the Group has gone ahead and paid a fine for Euro 2 million.

Plan to close the production facility in Neumünster (Germany)

On 29 November 2019, the German company Prysmian Kabel und Systeme GmbH announced it intended to commence a process of informing and consulting employees about a collective redundancy procedure for the entire workforce of the Neumünster plant (Germany), which would aect 14 employees.

The Neumünster facility performs harnessing activities which will be transferred to the plants in Wuppertal and Neustadt.

Industrial activities are expected to cease by the end of March 2020, resulting in the plant's closure. A social plan has been drawn up with the factory union, which oers employees the option of relocating to other German plants or a redundancy incentive for those who decide to leave the Group.

Exclusion of PIS and COFINS taxes from calculation of ICMS tax in Brazil

During the last part of the year ended 31 December 2019, final rulings were handed down on 10 tax cases that granted the Group's Brazilian companies the right to exclude the taxes PIS and COFINS for the years from 1992 to 2018 from the calculation base of ICMS (a state tax on the movement of goods, the provision of transportation services between states and municipalities and telecommunication services). The consolidated income statement at 31 December 2019 reports a positive impact of Euro 28 million on the net result for the year.

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63

Business environment

MACROECONOMIC ENVIRONMENT

Global macroeconomic conditions softened progressively over the course of 2019. The world economy continued to grow, but by less than in 2018 due to a slowing in advanced economies, including the Eurozone, as well as emerging ones (India).

After a positive start to the year, trade tensions, especially between the US and China, gradually increased, triggering significant tari rises between these countries and a general deterioration in global business sentiment. The macroeconomic indicators for Europe also signal a slowdown in the economic cycle. According to the latest International Monetary Fund estimates*, global growth in 2019 is expected to be +2.9%, the lowest level in 10 years. This growth rate, well below the +3.6% recorded in 2018, reflects slower growth in both developed economies (from +2.2% in 2018 to +1.7% estimated in 2019) and emerging ones (from +4.5% to +3.7%).

Many factors of uncertainty and risk have weighed on the expansion of international economic activity: trade negotiations between the US and China, growing geopolitical tensions (particularly those between the US and Iran) and the process and manner of the UK's departure from the European Union.

As regards the Eurozone, economic growth was weaker than in 2018, despite the European Central Bank's continued pursuit of expansionary monetary policies. In addition to trade tensions, the slowdown was also aected by specific factors, such as the high uncertainty surrounding a negative outcome to the Brexit negotiations or the turmoil in the automotive sector, causing production to falter in the main car-making nations (Germany, Italy). The Eurozone is expected to have grown by +1.2% in 2019, down from +1.9% in 2018, with GDP growth in retreat for basically all the continent's major economies: in Germany, down from +1.5% to +0.5%, Italy from +0.8% to +0.2%, France from +1.7% to +1.3% and Spain from +2.4% to +2.0%.

In the UK, growth should have stayed at +1.3%, in line with 2018 after slowing from +1.8% in 2017.

The United States is estimated to have grown by +2.3% in 2019, down from +2.9% in 2018 and partly reflecting the eects of the US Administration's expansionary fiscal policies.

China is estimated to have grown by +6.1%, down from +6.6% in the previous year. The Brazilian economy is estimated to have grown for the third year in a row (+1.2%), in the wake of the 2016 recession.

64

Prysmian Group

Annual Report 2019

GDP GROWTH BY COUNTRY 2018-2019

8%

6%

4%

2%

0%

-2%

-4%

World

USA

Euro

Area

Germany

France

Italy

Spain

Japan

UK

Russia

China

India

Brazil

2018

2019

(*) Source: IMF, World Economic Outlook Update - January 2020.

CABLE INDUSTRY TRENDS

2019 was a weak year for the global cables market, for both power and optical cables, mainly due to worse-than-expected demand in China and India and a significant contraction in Western Europe.

World demand for power cables was subdued in 2019, mainly because of softer-than-expected demand in China and India and a significant contraction in Western Europe, particularly in Germany, the country most aected by automotive industry downturn. Demand in China, alone by far the largest market for power cables, was weighed down not only by the automotive industry and trade tensions with the United States, but also by waning government investment in the electricity network. On the positive side, Spain continued to record one of the highest rates of growth in demand, driven mainly by the construction sector. In the United States, production of power cables grew at a faster pace than the previous year, also benefiting from protectionist measures implemented by the Administration.

In the case of the optical cables market, it was a year of soft demand, excess capacity, rising stock levels and falling fibre prices. Demand for optical fibre cables was slightly down on 2018, mainly due to the retreat in the Chinese market, which alone accounts for more than 50% of the global total. In India, the third largest optical cable market in the world, telecom operators cut back their consumption of optical cables in 2019 mainly due to financial problems. In North America and Europe, consumption of optical fibre cables continued to expand, although at a slower pace than in 2018. Partly thanks to renewed political stability, South America saw resumed investment by its major telco's, primarily in optical cables.

The various segments of Prysmian Group's market had a mixed performance in 2019, featuring higher demand for optical fibre cables in the first half of the year followed by a slower second half, a solid trend for the Energy

  • Infrastructure business, driven by Power Distribution, and generally stable demand for industrial cables, de- spite dierences between the various business lines and geographical areas.

Prysmian Group

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The submarine cables business saw signs of a market recovery in 2019, with a number of large strategic contracts awarded during the year, including Viking Link, the first submarine cable interconnector between the UK and Denmark, worth nearly Euro 700 million, and contracts for the cabling of oshore wind farms like the Vineyard in the USA and Dolwin5 in Germany.

Tendering activities, initiated in late 2018, for the major Suedlink, Suedostlink and A-Nord underground HVDC cable projects in Germany, are progressing as expected, with negotiations and award of the initial contracts due in the first half of 2020.

The market is expected to grow over the medium term, especially the Oshore Wind segment, fostered by the continuous reduction in electricity generation costs.

During 2019, the Trade & Installers business saw a slight dip in demand not only in most of the European countries served, especially in North Europe and the UK due to Brexit-related uncertainties, but also in North Amer- ica and the Middle East. APAC, however, reported a positive trend, in line with market expectations. The Power Distribution business confirmed the signs of market recovery emerging in the last quarter of 2018 within Eu- rope. Beyond Europe, demand grew in North America and Oman, while remaining stable in APAC; the situation in LATAM remained challenging, with recent changes in the utilities market still in the process of consolidation. The Overhead Transmission Lines business saw a year-on-year decline in its North American volumes, in line with market expectations, although more than oset by growth in LATAM.

Trends in Industrial cable markets displayed considerable inconsistencies within the various business lines and between the dierent geographical areas. In fact, while some market segments showed growing demand, like certain OEM sectors (such as Nuclear, Mining, Marine, and Infrastructure), and others were stable, like Rolling stock, other segments reported lower volumes in specific countries due to delays in investment projects in areas of national interest, like Railways and Cranes. The Renewables business experienced an uptick in demand for Solar products but a lull in the Wind sector.

The Automotive market saw volumes contract in North America and signs of slowing in Europe as well, while remaining largely stable in LATAM and APAC. The Elevator market recorded growth in all geographical areas, particularly in North America and APAC.

With regard to its Telecom business, the Group enjoyed a good first half of the year, primarily due to steady growth in demand for optical fibre and special cables serving major investment projects. However, this growth turned negative in the second half of 2019, reflecting a slowing in order intake due to overstocking by some customers.

Volume trends in Europe were positive and prices stable. Among the Group's major contracts are those with leading operators in Europe engaged in the construction of backhaul links and FTTH connections. In North America, the development of new ultra-broadband networks is generating a steady increase in domestic demand from which Prysmian Group is benefiting. Australia, on the other hand, reported less brisk demand than in the previous year.

Growth in the Multimedia Solutions business reflected increased volumes in the North American market, primarily related to the acquisition of General Cable, and in the European market for copper data transmission ca- bles. A similar, albeit weaker, trend to the European one was observed in South America.

Lastly, copper cables continued their steady decline with the retirement of traditional networks in favour of new-generation ones.

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Group performance and results

INTRODUCTION

In keeping with the integration process, initiated last year, as from financial year 2019 the Group's results are being analysed as a whole (with no distinction between the two groups of Prysmian and General Cable). The fig- ures for 2019 are compared respectively with those reported in the prior year Consolidated Financial Statements and, in the case of the key performance indicators (Sales and Adjusted EBITDA), with combined amounts, which incorporate General Cable's results as if consolidated from 1 January 2018.

The combined figures are not to be treated as pro-forma ones, even if they have been restated using Prysmian Group's main accounting principles and policies.

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FINANCIAL PERFORMANCE

(in millions of Euro)

2019

2018 -

2018(**)

% change

% change

2017

Combined (*)

Combined

Consol

Sales

11,519

11,523

10,104

0.0%

14.0%

7,904

Adjusted EBITDA before share of net profit/

983

708

634

38.9%

55.0%

694

(loss) of equity-accounted companies

% of sales

8.5%

6.1%

6.3%

8.8%

Adjusted EBITDA

1,007

767

693

31.4%

45.3%

736

% of sales

8.7%

6.7%

6.9%

9.3%

EBITDA

907

501

81.0%

660

% of sales

7.9%

5.0%

8.4%

Fair value change in metal derivatives

15

(48)

12

Fair value stock options

1

(6)

(49)

Amortisation, depreciation, impairment and

(354)

(232)

(199)

impairment reversal

Operating income

569

215

164.7%

424

% of sales

4.9%

2.1%

5.4%

Net finance income/(costs)

(125)

(112)

(99)

Profit/(loss) before taxes

444

103

331.1%

325

% of sales

3.9%

1.0%

4.1%

Taxes

(148)

(45)

(88)

Net profit/(loss)

296

58

410.3%

237

% of sales

2.6%

0.6%

3.0%

Attributable to:

-

-

Owners of the parent

292

58

241

Non-controlling interests

4

-

(4)

Reconciliation of Operating Income/EBITDA

to Adjusted Operating Income/Adjusted

EBITDA

Operating income (A)

569

215

164.7%

424

EBITDA (B)

907

501

81.0%

660

Adjustments:

-

-

Company reorganisation

85

66

30

Non-recurring expenses/(income)

(32)

94

18

Other non-operating expenses/(income)

47

32

28

Total adjustments (C)

100

192

76

Fair value change in metal derivatives (D)

(15)

48

(12)

Fair value stock options (E)

(1)

6

49

Assets impairment and impairment reversal (F)

36

5

22

Adjusted operating income (A+C+D+E+F)

689

466

47.9%

559

Adjusted EBITDA (B+C)

1,007

693

45.3%

736

  1. These figures include General Cable for the period 1 January - 31 December 2018.
  1. The results of General Cable have been consolidated with eect from 1 June 2018. The previously published comparative figures have been revised after finalising the General Cable purchase price allocation. More details can be found in the Explanatory Notes: Section C. Restatement of comparative figures.

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The Group's Adjusted EBITDA for 2019 was up on the corresponding combined figure for 2018, reflecting all the various factors described below.

The Projects segment posted a decline in Adjusted EBITDA, excluding Western Link eects, but a strong fourth-quarter.

During the year, successful project execution resulted in the completion of major contracts worth in excess of Euro 2 billion (Borwin 3, Cobra, Dolwin 3, Mon.Ita, Western Link).

Order intake in the period took the segment's order backlog back above the Euro 2 billion mark, of which Euro

1.3 billion for the Submarine business. The new orders were won also thanks to the ongoing transition of energy systems to renewable sources.

The Energy and Infrastructure business, with a solid performance in North America and LATAM, posted a positive set of results, especially for Power Distribution. There was also a recovery in the Overhead Transmission Lines business in North America and LATAM.

The Industrial & Network Components business improved its profitability, primarily thanks to the OEM, Renewables and Network Components businesses.

The Telecom segment enjoyed solid growth in the first six months, turning negative in the second half due to slower order intake. Adjusted EBITDA, excluding the contribution from the associate YOFC and several one-o eects recorded in the previous year, was up despite the negative impact of lower volumes and price pressure, nonetheless partially absorbed by better cost eciencies. Also of note was the good performance of the Mul- timedia Solutions business in North America. However, the contribution from the associate YOFC more than halved compared with the previous year.

The Group's sales in 2019 came to Euro 11,519 million, compared with Euro 11,523 million on a combined basis for 2018, posting a negative change of Euro 4 million.

The factors behind this change were:

negative organic sales growth, excluding eects of the Western Link project, causing a decrease of Euro 104 million (-0.9%);

favourable exchange rate trends and net currency eects accounted for on completion of projects, generating an increase of Euro 341 million (+3.0%);

fluctuation in the price of metals (copper, aluminium and lead), causing a sales price decrease of Euro 241 million (-2.1%).

Negative organic sales growth of -0.9%, excluding Western Link eects, is analysed between the three operating segments as follows:

  • Projects: -5.8%
  • Energy: +0.0%
  • Telecom: +0.4%

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The Group's Adjusted EBITDA came to Euro 1,007 million, inclusive of Euro 47 million in IFRS 16 eects, posting an increase of Euro 240 million on the corresponding 2018 combined figure of Euro 767 million (+31.3%). In light of the above eects, Adjusted EBITDA for the Projects segment, excluding Western Link eects of Euro 165 million in 2018, decreased by Euro 41 million, while the Energy segment enjoyed an increase of Euro 109 million. Excluding the smaller contribution of the associate YOFC and other one-o factors for Euro 37 million, the Telecom segment recorded an increase of Euro 12 million. Adjusted EBITDA was also negatively aected by recognition of the 2019 MBO in profit or loss since it would no longer be co-invested after revoking the long-term incentive plan, adding Euro 15 million to personnel costs. Adjusted EBITDA also benefited from Euro 47 million on first-time adoption of IFRS 16.

EBITDA is stated after net expenses for company reorganisation, net non-recurring expenses and other net non-operating expenses, totalling Euro 100 million (Euro 192 million in 2018). These adjustments primarily re- flect Euro 85 million in reorganisation costs.

Amortisation, depreciation and impairment amounted to Euro 354 million in 2019, reporting a year-on-year increase of Euro 122 million, most of which attributable to the consolidation of General Cable for the whole of 2019, rather than just 7 months in 2018, and to the adoption of IFRS 16, accounting for Euro 44 million of the variation. Impairment losses totalling Euro 36 million include Euro 22 million to write o all the plant and ma- chinery, equipment, other assets and assets under construction in the Energy segment's Oceania South East Asia (OSEA) regional CGU, and Euro 14 million in other write-downs, mainly at the production facilities in Manlleu and Montcada i Reixac (Catalonia, Spain), involved in restructuring processes, more details of which can be found in the section on "Significant events during the year". The fair value change in metal derivatives was a positive Euro 15 million in 2019, compared with a negative Euro 48 million in 2018.

The Group's operating income came to Euro 569 million, compared with Euro 215 million in 2018, reflecting an increase of Euro 354 million.

Net finance costs amounted to Euro 125 million in 2019, compared with Euro 112 million in the previous year. The increase is mainly attributable to this year's consolidation of General Cable for a full 12 months as opposed to just 7 months the previous year.

Net profit for 2019 was Euro 296 million, almost all attributable to the Group (Euro 292 million), compared with Euro 58 million in 2018, all attributable to the Group.

The results of the operating segments are analysed in the following pages on a combined basis, therefore incorporating the results of General Cable as from 1 January 2018.

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Review of Projects Operating Segment

(in millions of Euro)

2019

2018

Var, %

2018**

2017

Combined*

Sales

1,844

1,750

5.4%

1,635

1,533

Adjusted EBITDA before share of net profit/

228

100

128.3%

89

277

(loss) of equity-accounted companies

% of sales

12.3%

5.7%

5.4%

18.0%

Adjusted EBITDA

228

100

128.3%

89

278

% of sales

12.4%

5.7%

5.4%

18.0%

Adjustments

(23)

(105)

(20)

EBITDA

205

(16)

258

% of sales

11.1%

-0.9%

16.6%

Amortisation and depreciation

(64)

(54)

(50)

Adjusted operating income

164

35

228

% of sales

8.9%

-

2.1%

14.7%

  1. These figures include General Cable for the period 1 January - 31 December 2018.
  1. The previously published comparative figures have been revised after finalising the General Cable purchase price allocation. More details can be found in the Explanatory Notes: Section C. Restatement of comparative figures.

The Projects Operating Segment incorporates the high-tech businesses of High Voltage underground, Submarine Power, Submarine Telecom, and Oshore Specialties, whose focus is projects and their execution, as well as product customisation.

The Group engineers, produces and installs high and extra high voltage cables for electricity transmission both from power stations and within transmission and primary distribution grids. These highly specialised, tech-driven products include cables insulated with oil or fluid-impregnated paper for voltages up to 1100 kV and extruded polymer insulated cables for voltages up to 600 kV. These are complemented by laying and post-laying services, grid monitoring and preventive maintenance services, power line repair and maintenance services, as well as emergency services, including intervention in the event of damage.

In addition, Prysmian Group engineers, produces and installs "end-to-end" submarine cable solutions for power transmission and distribution. The products oered include cables with dierent types of insulation: cables insulated with layers of oil or fluid-impregnated paper for AC and DC transmission up to 700 kV; cables insulated with extruded polymer for AC transmission up to 400 kV and DC transmission up to 600 kV. The Group uses speci fic technological solutions for power transmission and distribution in underwater environments, which satisfy the strictest international standards.

With the acquisition of General Cable, Prysmian Group has re-entered the Submarine Telecom cables business, specialised in the production and installation of data transmission cables.

The Oshore Specialties business incorporates a wide range of products for the oil industry, including umbilical cables, flexible pipes and all electrical, optical and signalling components for oil well management from seabed to oshore platform.

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MARKET OVERVIEW

The Submarine Power cables business saw signs of a market recovery in 2019, with a number of large strategic contracts awarded during the second half of the year; in addition, several bids are now at an advanced stage of the tendering process, with their award expected in the next few months. This market is expected to grow over the medium term, especially the Oshore Wind segment, fostered by the continuous reduction in electricity generation costs.

The Submarine Telecom cables business performed well, with the award of a number of major contracts, now in the process of fulfilment.

In the High Voltage Underground business, the HVAC market was largely stable in Europe and mixed in other countries, while the HVDC market, typically for interconnections, was very quiet following completion of projects awarded in recent years and the near-term absence of new start-ups since tendering activities are still in progress. North America recorded an upturn in demand, while Southeast Asia enjoyed a partial recovery after a first-half downturn. Tendering activities, initiated in late 2018, for the major Suedlink, Suedostlink and A-Nord underground HVDC cable projects in Germany, are progressing as expected, with negotiations and award of the initial contracts due in the first half of 2020.

The Oshore Specialties business continued to experience declining prices and volumes.

FINANCIAL PERFORMANCE

Sales to third parties by the Projects segment amounted to Euro 1,844 million in 2019, compared with the 2018 combined figure of Euro 1,750 million, recording a positive change of Euro 94 million (+5.4%).

The factors behind this change were:

negative organic sales growth, excluding eects of the Western Link project, producing a decrease of Euro 101 million (-5.8%)

favourable exchange rate trends and net currency eects accounted for on completion of projects, generating an increase of Euro 195 million (+11.2%)

zero impact on sales prices from metal price fluctuations.

The organic growth of the Projects segment is largely due to a significant fourth-quarter recovery in the phasing of ongoing Submarine projects, combined with the fact that business volumes were low in the corresponding quarter of 2018; this eect was partially neutralised by a contraction in volumes and prices in the Oshore Specialties business and by lower sales volumes in some High Voltage markets, primarily France, South America and APAC.

The Submarine Telecom business saw volumes and profitability grow thanks to specific contracts won during the year and already at an advanced stage of execution.

The main Submarine Power projects on which work was performed during the period were: the interconnector between Norway and the UK (North Sea Link), the interconnector between the Netherlands and Denmark (Co- BRA cable), the interconnection between France and the UK (IFA2), the Hainan2 project in China and the interconnection projects in the Philippines and Bahrain.

Sales in the period were the result of cable manufacturing activities by the Group's industrial facilities (Pikkala in Finland, Arco Felice in Italy, Drammen in Norway and Nordenham in Germany) and installation services, performed with both its own assets and third-party equipment.

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The value of the Group's Submarine Power order backlog increased during the year, with the award of several major projects (worth Euro 1.3 billion) in the period, including the Viking Link interconnector. The order backlog was worth more than Euro 1.7 billion at the end of 2019, mainly consisting of the following contracts: the inter- connector between Norway and the UK (North Sea Link); the interconnection between France and the UK (IFA2); the interconnection projects in the Philippines and Bahrain; the oshore projects in France; the Capri-Sorrento interconnection project in Italy; and contracts to supply inter-array cables for the Hornsea2 and Borssele III and IV wind farms; also included in the order backlog are the recently acquired contracts for the Dolwin5 oshore wind project in Germany and the interconnector between the UK and Denmark (Viking Link).

The value of the Group's High Voltage order backlog is stable compared with the end of 2018 at around Euro 310 million.

Adjusted EBITDA came to Euro 228 million in 2019, up Euro 128 million from Euro 100 million the year before; excluding the Euro 165 million in extra costs for the Western Link project recorded in 2018, Adjusted EBITDA would have been below the previous year, mainly due to a number of reworks, and to the dierent mix of projects under execution in the Submarine Power business. The High Voltage business performed less well than the year before, during which a number of high margin HVDC interconnection projects were completed. The Oshore Specialties business had a similar performance to the previous year, while the 2019 results of the Submarine Telecom business were considerably higher. The adoption of IFRS 16 benefited Adjusted EBITDA by Euro 7 million in 2019.

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Review of Energy Operating Segment

(in millions of Euro)

2019

2018(*)

% change

2018

2017

Combined

Sales

8,027

8,139

-1.4%

6,975

5,113

Adjusted EBITDA before share of net profit/

503

368

36.8%

316

240

(loss) of equity-accounted companies

% of sales

6.3%

4.5%

4.5%

4.7%

Adjusted EBITDA

505

372

35.9%

320

244

% of sales

6.3%

4.6%

4.6%

4.8%

Adjustments

(60)

(71)

(23)

EBITDA

445

249

221

% of sales

5.5%

3.6%

4.3%

Amortisation and depreciation

(182)

(126)

(86)

Adjusted operating income

323

194

158

% of sales

4.0%

2.8%

3.1%

  1. These figures include General Cable for the period 1 January - 31 December 2018.

The Energy Operating Segment, incorporating those businesses able to oer a complete and innovative portfolio to a variety of industries, is organised around the business areas of Energy & Infrastructure (comprising Trade & Installers, Power Distribution and Overhead Transmission Lines) and Industrial and Network Components (comprising Oil & Gas, Downhole Technology, Specialties & OEM, Elevators, Automotive and Network Compo- nents).

Sales to third parties by the Energy operating segment amounted to Euro 8,027 million in 2019, compared with the 2018 combined figure of Euro 8,139 million, posting a negative change of Euro 112 million (-1.4%), the main components of which are as follows:

  • organic sales change of Euro 4 million (0.0%);
  • increase of Euro 128 million (+1.5%) linked to positive exchange rate fluctuations;
  • sales price decrease of Euro 236 million (-2.9%) for metal price fluctuations.

L'Adjusted EBITDA came to Euro 505 million in 2019, up Euro 133 million (+35.9%) from Euro 372 million in 2018. This increase has been partly generated by cost structure rationalisation following the acquisition of General Cable and by adoption of IFRS 16 (benefiting the 2019 figure by Euro 33 million).

The following paragraphs describe market trends and financial performance in each of the Energy operating segment's business areas.

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ENERGY & INFRASTRUCTURE

(in millions of Euro)

2019

2018(*)

% change

2018(**)

2017

Combined

Sales

5,285

5,318

-0.6%

4,462

3,271

Adjusted EBITDA before share of net profit/

307

199

54.1%

163

128

(loss) of equity-accounted companies

% of sales

5.8%

3.7%

3.7%

3.9%

Adjusted EBITDA

308

202

52.8%

166

130

% of sales

5.8%

3.8%

3.7%

4.0%

Adjusted operating income

185

80

73

% of sales

3.5%

1.8%

2.2%

  1. These figures include General Cable for the period 1 January - 31 December 2018.
  1. The comparative figures reflect a reclassification within the Energy operating segment between the E&I and Industrial & NWC businesses for better allocation of the figures of the Omani subsidiary. The results of General Cable have been consolidated for the period 1 June - 31 December 2018.

Prysmian produces high and medium voltage cable systems to connect industrial and/or civilian buildings to primary distribution grids and low voltage cables and systems for power distribution and the wiring of buildings. All the products oered comply with international standards regarding insulation, fire resistance, smoke emissions and halogen levels. The low voltage product portfolio includes rigid and flexible cables for distributing power to and within residential and commercial buildings. The Group concentrates product development and innovation activities on high performance cables, such as Fire-Resistant and Low Smoke zero Halogen cables, capable of guaranteeing specific safety standards. The product range has been lately expanded to satisfy the demand for cables serving infrastructure such as airports, ports and railway stations, by customers as diverse as international distributors, buying syndicates, installers and wholesalers.

MARKET OVERVIEW

The reference markets have distinct geographical characteristics (despite international product standards) both in terms of customer and supplier fragmentation and the range of items produced and sold.

During 2019, the Trade & Installers business saw a slight dip in demand not only in most of the European countries served, especially in North Europe and the UK due to Brexit-related uncertainties, but also in the Middle East and North America. APAC, however, reported a positive trend, in line with market expectations.

As for Power Distribution, stagnant energy consumption in Europe's principal countries in recent years has adversely aected demand by the major utilities. The latter, operating in a recessionary economic environment, have either maintained cautious positions, given the diculty of forecasting future growth, or else they have concentrated on business restructuring to improve eciency and reduce supply-side costs. This situation has exacerbated the competitive dynamics in terms of price and mix, leaving an extremely challenging environment almost everywhere.

In 2019, the Power Distribution business confirmed the signs of a European market recovery emerging towards the end of 2018, particularly in Germany, the Danube area and North Europe, while experiencing a contraction in demand in South Europe.

Performance also improved in North America, also thanks to Wind market demand which benefited from Production Tax Credit (PTC), a tax incentive based on generated production and which is expected to be extended until mid-2020.

Demand was up in OMAN, while remaining stable in APAC; the situation in LATAM, however, remained challenging with recent changes in the utilities market still in the process of consolidation.

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The Overhead Transmission Lines business saw a year-on-year decline in its North American volumes, in line with market expectations, although more than oset by growth in LATAM.

FINANCIAL PERFORMANCE

Sales to third parties by the Energy & Infrastructure business area amounted to Euro 5,285 million in 2019, compared with the 2018 combined figure of Euro 5,318 million, posting a negative change of Euro 33 million (-0.6%), the main components of which are as follows:

  • positive organic sales growth of Euro 38 million (+0.7%);
  • positive change of Euro 71 million (+1.4%) for exchange rate fluctuations;
  • sales price decrease of Euro 142 million (-2.7%) for metal price fluctuations.

Prysmian Group has carried on its strategy for the Trade & Installers business of focusing on relationships with top international customers and of developing tactical actions to avoid losing sales opportunities, by dierenti- ating its oer in the various markets and by increasing its market share in specific geographical areas.

The Trade & Installers business enjoyed positive organic sales growth, albeit punctuated by certain geographical dierences, and an improvement in profitability, especially in North America and LATAM.

The Power Distribution business's growth varied by region: strong in North America, positive in East Europe and the Middle East but in retreat in APAC. There was an overall improvement in profitability, driven above all by North America and LATAM, despite strong price pressure in Europe.

Given the factors described above, Adjusted EBITDA for 2019 came to Euro 308 million, compared with Euro 202 million the year before, reflecting an increase of Euro 106 million (+52.8%), part of which due to adoption of IFRS 16 (benefiting 2019 by Euro 20 million).

INDUSTRIAL & NETWORK COMPONENTS

(in millions of Euro)

2019

2018(*)

% change

2018(**)

2017

Combined

Sales

2,492

2,527

-1.4%

2,277

1,693

Adjusted EBITDA before share of net profit/

195

171

14.3%

155

113

(loss) of equity-accounted companies

% of sales

7.8%

6.8%

6.8%

6.7%

Adjusted EBITDA

196

172

13.7%

156

115

% of sales

7.9%

6.8%

6.8%

6.8%

Adjusted operating income

140

118

88

% of sales

5.6%

5.2%

5.2%

  1. These figures include General Cable for the period 1 January - 31 December 2018.
  1. The comparative figures reflect a reclassification within the Energy operating segment between the E&I and Industrial & NWC businesses for better allocation of the figures of the Omani subsidiary. The results of General Cable have been consolidated for the period 1 June - 31 December 2018.

The extensive range of cables developed specially for certain industries is characterised by the highly specific nature of the solutions oered. In the transport market, Prysmian cables are used in the construction of ships and trains, and in the automotive and aerospace industries; in the infrastructure market, the principal applications for its cables are found in railways, docks and airports. The product range also includes cables for the mining industry, for elevators and for applications in the renewable energy field (solar and wind power), cables for military use and for nuclear power stations, able to withstand the highest radiation environments.

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Prysmian also oers a wide range of products for the petrochemicals sector able to serve every onshore and o- shore need, including the design and supply of systems for power transmission and data communication from oshore platforms and/or floating hydrocarbon storage vessels to the well-heads; flexible oshore pipes for hydrocarbon transport; Downhole Technology (DHT) solutions, which include steel tubing encased cables to control and power monitoring systems inside extraction wells both oshore and onshore.

The range of products for the petrochemicals industry also includes low and medium voltage power cables, and instrumentation and control cables. The onshore product range is able to support applications in all three segments of the petrochemical production chain: Upstream, Midstream and Downstream.

Lastly, the Group produces accessories and network components, as well as sophisticated control systems; for example, joints and terminations for low, medium, high and extra high voltage cables and submarine systems to connect cables with one another and/or connect them with other network devices, suitable for industrial, construction and infrastructure applications and for use within power transmission and distribution networks.

MARKET OVERVIEW

Markets for Industrial cables displayed considerable inconsistencies within the various business lines and between the dierent geographical areas. In fact, while some market segments showed growing demand, like certain OEM sectors (such as Nuclear, Mining, Marine and Infrastructure), and others were stable, like Rolling stock, other segments reported lower volumes in specific countries due to delays in investment projects in areas of national interest, like Railways and Cranes. The Renewables business experienced an uptick in demand for Solar products but a lull in the Wind sector.

O&G demand bounced back strongly in Europe and North America compared with the previous year and picked up in APAC, mainly due to project phasing. Oshore activities continued to report a low level of demand, putting pressure not only on the major Asian shipyards (in Singapore and Korea) but also on the oil companies. After a brief revival, mainly in North America, the drilling market remained stable, like the MRO sector (Maintenance, Repair and Overhaul).

The Downhole Technology business showed growth. The ESP (Electro Submersible Pump) business remained stable.

The Elevator market recorded growth in all geographical areas, particularly in North America and APAC.

The Automotive market saw volumes contract in North America and signs of slowing in Europe as well, while remaining stable in LATAM and APAC. Despite strong growth in the market for electric cars and good performance in the premium market, the latter region reported a sharp downturn at the mid and low end of the market. The tendency for cable manufacturers to intercept the market upstream continued.

The network components market reported growing volumes both for medium voltage products and HV and EHV ones.

FINANCIAL PERFORMANCE

Sales to third parties by the Industrial & Network Components business area amounted to Euro 2,492 million in 2019, compared with the 2018 combined figure of Euro 2,527 million, recording a negative change of Euro 35 million (-1.4%), the main components of which are as follows:

  • negative organic sales growth of Euro 42 million (-1.7%);
  • positive change of Euro 53 million (+2.1%) for exchange rate fluctuations;
  • sales price decrease of Euro 46 million (-1.8%) for metal price fluctuations.

All the Industrial & Network Components business lines had a positive performance in 2019, except for Automotive due to the general market conditions.

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The Oil & Gas business witnessed a higher level of demand for onshore projects activities than in the previous year. The business's overall margins remained largely stable despite lower turnover related to project phasing and despite a reduction in higher-margin MRO and oshore volumes.

The Downhole Technology business confirmed the signs of improving demand, primarily thanks to resumed activity in the Middle East.

Specialties, OEM and Renewables recorded growth in North America and LATAM, especially in the areas of min- ing, nuclear and solar applications. The Elevator business upped its profitability after suering the previous year from strong pressures in the Chinese market and from the impact of unfavourable exchange rates on its major exposure in the North American market.

The Automotive business's year-on-year performance reflected a reduction in volumes on the American and Eu- ropean markets and continued price pressure on low-margin products; these impacts were partially mitigated by the strategy of focusing on top-end segments and of improving industrial performance.

The Network Components business showed solid growth, primarily driven by the European market and with medium voltage products outperforming high voltage ones.

Given the factors described above, Adjusted EBITDA for 2019 came to Euro 196 million, up from Euro 172 million the year before, reflecting an increase of Euro 24 million (+13.7%), part of which due to adoption of IFRS 16 (ben- efiting 2019 by Euro 12 million).

OTHER

(in millions of Euro)

2019

2018(*)

2018

2017

Combined

Sales

250

294

236

149

Adjusted EBITDA before share of net profit/

1

(2)

(2)

(1)

(loss) of equity-accounted companies

Adjusted EBITDA

1

(2)

(2)

(1)

Adjusted operating income

(2)

(4)

(3)

  1. Results of General Cable consolidated for the period 1 January - 31 December 2018

This business area encompasses occasional sales by Prysmian Group operating units of intermediate goods, raw materials or other products forming part of the production process. These sales are normally linked to local business situations, do not generate high margins and can vary in size from period to period.

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Review of Telecom Operating

Segment

(in milioni di Euro)

2019

2018(*)

% change

2018

2017

Combined

Sales

1,648

1,634

0.8%

1,494

1,258

Adjusted EBITDA before share of net profit/

252

240

4.8%

229

177

(loss) of equity-accounted companies

% of sales

15.3%

14.7%

15.4%

14.0%

Adjusted EBITDA

274

295

-7.2%

284

214

% of sales

16.6%

18.0%

19.0%

17.0%

Adjustments

-

22

(8)

EBITDA

274

306

206

% of sales

16.6%

20.5%

16.4%

Amortisation and depreciation

(72)

(47)

(41)

Adjusted operating income

202

237

173

% of sales

12.3%

15.9%

13.8%

  1. These figures include General Cable for the period 1 January - 31 December 2018.

As partner to leading telecom operators worldwide, Prysmian Group produces and manufactures a wide range of cable systems and connectivity products used in telecommunication networks. The product portfolio includes optical fibre, optical cables, connectivity components and accessories and copper cables.

MARKET OVERVIEW

The global optical fibre cables market experienced a slight contraction in 2019 compared with the previous year. Softer demand in fast-developing markets (China) was partially counterbalanced by growth in the APAC market. Optical fibre cable consumption was stable in North America, but slightly higher in Europe thanks to plans under the Digital Agenda for Europe 2025. The latter envisages the provision of three levels of minimum service depending on the type of user. In fact, government oces and entities like schools and hospitals will benefit from a bandwidth of at least 1 Gb/s. Likewise, the entire residential population will be connected with 100 Mb/s, while all urban areas and transport corridors should have broadband mobile coverage with 5G technology. In Europe, the network architectures used vary as decided by each individual country.

FTTH networks are the preference in France, Spain, Portugal and the Nordics, while G.Fast is the norm in Germa- ny and Britain; although these systems use the last metres of the existing copper network, massive volumes of optical cables are nonetheless required to upgrade the distribution networks. In other places like Italy, the two technologies coexist.

Partly thanks to renewed political stability, South America saw resumed investment by its major teleco's, primarily in optical fibre cables.

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The copper cable market is slowing due to the maturity of the products concerned. The decline in this market was increasingly evident in 2019, with high demand for internet access causing major operators to opt to renew their networks using optical fibre, rather than perform maintenance or upgrade work on existing networks. It is still worth remaining in this segment since the gradual decommissioning of assets by competitor cable manufacturers nonetheless oers attractive opportunities.

The MMS cable market reported timid global growth, driven by Asia and, in the case of the optical cables segment, by China. Growth is being fuelled by demand for ever greater bandwidth capacity in professional and oce environments and data centres. Interestingly, this trend applies to both new buildings and projects to renovate existing ones. An important contribution to this growth is coming from industrial applications (Industry 4.0) that require new highly specialised products. Another important source of growth is HDTV cables used for the broadcast of digital content such as sports events or other events of media interest.

FINANCIAL PERFORMANCE

Sales to third parties by the Telecom operating segment came to Euro 1,648 million at the end of 2019, compared with the combined figure of Euro 1,634 million in 2018.

The change of Euro 14 million (+0.8%) is explained by:

  • organic sales growth of Euro 7 million (+0.4%), mainly thanks to minor volume growth for optical fibre ca- bles;
  • negative change of Euro 5 million (-0.4%) in sales prices for metal price fluctuations;
  • positive change of Euro 12 million (+0.8%) for exchange rate fluctuations.

The organic growth in 2019 sales reflects the positive trend already observed the previous year, and was primarily the result of year-on-year growth in demand for optical fibre and special cables serving major investment projects. It should be noted, however, that this growth turned negative in the second half of 2019.

Volume trends in Europe were positive and prices stable in the first three quarters of the year. A slowing in orders in the last few months of 2019 was accompanied by a drop in prices. Among the Group's major contracts are those with leading operators in Europe engaged in the construction of backhaul links and FTTH connections. In the Netherlands, work continues on the plan to develop the network in rural areas, while Swisscom is in the process of implementing a national plan in Switzerland. In France, the "Trés Haut Débit" broadband project continues to be rolled out. In addition, British Telecom has announced a new FTTH project to connect 3 million "premises" in 8 cities by 2020.

In North America, the development of new ultra-broadband networks generated steady demand compared with the year before. Australia reported less brisk demand than in the previous year.

Brazil and Argentina saw the major telecom carriers increase their investments in optical fibre cables.

Lastly, copper cables continued their steady decline with the retirement of traditional networks in favour of new-generation ones.

The high value-added business of optical connectivity accessories performed well, thanks to the development of new FTTx networks (for last mile broadband access) in Europe, particularly in the Netherlands and the UK.

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Growth in the Multimedia Solutions business mainly reflected increased volumes on the North American market, primarily related to the acquisition of General Cable, and in the European market for copper data transmission cables, also observed, albeit to a lesser extent, in South America. This result has been achieved thanks to the busi- ness's ability to satisfy growing demand with a high level of responsiveness and service. An approach that, along with its strong customer orientation, has been identified as one of the Group's main strengths.

The return on investments in optical fibre cost reduction and the relocation of some cable manufacturing sources to Eastern Europe also made a substantial contribution to the segment's overall results.

Adjusted EBITDA for 2019 came to Euro 274 million, reporting a decrease of Euro 21 million (-7.2%) from Euro 295 million in 2018. This decline is due to the negative results of the associate Yangtze Optical Fibre and Cable Joint Stock Limited Company in China, involving a negative impact of some Euro 33 million, as only partially oset by the positive eect of Euro 7 million from the first-time adoption of IFRS 16 in 2019.

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Results by Geographical Area

(in millions of Euro)

Sales

Adjusted EBITDA

2019

2018(*)

2019

2018(*)

Combined

Combined

EMEA(**)

6,196

6,239

491

348

North America

3,441

3,298

352

242

Latin America

931

1,003

102

76

Asia Pacific

951

983

62

101

Total

11,519

11,523

1,007

767

  1. These figures include General Cable for the period 1 January - 31 December 2018. (**) EMEA = Europe, Middle East and Africa.

As stated in the Explanatory Notes to this Annual Report, the Group's operating segments are: Energy, Projects and Telecom, reflecting the structure used in the periodic reports prepared to review business performance. The primary performance indicator used in these reports, presented by macro type of business (Energy, Projects and Telecom), is Adjusted EBITDA, defined as earnings (loss) for the period before non-recurring items, the fair value change in metal price derivatives and in other fair value items, amortisation, depreciation and impairment, finance costs and income and taxes.

In order to provide users of the financial statements with information that is more consistent with the Group's greater geographical diversification following the General Cable acquisition, Sales and Adjusted EBITDA have been reported above by geographical area, even though the primary operating segments remain those by busi- ness. For this purpose, sales of goods and services are analysed geographically on the basis of the location of the registered oce of the company that issues the invoices, regardless of the geographic destination of the products sold. This type of presentation does not produce significantly dierent results from analysing sales of goods and services by destination of the products sold.

EMEA

The EMEA region's organic sales growth, including the impact of Western Link, was negative in 2019 compared with the previous year, at -2.4%. Excluding the Projects operating segment, organic growth would have been -1.3%. Ignoring provisions of Euro 165 million recorded in 2018 for the Western Link project, Adjusted EBITDA was lower, with the decrease due to the Projects operating segment, which nonetheless enjoyed a fourth-quarter upturn, albeit spoiled by a Telecom downturn in the same quarter.

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North America

North America had positive organic sales growth of +2.6% in 2019 compared with the previous year. Excluding the Projects segment, this growth would have been +1.9%. The E&I business and the Telecom operating seg- ment's MMS business particularly accounted for this positive sales performance, even though Telecom started to flag in the fourth quarter of 2019.

The increase in Adjusted EBITDA also reflects the high degree of integration achieved with General Cable.

LATAM

LATAM had positive organic sales growth of +0.7% in 2019 compared with the previous year. Excluding the Projects segment, this growth would have been +2.0%.

The increase in Adjusted EBITDA was driven by strong performance in the Energy operating segment (by both the E&I and Industrial & Network Components businesses), by accelerated integration with General Cable, helping improve margins, and by cross-selling activities allowing the Group to seize new growth opportunities.

APAC

APAC had negative organic sales growth of -4.5% in 2019 compared with the previous year. Excluding the Projects segment, this growth would have been -1.4%.

Adjusted EBITDA turned down sharply on the previous year especially in the Telecom operating segment, partly reflecting the smaller contribution from the associate YOFC and lower sales volumes in Australia. The Energy segment result was nonetheless stable.

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83

Group Statement of Financial Position

RECLASSIFIED STATEMENT OF FINANCIAL POSITION

(in millions of Euro)

31.12.2019

31.12.2018 (*)

Change

31.12.2017

Net fixed assets

5,301

5,101

200

2,610

Net working capital

755

692

63

128

Provisions and net deferred taxes

(820)

(734)

(86)

(308)

Net capital employed

5,236

5,059

177

2,430

Employee benefit obligations

494

463

31

355

Total equity

2,602

2,374

228

1,639

of which attributable to non-controlling

187

188

(1)

188

interests

Net financial debt

2,140

2,222

(82)

436

Total equity and sources of funds

5,236

5,059

177

2,430

  1. The previously published comparative figures have been revised after finalising the General Cable purchase price allocation. More details can be found in the Ex- planatory Notes: Section C. Restatement of comparative figures.

NET FIXED ASSETS

(in millions of Euro)

31.12.2019

31.12.2018 (*)

Change

31.12.2017

Property, plant and equipment

2,804

2,629

175

1,646

Intangible assets

2,154

2,162

(8)

735

Equity-accounted investments

314

294

20

217

Other investments at fair value through other

13

13

-

12

comprehensive income

Assets held for sale (**)

16

3

13

-

Net fixed assets

5,301

5,101

200

2,610

  1. The previously published comparative figures have been revised after finalising the General Cable purchase price allocation. More details can be found in the Ex-

planatory Notes: Section C. Restatement of comparative figures. (**) Excluding the value of financial assets and liabilities held for sale.

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At 31 December 2019, net fixed assets amounted to Euro 5,301 million, compared with Euro 5,101 million at 31 De- cember 2018, posting an increase of Euro 200 million mainly due to the combined eect of the following factors:

Euro 274 million in net capital expenditure on property, plant and equipment and intangible assets; Euro 354 million in depreciation, amortisation and impairment charges for the year;

Euro 211 million in increases in property, plant and equipment on adoption of IFRS 16;

Euro 50 million in positive currency translation dierences aecting property, plant and equipment and intangible assets;

Euro 7 million from the disposal of the oces in Barcelona (Spain);

Euro 20 million for the net increase in equity-accounted investments, mainly comprising Euro 24 million for the share of net profit/(loss) of equity-accounted companies, less Euro 9 million in dividend receipts plus Euro 3 million in positive currency translation dierences;

Euro 3 million from the disposal of the plant in Delfzijl (Netherlands);

reclassification to Assets held for sale of Euro 14 million in other assets and Euro 10 million in other liabilities in respect of Draka Fileca SAS, for which a binding purchase oer has been received from Carlisle Companies Incorporated.

NET WORKING CAPITAL

The following table analyses the main components of net working capital:

(in millions of Euro)

31.12.2019

31.12.2018 (*)

Change

31.12.2017

Inventories

1,523

1,511

12

954

Trade receivables

1,475

1,635

(160)

1,131

Trade payables

(2,062)

(2,132)

70

(1,686)

Other receivables/(payables)

(187)

(307)

120

(293)

Net operating working capital

749

707

42

106

Derivatives

6

(15)

21

22

Net working capital

755

692

63

128

  1. The previously published comparative figures have been revised after finalising the General Cable purchase price allocation. More details can be found in the Ex- planatory Notes: Section C. Restatement of comparative figures.

Net working capital of Euro 755 million at 31 December 2019 was Euro 63 million higher than the corresponding figure of Euro 692 million at 31 December 2018. Net operating working capital amounted to Euro 749 million (6.5% of annualised sales) at 31 December 2019, an increase of Euro 42 million from Euro 707 million (6.3% of sales) at 31 December 2018, reflecting the following factors:

  • a decrease in working capital employed in multi-year Submarine projects, reflecting their stage of comple- tion relative to their respective contractual deadlines, and inclusive of payments relating to the Western Link project;
  • a reduction in working capital due to a decrease in without-recourse factoring of trade receivables;
  • an increase associated with currency translation dierences.

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85

EQUITY

The following table reconciles the Group's equity and net profit/(loss) for 2019 with the corresponding figures reported by Prysmian S.p.A., the Parent Company.

(in millions of Euro)

Equity

Net profit/

Equity

Net profit/

at 31 December

(loss)

at 31 December

(loss)

2019

2019

2018

2018

Parent Company Financial Statements

2,161

179

2,102

96

Share of equity and net profit of consolidated

subsidiaries, net of carrying amount of the

485

289

298

102

related investments

Reversal of dividends distributed to the Par-

-

(154)

-

(139)

ent Company by consolidated subsidiaries

Deferred taxes on earnings/reserves distrib-

(30)

(14)

(16)

-

utable by subsidiaries

Elimination of intercompany profits and

(14)

(4)

(10)

(1)

losses included in inventories

Non-controlling interests

(187)

(4)

(188)

-

Consolidated Financial Statements

2,415

292

2,186

58

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Annual Report 2019

NET FINANCIAL DEBT

The following table provides a detailed breakdown of net financial debt:

(in millions of Euro)

31.12.2019

31.12.2018

Change

31.12.2017

Long-term financial payables

CDP Loans

100

100

-

100

EIB Loans

118

135

(17)

152

Non-convertible bond

746

745

1

743

Convertible Bond 2017

478

467

11

456

Term Loan

995

993

2

-

Bridge Loan

-

500

(500)

-

UniCredit Loan

199

199

-

-

Mediobanca Loan

100

-

100

-

Intesa Loan

149

-

149

-

Derivatives

15

8

7

-

Lease liabilities

135

11

124

12

Other financial payables

12

11

1

3

Total long-term financial payables

3,047

3,169

(122)

1,466

Short-term financial payables

CDP Loans

100

-

100

-

EIB Loans

17

17

-

17

Non-convertible bond

14

14

-

14

Convertible bond 2013

-

-

-

283

Term Loan

1

1

-

-

Derivatives

10

8

2

1

Lease liabilities

44

1

43

1

Other financial payables

36

65

(29)

55

Total short-term financial payables

222

106

116

371

Total financial liabilities

3,269

3,275

(6)

1,837

Long-term financial receivables

2

2

-

2

Long-term bank fees

4

-

4

1

Financialassetsatamortisedcost

4

5

(1)

4

Short-term derivatives

6

2

4

1

Short-term financial receivables

2

7

(5)

7

Short-term bank fees

2

1

1

2

Financial assets at fair value through profit

or loss

27

25

2

38

Financial assets at fair value through other

comprehensive income

11

10

1

11

Financial assets held for sale

1

1

Cash and cash equivalents

1,070

1,001