Linking the
sustainable future
Annual Report
2021
II
Annual Report
2021
Linking the
sustainable future
3
CONTENTS
LETTER FROM THE CEO
4
GROUP ANNUAL REPORT
6
01_Directors’ Report
9
02_Consolidated Financial Statements
119
03_Explanatory Notes
125
Certification of the consolidated financial statements
pursuant to art. 81-ter of Consob regulation 11971
dated 14 may 1999 and subsequent amendments and additions
215
Indipendent Auditors’ Report
216
PARENT COMPANY REPORT
222
04_Directors’ Report
225
05_Financial Statements
235
06_Explanatory Notes
241
Certification of the financial statements
pursuant to art. 81-ter of Consob regulation 11971
dated 14 may 1999 and subsequent amendments and additions
297
Independent Auditors’ Report
300
Report of the Board of Statutory Auditors
306
Disclaimer
This document contains forward-looking statements, specifically in the sections entitled “Events after the
reporting period” and “Business 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 differ materially
from those reflected in forward-looking statements due to multiple factors.
4
Prysmian Group - Annual Report
2021
Letter from the CEO
2021 has been a another year of unprecedented
uncertainty and challenges for global businesses and
industries, as we continue to see the impacts of global
macroeconomic, political and societal change.
This year has also provided considerable challenges and
uncertainty for all of our people and communities across
the world, and I would like to thank all of our employees
for their incredible resilience and commitment during
the year.
The world is changing and climate change is one of the
core global challenges that human societies are presently
facing. Deep decarbonization must be achieved to tackle
this challenge and the collective response has been a
call for the expansion and integration of renewables.
Prysmian constant technological innovation is at the
core of the response.
Our smart, efficient and green solutions, coupled
with our people’s expertise, commitment and passion
positions Prysmian as the leading technological enabler
with game changing offerings and solutions for both
now and generations to come.
Our strong performance in 2021 across our all of our
business has been driven by the strong demand for our
solutions across every region of the world. As a result,
we remain the driving force in the energy transition,
global digitalisation and the electrification of society.
A YEAR OF STRONG GROWTH
AND RECORD ORDERS
For the first time in our history, the Group sales exceeded
€12 billion, a record milestone, with an organic change
of 10.9%, driven by strong performances across the
resilient Energy segment and a recovery in the Telecom.
Adjusted EBITDA grew sharply by 16.2% to €976 million,
exceeding the Group’s upper range of expectations and
revised guidance of €920-€970 million.
The Energy segment has once again demonstrated
its resilience, with sound organic growth of 10.7%
and stable margins within the business division. This
included strong performances from both Energy &
Infrastructure and Industrial & Network Components
The Projects segment reported positive organic growth
of 10.2%, mainly attributable to the excellent execution
of Submarine Power Cables projects in H2. The Group has
also reaffirmed its technological and market leadership,
acquiring record orders worth approximately €4.8
billion in the year.
Another highlight has been the recovery in the Telecom
segment during 2021, which has been driven by the
strong demand for our solutions in the US, recording
organic growth 12.7%.
The Group continues to generate strong cash flow, with
recorded Free Cash Flow of €365m for the year, ± 20%
higher than previous guidance.
Given the strength of the results for 2021, the Board of
Directors will recommend at dividend of €0.55 per share
be distributed, with a total pay-out of approximately
€145 million if approved by at the forthcoming AGM.
ACCELERATING THE ROLLOUT
OF GLOBAL PROJECTS
We have been breaking boundaries in delivery of cable
projects throughout 2021. Our execution capabilities,
production capacity and equipment investments mean
5
Group Annual Report - LETTER FROM THE CEO
we are second to none and we continue to provide state-
of-the-art solutions for High Voltage. Underground
and Submarine cable links in some of the world’s most
challenging environments and major offshore wind
farms. The launch of the Leonardo Da Vinci, a state-of-
the-art cable-laying vessel represents a unique asset for
the development of efficient and sustainable power
grids to support the energy transition.
There have been several major developments within the
Projects division in 2021 including the Viking Link, the
world’s longest submarine interconnection between
the UK and Denmark, where the Leonardo da Vinci is
starting operations.
We have also accelerated our offering across several
significant US projects. This included the mega land
power cable SOO Green HVDC Link, the first of its kind in
the US and new contract awards with Dominion Energy
Group for the largest submarine project ever awarded
in the US and the Vineyard offshore wind farm, the first
large scale offshore windfarm in the US. The US remains
significantly underserved by renewable energy and we
expect continued strong growth in investment in US
energy infrastructure for a number of years.
OUR FOCUS ON SUSTAINABILITY
AND SOCIAL AMBITION
2021 has seen Prysmian take accelerated steps in the
process
of
integrating
environmental,
social
and
governance factors across its company strategies. This
is a critical part of our journey in building out the Group’s
sustainability identity for future years.
Throughout the course of the year, we have reinforced
our continued commitment to being a credible and
transparent ESG-focused company – dedicated to a
business model that integrates economic, social and
environmental responsibility across our Group activities
and scientific-based targets to tackle climate change.
The launch of our new and ambitious sustainability
strategy has seen the Group adopt science-based targets
aligned with the requirements of the Paris Agreement
and also endorse the Climate Change Ambition, and
Prysmian also reinforced its commitment to its social
purpose through the formal announcement of the
Group’s Social Ambition.
This includes a set of new 2030 targets, committing
to improving diversity, equality and inclusion (DE&I),
digital inclusion, community empowerment, employee
engagement and upskilling.
Prysmian is proactively developing as an organisation
which recognises the need for diversity, inclusion and
gender equality at all levels. We are empowering more
women to pursue careers within Prysmian in technical
and scientific roles – committing to 30% of senior
leadership roles to be held by women and more than
500 new female hires with STEM backgrounds by 2030.
Valerio Battista
CEO Prysmian Group
6
Prysmian Group - Annual Report
2021
Group Annual Report
7
CONTENTS
01_DIRECTORS’ REPORT
9
Directors and auditors
9
Preface
10
Financial highlights
11
Prysmian Group
14
Prysmian and the financial markets
43
Business environment
51
Significant events during the year
65
Group performance and results
67
Review of Projects Operating Segment
70
Review of Energy Operating Segment
72
Review of Telecom Operating Segment
77
Results by Geographical Area
79
Group Statement of Financial Position
80
Alternative Performance Indicators
82
Risk Factors and Uncertainties
88
Research and Development
105
Incentive Plans
114
Other Information
115
Business Outlook
116
Certification pursuant to art. 262 of the italian stock
exchange market regulations
117
02_CONSOLIDATED FINANCIAL STATEMENTS
119
Consolidated Statement of Financial position
119
Consolidated Income Statement
120
Other Comprehensive Income
121
Consolidated Statement of Changes in Equity
122
Consolidated Statement of Cash Flows
123
03_EXPLANATORY NOTES
125
Certification of the Consolidated Financial Statements
Pursuant to art. 81-ter of Consob regulation 11971
dated 14 may 1999and subsequent amendments and additions
125
Independent Auditors’ Report
216
9
01_DIRECTORS’ REPORT
Directors and auditors
BOARD OF DIRECTORS
(4)
Chairman
Claudio De Conto
(
*
)(2)
Chief Executive Officer
Valerio Battista
Directors
Francesco Gori
(
**
)(1)
Maria Letizia Mariani
(
**
)(3)
Jaska Marianne de Bakker
(
**
)(1)
Massimo Battaini
Tarak Mehta
(
**
)(1)
Pier Francesco Facchini
Ines Kolmsee
(
**
)(3)
Annalisa Stupenengo
(
**
)(2)
Paolo Amato
(
**
)(2)
Mimi Kung
(
**
)(3)
BOARD OF STATUTORY AUDITORS
(5)
Chairman
Pellegrino Libroia
Standing Statutory Auditors
Laura Gualtieri
Paolo Francesco Lazzati
Alternative Statutory Auditors
Michele Milano
Claudia Mezzabotta
Independent Auditors
(6)
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 for Listed Companies (January 2020 edition) approved
by the Italian Corporate Governance Committee, comprising business associations (ABI, ANIA, Assonime, Confindustria), Borsa Italiana S.p.A. (the Italian Stock
Exchange) and Assogestioni (Italian investment managers association)
(1)
Members of the Control and Risks Committee
(2)
Members of the Remuneration and Nominations Committee
(3)
Members of the Sustainability Committee
(4)
Appointed by the Shareholders' Meeting on 28 April 2021
(5)
Appointed by the Shareholders' Meeting on 5 June 2019
(6)
Appointed by the Shareholders' Meeting on 16 April 2015
10
Prysmian Group - Annual Report
2021
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 Information Statement in a separate document (Sustainability Report
2021). This document, containing information about environmental and social matters, human resources,
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
Information Statement 2021, drawn up in accordance with the GRI Sustainability Reporting Standards, was
approved by the Board of Directors on 1 March 2022. 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
.
11
Group Annual Report - DIRECTORS’ REPORT
Financial highlights
KEY FINANCIAL AND OPERATING DATA
(
*
)
(Euro/million)
2021
2020
% Change
2019
Sales
12,736
10,016
27.1%
11,519
Adjusted EBITDA before share of net profit/(loss)
of equity-accounted companies
958
822
16.5%
983
Adjusted EBITDA
(1)
976
840
16.2%
1,007
EBITDA
(2)
927
781
18.7%
907
Adjusted operating income
(3)
647
515
25.6%
689
Operating income
572
353
62.0%
569
Profit/(loss) before taxes
476
252
88.9%
444
Net profit/(loss)
310
174
78.2%
296
(Euro/million)
31.12.2021
31.12.2020
Change
31.12.2019
Net capital employed
5,295
4,915
380
5,236
Employee benefit obligations
446
506
(60)
494
Equity
3,089
2,423
666
2,602
- of which attributable to non-controlling interests
174
164
10
187
Net financial debt
1,760
1,986
(226)
2,140
(Euro/million)
2021
2020
% Change
2019
Net capital expenditure
(4)
275
244
12.7%
248
Employees (at period-end)
29,763
28,321
5.1%
28,714
Earnings/(loss) per share
- basic
1.17
0.68
1.11
- diluted
1.17
0.68
1.11
Number of patents
(5)
5,539
5,581
5,881
Number of plants
108
104
106
(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 flows from disposals of Assets held for sale and from disposals and additions of 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.
(*)
All percentages contained in this report have been calculated with reference to amounts expressed in thousands of Euro.
12
Prysmian Group - Annual Report
2021
2021 SALES BY GEOGRAPHICAL AREA
(*) Europe, Middle East, Africa.
€12,736 million
52% EMEA (*)
30% North America
9% Latin America
9% Asia Pacific
2021 SALES BY BUSINESS AREA
€12,736
million
13% Projects
50% of which Energy & Infrastructure
22% of which Industrial & Network Components
3% of which Others
12% Telecom
75% Energy
13
Group Annual Report - DIRECTORS’ REPORT
(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 effects.
The results of General Cable have been consolidated with effect from 1 June 2018.
(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 effect 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 effect from 1 June 2018.
(4)
Net Operating Working Capital is defined as Net Working Capital excluding the effect of derivatives. The percentage is calculated
as Net Working Capital/Annualised last-quarter sales.
KEY FINANCIALS
Amounts in millions of Euro – percentages on sales
11,519
10,016
12,736
2019
2019
2019
2019
2019
2020
2020
2020
2020
2020
2021
2021
2021
2021
2021
SALES
(1)
ADJUSTED
EBITDA
(2)
ADJUSTED
OPERATING
INCOME
(3)
NET OPERATING
WORKING CAPITAL
(4)
NET FINANCIAL DEBT
Organic growth
-10.3%
10.9%
1,007
840
976
8.7%
8.4%
7.7%
689
515
647
6.0%
5.1%
5.1%
749
432
476
6.5%
4.3%
3.5%
2,140
1,986
1,760
14
Prysmian Group - Annual Report
2021
Prysmian Group
HIGHLIGHTS 2021
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.
1.
Intelligent virtual
assistant for managing
drums and electrical
cables
PRY-CAM is a data gathering and analysis technology based on artificial intelligence algorithms
and on sensing technologies patented by the Group, that allows the accurate and reliable
measurement of the main parameters of an electrical system while in service, as well as
system diagnosis and fault location from remote, thanks to a portfolio of products and
services that promote the efficient management of power systems and grids using a predictive
approach.
2.
Breakthrough
technology
for the monitoring
of power grids
Prysmian Group enters for the first time the “intelligent home” market with PRY-CAM HOME,
launched in May in Italy and The Netherlands. More a primary good rather than a luxury accessory,
PRY-CAM HOME is a unique and cost-effective solution aimed at managing and increasing active
power safety in homes, resulting from years of know-how and expertise developed in HV & MV
power systems’ monitoring and deployed to the residential market. The need to responsibly
monitor residential power safety and efficiency has become a fact and PRY-CAM HOME is the ideal
solution and the perfect complement to an outstanding product range for the construction sector.
PRY-CAM HOME combines innovation and technology primacy into an easy to install, manage
and use solution that provides extensive and straight-forward information, as well as real-time
response, to improve work procedures for electricians and make power safety and efficiency
easier for homeowners.
3.
PRY-CAM HOME
In November, Prysmian Group completed the acquisition of Omnisens S.A., a leader in high
performance fiber-optic based monitoring solutions for a safer and more efficient use of critical
infrastructures. The acquisition is in line with Prysmian Group’s strategy to grow and reinforce its
value-added businesses, continuously increasing its drive towards a digital, remote and electrified
global industrial transformation. Omnisens’ advanced DTS/DAS technology is a complementary
add-on to the Group’s monitoring solutions range, enhancing opportunities to target a business
with a long-term growth trend and unlocking significant commercial synergies.
4.
Omnisens
acquistion
The Sirocco High Density range delivers record diameters and fibre density for blown mini-cables.
Sirocco HD cables provide once again world record diameters and fibre densities for blown
microduct cables. The new cable boasts 576 fibres in a diameter of 9.5mm, providing a fibre
density of 8.1 fibres per mm2, and is installable into a 12mm duct. Sirocco HD mini-cables use
Prysmian BendBright-A2 200µm (ITU-T G.657.A2), a single-mode fibre insensitive to bending,
to provide a truly future-proof solution that is ready to support advanced systems.
5.
Sirocco HD
15
Group Annual Report - DIRECTORS’ REPORT
The first cable with 180µm fibre for FTTx and 5G networks. The Sirocco Extreme cable
delivers record diameter and fibre density for mini-cables, ensuring faster, cheaper
and more sustainable installations. The newest cable boasts 576 fibres in a diameter
of 8.2mm, providing a fibre density of 10.9 fibres per mm2, and can be installed into
a 10mm duct.
6.
Sirocco
Extreme
P-Laser is the first technology to offer fully-recyclable, eco-sustainable, high performance
cables based on HPTE (High Performance Thermoplastic Elastomer). P-Laser is suitable
for higher voltages, offering advanced thermal performance and high reliability for more
flexible and sustainable solutions. Fully recyclable with higher productivity, P-Laser lowers
production CO
2
emissions by 35%.
7.
P-Laser
This innovation in cable technology enables a massive increase of the maximum transmission
capacity of bi-pole systems up to more than 2.6 GW (depending on thermal environmental
and installation conditions), which is more than double the value achieved with 320 kV DC
systems currently in service. For this new voltage class Prysmian leveraged an extensive
and in-depth knowledge of materials and the capability to improve manufacturing processes,
thus facing successfully the challenge of optimising a reliable industrial process with strict
technological parameters and providing an entire system of cable and accessories with the
best dielectric properties. HVDC cable links are key components of sustainable energy systems,
to transmit large bulks of electricity over long distances, often across or between countries.
8.
525 kV extruded
cable system
for HVDC
applications
Imagine a world with highways where you can charge your vehicle as you drive. Sounds
futuristic? The Progetto ERS ‘Arena del Futuro’ shows it is possible. Prysmian Group is part
of the Consortium realizing this breakthrough mobility idea. For the first time the innovative
P-Laser technology has been used in a LVDC (Low Voltage Direct Current) application allowing
to combine high performance with sustainability. Prysmian Group developed and supplied 10
km of P-Laser LVDC cabling infrastructure that guarantees higher efficiency,
product circularity and low environmental footprint.
9.
ERS Project
“Arena del Futuro”.
Green mobility
made reality with
dynamic wireless
power
transmission
With a cable diameter of 4.5 mm in a 10 mm conduit, compared with the traditional
6 mm cable in a 14 mm conduit, the volume of plastic used is reduced by about 50%.
The reduced diameters mean that each drum contains a longer length of cable,
thus lowering transportation, storage and packaging costs significantly.
10.
Prysmian launches
the first optical fibre
network with 90%
recycled plastic
and record low
diameter
cable
16
Prysmian Group - Annual Report
2021
This was the first project to use the new Sirocco Extreme optical cable. The world’s first
installation of 180µm optical fibre cable will enable a large number of private dwellings
and businesses located in Germany to benefit from access to high performance FTTx
and 5G networks. Sirocco Extreme is the first 180µm optical fibre cable available
on the market.
11
First 180µm
optical fibre cable
installed
in Germany
Prysmian Group has announced the finalisation of the contract with SOO Green HVDC Link
for the supply and installation of high-voltage direct current cable systems for this first-of-
its-kind transmission project to be installed underground along existing railroad rights of way.
The 2,100-megawatt interregional project, considered the first link in a national clean energy
grid, will connect two of the largest energy markets in the US, delivering abundant, low-cost
renewable energy to population centers from Chicago to the mid-Atlantic region.
12.
SOO Green
HVDC Link
It is the first submarine cable interconnection between the UK and Denmark. Worth close
to Euro 700 million, the contract includes the turn-key design, manufacture and installation
of the world’s longest power interconnector with 1,250 km of cables for the entire submarine
route and all approximately 135 km of land cables on the UK route, corresponding to four of the
five tender lots. The High Voltage Direct Current (HVDC) interconnector will operate at ± 525 kV
and will allow up to 1,400 MW of power to be transferred between the two countries passing
through UK, Dutch, German and Danish waters, using single-core, mass-impregnated
paper-insulated cables.
13.
Viking
Link
Prysmian Group secured the largest ever awarded submarine cable contract in the US.
The contract has been awarded by Dominion Energy Virginia, a subsidiary of Dominion Energy Inc.,
to a consortium made up of Prysmian and the DEME Group, a leader in the offshore wind industry.
The Balance of Plant (BoP) contract includes the complete package for the transportation and
installation of the foundations and the substations and the EPCI (Engineering, Procurement,
Construction, Installation) services for the inter-array and export cables for the future
largest commercial offshore windfarm in the United States. The total value of the contract is
approximately €1.6 billion, of which around €630 million related to Prysmian for
the cable supply and the installation works under its responsibility.
14.
The Coastal
Virginia Offshore
Wind Farm
Prysmian Group secured two new milestones offshore wind farm projects in the US for a total
of approximately $900M. Both projects have been awarded by Vineyard Wind, a joint venture
between Avangrid Renewables and Copenhagen Infrastructure Partners (CIP), thus strengthening
Prysmian’s partnership with one of the leading developers in the growing offshore wind industry
in the US.
15.
Commonwealth
Wind & Park
Wind City
17
Group Annual Report - DIRECTORS’ REPORT
Prysmian Group has been awarded a framework contract worth around €1.71 billion by Terna
Rete Italia S.p.A., a company fully owned by Terna S.p.A., the Italian electricity grid operator
(TSO). The framework contract includes the Tyrrhenian Link project, envisaging the design,
supply, submarine and land installation, and commissioning of a total of over 1,500 km
of submarine cables to support the power exchange among Sardinia, Sicily and Campania,
thus reinforcing the Mediterranean energy hub. The Tyrrhenian Link project involves
the turn-key installation of one to three 500 kV HVDC links, each one 500 km long, of single-
core cables with Mass Impregnated insulation and double wire armouring.
16.
Tyrrhenian
Link
The Prysmian Group was confirmed as part of the Dow Jones Sustainability World in 2021.
This is the most important international index for the assessment of performance in
environmental, social and governance (ESG) terms and for the first time ranked 1
st
in Electrical Components & Equipments (ELQ). Inclusion in this index recognises the efforts
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.
17.
Dow Jones
Sustainability
Index 2021
Prysmian Group has announced the delivery of the record-breaking vessel Leonardo da Vinci,
working since the second half of 2021.
A unique asset to be added to the existing Group’s
state-of-the-art vessel fleet, Leonardo da Vinci will allow more efficient and sustainable project
execution for the development of smarter and greener power grids worldwide to support the
energy transition. The official launching ceremony will take place by Q2 2022 so as to demonstrate
Leonardo da Vinci’s superior performances and cable installation capabilities, supported
by a solid projects’ execution track record.
18.
The “Leonardo
da Vinci”
Prysmian Group has acquired EHC Global, Canadian leader in the supply of strategic
components and integrated solutions for vertical mobility.
19.
EHC Global
The Group launched of its ECO CABLE label, the first proprietary green product label in the cable
industry. The ECO CABLE product label is aimed at proactively addressing the greener and greener
expectations of the market and of all stakeholders. The ECO CABLE label can be easily cross-
referenced and paired with additional certified sustainability protocols like the EPD (Environmental
Product Declaration) and the EU Ecolabel (the environmental excellence label for products
and services meeting high environmental standards throughout their life cycle). The ECO CABLE
label assignment is based on an automatic calculation system using recognized and measurable
criteria derived from the EU Ecolabel Regulation no 66/2010 and in line with the main regulatory
frameworks and requirements, with a very specific focus on cable products: Carbon Footprint,
Absence of Substances of Very High Concern, Recyclability/Circularity, Recycling input rate,
Environmental benefits and Cable transmission efficiency.
20.
ECO CABLE
18
Prysmian Group - Annual Report
2021
THE PRYSMIAN GROUP, A GLOBAL LEADER
Leadership in strategic sectors
Our identity is underpinned by solid leadership in the power and telecom cable systems industry. As such, we are at
the centre of the transition to a low carbon economy. Our vision of the future is founded on this role.
Prysmian Group is world leader in the power and telecom cable systems industry.
With sales in excess of 12 billion euro and about 29,000 employees, our heavily international presence is evidenced
by 108 plants in more than 50 countries. The Group has a consolidated presence in technologically advanced markets,
offering a broad range of products, services, technologies and know how are offered to manufacturers that use
cabling systems in the production and distribution of energy and telecommunications.
Established as Pirelli Cables at the end of the 1800s, the Group has grown by acquisitions: from integration of the
power cables manufactured by Siemens and Nokia, to acquisition of the Draka group based in the Netherlands, and,
in 2018, absorption of General Cable, a US group. These aggregations sustained expansion of the range of products
and services, with innovations to improve standards and a greater geographical presence, which is a strength when
serving regional market needs. This evolution over time evidences the expansion of our know-how and technological
capabilities, as well as our operational ability, enabling us to become an industry leader in the area of operational
efficiency as well. Operations are guided at all times by strong convictions that support our ESG Identity in what
we do, how we do it and with what vision for the future, as embodied in our Values, Mission and Vision.
A history of innovation
At the start of the 20th century, Prysmian Group laid the first submarine cables for telecommunications 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.
In the High Voltage and Underground and Submarine Cables and Systems business, the Group, as demonstrated
by its strong order intake, is committed to confirming its leadership in a market expected to grow significantly,
thanks to the development of the offshore wind farms and interconnections in support of the energy transition
towards renewable sources. For this segment, the Group expects results to grow compared to last year, with the
last quarter of the year clearly improving compared to the previous three quarters, thanks to the achievement of
milestones in project execution and greater use of capacity in the submarine cable business.
The key projects underway in the Submarine Power Cable business were: the Crete-Peloponnese region (installing
for the first time at a 1,000-metre depth a new synthetic-armoured cable, which is 30% lighter than steel-wrapped
cables) and Crete-Attica interconnection projects in Greece; the Viking Link (Great Britain–Denmark), which saw the
new cable-laying vessel Leonardo da Vinci starting operations; the Offshore Wind projects in France and Germany
(Dolwin5), the connection between Sicily and the Italian peninsula and the new submarine cable links between
Capri and the mainland to supply the island with energy form renewable sources, in order to decommission its
fossil-fuelled electricity plant and thereby reduce CO
2
emissions.
Other relevant projects acquired by Prysmian in 2021 are: the mega land power cable SOO Green HVDC Link, the first
of its kind in the USA; the Egypt-Saudi and Turkish Crossing submarine power cable links; and the cabling of the Sofia,
Gode Wind Burkum & Riffgrund 3 and Grussian offshore wind farms. There was a further boost in the last months
of 2021 with the €630 million project for cabling the Coastal Virginia Offshore Wind Farm, the largest submarine
cable project ever awarded in the USA, that will have a total capacity of 2.6 GW. This project confirmed the Group’s
leadership in the US energy transition and supported by the Biden administration’s plans.
19
Group Annual Report - DIRECTORS’ REPORT
Prysmian Group’s history has
its roots in the history of the
Pirelli Group. Società Cavi Pierelli
is established in Italy as the able
division of the recently founded
company.
PRYSMIAN
GENERAL CABLE
DRAKA
1879
Draka was founded under
the name or Hollandsche Draad
8 Kabel Fabriek.
1910
Originally incorporated
in New Jersey bringing together
several older companies founded
in the 1800s.
1927
The commpany begins targeted
acquisitions, including the power
cable business of Siemens, BICC,
Metal Manufacturers Ltd and NKF.
1998
The company is acquired
by Philips and became part
of the Wire and Cable Division.
1970
Acquired the Carol Cable
Company and industry Leading
Carol
®
Brand cord, cordset and
automotive product lines.
1990
Prysmian is founded in July 2005
through the acquisition of the
energy and Telecom cables
and system activities of Pirelli.
2005
The business became
independednt throught a buyout
financed by Parcom and Flinet
Beheer. The name Draka was born.
1986
Acquired Silec, a leader
energy and industrial business,
and Helix/HiTemp,
a manufacturer of high-end
enterprise networks products.
2005
The combination of the two
market leading companies
culminated in Prysmian Group.
2011
Acquired Stabiloy and Nual
aluminium building wire brands,
acquired Procables of Colombia,
and aquired Prestolite Wire,
serving predominately origina
equipment manufacturerts (DEM)
and distributors.
2012
Prysmian becomes a listed
company quoted in the Milan
stock exchange after the sale
of 46% of the shares held
by the Goldman Sachs Group.
2007
A spree of global acquisitions
over a 20 year period followed
including Philips Optical Fiber
and Alcatel.
1987
Acquired
NSW, an offshore
submarine cable supplier
and installer in Germany.
2007
General Cable joins Prysmian
Group.
2018
20
Prysmian Group - Annual Report
2021
PRYSMIAN GROUP IN THE WORLD
We are present in more than 50 countries around the world, with 108 plants and over 29,000 employees. Our business
model is diversified by portfolio and geographical area.
NORTH AMERICA
Canada
St. Maurice
St. Jerome
Prescott
Oshawa
Saguenay QC - Lapointe
U.S.A.
Rocky Mountain
Du Quoin
Lincoln
Indianapolis
Jackson
Manchester
Marion
Marshall
Paragould
Sedalia
Williamsport
Willimantic
Lawrenceburg
Abbeville
Bridgewater
Claremont
Lexington
North Dighton
Schuylkill Haven
24
plants
KEY
Energy
Telecom
Shared
LATIN AMERICA
Argentina
La Rosa
Brazil
Joinville factory
Poços de Caldas
Sorocaba Fiber
Sorocaba Eden
Vila Velha
Chile
Santiago
Colombia
Bogotá
Costa Rica
Heredia
Mexico
Durango
Tetla
Piedras Negras
Nogales
13
plants
26
26
R&D
centers
4
cable-laying
ships
29,000
about
employees
108
plants
+50
countries
21
Group Annual Report - DIRECTORS’ REPORT
Czech
Republic
Velké Mezirící
Estonia
Keila
Finland
Pikkala
Oulu
France
Calais
Billy - Berclau - Douvrin
Sainte Geneviève
Amfreville
Paron
Pont de Cheruy -Charvieu
Cornimont - Xoulces
Gron
Pont de Cheruy - Chavanoz
Montreau
Germany
Wuppertal
Berlin
Nurnberg
Nordenham
Neustadt
Schwerin
Baesweiler
Hungary
Kistelek
Balassagyarmat
Italy
Battipaglia
Giovinazzo
Livorno
Merlino
Pignataro M.
Quattordio
Arco Felice
Norway
Drammen
Portugal
Morelena
Romania
Milcov
Slatina
Russia
Rybinsk
Slovakia
Presov
Spain
Abrera
Santa Perpetua
Vilanova
Santander
Sweden
Nassjo
The Netherlands
Eindhoven
Delft
Nieuw Berger
Emmen
U.K.
Washington
Wrexham
Bishopstoke
Aberdare
EUROPE
49
plants
Angola
Luanda
Ivory Coast
Abidjian
Oman
Sohar
Muscat
Tunisia
Grombalia
Menzel Bouzelfa
Turkey
Mudanya
MEAT
7
plants
Australia
Liverpool
Dee Why
China
Zhongyao
Haixun
Yixing
Tianjin
Suzhou
Shangai 1
Shangai 2
India
Chiplun
Indonesia
Cikampek
Malaysia
Melaka
New Zealand
New Lynn
Philippines
Cebu
Thailand
Rayong
APAC
15
plants
22
Prysmian Group - Annual Report
2021
BUSINESS AREAS
The Group is organised in a matrix structure by reference market and business unit, identifying three macro-areas
of activity.
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 differing 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 dynamism. 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 differently with more consolidated dynamics. Additionally, while the positioning of the Prysmian Group
as a cable manufacturer remains central, part of our activities makes us a network solution provider, drawing on
the ability to integrate ever more closely the various components - engineering, installation, network monitoring
and after-sales services - 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 solutions for the
elevator industry, cables for multimedia applications, monitoring solutions developed by Prysmian Electronics -
while releasing the synergies needed to be cost-effective and offer end-to-end solutions integrated with advanced
digital equipment.
The
ENERGY
segment generated
9,557 million euro in 2021, representing
75%
of the total revenues
of the Group.
The
PROJECTS
segment generated
1,594 million euro in 2021, representing
13% of the total revenues
of the Group.
The
TELECOM
segment generated
1,585 million euro in 2021, representing
12% of the total revenues
of the Group.
Energy
Comprising business segments that offer
a complete and innovative portfolio of
products designed to satisfy the many
needs of the markets served. This macro-
area is organised as follows:
•
Energy & Infrastructure, which includes
Trade & Installers, Power Distribution
and Overhead Transmission Lines;
•
Industrial & Network Components, which
includes Oil & Gas, Elevators, Automotive,
Network Components, Specialties &
OEM (serving in turn the following
sectors: Cranes, Mining, Railways,
Rolling Stock, Marine and Renewables
- cables for the solar energy industry
and for the operation and connection
of wind turbines) and Electronics (Asset
Monitoring Solutions).
Projects
Comprising high-tech and high value-
added businesses focused on the design,
production and customisation of HV
and EHV 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, the Ulisse
and the Leonardo da Vinci (operational
from July 2021). Prysmian Group also
offers advanced services for terrestrial
and submarine interconnections between
various countries and between offshore
wind farms and the mainland, used for
both the generation and distribution of
electricity.
Telecom
Comprising 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.
23
Group Annual Report - DIRECTORS’ REPORT
SUSTAINABILITY IS IN OUR DNA
We are a public company focused on generating value for our stakeholders and our people. This distinguishing element
means that we have always sought to integrate the various environmental, social and governance factors within our
DNA, developing ambitious objectives that position us as a sustainability champion.
Implementing a sustainability strategy means building today the conditions for the resilience of the entire industrial
value chain of tomorrow. In view of this commitment, which characterises our DNA as a public company, we have
defined an ambitious and measurable strategic sustainability plan that is consistent with international standards
and creates value for all our stakeholders.
Public
Company
Prysmian Group is, in primis, a public company included in the FTSE MIB index of the Milan
stock exchange: a company with a broad shareholder base for which it is fundamental to align
the interests of the Group with those of all stakeholders. This special nature requires an ability
to develop open and transparent dialogue with our shareholders, employees, customers and
suppliers, with the institutions and with the communities in which we work.
Prysmian Group has always invested in the values of stakeholder capitalism, striving to comply
with the highest international standards of governance. For example, 75% of Board members are
independent and 42% are women. Corporate integrity is expressed using a series of instruments
and policies disseminated throughout the entire organisation, including the Code of Ethics, the
anti-corruption policy, privacy and data protection, and the helpline programme.
Prysmian Group is people-centric, supporting and recognising the abilities of those who
work for the Group and for the community in which it operates. To achieve this, continuous
multi-disciplinary and specialist training programmes have been adopted for our employees.
Developing in full the global know-how of our people, who represent the greatest asset of the
Group, is an integral part of our long-term sustainability strategy.
Out of around 29,000 employees, about one third are stable shareholders. Together with
management, these employees own more than 3% of the share capital, investing directly in
the Company and demonstrating their confidence in us.
People
Company
SOCIAL AMBITION
•
D&I programs
•
Women in STEM
•
Measurement of impacts on communities
•
Health and Safety as a top priority
•
Gender Equality
Positioning as
SUSTAINABILITY CHAMPION
CLIMATE CHANGE AMBITION
•
Net zero target
•
Science Based Target Initiatives
•
New climate strategy (in line with COP26),
endorsing the Business Ambition
(1.5°C) with “net zero” target:
–
by 2035 Scope 1 and 2
–
by 2050 Scope 3
ENERGY TRANSITION & DIGITALIZATION
•
Role of cables
in enabling energy transition
•
Role of fibres & innovative solutions
in the digitalisation and decarbonisation
of economy
24
Prysmian Group - Annual Report
2021
VALUES, MISSION, VISION
The ESG Identity of a leading group must be supported by Values, Mission and Vision that guide operations, translate
into products made and fuel the ambitions for our role in tomorrow’s world.
SDGS - SUSTAINABLE DEVELOPMENT GOALS
Here we discuss the priorities of our ESG strategy and the actions that we intend to take, as well as how our commitment
translates into a concrete contribution towards the sustainability goals of the United Nations.
NIn 2017, Prysmian published its own Sustainability Policy, which defines the vision and reference values for the
various areas of Business Integrity, Governance, Product, Social and Environmental Responsibility. The policy aims
to provide sustainability guidelines for all Group companies and operations, based on the strategic priorities as
part of a medium to long-term vision.
The ESG strategy of Prysmian Group consists of three priorities that were defined in 2016, taking into consideration
the main global and industry trends, the 17 Sustainable Development Goals for 2030 (SDGs) defined by the United
Nations, requests from major International Sustainability Indexes (Dow Jones Sustainability Index, FTSE4GOOD,
CDP, Bloomberg ESG, etc.) and the needs and expectations of our stakeholders.
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.
We believe in the efficient, effective and sustainable supply
of energy and information as the main driver
for the development of community.
Vision
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.
Mission
25
Group Annual Report - DIRECTORS’ REPORT
THE THREE PRIORITIES
SUSTAINABLE AND INNOVATIVE
SOLUTIONS FOR THE BUSINESS
RESPONSIBLE USE OF ENERGY
AND WATER RESOURCES
DEVELOPMENT OF PEOPLE
AND COMMUNITIES
Facilitate the deployment of
accessible energy and innovation in
telecommunications and infrastructure
Pursue the responsible
consumption of natural
resources and sustainable supplies
Contribute to the development
of people and local communities
ACTION
1.
Develop innovative products and solutions that support improvement of the sustainability of telecommunication
and energy infrastructures.
2.
Boost the sale of high quality, reliable and “green” products and services.
3.
Contribute to the universal dissemination of energy and telecommunications via reliable and accessible infrastructure.
4.
Facilitate access to clean energy, via the development of solutions for the producers of renewable energy and support
for the research into sustainable technologies.
5.
Facilitate access to clean energy, via the development of solutions for the producers of renewable energy and support
for the research into sustainable technologies.
6.
Promote sustainable business practices between our suppliers and business partners.
7.
Participate in and contribute to the socio-economic development of the communities in which the Group operates, via the
adoption of an appropriate Corporate Citizenship and Philanthropy policy.
8.
Promote ethical conduct and the training and professional growth of personnel, protect diversity and the rights of workers
and develop a healthy workplace environment.
9.
Develop effective, transparent and responsible communications with stakeholders.
The Prysmian sustainability strategy takes a long-term view that seeks constant equilibrium among three main
factors:
• ORGANIZATION
, the adoption of innovative and efficient processes.
• OPERATION
, the responsible management of performance throughout the
entire value chain.
• PEOPLE
, the protection of individuals and the advancement of talent.
26
Prysmian Group - Annual Report
2021
ELEMENTS UNDERLYING THE GROUP’S SUSTAINABILITY STRATEGY
Employees
Customers
and Business Partners
Universities
and Research Centers
Suppliers and
sub-contractors
Shareholders and
Financial institutions
Society
and Communities
Institutions
and Governments
ECOVADIS - SUPPLIER
SUSTAINABILITY RATINGS
STOXX
DOW JONES
SUSTAINABILITY INDEXES
STANDARD
ETHICS
BLOOMBERG
MSCI
CDP
FTSE4GOOD
CLEAN 200
SUSTAINALYTICS
SUSTAINABILITY INDICES
STAKEHOLDERS
UN SDGS
27
Group Annual Report - DIRECTORS’ REPORT
The Prysmian Group strategy includes concrete actions that make a targeted contribution to the following UN
SDGs. In particular:
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
ncrease the number of plants with environmental, health and safety management certification.
Investments and other initiatives designed to reduce GHG emissions. Preparation of the new
Climate Change Ambition and the definition of new Scope 1 and 2 emission-reduction targets,
consistent with the COP26 Paris Agreements (SBTi).
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).
Preparation of the new Social Ambition.
28
Prysmian Group - Annual Report
2021
STAKEHOLDER VALUE CREATION
The creation of value for stakeholders is an essential element of the ESG Identity of Prysmian.
This element is sustained by a series of activities designed to involve stakeholders throughout the entire value
chain, with specific actions to promote active listening and sustainable behaviours.
The creation of sustainable value for all stakeholders also depends heavily on how the supply chain is managed, with
Prysmian adopting an ever more pro-active role in decarbonisation efforts by including ESG KPIs in the appraisal of
suppliers. The procurement of raw materials and the performance of activities are subject to rigid sustainability
policies that address their environment impact and their respect for human rights and business ethics. Particular
attention is dedicated to the engagement and satisfaction of customers and all significant stakeholders, as well as
to the impact of our activities on the communities in which we operate. On-time delivery in the Telecom segment
is around 91%, while the Energy segment achieves about 93%.
Actions:
• Customer
satisfaction survey
• Cable App & Customer
Portal
Listen and engage with our
customers to better serve
them and to drive innovation
Customers
Actions:
• Long-term and
sustainable value
creation
• Shareholders’ meetings
and participation
Public company with
broad shareholders base
Shareholders
Actions:
• PG’s Academy
• Local mentoring
programs for 500 students
Invest and promote
learning and education as a
key driver of improvement
and innovation
Schools, Universities & Research Centers
Actions:
• ESG evaluation
of suppliers base
• Sustainability audits
• CDP partnership
Proactively promote the
decarbonization of our supply
chain incorporating ESG drivers
in the suppliers selection
Suppliers
Actions:
• Internal projects
of upskilling, mobility
and workforce development
• Health & Safety focus
Create and nurture
a diverse, inclusive,
equal opportunities working
environment where
meritocracy is at the core
People
Actions:
•
Construction
of nursery/school projects
•
Donation of cables
to improve local development
Promote and contribute
to the social and economic
development of the
communities where
we operate
Local Communities
29
Group Annual Report - DIRECTORS’ REPORT
The resilience demonstrated by the business in tackling the effects of the pandemic made it possible to defend
the economic and financial strength of the Group, ensuring the creation of economic value for our shareholders.
The Prysmian stock price rose by 13.9% during 2021, closing the year at € 33.11
per share compared with € 29.08 at the end of 2020.
The economic value generated, being the overall wealth created by the Group for all stakeholders, totalled 13,484
million euro in 2021. Much of this value, 13,174 million euro, was redistributed in the form of:
81.49% Spending on Suppliers
11.28% Payment to Staff
5.96% Payment to Lenders
1.26% Payment to the Public Administration
0.02% Contributions to the Community
0
50
100
150
200
250
EURO STOXX 600 INDUSTRIAL
FTSE MIB
Prysmian
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
May-20
Nov-20
May-21
Nov-21
TOTAL SHAREHOLDER RETURN
+15.90
%
IN 2021
SINCE ITS DATE OF LISTING
+196.0
%
PERFORMANCE OF PRYSMIAN STOCK
30
Prysmian Group - Annual Report
2021
NEW GROUP OBJECTIVES: CLIMATE CHANGE & SOCIAL AMBITION
We seek to become a global leader in sustainability. This ambition has caused us to establish challenging climate and
social objectives that promote the transition towards a low-carbon world and a more equal and inclusive working
environment.
Prysmian introduced two new strategic ambitions during 2021 that will guide the actions of the Group over the
medium-long term: the climate change ambition and the social ambition. Linking the social ambition with our
environmental objectives is a fundamental element of the ESG identity of Prysmian, alongside the intention of
the Group to contribute actively to the energy transition, promote actively the transition towards a more equal,
diversified, inclusive and rich working environment, and impact positively the development of the communities
and societies in which we are present.
The climate change ambition seeks to position the Group as one of the main technological players in the transition
to low-carbon energy. The climate strategy adopts “science-based” targets aligned with the requirements of the
Paris Agreement, which calls for net-zero emissions within 2035 for those generated by internal activities (Scopes
1 and 2) and by 2050 for those generated by the value chain (Scope 3). In September 2021, Prysmian obtained
approval for its targets from the Science-Based Target Initiative (SBTI), which is an organisation founded in 2015
to help businesses establish emission reduction objectives in line with the Paris Agreement objectives.
CLIMATE CHANGE AMBITION
•
100 MILLION EURO INVESTED
over the next ten years
TO IMPROVE THE
ENVIRONMENTAL PERFORMANCE
of the Group’s assets;
•
46% REDUCTION
in Scope 1 and 2 emissions, in absolute terms compared with
2019,
BY 2030
and
NET-ZERO EMISSIONS BY 2040;
•
21% REDUCTION
in Scope 3 emissions
BY 2030
and
NET-ZERO EMISSIONS BY
2050
, based on a targeted strategy for the supply chain.
The social ambition of the Group mainly concentrates on the commitment to improve diversity, equality and
inclusion (DE&I), digital inclusion, the empowerment of communities, employee engagement and upskilling. The
Group promotes programmes designed to enhance the digital inclusion of all employees, eliminating at the same
time discrimination based on their role or position. By adopting a pro-active approach, the Group is evolving into
an organisation that recognises diversity, inclusion and gender equality at all levels, committed to facilitating the
empowerment of a larger number of women, so that they can pursue further their technical and scientific positions
within Prysmian.
The new targets for 2030, as better illustrated into Non-Financial Disclosure 2021, promote achievement of the
social ambition objectives of Prysmian and further align the Group with the UN Social Development Goals.
31
Group Annual Report - DIRECTORS’ REPORT
GROUP STRATEGY: LEADERSHIP IN KEY SECTORS
Network infrastructures play a role of strategic importance in the great challenges posed by the energy transition
and digitalisation. In detail, cable technology is a key component of infrastructure networks for power transmission
and telecommunications. The crucial challenges set by the US Build Back Better Plan introduced by the Biden
Administration and the European Union’s Green Deal also attach great importance to infrastructural development,
and thus open up significant opportunities for Prysmian Group. The Group’s strategy is thus strongly focused on
three main drivers:
•
ENERGY TRANSITION:
from fossil fuels to renewable resources for a low-carbon
future;
•
DIGITALISATION OF THE WORLD:
channelling and transporting the explosion of
big data;
•
ELECTRIFICATION OF SOCIETY:
enabling the application of electrical power
throughout the world.
Supply chain efficiency and flexibility, customer proximity, technological innovation, and ongoing knowledge and
skill development are the pillars of Prysmian’s strategy aimed at grasping these growth opportunities. In addition,
there are also other transversal factors such as the Group’s financial solidity and its ability to generate resources to
support investment in businesses with the greatest technological content and added value, as well as the continuous
improvement of product and production process sustainability.
PRYSMIAN GROUP FOR THE ENERGY TRANSITION
Our vision and our ambition lead us into a world of cleaner energy that is more intelligent and efficient. Our technology
enables us to play a key role in accelerating the energy transition, digitalisation and electrification. Here we explain why
and how we seek to be a game changer for tomorrow’s world..
Climate change is the main global challenge faced by humanity. 40%
1
of the world’s CO
2
emissions are generated by
energy production processes and a profound decarbonisation of the system is necessary. The collective response
has been a call for the expansion and integration of renewables. The European Union was one of the first economies
to make a formal commitment by establishing objectives for 2030, seeking to become carbon neutral by 2050
and highlighting the priority need for an integrated energy market that is both digitalised and interconnected
with renewable sources. The ambition of Prysmian Group is to be a game changer in this scenario, acting as an
enabler in accelerating the energy transition while, at the same time, creating business value. In fact, over the
past decade it has become more economic to invest in new sources of wind or solar energy than to build new
carbon-consuming plants. However, a solid and interconnected grid is essential for a complete transition to
renewables, so that energy can be constantly transmitted everywhere from one place to another: from where
it is produced (including offshore wind farms) to where it is consumed (communities and inhabited centres).
Power grids are the skeleton of an energy system dominated by renewables and, therefore, must be extended and
strengthened in response to a net-zero world founded largely on renewable electricity, the demand for which is
sure to increase with the progressive decarbonisation currently in progress.
1
Global energy-related CO
2
emissions by sector, International Energy Agency (IEA), March 2021.
32
Prysmian Group - Annual Report
2021
In addition to the existing distribution of renewable electricity to homes and businesses, the electrification of
building heating systems, the transportation sector and industrial processes will require considerable expansion
of the existing grid. For example, according to the IEA outlook, the electrification of air transportation could by
itself double the demand for electricity.
Prysmian supports the development of greener and more intelligent power grids, with innovative technologies
that cover long distances and the ocean depths while assuring high performance, reliability and sustainability:
•
OFFSHORE WIND SOLUTIONS
bring power from sea to shore;
•
SUBMARINE CABLE SYSTEMS
go deeper and further;
•
LAND INTERCONNECTORS
bring power to where it’s needed most.
PRYSMIAN GROUP FOR DIGITALISATION
The Prysmian Group seeks to be the go-to technology player, facilitating the production and transmission of cleaner,
more intelligent, more efficient and more competitive energy.
Just as cables for power grids are an essential element of the energy transition, 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 Group has established 3 main objectives for its role as an enabler of digitalisation:
INVESTING IN DIGITAL
TECHNOLOGY AND CULTURE
TO SUPPORT A #NEWLEADERSHIP
By re-positioning our company
as a digital player in the market
DIGITAL PLANKTON
Building next generation skills
nurturing customers
and people digital needs
LEVERAGING #DATAEXPLOITATION
TO IMPROVE PRODUCT
AND SERVICE QUALITY
By designing value roadmap
and measuring its impact
DO MORE WITH LESS
Optimize business performance
through digital solutions and automation
FROM PURE CABLE SUPPLIER
TO A #SOLUTIONPROVIDER
By scaling at full speed
to accelerate value delivery
DIGITAL PRODUCT
Sustain growth creating & integrating
software solutions at scale
33
Group Annual Report - DIRECTORS’ REPORT
THE ROLE OF CABLES
With a view to facilitating the ever more efficient development of sustainable and integrated grids, Prysmian Group
strives constantly to improve the performance of its terrestrial and submarine HV cables.
The five main research objectives of Prysmian Group are:
1.
Make cables that can be installed at ever greater depths and in any marine environment, even reaching a depth
of 3,000 metres, partly as a result of lighter reinforcements.
2.
Link countries that are far apart or cable the floating wind farms located far offshore, in windy areas that provide
a constant flow of electricity, using ever longer interconnections.
3.
Increase the intrinsic reliability of cables, limiting their dispersion, and equipping them with sensors capable
of monitoring the system.
4.
Increase cable productivity, contributing to a significant reduction in system installation costs. Higher
performance and more reliable cables help to optimise installation costs.
5.
Ensure ever greater levels of flexibility in the use of optical fibres without degrading the signal quality. The 5G
challenge requires the market to make an infrastructure effort almost without historical precedent.
CORPORATE GOVERNANCE
Effective and efficient, 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 system of corporate governance system in achieving strategic
objectives and creating long-term sustainable value, by ensuring governance that is effective in complying with
the legal and regulatory framework, efficient in terms of cost-effectiveness, 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
effective and transparent manner.
Once again in 2021, Prysmian continued to abide by Italy’s Corporate Governance for listed companies, approved by
the Corporate Governance Committee
1
. During the year ended 31 December 2021, the Board of Directors evaluated
a number of actions to comply with the new recommendations introduced in the latest edition of the Corporate
Governance Code, applicable from the first financial year beginning after 31 December 2020 and, therefore, with
related disclosures in the Corporate Governance Report to be published in 2022.
Further information about:
•
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;
•
any corporate governance practices actually applied by the Company over and above its obligations under
laws or regulations can be found in the “Report on Corporate Governance and Ownership Structure”, approved
by the Board of Directors and available in the Company/Governance section of the official website at
.
1
Italy’s Corporate Governance Code for Listed Companies - January 2020 edition - approved by the Corporate Governance Committee and promoted by Borsa Italiana
S.p.A., ABI, Ania, Assogestioni, Assonime and Confindustria.
34
Prysmian Group - Annual Report
2021
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 effective system of internal control and risk management, including decision-making
processes for both internal and external affairs.
An overview of the Company’s corporate governance structure at 31 December 2021 now follows, along with a
description of its main features.
GOVERNANCE STRUCTURE
BOARD OF DIRECTORS
Claudio De Conto
Chairman -Independent Director
Valerio Battista
-
CEO
Massimo Battaini
-
COO
Pier Francesco Facchini
-
CFO
Paolo Amato -
Independent
Jaska de Bakker
-
Independent
Francesco Gori
-
Independent
Ines Kolmsee
-
Independent
Maria Letizia Mariani
-
Independent
Tarak Mehta
- Independent
Annalisa Stupenengo
-
Independent
Mimi Kung
-
Independent
SHAREHOLDERS’
MEETING
STATUTORY
AUDITING COMPANY
EY S.p.A.
BOARD OF STATUTORY
AUDITORS
Pellegrino Libroia
-
(Chairman)
Paolo F. Lazzati
Laura Gualtieri
MONITIRING BOARD
(Italian Legislative
Decree no. 231/01)
Maria Luisa Mosconi
(Chairwoman)
Sergio Corbella
Alessandro Nespoli
LEAD INDEPENDENT
DIRECTOR
Maria Letizia Mariani
MANAGERS RESPONSIBLE
FOR PREPARING THE COMPANY’S
FINANCIAL REPORTS
Alessandro Brunetti
Stefano Invernici
COMPLIANCE & AUDIT OFFICER
Alessandro Nespoli
CONTROL AND RISK COMMITTEE
Francesco Gori
(Chairman)
Jaska de Bakker
Tarak Mehta
SUSTAINABILITY
COMMITTEE
Ines Kolmsee
Mimi Kung
Maria Letizia Mariani
(Chairwoman)
REMUNERATIONS AND
NOMINATIONS COMMITTEE
Paolo Amato
(Chairman)
Annalisa Stupenengo
Claudio De Conto
35
Group Annual Report - DIRECTORS’ REPORT
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 office until the date of the annual general meeting
called to approve the financial statements for the year ended 31 December 2023 - of whom nine are non-executive.
At 31 December 2021, seven of the Directors were 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 meeting. In
line with the recommendations of the Corporate Governance Code, the non-executive Directors are sufficiently
numerous and have enough authority to ensure that their judgement carries significant weight in Board decision-
making. Eight of the non-executive Directors are independent within the meaning of art. 148, par. 3 of Italian
Legislative Decree 58 dated 24 February 1998 (known as the Unified Finance Act) and of art. 2 recommendation
no. 7 of Italy’s 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 identified a Chief Executive Officer 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 carry out those activities 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 Officer, the Board of Statutory Auditors and the Managers responsible for
preparing company financial reports.
Completing the Prysmian corporate governance structure is a Remuneration and Nominations Committee, a
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 structure,
as required by art.123-bis of Italy’s 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 Company/Governance section of the official website at
.
36
Prysmian Group - Annual Report
2021
CORPORATE STRUCTURE
The companies consolidated on a line-by-line basis at 31 December 2021 are presented below:
Continues on next page
70.05%
Eksa Sp.z.o.o
23
50.998%
Auto Cables
Tunisie S.A.
99.97%
Prysmian Cables
and Systems
Tunisia S.A.
3
100%
SICABLE
Societé Ivoirienne
de Cables S.A.
100%
100%
95%
83.746%
67%
100%
59.74%
95%
100%
100%
100%
100%
100%
100%
99.9995%
99.95%
100%
99%
50%
100%
99.48%
100%
100%
94.543%
100%
99.999999%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.999985%
70.250172%
100%
100%
100%
100%
100%
100%
100%
77.7972%
100%
100%
100%
100%
100%
99.9983%
Prysmian
PowerLink S.r.l.
Prysmian
PowerLink
Saudi LLC
Prysmian
Electronics S.r.l.
Comergy Ltd.
Prysmian
Cabos e Sistemas
do Brasil S.A.
Prysmian Energia
Cables y Sistemas
de Argentina S.A.
Prysmian
Consultora
Conductores e
Instalaciones SAIC
Prysmian Cable
Systems Pte Ltd.
Prysmian Cables
Asia-Pacific Pte Ltd.
Prysmian Re
Company Designated
Activity Company
P.T. Prysmian
Cables Indonesia
Prysmian Cabluri
Si Sisteme S.A.
Prysmian
Kablo S.r.o.
Prysmian
OEKW GmbH
Limited Liability
Company Prysmian
RUS
Turk Prysmian
Kablo Ve
Sistemleri A.S.
Prysmian Tianjin
Cables Co. Ltd.
Prysmian
Wuxi Cable
Company Ltd.
Prysmian
(China) Investment
Company Ltd.
Prysmian
Hong Kong
Holding Ltd.
Prysmian Cable
(Shanghai) Co. Ltd.
Prysmian
Technology
Jiangsu Co. Ltd.
Prysmian
MKM Magyar
Kabel Muvek KFT
Prysmian Cables
Chile S.p.A.
Jaguar
Communication
Consultancy Services
Private Ltd.
Prysmian
Australia Pty Ltd.
Prysmian
New Zealand Ltd.
Prysmian (French)
Holdings S.A.S.
Prysmian
Cables et Systemes
France SAS
Prysmian Group
Finland OY
Draka NK Cables
(Asia) Pte Ltd.
NK Mexico
Holdings S.A. de CV
Prysmian Group
Baltics AS
Prysmian Group
Norge AS
Prysmian
Cables and Systems
(US) INC.
Prysmian
Cables y Sistemas
de Mexico
S. De R.L.De C.V.
Fibre Ottiche
Sud - FOS S.r.l.
Prysmian
Treasury S.r.l.
Prysmian
Pension Scheme
Trustee Ltd.
Prysmian
Cavi e Sistemi
Italia S.r.l.
Prysmian
Cavi e Sistemi S.r.l.
Draka
Holding B.V.
Omnisens do Brasil
sercicos de solucoes
de monitoracao
em fibra otica Ltda
Omnisens S.A.
Grupo General
Cable Sistemas, S.L.
(Spain)
Draka Cableteq
Asia Pacific
Holding Pte Ltd.
Grupo General
Cable Sistemas, S.L.
Suzhou Draka
Cable Co. Ltd.
MCI-Draka
Cable Co. Ltd.
Sindutch Cable
Manufacturer
Sdn Bhd
Singapore Cables
Manufacturers
Pte Ltd.
Cable Supply and
Consulting
Company Pte Ltd.
Draka (Malaysia)
Sdn Bhd
PRYSMIAN S.P.A.
99.9983%
99.996%
100%
100%
100%
99.9999975%
100%
100%
100%
100%
100%
Draka Mexico
Holdings
S.A. de CV
Draka Durango
S. De R.L. de C.V.
Prysmian Group
North Europe AB
Prysmian Group
Sverige AB
Draka
France S.A.S.
Draka
Philippines Inc.
Draka Comteq
France S.A.S.
Draka
Fileca S.A.S.
P.O.R. S.A.S.
Draka
Paricable S.A.S
Prysmian Group
Denmark A/S
16
19
4
1
2
5
7
6
20
8
9
18
10
10
21
37
Group Annual Report - DIRECTORS’ REPORT
Continues from previous page
Continues on next page
Wholly owned
Third-party ownership
Italy
UK - Ireland
France
Netherlands
Nordics
Germany
Spain
Danubian Area
Switzerland
Oceania
ASEAN
China
Russia
South America
North America
Turkey
Africa
Luxembourg
Oman
1.
Prysmian Cables & Systems Ltd. 50%
2.
Prysmian Cavi e Sistemi S.r.l. 0.52%
3.
Prysmian (French) Holdings S.A.S. 0.005%
Prysmian Cavi and Sistemi S.r.l. 0.005%
4.
Prysmian Cavi and Sistemi S.r.l. 5%
5.
Prysmian Cavi and Sistemi S.r.l. 0.0005%
6.
Prysmian Cavi and Sistemi S.r.l. 1%
7.
Prysmian S.p.A. 0.005%
8.
Prysmian S.p.A. 0.000001%
9.
Draka Comteq B.V. 2.27%
Draka Holding B.V. 19.9301%
10.
Draka Comteq B.V. 0.000002%
11.
Draka (Malaysia) Sdn Bhd 0.000023%,
Sindutch Cable Manufacturer Sdn Bhd 0.000023%
Singapore Cables Manufacturers Pte Ltd 0.000023%
12.
Draka Kabel B.V. 1.48%
13.
Prysmian Netherlands B.V. 1%
14.
Prysmian S.p.A. 6.25%
15.
Prysmian Netherlands B.V. 50.10%
16.
Prysmian S.p.A. 0.026882%
Draka Holding B.V. 1.129032%
Draka Comteq B.V. 4.301075%
17.
Prysmian Cabos and Sistemas do Brasil S.A. 50.647681%
18.
Draka Mexico Holdings S.A. de CV 0.0017%
19.
Prysmian Cabos and Sistemas do Brasil S.A. 0.11%
Prysmian Consultora Conductores e Instalaciones SAIC 40.01%
20.
Turk Prysmian Kablo Ve Sistemleri A.S 0.4614%
21.
Draka Holding B.V. 0.004%
22.
Prysmian Netherlands B.V. 1.00%
23.
Prysmian Cavi e Sistemi S.r.l. 29.95%
100%
General Cable
Celcat, Energia e
Telecomunicaçoes
S.A. (Portugal)
99.80%
General Cable Condel,
Cabos de Energia e
Telecomunicaçoes
S.A. (Angola)
100%
General Cable
Investments,
SGPS S.A.
(Madeira)
100%
100%
100%
100%
63.84%
49.352319%
100%
100%
100%
100%
100%
100%
100%
100%
51.17%
100%
10%
90%
49.9%
100%
100%
100%
100%
98.52%
100%
93.75%
100%
100%
100%
99%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.99%
100%
Draka Comteq
Germany GmbH
& Co. KG
Draka Comteq
Germany
Verwaltungs
GmbH
Draka Comteq
Fibre B.V.
Draka Comteq
UK Ltd.
Prysmian
Cables & Systems
Ltd.
Cable
Makers Properties
and Services Ltd.
Draka Comteq
Cabos Brasil S.A.
Prysmian
Netherlands B.V.
Prysmian Cables
(2000) Ltd.
Draka Kabel B.V.
Donne
Draad B.V.
99%
NKF Vastgoed
III B.V.
Prysmian
Construction
Company Ltd.
Prysmian Telecom
Cables and Systems
UK Ltd.
Draka Deutschland
Zweite
Beteiligungs
GmbH
NKF Holding
(Deutschland)
GmbH i.L.
Oman Cables
Industry (S.A.O.G.)
Draka Deutschland
Erste Beteiligungs
GmbH
Draka Deutschland
GmbH
Draka Comteq
Berlin GmbH
& Co. KG
Associated
Cables PVT Ltd.
Oman Aluminium
Processing
Industries (SPC)
Hohn GmbH
Kaiser Kabel
GmbH
Draka
Belgium N.V.
Draka Service
GmbH
Prysmian Kabel
Und Systeme
GmbH
Draka Deutschland
Verwaltungs GmbH
Draka Kabely S.r.o.
Prysmian
Unterstuetzun-
gseinrichtung
Lynen GmbH
NKF Vastgoed I
B.V.
Prysmian Cables
Spain S.A.
(Sociedad
Unipersonal)
Draka Holding, S.L.
(Sociedad
Unipersonal)
Draka
Comteq B.V.
Prysmian
Netherlands
Holding B.V.
Prysmian UK
Group Ltd.
Draka U.K. Ltd.
Prysmian
Powerlink
Services Ltd.
Silec Cable, SAS
(France)
Norddeutsche
Seekabelwerke
GmbH
(Germany)
General Cable
Nordic A/S
(Norway)
NSW Technology
Limited
(Scotland, UK)
17
22
15
12
14
13
38
Prysmian Group - Annual Report
2021
Continues on next page
Continues on next page
Continues from previous page
100%
Prysmian
Cables and Systems
Canada Ltd.
100%
100%
100%
100%
75%
100%
60%
100%
Prysmian
Construction
Services Inc
Prysmian Cables
and Systems
USA LLC
Prysmian Group
Speciality
Cables, LLC
Draka Transport
USA, LLC
Draka Elevator
Products, Inc.
Draka Elevator
Products
Incorporated
Nantong Haixum
Draka Elevator
Products Co. Ltd.
Nantong Zhongyao
Draka Elevator
Products Co. Ltd.
100%
100%
30.7%
100%
100%
100%
100%
100%
80.41734%
99.998%
99.8%
95.5%
100%
69.3%
General Cable
Services Europe
Limited
(England)
Prysmian
Cables and Systems
(US) INC.
100%
100%
99.995%
100%
General Cable
Holdings (UK)
Limited
(England)
General Cable
Trinidad Limited
(Trinidad)
General Cable
Caribbean S.r.l.
(Dominican
Republic)
General Cable
Industries, Inc.
(US-Delaware)
Prestolite Wire
(Shanghai)
Co. Ltd. (China)
National Cables
(Pty) Ltd
(South Africa)
Phelps Dodge
Enfield Corporation
(US-Delaware)
Phelps Dodge
National Cables
Corporation
(US-Delaware)
General Cable
Canada
Holdings LLC
(US-Delaware)
Prestolite de
Mexico, S.A. de CV
(Mexico)
General Cable
Technologies
Corporation
(US-Delaware)
General Cable de
Mexico S.A. de CV
(Mexico)
Servicios
Latinoamericanos
GC S.A. de CV
(Mexico)
General de Cable
de Mexico del
Norte, S.A. de CV
(Mexico)
General Cable
Holdings
Netherlands CV
(Netherlands)
GK Technologies,
Inc.
(US-New Jersey)
100%
General Cable
Company Ltd.
(Canada)
78.08%
Alambres y Cables
de Panama S.A.
(Panama)
100%
EHC Global Inc.
100%
EHC Spain
and Portugal, S.L.
100%
Escalator Handrail
(UK) Ltd.
100%
EHC Germany
GmbH
100%
EHC France
s.a.r.l.
100%
Elator Inc.
99.9997%
EHC Canada Inc.
100%
EHC Turkey
Asansör ve Yürüyen
Merdiven Sanayi
Limited Şirketi
100%
EHC Engineered
Polymer
(Shanghai)
Co. Ltd.
98.9%
EHC Brazil Ltda.
100%
EHC USA Inc.
100%
EHC
Management
Company Inc.
100%
EHC Japan K.K.
100%
EHC Technology
Development
(Shanghai)
Co. Ltd.
100%
EHC Escalator
Handrail
(Shanghai)
Co. Ltd.
100%
EHC
Lift Components
(Shanghai)
Co. Ltd.
100%
General Cable
Corporation
5
8
10
9
6
7
1
12
11
39
Group Annual Report - DIRECTORS’ REPORT
Continues from previous page
Wholly owned
Third-party ownership
Italy
UK - Ireland
France
Netherlands
Nordics
Germany
Spain
Portugal
Oceania
ASEAN
China
Japan
South America
North America
Turkey
Africa
1.
GC Latin America Holdings, S.L. 21.92%
2.
GC Latin America Holdings, S.L. 40.61%
3.
General Cable Overseas Holdings, LLC 0.6510%
4.
GK Technologies, Incorporated 0.04%
5.
General Cable Industries, Inc. 0.005%
6.
General Cable Industries, Inc. (US-Delaware) 0.2%
7.
GC Global Holdings, Inc. (US-Delaware) 1%
Phelps Dodge National Cables Corporation
(USDelaware) 3.5%
8.
GK Technologies, Incorporated 0.20%
9.
General Cable Technologies Corporation
(US-Delaware) 0.002%
10.
General Cable Technologies Corporation 0.00000015%
GK Technologies, Incorporated 0.00000015%
Conducen, S.R.L. 19.58266361%
11.
Prysmian Cables and Systems Canada Ltd. 0.0003%
12.
EHC Canada Inc. 1.1%
100%
GC Global
Holdings, Inc.
(US-Delaware)
59.39%
100%
99%
100%
99.95%
99.998%
67.14%
100%
99.96%
99.99999%
99.80%
100%
100%
99.349%
Electroconductores
de Honduras
S.A. de CV
(Honduras)
Conducen, SRL
(Costa Rica)
Proveedora de
Cables y Alambres
PDCA Guatemala,
S.A. (Guatemala)
Alcap Comercial S.A.
(Panama)
Conducen Phelps Dodge
Centroamerica-El
Salvador, S.A. de CV
(El Salvador)
PDIC Mexico,
S.A. de CV
(Mexico)
Cables Electricos
Ecuatorianos C.A.
CABLEC (Ecuador)
GC Latin America
Holding, S.L.
(Spain)
Productora de Cables
Procables S.A.S.
(Colombia)
General Cable
Peru S.A.C.
(Peru)
Cobre Cerrillos S.A.
(Chile)
General Cable
Phoenix South
Africa Pty. Ltd.
(South Africa)
General Cable
Overseas Holdings,
LLC (US-Delaware)
General Cable
Holdings (Spain),
S.L. (Spain)
2
4
3
40
Prysmian Group - Annual Report
2021
ORGANIZATIONAL CHART OF THE GROUP*
Strategic appointments for success.
Headed by Valerio Battista, Prysmian Group is characterised by a dedication to open and transparent business
practice, enshrined in the Code of Ethics and spearheaded by key experts who inspire market confidence.
GROUP
FUNCTIONS
G. Sofia
S. Siripurapu
Operations
Research &
Development
BUSINESS
OPERATIONS
REGIONS
Cent.East
Europe
3
North
America
4
Latam
5
MEAT
6
China
Osea
7
South
Europe
2
North
Europe
1
UK
F. Persson
A. Pirondini
C. Farisè
M. Bavaresco
E. Aydogdu
L. Tardif
J. M. Arata
M. Del Brenna
A. C. Quiroz
Projects
DIVISIONS
Energy
Telecom
H. Ozmen
P. Vanhille
J. Mogollon
Finance Admin
& Control & It
Hr &
Organization
Corporate
Affairs
Corporate
Strategy & Dev.
Innovation
Digital
Innovation
Sustainability
Communication
& Public Affairs
P.F. Facchini
F. Rutschmann
J. Zirulia
I. Longhi
L. Caruso
S. Siripurapu
S. Brandinali
M.C. Bifulco
CEO
V. Battista
BOARD
OF DIRECTORS
Audit and
Compliance
A. Nespoli
Chief
Operating Officer
M. Battaini
Also reporting
to CFO as IR
Also reporting
to CFO as CIO
7
*
The organisation chart presented reflects the organisational structure in January 2022.
1
NORTH EUROPE: Estonia, Finland, Russia, Scandia (Norway, Denmark and Sweden), Netherlands.
2
SOUTH EUROPE: Belgium, France, Italy, Portugal, Spain, Tunisia, Côte d’Ivoire and Angola.
3
CENTRAL EAST EUROPE: Austria, Czech Republic, Hungary, Germany, Romania, Slovak Republic.
4
NORTH AMERICA: Canada, USA.
5
LATAM: Argentina, Brazil, Central America, Chile, Mexico, Peru, Colombia, Ecuador.
6
MEAT: Oman, Turkey, India.
7
OSEA: Australia, New Zeland, Malaysia, Indonesia, Philippines, Singapore, Thailand.
41
Group Annual Report - DIRECTORS’ REPORT
TOP MANAGER
Directors
VALERIO BATTISTA
Managing Director and Group Chief Executive Officer.
Born in Arezzo on 8 January 1957. With a degree in Mechanical Engineering from the
University of Florence, Valerio Battista is a manager with extensive skills and experience
built up in the industrial sector over 30 years, first with the Pirelli Group and then with the
Prysmian Group, where he took the helm in 2005. His earlier roles within the Pirelli Group
gave him increasing responsibilities, including the restructuring and reorganisation of
Pirelli Cables in the period 2002-2004. As a result, the division became one of the sector’s
most profitable and competitive businesses. He then played a key role in the 2005 creation
of the Prysmian Group, which obtained a stock exchange listing in 2007. The Group of which
he is currently CEO is a world leader in the supply of power and telecom cables, with about
29,000 employees and 108 plants worldwide. He was the Chairman of Europacable from
June 2014 to March 2019 and has been the Lead Independent Director at Brembo S.p.A.
since April 2017. Valerio Battista became an Executive Director of the Company in December
2005. With reference to his current mandate, he was elected on 28 April 2021 from the list
presented by the Board of Directors, which obtained the majority of the votes cast at the
Shareholders’ Meeting.
MASSIMO BATTAINI
Executive Director and Chief Operating Officer Prysmian Group.
Born in Varese on 1 August 1961. Graduated in Mechanical Engineering from Politecnico in
Milan has an MBA from SDA Bocconi. His career in the Pirelli Group began in 1987 where,
over a period of 18 years, he held various positions in R&D and Operations. After leading
the Business Development department from 2000 to 2002, with responsibility for the
Tyres, Power Cables and Telecom Cables businesses, he was appointed as the Pirelli Group
Operations Director for Power Cables and Telecom Cables. In 2005 he was appointed
CEO of Prysmian UK and in January 2011 Chief Operating Officer of the Group, a position
he held until 2014 when he assumed the role of Business Energy Project Manager and
President and CEO of Prysmian PowerLink Srl, a position held until the month of June
2018. From June 2018 to February 2021 he held the position of CEO of the North America
region, before taking on the role of Chief Operating Officer of the Prysmian Group. He has
been a member of the Company’s Board of Directors since February 2014. With reference
to the current mandate, he was elected on 28 April 2021 from the list presented by the
Board of Directors, which obtained the majority of votes at the Shareholders’ Meeting.
PIER FRANCESCO FACCHINI
Executive Director and Chief Financial Officer.
Born in Lugo (RA) on 4 August 1967. He has been Prysmian Group CFO since January 2007.
Graduated from Milan’s Bocconi University in 1991 with a degree in Business Economics.
His initial work experience was gained at Nestlè Italia, where he held various roles in the
Administration and Finance area from 1991 to 1995. Between 1995 and 2001 he worked for
several companies within the Panalpina group, including as Regional Financial Controller
for the Asia and South Pacific area and as Administration, Finance and Control Manager
at Panalpina Korea (Seoul) and at Panalpina Italia Trasporti Internazionali S.p.A. In April
2001 he become the Finance and Control Director of the Consumer Services BU at Fiat Auto,
which he left in 2003 on appointment as the CFO of Benetton Group, where he stayed until
November 2006. Facchini joined the Board of Directors of the Company in February 2007.
With reference to his current mandate, he was re-elected on 28 April 2021 from the list
presented by the Board of Directors, which obtained the majority of the votes cast at the
Shareholders’ Meeting.
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Prysmian Group - Annual Report
2021
Senior Manager
JUAN MOGOLLON
Executive Vice President Energy Division.
Before joining Prysmian, He spent 2 years at General Cable as Senior Vice President
of General Cable Latin America. Prior to joining General Cable, Mogollon served as
President of Emerging Markets at Tyco International, and President of Security Services
for United Technology in Europe. Mogollon started his career at General Electric where
he held various global leadership positions, including Global Commercial Director for
GE Capital Equipment Services; Commercial Director for GE Consumer & Industrial in
Europe; General Manager for Global Services of GE Healthcare; and Managing Director
for GE Medical Systems Brazil. He has a bachelor’s degree in Nuclear Engineering from
the University of Arizona and a master’s degree in Mechanical Engineering from the
University of California at Berkeley.
PHILIPPE VANHILLE
Executive Vice President Telecom.
Philippe Vanhille has been EVP Telecom Division since May 2013. After graduating in 1989
with a degree in Mechanical Engineering from Lyon University (France), he commenced
his professional career as a Research Engineer, working on the development of Renault’s
Formula 1 programme, before moving to the cables sector in 1991 with Alcatel Cable.
Over a period of two decades he held various Operations and General Management
positions in the cables industry, with Alcatel and Draka, and then in copper and optical
fibre cables for the power and telecom sectors. At the time of the Prysmian-Draka merger
he was responsible for Draka’s Optical Fibre BU and then held the same position within
the Prysmian Group until his appointment as EVP Telecom Division.
HAKAN OZMEN
Executive Vice President Projects.
Hakan Ozmen has been Executive Vice President Projects Business and Chief Executive
Officer at Prysmian Powerlink Srl since June 2018. After graduating as Industrial
Engineer, he began his career in 1993 as Internal Audit Manager and Corporate Secretary
at Siemens AS in Istanbul. In August 1999, Hakan achieved an MBA at Yeditepe University
in Istanbul. He joined Pirelli SpA in September 1999, whose activities were Internal Audit
Management for the region EMEA and completed audits in Germany, Italy, Finland, UK,
Turkey, Romania and Check Republic. In January 2001, Hakan became Chief Financial
Officer & Board Member at Turk Pirelli in Istanbul and later becoming President. After
holding the position of Global Director of Prysmian Telecom at Prysmian Cavi & Sistemi
for two years, he was President & Chief Executive Officer of North America at Prysmian
Group from 2011 to May 2018.
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Group Annual Report - DIRECTORS’ REPORT
Prysmian and the financial markets
OWNERSHIP STRUCTURE
Prysmian Group has been a public company in all respects for many years: its free float is equal to 100% of capital,
of which over 80% is held by institutional investors..
LThe 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 Company,
control of which was acquired in July 2005, by placing the remaining 54% of the shares with institutional and
selected investors in several successive stages:
1.
approx. 22% in November 2007,
2.
approx. 14% in November 2009,
3.
approx. 17% in March 2010.
Valerio Battista, Prysmian’s Chief Executive Officer, announced on occasion 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%, which
he has raised to approximately 1.5% during the course of subsequent years.
At 31 December 2021, the Company’s free float was equal to 100% of the outstanding shares and significant
shareholdings (in excess of 3%) accounted for approximately 28% of total share capital, meaning there are 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.
As at 31 December 2021, the share capital of Prysmian S.p.A. amounts 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 that date is indicated below.
SHARE OWNERSHIP BY TYPE AND SIGNIFICANT SHAREHOLDERS
8.3% Retail
1.8% Treasury shares
3.0% Employees + Management
5.3% Other*
7.4% BlackRock, Inc.
4.7% UBS AG
4.5% Crédit Agricole S.A.
4.1% T. Rowe Price Group, Inc.
3.7% AXA S.A.
3.2% Sun Life Financial, Inc.
2.9% The Vanguard Group, Inc.
2.7% Hardman Johnston Global Advisors LLC
2.2% Schroders PLC
64.6% Other
81.6% Institutional Investors
(*) Mainly comprises shares held by non-institutional investors and by third-party holders of shares for trading purposes.
Source: Nasdaq, December 2021
44
Prysmian Group - Annual Report
2021
Source: Nasdaq, December 2021
INSTITUTIONAL INVESTORS BY GEOGRAPHICAL AREA
30% US
27% UK
12% France
7% Italy
4% Sweden
16% RoE
4% RoW
Source: Nasdaq, December 2021
INSTITUTIONAL INVESTORS BY INVESTMENT STYLE
36% Growth
19% GARP
17% Value
16% Index
5% Hedge Fund
7% Other
72% Growth+GARP+Value
Source: Nasdaq, December 2021
ESG INSTITUTIONAL INVESTORS
44% ESG-Focused
56% Others investors
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Group Annual Report - DIRECTORS’ REPORT
The geographical ownership structure confirms the predominant and essentially stable presence of the United
States, with 30% of capital held by institutional investors, followed by the United Kingdom with 27%, up from about
25% in the prior year. The weightings of France and Northern Europe, where investor awareness about ESG matters
is generally greater, are also continuing to increase. At the end of 2021, France and Northern Europe contribute
about 12% and 8% of all institutional investors, compared with 11% and 7% respectively in the prior year. In the
meantime, the weighting of Italy has eased from 8% to 7%. The combined weighting of the other European countries
is about 12%, down from 14% in the prior year. Among the main countries, Germany and Ireland have increased
their weightings, while those of the Netherlands, Spain and Switzerland have decreased. There has also been a
slight decline in the proportion of Asian investors (principally Japan and Hong Kong).
Overall, about 72% of capital is held by investment funds with Value, Growth or GARP (Growth at Reasonable Price)
strategies. They anticipate the creation of value over the medium-long term and consider the current share price
to be undervalued given the prospects offered by the fundamentals of the Company. With respect to 2020, there
has been a slight increase in the number of shareholders adopting an Index investment (or passive) strategy, based
on the main stock indices, while the weighting of the Hedge Fund component - with a shorter time horizon - has
increased slightly to 5% from 4% in the prior year.
ESG investors have also established an important and growing presence within the ownership structure of Prysmian,
focusing their investment strategies on various Environmental, Social and Governance matters. Indeed, their
weighting within the Prysmian ownership structure has increased substantially over the past 3 years, rising from
about 13% in 2019 to 35% in 2020 and over 44% now. According to the latest Nasdaq data, this percentage is
well above average for both the industrial sector and the Italian market, which is around 30% of all institutional
investors. In absolute terms, Prysmian currently has 185 ESG investors, up strongly from 138 in the prior year and
55 just three years ago.
The increase in these investors within the ownership structure reflects not only the general growth of ESG
investment, due to greater investor awareness about environmental, social and governance matters, but also
market recognition of Prysmian’s strategy and firm commitment to the steady improvement of both the ESG
and financial aspects of its performance. In addition, the greater attention paid to ESG investors and constant
engagement with them by the Company and top management - with various organised activities, the Sustainability
Day and dedicated meetings - have contributed to the further increase in their weighting within the ownership
structure of the Company.
SHAREHOLDERS’ MEETING
In total, 65.8% of share capital was represented at the Annual General Meeting, with 1,819 shareholders present by
proxy.
On 28 April 2021 the Shareholders’ Meeting of Prysmian S.p.A., held in first and only calling, discussed and
resolved on several items on the agenda, including approval of the 2020 financial statements, allocation of the
profits for the year and the distribution of dividends, renewal of the administrative body with the appointment
of directors and the fixing of their remuneration, authorisation for the purchase and use of treasury shares,
extension of the share ownership plan in favour of employees, approval of the remuneration policy, consultation
on the report on remuneration paid and authorisation for the convertibility of an equity-linked bond. The
Meeting, attended by proxy by 1,819 shareholders representing 65.8% of share capital, approved every item
on the agenda by large majorities.
The Annual General Meeting also approved the declaration of a dividend of Euro 0.50 per share. The dividend was
paid on 26 May 2020, involving a total pay-out of approximately Euro 132 million.
46
Prysmian Group - Annual Report
2021
FINANCIAL CALENDAR
1 March 2022
Approval of the draft financial statements and consolidated financial statements as of 31 December 2021
12 April 2022
Shareholders’ Meeting to approve the Annual Report as of 31 December 2021
12 May 2022
Approval of the quarterly financial report as of 31 March 2022
28 July 2022
Approval of the half-year financial report as of 30 June 2022
10 November 2022
Approval of the quarterly financial report as of 30 September 2022
0%
10%
20%
30%
40%
50%
60%
70%
80%
Participation of the main shareholder in the Shareholders’ Meeting
Capital represented in the Shareholders’ Meeting
2015
2014
2013
2012
2011
Apr
2011
Gen
2010
2009
2008
2021
2020
2019
2018
2017
2016
Public Company (no controlling shareholders)
SHAREHOLDERS’ MEETING: REPRESENTED CAPITAL
0
500
1000
1500
2000
Number of shareholders attending the meeting
2016
2015
2014
2013
2012
2011
2011
2010
2009
2008
2021
2020
2019
2018
2017
2016
Public Company (no controlling shareholders)
SHAREHOLDERS’ MEETING: NUMBER OF PARTICIPANTS PRESENT OR REPRESENTED
47
Group Annual Report - DIRECTORS’ REPORT
FINANCIAL MARKET PERFORMANCE
2021
was a good year for financial markets, buoyed by accommodative central bank policies and sweeping economic
support packages adopted in the major global economic areas. On the whole, developed country markets performed
better than emerging ones.
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 selected basket of listed companies that demonstrate excellent Environmental,
Social and Governance (ESG) practice. Since 2019, Prysmian Group has also been included in the Dow Jones
Sustainability World index, one of the most important international sustainability indexes for tracking ESG
performance.
The main European stock indexes performed well in 2021, buoyed by accommodative central bank policies and
the sweeping economic support packages adopted in the various countries. The main French index (CAC 40) was
the top performer at +28.9%, followed by the Italian index (FTSE MIB) at +23.0%. The Spanish index (IBEX 35)
saw the smallest gains at +7.9%, while the German index (DAX) and the UK index (FTSE 100) had fairly similar
performances of +15.8% and +14.3% respectively. Overall, the Stoxx Europe 600 gained 22.2%, with banking,
technology, media and industrial goods among the best performers. At the opposite end of the scale, with a
less brilliant but still positive performance, were the telecommunications, utilities and travel & entertainment
sectors. US equity markets also performed well in 2021, with all three major indexes reporting substantial gains:
S&P 500 +26.9%; Nasdaq Composite +21.4% and Dow Jones Industrial +18.7%.
Emerging country equity markets turned in generally weaker performances than those in developed countries.
The Brazilian index (Bovespa) lost 11.9%, while in China, the Shanghai Composite index added 4.8% and the DJ
Shenzen 7.6%. In Hong Kong, the Hang Seng index recorded one of the worst performances among the major
world stock indexes, at -14.1%.
The Prysmian stock gained 13.9% in 2021, closing the year at Euro 33.11 per share versus Euro 29.08 at the end of
2020. This performance followed in the wake of gains of 27.4% in 2019 and 35.3% in 2020, taking total growth in
the past three years to +96.3%. Over the same period (i.e. the last three years), Prysmian not only outperformed
the Italian market, whose FTSE MIB index climbed by +49.2%, but also that of the European benchmark sector
(Capital Goods Industrial Services), whose STOXX Europe 600/Industrial Goods & Services index grew by +75.0%.
The average share price was Euro 29.87 in 2021, up from Euro 21.81 in 2020. Including dividend pay-outs, the Total
Shareholder Return (TSR) offered by the Prysmian stock was +15.9% in 2021 and +196% since its original listing
date. Excluding the contribution of dividends and so just considering the change in price, the performance was
+13.9% in 2021 and +115.5% since the listing date.
Looking at the share price performance over the four quarters of 2021, this was particularly strong in the
second and fourth quarters, also supported by the Group’s excellent order intake for its Projects segment, with
the award of several major contracts in the US, such as the SOO Green HVDC Link, a mega underground power
transmission line worth approximately USD 900 million, cable systems for the following three offshore wind
farms: Coastal Virginia Offshore Wind Farm (Euro 630 million), Commonwealth Wind (USD 580 million) and
Park Wind City (USD 310 million), as well as the cable system for the Tyrrhenian Link in Italy, a new electricity
corridor in the Mediterranean, for over Euro 1.7 billion. Total contract awards during 2021 amounted to around
Euro 4.9 billion.
The Group’s solidity and expectations of growth in its key markets, partly thanks to Energy Transition and
Digitalisation megatrends, have enabled the Prysmian stock to retain its strong market appeal, as confirmed
by financial analyst recommendations, of which at the close of the year 65% were “Buy” and 24% “Hold”.
48
Prysmian Group - Annual Report
2021
0. 0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
16.0
18.0
20.0
0
3
6
9
12
15
18
21
24
27
30
33
36
39
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
May-20
Nov-20
May-21
Nov-21
Volume - Mln shares
Price - Euro
Volume
Prysmian
0
50
100
150
200
250
EURO STOXX 600 INDUSTRIAL
FTSE MIB
Prysmian
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
May-20
Nov-20
May-21
Nov-21
PERFORMANCE OF PRYSMIAN STOCK SINCE IPO
PERFORMANCE OF PRYSMIAN STOCK
TOT
AL SHAREHOLDER RETURN
+15.90
%
IN 2021
SINCE ITS DATE OF LISTING
+196.0
%
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Group Annual Report - DIRECTORS’ REPORT
During 2021, the stock’s liquidity recorded average daily trading volumes of approximately 0.9 million shares, with
an average daily turnover of Euro 25 million.
PRYSMIAN: KEY DATA
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
Price at
31 December (Euro)
33.11
29.08
21.49
16.87
27.19
24.40
20.26
15.15
18.71
15.01
Change
in year
13.9%
35.3%
27.4%
-38.0%
11.4%
20.4%
33.7%
-19.0%
24.7%
56.4%
Average price
(Euro)
29.87
21.81
18.55
22.17
26.31
20.93
19.10
16.38
16.68
13.00
Maximum price
(Euro)
35.05
29.08
22.06
28.54
30.00
24.42
22.23
19.54
19.30
15.43
Minimum price
(Euro)
25.34
13.96
14.93
14.97
23.34
16.45
14.43
12.78
14.03
9.77
Capitalisation
at year end
(millions of Euro)
8,878
7,798
5,762
4,523
5,913
5,288
4,319
3,283
4,015
3,22
0
Average
capitalisation
in year
(millions of Euro)
8,009
5,849
4,975
5,361
5,701
4,536
4,140
3,521
3,578
2,78
7
Ave no.
of shares traded
(millions)
0.9
1.3
1.7
1.3
1.0
1.0
1.4
1.4
1.2
1.5
Average
amount traded
(millions of Euro)
25
27
31
28
26
20
27
23
20
20
No. of shares
at 31 December
268,144,246 268,144,246 268,144,246 268,144,246
217,482,754
216,720,922
216,720,922
216,712,397
214,591,710 214,508,781
Source: based on Nasdaq data.
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 directed towards the highest standards of accuracy, clarity and transparency. Corporate
activities and procedures are designed to provide the market with credible information about the business, with
a view to boosting confidence in the Company and facilitating a long-term approach to investment in our shares.
Every effort is made to avoid biased disclosures and ensure that all current and potential investors receive the same
information, so that balanced investment decisions can be made.
Upon publishing its quarterly data, Prysmian organises conference calls with institutional investors and financial
analysts. In addition, the Company promptly informs existing and potential shareholders about any action or
decision that could have a material impact on their investment decisions. Relations with the financial market
were continuous and intense during 2021, with more than 500 conference calls and one-on-one or group sessions,
50
Prysmian Group - Annual Report
2021
which were essentially all held as virtual meetings due to the Covid-19 pandemic. The Company also participated
in numerous conferences organised at sector level by leading international brokers, as well as in a number of topic-
specific road shows (e.g. Energy Transition, Telecom Developments, Innovation).
In addition, the ever increasing attention paid by ESG investors to environmental, social and governance matters
was further confirmed by their growing attendance at meetings and conferences held specifically for them.
The coverage of Prysmian shares by analysts remains very high, with wide geographical diversification. A total of 19
independent analysts regularly cover the Prysmian stock: AlphaValue, Banca Akros, Bestinver, Barclays Capital, BofA
Merrill Lynch, Citi, Credit Suisse, Equita, Exane BNP Paribas, Goldman Sachs, HSBC, Intermonte, Intesa Sanpaolo,
JP Morgan, Kepler Cheuvreux, Mediobanca, Morgan Stanley, Societe Generale and Stifel.
The Investor Relations function has maintained constant contacts with institutional investors, not least via the
website
, which includes the recordings of conference calls and presentations to the
financial community, corporate documentation, press releases and all other information relating to the Group,
in both Italian and English. Other available information includes the financial calendar, documents relating to
shareholders’ meetings, the Code of Ethics and details of analysts who cover the stock, as well as specific sections
about Corporate Governance, Risk Factors and Share Performance.
CONTACT DETAILS FOR THE INVESTOR RELATIONS OFFICE:
Maria Cristina Bifulco
Chief Sustainability Officer And Group Investor Relations Director
mariacristina.bifulco@prysmiangroup.com
Investor Relations Office
investor.relations@prysmiangroup.com
51
Group Annual Report - DIRECTORS’ REPORT
Business environment
MACROECONOMIC ENVIRONMENT
During 2021, there was a substantial improvement in the global macroeconomic environment thanks to fiscal
and monetary support, particularly in some advanced economies, and to the easing of restrictions as vaccination
campaigns forged ahead.
During 2021, the global economy enjoyed a major recovery following the easing of restrictions as vaccination
campaigns gathered pace. This recovery was also assisted by national plans to support the development of
infrastructure projects, energy transition and digitalisation. The strong upturn in economic activity was
accompanied by higher inflation than anticipated, mainly due to soaring energy and commodity prices and
continued disruptions in supply chains, particularly in many advanced economies including the United States.
Displaying confidence in the economic recovery, towards the end of 2021 a number of central banks began to
ease some of the stimulus previously put in place to cope with the pandemic-induced crisis.
According to its latest estimates, the International Monetary Fund reckons the global economy grew by 5.9%
in 2021, after contracting by 3.1% in 2020. Geographically, the United States performed best, with its economy
re-emerging from recession in a matter of months and GDP recovering to pre-covid levels by mid-2021. After
contracting by 3.4% in 2020, the US economy is estimated to have grown by 5.6% in 2021, mainly thanks to the
government’s massive stimulus package and the Fed’s ultra-expansionary monetary policy. The forecast for 2022
is for continued growth, albeit at a slower pace, reflecting the Federal Reserve’s early withdrawal of monetary
accommodation and delays in approving the “Build Back Better” fiscal policy package, as well as persistent
problems in supply chains that are expected to continue even in the first few months of 2022.
The European economy has also rebounded strongly from the pandemic-induced recession, and is moving
unevenly towards pre-covid GDP levels. After contracting by 6.4% in 2020, the euro area economy is reckoned
to have grown by 5.2% in 2021. The economic rebound has been greatest in countries hardest hit by the pandemic
crisis, such as Italy and France, which, after declining by 8.9% and 8.0% in 2020, are estimated to have grown by
6.2% and 6.7% respectively in 2021. In northern Europe, where the health situation has been better, the economy
has also reacted better. In Germany, GDP growth in 2021 is estimated at 2.7% versus a contraction of 4.6% in the
previous year. Great Britain also bounced back strongly, with estimated economic growth of 7.2% in 2021 after
shrinking by 9.4% the year before. Among the large European economies, Spain’s economy has disappointed
somewhat, with estimated growth of 4.9% in 2021 after a contraction of 10.8% in 2020.
In the euro area, growth is expected to continue in the coming years, exceeding pre-covid levels already in the
course of 2022, also thanks to the impetus of monetary and fiscal support measures. In particular, the Next
Generation EU pandemic recovery plan will help to ensure a stronger and more even recovery across euro area
countries, accelerating the transition to a green and digital economy, supporting structural reforms and driving
long-term growth.
China, which was the only major economy to end 2020 on a positive note, continued to grow in 2021 at an estimated
rate of 8.1%, even higher than in recent pre-covid years. Growth is expected to continue in 2022, albeit at a slower
pace of 4.8%, which could have been higher were it not for stress in its property sector, combined with the
draconian restrictions forming part of the country’s zero-tolerance Covid policy, as well as slower-than-expected
recovery in private consumption.
Although expectations for the future are positive, there are still a number of uncertainties that could weigh on
short-term growth prospects, including persistent bottlenecks in supply chains, rising commodity and energy
prices together with the appearance of possible new variants as the evolves and the war in Ukraine.
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Prysmian Group - Annual Report
2021
CABLE INDUSTRY TRENDS
The cable market saw substantial growth in 2021 after the prior year Covid-induced contraction.
Global demand for energy cables grew significantly in 2021, in line with the economic recovery, following the
gradual easing of restrictions as vaccination campaigns gathered pace. Growth in market value was even more
significant, reflecting steep price appreciation of metals and other raw materials used in cable manufacturing.
Geographically, demand was up in all the major countries. In some, like the United States, demand even exceeded
pre-pandemic levels during 2021, mainly thanks to the maxi stimulus packages enacted by government. In Europe,
too, there was significant growth in demand in 2021 following on from the Covid-induced contraction the year
before, but with mixed performances between countries; the rebound was greatest in southern countries like
France, Italy and Spain, hardest hit by the pandemic, but which are expected to reach pre-covid levels only during
2022, unlike Germany and the Nordic nations, which have already exceeded pre-covid levels despite growing
less in percentage terms than the previous year. China, which was the only major economy to end 2020 on a
positive note, continued to grow in 2021, albeit at a slower pace than the other major economies, due not only
to a baseline effect but also in part to stress in its property sector and the draconian restrictions forming part of
the country’s zero-tolerance Covid policy.
Fibre optic cables for the Telecom industry also enjoyed a recovery in 2021, underpinned by an improvement
in the Chinese market, which alone accounts for around half of global demand. Demand was up in all regions,
benefiting in 2021 not only from a strong baseline effect after the previous year’s contraction, but also from
increased levels of investment in fixed networks. In China, after contracting in recent years, demand resumed
an upward direction, also accompanied by an increase in prices.
There was also growth in demand in Europe, which is expected to continue in the coming years, especially in
countries such as Germany, Italy and the UK, thanks to vibrant FTTH programs driven by both private and public
investment. In the United States, the upward trend of recent years was confirmed in 2021, being one of the
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
2021
2020
Brasil
India
China
Russia
UK
Japan
Spain
Italy
France
Germany
Area Euro
USA
World
CHANGE IN GDP 2019-2020 BY COUNTRY
*
Source: IMF, World Economic Outlook Update – January 2022.
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Group Annual Report - DIRECTORS’ REPORT
few countries to have recorded growing demand for optical fibre in the TLC sector despite the pandemic. This
growth is expected to continue in the coming years thanks to infrastructure plans to expand access to high-speed
broadband in the country.
Prysmian Group’s various market segments saw a mixed performance in 2021. Market demand for Submarine Power
cables reported a significant upward trend in 2021: several tenders were awarded while others now in progress are
at an advanced stage of the tendering process, which is expected to be finalised in the next few months. Demand,
concentrated mainly in Europe up until now, also began to develop in the United States, also thanks to the political
impetus benefiting renewable energy sources and the government incentives available for the sector.
The market is expected to grow strongly over the medium term, especially the Offshore Wind and Interconnections
segments, fostered by the continuing reduction in electricity generation costs and national plans promoting the
green economy and energy transition.
In the High Voltage underground business, the HVAC market was largely stable in both North America and Europe,
with mixed trends between the different countries, while displaying persistently soft demand in both Southeast
Asia and South America, exacerbated by the impact of Covid-19. In the HVDC market, typically for interconnectors,
following the award of major contracts in Germany in 2020 worth approximately Euro 1.8 billion, during 2021 the
tendering process for the SOO Green contract in North America was completed, worth around USD 900 million.
In the Trade & Installers business, demand made a strong comeback during 2021 in almost all European countries,
recovering in most cases to pre-covid levels. In LATAM, demand made an even more significant recovery, confirming
the healthy trend already recorded at the end of 2020, like in North America, even though persistent difficulties
nonetheless remained in procuring raw materials and transport. APAC also returned to pre-covid levels, mainly
driven by both China and Oceania.
As for Power Distribution, the market trend was slightly better than in 2020, reflecting overall stability in Europe
and growth in South Europe and the Middle East. North America reported a downturn mainly because in the
previous year this region had enjoyed strong performance in the Onshore Wind market thanks to the Production Tax
Credit (PTC), a tax incentive based on electricity generation. Following the pandemic, the deadline for installations
was extended until the end of the year, without increasing the amount of incentives. In addition, shortages of
essential production materials and transport problems weighed negatively on growth in core markets.
Markets for Industrial cables displayed good resilience with some understandable disparities within the various
business lines and between the different geographical areas. Certain applications for the OEM sector performed
well: Infrastructure and Water. The Mining and Crane segments both recovered. The Defence business performed
well, especially in North America, while Nuclear lost traction after benefiting from project phasing in North
America in 2020. A contraction in volumes also affected Rolling Stock in South Europe and China as well as Railways
in Europe and North America, which continued to labour under the effects of the pandemic.
Demand in the Renewables segment was particularly lively. The Wind business grew in Europe and especially in
LATAM, while retreating in China. The Solar business grew in all markets except South Europe. Both businesses
saw an increase in competitive price pressure due to higher raw material and logistics costs, which affected unit
margins but was more than offset by the healthy trend in volumes.
The Elevator market showed a certain stability thanks to good performance in North America, to development
in Central Europe and a recovery in China, the first country to be affected by Covid-19 in the previous year.
The Automotive segment’s volumes in 2021 displayed a strong year-on-year rebound, although the shortage of
microchips caused fourth-quarter business to slow compared with the same period in 2020. In the APAC region,
despite strong growth in the market for electric cars and good performance in the premium market, there was
a sharp downturn at the mid and low end of the market. Moreover, cable manufacturers continued to expand
their market offerings upstream.
The Network Components market displayed a recovery in demand during 2021, especially by the MV segment
in the South Europe region. The HV and EHV businesses reported growth in North America and a recovery in the
UK thanks to the phasing of certain projects. Difficulties persisted in APAC due to strong competition, while the
situation in other markets was stable.
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Prysmian Group - Annual Report
2021
As for the Telecom industry, the global fibre optic cable market recovered during 2021. In Europe, market
growth was driven by the plans set out in the Digital Agenda for Europe 2025. The network architectures used
vary according to choices made by each individual country. FTTH networks are the preference in France, Spain,
Portugal and the Nordics, while G.Fast is the norm in Germany and Britain; although these systems use the last
few metres of the existing copper network, huge volumes of optical cables are nonetheless required to upgrade
the distribution networks. In other places like Italy, the two technologies coexist.
North America confirmed the upward trend already observed since the final quarter of the previous year. In
South America, a region when fibre penetration rates are still low, there was a slight growth in the optical cables
market, driven by resumed investment by major telecom operators.
The copper cable market is experiencing a slowdown linked to product maturity. The downturn in demand, already
evident in recent years, has been confirmed but without showing any acceleration. Given the high demand for
internet access, the major operators have opted to renew their networks using optical fibre, rather than perform
extensive maintenance work or upgrade existing networks. It is still worth retaining a presence in this segment
since the gradual decommissioning of assets by competitor cable manufacturers nonetheless offers attractive
opportunities.
The MMS cable market recovered, particularly in Germany, France, China and North America. In South America,
a gradual recovery has been in progress since the final quarter of the previous year.
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Group Annual Report - DIRECTORS’ REPORT
Significant events during the year
Prysmian Group completes the acquisition of EHC Global
On 8 January 2021, the Group announced it had completed the acquisition of EHC Global, a leading manufacturer
of strategic components and integrated solutions for the vertical transportation industry. Established in 1977,
EHC Global is a manufacturer and supplier of escalator handrails, rollers, elevator belts, strategic components
and integrated solutions for the vertical transportation industry. EHC Global also offers a comprehensive range
of technical and installation services for escalators and moving walkways.
The acquisition of EHC Global is in line with Prysmian Group’s strategy to develop and strengthen its value-added
businesses. EHC Global is a complementary add-on to the Draka Elevator business, broadening its product portfolio
to include a wide range of escalator products and services.
Following the acquisition, the Group has consolidated EHC Global with effect from 1 January 2021, as more fully
explained in the “Business Combinations” section of the Explanatory Notes to which reference should be made.
Placement of a Euro 750 million equity-linked bond
On 26 January 2021, the Group announced that the placement of an equity-linked bond (the “Bonds”) had been
finalised for the sum of Euro 750 million.
The Bonds, with a 5-year maturity from 2 February 2021 and denomination of Euro 100,000 each, are zero coupon.
The issue price is Euro 102.50, representing a yield to maturity of minus 0.49% per annum. The initial price for the
conversion of the Bonds into the Company’s ordinary shares is Euro 40.2355, representing a 47.50% premium on
the weighted average price by volume of Prysmian ordinary shares on the Milan Stock Exchange between the start
and end of the book-building process on 26 January 2021.
The Shareholders’ Meeting held on 28 April 2021 authorised the convertibility of the equity-linked bond and approved
the proposal for a share capital increase serving the conversion of the convertible bond for a maximum nominal
amount of Euro 1,864,025.50 by issuing up to 18,640,255 ordinary shares with a nominal value of Euro 0.10 each.
As provided for in the Bond regulations, the Group has the option to call all - but not just a part - of the Bonds at
their principal amount from 12 February 2024, should the share price exceed 130% of the conversion price for at
least 20 days within a period of 30 consecutive trading days.
Repurchase of the 2017 Bonds
On 26 January 2021, the Group announced a partial redemption of the Company’s outstanding Euro 500 million
zero-coupon equity-linked bonds due in 2022 and issued on 17 January 2017 (the “2017 Bonds”).
The total face value of the 2017 Bonds which the Company redeemed on 2 February 2021 was equal to Euro
250,000,000 representing 50% of the 2017 Bonds originally issued, at a repurchase price of Euro 104.250 per Euro
100,000 in face value.
CDP Loan
On 28 January 2021, a new loan for Euro 75 million over 4.5 years was agreed with Cassa Depositi e Prestiti S.p.A.
(CDP), intended to finance part of the Group’s expenditure to purchase the “Leonardo da Vinci” cable-laying vessel.
This loan was drawn down in its entirety on 9 February 2021, with a bullet repayment envisaged at maturity on 28
July 2025. Interest rate swaps have been arranged in respect of this loan, for an overall notional value of Euro 75
million, with the objective of hedging variable rate interest flows over the period 2021-2025.
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New organisational structure
On 3 February 2021, the Group announced that it had adopted a new organisational structure, in line with international
best practices, with the aim of reinforcing its focus on the strategic opportunities offered by the global transition
to low-carbon energy and digitalisation-based economies.
The introduction of this new structure marks the successful completion of the integration with General Cable, which
has significantly enlarged the Group and broadened its geographical diversification.
Under the leadership of the CEO, the new organisation will pivot around the following key roles:
•
Chief Operating Officer
•
Business Divisions
•
Group Functions
Under the new organisation, the CEO will further intensify the Group’s focus on its organic and non-organic
growth strategy, as well as on accelerating major innovation projects. The two global megatrends of transition
to low-carbon energy and development of telecommunications networks to support digitalisation are among
the major growth opportunities on which the Group will focus to ensure sustainable growth. In order to
leverage the Group’s wide geographic presence and customer proximity, while delivering business synergies
at the same time, the new role of Chief Operating Officer (COO) will oversee the Group’s operational strategy
and performance and results of the Regions, in conjunction with the Group’s three Business Divisions. The
Business Divisions, which report directly to the CEO, are focused on the strategic development of their different
segments, with P&L responsibility for the global Business Units, in conjunction with the COO. In addition,
they drive key decisions on product technology, production allocation and the most important projects. The
Group Functions, reporting directly to the CEO, guide the governance and harmonisation of the main business
processes, providing operational support to all Group entities. To sharpen the focus on ESG objectives, a Group
Chief Sustainability Officer has been appointed.
Construction of new fibre-optic Telecom link in Brazil
On 24 February 2021, the Group announced that it will supply 770 km of MINISUB fibre-optic submarine telecom
cables to link the city of Macapá to Santarém and Alenquer, located in the north of the Amazon region, as part of
the Norte Conectado project awarded by RNP, Rede Nacional de Ensino and Pesquisa, a Brazilian internet provider.
The MINISUB solution is one of the most widely used technologies in the world.
Finalisation of contract worth Euro 240 million with RWE for Sofia offshore wind farm
On 29 March 2021, the Group announced the finalisation of a contract with RWE Renewables, one of the world’s
largest offshore wind farm developers, for the construction of a turnkey high voltage submarine and onshore
cable system worth approximately Euro 240 million for the 1.4GW Sofia offshore wind farm. The Group had already
announced a preferred bidder agreement in November 2020.
Prysmian Group will be responsible for the design, supply, installation and commissioning of an HVDC symmetrical
single-core cable system that will connect the wind farm’s offshore substation to the onshore converter station
in Teesside. The project requires over 440 km of ±320 kV XLPE-insulated submarine cables and 15 km of ±320 kV
P-Laser-insulated underground cables.
Offshore installation operations will be carried out using the Leonardo da Vinci, Prysmian’s new state-of-the-art cable-
laying vessel, the most high-performing ship on the market offering superior versatility in project implementation.
Project commissioning is expected towards the end of 2026.
Successful completion of the first ever submarine interconnection between the island of Crete
and mainland Greece
On 1 April 2021, the Group and Independent Power Transmission Operator (IPTO) announced the completion of
the submarine interconnection between the island of Crete and mainland Greece (Peloponnese region), a record-
breaking project in many respects, including in terms of length, depth and innovative HVAC cable technology.
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Group Annual Report - DIRECTORS’ REPORT
Prysmian Group has designed, supplied, and installed an HVAC cable system involving 135 km of 150 kV XLPE-insulated
double-armoured three-core cables. This is a record-breaking project because Prysmian Group has installed its
innovative cable technology, using a synthetic armour 30% lighter than steel, at a maximum depth of approximately
1,000 metres for the very first time. The project, worth a total of Euro 125 million, was awarded to the Group in 2018
by IPTO, operator of the electricity grid transmission system in Greece. The first interconnection between Crete
and mainland Greece is expected to become operational in the next few months, ensuring reliable, cost-effective
and sustainable power transmission.
Approval of the Annual Financial Statements at 31 December 2020, distribution of dividends
and appointment of the Prysmian S.p.A. Board of Directors
On 28 April 2021, the shareholders of Prysmian S.p.A. approved the financial statements for 2020 and the distribution
of a gross dividend of Euro 0.50 per share, for a total of some Euro 132 million. The dividend was paid out from 26
May 2021, with record date 25 May 2021 and ex-dividend date 24 May 2021. The same Shareholders’ Meeting also
appointed the new members of the Prysmian S.p.A. Board of Directors.
Authorisation to buy back and dispose of treasury shares
On 28 April 2021, the shareholders of Prysmian S.p.A. authorised the Board of Directors to buy back and dispose of
treasury shares. This authorisation provides the opportunity to buy back, on one or more occasions, a maximum
number of shares whose total must not exceed, at any one time, 10% of share capital. Purchases may not exceed
the amount of retained earnings and unrestricted reserves reported in the most recently approved annual financial
statements. The authorisation to buy back treasury shares will last for 18 months commencing from the date of the
Shareholders’ Meeting, while the authorisation to dispose of treasury shares has no time limit. The authorisation
to purchase and dispose of treasury shares is required in order to enable the Group:
•
to have a portfolio of treasury shares (a so-called “stock of shares”) that can be used in any extraordinary
transactions (e.g. mergers, demergers, spin-offs, acquisition of equity investments) and to implement the
shareholder-approved remuneration policies applied to Prysmian Group;
•
to use the treasury shares purchased to service the exercise of rights arising from convertible debt instruments
or instruments exchangeable with financial instruments issued by the Company, its subsidiaries or third parties
(e.g. in takeovers bids and/or stock swaps);
•
to use the treasury shares to satisfy share-based incentive plans or share ownership plans reserved for Prysmian
Group directors and/or employees;
•
to manage the Company’s capital effectively, by creating an investment opportunity, also in view of its available
liquidity.
Treasury shares may be bought back and disposed of in accordance with applicable laws and regulations:
1.
at a minimum price no more than 10% below the stock’s official price reported in the trading session on the day
before carrying out each individual transaction;
2.
at a maximum price no more than 10% above the stock’s official price reported in the trading session on the day
before carrying out each individual transaction.
Your Employee Shares (YES) Plan
On 28 April 2021, the shareholders of Prysmian S.p.A. approved the extension of the share ownership plan for
Prysmian Group employees, previously approved by the shareholders’ resolution dated 13 April 2016.
The Plan provides the opportunity to purchase Prysmian’s ordinary shares on preferential terms, with a maximum
discount of 25% on the stock price, given in the form of treasury shares. The shares purchased will be subject to a
retention period, during which they cannot be sold. The extension has added new purchase windows in the years
2022, 2023 and 2024.
Beneficiaries of the Plan also include the executive directors of Prysmian S.p.A. as well as key management
personnel, for whom the discount will be 1%.
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Prysmian Group - Annual Report
2021
Authorisation of the convertibility of the Equity-linked Bond 2021
The Extraordinary Shareholders’ Meeting held on 28 April 2021 authorised the convertibility of the Euro 750 million
equity-linked bond, approved by the Board of Directors on 26 January 2021 and reserved for institutional investors.
The same meeting also approved the proposal for a share capital increase pursuant to art. 2420-bis, par. 2, of the
Italian Civil Code, in one or more tranches, with the exclusion of pre-emptive rights under art. 2441, par. 5, of the
Italian Civil Code, serving the conversion of the aforementioned convertible bond for a maximum nominal amount
of Euro 1,864,025.50 by issuing up to 18,640,255 of the Company’s ordinary shares with a nominal value of Euro 0.10
each, and thus amending art. 6 of its By-laws accordingly.
Climate Change
With the intention of further accelerating its pursuit of sustainability, the Group has decided to adopt the UN
Global Compact. Prysmian has launched an ambitious climate change strategy by adopting Science-Based targets
to reduce its CO
2
emissions, in line with the COP 21 Paris Agreement, and by supporting the Business Ambition for
1.5°C campaign.
The target of zero net emissions is expected to be achieved by 2035 for emissions generated by the Group’s operations
(Scope 1 and 2) and by 2050 for emissions generated by its value chain (Scope 3).
“ECO CABLE”: the cable industry’s first certifiable green product label in support of energy transition
On 4 May 2021, the Group announced the launch of its ECO CABLE label, the first proprietary label in the cable industry
to help utilities and distributors make their supply chains and value propositions even greener.
The ECO CABLE label can be easily compared and combined with other sustainability certification protocols like the
EPD (Environmental Product Declaration) and the EU Ecolabel (the environmental label of excellence for products
and services that meet high environmental standards throughout their life cycle). Award of the ECO CABLE label is
based on an automatic calculation system developed specifically for cable products, which applies recognised and
measurable criteria from EU Ecolabel Regulation 66/2010, and in line with the main regulatory frameworks and
requirements: Carbon Footprint, Absence of Substances of Very High Concern, Recyclability/Circularity, Recycling
input rate, Environmental benefits and Cable transmission efficiency.
Prysmian Group has committed to apply the ECO CABLE rating system to 20% of all its products by 2022, in line with
the Group’s Sustainability Scorecard goals.
Partnership with Hardt Hyperloop to accelerate Open Innovation
On 10 May 2021, the Group announced a deepening of its partnership with Hardt Global Mobility as part of a program
to make Hyperloop into a sustainable, high-speed pan-European passenger and freight transport network that will
help Europe meet its zero-carbon goals by 2050.
Diversity & Inclusion to empower “human capital”
On 12 May 2021, the Group announced it was strengthening its commitment to Diversity & Inclusion (D&I) with the
aim of further empowering its human capital, comprising some 29,000 employees worldwide. The increase in the
percentage of women, both among white-collar workers and at senior management level, is one of the sustainability
parameters to which the variable remuneration of company managers is linked.
As evidence of the strategic importance of gender and cultural diversity, Prysmian has also set up a new global
Diversity & Inclusion Steering Committee to oversee the achievement of the Group’s objectives. This Committee
is responsible for defining D&I objectives at every level of the organisation and helping decide the actions to be
taken, as well as promoting a cultural change to facilitate D&I within the workplace.
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Group Annual Report - DIRECTORS’ REPORT
Prysmian Group believes in the value of people, background, leadership style and attitudes because every individual
has the potential to generate value for the business. Its global footprint enables the Group to promote an inclusive
environment, encouraging the development of corporate culture and identity.
Euro 46 million contract for a new submarine power interconnection between Ibiza and Formentera
On 12 May 2021, the Group announced that it had been awarded a contract worth approximately Euro 46 million
by REE (Red Eléctrica de España, S.A.U.), the Spanish power grid transmission system operator, to develop a dual-
circuit submarine power interconnection between the islands of Ibiza and Formentera.
Prysmian will provide its turnkey services to design, supply, install and commission two 132 kV XLPE-insulated
single-armoured three-core HVAC submarine power cables. The system will consist of 27 km of submarine cable
and 10 km of onshore cable.
The submarine cables will be made in Italy at the Arco Felice plant, the Group’s centre of manufacturing and
technological excellence for this type of cable. The onshore cables will be manufactured at the Group’s local plant
in Vilanova (Spain). Marine operations will be performed by one of Prysmian Group’s cable-laying vessels. The
system is expected to be commissioned in 2023.
Prysmian Group enters the “smart home” market
On 26 May 2021, the Group announced it had entered the “smart home” market for the first time with its innovative
PRY-CAM HOME technology to manage and enhance the active safety of domestic electrical systems.
New submarine cable links between Europe and Asia
On 18 June 2021, the Group announced it had been awarded a contract worth a total of Euro 140 million by the
Turkish utility TEIAS for the design, supply, installation and commissioning of two high-voltage submarine power
transmission cables, one between Europe and Asia, the other across the Izmit Gulf in Asia. Both projects are
scheduled for completion by 2023. The first project - Dardanelles III - involves the design, supply, installation and
commissioning of a third high-voltage submarine power cable linking Europe and Asia across the Dardanelles strait
in Turkey. The dual-circuit cable with a rating of 1,000 MW per circuit will cover a total distance of 4.2 km (4 km
offshore and 0.2 km onshore). The second project - Izmit Gulf Crossing - involves the design, supply, installation
and commissioning of a high-voltage submarine power cable to be laid in the vicinity of the Osman Gazi Bridge, in
the Izmit Gulf, Turkey. The dual-circuit cable with a rating of 1,000 MW per circuit will cover a total distance of 14 km
(4 km offshore and 10 km onshore). Each link will include two 400 kV XLPE-insulated single-armoured single-core
HVAC cables. The submarine cables will be manufactured at Prysmian’s centre of excellence in Pikkala (Finland),
while the onshore cables will be produced in Gron (France). Offshore installation operations will be performed by
one of the Group’s state-of-the-art cable-laying vessels.
USD 900 million contract for SOO Green HVDC Link
On 21 June 2021, the Group announced it had been selected by SOO Green HVDC Link as its preferred supplier of HVDC
cable systems for a unique project: the overland transmission of power along existing rail corridors. The 2,100 MW
interregional project, intended as the first link within a national clean power grid, will connect two of the largest US
power markets. By linking Midwest Independent System Operator (MISO) serving the central US, to the eastern PJM
Interconnection, SOO Green will deliver abundant, affordable renewable energy to population centres from Chicago
to the mid-Atlantic region. As part of the project worth approximately USD 900 million, Prysmian Group will supply
state-of-the-art ±525 kV HVDC cables that can reliably and efficiently transmit enough renewable energy to power more
than 1.2 million homes. On 25 June 2021, the Group announced that the contract with SOO Green HVDC link had been
finalised. Cable production for the project is expected to start in 2023 at Prysmian’s Abbeville plant in South Carolina.
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Prysmian Group - Annual Report
2021
Faster-track commitment to sustainability by adopting Social Ambition goals alongside
Climate Change Ambition
On 15 July 2021, the Group confirmed its ambition to be a global sustainability leader with the announcement of
new Social Ambition goals to sit alongside its existing Climate Change Ambition targets. The main areas of focus
of the Group’s new Social Ambition include commitments to improving diversity, equality and inclusion (DE&I);
digital inclusion; empowerment of communities; and employee engagement and upskilling. The new 2030 targets
support delivery of Prysmian’s Social Ambition goals and bring the Group further into line with the United Nations
Sustainable Development Goals. Prysmian’s Social Ambition complements its Climate Change Ambition, which
aims to make the Group one of the leading technological players in the transition to low-carbon energy. Its climate
strategy adopts science-based targets aligned with the requirements of the Paris Agreement, and sets the goal of
net zero emissions by 2035 for emissions generated by its operations (Scope 1 and 2) and by 2050 for value chain
emissions (Scope 3).
Agreement to supply 350 km of Steel Tube & Thermoplastic Electro-Hydraulic Umbilicals
to Petrobras in Brazil
On 20 July 2021, the Group signed a contract with Petrobras to supply a total of 350 km of latest-generation deep-
water electro-hydraulic umbilicals using both Steel Tube and Thermoplastic technologies, as well as specialised
offshore and logistics services. The contract, worth approximately Euro 92 million, will support brown and green
field projects in Brazil by providing the technology to upgrade installations and operations. Both the Steel Tube
and Thermoplastic umbilicals will be engineered, manufactured, tested and delivered in the period 2022-2025 by
the Group’s centre of excellence for subsea dynamic technologies based in Vila Velha. Prysmian Group is strongly
committed to developing and producing state-of-the-art top quality umbilical systems in order to offer the industry’s
major players engaged in challenging subsea projects, best-in-class solutions in terms of operating performance,
reliability, resilience and safety.
Commitment to protecting R&D investments confirmed
On 21 July 2021, the Group announced it had commenced patent infringement proceedings in the UK High Court
against Sterlite Technologies Limited (“Sterlite”). Prysmian claims that Sterlite’s Micro-LITE Multitube Single Jacket
fibre optic cable products infringe the UK designations of Prysmian’s European Patents EP (UK) 2,390,700B1 and EP
(UK) 1,668,392B1 (“the Patents”) for fibre optic cables.
European Patent EP ‘392 relates to optical telecommunication cables, and in particular to an optical telecommunication
cable with a very small diameter. European Patent EP ‘700 relates to optical telecommunication cables, and in
particular bundled cables containing optical fibres.
Organisation set up to manage the three power transmission cable projects in Germany
On 27 July 2021, the Group announced it had set up its organisation to manage the three strategic High Voltage Direct
Current (HVDC) land cable power transmission projects in Germany, namely SuedOstLink, SuedLink and A-Nord.
Prysmian was awarded the contracts in 2020 by TenneT, Transnet and Amprion respectively, and is the only cable
manufacturer involved in all three projects. Prysmian will supply its innovative, eco-friendly cable technologies
to transport clean energy generated by wind farms off the northern coast of Germany to the highly industrialised
regions in the south of the country. To support project execution, Prysmian has opened three new German offices
in Bayreuth, Würzburg and Wuppertal and has formed a multicultural project development and management
team with over 200 members.
The Group is now preparing to start production of the HVDC cable system for SuedOstLink. Prysmian will supply a
±525 kV P-Laser HVDC underground cable system running along a 270 km route that starts from the Isar connection
point near Landshut in Bavaria, southern Germany. This solution offers a power transmission capacity of more
than 2 GW on a single system. P-Laser cable technology, developed by Prysmian, is the first 100% recyclable, eco-
sustainable, high-performance insulation using HPTE (High Performance Thermoplastic Elastomer), which reduces
production process CO
2
emissions by 30%.
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Group Annual Report - DIRECTORS’ REPORT
Sustainability plays a key role in all of Prysmian Group’s operations and organisation. Prysmian has clearly defined
its Climate Change Ambition and related targets to accelerate the race to zero net emissions by 2035 and has
announced its new Social Ambition targets (to be achieved by 2030), reconfirming its commitment to becoming
a global sustainability leader.
Ørsted awards cable contracts for offshore wind farms in the North Sea
On 28 July 2021, the Group announced it had been awarded a contract worth more than Euro 60 million by Ørsted,
a leading developer of offshore wind farms worldwide, for the design, supply, connection and commissioning of
inter-array submarine cable systems for the Gode Wind 3 and Borkum Riffgrund 3 offshore wind farms. Both projects
are scheduled for completion by 2024.
The Gode Wind 3 and Borkum Riffgrund 3 offshore wind farms will be located in the German section of the North
Sea, approximately 60 km apart, and will be built simultaneously. Prysmian Group will supply inter-array systems
involving more than 150 km of 66 kV XLPE-insulated cables to connect the wind turbines of Gode Wind 3 to an offshore
substation platform and Borkum Riffgrund 3 to an offshore conversion station where the voltage will be raised and
converted for onward transmission to the German mainland, with an overall combined capacity of more than 1,100
MW. Once operational, the two wind farms will be capable of supplying energy to around 1.2 million German homes.
The cables for the Gode Wind 3 and Borkum Riffgrund 3 projects will be manufactured in Montereau and Gron
(France), as well as in Nordenham (Germany), one of the Group’s three centres of excellence for submarine cable
production along with those in Arco Felice (Italy) and Pikkala (Finland).
Agreement worth approximately Euro 66 million with Petrobras in Brazil for 200 km
of Steel Tube & Thermoplastic Electro-Hydraulic Umbilicals
On 5 August 2021, the Group announced it had signed a contract with Petrobras for the supply of a total of 200 km of
state-of-the-art deep-water electro-hydraulic umbilicals, using both Steel Tube and Thermoplastic technologies,
and specialised offshore and logistics services intended to upgrade installations and operations in brown field and
green field projects.
The contract, worth approximately Euro 66 million, follows the recent order for 350 km of umbilicals and will
provide the technology to support the upgrading of Petrobras installations and operations. Both the Steel Tube
and Thermoplastic umbilicals will be engineered, manufactured, tested and delivered in the period 2022-2025 by
the Group’s centre of excellence for subsea dynamic technologies based in Vila Velha.
Prysmian Group has unrivalled experience and expertise developed over the years. Its dedicated Offshore Specialties
division offers advanced solutions for complex subsea projects that guarantee the highest standards of operational
performance, reliability and safety.
Leonardo da Vinci, the world’s largest and most technologically advanced cable-laying vessel,
goes into action
In the second half of 2021, the Group announced delivery of the vessel Leonardo da Vinci. A unique asset that joins
the Group’s existing fleet of state-of-the-art cable-laying vessels, it will enable more efficient and sustainable
project execution internationally for the development of smarter and greener electricity grids to support energy
transition. The Leonardo da Vinci will be based in Arco Felice, since 1960 the Group’s state-of-the-art centre for
submarine cables used in subsea interconnections around the world.
Investment to support the development of broadband and 5G in North America
On 23 August 2021, the Group announced the investment of USD 85 million in major equipment and technology upgrades
at its North American plants, enabling the business to meet the growing production needs of its telecom customers.
Most of these investments and upgrades will take place at the Prysmian Group Claremont North Carolina facility to
expand production of optical products. In addition, the Claremont facility is expected to grow to 620 employees
over the next 18 months, adding up to 70 new jobs.
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Cable project for a new floating offshore wind farm in France
On 7 September 2021, the Group announced that it had signed in consortium with Asso.subsea, a specialist submarine
installation contractor, a contract worth approximately Euro 30 million with RTE (Réseau de Transport d’Électricité)
to develop a submarine power export cable system for the Gruissan floating offshore wind farm located in the
South of France.
Prysmian Group will be responsible for the design, supply, connection, testing and commissioning of one 66 kV
EPR-insulated three-core submarine power export cable totalling 25 km, together with other dynamic 66 kV EPR-
insulated submarine cables for about 1 km, which will connect the shore to the floating substation. The Group will
also supply a further 3 km of 66 kV XLPE-insulated cables for the onshore section.
All the submarine cables will be produced at Prysmian Group’s centre of excellence in Nordenham (Germany), while
the onshore cables will be manufactured at the plant in Gron (France).
Science Based Targets initiative (SBTi) approves Prysmian emissions reduction targets
On 23 September 2021, the Group announced that its ambitious emissions reduction targets had been approved by
the Science Based Targets initiative (SBTi). The Group has committed to an absolute reduction of 46% in Scope 1 and
2 greenhouse gas (GHG) emissions by 2030 from the 2019 baseline. It also intends to reduce Scope 3 GHG emissions
from purchased goods and services and from the use of products sold by 21% in absolute terms within the same
timeframe. The Net Zero emissions target (Scope 1 and 2) has been brought forward to 2035.
Prysmian has been found to be compliant with the SBTi Criteria and Recommendations. The SBTi Target Validation
Team has classified Prysmian’s Scope 1 and 2 target ambition as in line with the 1.5°C goal.
Prysmian’s Climate Change Ambition aims to make the Group one of the leading technology players in the transition
to low carbon energy. The Group has announced an ambitious new climate strategy by adopting science-based
targets, in line with the requirements of the Paris Agreement, and endorsing the “Business Ambition for 1.5°C”
campaign.
Euro 221 million submarine cable project awarded in the Middle East
On 30 September 2021, the Group was awarded a contract worth approximately Euro 221 million for a ±500 kV
HVDC submarine and land cable system between the Arab Republic of Egypt and the Kingdom of Saudi Arabia. The
project has been awarded to Prysmian Group by the Egyptian Electricity Transmission Company (EETC) and the
Saudi Electricity Company (SEC). The new link will facilitate strategic energy exchange between the two countries
and connect the Gulf Cooperation Council (GCC) states with the African continent.
The project involves the design, supply, installation and commissioning of around 127.5 km of ±500 kV mass
impregnated single-core HVDC submarine cables, 43.5 km of 36 kV XLPE-insulated double-armoured single-core
cables and 61 km of MINISUB fibre optic cables for telecommunications and Distributed Temperature Sensing (DTS)
monitoring.
Project handover and commissioning are scheduled for 2024.
The mass impregnated cables will be produced at Arco Felice, Prysmian Group’s centre of excellence for the
manufacture of this type of product. The fibre optic submarine cables will be manufactured in Nordenham, Germany.
Work on Vineyard offshore wind farm in USA to commence after receiving Notice to Proceed
with the Euro 200 million project
On 1 October 2021, the Group announced that it had received Notice to Proceed with the contract worth approximately
Euro 200 million to supply a submarine cable system for the Vineyard Wind 1 offshore wind farm. A milestone in the
development of offshore wind farms in the US, Vineyard will consist of an array of 62 wind turbines and generate
800 MW of electricity per year, powering over 400,000 homes.
Under the contract awarded in 2019 by Vineyard Wind, LLC, a US offshore wind developer owned by Copenhagen
Infrastructure Partners and Avangrid Renewables (part of the Iberdrola Group), Prysmian Group will develop a
submarine power cable system that will deliver clean energy to the mainland power grid.
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Group Annual Report - DIRECTORS’ REPORT
The Group is responsible for the engineering, manufacture, installation and commissioning of an HVAC (High
Voltage Alternating Current) cable system consisting of two 220 kV XLPE-insulated three-core cables, requiring a
total of 134 km in submarine cable which will be manufactured at Prysmian Group’s centres of excellence in Pikkala
(Finland) and Arco Felice (Italy). Prysmian Group will also supply a PRY-CAM system for permanent monitoring.
Continued partnership with Openreach in the UK to support Full Fibre broadband program
On 11 October 2021, the Group announced the extension of its partnership with Openreach, the UK’s largest digital
network business, with a new three-year contract. Prysmian Group will provide its expertise and innovation to
support Openreach’s Full Fibre broadband build program, which will be essential for the UK government to achieve
its target of delivering “gigabit capable broadband” to 85% of the UK by 2025.
Award of Dominion Energy Euro 630 million submarine cable project, the largest ever awarded in the USA
On 5 November 2021, the Group announced that it had won the largest contract ever awarded in the United States
for a submarine cable system. The contract has been awarded by Dominion Energy Virginia, a subsidiary of Dominion
Energy Inc., to a consortium formed by Prysmian and the DEME Group, a leader in the offshore wind industry. The
Balance of Plant (BoP) contract includes a complete package for the transportation and installation of foundations
and substations and EPCI (Engineering, Procurement, Construction, Installation) services for the inter-array and
export cables for what will be the largest commercial offshore wind farm in the United States. This is a major
milestone for Prysmian Group, being the first cable company in the offshore wind industry to sign a Balance of
Plant services agreement. The total value of the contract is approximately Euro 1.6 billion, of which Prysmian’s
share for cable supply and installation is around Euro 630 million. The project is expected to be completed by 2026.
Prysmian Group acquires Omnisens S.A. of Switzerland, a leader in fibre-optic sensing solutions
for monitoring critical infrastructure
On 12 November 2021, the Group announced that it had completed the acquisition of Omnisens S.A., a leader in high-
performance fibre-optic monitoring solutions for the safety and efficiency of critical infrastructure. The acquisition,
a transaction valued at CHF 18.8 million, is in line with Prysmian Group’s strategy to develop and strengthen its
value-added businesses, confirming its commitment to global industrial transformation based on digitalisation
and electrification. Prysmian Group, through Prysmian Electronics, its division devoted entirely to asset monitoring
solutions, offers major TSOs and DSOs around the world a portfolio of patented technologies, products and services
for monitoring the condition of their electrical assets. PRY-CAM monitoring solutions are successfully in use in major
power grids worldwide, including in Italy, UK, Middle East, China, USA and Singapore.
Omnisens’ advanced DTS/DAS technologies are a perfect complement to the Group’s monitoring solutions range,
enhancing opportunities to expand in a long-term growth business and unlocking significant commercial synergies.
Founded in 1999 and based in Morges, Switzerland, Omnisens S.A. is a leading provider of long-distance fibre-
optic sensing solutions for real-time asset integrity monitoring. It operates worldwide, both directly and through
specialised solution providers, via dedicated application, commissioning and customer service teams.
Prysmian Group ranks top of the Dow Jones Sustainability World Index
On 13 November 2021, the Group was ranked in first place with a score of 87 points in the Electrical Components &
Equipment section of the Dow Jones Sustainability World index, according to the results of the 2021 annual review
conducted by S&P Global CSA. Prysmian Group is the only pure cable manufacturer included in the most globally
recognised sustainability index, covering over 5,300 companies.
Prysmian achieved top scores (100 points) for Innovation Management, Environmental Reporting, Social Reporting,
Talent Attraction & Retention, Materiality, Risk & Crisis Management and Occupational Health & Safety. Prysmian
Group has also recently obtained approval of the emission reduction targets from the Science Based Targets initiative
(SBTi) and announced its new Social Ambition targets to complement the Climate Change Ambition targets already set.
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2021
First company in the cable industry to join the Responsible Mica Initiative
On 18 November 2021, the Group announced that it was the first company in the cable industry to join the Responsible
Mica Initiative (RMI), a non-profit coalition committed to eliminating child labour and poor working conditions
in Mica supply chains. Joining the Responsible Mica Initiative is part of Prysmian’s Social Ambition targets and its
commitment to improving the lives of people in the communities and places in which it operates. Prysmian Group’s
social responsibility is one of the pillars of its sustainability strategy and reflects the principles enshrined in its
Human Rights Policy.
As a member of the RMI, Prysmian Group will take part in three main schemes. The first involves mapping the
supply chain to identify all the stakeholders, some of whom may be unknown to the multinationals that use mica.
Under the second scheme, RMI members help empower a total of some 75,000 beneficiaries in 130 villages in
order to have better livelihoods, access to quality education and reduce child labour. Under the final scheme,
members contribute to discussions with governments to strengthen the legislative environment and advocate
proper regulations to ensure that mica-related activities are recognised and formalised, as well as to monitoring
the presence of responsible working conditions.
European Commission imposes anti-dumping duties on imports of optical fibre cables from China
On 18 November 2021, the Group announced that it welcomed the European Commission’s decision to impose anti-
dumping duties on imports of optical fibre cables from China.
The European Commission has decided to impose anti-dumping duties of between 19.7% and 44% on imports of
optical fibre cables from China. China’s heavily subsidised optical cable industry has enjoyed an unfair competitive
advantage, allowing it to significantly increase exports to the EU in recent years at seriously undercut prices.
As a global industry leader, Prysmian Group is strongly committed to ensuring the quality required to deliver a truly
future-proof telecommunications infrastructure that can keep pace with new technologies. Protecting its products
with patents and trademarks is therefore a key focus of the Group’s activities, and legal actions are underway as a
necessary part of a wider activity to safeguard its investment in research and development.
New power transmission cable between the island of Elba and mainland Italy
On 23 November 2021, the Group announced that it had received the letter of award for a project worth approximately
Euro 68 million for the new submarine cable between the island of Elba and the Italian mainland (Piombino). The
project has been awarded by Terna Rete Italia S.p.A., a wholly-owned subsidiary of Terna S.p.A., operator of the
Italian electricity grid.
The project involves marine and civil works for the design, supply, installation and commissioning of a 132 kV XLPE-
insulated single-armoured three-core HVAC cable between the power station located on the island of Elba and that
in Piombino, running along a 34 km submarine route and a 3 km onshore one.
The submarine cables will be produced at the Arco Felice plant (Naples), one of the Group’s centres of technological
and manufacturing excellence. The onshore cables will be manufactured at the Pignataro plant. The cables will
be laid by Prysmian’s “Leonardo da Vinci” cable-laying vessel, with delivery and commissioning expected in 2023.
Euro 1.71 billion framework contract with Terna
On 30 November 2021, the Group announced that it had been awarded a framework contract worth some Euro 1.71
billion by Terna Rete Italia S.p.A., a wholly-owned subsidiary of Terna S.p.A., TSO of the Italian electricity grid. The
framework contract includes the Tyrrhenian Link project, entailing the design, supply, submarine and onshore
installation and commissioning of over 1,500 km of submarine cables to facilitate power exchange between Sardinia,
Sicily and the Italian region of Campania, thus strengthening the Mediterranean energy hub.
The Tyrrhenian Link project involves the turnkey installation of one to three 500 kV HVDC links, each 500 km long,
using double-armoured single-core cables with mass-impregnated insulation. The innovative aramid armour,
recently developed by Prysmian Group, and the new “Leonardo da Vinci” cable-laying vessel will allow the Tyrrhenian
Link to be installed and repaired at a depth of 2,000 metres, the deepest ever reached by a power transmission
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Group Annual Report - DIRECTORS’ REPORT
cable. The framework contract also includes a system of electrodes and fibre optics for system monitoring, as well
as onshore civil works and horizontal directional drilling at the landfall. The submarine and onshore cables will be
manufactured at the plant in Arco Felice (Naples), Prysmian Group’s centre of excellence for submarine cables.
For the purpose of upgrading the plant’s production capacity and developing a new R&D centre to support energy
transition, the Group has already approved a major investment project for approximately Euro 80 million. Delivery
and commissioning are scheduled for 2025-2028.
Offshore wind farm cabling projects in the US worth approximately USD 900 million
On 17 December 2021, the Group announced that it had been awarded two new major offshore wind farm cabling
projects in the United States worth a total of approximately USD 900 million. Both projects have been awarded
by Vineyard Wind, a joint venture between Avangrid Renewables and Copenhagen Infrastructure Partners (CIP),
thus strengthening Prysmian’s partnership with one of the leading developers in the growing US offshore wind
industry.
Worth around USD 300 million, the first cabling project will connect the 804 MW Park Wind City offshore wind
farm to the electricity grid in the state of Connecticut, for which Prysmian will supply 275 kV XLPE-insulated single-
armoured three-core HVAC cables. The cables will be manufactured at the Group’s centres of excellence in Arco
Felice (Naples) and Pikkala (Finland) and will be installed using the Leonardo da Vinci and Ulisse vessels. Delivery
and commissioning are scheduled for 2026.
The Commonwealth Wind cabling project is worth around USD 580 million. The award to Prysmian follows the
Massachusetts Baker-Polito Administration’s selection of Vineyard Wind’s proposal to provide 1,200 MW of offshore
wind farm capacity. Prysmian Group will design, supply, install and commission three submarine cables to connect
the Commonwealth Wind Project to the Massachusetts electricity grid. The cables supplied will be 275 kV XLPE-
insulated single-armoured three-core HVAC cables.
As part of the agreement and subject to the fulfilment of several conditions precedent, such as obtaining permits
to build the facilities and finalising commercial agreements with the landowner, Prysmian plans to build a state-of-
the-art manufacturing facility for submarine power transmission cables at Brayton Point, site of the former 1,600
MW coal-fired power plant in Somerset. Both cable contracts are conditional on Prysmian’s completion of plans to
localise its manufacturing footprint.
The submarine cables are planned to be manufactured at the new plant in Massachusetts (USA), as well as at Arco
Felice (Italy) and Pikkala (Finland). Cables will be installed by the Leonardo da Vinci and Ulisse vessels. Delivery
and commissioning of the export cables are scheduled for 2027. After consolidating its position in the European
market, these new contracts confirm Prysmian’s leading role in the development of power grid infrastructure to
support energy transition in the United States as well.
Prysmian Group eases the path to FTTX and 5G network deployment with 180 µM fibre cables
On 20 December 2021, the Group announced that it had expanded its Sirocco Extreme microduct cable range to include
a 576-fibre cable. Sirocco Extreme cables offer record diameters and fibre densities for blown microduct cables.
The new cable boasts 576 fibres in a diameter of 8.2mm, providing a fibre density of 10.9 fibres per mm2, and can be
installed in a 10mm duct. Sirocco Extreme microduct cables use Prysmian’s BendBrightXS 180µm bend insensitive
single-mode fibre, which is fully compatible for splicing with any standard fibre, offering a truly future-proof
solution for advanced systems.
Available in fibre counts from 192 to 576 and conforming to international standards for optical and mechanical
performance, Sirocco Extreme cables benefit from the application of Prysmian’s PicoTube technology. This makes
them up to 15% smaller than Sirocco HD microduct cables, Prysmian’s previous record-holding 200µm microduct
cables. As a result, more fibre can be installed in a congested duct, and smaller ducts can be used for new installations,
reducing installation costs and raw material usage. Other benefits include reductions in the overall cost of network
deployment and in environmental footprint.
With these cables, Prysmian Group continues to leverage its global knowledge and capabilities to meet the ever-
growing technological challenges faced by its customers. The Sirocco Extreme product enhancements underline
the Group’s commitment to responding to the evolving needs of the market and to offering a scalable, future-proof
solution that is high-density, physically compact and easily deployable.
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Other significant events
Ravin Cables Limited
In January 2010, Prysmian Group acquired a 51% interest in the Indian company Ravin Cables Limited (“Ravin”),
with the remaining 49% held by other shareholders directly or indirectly associated with the Karia family (the
“Local Shareholders”). Under the agreements signed with the Local Shareholders, after a limited transition
period, management of Ravin would be transferred to a Chief Executive Officer appointed by Prysmian. However,
this failed to happen and, in breach of the agreements, Ravin’s management remained in the hands of the
Local Shareholders and their representatives. Consequently, having now lost control, Prysmian Group ceased
to consolidate Ravin and its subsidiary Power Plus Cable Co. LLC. with effect from 1 April 2012. In February 2012,
Prysmian was also forced to initiate arbitration proceedings before the London Court of International Arbitration
(LCIA), requesting that the Local Shareholders be declared in breach of contract and ordered to sell the shares
representing 49% of Ravin’s share capital to Prysmian. In a ruling handed down in April 2017, the LCIA upheld
Prysmian’s claims and ordered the Local Shareholders to sell the shares representing 49% of Ravin’s share
capital to Prysmian. However, the Local Shareholders did not voluntarily enforce the arbitration award and
so Prysmian had to initiate proceedings in the Indian courts in order to have the arbitration award recognised
in India. Having gone through two levels of the court system, these proceedings were finally concluded on
13 February 2020 with the pronouncement of a ruling by the Indian Supreme Court under which the latter
definitively declared the arbitration award enforceable in India. In view of the continuing failure of the Local
Shareholders to comply voluntarily, Prysmian has requested the Mumbai court to enforce the arbitration award
so as to purchase the shares representing 49% of Ravin’s share capital as soon as possible. This case is currently
still pending, slowed down by the ongoing Covid-19 emergency that has also affected India, and so control of
Ravin is considered to have not yet been acquired.
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Group Annual Report - DIRECTORS’ REPORT
Group performance and results
FINANCIAL PERFORMANCE
(Euro/million)
2021
2020
% Change
2019
Sales
12,736
10,016
27.1%
11,519
Adjusted EBITDA before share of net profit/(loss)
of equity-accounted companies
958
822
16.5%
983
% of sales
7.5%
8.2%
8.5%
Adjusted EBITDA
976
840
16.2%
1,007
% of sales
7.7%
8.4%
8.7%
EBITDA
927
781
18.7%
907
% of sales
7.3%
7.8%
7.9%
Fair value change in metal derivatives
13
(4)
15
Fair value stock options
(33)
(31)
1
Amortisation, depreciation, impairment and impairment
reversal
(335)
(393)
(354)
Operating income
572
353
62.0%
569
% of sales
4.5%
3.5%
4.9%
Net finance income/(costs)
(96)
(101)
(125)
Profit/(loss) before taxes
476
252
88.9%
444
% of sales
3.7%
2.5%
2.6%
Taxes
(166)
(78)
(148)
Net profit/(loss)
310
174
78.2%
296
% of sales
2.4%
1.7%
2.6%
Attributable to:
-
Owners of the parent
308
178
292
Non-controlling interests
2
(4)
4
Reconciliation of Operating Income/EBITDA to Adjusted Operating Income/Adjusted EBITDA
Operating income (A)
572
353
62.0%
569
EBITDA (B)
927
781
18.7%
907
Adjustments:
Company reorganisation
21
32
85
Non-recurring expenses/(income)
2
9
(32)
Other non-operating expenses/(income)
26
18
47
Total adjustments (C)
49
59
100
Fair value change in metal derivatives (D)
(13)
4
(15)
Fair value stock options (E)
33
31
(1)
Asset impairment and impairment reversal (F)
6
68
36
Adjusted operating income (A+C+D+E+F)
647
515
25.6%
689
Adjusted EBITDA (B+C)
976
840
16.2%
1,007
The Group’s sales in 2021 came to Euro 12,736 million, compared with Euro 10,016 million in 2020, posting a positive
change of Euro 2,720 million (+27.1%).
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Prysmian Group - Annual Report
2021
The main factors behind this change were:
•
positive organic sales growth, accounting for an increase of Euro 1,092 million (+10.9%). Excluding the Projects
segment, organic sales growth would have been +11.0%;
•
unfavourable exchange rate movements, resulting in a decrease of Euro 211 million (-2.1%);
•
fluctuation in the price of metals (copper, aluminium and lead), generating a sales price increase of Euro 1,766
million (+17.6%);
•
increase of Euro 73 million (+0.7%) due to a change in the scope of consolidation after acquiring control of EHC
Global and Omnisens, as already discussed in the earlier section on “Significant events during the year”.
In particolare, la variazione organica delle vendite risulta così ripartita tra i tre segmenti:
PROJECTS
+
10.2
%
ENERGY
+
10.7
%
TELECOM
+
12.7
%
The Group posted solid results in 2021, with organic growth of +10.9% (+11.0% excluding the Projects segment).
This performance was sustained thanks to good performances in all the businesses and to an acceleration by the
Projects segment in the last quarter of the year. The fourth quarter of 2021, in fact, turned out to be the best of all
the same periods of previous years.
The organic change described above is explained by the following main factors:
•
an increase by the
Energy & Infrastructure
business with +12.3% organic growth in sales, primarily supported by
Trade & Installers;
•
an increase by the
Industrial & Network Components
business with +8.4% organic growth in sales, fuelled by
Renewables which grew by +21.8%;
•
a significant increase by the Telecom segment with +12.7% organic growth in sales.
The Group’s Adjusted EBITDA (before net expenses for company reorganisation, net non-recurring expenses
and other net non-operating expenses) came to Euro 976 million in 2021, up Euro 136 million (+16.2%) on the
corresponding 2020 figure of Euro 840 million. Despite the adverse trend in exchange rates, causing an impact of
Euro 11 million, the Group was able to improve its margins. Indeed, its Adjusted EBITDA margin on sales was 8.6%
assuming the same level of metal prices as in 2020. It should also be noted that the exchange rate effect measured
with respect to 2019 negatively impacted The Adjusted EBITDA of Euro 55 million and therefore, net of this effect,
the level of Adjusted EBITDA for 2021 would have been higher than in 2019. The Energy segment’s Adjusted EBITDA
even exceeded pre-pandemic levels.
EBITDA is stated after net expenses for company reorganisation, net non-recurring expenses and other net non-
operating expenses, totalling Euro 49 million (Euro 59 million in 2020). These adjustments mainly consist of Euro
26 million in non-operating expenses and income and Euro 21 million in reorganisation costs.
Amortisation, depreciation and impairment amounted to Euro 335 million in 2021, down from Euro 393 million in
the previous year, when Euro 66 million in impairment had been recognised against the Energy South Europe CGU.
The fair value change in metal derivatives was a positive Euro 13 million in 2021, compared with a negative Euro 4
million in 2020. After adopting hedge accounting for the majority of its derivatives on commodity prices, affected
by price rises for copper, aluminium and lead, the Group has recognised a positive pre-tax amount of Euro 88 million
in the metals cash flow hedge reserve.
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Group Annual Report - DIRECTORS’ REPORT
A total of Euro 33 million in costs were recognised in 2021 to account for the effects of the long-term incentive plan
and employee share purchase scheme.
Reflecting the effects described above, the Group’s operating income came to Euro 572 million, compared with
Euro 353 million in the previous year, thus reporting an increase of Euro 219 million.
Net finance costs for 2021 amounted to Euro 96 million, down from Euro 101 million in the previous year.
Taxes came to Euro 166 million, representing an effective tax rate of about 35% (about 31% in 2020).
Net profit for 2021 was Euro 310 million (of which Euro 308 million attributable to the Group), compared with Euro
174 million in 2020 (Euro 178 million attributable to the Group).
Net financial debt stood at Euro 1,760 million at 31 December 2021, down Euro 226 million from Euro 1,986 million
at 31 December 2020. The Group generated free cash flow of Euro 365 million excluding flows from acquisitions
and disposals of Euro 93 million and cash flow of Euro 58 million mainly due to settlement agreements reached
with third-party counterparties.
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Prysmian Group - Annual Report
2021
Review of Projects operating segment
(Euro/million)
2021
2020
% Change
2019
Sales
1,594
1,438
10.8%
1,844
Adjusted EBITDA before share of net profit/(loss)
of equity-accounted companies
210
186
12.9%
228
% of sales
13.2%
13.0%
12.3%
Adjusted EBITDA
210
186
12.4%
228
% of sales
13.2%
13.0%
12.4%
Adjustments
(8)
(13)
(23)
EBITDA
202
173
16.4%
205
% of sales
12.7%
12.1%
11.1%
Amortisation and depreciation
(69)
(64)
(64)
Adjusted operating income
141
122
21.0%
164
% of sales
8.8%
8.5%
8.9%
The
Projects
Operating Segment incorporates the high-tech businesses of High Voltage underground, Submarine
Power, Submarine Telecom, and Offshore 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 plants 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 700 kV and extruded
polymer (XLPE) 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 offered include cables with different types of insulation: cables
insulated with layers of oil or fluid-impregnated paper for AC and DC transmission up to 700 kV; extruded polymer
insulated cables for AC transmission up to 400 kV and DC transmission up to 600 kV. The Group uses specific
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 Offshore Specialties business incorporates a wide range of products for the oil industry, including umbilical
cables, hoses and all electrical, optical and signalling components for oil well management from seabed to
offshore platform.
MARKET OVERVIEW
Market demand for Submarine Power cables reported a significant upward trend in 2021: several tenders were
awarded while others now in progress are at an advanced stage of the tendering process, which is expected to be
finalised in the next few months. Demand, concentrated mainly in Europe up until now, also began to develop in
the United States, also thanks to the political impetus benefiting renewable energy sources and the government
incentives available for the sector.
The market is expected to grow strongly over the medium term, especially the Offshore Wind and Interconnections
segments, fostered by the continuing reduction in electricity generation costs and national plans promoting the
green economy and energy transition.
Market demand for Submarine Telecom cables remained stable.
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Group Annual Report - DIRECTORS’ REPORT
In the High Voltage underground business, the HVAC market was largely stable in both North America and Europe,
with mixed trends between the different countries, while displaying persistently soft demand in both Southeast
Asia and South America, exacerbated by the impact of Covid-19.
In the HVDC market, typically for interconnectors, following the award of major contracts in Germany in 2020,
as a result of which Prysmian Group secured contracts worth approximately Euro 1.8 billion, no further contracts
were awarded in Europe during 2021; on the other hand, the tendering process for the SOO Green contract in North
America, worth around USD 900 million plus the civil works portion, was completed and awarded to Prysmian
Group’s US subsidiary.
The Offshore Specialties business reported a continued fall in prices, but stable volumes.
FINANCIAL PERFORMANCE
Sales to third parties by the
Projects
segment amounted to Euro 1,594 million in 2021, versus Euro 1,438 million in
2020, posting a positive change of Euro 156 million (+10.8%).
The factors behind this change were:
•
organic sales growth, accounting for an increase of Euro 146 million (+10.2%);
•
exchange rate trends, resulting in a decrease of Euro 13 million (-1.0%);
•
metal price fluctuations, producing an increase of Euro 23 million (+1.6%).
The
Projects
segment’s positive organic growth is explained by the robust level of second-half activity, especially in
the last three months, making up for the shortfall in the first part of the year; the acceleration is largely attributable
to contracts in progress in the Submarine Power business and to a positive contribution by the High Voltage
Underground business. The Submarine Telecom and Offshore Specialties businesses both recorded reasonable
growth due to higher volumes.
The main Submarine Power projects on which work was performed during the period were: the Crete-Peloponnese
and Crete-Attica interconnector projects in Greece, the Viking Link between Great Britain and Denmark, the offshore
wind projects in France and Germany (Dolwin5), plus contracts to supply cables for connecting offshore wind farms.
2021 sales 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
the assistance of both its own assets and third-party equipment.
The value of the Group’s Submarine Power order backlog stands at around Euro 2.3 billion, mainly consisting of the
following contracts: the offshore wind contracts in France (Fecamp and Calvados), Germany (Dolwin5) and Great
Britain (Sofia); the interconnector between Great Britain and Denmark (Viking Link); the link between Scotland
and the NNG offshore wind farm and the Crete-Attica link in Greece. On top of these are the offshore wind contract
in North America (Vineyard Wind) and the interconnection contracts in Turkey.
The order backlog grew even more in the last quarter following award of the Tyrrhenian Link and Elba Piombino
interconnection contracts in Italy, as well as a contract for the installation of a third-party cable in the Philippines.
The value of the Group’s High Voltage order backlog business is just over Euro 2 billion, mostly consisting of German
Corridor contracts and taking the total order backlog for the
Projects
segment to an unprecedented value of Euro
4.4 billion.
Adjusted EBITDA for the year came to Euro 210 million, up from the prior year figure of Euro 186 million and putting
the margin of the
Projects
business at 13.2 % (13.3 % if metal prices had remained at their 2020 level). The main
source of the increase was the positive mix of contracts in progress in the Submarine Power business and the start
of work on the German Corridors, as well as the weaker impact of the Covid-19 pandemic on the dynamics of the
High Voltage Underground business.
72
Prysmian Group - Annual Report
2021
Review of Energy operating segment
(Euro/million)
2021
2020
% Change
2019
Sales
9,557
7,207
32.6%
8,027
Adjusted EBITDA before share of net profit/(loss) of equity-
accounted companies
542
436
24.3%
503
% of sales
5.7%
6.1%
6.3%
Adjusted EBITDA
546
440
24.1%
505
% of sales
5.7%
6.1%
6.3%
Adjustments
(46)
(45)
(60)
EBITDA
500
395
26.9%
445
% of sales
5.2%
5.5%
5.5%
Amortisation and depreciation
(184)
(185)
(182)
Adjusted operating income
362
255
50.3%
323
% of sales
3.8%
3.5%
4.0%
The
Energy
Operating Segment, encompassing businesses offering a complete and innovative product 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 & Network Components
(comprising
Oil & Gas, Downhole Technology, Specialties & OEM, Elevators, Automotive and Network Components).
Sales to third parties by the
Energy
segment came to Euro 9,557 million, versus Euro 7,207 million in 2020, posting
a positive change of Euro 2,350 million (+32.6%), the main components of which were as follows:
•
positive organic sales growth of Euro 771 million (+10.7%);
•
decrease of Euro 177 million (-2.4%) for adverse exchange rate fluctuations;
•
sales price increase of Euro 1,683 million (+23.3%) for metal price fluctuations;
•
positive change of Euro 73 million (+1.0%) due to acquisition of EHC, consolidated from 1 January 2021, and of
Omnisens S.A, consolidated from 1 November 2021.
Adjusted EBITDA came to Euro 546 million, up Euro 106 million (+24.1%) from Euro 440 million in 2020, reflecting
not only increased volumes and efficiencies that reversed the negative impact of the Covid-19 pandemic recorded
in 2020, but also the contribution of Euro 11 million from the acquisition of EHC, consolidated from 1 January 2021.
The
Energy
business reported a margin of 5.7%, which would have been 6.6% if metal prices had remained at
their 2020 level.
The following paragraphs describe market trends and financial performance in each of the
Energy
operating
segment’s business areas.
73
Group Annual Report - DIRECTORS’ REPORT
ENERGY & INFRASTRUCTURE
(Euro/million)
2021
2020
% Change
2019
Sales
6,361
4,735
34.3%
5,285
Adjusted EBITDA before share of net profit/(loss) of equity-
accounted companies
353
272
29.3%
307
% of sales
5.5%
5.8%
5.8%
Adjusted EBITDA
356
275
28.8%
308
% of sales
5.6%
5.8%
5.8%
Adjusted operating income
233
152
57.7%
185
% of sales
3.7%
3.2%
3.5%
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 offered 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 product 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 2021, demand in all countries of the Trade & Installers European market showed signs of a strong rebound
in line with market trends, most so in South Europe, Germany, Eastern Europe and North Europe and less so in the
United Kingdom and the Middle East, recovering in most cases to pre-covid-19 levels.
In LATAM, the recovery in demand was even more significant, confirming the healthy trend already recorded at
the end of 2020.
In North America, the Trade & Installers market reported a strong upturn on the previous year, which had been
particularly negative due to the effects of the Covid-19 pandemic. However, there were persistent difficulties in
procuring raw materials and transport.
APAC also returned to pre-covid levels, mainly driven by both China and Oceania.
As for Power Distribution, the market trend was slightly better than in 2020: generally stable in Europe, with growth
in South Europe and the Middle East, but worse in Central Europe, North Europe and North America. The downturn in
North American volumes was due to the fact that in the previous year this region had enjoyed strong performance in
the Onshore Wind market thanks to the Production Tax Credit (PTC), a tax incentive based on electricity generation.
Following the pandemic, the deadline for installations was extended until the end of the year, without increasing
the amount of incentives. In addition, shortages of essential production materials and transport problems weighed
negatively on growth in core markets.
74
Prysmian Group - Annual Report
2021
FINANCIAL PERFORMANCE
Sales to third parties by the
Energy & Infrastructure
business amounted to Euro 6,361 million in 2021, versus Euro
4,735 million in 2020, posting a positive change of Euro 1,626 million (+34.3%), the main components of which
were as follows:
•
positive organic sales growth of Euro 583 million (+12.3%);
•
negative change of Euro 110 million (-2.4%) for exchange rate fluctuations;
•
sales price increase of Euro 1,153 million (+24.4%) for metal price fluctuations.
The
Energy & Infrastructure
business recorded positive organic sales growth of +12.3% in 2021, mainly due to
excellent performance by the Trade & Installers business and due to the Power Distribution recovery in the fourth
quarter, expecially in US. Trade & Installers enjoyed strong organic growth, albeit with geographical differences:
most pronounced in South and Central Europe, with a recovery in North Europe and stability in the United Kingdom
and the Middle East where Turkey made up for difficulties encountered by the Omani subsidiary. LATAM and North
America made a strong rebound despite difficulties in procuring raw materials and transport. APAC recorded a
good recovery, driven by China and Oceania.
Overall profitability of the Trade & Installers business accelerated with respect to 2020, mainly due to recovery
of volumes and industrial efficiencies, along with price increases and positive product mix that offset the higher
cost of most raw materials.
The Power Distribution business posted positive organic growth in every region, including North America which had
been struggling up until the third quarter. There was a slight decline in profitability, generated by a combination
of negative exchange rate trends and the product mix, especially in North America. In North America, the Power
Distribution business normalised its performance in the second half of the year, as expected, after the strong tax
incentive-driven growth in the previous year. In Europe, there was persistently strong price pressure with difficulties
in recovering key commodity price increases partially offset by gains in industrial efficiency.
In the Overhead Lines business, volumes reported a year-on-year contraction in LATAM, while remaining stable in
North America.
Given the factors described above, Adjusted EBITDA for 2021 came to Euro 356 million, versus Euro 275 million in
2020, reflecting an increase of Euro 81 million (+28.8%). The
Energy & Infrastructure
business reported a margin
of 5.6%, which would have been 6.4% if metal prices had stayed at their 2020 level.
INDUSTRIAL & NETWORK COMPONENTS
(Euro/million)
2021
2020
% Change
2019
Sales
2,838
2,252
26.0%
2,492
Adjusted EBITDA before share of net profit/(loss) of equity-
accounted companies
195
165
18.8%
195
% of sales
6.9%
7.3%
7.8%
Adjusted EBITDA
196
166
18.6%
196
% of sales
6.9%
7.4%
7.9%
Adjusted operating income
139
109
36.6%
140
% of sales
4.9%
4.8%
5.6%
75
Group Annual Report - DIRECTORS’ REPORT
The extensive range of cables developed specially for certain industries is characterised by the highly specific nature
of the solutions offered. 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 fields of application
for its cables are 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.
Prysmian also offers a wide range of products and systems for the petrochemicals sector covering every need
both onshore and offshore: low and medium voltage power cables, instrumentation and control cables as well as
Downhole Technology (DHT) solutions, with cables encased in steel pipes to control and power monitoring systems
within extraction wells.
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 good resilience with some understandable disparities within the various
business lines and between the different geographical areas. Some market segments enjoyed growth and recovery
thanks to strong existing order backlogs and resilient customer investment programs. Certain applications for
the OEM sector performed well: Infrastructure and Water. The Mining business recovered thanks to renewed MRO
demand in Europe and the call-off of certain projects already in the order backlog in South America, as did the results
of the Crane business which nonetheless compare with a healthy performance in 2020 resulting from fourth-quarter
order intake in 2019. The Defence business performed well, especially in North America, while Nuclear lost traction
after benefiting from project phasing in North America in 2020.
A contraction in volumes also affected Rolling Stock in South Europe and China as well as Railways in Europe and
North America, which continued to labour under the effects of the pandemic.
Demand in the Renewables segment was particularly lively. The Wind business grew in Europe and especially in
LATAM, while retreating in China. The Solar business grew in all markets except South Europe. Both businesses saw
an increase in competitive price pressure due to higher raw material and logistics costs, which affected unit margins
but was more than offset by the healthy trend in volumes.
The Elevator market showed a certain stability thanks to good performance in North America, to development in
Central Europe and a recovery in China, the first country to be affected by Covid-19 in the previous year. It should
be noted that the EHC Global Group, operating in the elevator business, has been consolidated as from 1 January
2021, making a Euro 11 million contribution to the Group’s EBITDA.
The Automotive segment’s volumes in 2021 displayed a strong year-on-year rebound, although the shortage of
microchips caused fourth-quarter business to slow compared with the same period in 2020.
In the APAC region, despite strong growth in the market for electric cars and good performance in the premium
market, there was a sharp downturn at the mid and low end of the market. Moreover, cable manufacturers continued
to expand their market offerings upstream.
The Network Components market displayed a recovery in demand during 2021, especially by the MV segment in
the South Europe region, while other markets were stable.
The HV and EHV businesses reported growth in North America and a recovery in the UK thanks to the phasing of
certain projects.
Difficulties persisted in APAC due to strong competition, while the situation in other markets was stable.
76
Prysmian Group - Annual Report
2021
FINANCIAL PERFORMANCE
Sales to third parties by the
Industrial & Network Components
business area amounted to Euro 2,838 million in 2021,
versus Euro 2,252 million in 2020, recording a positive change of Euro 586 million (+26.0%), the main components
of which were as follows:
•
positive organic sales growth of Euro 188 million (+8.4%).
•
negative change of Euro 60 million (-2.7%) for exchange rate fluctuations;
•
sales price increase of Euro 385 million (+17.1%) for metal price fluctuations;
•
positive change of Euro 73 million (+3.2%) thanks to the acquisition of EHC and Omnisens S.A.
Industrial & Network Components
performed very well in 2021, mainly thanks to OEM and Renewables businesses.
All the other business lines, except Oil & Gas, also made a positive contribution.
Specialties, OEM and Renewables recorded a healthy level of profit and positive organic growth in line with expectations,
displaying good resilience to the global economic situation, particularly thanks to results achieved in Europe, North
America and LATAM and good performance by the Infrastructure, Water, Mining and Renewables businesses.
This positive performance was partially tempered by worse results for the Marine, Railways, Rolling Stock and
Nuclear businesses due to project phasing and delays in calling off orders already in the backlog.
The Elevator business continued to do well, with a good performance in China, despite the difficulties and tensions
on markets involving the sourcing of key components.
The acquisition of the EHC group was completed in January 2021 and is enabling the Group to integrate vertical
transportation solutions into the product portfolio of its Elevator business.
The Automotive business reported positive organic growth in every geographical region, with a recovery in both
volumes and profitability in progress since the final quarter of 2020.
The Network Components business recovered to pre-covid-19 levels, driven above all by the European MV segment
despite strong price pressure. The HV and EHV segment also showed signs of recovery related to project phasing.
Given the factors described above, Adjusted EBITDA for 2021 came to Euro 196 million, up from Euro 166 million in
2020, reporting a positive change of Euro 30 million (+18.6%).
The
Industrial & Network Components
business reported a margin of 6.9%, which would have been 7.8% if metal
prices had stayed at their 2020 level.
OTHER
(Euro/million)
2021
2020
2019
Sales
358
220
250
Adjusted EBITDA before share of net profit/(loss) of equity-accounted
companies
(6)
(1)
1
Adjusted EBITDA
(6)
(1)
1
EBITDA
(8)
3
3
Adjusted operating income
(10)
(6)
(2)
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 and from period to period.
77
Group Annual Report - DIRECTORS’ REPORT
Review of Telecom operating segment
(Euro/million)
2021
2020
% Change
2019
Sales
1,585
1,371
15.6%
1,648
Adjusted EBITDA before share of net profit/(loss)
of equity-accounted companies
206
200
2.9%
252
% of sales
13.0%
14.6%
15.3%
Adjusted EBITDA
220
214
2.9%
274
% of sales
13.9%
15.6%
16.6%
Adjustments
9
8
-
EBITDA
229
222
3.2%
274
% of sales
14.4%
16.2%
16.6%
Amortisation and depreciation
(76)
(76)
(72)
Adjusted operating income
144
138
4.7%
202
% of sales
9.1%
10.1%
12.3%
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 fibre optic cable market recovered during 2021.
In Europe, market growth has been driven by the plans set out in the Digital Agenda for Europe 2025, which envisages
the provision of three levels of minimum service depending on the type of user. In particular, government offices
and institutions like schools and hospitals are intended to benefit from a bandwidth of at least 1 Gb/s. Similarly, 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 according to
choices made by each individual country.
FTTH networks are the preference in France, Spain, Portugal and the Nordics, while G.Fast is the norm in Germany
and Britain; although these systems use the last few metres of the existing copper network, huge volumes of
optical cables are nonetheless required to upgrade the distribution networks. In other places like Italy, the two
technologies coexist.
North America confirmed the upward trend already observed since the final quarter of the previous year. In South
America, a region when fibre penetration rates are still low, there was a slight growth in the optical cables market,
driven by resumed investment by major telecom operators.
The copper cable market is experiencing a slowdown linked to product maturity. The downturn in demand, already
evident in recent years, has been confirmed but without showing any acceleration.
Given the high demand for internet access, the major operators have opted to renew their networks using optical
fibre, rather than perform extensive maintenance work or upgrade existing networks. It is still worth retaining
a presence in this segment since the gradual decommissioning of assets by competitor cable manufacturers
nonetheless offers attractive opportunities.
The MMS cable market has recovered, particularly in Germany, France, China and North America. In South America,
a gradual recovery has been in progress since the final quarter of the previous year.
78
Prysmian Group - Annual Report
2021
FINANCIAL PERFORMANCE
Sales to third parties by the
Telecom
operating segment came to Euro 1,585 million at the end of 2021, versus Euro
1,371 million in 2020.
The positive change of Euro 214 million (+15.6%) is explained by:
•
organic sales growth of Euro 175 million (+12.7%);
•
sales price increase of Euro 60 million (+4.4%) for metal price fluctuations;
•
negative change of Euro 21 million (-1.5%) for exchange rate fluctuations.
Organic growth in 2021 has been driven by a recovery in North America.
In Europe, although volumes were up on the previous year, prices were lower. The policy of “destocking” adopted
by the main European operators during 2020 gave way to a gradual recovery in volumes.
In South America, volumes grew in line with the positive market trend.
Globally, 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 continued to perform well, prompted by the
development of new FTTx (last-mile broadband) networks, particularly in Great Britain.
The Multimedia Solutions business recorded positive organic growth due to an upturn in North American market
volumes.
Adjusted EBITDA for 2021 came to Euro 220 million, reporting an increase of Euro 6 million (+2.9%) from Euro 214
million in 2020. The
Telecom
business posted a margin of 13.9%, which would have been 14.1% if metal prices had
stayed at their 2020 level.
79
Group Annual Report - DIRECTORS’ REPORT
Results by geographical area
Sales
Adjusted EBITDA
(Euro/million)
2021
2020
2021
2020
EMEA*
5,272
4,097
265
197
North America
3,808
3,016
336
345
Latin America
1,060
723
99
64
Asia Pacific
1,002
742
66
48
Total (excluding Projects)
11,142
8,578
766
654
Projects
1,594
1,438
210
186
Total
12,736
10,016
976
840
(*) EMEA = Europe, Middle East and Africa
As stated in the Explanatory Notes to the current Financial 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.
Although the primary operating segments remain those by business, 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, excluding
the
Projects
business whose geographical breakdown is unrepresentative. For this purpose, sales of goods and services
are analysed geographically on the basis of the location of the registered office of the company that issues the invoices,
regardless of the geographic destination of the products sold. This type of presentation does not produce significantly
different results from analysing sales of goods and services by such destination.
EMEA
The EMEA region’s sales amounted to Euro 5,272 million in 2021, reflecting year-on-year organic growth of +9.3%.
Adjusted EBITDA came to Euro 265 million (Euro 197 million in 2020), reporting a margin on sales of 5.0% (4.8%
in the previous year). These results were due to a recovery in Energy and Telecom, with strong organic growth by
Industrial & Network Components driven by OEM and Renewables (+21.7%).
North America
The region’s sales amounted to Euro 3,808 million in 2021, reflecting year-on-year organic growth of +10.2%.
Adjusted EBITDA amounted to Euro 336 million (Euro 345 million in 2020) and was negatively impacted by Euro 11
million in unfavourable exchange rate trends. Adjusted EBITDA reported a margin on sales of 8.8% (11.4% in the
previous year). Solid performance was recorded by the Trade & Installers business and Renewables. Since the last
quarter of the year, the Power Distribution business has been recovering after it has been impacted by raw material
prices increase during the first nine months of 2021.
LATAM
The LATAM region’s sales amounted to Euro 1,060 million in 2021, reflecting organic growth of +23.8%. Adjusted
EBITDA came to Euro 99 million (Euro 64 million in 2020), reporting a margin on sales of 9.4% (8.9% in the previous
year) notwithstanding negative forex impact for Euro 4 million. Excellent performances were displayed, particularly
by the Construction and Renewables.
APAC
The APAC region’s sales amounted to Euro 1,002 million in 2021, reflecting organic growth of +9.6%. Adjusted EBITDA
came to Euro 66 million (Euro 48 million in 2020) with a positive forex impact of Euro 3 million, reporting a margin
on sales of 6.6% (6.4% in the previous year). These robust results were achieved thanks to China contribution.
80
Prysmian Group - Annual Report
2021
Group statement of financial position
RECLASSIFIED STATEMENT OF FINANCIAL POSITION
(Euro/million)
31.12.2021
31.12.2020
Change
31.12.2019
Net fixed assets
5,304
4,971
333
5,301
Net working capital
650
523
127
755
Provisions and net deferred taxes
(659)
(579)
(80)
(820)
Net capital employed
5,295
4,915
380
5,236
Employee benefit obligations
446
506
(60)
494
Total equity
3,089
2,423
666
2,602
of which attributable to non-controlling interests
174
164
10
187
Net financial debt
1,760
1,986
(226)
2,140
Total equity and sources of funds
5,295
4,915
380
5,236
NET FIXED ASSETS
(Euro/million)
31.12.2021
31.12.2020
Change
31.12.2019
Property, plant and equipment
2,794
2,648
146
2,804
Intangible assets
2,137
1,997
140
2,154
Equity-accounted investments
360
312
48
314
Other investments at fair value through other
comprehensive income
13
13
-
13
Assets and liabilities held for sale (*)
-
1
(1)
16
Net fixed assets
5,304
4,971
333
5,301
*
Excluding the value of financial assets and liabilities held for sale.
At 31 December 2021, net fixed assets amounted to Euro 5,304 million, compared with Euro 4,971 million at 31
December 2020, posting an increase of Euro 333 million mainly due to the combined effect of the following factors:
•
Euro 277 million in net capital expenditure on property, plant and equipment and intangible assets;
•
Euro 335 million in amortisation, depreciation and impairment for the year;
•
Euro 63 million in increases in property, plant and equipment for new lease agreements accounted for in
accordance with IFRS 16;
•
Euro 190 million in positive currency translation differences affecting property, plant and equipment and
intangible assets;
•
Euro 48 million for the net increase in equity-accounted investments;
•
Euro 87 million in net additions to property, plant and equipment and intangible assets following the acquisition
of EHC, Omnisens and Eksa, consolidated respectively from 1 January, 1 November and 31 December 2021.
81
Group Annual Report - DIRECTORS’ REPORT
NET WORKING CAPITAL
The following table analyses the main components of net working capital:
(Euro/million)
31.12.2021
31.12.2020
Change
31.12.2019
Inventories
2,054
1,531
523
1,523
Trade receivables
1,622
1,374
248
1,475
Trade payables
(2,592)
(1,958)
(634)
(2,062)
Other receivables/(payables)
(608)
(515)
(93)
(187)
Net operating working capital
476
432
44
749
Derivatives
174
91
83
6
Net working capital
650
523
127
755
Net working capital of Euro 650 million at 31 December 2021 was Euro 127 million higher than the corresponding figure
of Euro 523 million at 31 December 2020. Net operating working capital, which excludes the value of derivatives,
amounted to Euro 476 million (3.5% of last-quarter annualised sales) at 31 December 2021, up Euro 44 million from
Euro 432 million (4.3% of last-quarter annualised sales) at 31 December 2020. The increase was due to exchange
rate differences and the significant rise in metal prices, which was only partially offset by a decrease in contract-
related net working capital.
EQUITY
The following table reconciles the Group’s equity and net profit/(loss) for 2021 with the corresponding figures
reported by Prysmian S.p.A., the Parent Company.
(Euro/million)
Equity at
31.12.2021
Net profit/
(loss) 2021
Equity at
3.12.2020
Net profit/
(loss) 20200
Parent Company Financial Statements
2,295
139
2,209
80
Share of equity and net profit of consolidated subsidiaries,
net of carrying amount of the related investments
870
293
290
208
Reversal of dividends distributed to the Parent Company
by consolidated subsidiaries
-
(121)
-
(123)
Deferred taxes on earnings/reserves distributable
by subsidiaries
(30)
-
(30)
-
Elimination of intercompany profits and losses included
in fixed assets
(35)
2
(37)
4
Elimination of intercompany profits and losses included
in inventories
(12)
(3)
(9)
5
Non-controlling interests
(173)
(2)
(164)
4
Consolidated Financial Statements
2,915
308
2,259
178
82
Prysmian Group - Annual Report
2021
NET FINANCIAL DEBT
The following table provides a detailed breakdown of net financial debt:
(Euro/million)
31.12.2021
31.12.2020
Change
31.12.2019
Long-term financial payables
CDP Loans
175
100
75
100
EIB Loans
110
110
-
118
Non-convertible bond
-
748
(748)
746
Convertible Bond 2021
707
-
707
-
Convertible Bond 2017
-
489
(489)
478
Term Loan
998
996
2
995
Unicredit Loan
200
200
-
199
Mediobanca Loan
100
100
-
100
Intesa Loan
150
150
-
149
Interest rate swaps
3
12
(9)
15
Lease liabilities
158
143
15
135
Other financial payables
8
9
(1)
12
Total long-term financial payables
2,609
3,057
(448)
3,047
Short-term financial payables
CDP Loans
-
1
(1)
100
EIB Loans
-
8
(8)
17
Non-convertible bond
763
14
749
14
Convertible Bond 2017
250
-
250
-
Term Loan
1
1
-
1
Interest rate swaps
6
7
(1)
6
Forward currency contracts on financial transactions
3
9
(6)
4
Lease liabilities
53
52
1
44
Other financial payables
56
51
5
36
Total short-term financial payables
1,132
143
989
222
Total financial liabilities
3,741
3,200
541
3,269
Long-term financial receivables
3
2
1
2
Long-term bank fees
1
3
(2)
4
Financial assets at amortised cost
3
4
(1)
4
Short-term forward currency contracts on financial
transactions
3
4
(1)
6
Short-term financial receivables
12
4
8
2
Short-term bank fees
2
2
-
2
Financial assets at fair value through profit or loss
244
20
224
27
Financial assets at fair value through
other comprehensive income
11
11
-
11
Financial assets held for sale
-
1
(1)
1
Cash and cash equivalents
1,702
1,163
539
1,070
Total financial assets
1,981
1,214
767
1,129
Net financial debt
1,760
1,986
(226)
2,140
Net financial debt of Euro 1,760 million at 31 December 2021 has decreased by Euro 226 million from Euro 1,986
million at 31 December 2020. As regards the principal factors behind the change in net financial debt, reference
should be made to the next section containing the “Statement of cash flows”.
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Group Annual Report - DIRECTORS’ REPORT
STATEMENT OF CASH FLOWS
(Euro/million)
2021
2020
Change
2019
EBITDA
927
781
146
907
Changes in provisions (including employee benefit
obligations) and other movements
19
(163)
182
(72)
Net gains on disposal of property, plant and equipment
and intangible assets
(2)
(20)
18
(1)
Share of net profit/(loss) of equity-accounted companies
(27)
(18)
(9)
(24)
Net cash flow from operating activities
(before changes in net working capital)
917
580
337
810
Changes in net working capital
(28)
259
(287)
67
Taxes paid
(120)
(142)
22
(111)
Dividends from investments in equity-accounted companies
8
8
-
9
Net cash flow from operating activities
777
705
72
775
Cash flow from acquisitions and/or disposals
(93)
(5)
(88)
(7)
Net cash flow used in operating investing activities
(275)
(244)
(31)
(248)
Free cash flow (unlevered)
409
456
(47)
520
Net finance costs
(79)
(86)
7
(94)
Free cash flow (levered)
330
370
(40)
426
Dividend distribution
(134)
(70)
(64)
(119)
Capital contributions and other changes in equity
1
1
-
2
Net cash flow provided/(used) in the year
197
301
(104)
309
Opening net financial debt
(1,986)
(2,140)
154
(2,222)
Net cash flow provided/(used) in the year
197
301
(104)
309
Equity component of Convertible Bond 2021
49
-
49
-
Partial redemption of Convertible Bond 2017
(13)
-
(13)
-
Increase in net financial debt for IFRS 16
(63)
(79)
16
(211)
Net financial debt from Acquisition and Disposals
8
-
8
-
Other changes
48
(68)
116
(16)
Closing net financial debt
(1,760)
(1,986)
226
(2,140)
Net cash flow provided by operating activities (before changes in net working capital) amounted to Euro 917 million
at the end of 2021.
The increase in net working capital used Euro 28 million in cash flow. After Euro 120 million in tax payments and Euro
8 million in dividend receipts, operating activities in 2021 therefore generated a net cash inflow of Euro 777 million.
Net operating capital expenditure used Euro 275 million in cash in 2021, a large part of which relating to projects
to increase and rationalise production capacity and to develop new products.
In addition, Euro 79 million in net finance costs were paid during the period.
In the past 12 months, the Group generated free cash flow of Euro 365 million excluding flows from acquisitions
and disposals of Euro 93 million and cash flow of Euro 58 million mainly due to settlement agreements reached
with third-party counterparties. The net inflow of Euro 365 million was generated by:
a.
Euro 883 million in net cash flow provided by operating activities before changes in net working capital;
b.
Euro 24 million in cash flow absorbed by restructuring costs;
c.
Euro 28 million in cash flow absorbed by the increase in net working capital;
d.
Euro 275 million in cash outflows for net capital expenditure;
e.
Euro 79 million in payments of net finance costs;
f.
Euro 120 million in tax payments;
g.
Euro 8 million in dividend receipts from associates.
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Prysmian Group - Annual Report
2021
Alternative performance indicators
In addition to the standard financial reporting formats and indicators required under IFRS, this document contains
a number of reclassified statements and alternative performance indicators. The purpose is to help users better
evaluate the Group’s economic and financial performance. However, these statements and indicators should not
be treated as a substitute for the accepted ones required by IFRS.
In this regard, on 3 December 2015, Consob adopted the ESMA guidelines in Italy with publication of “ESMA
Guidelines/2015/1415” which supersede the “CESR Recommendation 2005 (CESR/05-178b)”. The alternative
performance measures have therefore been revised in light of these guidelines.
The alternative indicators used for reviewing the income statement include:
•
Adjusted operating income:
operating income before income and expense for company reorganisation
1
, before
non-recurring items
2
, as presented in the consolidated income statement, before other non-operating income
and expense
3
and before the fair value change in metal derivatives and in other fair value items. The purpose
of this indicator is to present the Group’s operating profitability without the effects of events considered to
be outside its recurring operations.
•
EBITDA:
operating income before the fair value change in metal price derivatives and in other fair value items
and before amortisation, depreciation and impairment. The purpose of this indicator is to present the Group’s
operating profitability before the main non-monetary items.
•
Adjusted EBITDA:
EBITDA as defined above calculated before income and expense for company reorganisation,
before non-recurring items, as presented in the consolidated income statement, and before other non-
operating income and expense. The purpose of this indicator is to present the Group’s operating profitability
before the main non-monetary items, without the effects of events considered to be outside the Group’s
recurring operations.
•
Adjusted EBITDA before share of net profit/(loss) of equity-accounted companies:
Adjusted EBITDA as defined
above calculated before the share of net profit/(loss) of equity-method accounted companies.
•
Organic growth:
growth in sales calculated net of changes in the scope of consolidation, changes in metal
prices and exchange rate effects.
The alternative indicators used for reviewing the reclassified statement of financial position include:
•
Net fixed assets:
sum of the following items contained in the statement of financial position:
–
intangible assets;
–
property, plant and equipment;
–
equity-accounted investments;
–
other investments at fair value through other comprehensive income;
–
assets held for sale (excluding financial assets and liabilities held for sale).
1
Income and expense for company reorganisation: these refer to income and expense that arise as a result of the closure of production facilities and/or as a result of
projects to enhance the organisational structure’s efficiency.
2
Non-recurring income and expense: these refer to income and expense related to unusual events that have not affected the income statement in past periods and
that will probably not affect the results in future periods.
3
Other non-operating income and expense: these refer to income and expense that management considers should not be taken into account when measuring business
performance.
85
Group Annual Report - DIRECTORS’ REPORT
•
Net working capital:
sum of the following items contained in the statement of financial position:
–
inventories;
–
trade receivables;
–
trade payables;
–
other non-current receivables and payables, net of long-term financial receivables classified in net financial debt;
–
other current receivables and payables, net of short-term financial receivables classified in net financial debt;
–
derivatives net of financial instruments for hedging interest rate and currency risks relating to financial
transactions, classified in net financial debt;
–
current tax payables;
–
assets and liabilities held for sale involving current assets and liabilities.
•
Net operating working capital:
net working capital described above net of Derivatives not classified in Net
Financial Debt.
•
Provisions and net deferred taxes:
sum of the following items contained in the statement of financial position:
–
provisions for risks and charges – current portion;
–
provisions for risks and charges – non-current portion;
–
provisions for deferred tax liabilities;
–
deferred tax assets.
•
Net capital employed:
sum of Net fixed assets, Net working capital and Provisions.
•
Employee benefit obligations and Total equity:
these indicators correspond to Employee benefit obligations
and Total equity reported in the statement of financial position.
•
Net financial debt:
sum of the following items:
–
borrowings from banks and other lenders – non-current portion;
–
borrowings from banks and other lenders – current portion;
–
derivatives on financial transactions recorded as Non-current derivatives and classified under Long-term
financial receivables;
–
derivatives on financial transactions recorded as Current derivatives and classified under Short-term financial
receivables;
–
derivatives on financial transactions recorded as Non-current derivatives and classified under Long-term
financial payables;
–
derivatives on financial transactions recorded as Current derivatives and classified under Short-term financial
payables;
–
medium/long-term financial receivables recorded in Other non-current receivables;
–
loan arrangement fees recorded in Other non-current receivables;
–
short-term financial receivables recorded in Other current receivables;
–
loan arrangement fees recorded in Other current receivables;
–
financial assets at amortised cost;
–
financial assets at fair value through profit or loss;
–
financial assets at fair value through other comprehensive income;
–
cash and cash equivalents.
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Prysmian Group - Annual Report
2021
RECONCILIATION BETWEEN THE RECLASSIFIED STATEMENT OF FINANCIAL POSITION PRESENTED
IN THE DIRECTORS’ REPORT AND THE STATEMENT OF FINANCIAL POSITION CONTAINED IN THE CONSOLIDATED
FINANCIAL STATEMENTS AND EXPLANATORY NOTES AT 31 DECEMBER 2021.
(Euro/million)
31.12.2021
31.12.2020
Note
As per
financial
statements
As per
financial
statements
Total net fixed assets
A
5,304
4,971
Inventories
6
2,054
1,531
Trade receivables
5
1,622
1,374
Trade payables
12
(2,592)
(1,958)
Other receivables
5
661
522
Other payables
12
(1,197)
(1,001)
Current tax payables
(54)
(25)
Derivatives
8
165
67
Items not included in net working capital:
Financial receivables
5
15
6
Prepaid finance costs
5
3
5
Interest rate swaps
8
(9)
(19)
Forward currency contracts on financial transactions
8
-
(5)
Total net working capital
B
650
523
Provisions for risks and charges
13
(653)
(591)
Deferred tax assets
15
182
207
Deferred tax liabilities
15
(188)
(195)
Total provisions
C
(659)
(579)
Net capital employed
D=A+B+C
5,295
4,915
Employee benefit obligations
E
14
446
506
Total equity
F
10
3,089
2,423
Borrowings from banks and other lenders
11
3,729
3,172
Financial assets at amortised cost
(3)
(4)
Financial assets at fair value through other comprehensive
income
4
(244)
(20)
Financial assets at fair value through profit or loss
7
(11)
(11)
Financial assets held for sale
-
(1)
Cash and cash equivalents
9
(1,702)
(1,163)
Financial receivables
5
(15)
(6)
Prepaid finance costs
5
(3)
(5)
Interest rate derivatives
8
9
19
Forward currency contracts on financial transactions
8
-
5
Net financial debt
G
1,760
1,986
Total equity and sources of funds
H=E+F+G
5,295
4,915
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Group Annual Report - DIRECTORS’ REPORT
RECONCILIATION BETWEEN THE PRINCIPAL INCOME STATEMENT INDICATORS AND THE INCOME STATEMENT
CONTAINED IN THE CONSOLIDATED FINANCIAL STATEMENTS AND EXPLANATORY NOTES FOR 2021.
(Euro/million)
2021
2020
As per income
statement
As per income
statement
Sales
A
12,736
10,016
Change in inventories of finished goods and work in progress
229
69
Other income
125
99
Raw materials, consumables and supplies
(8,906)
(6,464)
Personnel costs
(1,486)
(1,409)
Other expenses
(1,831)
(1,579)
Operating costs
B
(11,869)
(9,284)
Share of net profit/(loss) of equity-accounted companies
C
27
18
Fair value stock options
D
33
31
EBITDA
E = A+B+C+D
927
781
Other non-recurring expenses and revenues
F
(2)
(9)
Personnel costs for company reorganisation
G
(13)
(24)
Other costs and revenues for company reorganisation
H
(8)
(8)
Other non-operating expenses
I
(26)
(18)
Total adjustments to EBITDA
L = F+G+H+I
(49)
(59)
Adjusted EBITDA
M = E-L
976
840
Share of net profit/(loss) of equity-accounted companies
N
18
18
Adjusted EBITDA before share of net profit/(loss) of equity-
accounted companies
O = M-N
958
822
(Euro/million)
2021
2020
As per income
statement
As per income
statement
Operating income
A
572
353
Other non-recurring expenses and revenues
(2)
(9)
Personnel costs for company reorganisation
(13)
(24)
Other costs and revenues for company reorganisation
(8)
(8)
Other non-operating expenses
(26)
(18)
Total adjustments to EBITDA
B
(49)
(59)
Fair value change in metal derivatives
C
13
(4)
Fair value stock options
D
(33)
(31)
Non-recurring impairment and reversals
E
(6)
(68)
Adjusted operating income
G=A-B-C-D-E
647
515
88
Prysmian Group - Annual Report
2021
Risk factors and uncertainties
Prysmian Group’s value creation policy has always been based on effective management of risks and opportunities.
Since 2012, by adopting the provisions on risk management introduced by the “Italian Stock Exchange Corporate
Governance Code for Listed Companies” (Corporate Governance Code), Prysmian has taken the opportunity to
strengthen its governance model and implement an evolving system of Risk Management that promotes proactive
management of risks and opportunities using a structured and systematic tool to support the main business
decision-making processes.
In fact, this Enterprise Risk Management (ERM) model, developed in line with internationally recognised models
and best practices, such as the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and
ISO 31000, enables the Board of Directors and management to make informed assessments of risk scenarios that
could jeopardise the achievement of strategic objectives, and to adopt additional tools able to anticipate, mitigate
or manage significant exposures and to pursue opportunities.
The Group Chief Risk Officer (CRO), designated to manage the ERM process, is responsible for ensuring, together
with management, that the main risks/opportunities facing Prysmian and its subsidiaries are promptly identified,
assessed, managed and monitored over time. A special Internal Risk Management Committee (consisting of the
Group’s Senior Management) also ensures, through the CRO, that the ERM process develops dynamically, by taking
account of changes in the business, needs and events that have an impact on the Group over time. The CRO reports
periodically on such developments to senior management. Reference should be made to the “Corporate Governance”
section of this report for a discussion of the governance structure adopted and the responsibilities designated to
the bodies involved.
The ERM model adopted (and formalised within the Group ERM Policy which incorporates the guidelines for the
Internal Control and Risk Management System approved by the Board of Directors back in 2014) follows a top-
down approach, meaning it is directed by Senior Management and medium/long-term business objectives and
strategies. It extends to all the types of risk/opportunity for the Group, represented in the Risk Model - shown in
the following diagram - that uses five categories to classify the risks of an internal or external nature characterising
the Prysmian business model:
•
Strategic Risks:
risks arising from external or internal factors such as changes in the market environment, from
bad and/or improperly implemented corporate decisions and from failure to react to changes in the competitive
environment, which could therefore threaten the Group’s competitive position and achievement of its strategic
objectives;
•
Financial Risks: r
isks associated with the quantity of financial resources available, with the ability to manage
currency and interest rate volatility efficiently;
•
Operational Risks:
risks arising from the occurrence of events or situations that, by limiting the effectiveness
and efficiency of key processes, affect the Group’s ability to create value;
•
Legal and Compliance Risks:
risks related to violations of national, international and industry-specific legal and
regulatory requirements, to unprofessional conduct in conflict with company ethics, exposing the Group to
possible penalties and undermining its reputation in the marketplace;
•
Planning and Reporting Risks:
risks related to the adverse effects of disclosing incomplete, incorrect and/or
untimely information with possible impacts on the Group’s strategic, operational and financial decisions.
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Group Annual Report - DIRECTORS’ REPORT
Members of management involved in the ERM process are required to use a clearly defined common method to
measure and assess specific risk events in terms of Impact, Probability of occurrence and adequacy of the existing
Level of Risk Management, meaning:
•
economic-financial impact
on expected EBITDA or cash flow, net of any insurance coverage and countermeasures
in place, and/or qualitative impact on reputation and/or operational efficiency/ continuity, measured on a scale
that goes from negligible (1) to very high (4);
•
probability
that a particular event may occur within the specific planning period, measured on a scale that goes
from remote (1) to probable (4);
•
level of control
, meaning the maturity and efficiency of existing risk management systems and processes,
measured on a scale that goes from adequate (green) to unadequate/non-existent (red).
The overall assessment must also take into account the future outlook for risk, i.e. the possibility that the exposure
is increasing, constant or decreasing over the period considered.
The results of measuring exposure to the risks analysed are then represented on a 4x4 heat map, which, by combining
the variables in question, provides an immediate picture of the most significant risk events.
Macroeconomic, demand trends &
Competivie environment
Stakeholder expectations and
Corporate Social Responsibility
Key customer & business partners
Emerging country risk
Law & regulation evolution
Research & Development
M&A / JVs and integration process
Operative CAPEX
Strategy implementation
Organizational framework &
governance
STRATEGIC
lntellectual Property rights
Compliance to laws and regulations
Compliance to Code of Ethics, Policies & Procedures
LEGAL & COMPLIANCE
Budgeting & Strategie planning
Tax & Financial planning
Management reporting
Financial reporting
PLANNING & REPORTING
Raw materials price volatility
Exchange rate volatility
Interest rate volatility
Financial instruments
Credit risk
Liquidy risk / Working Capital risk
Capital availability / cost risk
Financial counterparties
FINANCIAL
Sales & Tendering
Production Capaccity / Efficiency
Supply Chain Capaity / Efficiency
Business interruption / Catastrophic
events
Contract execution / Liabilities
Product quality / Liabilities
Environmental
Information Technology
Human Resources
Outsourcing
OPERATIONAL
THE PRYSMIAN RISK MODEL
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Prysmian Group - Annual Report
2021
This overall picture of the Group’s risks allows the Board of Directors and Management to reflect upon the level of
the Group’s risk appetite, and so identify the risk management strategies to adopt, by assessing which risks and with
what priority it is thought necessary to implement, improve and optimise mitigation actions or simply to monitor
the exposure over time. The adoption of a particular risk management strategy, however, depends on the nature
of the risk event identified, so in the case of:
•
external risks outside
the Group’s control, it will be possible to implement tools that support the assessment of
scenarios should the risk materialise, by defining the possible action plans to mitigate impacts (e.g. continuous
monitoring activities, stress testing of the business plan, taking out of insurance coverage, disaster recovery
plans, and so on);
•
risks partially addressable
by the Group, it will be possible to intervene through systems of risk transfer, monitoring
of specific indicators of risk, hedging activities, and so on;
•
internal risks addressable
by the Group, it will be possible, as risks inherent in the business, to take targeted
actions to prevent risk and minimise impacts by implementing an adequate system of internal controls and
related monitoring and auditing.
ERM is a continuous process that, as stated in the ERM Policy, forms part of the Group’s strategic planning process
through identifying potential events that could affect its sustainability, and which is updated annually with the
involvement of key members of management.
In 2021, this process involved the main business/function managers of the Group, allowing the most significant risk
factors to be identified, assessed and managed; this process also covered factors related to the Group’s sustainability,
to ensure lasting value creation for shareholders and stakeholders.
In particular, work was carried out in 2021 to update the assessment of sustainability-related risks and opportunities,
by enhancing the review process to make ESG (Environmental, Social, Governance) issues, especially those related
to climate change, an ever-more integral part of the Group’s ERM model. The assessment of risks and opportunities
was carried out considering the impact on the business in the short, medium and long term, in accordance with the
requirements of the framework of the task force on climate-related financial disclosures (TCFD). Further details
can be found in the TCFD report published separately in 2021.
Probability
Very High
High
Moderate
Minor
Remote
Low
Medium
Probable
Impact
Assessment criteria
Impact
Probability
Level of Control
Risk NOT ADEQUATELY
understood and/or managed
Risk understood and/or managed
with ROOM FOR IMPROVEMENT
Risk ADEQUATELY understood
and/or managed
Level of Risk Management
RISK ASSESSMENT CRITERIA
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Group Annual Report - DIRECTORS’ REPORT
The main risk factors to which the Group’s particular type of business model is exposed will now be presented
according to the classification used in the Risk Model described earlier, and describing the strategies adopted to
mitigate these risks.
Among the main risk factors, those that can have an impact in terms of economic, environmental and social
sustainability (ESG Environmental, Social, Governance risks) have also been assessed. For an analysis of all ESG risks
and further details, reference should be made to the specific section in the annual Sustainability Report, available
on the Company’s website at
in the section Media/Media Library/Sustainability Report.
Financial risks are discussed in detail in the Explanatory Notes to the Consolidated Financial Statements (Financial
Risk Management). As stated in the Explanatory Notes to the Consolidated Financial Statements (Basis of
preparation), the Directors have assessed that there are no financial, operating or other kind of indicators that
might provide evidence of the Group’s inability to meet its obligations in the foreseeable future and particularly
in the next 12 months. In particular, based on its financial performance and cash generation in recent years, as
well as its available financial resources at 31 December 2021, the Directors believe that, barring any unforeseeable
extraordinary events, there are no material uncertainties that could cast significant doubts upon the business’s
ability to continue as a going concern.
STRATEGIC RISKS
Risks associated with the competitive environment
Many of the products offered by Prysmian Group, primarily in the Trade & Installers and Power Distribution
businesses, are made in conformity with specific industrial standards and so are interchangeable with those
offered by major competitors. Price is therefore a key factor in customer choice of supplier. The entry into mature
markets (e.g. Europe) of non-traditional competitors, meaning small to medium manufacturing companies with
low production costs, and the need to saturate production capacity, together with the possible occurrence of a
contraction in market demand, translate into strong competitive pressure on prices, with possible consequences
for the Group’s expected margins.
Moreover, high value-added businesses - such as high voltage underground and submarine cables - are seeing an
escalation in competition both from existing operators and from new players, not necessarily from the industry
but with leaner more flexible organisational models, and/or significant financial resources, with a potentially
negative impact on both sales volumes and selling prices.
Although the existence of certain barriers to entry (such as those relating to ownership of technology, know-how
and track record that are difficult to replicate) may limit the number of players able to compete effectively on
a global scale in high value-added segments (such as high voltage underground cables, optical cables and, to
a much lesser extent, submarine cables), Prysmian Group cannot rule out either the entry of new competitors
into these market segments or an escalation of competition from existing players, with potential consequences
for the Group’s expected sales volumes and selling prices. The Group may be unable either to reduce its costs
sufficiently to offset the reduction in demand and the increased pressure on prices, or to effectively limit the
greater competition from both new entrants and existing players, which could have a material adverse effect
on its economic and financial conditions and/or results of operations.
In addition, the acceleration of technological innovation observed in recent years, with an increasingly widespread
use of renewable energy and a shift towards digitalisation, also fostered by the Covid-19 pandemic, represents
a further area of competition in the medium and long term.
The strategy of rationalising manufacturing footprint currently in progress, the consequent optimisation of cost
structure, the policy of geographical diversification and, last but not least, the ongoing pursuit of innovative
technological solutions, all help the Group to address the potential effects arising from the competitive
environment.
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Prysmian Group - Annual Report
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Risks associated with changes in macroeconomic conditions and demand
Factors such as trends in GDP and interest rates, the ease of getting credit, the cost of raw materials, and the general
level of energy consumption, significantly affect the energy demand of countries which, in the face of persistently
difficult economic conditions, then reduce investments that would otherwise develop the market. Government
incentives for alternative energy sources and for developing telecom networks also face cuts for the same reason.
In Europe, to cope with the current wave of the pandemic, some eurozone countries have reintroduced stricter
containment measures that could hold back economic recovery (see also “Risk of market contraction or softer
demand due to Covid-19”). In addition, current shortages of equipment, materials and labour in some sectors could
hamper the production of goods, causing delays in contract execution and slowing the recovery in some sectors
of the economy; these bottlenecks are expected to persist for some time. In periods of negative or no growth,
Prysmian Group could experience a decrease in sales and net profit, which could have a significant adverse effect
on its financial condition and results of operations.
Prysmian Group’s Transmission (high voltage submarine cables), Power Distribution and Telecom businesses are
being affected by the fluctuating contractions in European market demand due to the region’s prolonged economic
downturn.
To counter this risk, the Group is pursuing, on the one hand, a policy of geographical diversification in non-European
countries and, on the other, a strategy to reduce costs by rationalising its manufacturing footprint around the
world in order to mitigate possible negative effects on the Group’s performance in terms of reduced sales and
lower margins.
In addition, the Group constantly monitors developments in the global geopolitical stage which, as a result - for
example - of the introduction of specific industrial policies by individual countries, could require it to revise existing
business strategies and/or adopt mechanisms to safeguard the Group’s competitive position.
Risk of instability in the Group’s countries of operation
Prysmian Group operates and has production facilities and/or companies in Asia, Latin America, the Middle East,
Africa and Eastern Europe. The Group’s operations in these countries are exposed to different risks linked to local
regulatory and legal systems, the imposition of tariffs or taxes, exchange rate volatility, and political and economic
instability affecting the ability of business and financial partners to meet their obligations.
Some of the Group’s facilities, particularly in certain locations, are more at risk of being the target of economic
and political destabilisation, international conflicts, restrictive actions by foreign governments, nationalisation
or expropriation, changes in regulatory requirements, as well as difficulties in effectively managing various global
operations, terrorist activities, natural disasters, adverse foreign tax laws or trade agreements and the threat posed
by potential pandemics in countries that do not have the resources to deal with such outbreaks.
Significant changes in the macroeconomic, political, tax or legislative environment of such countries could have an
adverse impact on the Group’s business, results of operations, assets and financial condition; consequently, as already
mentioned in an earlier paragraph, the Group constantly monitors developments on the global geopolitical stage
that could require it to revise existing business strategies and/or adopt mechanisms to safeguard its competitive
position and performance.
The growing geopolitical tensions in Ukraine represent a further element of instability.
Risk of market contraction or softer demand due to Covid-19
The global macroeconomic situation deteriorated over the course of 2020 following the spread of the Covid-19
pandemic.
In response to this health emergency, governments in most countries adopted containment measures, including
travel bans, quarantines and other public emergency measures, with serious repercussions for economic activity
and the entire production system. These restrictions on travel and freedom of movement continued in the second
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half of 2020 and early 2021 with restrictions due to the “second and third waves”, and in autumn 2021 and early
2022 as a result of the “fourth wave”. More recently, the emergence of the Omicron variant has threatened an
intensification of the pandemic on a global scale and made uncertainty about its future evolution even greater.
This “wave” (and any future “waves”) has caused (and may continue to cause) fresh disruptions in the economies
of those nations already impacted by Covid-19 and could lead to further negative impacts on the global economy
in general. Potential impacts, including a global, regional or other economic recession, are increasingly uncertain
and difficult to assess. If the spread of Covid-19 persists for a significant period of time or if other restrictions are put
in place, this could have further negative impacts on the global economy that will depend heavily on the duration
and severity of the outbreak itself.
Any persistent or aggravated adverse impact on the global economy could affect the Group’s business, financial
condition and/or results of operations. The program of extraordinary measures, swiftly deployed by the Group since
the onset of the Covid-19 pandemic, is proving effective and has put people first. Accordingly, in order to preserve
the permanent employment of its resources, steps have been taken to safeguard the health of employees, including
through the ongoing performance of tests and provision of hygiene materials and personal protective equipment.
The Group has also implemented a series of measures intended to mitigate risks arising from the Covid-19 pandemic
with the purpose of defending its cash generating capability, through strict working capital management and
effective cost monitoring designed to reduce both fixed and variable expenditure. A much more rigorous investment
policy has also been adopted, while preserving a strategic allocation of resources.
Risks related to acquisitions and disposals
The Group reviews potential acquisition targets on an ongoing basis and whenever it acquires new companies, their
integration may pose challenges, particularly if management information and accounting systems are substantially
different from those used elsewhere in the Group. It is also possible that unforeseen problems may be encountered
in one or more of the acquired entities.
In addition, the Group may have to incur additional debt on each occasion to finance acquisitions.
Prysmian Group may also dispose of some of its businesses through M&A transactions, themselves subject to
uncertainty. Agreements entered into as part of disposal transactions typically provide for mutual obligations
as well as representations and warranties and seller obligations to indemnify the buyer for any liabilities arising
from the breach of such representations and warranties. In addition, such agreements typically contain conditions
precedent that must be satisfied prior to completion, otherwise the buyer’s termination rights may be triggered,
and therefore there is no guarantee that transactions in progress but not yet completed will actually be completed
by the deadline.
FINANCIAL RISKS
Prysmian Group’s risk management strategy focuses on the unpredictability of markets and aims to minimise the
potentially negative impact on the Group’s financial performance. Some types of risk are mitigated by using financial
instruments (including derivatives).
Financial risk management is centralised with the Group Finance department which identifies, assesses and hedges
financial risks in close collaboration with the Group’s operating companies. The Group Finance, Administration
and Control department provides guidelines on risk management, with particular attention to exchange rate risk,
interest rate risk, credit risk, the use of derivative and non-derivative instruments, and on how to invest excess
liquidity. Such financial instruments are used solely to hedge risks and not for speculative purposes.
Risks associated with availability of financial resources and their cost
The volatility of the international banking and financial system could be a potential risk factor in terms of obtaining
finance and its associated cost. In addition, failure to comply with the financial and non-financial covenants contained
in the Group’s credit agreements could limit its ability to increase its net indebtedness, other factors remaining
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equal. In fact, should it fail to satisfy one of these covenants, this would trigger a default event which, unless
resolved under the terms of the respective agreements, could lead to their termination and/or early repayment
of any credit drawn down. In such a case, the Group might be unable to repay the amounts demanded early, in turn
giving rise to a liquidity risk.
Given the current amount of financial resources and undrawn committed credit lines, totalling in excess of Euro
2 billion at 31 December 2021, and six-monthly monitoring
1
of financial covenant compliance (fully satisfied at 31
December 2021), the Group is of the opinion that it has significantly mitigated this risk and that it is capable of
raising sufficient financial resources at a competitive cost. A more detailed analysis of the risk in question, including
a description of the Group’s principal sources of finance, can be found in the Explanatory Notes to the Consolidated
Financial Statements.
Exchange rate volatility
Prysmian Group operates internationally and is therefore exposed to exchange rate risk on the currencies of the
different countries in which it operates. Exchange rate risk occurs when future transactions or assets and liabilities
recognised in the statement of financial position are denominated in a currency other than the functional currency
of the company which undertakes the transaction.
To manage exchange rate risk arising from future trade transactions and from the recognition of foreign currency
assets and liabilities, most Prysmian Group companies use forward contracts arranged by Group Treasury, which
manages the various positions in each currency.
However, since Prysmian prepares its consolidated financial statements in Euro, fluctuations in the exchange
rates used to translate the financial statements of subsidiaries, originally expressed in a foreign currency, could
affect the Group’s results of operations and financial condition. Exchange rate volatility is monitored both locally
and centrally, by the Group Finance department, also using specific indicators designed to intercept potential risk
situations which, when deemed to exceed the defined tolerance limits, will trigger immediate mitigating actions.
A more detailed analysis of the risk in question can be found in the “Financial Risk Management” section of the
Explanatory Notes to the Consolidated Financial Statements.
Interest rate volatility
Changes in interest rates affect the market value of Prysmian Group’s financial assets and liabilities as well as its
net finance costs. The interest rate risk to which the Group is exposed is mainly on long-term financial liabilities,
carrying both fixed and variable rates. Fixed rate debt exposes the Group to a fair value risk. The Group does not
operate any particular hedging policies in relation to the risk arising from such contracts since it considers this
risk to be immaterial. Variable rate debt exposes the Group to a rate volatility risk (cash flow risk). In order to
hedge this risk, the Group uses Interest Rate Swaps (IRS), which transform the variable rate into a fixed rate, thus
reducing the risk caused by interest rate volatility. IRS contracts make it possible to exchange on specified dates
the difference between contracted fixed rates and the variable rate calculated with reference to the loan’s notional
value. A potential rise in interest rates, from the record lows reached in recent years, could represent a risk factor
in coming quarters.
A more detailed analysis of the risk in question can be found in the “Financial Risk Management” section of the
Explanatory Notes to the Consolidated Financial Statements.
Credit risk
Credit risk is represented by Prysmian Group’s exposure to potential losses arising from the failure of business or
financial partners to discharge their obligations. This risk is monitored centrally by the Group Finance department,
while customer-related credit risk is managed operationally by the individual subsidiaries.
1
The financial covenants are measured at the half-year reporting date of 30 June and at the full-year reporting date of 31 December.
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The Group does not have any excessive concentrations of credit risk, but given the economic and social difficulties
faced by some countries in which it operates, the exposure could undergo a deterioration that would require closer
monitoring.
Accordingly, the Group has procedures in place to ensure that its business partners are of proven reliability and
that its financial partners have high credit ratings. In addition, in mitigation of credit risk, the Group has a global
trade credit insurance program covering almost all its operating companies; this is managed centrally by the Risk
Management department, which monitors, with the assistance of the Group’s Credit Management function, the
level of exposure to risk and intervenes when tolerance limits are exceeded due to difficulty in finding coverage
on the market.
It should be noted that credit risk was not particularly impacted during 2021 by the spread of the Covid-19 pandemic.
A more detailed analysis of the risk in question can be found in the “Financial Risk Management” section of the
Explanatory Notes to the Consolidated Financial Statements.
Liquidity risk
Liquidity risk indicates the sufficiency of an entity’s financial resources to meet its obligations to business or financial
partners on the agreed due dates.
With regard to Prysmian Group’s working capital cash requirements, these increase significantly during the first half
of the year when it commences production in anticipation of order intake, with a consequent temporary increase
in net financial debt.
Prudent management of liquidity risk involves the maintenance of adequate levels of cash, cash equivalents and
short-term securities, the availability of sufficient committed credit lines, and timely renegotiation of loans before
their maturity. Given the dynamic nature of the business in which Prysmian Group operates, the Group Finance
department prefers flexible forms of funding in the form of committed credit lines.
At 31 December 2021, the Group’s total financial resources and undrawn committed credit lines stood in excess of
Euro 2 billion.
A more detailed analysis of the risk in question can be found in the “Financial Risk Management” section of the
Explanatory Notes to the Consolidated Financial Statements.
Commodity price volatility risk
The Group’s operating results could be affected by changes in the prices of commodities and strategic materials
(such as copper, aluminium, lead, resins and polyethylene compounds as well as fuels and energy), which are
subject to market volatility.
The main commodities purchased by the Group are copper, aluminium and lead, accounting for more than 50% of
the total raw materials used to manufacture its products. The Group neutralises the impact of possible variations
in the price of copper, aluminium and, although less significant, lead through hedging activities and automatic
sales price adjustment mechanisms. Hedging activities are based on sales contracts or sales forecasts, which if not
met, could expose the Group to the risk of price volatility in the underlying assets.
A dedicated team within the Group Purchasing department monitors and coordinates centrally those sales
transactions requiring the purchase of metals and the related hedging activities carried out by each subsidiary,
ensuring that the level of exposure to risk is kept within defined tolerance limits.
A more detailed analysis of the risk in question can be found in the “Financial Risk Management” section of the
Explanatory Notes to the Consolidated Financial Statements.
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Risks associated with meeting pension plan obligations
Group companies have defined benefit pension plans in place throughout the world, into which they are required
to pay specific contributions. Under these plans, the Group is obliged to provide a defined level of benefits to plan
participants, and is therefore subject to the risk that the related assets are insufficient to cover the benefits. If a
fund is in deficit, its managing trustee it will require Prysmian Group to fund the plan.
In addition, the Group may be called upon to advance substantial contributions or provide further financial support
to certain plans if their creditworthiness declines or if beneficiaries withdraw en masse from the plans and require
immediate coverage of their deficits.
The Group has taken measures to mitigate its exposure to these risks, including by preventing new participants
from joining funded plans and requiring ongoing contributions from the original beneficiaries, but there can be no
assurance that these measures will be sufficient to mitigate the relevant risks. The costs of defined benefit pension
plans are determined on the basis of a number of actuarial assumptions, including an expected long-term rate of
return on assets and a discount rate. The use of these assumptions makes pension expense and cash contributions
subject to volatility from year to year.
OPERATIONAL RISKS
Liability for product quality/defects
Possible defects in the design and manufacture of Prysmian Group’s products could give rise to civil or criminal liability
towards its customers or third parties. Therefore, the Group, like other companies in the industry, is exposed to the
risk of product liability legal actions in its countries of operation. In line with the practice followed by many industry
operators, the Group has taken out insurance which it considers provides adequate protection against the risks arising
from such liability. Should such insurance coverage prove insufficient, the Group’s results of operations and financial
condition could be adversely affected.
In addition, the Group’s involvement in this kind of legal action and any negative outcome could expose it to reputational
damage, with potentially further adverse consequences for its results of operations and financial condition.
Risks associated with failure to meet contractual conditions in turnkey projects
Turnkey projects involve operational and management complexities that can affect delivery times, the quality of
the cables produced, the costs estimated at the contractual stage and, consequently, the agreed consideration and
any costs related to guarantees. The Group uses the percentage of completion method to account for such projects,
whereby the margins recognised in its financial statements depend on a project’s progress and its estimated margins
at completion. Consequently, work in progress and margins on incomplete projects may not be recognised correctly if
the revenues and costs of completion, including any contractual variations and cost overruns and penalties that might
reduce expected margins, have not been estimated correctly. The percentage of completion method requires the
Group to estimate the costs of project completion and involves making estimates based on factors that could change
over time and therefore could have a significant impact on the recognition of revenues and margins. Although the
Group has policies and procedures designed to manage and monitor the implementation of each project, there can
be no assurance that such problems will not arise. This could have a material adverse effect on the Group’s business,
financial condition and/or results of operations.
Specifically, projects for high/medium voltage submarine or underground power cables are characterised by
contractual forms entailing a “turnkey” or end-to-end type of project management that therefore demands compliance
with deadlines and quality standards, guaranteed by penalties calculated as an agreed percentage of the contract
value and that can even result in contract termination if the Group (or its subcontractors and/or other third parties
used by the Group in the execution of these projects) fails to comply with specific deadlines and quality standards.
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The application of such penalties, the obligation to pay damages as well as indirect effects on the supply chain in
the event of late delivery or manufacturing problems, could significantly affect project performance and hence
the Group’s margins. Possible damage to market reputation cannot be ruled out.
Given the complexity of turnkey projects, Prysmian Group has implemented a quality management process
involving an extensive series of tests on cables and accessories before delivery and installation, as well as ad
hoc insurance coverage, often through insurance syndicates, to mitigate exposure to risks starting from the
manufacturing stage through to delivery.
In addition, the ERM assessments for this particular risk have led the Risk Management department, with the
support of the Sales department, to implement a systematic process of Project Risk Assessment for all turnkey
projects, involving the assignment of a Project Risk Manager, right from the bidding stage, with the aim of
identifying, assessing and monitoring over time the Group’s exposure to specific risks and of foreseeing the
necessary mitigation actions. The decision to present a bid proposal to a customer will therefore also depend
on the results of risk assessment.
Management periodically carries out an assessment of completed and ongoing contracts, analysing the risks
involved, including a potential domino effect on the order backlog. The Group has set aside specific provisions
for such risks that represent the best estimate of the related liabilities based on available information.
Business interruption risk due to dependence on key assets
The submarine cables business is heavily dependent on certain key assets, such as the plants in Pikkala (Finland)
and Arco Felice (Italy) for the production of a particular type of cable and the cable-laying vessels owned by the
Group (the “Giulio Verne” and the new “Leonardo da Vinci” in operation since 2021), some of whose technical
capabilities are hard to find on the market. The loss of one of these assets due to unforeseen natural events (e.g.
earthquakes, storms, etc.) or other incidents (e.g. fire, terrorist attacks, etc.) and the consequent prolonged
business interruption could have a critical economic impact on the Group’s performance.
Prysmian addresses asset dependency risk by having:
•
a systematic Loss Prevention program, managed centrally by the Risk Management department, which, through
periodic on-site inspections, make it possible to assess the adequacy of existing systems of protection and
to decide any necessary remedial actions to mitigate the estimated residual risk. As at 31 December 2021,
the Group’s operating plants were sufficiently protected and there were no significant risk exposures. All the
plants have been classified as “Excellent Highly Protected Rated (HPR)”, “Good HPR” or “Good not HPR”, in
accordance with the methodology defined by internationally recognised best practices in the field of Risk
Engineering & Loss Prevention;
•
specific disaster recovery & business continuity plans that make it possible to activate, as quickly as possible,
the countermeasures required to contain the impact following a catastrophic event and manage any resulting
crisis;
•
specific insurance schemes covering damage to assets and loss of associated contribution margin due to
business interruption, so as to minimise the financial impact of this risk on cash flow.
Environmental risks
The Group’s production activities are subject to specific environmental regulations, amongst which those
concerning the management of raw materials, energy resources and hazardous substances, water discharges,
atmospheric emissions and waste, including pollution prevention and minimisation of impacts on environmental
factors (soil, subsoil, water resources, atmosphere).
As these regulations evolve, they are placing an ever-heavier compliance burden on businesses, often calling
for the upgrading of technology (Best Available Techniques) and the relevant risk prevention systems, with
associated related costs.
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Despite the Group’s risk management measures, there is no guarantee that certain environmental accidents
will not occur in the normal course of business. This may result in criminal and/or civil penalties and, in some
cases, safety violations. There are also costs associated with the Group’s compliance with health, safety and
environmental rules and regulations. The occurrence of environmental accidents or non-compliance with health,
safety and environmental legislation may have a material adverse effect on the business, its financial condition
and/or results of operations.
Given the Group’s large number of production sites, the probability of an accident, with consequences not only
for the environment but also for the continuity of production, cannot be ignored or the resulting economic and
reputational impact, which could be significant.
In order to prevent and mitigate environmental risks, the Group has adopted an ISO14000 certified environmental
management system at most of its production sites.
Environmental issues are managed centrally by the HQ Health Safety & Environment (HSE) department which, by
coordinating local HSE departments, is responsible for adopting systems to ensure strict compliance with legislation
in accordance with best practice, for collecting and analysing environmental data via a centralised platform, for
monitoring risk exposure using specific indicators, for organising specific training activities and carrying out
production site audits.
Cyber security risks
The growing prevalence of web-based technologies and business models allowing the transfer and sharing
of sensitive information through virtual spaces (i.e. social media, cloud computing, etc.) carries computing
vulnerability risks which Prysmian Group cannot ignore in conducting its business. Exposure to potential
cyberattacks could be due to several factors such as the necessary distribution of IT systems around the world,
and the possession of high value-added information such as patents, technology innovation projects, financial
projections and strategic plans not yet disclosed to the market, as well as risk related IT system obsolescence
and lack of proper maintenance, unauthorised access to which could damage a company’s results, financial
situation and image.
In particular, with regard to cyber risk, the Group has adopted a Cyber Security Program, which includes a
governance structure, policies and procedures, training, Security Reports, technologies and processes for
monitoring, analysing and containing incidents, Security Assessment for selected plants, periodic review of
the Threat Model and in-depth analysis of the complex structural factors that form the framework of a modern
Security system for the corporate community.
Given the increasing frequency of manufacturing cyberattacks and the growing introduction of IoT systems
in Operations and probable acceleration of these technologies due to energy transition plans, the potential
consequences under possible future scenarios (IEA - STEPS, APS, SDS and NZE) have been analysed and a secure
redesign and segregation project for production plants is underway, starting from the most strategic ones.
Also in 2021, training and multi-channel security campaigns were conducted for the entire Group, and controlled
Phishing and Social Engineering exercises were carried out, aimed at testing the readiness of company personnel
to recognise this common type of cyberattack.
A special Information Security Committee, consisting of the key figures involved in managing cyber risk, has been
appointed with the mission of defining the strategic and operational cyber security objectives, of coordinating the
main initiatives undertaken, and of examining and approving policies, operating procedures and instructions. The
Committee is convened on a periodic basis (twice a year) and in any case upon the occurrence of any significant
events or crises. Lastly, specific e-learning training sessions have been provided to all the Group’s IT staff with the
aim of raising their awareness of this issue.
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Risk of loss of key resources or failure to attract qualified personnel
The Group is exposed to the risk of lack or loss of key resources in strategic operational roles. Such persons can be
identified by their managerial responsibilities and/or specific know-how, necessary for the implementation of
corporate strategies, and are hard to replace quickly.
In order to ensure business continuity in line with its strategic objectives, the Group has established the following:
•
“Job Band Program”
to define staff grading based on correct job weighting with respect to responsibility, problem-
solving ability and know-how, in line with company strategies, using a common, global organisational language;
•
“Group Academy”
to teach and develop Leadership skills (Management School), Technical skills (Professional
School) and E-Learning (Digital school) within the Group, which, since 2021, have been complemented by “Local
Schools”, i.e. the set of training initiatives promoted by the Regions and inspired by the principle of continuous
on-site training, often in the local language. Such initiatives are designed to meet local, contingent needs, linked
to the challenges of existing roles or with a view to local growth of a more short-term nature;
•
“Stem it”
,
“Sell it”
,
“Sum it”
recruitment programs for professionals in the production, quality, purchasing,
logistics, sales and finance functions. The “Stem it” program also contains a specific policy dedicated to attracting
and retaining female technical specialists, in order to help make the Group increasingly gender-balanced;
•
“People Performance Program”
to manage career paths;
•
“Talent Management Program”
to accelerate development of our talents;
•
“MyMentorship”
, an in-house mentoring program operating globally to support the growth of key people through
an exchange of technical or leadership skills;
•
“Long-Term Incentive Program”
to motivate and retain the Group’s key managers;
•
“Graduate Program” aimed at attracting and recruiting talented, high-potential personnel to ensure successful
future staff replacements internally;
•
“Non-compete agreements”
formalised for those employees who possess technical process and product
innovation know-how representing strategic value added for the business in its particular competitive sector;
•
“Internal Job Posting”
, already active since 2020 regionally but intended to go global at a later date, to facilitate
the development of people’s cross-functional skills and continue to build a global corporate culture.
Key supplier dependence risks
In carrying out its operations, Prysmian Group uses numerous suppliers of goods and services, some of which are
important suppliers of raw materials like, for example, certain metals (copper, aluminium and lead) and some
polymer compounds, especially in the high voltage and submarine cables business. Dependence on key suppliers
obviously constitutes a risk in the event of delivery problems, quality issues or price rises, and, in the case of certain
raw material suppliers, Prysmian is potentially exposed to their industrial risk (fire, explosion, flood, etc.).
With the objective of preventing and mitigating these risks, the Group has a well-established qualification system
to select and work with reliable suppliers of goods and services and, where possible, identify possible alternatives,
thus avoiding single-source situations.
The mitigation strategy is therefore based on partnerships with a number of key suppliers aimed at reducing the
Group’s exposure to supply shortages, on close monitoring of their performance and on projects and investments
in R&D to develop alternative technical solutions.
Risks of dependence on key distributors and resellers for the non-exclusive sale of the Group’s products
Distributors and resellers account for a significant portion of the Group’s sales. These distributors and resellers are
not contractually obliged to purchase the Group’s products on an exclusive basis. Therefore, they may purchase
competitor products or cease to purchase the Group’s products at any time. The loss of one or more major distributor
could have a material adverse effect on the Group’s business, financial condition and/or results of operations.
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LEGAL AND COMPLIANCE RISKS
Risks of non-compliance with Code of Ethics, Policies and Procedures
Non-compliance risk generically represents the possibility of incurring legal or administrative sanctions, material financial
losses or reputational damage as a result of violations of applicable laws and regulations. Prysmian Group has put in place
a series of organisational tools to define the principles of legality, transparency, fairness and honesty through which it
operates. In particular, since its inception, the Group has adopted a Code of Ethics, a document which contains the ethical
standards and the behavioural guidelines that all those engaged in activities on behalf of Prysmian or its subsidiaries
(including managers, officers, employees, agents, representatives, contractors, suppliers and consultants) are required
to observe. Through its Internal Audit & Compliance department, the Group undertakes to constantly monitor compliance
with and effective application of these rules, not tolerating any kind of violation.
However, despite this ongoing attention, close vigilance and periodic information campaigns, it is not possible to rule
out future episodes of misconduct in breach of policies, procedures or the Code of Ethics, and hence of applicable laws
and regulations, by persons carrying out activities on Prysmian’s behalf, which could result in legal sanctions, fines or
reputational damage, even on a material scale.
Risks of non-compliance with Data Protection (Privacy) legislation
In today’s increasingly globalised business environment, with a proliferation of channels and ways to access
information, as well as growth in the volume and types of data managed, Prysmian is addressing the various data
management issues, ranging from compliance with recent legislation to defence against potential threats to
confidentiality, integrity and availability of information.
Accordingly, it is fundamental to have a global vision when managing sensitive information, not only with respect
to regulatory compliance but also with respect to security and business priorities.
Furthermore, Europe’s General Data Protection Regulation (GDPR), which came into force in May 2018, has now
become one of the main reference points for a renewed commitment to data protection, particularly personal data.
If the Group does not adequately comply with or successfully implement processes in response to these new
regulatory requirements, and particularly in light of its large number of employees and the growing trend towards
global data management (including cloud storage and the use of mobile devices), it could be at risk of individual
claims for compensation for alleged mismanagement of personal data, imposition of sanctions by relevant
authorities and reputational damage.
The personal data protection program adopted by Prysmian is based on the following key elements, involving the
entire corporate structure:
•
Implementation of a data-based model, through mapping the personal data processed by company departments
and keeping a record of processing activities;
•
Definition of a governance model, designed to comply with the requirements of the GDPR and other emerging
data protection regulations, featuring:
–
an organisational structure under which the Data Protection Officer (DPO) serves in an advisory and monitoring
capacity where personal data management is concerned, with the duties and related responsibilities delegated
to those materially engaged in data processing activities;
–
policies and documents supporting the model (company policies, disclosure statements, internal
appointments, clauses applicable to suppliers, etc.);
•
Evaluation and adoption of adequate technical and organisational measures to ensure a level of security
appropriate to the risk, also with the help of new tools such as Data Protection Impact Assessment introduced
by the GDPR;
•
Definition of communication and training material specifically for those parties identified within the data
protection organisational model, so that all the parties involved are aware of the revised regulatory requirements
and take steps to fulfil them;
•
Review of video surveillance systems, with particular reference to the new European guidelines and the regulations
applicable in Italy.
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In addition, the following activities have been undertaken to ensure data protection compliance:
•
Verification of the adequacy of the procedures adopted by the Group to manage the green pass and related
access controls by the employer;
•
Review of the process for appointing System Administrators, periodically updating appointments and managing
system logs;
•
Coordination of the adoption of a privacy model in relation to the Group’s legal entities in Chile and Brazil.
Monitoring and support have been provided to Prysmian’s many European legal entities in applying the model to
ensure its consistent application and the establishment of an internationally shared corporate culture in this regard.
The activities to comply with the recent European legislation are capitalised on as much as possible in the compliance
activities required by other national regulations.
Risks of non-compliance with anti-bribery legislation
In recent years, legislators and regulators have devoted much attention to the fight against bribery and corruption,
with a growing tendency to extend responsibility to legal entities as well as to natural persons. With growing
internationalisation, organisations more and more often find themselves operating in contexts exposed to
the risk of bribery and having to comply with a variety of relevant legislation, such as Italian Legislative Decree
231/2001, Italy’s Anti-bribery Law (Law 190/2012), the Foreign Corrupt Practices Act, the UK Bribery Act etc., all
with a common objective: to fight and repress corruption.
The Group’s business model, with a global presence in over 50 countries and a multitude of diverse product
applications, brings it into constant contact with numerous third parties (suppliers, intermediaries, agents and
customers). In particular, the management of large international projects in the Energy (submarine and high
voltage) business involves having business relationships, often through local commercial agents and public
officials, in countries at potential risk of corruption (as per the Corruption Perception Index).
Prysmian Group has therefore implemented a series of actions designed to manage bribery and corruption on a
preventive basis; foremost amongst these is the adoption of an Anti-Bribery Policy which prohibits the bribery
of both public officials and private individuals and requires employees to abide by it and to observe and comply
with all anti-bribery legislation in the countries in which they are employed or active, if this is more restrictive. In
addition, specific e-learning activities (training and testing) for all Group personnel are periodically conducted
to raise awareness about compliance with this legislation.
Like in the previous year, during 2021 Prysmian Group continued its monitoring activities and maintained its
focus on compliance through a special anti-bribery compliance program inspired by the guidelines of ISO
37001:2016 “Anti-bribery Management Systems”. This program is intended to provide greater control over
the management of bribery risk and minimise the risk of incurring penalties as a result of corrupt offences by
employees or third parties.
In 2021, the Group initiated the process of obtaining ISO 37001:2016 certification by updating its anti-bribery
risk assessment, its “Anti-bribery Management Systems” as well as its Anti-bribery Policy in order to comply
with ISO 37001. In addition, a specific anti-bribery unit was set up within the Compliance office. ISO 37001
certification was obtained in December 2021 from an outside independent certifier.
The core of the ISO 37001 standard is the control of third parties (suppliers, intermediaries, agents and
customers) through due diligence designed to reveal any critical issues or negative events that undermine
the reputation of third parties with whom Prysmian Group deals.
In this regard, in 2019 the Group implemented a “Third Party Program”, a new Group Policy aimed at preventing
and managing the risk of bribery arising from relationships with third parties (such as distributor agents, and
certain categories of supplier). In particular, prior to establishing any business relationship with third parties,
it is mandatory to perform - through a dedicated online platform - due diligence checks on the third party.
As a result, each third party receives a risk rating (high, medium, low) and is consequently submitted to an
approval process, differing according to the level of risk. This program, introduced in 2019, continued to run
throughout 2021.
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In addition, in line with the Group’s ongoing commitment to ensure that the financial and personal interests of its
employees and consultants do not conflict with the ability to perform their duties in a professional, ethical and
transparent manner, a new Conflict of Interest policy was issued in 2019. A new online platform was implemented
in 2021 for reporting potential conflicts of interest, both inside and outside the business. In particular, all Prysmian
Group employees were required to disclose all personal or financial relationships that could potentially lead to a
conflict of interest.
In 2021, the Gifts and Entertainment Policy was also updated, establishing a series of rules to be complied with
before making or receiving gifts or entertainment expenses and distinguishing between private companies and
government agencies/public officials. In the same period, a new online platform was also implemented so that
before making or receiving gifts or entertainment expenses, all Prysmian employees make appropriate disclosures
and obtain the necessary approvals. All compliance policies (Code of Ethics, Global Compliance, Helpline, Anti-
Bribery, Gifts & Entertainment, Third Party Program, Antitrust, Antitrust EU, Conflict of Interest, Export Control)
are published on the corporate intranet and are available in the official languages of the Prysmian Group.
Further details about the actions taken by the Group to prevent corrupt practices can be found in the specific section
of the annual Sustainability Report.
Risks of non-compliance with antitrust law
Competition rules on restrictive agreements and abuse of dominant position now play a central role in governing
business activities in all sectors of economic life. Its extensive international presence in more than 50 countries
means the Group is subject to antitrust law in Europe and every other country in the world in which it operates, each
with more or less strict rules on the civil, administrative and criminal liability of parties that violate the applicable
legislation. In the last decade, local antitrust authorities have paid increasing attention to commercial activities
by market players, also involving a tendency for international collaboration between authorities themselves.
Prysmian aspires to operate on the market in compliance with the competition rules.
In keeping with the priorities identified by the ERM process, the Board of Directors has adopted an Antitrust Code
of Conduct that all Group employees, Directors and managers are required to know and abide by in the conduct of
their duties and in their dealings with third parties.
Like with other Policies, following the acquisition of General Cable, the Antitrust Code of Conduct has also been updated in
order to have a single document, valid for the entire Prysmian Group and designed to provide an overview of the problems
associated with applying antitrust law and the consequent standards of conduct to follow. More detailed documents on
the antitrust regulations in force in the European Union, North America, China and Australia have also been adopted.
The Antitrust Code of Conduct is an integral part of the training program and is intended to provide an overview of
the issues concerning application of EU and Italian competition law on collusive practices and abuse of dominant
positions, within which specific situations are assessed on a case-by-case basis. These activities represent a further
step in establishing an “antitrust culture” within the Group by promoting knowledge and making individuals more
accountable for their professional duties under antitrust legislation. Training in this area continued to be pursued
in 2021. In particular, due to the Covid-19 emergency, classroom lessons have been replaced by specific online
training delivered via the Microsoft Teams platforms for certain functions, including Sales, Finance and Purchasing.
In addition, e-learning modules are available on the company intranet to support and raise awareness of and
attention to this issue on an ongoing basis.
In particular, in 2017 Prysmian launched an antitrust training program called Integrity First (IF Training) with the
aim of raising the awareness of all those working in the name of and on behalf of the Group; this program continued
to run throughout 2021. In addition, two additional antitrust training sessions were held in 2021, one in Europe (in
Spain) and the other in North America.
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With regard to the antitrust investigations still in progress, details of which can be found in the note on Provisions
for risks and charges in the Explanatory Notes to the Consolidated Financial Statements, the Group has a specific
provision for risks and charges amounting to approximately Euro 179 million as at 31 December 2021. Despite the
uncertainty of the outcome of the investigations and legal actions in progress, the amount of this provision is
considered to represent the best estimate of the liability based on the information available at the date of the
current report.
Risks arising from export restrictions, trade tariffs and other changes in trade policy
Prysmian Group’s activities also involve the shipment and transfer of finished products, semi-finished goods and
raw materials between different countries, exposing the Group to risks related to changes in the tax, customs tariff
and trade regimes of different political jurisdictions.
In addition, many countries have rules on international trade and apply laws and regulations governing trade in
products, software, technology and services, including financial transactions and intermediation.
For example, export control regimes, governed by the laws of the United States, the EU (article 215 of the Treaty
on the Functioning of the EU) and the United Nations (Chapter VII of the UN Charter), identify the parties (natural
or legal persons) to whom the application of specific restrictions (e.g. arms embargoes, travel bans, financial or
diplomatic sanctions, etc.) is mandatory.
Failure to comply may result in the imposition of fines and criminal and/or civil penalties, including imprisonment.
Any of the above circumstances could have a material adverse effect on the business, financial condition and/or
results of operations of Prysmian Group and could affect its ability to fulfil issuer obligations under its Bond issues.
In order to prevent and mitigate this risk, Prysmian Group has adopted a policy to manage and control its exports
that involves among other things:
•
Monitoring of countries and parties subject to restrictions, as well as the level of restrictions in force;
•
Due Diligence on restricted persons, in order to avoid transactions with prohibited parties, including screening
of Prysmian Group employees and visitors;
•
Product classification to determine which export compliance requirements are applicable. This classification
allows the Group to understand where and to whom products can be exported and whether a licence or other
permit is required;
•
Basic training for all employees on export controls and specific training for staff in functions responsible for
international trade transactions and export controls;
•
Requirement for an end-user declaration certifying that the buyer or end-user of goods/technology complies
with applicable export regulations.
Risks related to changes in industry standards and legal requirements
Group companies are required to comply with specific federal, state, local and foreign legal and regulatory
requirements, as well as certain industry standards. Changes in applicable laws and regulations may affect the
growth of the markets in which the Group operates. Growth in the cable industry is partly due to legislation on energy
and alternative and renewable energy sources, as well as to incentives for investing in utilities and infrastructure.
It is not foreseeable whether, in the future, there will be changes and/or industry standards that are detrimental to
the Group’s business. Although the Group’s business is managed to mitigate such risks, there can be no assurance
that changes in applicable standards, laws and regulations will not result in significant costs, which could have a
material adverse effect on the Group’s business, financial condition and/or results of operations.
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PLANNING AND REPORTING RISKS
Planning and reporting risks are related to the adverse effects that irrelevant, untimely or incorrect information
might have on the Group’s strategic, operational and financial decisions. At present, in view of the reliability and
effectiveness of internal procedures for reporting and planning, the Group does not consider these risks to be
relevant.
In addition, the risks related to climate change are reproduced below from the Consolidated Non-Financial
Information Statement (Sustainability Report 2021) and the TCFD Report 2021, in which further details can be found.
Risks related to climate change
Events related to climate change, including extreme weather events such as storms, floods, hailstorms, changes
in summer and winter rainfall and increased temperatures, may also affect the Group’s activities. The Group’s
plants use water for industrial uses, mainly for certain cooling phases of their processes, although in relatively
small quantities. Consequently, the Group is exposed to the potential risk of reduced water availability, which is
affected by climate change. In addition, any rise in sea level could lead to an increased risk of coastal flooding
as a result of adverse weather conditions in the locations where the Group’s production facilities are located.
Analysis of these physical risks has been extended to the Group’s entire supply chain. On top of physical risks,
climate change also entails a transition risk accompanying the energy market’s evolution in the wake of the climate
crisis. Firstly, the Group is exposed to the potential risk of inadequate support for technological innovation and
the emergence of alternative or substitute technologies. This could mean a reduction in demand for products
and services, which in turn would lead to a decrease in revenues. Secondly, new energy transition policies, and
the consequent impact of increased market opportunities, are rapidly changing an already competitive scenario.
The expansion or entry of new players may reduce or disrupt the Group’s leadership, resulting in lost revenues
or reduced margins.
The need to decarbonise our economy also translates into more complex market demands, increasing the likelihood
that Prysmian’s products contain patented third-party solutions. This could expose the business to risks associated
with the management of third-party patents and possible costs arising from litigation.
In addition, there is a risk of a climate change-related increase in costs for the Group due to a potential rise in
production costs caused by the wider application of emission laws and regulations, both in the form of carbon
taxes and emission trading schemes. Finally, although already mentioned, the energy transition is accelerating
the digitisation of physical assets and increasing the risks and consequences related to cyber security. This could
lead to higher adaptation and monitoring costs. Any of these circumstances may have a material adverse effect
on the Group’s business, financial condition and/or results of operations.
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Research and development
SUSTAINABLE INNOVATION
Globally Prysmian Group R&D consists of more than 900 professionals, spread in 26 R&D centers in the world. The HQ
R&D located near the Headquarters in Milan, acts as coordinator of the activities performed in the local R&D centers
and as promoter of special breakthrough innovation projects, oriented on a medium- and long-term perspective.
It includes laboratories where development of new cables and technologies can be performed in full autonomy,
being able to count on an experimental prototype room for production of cables and compounds, on an electrical
testing facility, equipped with the most advanced systems for EHV cables testing, and a physical-chemical lab gifted
with cutting-edge instruments dedicated to deeply analyze cables and materials properties.
Group R&D has responsibility for overall innovation strategy, aimed at making Prysmian a key player in the value
chain to support Energy Transition, Digitalization and Sustainability. Local R&D centers act operatively on new
products development, design to cost and product family rationalization.
*
Euro 94 million in operating expenses and Euro 13 million in investment expenditure
It has been reinforced the role of Sustainability in the R&D activity, acting as leading force for the whole Innovation
process of the Company. Strong focus has been given on decarbonizing the product portfolio in all segments /
businesses and working closely with our customers / suppliers to cut the emissions in the supply chain.
Covid situation has been properly managed in almost all the countries, with not relevant impact in daily activities
and operations. The company learned how to deal with the pandemic, by putting in place all the necessary measures
in order to preserve the health of people, considered the leading priority in all regions and at all company levels.
Materials Shortage was a sever issue for the Company starting in Q2 and is still far from the normalization. The
supply chain disruptions and the strong growth of raw materials prices was properly managed by putting in place
fast track procedures for qualification of alternative materials, leveraging on the strength of the company and the
global presence.
107
*
million euros
invested in R&D
298
product families
launched in 2021
about
5.600
patens covering
the main innovations
50
collaborations with research
centres and universities
26
research centres
900
professionals
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2021 was an exceptional year in terms of DTC (Design to Cost), both activities and related results. Final result (48,4
Mln €) is the highest ever achieved, overcoming 7% the Company best year results (2019, 45,4 Mln €). DTC helped
to mitigate variable cost inefficiencies (shortages and raw materials price volatility related for the most part) and
enhance product competitiveness across several segments.
New products introduction (NPI) activity showed a significant increase, with 14% vitality (was 13% in 2020) and
almost 300 new product families launched in the year (were 200 in 2020).
Following the success of the Innovation Contest launched in 2019 and awarded in 2020, a new edition has been
launched in 2021 in collaboration with an important customer and channel partner operating in Multimedia &
Enterprise Solutions.
When carrying out research, the Prysmian Group is aware that today - as evidenced by the SDGs - it is essential to
develop partnerships with all relevant stakeholders: from the academic world to independent research centres, from
suppliers and all supply chain counterparties to our customers, whose collaboration and feedback are extremely
important for the identification of those requirements that need the greatest attention.
Prysmian and General Cable have established consolidated collaborative relations with more than 50 major universities
and research centres around the world. These collaborations, strategic for the Prysmian Group, support cutting-edge
technological research and allow the adoption of state-of-the-art innovations in all areas relevant to the wire and
cable industry.
For an indication of the institutions with which Prysmian cooperates, the research carried out with them and the
international conferences in which the Group participated in order to share the developments of this research, please
refer to the 2021 Non-Financial Disclosure.
R&D BY THE PRYSMIAN GROUP
Core Area
The main aspect guiding the strategy of the Prysmian Group is the need to concentrate on factors that facilitate
the development of cabled infrastructures for the transportation of electricity and information that, today, are
essential elements in all current transformations of society, from the new electric mobility to smart cities, from
the expansion of 5G to the use of artificial intelligence to collect and interpret data, and much more.
The ever more advanced search for EHV electricity transmission systems that can be buried, for longer and more
efficient cables that can be laid at greater depth, for optical fibre solutions that can contain the largest number of
cables in a miniaturised space and that can be used easily in the field, are therefore core areas in which the majority
of the investment made by the Group is dedicated.
ACADEMIC CENTRES
CUSTOMERS
SUPPLIERS
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Digital Ambition
Providing solutions for the energy and telecom sector is the next step for Prysmian Group’s future, guided by
the “digital ambition” principle that will expand on the current leading position as cabling system manufacturer.
Digital tools and solutions are being currently leveraged to optimize business performance: digital products and
services will help in sustaining the Group’s growth strategy, supporting collective intelligence by digitalizing the
company’s culture. This ambition is based on 3 pillars:
ENABLING ENERGY
TRANSITION
& DIGITALIZATION
GOING DEEPER
INTO THE SEA WITH
LONGER LENGTHS
PUSHING THE
BOUNDARIES
OF UHVDC
Industry first to qualify
both 525kV XLPE and P
Laser solutions
1 high depth
submarine cable
with synthetic armor
TRANSFORMING
THE OPTICAL
FIBER LANDSCAPE
Sirocco Extreme
with 180µm
Fiber Nano Cables
Super high density
FlexRibbon up to 6912f
DIGITIZATION
OF PROCESS
AND PRODUCTS
Smart cable solutions
From Data to Insight
Augmented
user experience
ACCELERATING
INNOVATION
WITH CORPORATE
HANGAR START-UPS
Alesea
Kablee
Cultifutura
MONITORING THE
GRIDS WITH
PRYSMIAN
ELECTRONICS
Pry-Cam HOME
Pry-Cam DTS
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•
efficiency through data, to reduce waste and improve performance.
•
develop value-added digital products, by extracting and generating value from enterprise data.
•
foster new digital practices in the organization, to empower the entire workforce.
Innovative digital technologies play a central role in making room for growth that both benefits the customer, the
Group and external stakeholders, by optimizing the use of resources and guaranteeing accountability in tracking
our results and guaranteeing high quality standards by leveraging the vast amounts of data that is already present.
With more than 10 technologies in exploration, 5 projects in experimentation, 5 projects in integration and more
than 30 Digital Local Partners all around the world, Digital Innovation brings us closer to a holistically approached
sustainable development, addressing economic sustainability by amplifying outputs from the same amount of inputs,
social sustainability by bringing people closer from afar and environmental sustainability by allowing for the most
efficient use of resources.
IT, R&D
The group’s ERP system (SAP 1C) has been successfully migrated in September 2021 to the new SAP S4 / HANA platform.
The new system is covering 78 plants, in 28 countries, and more than 6.000 Users, it is now completely on Cloud
infrastructure and it runs with a simplified database. This technological leap will allow in the coming months an
acceleration of innovation towards the concept of “intelligent ERP” using real time data, advanced Analytics, and a
better User Experience. Also, in 2021, we continued to invest in the SAP BW / 4 HANA Business Intelligence system.
Prysmian’s open innovation infrastructure: corporate hangar
Prysmian Group confirmed its commitment with Corporate Hangar for an additional 3 years to accelerate its path
towards innovation and sustainability. In 2021, Corporate Hangar enlarged the projects base with Prysmian and the
startups started delivering solid and measurable results.
For further details refer to 2021 Non-Financial Disclosure.
Innovation Steering Committee
In 2021, the Prysmian Group Innovation Steering Committee created an operating rhythm to consolidate our
innovation focus areas and enhance the entrepreneurial culture of our employees. The following measures were
instituted combining the strengths of R&D, Prysmian Electronics, Corporate Hangar and Digital Innovation:
1.
Creation of a global innovation portfolio aligned with the group goals to be an innovation leader in Energy
Transition and Digitalization, ensuring high potential projects are accelerated with the right resources
2.
Increasing our R&D spend linking our Innovation efforts to Sustainability in support of our Climate Ambition
3.
Enhancing collaboration both internally and externally to deliver higher value add products and services that
transform Prysmian as a wire and cable solution provider to address our customer needs.
NEW PRODUCTS INTRODUCTION (NPI)
The introduction of new products (NP) is tracked as a routine activity, to highlight the effectiveness of our R&D
departments.
The main purpose of this process is to increase awareness of the growing importance of innovation as a success
factor and the development of new products as a driver for improving the performance of the organization.
The consolidation of the New products process, together with GC Legacy, provides a new value in order to sustain
the business, overcome competitors and acquire new customers.
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Main New Products Activities:
•
New Products Tool
(created internally on Qlikview and updated automatically ) developed to support analysing
economics of new products and to track the top projects during the three-year vitality period. The Tool is currently
used globally for all Regions and Businesses.
•
Global Innovation data management software (Sopheon Accolade
®
) implementation (2021-2022)
standardizes
the new product development work process for Prysmian globally. It provides a unique platform for prioritizing
the projects with highest value, decision making on the projects during execution and driving project execution.
During 2021 the R&D function executed a large number of new product development projects resulting in:
Over
700
new products
in the Development
category
Over
90
new products
in the Innovation
category
The Group Vitality Result 3Q 2021 compared to 3Q-2020 increased from 13,0 % to 14,0%:
PRYSMIAN GROUP
NET TURNOVER
TOTAL RESULT (K€)
NET TURNOVER NP (K€)
%
3Q2021
7,750,532
1,083,244
14.0
3Q2020
6,429,117
836,668
13.0
NP CATEGORY
NET TURNOVER NP (K€)
%
Innovation
52,159
0.7
Product Development
575,223
7.4
Technology Transfer
455,864
59
For further details on the development of new technologies in the Projects segment, in the Energy segment and
in the Telecom segment, please refer to the 2021 Non-Financial Disclosure.
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INTELLECTUAL PROPERTY PROTECTION
Protecting the portfolio of patents and trademarks is a key part of the Group’s business, particularly given the growth
strategy adopted in high-tech market segments. At the end of 2021 Prysmian Group has essentially the same number
of patents and patent applications as in previous years. The number of patents increased in 2018 because of the
General Cable acquisition. The same behavior can be found in the number of families of patents representative of
the number of inventions patented:
Prysmian has implemented a change in the filing strategy, consistent with the market strategies of the Group.
Further, the portfolio of patents is reviewed continuously, with a view to abandoning those no longer used by
the Group. This explains why the total number of patents and families is declining. Analysis of the patents in
the Telecom sector makes this trend clear. The number of patents in the Energy sector appears to be behaving
differently, although the strategies implemented are broadly similar to those adopted by the Telecom sector.
The difference is explained by the acquisition of General Cable, which mostly influenced the total number of
patents in the Energy sector.
NUMBER OF FAMILIES
2021
2020
2019
2018
2017
2016
2015
771
780
806
853
905
749
746
2021
2020
2019
2018
2017
2016
2015
4,785
5,539
5,581
5,627
5,881
4,651
4,871
NUMBER OF PATENTS AND APPLICATIONS
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The annual number of new filings is decreasing despite the marked increase in Records of Invention (ROI) received,
which reflects the volume of inventions submitted to the patents office. The ratio of patentable inventions to ROI
received is clearly lower than in the past.
2021
2020
2019
2018
2017
2016
2015
Energy
Telecom
20
20
18
24
24
18
13
9
11
10
26
17
11
10
Total
29
31
28
50
41
29
24
NEW FIRST FILINGS
2021
2020
2019
2018
2017
2016
2015
543
527
520
574
589
518
473
228
222
226
279
316
288
308
NUMBER OF PATENTS FOR THE ENERGY AND TELECOM SECTORS
Energy
Telecom
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In the Telecom sector, this phenomenon reflects a temporary decline in the activity of the Optical Fibre domain.
This domain was probably one of those most affected by the pandemic, given that research is mainly carried out
in laboratories and at plants. The pandemic reduced considerably the ability to conduct validation tests and try
out innovative solutions.
2021
2020
2019
2018
2017
2016
2015
Energy
Telecom
40
29
27
44
56
30
34
12
22
13
44
29
28
80
Total
52
51
40
88
27
58
46
NUMBER OF ROI
NEW FILINGS TELECOM
FTTx / connectivity
Telecom Cable
Optical Fiber
2021
2020
2019
2018
2017
2016
2015
10
6
4
11
3
6
5
6
7
6
11
7
0
10
14
0
7
11
3
4
6
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Group Annual Report - DIRECTORS’ REPORT
Importantly, once again, Group patents were enforced in counterfeiting cases brought in Italy, Germany, the United
Kingdom and France during 2021. These legal initiatives are integral to a broader strategy adopted by the Group to
safeguard the investment made in research and development.
Turning to trademarks, the Prysmian Group filed 123 new trademarks during the year and abandoned 282 that are
no longer used. As a consequence of Brexit, the Group had to register 190 trademarks in the UK that were previously
registered as European trademarks, inclusive of the UK.
The data has been extracted from our internal database, which is constantly updated by the IP team for consistency
with the main databases of available patents. The tools used by the IP team also include a new website for the collection
of ROI and new trademark applications.
The internal database is regularly cross-checked against the databases maintained by the patent and trademark
offices. This data is also checked against the databases held by the external legal advisors that manage certain steps
in the process of obtaining patents and trademarks.
NEW ROI TELECOM
FTTx / connectivity
Telecom Cable
Optical Fiber
2021
2020
2019
2018
2017
2016
2015
23
11
6
17
6
6
9
10
8
11
17
14
5
10
14
3
10
15
21
12
13
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Incentive plans
LONG-TERM INCENTIVE PLAN
The Prysmian S.p.A. Shareholders’ Meeting of 28 April 2020 approved a long-term incentive plan, designed to
motivate management to create sustainable value over time, including by deferring part of their annual bonus
in shares. The plan is also tied to long-term ESG objectives (Environment Social Governance). The Shareholders’
Meeting authorised a bonus capital increase, as proposed by the Board of Directors, to be reserved for Prysmian
Group employees in execution of the above plan. This capital increase can reach a maximum nominal amount of
Euro 1,100,000 through transfer, pursuant to art. 2349 of the Italian Civil Code, of a corresponding amount from
profits or earnings reserves, with the issue of no more than 11,000,000 ordinary shares of nominal value Euro
0.10 each. At the same time, the shareholders’ resolution of 12 April 2018 relating to a similar capital increase
was revoked, amending article 6 of the By-laws. Recognition of the effects of the long-term incentive plan
in the year ended 31 December 2021 has resulted in recording personnel costs of Euro 33 million in a specific
equity reserve.
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Other information
Related party transactions
Related party transactions do not qualify as either atypical or unusual but form part of the normal course of business
by Group companies. Such transactions take place under market terms and conditions, according to the type of
goods and services provided.
The Group has published, including on its website, the procedures adopted to ensure the transparency and
substantive and procedural fairness of related party transactions.
Information about related party transactions, including that required by the Consob Communication dated 28 July
2006, is presented in Note 32 to the Consolidated Financial Statements at 31 December 2021.
Atypical and/or unusual transactions
In accordance with the disclosures required by Consob Communication DEM/6064293 dated 28 July 2006, it is
reported that no atypical and/or unusual transactions took place during 2020.
Secondary offices and basic corporate information
The list of secondary offices and basic corporate information about the legal entities making up the Group can be
found in Appendix A of the Explanatory Notes to the Consolidated Financial Statements.
Financial risk management
The management of financial risks is discussed in the Explanatory Notes to the Consolidated Financial Statements
(Financial risk management).
Treasury shares
Information about treasury shares can be found in Note 10 to the Consolidated Financial Statements at 31 December 2021.
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Business outlook
During 2021, there was a noticeable recovery in the global economy following the easing of pandemic-related
restrictions in the wake of accelerated vaccination campaigns. The recovery was also supported by national
plans to support the development of infrastructure projects, energy transition and digitalisation. The strong
recovery in economic activity was accompanied by significant inflation pressures, mainly driven by rising energy
and commodity prices and continuing disruptions in supply chains. Towards the end of 2021, some central banks
showed confidence in the economic recovery and began withdrawing some monetary stimulus measures, also
with a view to containing rising inflation.
After a 3.1% contraction in 2020, the global economy is expected to grow by 5.9% in 2021 and 4.4% in 2022
according to most recent estimates from the International Monetary Fund. Although there are positive economic
growth expectations for the future, a number of short-term uncertainties persist, not least in the face of
persistent inflationary pressures fuelled by disruptions in supply chains, rising commodity and energy prices,
and developments of the pandemic. Growing geopolitical tensions in Ukraine are a further element of instability.
The results for FY 2021 testify to the Prysmian Group’s focus on proactively and seamlessly serving its customers
and efficiently managing its industrial footprint. This is evidenced by the results achieved by the Energy business,
which exceeded pre-pandemic levels, with a significant improvement in margins when excluding the effect
of higher metal prices on revenues, and by the record amount of approximately Euro 4.8 billion of new orders
awarded in 2021 to the Projects business.
This favourable trend is seemingly continuing at the outset of 2022. For the full year 2022 Prysmian Group
expects moderate demand growth in the construction and industrial cables businesses after last year’s excellent
performance, with earnings also supported by the ability to implement pricing policies to contain inflation-
driven cost pressures.
In the high voltage underground and submarine cables and systems business, the Group aims to confirm its
leadership on the market which is expected to show strong growth, driven by the development of offshore
wind farms and interconnections to support the energy transition, as well as the start of a trend of significant
market growth in the United States, where the Group has decided to expand its production capacity of submarine
cables. For this segment, the Group expects results to be up on the previous year, thanks to a solid order book
and increased capacity utilisation in the submarine cable business. In the Telecom segment, the Group expects
volumes to grow in the optical business, amid a challenging competitive environment, especially in Europe.
Prysmian Group’s long-term growth drivers are confirmed, mainly linked to the energy transition, the strengthening
of telecommunications networks (digitalisation) and the electrification process. The Group can also leverage its
broad business and geographical diversification, solid capital structure, efficient and flexible supply chain and
lean organisation, all of which is enabling it to effectively seize growth opportunities.
In light of the above considerations, the Group expects to achieve Adjusted EBITDA in the range of Euro 1,010-
1,080 million in 2022, a significant improvement on the Euro 976 million reported in 2021. In addition, the Group
expects to generate cash flows of approximately Euro 400 million ± 15% (FCF before acquisitions and disposals)
for FY 2022.
These forecasts do not include any negative impacts resulting from the military conflict in Ukraine and assume
no major changes will occur in the evolution of the health emergency and, consequently, no further disruptions
and slowdowns in global economic activity. In addition, the higher part of the range of Adjusted EBITDA and cash
flow targets is based on the assumption of a stability of the current favourable market conditions, especially
in the United States. Moreover, the forecasts are based on the Company’s current business scope, on a EUR/USD
exchange rate of 1.15, and do not include impacts on cash flow related to Antitrust issues.
117
Group Annual Report - DIRECTORS’ REPORT
Certification pursuant to Art. 2.6.2
of the italian stock exchange market regulations
Suitable measures have been taken to ensure compliance with art. 15 of the Regulations issued by Consob under
Resolution no. 20249 of 28 December 2017, concerning conditions for the listing of shares of parent companies
that control companies incorporated under and regulated by the law of countries other than EU member states
and which are material to the Consolidated Financial Statements, and whose conditions apply to the Company.
Milano, 1 marzo 2022
ON BEHALF OF THE BOARD OF DIRECTORS
THE CHAIRMAN
Claudio De Conto
119
02_CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of financial position
(Euro/million)
Note
31.12.2021
of which
related
parties
31.12.2020
of which
related
parties
Non-current assets
Property, plant and equipment
1
Goodwill
2
Other intangible assets
2
Equity-accounted investments
3
Other investments at fair value through other
comprehensive income
4
Financial assets at amortised cost
Derivatives
8
Deferred tax assets
15
Other receivables
5
Total non-current assets
Current assets
Inventories
6
Trade receivables
5
Other receivables
5
Financial assets at fair value through profit or loss
7
Derivatives
8
Financial assets at fair value through other comprehensive
income
4
Cash and cash equivalents
9
Total current assets
Assets held for sale
Total assets
Equity
Share capital
10
Reserves
10
Group share of net profit/(loss)
10
Equity attributable to the Group
Equity attributable to non-controlling interests
Total equity
Non-current liabilities
Borrowings from banks and other lenders
11
Employee benefit obligations
14
Provisions for risks and charges
13
Deferred tax liabilities
15
Derivatives
8
Other payables
12
Total non-current liabilities
Current liabilities
Borrowings from banks and other lenders
11
Provisions for risks and charges
13
Derivatives
8
Trade payables
12
Other payables
12
Current tax payables
Total current liabilities
Liabilities held for sale
Total liabilities
Total equity and liabilities
120
Prysmian Group - Annual Report
2021
Consolidated income statement
(Euro/million)
Note
2021
of which related
parties
2020
of which related
parties
Sales
16
Change in inventories of finished goods and
work in progress
17
Other income
18
Total sales and income
Raw materials, consumables and supplies
19
(8,906 )
(2 )
(6,464 )
(3 )
Fair value change in metal derivatives
(4 )
Personnel costs
20
(1,486 )
(10 )
(1,409 )
(19 )
Amortisation, depreciation, impairment
and impairment reversals
21
(335 )
(393 )
Other expenses
22
(1,831 )
(7 )
(1,579 )
(8 )
Share of net profit/(loss)
of equity-accounted companies
23
Operating income
Finance costs
24
(785 )
(569 )
Finance income
25
Profit/(loss) before taxes
Taxes
26
(166 )
(78 )
Net profit/(loss)
Of which:
Attributable to non-controlling interests
(4 )
Group share
Basic earnings/(loss) per share (in Euro)
27
Diluted earnings/(loss) per share (in Euro)
27
121
Group Annual Report - CONSOLIDATED FINANCIAL STATEMENTS
Other comprehensive income
(Euro/million)
2021
2020
Net profit/(loss)
Other comprehensive income:
A) Change in cash flow hedge reserve:
- Profit/(loss) for the year
- Taxes
(20 )
(23 )
B) Change in currency translation reserve
(358 )
C) Actuarial gains/(losses) on employee benefits*:
(19 )
- Profit/(loss) for the year
(28 )
- Taxes
(9 )
Total other comprehensive income (A+B+C):
(322 )
Total comprehensive income/(loss)
(148 )
Of which:
Attributable to non-controlling interests
(20 )
Group share
(128 )
*
Components of comprehensive income that will not be reclassified to profit or loss in subsequent periods.
122
Prysmian Group - Annual Report
2021
Consolidated statement of changes in equity
(Euro/million)
Share
capital
Cash flow
hedge
reserve
Currency
translation
reserve
Other
reserves
Group share
of net
profit/(loss)
Equity
attributable
to the Group
Equity
attributable
to
noncontrolling
interests
Total
Balance at 31
December 2019
(14 )
(249 )
Allocation of prior
year net result
(292 )
Fair value - stock
options
Dividend distribution
(66 )
(66 )
(4 )
(70 )
Acquisition of
noncontrolling
interests
Capital paid in by
noncontrolling
interests
Effect of
hyperinflation
Total comprehensive
income/(loss)
(341 )
(19 )
(128 )
(20 )
(148 )
Balance at 31
December 2020
(590 )
(Euro/million)
Share
capital
Cash flow
hedge
reserve
Currency
translation
reserve
Other
reserves
Group share
of net
profit/(loss)
Equity
attributable
to the Group
Equity
attributable
to
noncontrolling
interests
Total
Balance at 31
December 2020
(590 )
Allocation of prior
year net result
(178 )
Fair value - stock
options
Dividend distribution
(132 )
(132 )
(2 )
(134 )
Issue of Convertible
Bond 2021
Redemtion of
Convertible Bond
2017
(13 )
(13 )
(13 )
Disposal of
non-controlling
interests
(1 )
(1 )
Other movements
equity
Effect of
hyperinflation
Total comprehensive
income/(loss)
Balance at 31
Decembe 2021
(309 )
123
Group Annual Report - CONSOLIDATED FINANCIAL STATEMENTS
Consolidated statement of cash flows
(Euro/million)
2021
of which related
parties
2020
of which related
parties
Profit/(loss) before taxes
Amortisation, depreciation and impairment
Net gains on disposal of property, plant and
equipment
(2 )
(20 )
Share of net profit/(loss) of equity-accounted
companies
(27 )
(27 )
(18 )
(18 )
Dividends received from equity-accounted
companies
Share-based payments
Fair value change in metal derivatives
(13 )
Net finance costs
Changes in inventories
(449 )
(101 )
Changes in trade receivables/payables
Changes in other receivables/payables
Change in employee benefit obligations
(15 )
(13 )
Change in provisions for risks and other movements
(150 )
Net income taxes paid
(120 )
(142 )
A. Cash flow from operating activities
Cash flow from acquisitions and/or disposals
(85 )
(5 )
Investments in property, plant and equipment
(258 )
(240 )
Disposals of property, plant and equipment
Investments in intangible assets
(25 )
(22 )
Investments in financial assets at fair value through
profit or loss
(224 )
(3 )
Disposals of financial assets at fair value through
profit or loss
Disposals of financial assets at amortised cost
Divestment of associates
B. Cash flow from investing activities
(582 )
(250 )
Capital contributions and other changes in equity
Dividend distribution
(134 )
(70 )
Proceeds of new loans
Repayments of loans
(269 )
(117 )
Changes in other net financial receivables/payables
(28 )
(53 )
Net finance costs paid*
(79 )
(86 )
C. Cash flow from financing activities
(325 )
D. Exchange (losses) gains on cash and cash
equivalents
(36 )
E. Net increase/(decrease) in cash and cash
equivalents (A+B+C+D)
F. Cash and cash equivalents at the beginning of the
year
G. Cash and cash equivalents at the end of the year
(E+F)
Cash and cash equivalents presented in
consolidated statement of financial position
Cash and cash equivalents presented in assets held
for sale
*
Net finance costs paid include Euro 57 million in interest expense paid in 2021 (Euro 55 million in 2020) and Euro 6 million in interest income received (Euro 6
million in 2020).
125
03_EXPLANATORY NOTES
A. General information
of the Republic of Italy. The Company has its registered office in Via Chiese 6, Milan (Italy) .
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. Since
18 October 2021, the stock has been included in the MIB® ESG, the first "Environmental, Social and Governance"
index dedicated to Italian blue chips, which features the most important listed issuers that demonstrate the
implementation of ESG best practices.
The consolidated financial statements contained herein were approved by the Board of Directors of Prysmian S.p.A .
on 1 March 2022.
A.1 SIGNIFICANT EVENTS IN 2021
The review of significant events in the year can be found in the Directors' Report in the section entitled "SIGNIFICANT
EVENTS DURING THE YEAR".
B. Accounting principles
The main accounting principles used to prepare the consolidated financial statements and Group financial
information are discussed below.
B.1 BASIS OF PREPARATION
The consolidated financial statements at 31 December 2021 have been prepared on a going concern basis, with
the directors having assessed that there are no financial, operating or other kind of indicators that might provide
evidence of material uncertainties as to the Group's ability to meet its obligations in the foreseeable future and
particularly in the next 12 months.
The assessments carried out confirm Prysmian Group's ability to operate in compliance with the going concern
presumption and with its financial covenants.
Prysmian Group's consolidated financial statements at 31 December 2021 have been prepared in accordance with
the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board
(IASB), based on the text published in the Official Journal of the European Union (OJEU).
The primary financial statements adopted have the following characteristics:
•
the consolidated income statement is prepared in a stepped format with individual items classified by nature
and presents other comprehensive income, showing components of profit or loss deferred in equity;
•
the consolidated statement of financial position presents assets and liabilities according to maturity, with current
items shown separately from non-current ones;
•
the statement of cash flows is prepared by presenting cash flows using the "indirect method", as permitted by
IAS 7.
In application of art. 264b HGB of the German Commercial Code ("Handelsgesetzbuch"), the present financial
statements exempt Draka Comteq Berlin GMBH & Co.KG and Draka Comteq Germany GMBH & Co.KG. from the
requirement to present statutory financial statements.
All the amounts shown in the Group's financial statements are expressed in millions of Euro, unless otherwise stated.
126
Prysmian Group - Annual Report
2021
B.2 NEWLY ADOPTED ACCOUNTING STANDARDS AND PRINCIPLES
The accounting principles and policies and basis of consolidation used to prepare the 2021 Consolidated Financial
Statements are consistent with those used for the 2020 Consolidated Financial Statements. More complete details
can be found in Note 38. Basis of consolidation and accounting policies.
The following is a list of new standards, interpretations and amendments whose application became mandatory from
1 January 2021 but which have not shown to have had a material impact on the consolidated financial statements
at 31 December 2021:
•
Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021;
•
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform - Phase 2;
•
Amendments to IFRS 4 Insurance Contracts: Deferral of IFRS 9
B.3 ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS
NOT YET APPLICABLE AND NOT ADOPTED EARLY BY THE GROUP
The following new Standards, Amendments and Interpretations have been issued at the date of preparing the
present report but are not yet applicable:
New Standards, Amendments and Interpretations
Mandatory application
as from
Amendments to IAS 1 Presentation of Financial Statements;
IFRS 3 Business Combinations; IAS 16 Property, Plant and
Equipment; IAS 37 Provisions, Contingent Liabilities and
Contingent Assets; and Annual Improvements 2018-2020
1 January 2022
IFRS 17 Insurance Contracts
1 January 2023
Preliminary review has indicated that the new Standards, Amendments and Interpretations listed above have no
material impact on the Group's consolidated financial statements.
B.4 PRINCIPAL CHANGES IN THE SCOPE OF CONSOLIDATION
The Group's scope of consolidation includes the financial statements of Prysmian S.p.A. (the Parent Company) and
the companies over which it exercises direct or indirect control, which are consolidated from the date when control
is obtained until the date when such control ceases.
The changes in the scope of consolidation at 31 December 2021, compared with 31 December 2020, are listed below.
Liquidations
Liquidated companies
Nation
Date
Draka UK Group Ltd.
United Kingdom
23 March 2021
YA Holdings, Ltd.
Cayman Islands
29 April 2021
General Cable Italia S.r.l. in liquidation
Italy
5 May 2021
Cahosa S.A.
Panama
25 November 2021
127
Group Annual Report - EXPLANATORY NOTES
Acquisitions
Acquired companies
Nation
Date
EHC Brazil Ltda.
Brazil
8 January 2021
EHC Global Inc.
Canada
8 January 2021
EHC Canada Inc.
Canada
8 January 2021
Elator Inc.
Canada
8 January 2021
EHC Management Company Inc.
Canada
8 January 2021
EHC Escalator Handrail (Shanghai) Co. Ltd.
China
8 January 2021
EHC Engineered Polymer (Shanghai) Co. Ltd.
China
8 January 2021
EHC Lift Components (Shanghai) Co. Ltd.
China
8 January 2021
EHC Technology Development (Shanghai) Co. Ltd.
China
8 January 2021
EHC France s.a.r.l.
France
8 January 2021
EHC Germany GmbH
Germany
8 January 2021
EHC Japan K.K.
Japan
8 January 2021
Escalator Handrail (UK) Ltd.
United Kingdom
8 January 2021
EHC Spain and Portugal, S.L.
Spain
8 January 2021
EHC USA Inc.
United States
8 January 2021
EHC Turkey Asansör ve Yürüyen Merdiven Sanayi
Limited Şirketi
Turkey
8 January 2021
Omnisens S.A.
Switzerland
11 November 2021
Omnisens do Brasil sercicos de solucoes de
monitoracao em fibra otica Ltda
Brazil
11 November 2021
Eksa Sp.Z.o.o
Poland
31 December 2021
Mergers
Merged company
Merged into
Nation
Date
General Cable Brasil Indústria
e Comércio de Condutores
Elétricos Ltda
Prysmian Cabos e Sistemas do Brasil S.A.
Brazil
30 April 2021
General Cable Industries, LLC
General Cable Industries Inc
United States
31 December 2021
Diversified Contractors, Inc
General Cable Industries Inc
United States
31 December 2021
Name changes
For the sake of better understanding the scope of consolidation, the following name changes have taken place in
the year:
Original name
New name
Nation
Date
Eurelectric Tunisie S.A.
Prysmian Cables and Systems Tunisia S.A.
Tunisia
22 March 2021
In addition, during the final quarter of the year, the newco Prysmian Group Speciality Cables, LLC was formed in
September 2021, while Shanghai Guan Ye Optical Fibre Cable Co.Ltd. was sold in December 2021.
Appendix A contains a complete list of the companies included in the scope of consolidation at 31 December 2021.
128
Prysmian Group - Annual Report
2021
C. Financial risk management
The Group's activities are exposed to various forms of risk: market risk (including exchange rate, interest rate and
price risks), credit risk and liquidity risk. The Group's risk management strategy focuses on the unpredictability
of markets and aims to minimise the potentially negative impact on the Group's results. Certain types of risk are
mitigated using derivative instruments.
Monitoring of key financial risks is centrally coordinated by the Group Finance Department, and by the Purchasing
Department where price risk is concerned, in close cooperation with the Group's operating companies. Risk
management policies are approved by the Group Finance, Administration and Control Department, which provides
written guidelines on managing the above risks and on using (derivative and non-derivative) financial instruments.
The impact on profit and equity presented in the subsequent sensitivity analyses has been determined net of tax,
calculated using the Group's weighted average theoretical tax rate.
[a] Exchange rate risk
The Group operates worldwide and is therefore exposed to exchange rate risk caused by changes in the value of
trade and financial flows expressed in a currency other than the unit of account of individual Group companies.
The principal exchange rates affecting the Group are:
•
Euro/US Dollar: in relation to trade and financial transactions in US dollars by Eurozone companies on the North
American and Middle Eastern markets, and similar transactions in Euro by North American companies on the
European market;
•
Euro/Canadian Dollar: in relation to trade and financial transactions by Eurozone companies on the Canadian
market and vice versa;
•
Euro/British Pound: in relation to trade and financial transactions by Eurozone companies on the British market
and vice versa;
•
British Pound/US Dollar: in relation to trade transactions by North American companies on the British market;
•
Euro/Hungarian Forint: in relation to trade and financial transactions by Hungarian companies on the Eurozone
market and vice versa;
•
Euro/Romanian Leu: in relation to trade and financial transactions by Eurozone companies on the Romanian
market and vice versa;
•
Euro/Australian Dollar: in relation to trade and financial transactions by Eurozone companies on the Australian
market and vice versa;
•
Euro/Norwegian Krone: in relation to trade and financial transactions by Eurozone companies on the Norwegian
market and vice versa;
•
Euro/Czech Koruna: in relation to trade and financial transactions by Eurozone companies on the Czech market
and vice versa;
•
Euro/Swedish Krona: in relation to trade and financial transactions by Eurozone companies on the Swedish
market and vice versa;
•
Euro/Singapore Dollar: in relation to trade and financial transactions by Eurozone companies on the Singapore
market and vice versa;
•
Euro/Chinese Renminbi (Yuan): in relation to trade and financial transactions by Eurozone companies on the
Chinese market and vice versa;
•
US Dollar/Brazilian Real: in relation to trade and financial transactions by companies operating on the South
American market.
In 2021, trade and financial flows exposed to the above exchange rates accounted for around 85% of the total
exposure to exchange rate risk arising from trade and financial transactions.
The Group is also exposed to exchange rate risks on the following exchange rates: US Dollar/Turkish Lira, Euro/
Danish Krone and Euro/Mexican Peso. None of these exposures, taken individually, accounted for more than 2% of
the overall exposure to transactional exchange rate risk in 2021.
129
Group Annual Report - EXPLANATORY NOTES
It is the Group's policy to hedge, where possible, exposures in currencies other than the unit of account of its
individual companies. In particular, the Group hedges:
•
firm cash flows: invoiced trade flows and exposures arising from loans receivable and payable;
•
projected cash flows: trade and financial flows arising from firm or highly probable contractual commitments.
Such hedges are arranged using derivative contracts.
The following sensitivity analysis shows the effects on net profit of a 5% and 10% increase/decrease in exchange
rates versus closing exchange rates at 31 December 2021 and 31 December 2020.
(Euro/million)
2021
2020
-5%
+5%
-5%
+5%
Euro
(1.03)
0.93
(0.49)
0.44
US Dollar
(0.87)
0.79
(1.42)
1.29
Other currencies
(1.23)
1.11
(1.25)
1.13
Total
(3.13)
2.83
(3.16)
2.86
(Euro/million)
2021
2020
-10%
+10%
-10%
+10%
Euro
(2.18)
1.78
(1.04)
0.85
US Dollar
(1.84)
1.51
(3.01)
2.46
Other currencies
(2.59)
2.12
(2.63)
2.15
Total
(6.61)
5.41
(6.68)
5.46
When assessing the potential impact of the above, the assets and liabilities of each Group company in currencies
other than their unit of account were considered, net of any derivatives hedging the above-stated cash flows.
The following sensitivity analysis shows the post-tax effects on equity reserves of an increase/decrease in the fair
value of designated cash flow hedges following a 5% and 10% increase/decrease in exchange rates versus closing
exchange rates at 31 December 2021 and 31 December 2020.
(Euro/million)
2021
2020
-5%
+5%
-5%
+5%
US Dollar
3.22
(3.56)
0.51
(0.56)
Euro
16.75
(18.51)
0.38
(0.42)
Qatari Riyal
0.35
(0.38)
0.48
(0.53)
UAE Dirham
0.01
(0.01)
0.01
(0.01)
Other currencies
4.15
(4.58)
2.18
(2.41)
Total
24.48
(27.04)
3.56
(3.93)
(Euro/million)
2021
2020
-10%
+10%
-10%
+10%
US Dollar
6.15
(7.51)
0.96
(1.18)
Euro
31.97
(39.08)
0.72
(0.88)
Qatari Riyal
0.66
(0.81)
0.91
(1.11)
UAE Dirham
0.02
(0.03)
0.02
(0.02)
Other currencies
7.91
(9.67)
4.14
(5.06)
Total
46.71
(57.10)
6.75
(8.25)
130
Prysmian Group - Annual Report
2021
The above analysis ignores the effects of translating the equity of Group companies whose functional currency is
not the Euro.
Further details can be found in the individual notes to the financial statements.
[b] Interest rate risk
The interest rate risk to which the Group is exposed is mainly on long-term financial liabilities, carrying both fixed
and variable rates.
Fixed rate debt exposes the Group to a fair value risk. The Group does not operate any particular hedging policies
in relation to the risk arising from such contracts.
Variable rate debt exposes the Group to a rate volatility risk (cash flow risk). In order to hedge this risk, the Group
can use derivative contracts that limit the impact of interest rate changes on the income statement.
The Group Finance Department monitors the exposure to interest rate risk and adopts appropriate hedging strategies
to keep the exposure within the limits defined by the Group Administration, Finance and Control Department,
arranging derivative contracts, if necessary.
The following sensitivity analysis shows the effects on consolidated net profit of a 25 b.p. increase/decrease in
interest rates versus the interest rates applying at 31 December 2021 and 31 December 2020, assuming that all
other variables remain equal.
The potential effects shown below refer to net liabilities representing the bulk of Group debt at the reporting date,
for which the impact of the change in interest rates on net finance costs has been calculated on an annualised basis.
The net liabilities considered for sensitivity analysis include variable rate financial receivables and payables, cash
and cash equivalents and derivatives whose value is influenced by rate volatility.
(Euro/million)
2021
2020
-0,25%
+0,25%
-0,25%
+0,25%
Euro
(1.07)
1.07
(0.53)
0.53
US Dollar
(0.50)
0.50
(0.23)
0.23
British Pound
(0.28)
0.28
(0.08)
0.08
Other currencies
(0.77)
0.77
(0.44)
0.44
Total
(2.62)
2.62
(1.28)
1.28
At 31 December 2021, the Group had interest rate swap agreements in place that transform the variable rate into a
fixed one. These agreements have been accounted for as cash flow hedges.
[c] Price risk
The Group is exposed to price risk in relation to purchases and sales of strategic materials, whose purchase price is
subject to market volatility. The main raw materials used by the Group in its own production processes consist of
strategic metals such as copper, aluminium and lead. The cost of purchasing such strategic materials accounted
for approximately 62.8% of the Group's total cost of materials in 2021 (58.03% in 2020), forming part of its overall
production costs.
In order to manage the price risk on future trade transactions, the Group negotiates derivative contracts on strategic
metals, setting the price of expected future purchases or the value of stocks.
The derivative contracts entered into by the Group are negotiated with leading financial institutions on the basis
of strategic metal prices quoted on the London Metal Exchange ("LME"), the New York market ("COMEX") and the
Shanghai Futures Exchange ("SFE").
131
Group Annual Report - EXPLANATORY NOTES
The following sensitivity analysis shows the effect on consolidated equity of a 10% increase/decrease in strategic
material prices versus prices at 31 December 2021 and 31 December 2020, assuming that all other variables remain
equal.
(Euro/million)
2021
2020
-10%
+10%
-10%
+10%
LME
(48.69)
48.69
(34.09)
34.09
COMEX
(1.95)
1.95
4.18
(4.18)
SME
(2.13)
2.13
(1.27)
1.27
Total
(52.77)
52.77
(31.18)
31.18
The potential impact shown above is solely attributable to increases and decreases in the fair value of derivatives
on strategic material prices which are directly attributable to changes in the prices themselves. It does not refer
to the impact on the income statement of the purchase cost of strategic materials.
[d] Credit risk
Credit risk is connected with trade receivables, cash and cash equivalents, financial instruments, and deposits with
banks and other financial institutions.
Customer-related credit risk is managed by the individual subsidiaries and monitored centrally by the Group Finance
Department. The Group does not have excessive concentrations of credit risk. It nonetheless has procedures aimed at
ensuring that sales of goods and services are made to reliable customers, taking account of their financial situation,
track record and other factors. Credit limits for major customers are based on internal and external assessments
within ceilings approved by local country management. The utilisation of credit limits is periodically monitored
at local level. It should be noted that credit risk was not particularly impacted during 2021 by the spread of the
Covid-19 pandemic.
During 2021 the Group had a global insurance policy in place to provide coverage for part of its trade receivables
against any credit losses, net of the deductible.
As for credit risk relating to the management of financial and cash resources, this risk is monitored by the
Group Finance Department, which implements procedures intended to ensure that Group companies deal with
independent, highly rated, reliable counterparties. In fact, it is to be noted that at 31 December 2021 (like at 31
December 2020) the vast majority of the Group's financial and cash resources were held with investment grade
counterparties. Credit limits relating to the principal financial counterparties are based on internal and external
assessments, within ceilings set by the Group Finance Department.
An increase/decrease in the Group's credit rating at 31 December 2021 would not have had significant effects on
net profit at that date.
[e] Liquidity risk
Prudent management of the liquidity risk arising from the Group's normal operations involves the maintenance of
adequate levels of cash and cash equivalents and short-term securities as well as ensuring the availability of funds
by having an adequate amount of committed credit lines.
The Group Finance Department uses cash flow forecasts to monitor the projected level of the Group's liquidity
reserves.
132
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2021
The amount of liquidity reserves at the reporting date is as follows:
(Euro/million)
31.12.2021
31.12.2020
Cash and cash equivalents
1,702
1,163
Financial assets at fair value through profit
or loss
244
20
Financial assets at fair value through other
comprehensive income
11
11
Undrawn committed lines of credit
1,000
1,000
Total
2,957
2,194
Undrawn committed lines of credit at 31 December 2021 refer to the Revolving Credit Facility 2019 (Euro 1,000
million).
The following table presents a due date analysis of payables, at their repayment value, other liabilities, and
derivatives settled on a net basis; the various due date categories refer to the period between the reporting date
and the contractual maturity of the obligations.
(Euro/million)
31.12.2021
Due within 1 year
Due between 1 - 2 years
Due between 2 - 5 years
Due after 5 years
Borrowings from banks
and other lenders
1,169
1,279
1,325
62
Derivatives
42
15
8
3
Trade and other
payables
3,783
6
-
-
Total
4,994
1,300
1,333
65
(Euro/million)
31.12.2020
Due within 1 year
Due between 1 - 2 years
Due between 2 - 5 years
Due after 5 years
Borrowings from banks
and other lenders
174
1,315
1,726
63
Derivatives
46
8
5
-
Trade and other
payables
2,953
6
-
-
Total
3,173
1,329
1,731
63
133
Group Annual Report - EXPLANATORY NOTES
In completion of the disclosures about financial risks, the following is a reconciliation between the classes of
financial assets and liabilities reported in the Group's consolidated statement of financial position and the categories
used by IFRS 7 to identify financial assets and liabilities:
(Euro/million)
31.12.2021
Financial
assets at fair
value through
profit or loss
Receivables
and other
assets at
amortised
cost
Financial assets
at fair value
through other
comprehensive
income
Financial
liabilities at
fair value
through profit
or loss
Financial
liabilities
carried at
amortised
cost
Cash Flow
Hedge
derivatives
Other investments at
fair value through other
comprehensive income
-
-
13
-
-
-
Financial assets at fair value
through other comprehensive
income
-
-
11
-
-
-
Financial assets at amortised
cost
-
3
-
Trade receivables
-
1,622
-
-
-
-
Other receivables
-
661
-
-
-
-
Financial assets at fair value
through profit or loss
244
-
-
-
-
-
Derivatives (assets)
57
-
-
-
-
176
Cash and cash equivalents
-
1,702
-
-
-
-
Borrowings from banks and
other lenders
-
-
-
-
3,729
-
Trade payables
-
-
-
-
2,592
-
Other payables
-
-
-
-
1,197
-
Derivatives (liabilities)
-
-
-
23
-
45
(Euro/million)
31.12.2020
Financial
assets at fair
value through
profit or loss
Receivables
and other
assets at
amortised
cost
Financial assets
at fair value
through other
comprehensive
income
Financial
liabilities at
fair value
through profit
or loss
Financial
liabilities
carried at
amortised
cost
Cash Flow
Hedge
derivatives
Other investments at
fair value through other
comprehensive income
-
-
13
-
-
-
Financial assets at fair value
through other comprehensive
income
-
-
11
-
-
-
Financial assets at amortised
cost
-
4
-
-
-
-
Trade receivables
-
1,374
-
-
-
-
Other receivables
-
522
-
-
-
-
Financial assets at fair value
through profit or loss
20
-
-
-
-
-
Derivatives (assets)
38
-
-
-
-
88
Cash and cash equivalents
-
1,163
-
-
-
-
Borrowings from banks and
other lenders
-
-
-
-
3,172
-
Trade payables
-
-
-
-
1,958
-
Other payables
-
-
-
-
1,001
-
Derivatives (liabilities)
-
-
-
31
-
28
134
Prysmian Group - Annual Report
2021
C.1 CAPITAL RISK MANAGEMENT
The Group's objective in capital risk management is mainly to safeguard business continuity in order to guarantee
returns for shareholders and benefits for other stakeholders. The Group also aims to maintain an optimal capital
structure in order to reduce the cost of debt and to comply with a series of covenants required by the various Credit
Agreements (Note 31. Financial covenants).
The Group also monitors capital using a gearing ratio (i.e. the ratio between net financial debt and capital). Details
of how net financial debt is determined can be found in Note 11. Borrowings from banks and other lenders. Capital
is equal to the sum of equity, as reported in the Group consolidated financial statements, and net financial debt.
The gearing ratios at 31 December 2021 and 31 December 2020 are shown below:
(Euro/million)
2021
2020
Net financial debt
1,760
1,986
Equity
3,089
2,423
Total capital
4,849
4,409
Gearing ratio
36.30%
45.04%
C.2 FAIR VALUE MEASUREMENT
IFRS 13 requires assets and liabilities recognised in the statement of financial position at fair value to be classified
according to a hierarchy that reflects the significance of the inputs used in measuring fair value.
Financial instruments are classified according to the following fair value measurement hierarchy:
•
Level 1:
Fair value is determined with reference to quoted prices (unadjusted) in active markets for identical
financial instruments. Therefore, the emphasis within Level 1 is on determining both of the following:
a)
the principal market for the asset or liability or, in the absence of a principal market, the most advantageous
market for the asset or liability; and
b)
whether the entity can enter into a transaction for the asset or liability at the price in that market at the
measurement date.
•
Level 2:
Fair value is determined using valuation techniques where the input is based on observable market data.
The inputs for this level include:
a)
quoted prices for similar assets or liabilities in active markets;
b)
quoted prices for identical or similar assets or liabilities in markets that are not active;
c)
inputs other than quoted prices that are observable for the asset or liability, for example:
1.
interest rate and yield curves observable at commonly quoted intervals;
2.
implied volatilities;
3.
credit spreads;
d)
market-corroborated inputs.
•
Level 3:
Fair value is determined using valuation techniques where the input is not based on observable market
data.
The following tables present the assets and liabilities that are recurrently measured at fair value:
135
Group Annual Report - EXPLANATORY NOTES
(Euro/million)
31.12.2021
Level 1
Level 2
Level 3
Total
Assets
Financial assets at fair value:
Derivatives through profit or loss
-
57
-
57
Cash Flow Hedge derivatives
-
176
-
176
Financial assets at fair value
through profit or loss
240
4
-
244
Other investments at fair value
through other comprehensive
income
-
-
13
13
Financial assets at fair value
through other comprehensive
income
11
-
-
11
Total assets
251
237
13
501
Liabilities
Financial liabilities at fair value:
Derivatives through profit or loss
-
23
-
23
Cash Flow Hedge derivatives
-
45
-
45
Total liabilities
-
68
-
68
(Euro/million)
31.12.2020
Level 1
Level 2
Level 3
Total
Assets
Financial assets at fair value:
Derivatives through profit or loss
-
38
-
38
Cash Flow Hedge derivatives
-
88
-
88
Financial assets at fair value
through profit or loss
16
4
-
20
Other investments at fair value
through other comprehensive
income
-
-
13
13
Financial assets at fair value
through other comprehensive
income
11
-
-
11
Total assets
27
130
13
170
Liabilities
Financial liabilities at fair value:
Derivatives through profit or loss
-
31
-
31
Cash Flow Hedge derivatives
-
28
-
28
Total liabilities
-
59
-
59
Financial assets classified in fair value Level 3 have reported no significant movements in either 2021 or 2020.
136
Prysmian Group - Annual Report
2021
Given the short-term nature of trade receivables and trade payables, their carrying amounts, net of any allowance
for doubtful accounts, are treated as a good approximation of fair value.
During 2021 there were no transfers of financial assets and liabilities between the different levels of the fair value
hierarchy.
VALUATION TECHNIQUES
Level 1:
The fair value of financial instruments quoted in an active market is based on market price at the reporting
date. The market price used for derivatives is the bid price, while for financial liabilities the ask price is used.
Level 2:
Derivatives classified in this category include interest rate swaps, currency forwards and derivative contracts
on metals that are not quoted in active markets. Fair value is determined as follows:
•
for interest rate swaps, it is calculated on the basis of the present value of forecast future cash flows;
•
for currency forwards, it is determined using the forward exchange rate at the reporting date, appropriately
discounted;
•
for metal derivatives, it is determined using the prices of such metals at the reporting date, appropriately
discounted.
Level 3:
The fair value of instruments not quoted in an active market is primarily determined using valuation
techniques based on estimated discounted cash flows.
C.3 RISKS RELATED TO CLIMATE CHANGE
The Group's activities are exposed to different types of risks related to climate change, as described in the Directors'
Report and more extensively in the Group's Non-Financial Information Statement, to which reference should be
made.
The Group assesses whether climate risks could have a material impact (e.g., the introduction of regulations to
reduce emissions) and, if so, they are included in the significant assumptions.
137
Group Annual Report - EXPLANATORY NOTES
D. Business combinations
EHC Global
Prysmian Group acquired control of EHC Global on 8 January 2021. For accounting purposes, the acquisition date
has been backdated to 1 January 2021.
The total consideration for the acquisition was Euro 88 million.
The excess of the purchase consideration over the fair value of net assets acquired has been recognised as goodwill,
quantified as Euro 40 million.
Such goodwill is primarily justified by the future earnings expected from integrating the two groups, including
the benefits of run-rate synergies.
Details of the net assets acquired and goodwill are as follows:
(Euro/million)
Euro
Purchase price
88
Total cost of acquisition (A)
88
Fair value of net assets acquired (B)
48
Goodwill (A-B)
40
Financial outlay paid in previous year
7
Financial outlay for acquisition
81
Cash and cash equivalents held by acquiree
(6)
Acquisition cash flow in the year
75
(Euro/million)
Euro
Property, plant and equipment
10
Intangible assets
19
Financial assets
6
Deferred taxes
(5)
Inventories
9
Trade and other receivables
17
Trade and other payables
(10)
Borrowings from banks and other lenders
(3)
Employee benefit obligations and other provisions
(1)
Cash and cash equivalents
6
Net assets acquired (B)
48
At 31 December 2021, EHC Global accounted for Euro 73 million of Prysmian Group's total sales of goods and services,
and contributed Euro 4 million to consolidated net profit for the year.
Omnisens S.A.
The total consideration for the acquisition was approximately Euro 18 million.
The fair value of the assets and liabilities of Ominsens S.A. has been determined on a provisional basis, since the
acquisition accounting processes were still being finalised at the current reporting date.
As permitted by IFRS 3, the fair value of the assets, liabilities and contingent liabilities will be finalised within twelve
months of the acquisition date.
The excess of the purchase consideration over the provisional fair value of net assets acquired has been recognised
as goodwill, quantified at Euro 17 million.
Such goodwill is primarily justified by the future earnings expected from integrating the company into Prysmian
Group, including the benefits of run-rate synergies. The process of purchase price allocation is currently in progress,
as permitted by the relevant accounting standard.
Details of the net assets acquired and goodwill are as follows:
138
Prysmian Group - Annual Report
2021
(Euro/million)
Euro
Purchase price
18
Total cost of acquisition (A)
18
Fair value of net assets acquired (B)
1
Goodwill (A-B)
17
Financial outlay for acquisition
18
Cash and cash equivalents held by acquiree
(1)
Acquisition cash flow in the year
17
(Euro/million)
Euro
Inventories
2
Trade and other receivables
5
Trade and other payables
(6)
Borrowings from banks and other lenders
(1)
Cash and cash equivalents
1
Net assets acquired (B)
1
Omnisens S.A. accounted for Euro 2 million of Prysmian Group's total sales of goods and services, while its contribution
to net profit for the year was negligible. If Omnisens S.A. had been consolidated from 1 January 2021, it would have
accounted for Euro 12 million of Prysmian Group's total sales of goods and services, and contributed Euro 2 million
to consolidated net profit.
Eksa Sp.z.o.o.
On 31 December 2021 Prysmian Group completed the acquisition of Eksa Sp.z.o.o., 30% of whose capital it already
owned.
The total consideration for the acquisition was approximately Euro 7 million.
The fair value of the assets and liabilities of Eksa Sp.z.o.o. has been determined on a provisional basis, since the
acquisition accounting processes were still being finalised at the current reporting date.
As provided by IFRS 3, the fair value of the assets, liabilities and contingent liabilities will be finalised within twelve
months of the acquisition date.
Since the purchase consideration is equal to the provisional fair value of the net assets acquired, no goodwill has
been recognised.
The process of purchase price allocation is currently in progress, as permitted by the relevant accounting standard.
Details of the net assets acquired are as follows:
(Euro/million)
Euro
Total cost of acquisition (A)
7
Assets already held (B)
3
Fair value of net assets acquired (C)
10
Goodwill/(Badwill) (A+B-C)
-
Debt for acquisition
7
Cash and cash equivalents held by acquiree
(3)
Acquisition cash flow in the year
(3)
(Euro/million)
Euro
Property, plant and equipment
1
Trade and other receivables
7
Borrowings from banks and other lenders
(1)
Cash and cash equivalents
3
Net assets acquired (C)
10
139
Group Annual Report - EXPLANATORY NOTES
Since the company has been consolidated as from 31 December 2021, it has had a nil impact on Prysmian Group's
total sales of goods and services and net profit. If Eksa had been consolidated from 1 January 2021, it would have
accounted for Euro 31 million of Prysmian Group's total sales of goods and services, and contributed Euro 2 million
to consolidated net profit.
E. Segment information
The Group's operating segments are:
•
Energy
, whose smallest identifiable CGU are Regions/Countries depending on the specific organisation;
•
Projects
, whose smallest identifiable CGUs are the High Voltage, Submarine Power, Submarine Telecom and
Offshore Specialties businesses;
•
Telecom
, whose smallest CGU is the operating segment itself.
Segment information is structured in the same way as the report periodically prepared for the purpose of reviewing
business performance. This report presents operating performance by macro type of business (Energy, Projects and
Telecom) and the results of operating segments primarily on the basis of 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. This report also provides
information about the statement of financial position for the Group as a whole but not by operating segment.
In order to provide users of the financial statements with clearer information, certain economic data is also reported
by sales channels and business areas within the individual operating segments:
a)
Projects operating segment:
encompassing the following high-tech and high value-added businesses whose
focus is on projects and their execution, as well as on product customisation: High Voltage, Submarine Power,
Submarine Telecom and Offshore Specialties.
b)
Energy operating segment:
encompassing the businesses offering a complete and innovative product portfolio
designed to meet the various and many needs of the market, namely:
1.
Energy & Infrastructure (E&I): this includes Trade and Installers, Power Distribution and Overhead lines;
2.
Industrial & Network Components: this comprises Specialties and OEM, Elevators, Automotive, Network
Components, core Oil & Gas and DHT;
3.
Other: occasional sales of residual products.
c)
Telecom operating segment:
encompassing the manufacture of cable systems and connectivity products used
in telecommunication networks. This segment is organised in the following lines of business: optical fibre,
optical cables, connectivity components and accessories, OPGW (Optical Ground Wire) and copper cables.
All Corporate fixed costs are allocated to the Projects, Energy and Telecom operating segments. Revenues and
costs are allocated to each operating segment by identifying all revenues and costs directly attributable to that
segment and by allocating indirect costs.
Group operating activities are organised and managed separately according to the nature of the products and
services provided: each segment offers different products and services to different markets. Sales of goods and
services are analysed geographically on the basis of the location of the registered office of the company that issues
the invoices, regardless of the geographic destination of the products sold. This type of presentation does not
produce significantly different results from analysing sales of goods and services by such destination. All transfer
prices are set using the same conditions applied to other transactions between Group companies and are generally
determined by applying a mark-up to production costs.
Assets and liabilities by operating segment are not included in the data reviewed by management and so, as
permitted by IFRS 8, this information is not presented in the current report.
140
Prysmian Group - Annual Report
2021
E.1 OPERATING SEGMENTS
The following tables present information by operating segment.
(Euro/million)
2021
Projects
Energy
Telecom
Corporate
Group
total
E&I
Industrial & NWC
Other
Total Energy
Sales*
1,594
6,361
2,838
358
9,557
1,585
-
12,736
Adjusted EBITDA before
share of net profit/(loss)
of equity-accounted
companies
210
353
195
(6)
542
206
-
958
% of sales
13.2%
5.5%
6.9%
5.7%
13.0%
7.5%
Adjusted EBITDA (A)
210
356
196
(6)
546
220
-
976
% of sales
13.2%
5.6%
6.9%
5.7%
13.9%
7.7%
Adjustments
(8)
(29)
(15)
(2)
(46)
9
(4)
(49)
EBITDA (B)
202
327
181
(8)
500
229
(4)
927
% of sales
12.7%
5.2%
6.4%
5.2%
14.4%
7.3%
Amortisation and
depreciation (C)
(69)
(123)
(57)
(4)
(184)
(76)
-
(329)
Adjusted operating income
(A+C)
141
233
139
(10)
362
144
-
647
% of sales
8.8%
3.7%
4.9%
3.8%
9.1%
5.1%
Fair value change in metal
derivatives (D)
13
Fair value stock options (E)
(33)
Asset (impairment) and
impairment reversal (F)
(6)
Operating income
(B+C+D+E+F)
572
% of sales
4.5%
Finance income
689
Finance costs
(785)
Taxes
(166)
Net profit/(loss)
310
% of sales
2,4%
Attributable to:
Owners of the parent
308
Non-controlling interests
2
*
Sales of the operating segments and business areas are reported net of intercompany transactions and net of transactions between operating segments,
consistent with the presentation adopted in the regularly reviewed reports.
141
Group Annual Report - EXPLANATORY NOTES
(Euro/million)
2020
Projects
Energy
Telecom
Corporate
Group
total
E&I
Industrial & NWC
Other
Total Energy
Sales*
1,438
4,735
2,252
220
7,207
1,371
-
10,016
Adjusted EBITDA before
share of net profit/(loss)
of equity-accounted
companies
186
272
165
(1)
436
200
-
822
% of sales
13.0%
5.8%
7.3%
6.1%
14.6%
8.2%
Adjusted EBITDA (A)
186
275
166
(1)
440
214
-
840
% of sales
13.0%
5.8%
7.4%
6.1%
15.6%
8.4%
Adjustments
(13)
(24)
(18)
(3)
(45)
8
(9)
(59)
EBITDA (B)
173
251
148
(4)
395
222
(9)
781
% of sales
12.1%
5.3%
6.6%
5.5%
16.2%
7.8%
Amortisation and
depreciation (C)
(64)
(123)
(57)
(5)
(185)
(76)
-
(325)
Adjusted operating income
(A+C)
122
152
109
(6)
255
138
-
515
% of sales
8.5%
3.2%
4.8%
3.5%
10.1%
5.1%
Fair value change in metal
derivatives (D)
(4)
Fair value stock options (E)
(31)
Asset (impairment) and
impairment reversal (F)
(68)
Operating income
(B+C+D+E+F)
353
% of sales
3.5%
Finance income
468
Finance costs
(569)
Taxes
(78)
Net profit/(loss)
174
% of sales
1.7%
Attributable to:
Owners of the parent
178
Non-controlling interests
(4)
*
Sales of the operating segments and business areas are reported net of intercompany transactions and net of transactions between operating segments,
consistent with the presentation adopted in the regularly reviewed reports.
142
Prysmian Group - Annual Report
2021
E.2 GEOGRAPHICAL AREAS
The following table presents sales of goods and services by geographical area.
(Euro/million)
2021
2020
Sales
12,736
10,016
EMEA*
6,633
5,344
(of which Italy)
1,225
1,021
North America
3,902
3,084
Latin America
1,104
775
Asia Pacific
1,097
813
*
EMEA: Europe, Middle East and Africa.
1. PROPERTY, PLANT AND EQUIPMENT
Details of this line item and related movements are as follows:
(Euro/million)
Land
Buildings
Plant and
machinery
Equipment
Other
assets
Assets under
construction and
advances
Total
Balance at 31
December 2020
283
786
1,029
53
119
378
2,648
Movements in 2021:
- Business
combinations
1
2
6
-
1
-
10
- Investments
2
3
91
3
5
154
258
- Disposals
(3)
(3)
-
-
-
-
(6)
- Depreciation
-
(51)
(142)
(19)
(49)
-
(261)
- Impairment
(3)
(1)
(2)
-
-
-
(6)
- Currency
translation
differences
6
21
47
2
3
6
85
- Increases for
leases (IFRS 16)
-
19
1
7
36
-
63
- Monetary
revaluation for
hyperinflation
1
1
2
-
-
1
5
- Other
-
19
211
15
15
(262)
(2)
Balance at 31
December 2021
287
796
1,243
61
130
277
2,794
Of which:
- Historical cost
304
1,278
2,624
203
350
280
5,039
- Accumulated
depreciation and
impairment
(17)
(482)
(1,381)
(142)
(220)
(3)
(2,245)
Net book value
287
796
1,243
61
130
277
2,794
143
Group Annual Report - EXPLANATORY NOTES
(Euro/million)
Land
Buildings
Plant and
machinery
Equipment
Other
assets
Assets under
construction and
advances
Total
Balance at 31
December 2019
301
821
1,192
51
105
334
2,804
Movements in
2020:
- Investments
-
9
11
3
6
195
224
- Increases for
leases (IFRS 16)
4
20
1
6
48
-
79
- Disposals
-
(1)
(1)
-
-
-
(2)
- Depreciation
(1)
(54)
(135)
(17)
(52)
-
(259)
- Impairment
(9)
(5)
(50)
-
-
-
(64)
- Currency
translation
differences
(9)
(43)
(68)
(2)
(7)
(15)
(144)
- Reclassifications
(to)/from Assets
held for sale
(3)
6
4
-
-
1
8
- Monetary
revaluation for
hyperinflation
-
-
1
-
-
1
2
- Other
-
33
74
12
19
(138)
-
Balance at 31
December 2020
283
786
1,029
53
119
378
2,648
Of which:
- Historical cost
299
1,208
2,234
177
293
383
4,594
- Accumulated
depreciation and
impairment
(16)
(422)
(1,205)
(124)
(174)
(5)
(1,946)
Net book value
283
786
1,029
53
119
378
2,648
In 2021, gross capital expenditure on property, plant and equipment came to Euro 258 million.
Details of this expenditure during the course of 2021 are provided below:
•
Projects to increase and technologically upgrade production capacity and develop new products/markets: Euro
171 million (66% of the total):
-
With reference to the Projects segment, the most significant investment was for completing work on the new
cable-laying vessel Leonardo Da Vinci. The new vessel has been designed to be the best performing vessel on
the market and will ensure greater capacity and versatility in project execution thanks to advanced features
such as: deep-water installation capability at more than 2,000 metres, superior cable loading capacity thanks
to large carousels, the ability to perform complex installations supporting different burial equipment, state-
of-the-art dynamic positioning systems, and a propulsion system specifically designed to ensure a lower
environmental impact.
-
With reference to the Energy segment, investments were made in certain niches to ensure that growing demand
in specific value-added sectors could be met: in the USA, in Battleboro (North Carolina), production capacity
was increased to serve escalating demand for products and services for the escalator and elevator industry;
also in the USA, investments were initiated in Marshall (Texas) to increase production of medium voltage cables
serving the power transmission and distribution sectors, partly in response to the national infrastructure plan
launched by the US government. Northern Europe also witnessed a growth in demand for medium voltage
cables, in response to which the Group decided to invest in a plant in Nassjo, Sweden; lastly, in Latin America,
specifically in Brazil, investments were made to give the Pocos de Caldas plant, in the state of Minas Gerais,
the capability to produce wind turbine cables, in anticipation of escalating demand for renewable energy in
this region as well.
-
With reference to the Telecom segment, the Claremont plant in North Carolina confirmed its role as a centre of
excellence in the USA for the manufacture of optical cables and fibre: specifically, the Group completed a series
of investments in the production of ADSS (All Dielectric Self Supporting) cables, used in outdoor applications and
mainly installed on transmission towers to reach North America's vast rural areas; at the same time, investments
144
Prysmian Group - Annual Report
2021
to increase Loose Tube cable capacity were started in Durango (Mexico), destined to become a centre serving
the entire Central and North American region.
•
Multiple projects to improve industrial efficiency and rationalise production capacity: Euro 45 million (17% of
the total).
•
Structural work: Euro 42 million (17% of the total).
At 31 December 2021, the value of machinery pledged as collateral against long-term loans was virtually nil.
During the reporting period just ended, Prysmian Group reviewed whether there was any evidence that its CGUs
might be impaired, but did not identify any.
Instead, other assets belonging to larger CGUs, for which no explicit indicators of impairment were identified, were
written down for impairment due to specific market conditions. This has led to the recognition of Euro 6 million
in impairment losses in 2021, most of which due to writing down the Manlleu site in Spain as a result of aligning its
value to the consideration received upon disposal.
2. GOODWILL AND OTHER INTANGIBLE ASSETS
Details of this line item and related movements are as follows:
(Euro/million)
Patents
Concessions,
licences,
trademarks and
similar rights
Goodwill
Software
Other
intangible
assets
Intangibles in
progress and
advances
Total
Balance at 31 December 2020
2
83
1,508
67
320
17
1,997
Movements in 2021:
- Business combinations
4
4
57
-
12
-
77
- Investments
-
-
-
7
-
18
25
- Amortisation
(1)
(12)
-
(16)
(39)
-
(68)
- Currency translation
differences
(1)
5
78
1
22
(1)
104
- Other
1
-
-
13
1
(13)
2
Balance at 31 December 2021
5
80
1,643
72
316
21
2,137
Of which:
- Historical cost
64
196
1,663
185
629
42
2,779
- Accumulated amortisation
and impairment
(59)
(116)
(20)
(113)
(313)
(21)
(642)
Net book value
5
80
1,643
72
316
21
2,137
(Euro/million)
Patents
Concessions,
licences,
trademarks and
similar rights
Goodwill
Software
Other
intangible
assets
Intangibles in
progress and
advances
Total
Balance at 31 December 2019
4
100
1,590
40
383
37
2,154
Movements in 2020:
- Investments
-
1
-
9
-
12
22
- Amortisation
(2)
(14)
-
(9)
(41)
-
(66)
- Impairment
-
(3)
-
-
(1)
-
(4)
- Currency translation
differences
(1)
(5)
(82)
1
(25)
1
(111)
- Other
1
4
-
26
4
(33)
2
Balance at 31 December 2020
2
83
1,508
67
320
17
1,997
Of which:
- Historical cost
60
187
1,528
164
594
38
2,571
- Accumulated amortisation
and impairment
(58)
(104)
(20)
(97)
(274)
(21)
(574)
Net book value
2
83
1,508
67
320
17
1,997
145
Group Annual Report - EXPLANATORY NOTES
In 2021, gross capital expenditure on intangible assets came to Euro 25 million. In 2021, the group ERP system
(SAP 1C) successfully migrated to the new SAP S4/HANA platform. The system, which now manages 78 plants in
28 countries, operates entirely on cloud-based infrastructure and with a simplified database. This technological
leap will help accelerate the pace of innovation in coming months towards the concept of "Intelligent ERP" thanks
to use of real-time data and advanced analytics and to a better user experience. In the Operations area, projects
to implement the new Corporate MES (FastTrack) were launched in Pikkala (Finland) and Slatina (Romania), with
go-live scheduled for April 2022. Another area of the business that saw significant IT investments was the Treasury
function, with consolidation of its operations on the new SAP Treasury S4 platform. The R&D area saw continued
work on the project to implement the new global "Cable Builder" platform for cable design, scheduled to go live
in 2022. Investments in the Customer Centricity program has continued and grown, with the introduction of a new
B2B portal as part of the Group's strategy to strengthen its eServices. In another year in which the pandemic crisis
continued to severely test global IT infrastructures and systems, Prysmian's IT function has played a fundamental
role in boosting the Group's digital competitive advantage, including by toughening its cybersecurity measures
thanks to renewal of the contract with Microsoft. At the same time, a digital strategy ("Digital Ambition") has
been developed to drive innovation and support Prysmian's transition from pure cable manufacturer to solutions
provider. During 2021, the Predictive Quality project was completed at three production sites: Battipaglia, Douvrin
and Clermont; also in this area, a new Data Science Lab was created involving 30 colleagues and 6 plants.
Goodwill
At 31 December 2021, Prysmian Group reported Euro 1,643 million in Goodwill (Euro 1,508 million at 31 December
2020), with the increase on the previous year due to currency translation differences and business combinations
completed during the reporting period.
Goodwill impairment test
As reported in Note 38.4 Impairment of property, plant and equipment and finite-life intangible assets, the Group's
activities are organised in three operating segments: Projects, Energy and Telecom. The Projects segment consists
of the High Voltage, Submarine Power, Submarine Telecom and Offshore Specialties CGUs; the Energy segment
consists of a number of CGUs corresponding to the Regions or Countries in keeping with the new organisation
structure; lastly, the Telecom segment consists of a single CGU that coincides with the operating segment itself.
Goodwill, acquired on the occasion of business combinations, has been allocated to CGU groups, corresponding
to the operating segments, which are expected to benefit from the synergies of such combinations and which
represent the lowest level at which Management monitors business performance.
Goodwill has therefore been allocated to each of the operating segments: Projects, Energy and Telecom:
(Euro/million)
31.12.2020
Currency translation
differences
Business combinations
31.12.2021
Energy goodwill
1,000
54
57
1,111
Projects goodwill
226
12
-
238
Telecom goodwill
282
12
-
294
Total goodwill
1,508
78
57
1,643
The cash flows for all CGUs were determined, also taking into account risks related to climate change and
developments in the pandemic, as follows:
a)
for 2022, the post-tax cash flow was taken from the Group's 2022 budget, approved by the Board of Directors
on 24 February 2022;
b)
the cash flow forecasts were extended to the period 2023-2024 on the basis of growth projections consistent
with expected global growth rates;
c)
terminal value was calculated using a 2% perpetual growth rate, consistent with expected long-term world
growth forecasts.
The rate used to discount cash flows was determined on the basis of market information about the cost of money
and asset-specific risks (Weighted Average Cost of Capital, WACC). The outcome of the test has shown that the
recoverable amount of the individual operating segments is higher than their net invested capital (including the
share of allocated goodwill). In particular, recoverable amount is higher than carrying amount for the Projects
operating segment (111%), Energy operating segment (111%) and Telecom operating segment (256%).
146
Prysmian Group - Annual Report
2021
A WACC of 7% was used for the Projects segment. For recoverable amount to be equal to carrying amount, a
theoretical WACC of 11.1% would have to be used. A WACC of 6.4% was used for the Energy segment. For recoverable
amount to be equal to carrying amount, a theoretical WACC of 10.8% would have to be used. A WACC of 4.7% was
used for the Telecom segment. For recoverable amount to be equal to carrying amount, a theoretical WACC of
11.2% would have to be used.
For recoverable amount to be equal to carrying amount, the growth rate for all segments would have to be negative.
3. EQUITY-ACCOUNTED INVESTMENTS
This balance, amounting to Euro 360 million, has increased by Euro 48 million since 31 December 2020, when it
amounted to Euro 312 million, reflecting the effects shown in the following table:
(Euro/million)
31.12.2021
Investments in associates
Opening balance
312
Movements:
- Currency translation differences
32
- Share of net profit/(loss)
27
- Disposals
-
- Dividends
(8)
- Other movements
(3)
Closing balance
360
(Euro/million)
31.12.2020
Investments in associates
Opening balance
314
Movements:
- Currency translation differences
(10)
- Share of net profit/(loss)
18
- Disposals
(2)
- Dividends
(8)
Closing balance
312
Details of investments in equity-accounted companies are as follows:
(Euro/million)
31.12.2021
31.12.2020
Yangtze Optical Fibre and Cable Joint Stock Limited Company
311
263
Yangtze Optical Fibre & Cable (Shanghai) Co. Ltd.
27
25
Kabeltrommel Gmbh & Co.K.G.
6
7
Elkat Ltd.
7
6
Rodco Ltd.
2
2
Eksa Sp.Zo.o
-
3
Power Cables Malaysia Sdn Bhd
7
6
Total equity-accounted investments
360
312
The value of investments includes Euro 27 million for the share of net profit (loss) of equity-accounted companies.
147
Group Annual Report - EXPLANATORY NOTES
Investments in associates
Information about the nature of the main investments in associates:
Company name
Registered office
% owned
Yangtze Optical Fibre and Cable Joint Stock Limited Company
China
23.73%
Yangtze Optical Fibre & Cable (Shanghai) Co. Ltd
China
42.80%
Kabeltrommel GmbH & Co.K.G.
Germany
43.18%
Power Cables Malaysia Sdn Bhd
Malaysia
40.00%
Elkat Ltd.
Russia
40.00%
Yangtze Optical Fibre and Cable Joint Stock Limited Company is a Chinese company formed in 1988 whose main
shareholders are: China Huaxin Post and Telecommunication Economy Development Center, Wuhan Yangtze
Communications Industry Group Company Ltd. and Prysmian Group. The company is one of the industry's most
important manufacturers of optical fibre and cables. Its products and solutions are sold in more than 50 countries,
including the United States, Japan, the Middle East and Africa.
The company was listed on the Main Board of the Hong Kong Stock Exchange in December 2014 and in July 2018 it
was also listed on the Shanghai Stock Exchange.
At 31 December 2021, the fair value of the investment in Yangtze Optical Fibre and Cable Joint Stock Limited Company
was Euro 263 million (based on the price quoted on the Hong Kong market), while its carrying amount was Euro 311
million, thus higher than fair value, identified by the aforementioned market price. However, taking into account
specific analyses, this should not be treated as a lasting situation, also in view of the fact that the share price has
enjoyed a substantial rebound since the third quarter of 2021. This situation will continue to be monitored over
the coming months.
Yangtze Optical Fibre & Cable (Shanghai) Co. Ltd, formed in 2002 and based in Shanghai (China), is an associate
company, 25% of whose share capital is held by Prysmian Group and 75% by Yangtze Optical Fibre and Cable Joint
Stock Limited Company. The company specialises in the manufacture and sale of optical fibre and cables, offering
a wide range of optical fibre cables and accessories, services and FTTx solutions.
Kabeltrommel Gmbh & Co. K.G. is a German company that heads a consortium for the production, procurement,
management and sale of disposable and reusable cable carrying devices (drums). The services offered by the
company include both the sale of cable drums, and the complete management of logistics services such as drum
shipping, handling and subsequent retrieval. The company operates primarily in the German market.
Power Cables Malaysia Sdn Bhd, a company based in Malaysia, manufactures and sells power cables and conductors,
with its prime specialism high voltage products.
Elkat Ltd. is based in Russia and manufactures and sells copper conductors; it is the only company certified by the
LME to test copper cathodes for the local market.
148
Prysmian Group - Annual Report
2021
The following table reports key financial figures for the principal investments in associates:
(Euro/million)
Kabeltrommel
Gmbh & Co.K.G.
Yangtze Optical
Fibre and Cable
Joint Stock Limited
Company*
Elkat Ltd.
Yangtze Optical
Fibre & Cable
(Shanghai) Co. Ltd
Power Cables
Malaysia Sdn Bhd
31.12.2021
30.09.2021
31.12.2021
31.12.2021
31.12.2021
Non-current assets
n.a
905
n.a
10
9
Current assets
n.a
1,600
n.a
71
53
Total assets
n.a
2,505
n.a
81
62
Equity
n.a
1,341
n.a
45
15
Non-current liabilities
n.a
415
n.a
5
2
Current liabilities
n.a
749
n.a
31
45
Total equity and
liabilities
n.a
2,505
n.a
81
62
2021
2021
2021
2021
2021
Sales of goods and
services
n.a
877
n.a
64
45
Net profit/(loss) for
the year
n.a
74
n.a
-
1
Comprehensive
income/(loss) for the
year
n.a
73
n.a
-
1
Dividends received
3
5
1
-
-
*
The figures for Yangtze Optical Fibre and Cable Joint Stock Limited Company, a company listed on the Hong Kong Stock Exchange, refer to its latest published
financial results for the first nine months of 2021.
(Euro/million)
Kabeltrommel
Gmbh & Co.K.G.
Yangtze Optical
Fibre and Cable
Joint Stock Limited
Company
Elkat Ltd.
Yangtze Optical
Fibre & Cable
(Shanghai) Co. Ltd
Power Cables
Malaysia Sdn Bhd
31.12.2020
31.12.2020
31.12.2020
31.12.2020
31.12.2020
Non-current assets
9
798
6
9
10
Current assets
21
1,178
28
56
18
Total assets
30
1,976
34
65
28
Equity
11
1,170
19
41
14
Non-current liabilities
10
261
-
5
2
Current liabilities
9
546
15
19
12
Total equity and
liabilities
30
1,976
34
65
28
2020
2020
2020
2020
2020
Sales of goods and
services
34
1,044
210
70
33
Net profit/(loss) for
the year
7
69
3
1
2
Comprehensive
income/(loss) for the
year
7
63
3
1
2
Dividends received
2
6
-
-
-
149
Group Annual Report - EXPLANATORY NOTES
4. OTHER INVESTMENTS AND FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER
COMPREHENSIVE INCOME
Details are as follows:
(Euro/million)
31.12.2021
31.12.2020
Other investments at fair value through other
comprehensive income (non-current)
13
13
Financial assets at fair value through other comprehensive
income (current)
11
11
Total
24
24
Other investments at fair value through other comprehensive income (non-current) report shareholdings that are
not intended for sale in the near term.
Financial assets at fair value through other comprehensive income (current) report securities that either mature
within 12 months of the reporting date or could possibly be sold in the near term.
Other investments at fair value through other comprehensive income are analysed as follows:
(Euro/million)
Type of financial asset
% owned by
the Group
31.12.2021
31.12.2020
Ravin Cables Limited
unlisted shares
51%
9.25
9.00
Tunisie Cables S.A.
unlisted shares
7.55%
1.03
0.91
Cesi Motta S.p.A.
unlisted shares
6.48%
0.81
0.59
Other
1.57
2.08
Total non-current
12.66
12.58
Other investments and financial assets at fair value through other comprehensive income are denominated in the
following currencies:
(Euro/million)
31.12.2021
31.12.2020
Euro
14
14
Tunisian Dinar
1
1
Indian Rupee
9
9
Total
24
24
Other investments at fair value through other comprehensive income are classified in Level 3 of the fair value
hierarchy, while Financial assets at fair value through other comprehensive income fall under Level 1 of the fair
value hierarchy.
150
Prysmian Group - Annual Report
2021
5. TRADE AND OTHER RECEIVABLES
Details are as follows:
(Euro/million)
31.12.2021
Non-current
Current
Total
Trade receivables
-
1,719
1,719
Allowance for doubtful
accounts
-
(97)
(97)
Total trade receivables
-
1,622
1,622
Other receivables:
Tax receivables
10
229
239
Financial receivables
3
12
15
Prepaid finance costs
1
2
3
Receivables from employees
1
3
4
Pension plan receivables
-
2
2
Construction contracts
-
247
247
Advances to suppliers
5
27
32
Other
14
105
119
Total other receivables
34
627
661
Total
34
2,249
2,283
(Euro/million)
31.12.2020
Non-current
Current
Total
Trade receivables
1
1,468
1,469
Allowance for doubtful
accounts
(1)
(94)
(95)
Total trade receivables
-
1,374
1,374
Other receivables:
Tax receivables
6
228
234
Financial receivables
2
4
6
Prepaid finance costs
3
2
5
Receivables from employees
1
4
5
Pension plan receivables
-
3
3
Construction contracts
-
162
162
Advances to suppliers
4
21
25
Other
14
68
82
Total other receivables
30
492
522
Total
30
1,866
1,896
No individual customer accounted for more than 10% of the Group's net receivables in either 2020 or 2021.
151
Group Annual Report - EXPLANATORY NOTES
Trade receivables
The gross amount of past due receivables that are totally or partially impaired is Euro 266 million at 31 December
2021 (Euro 232 million at 31 December 2020).
Past due impaired receivables are aged as follows:
(Euro/million)
31.12.2021
31.12.2020
1 to 30 days
124
96
31 to 90 days
53
42
91 to 180 days
13
17
181 to 365 days
23
20
More than 365 days
53
57
Total
266
232
The value of trade receivables past due but not impaired is Euro 80 million at 31 December 2021 (the same amount
as at 31 December 2020). These receivables mainly relate to customers in the Projects operating segment which,
given the nature of the counterparties, are not considered necessary to impair.
Past due unimpaired receivables are aged as follows:
(Euro/million)
31.12.2021
31.12.2020
1 to 30 days
8
5
31 to 90 days
1
1
91 to 180 days
2
-
181 to 365 days
2
2
More than 365 days
67
72
Total
80
80
The total value of trade receivables not past due is Euro 1,346 million at 31 December 2021 (Euro 1,157 million at 31
December 2020). There are no particular problems with the quality of these receivables and there are no material
amounts that would otherwise be past due if their original due dates had not been renegotiated.
The following table breaks down trade and other receivables according to the currency in which they are expressed:
(Euro/million)
31.12.2021
31.12.2020
Euro
725
814
US Dollar
635
447
British Pound
231
48
Chinese Renminbi (Yuan)
164
110
Brazilian Real
131
109
Omani Rial
109
95
Canadian Dollar
57
34
Swedish Krona
27
22
Columbian Peso
26
23
Chilean Peso
24
18
Mexican Peso
21
42
Romanian Leu
21
11
Indonesian Rupiah
12
13
Russian Rouble
12
13
Singapore Dollar
12
11
Thai Baht
12
7
Turkish Lira
9
40
Other currencies
55
39
Total
2,283
1,896
152
Prysmian Group - Annual Report
2021
The allowance for doubtful accounts amounts to Euro 97 million at 31 December 2021 (Euro 95 million at 31 December
2020). Movements in this allowance are shown in the following table:
(Euro/million)
31.12.2021
31.12.2020
Opening balance
95
88
Movements:
- Increases in allowance
12
20
- Releases
(6)
(6)
- Bad debt write-offs
(5)
(3)
- Currency translation differences and
other movements
1
(4)
Closing balance
97
95
Increases in and releases from the allowance for doubtful accounts are reported in "Other expenses" in the income
statement.
Other receivables
Other receivables include "Prepaid finance costs" of Euro 3 million at 31 December 2021 (Euro 5 million at 31 December
2020), primarily relating to arrangement costs for the Revolving Credit Facility 2019 agreed with a syndicate of
leading banks on 3 April 2019.
"Construction contracts" represent the value of contracts in progress, determined as the difference between the
costs incurred plus the related profit margin, net of recognised losses, and the amount invoiced by the Group.
The following table shows how these amounts are reported between assets and liabilities:
(Euro/million)
31.12.2021
31.12.2020
Construction contract revenue to date
12,144
10,968
Amounts invoiced
(12,351)
(11,174)
Net amount due from/(to) customers for
construction contracts
(207)
(206)
Of which:
Other receivables for construction
contracts
247
162
Other payables for construction contracts
(454)
(368)
6. INVENTORIES
Details are as follows:
(Euro/million)
31.12.2021
31.12.2020
Raw materials
635
432
of which allowance for obsolete
and slow-moving raw materials
(63)
(52)
Work in progress and semi-finished goods
483
370
of which allowance for obsolete
and slow-moving work in progress
and semi-finished goods
(16)
(16)
Finished goods*
936
729
of which allowance for obsolete
and slow-moving finished goods
(68)
(79)
Total
2,054
1,531
*
Finished goods also include those for resale.
153
Group Annual Report - EXPLANATORY NOTES
7. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Details are as follows:
(Euro/million)
31.12.2021
31.12.2020
Listed securities
35
16
Unlisted securities
209
4
Total
244
20
Financial assets at fair value through profit or loss, amounting to Euro 244 million (Euro 20 million at 31 December
2020), include Euro 200 million in money market funds in which the Parent Company has temporarily invested its
liquidity, with the remainder referring to funds in which the Brazilian and Argentine subsidiaries have temporarily
invested their liquidity.
Movements in these assets are analysed as follows:
(Euro/million)
31.12.2021
31.12.2020
Opening balance
20
27
Movements:
- Currency translation differences
-
(8)
- Purchase of securities
224
3
- Disposal of securities
-
(2)
Closing balance
244
20
8. DERIVATIVES
Details are as follows:
(Euro/million)
31.12.2021
Asset
Liability
Interest rate derivatives (cash flow hedges)
-
3
Forward currency contracts on commercial transactions
(cash flow hedges)
1
10
Metal derivatives (cash flow hedges)
102
13
Metal derivatives
2
-
Total non-current
105
26
Forward currency contracts on commercial transactions
(cash flow hedges)
2
6
Interest rate derivatives (cash flow hedges)
-
6
Metal derivatives (cash flow hedges)
71
7
Forward currency contracts on commercial transactions
10
4
Forward currency contracts on financial transactions
3
3
Metal derivatives
42
16
Total current
128
42
Total
233
68
154
Prysmian Group - Annual Report
2021
(Euro/million)
31.12.2020
Asset
Liability
Interest rate derivatives (cash flow hedges)
-
12
Forward currency contracts on financial (cash flow hedges)
2
-
Metal derivatives (cash flow hedges)
40
-
Metal derivatives
2
1
Total non-current
44
13
Interest rate derivatives (cash flow hedges)
-
7
Forward currency contracts on commercial transactions
(cash flow hedges)
6
3
Metal derivatives (cash flow hedges)
40
6
Forward currency contracts on commercial transactions
4
10
Forward currency contracts on financial transactions
4
9
Metal derivatives
28
11
Total current
82
46
Total
126
59
Forward currency contracts have a notional value of Euro 2,574 million at 31 December 2021 (Euro 2,249 million at
31 December 2020); total notional value at 31 December 2021 includes Euro 873 million in derivatives designated
as cash flow hedges (Euro 441 million at 31 December 2020).
Interest rate derivatives designated as cash flow hedges refer to:
•
interest rate swaps, for an overall notional value of Euro 1,000 million, with the objective of hedging variable
rate interest flows for the period 2018-2023 on financing contracted by the Group to acquire General Cable;
•
interest rate swaps for an overall notional value of Euro 110 million, with the objective of hedging variable rate
interest flows over the period 2018-2024;
•
interest rate swaps for an overall notional value of Euro 100 million, with the objective of hedging variable rate
interest flows over the period 2020-2024;
•
interest rate swaps for an overall notional value of Euro 75 million, with the objective of hedging variable rate
interest flows over the period 2021-2025.
At 31 December 2021, like at 31 December 2020, almost all the derivative contracts had been entered into with
major financial institutions.
Metal derivatives have a notional value of Euro 2,068 million at 31 December 2021 (Euro 1,273 million at 31 December
2020).
The following tables show the impact of offsetting assets and liabilities for derivative instruments, done on the basis
of master netting arrangements (ISDA and similar agreements). They also show the effect of potential offsetting
in the event of currently unforeseen default events:
(Euro/million)
31.12.2021
Derivati lordi
Amounts
offset
Derivatives r
ecognised in statement
of financial position
Amounts
not offset*
Net
derivatives
Assets
Forward currency contracts
16
-
16
(7)
9
Interest rate derivatives
-
-
-
-
-
Metal derivatives
217
-
217
(11)
206
Total assets
233
-
233
(18)
215
Liabilities
Forward currency contracts
23
-
23
(7)
16
Interest rate derivatives
9
-
9
-
9
Metal derivatives
36
-
36
(11)
25
Total liabilities
68
-
68
(18)
50
*
Derivatives potentially offsettable in the event of default events under master netting arrangements.
155
Group Annual Report - EXPLANATORY NOTES
(Euro/million)
31.12.2020
Derivati lordi
Amounts
offset
Derivatives r
ecognised in statement
of financial position
Amounts
not offset*
Net
derivatives
Assets
Forward currency contracts
16
-
16
(13)
3
Interest rate derivatives
-
-
-
-
-
Metal derivatives
110
-
110
(18)
92
Total assets
126
-
126
(31)
95
Liabilities
Forward currency contracts
22
-
22
(13)
9
Interest rate derivatives
19
-
19
-
19
Metal derivatives
18
-
18
(18)
-
Total liabilities
59
-
59
(31)
28
*
Derivatives potentially offsettable in the event of default events under master netting arrangements.
The following table shows movements in both reporting periods in the cash flow hedge reserve for designated
hedging derivatives:
(Euro/million)
2021
2020
Riserva Lorda
Effetto imposte
Riserva Lorda
Effetto imposte
Opening balance
56
(14)
(20)
7
Changes in fair value
83
(20)
72
(20)
Reserve for other finance
costs/(income)
1
-
4
(1)
Release to construction
contract costs/(revenues)
(1)
-
-
-
Closing Balance
139
(34)
56
(14)
9. CASH AND CASH EQUIVALENTS
Details are as follows:
(Euro/million)
31.12.2021
31.12.2020
Cash and cheques
1
1
Bank and postal deposits
1,701
1,162
Total
1,702
1,163
Cash and cash equivalents, deposited with major financial institutions, are managed centrally through the Group's
treasury company and in its various operating units.
Cash and cash equivalents mainly managed by the Group's treasury company amounted to Euro 1,183 million at 31
December 2021, while at 31 December 2020 the figure was Euro 797 million.
The change in cash and cash equivalents is commented on in Note 36. Statement of cash flows.
156
Prysmian Group - Annual Report
2021
10. SHARE CAPITAL AND RESERVES
Consolidated equity has recorded a positive change of Euro 666 million since 31 December 2020, mainly reflecting
the net effect of:
•
positive currency translation differences of Euro 292 million;
•
the positive post-tax change of Euro 63 million in the fair value of derivatives designated as cash flow hedges;
•
a positive change of Euro 33 million in the share-based compensation reserve linked to stock option plans;
•
the distribution of Euro 134 million in dividends;
•
an increase of Euro 51 million in the reserves for actuarial gains and losses on employee benefits;
•
the net profit for the year of Euro 310 million;
•
an increase of Euro 15 million for the effects of hyperinflation;
•
n increase of Euro 36 million for the net impact of issuing the Convertible Bond 2021 and partial redemption of
the Convertible Bond 2017;
•
a decrease of Euro 1 million from the disposal of non-controlling interests.
At 31 December 2021, the share capital of Prysmian S.p.A. comprises 268,144,246 shares, each of nominal value
Euro 0.10 for a total of Euro 26,814,424.60.
Movements in the ordinary shares and treasury shares of Prysmian S.p.A. are reported in the following table:
Ordinary shares
Treasury shares
Total
Balance at 31 December 2019
268,144,246
(4,891,162)
263,253,084
Allotments and sales*
-
131,729
131,729
Balance at 31 December 2020
268,144,246
(4,759,433)
263,384,813
Allotments and sales**
-
106,565
106,565
Balance at 31 December 2021
268,144,246
(4,652,868)
263,491,378
*
Allotment and/or sale of treasury shares under the YES Group employee share purchase plan (131,729 shares).
**
Allotment and/or sale of treasury shares under the YES Group employee share purchase plan (106,565 shares).
Treasury shares
Movements in treasury shares during 2021 refer to the allotment and sale of treasury shares serving the Group
employee share purchase plan.
The following table reports movements in treasury shares during the year:
Number of
shares
Total nominal value
(in Euro)
% of share
capital
Average unit
value (in Euro)
Total carrying value
(in Euro)
Balance at 31 December 2019
4,891,162
489,117
1.82%
20.33
99,440,992
- Allotments and sales
(131,729)
(13,173)
-
19.92
(2,624,042)
Balance at 31 December 2020
4,759,433
475,944
1.77%
20.34
96,816,950
- Allotments and sales
(106,565)
(10,657)
-
19.92
(2,122,775)
Balance at 31 December 2021
4,652,868
465,288
1.74%
20.35
94,694,176
157
Group Annual Report - EXPLANATORY NOTES
11. BORROWINGS FROM BANKS AND OTHER LENDERS
Details are as follows:
(Euro/million)
31.12.2021
Non-current
Current
Total
Borrowings from banks and other lenders
293
56
349
Term Loan
998
1
999
Unicredit Loan
200
-
200
Mediobanca Loan
100
-
100
Intesa Loan
150
-
150
Non-convertible bond
-
763
763
Convertible Bond 2021
707
-
707
Convertible Bond 2017
-
250
250
Lease liabilities
158
53
211
Total
2,606
1,123
3,729
(Euro/million)
31.12.2020
Non-current
Current
Total
Borrowings from banks and other lenders
219
60
279
Term Loan
996
1
997
Unicredit Loan
200
-
200
Mediobanca Loan
100
-
100
Intesa Loan
150
-
150
Non-convertible bond
748
14
762
Convertible Bond 2017
489
-
489
Lease liabilities
143
52
195
Total
3,045
127
3,172
Borrowings from banks and other lenders and Bonds are analysed as follows:
(Euro/million)
31.12.2021
31.12.2020
CDP Loans
175
100
EIB Loans
110
118
Term Loan
999
997
Unicredit Loan
200
200
Mediobanca Loan
100
100
Intesa Loan
150
150
Other borrowings
64
61
Borrowings from banks and other lenders
1,798
1,726
Non-convertible bond
763
762
Convertible Bond 2021
707
-
Convertible Bond 2017
250
489
Total
3,518
2,977
158
Prysmian Group - Annual Report
2021
The Group's principal credit agreements in place at the reporting date are as follows:
Revolving Credit Facility 2019
On 3 April 2019, the Group renewed a Euro 1,000 million five-year revolving credit facility with a syndicate of leading
Italian and international banks. The funds are available for business and working capital needs, including the
refinancing of existing facilities. The Revolving Credit Facility 2019 can also be used for the issue of guarantees. At
31 December 2021, this facility was not being used.
CDP Loans
On 28 October 2019, the Group entered into an agreement with Cassa Depositi e Prestiti S.p.A. (CDP) for a Euro 100
million long-term loan for 4 years and 6 months 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. Interest rate swaps have been arranged in respect of this loan, for an overall
notional value of Euro 100 million, with the objective of hedging variable rate interest flows over the period 2020-
2024.
On 28 January 2021, a second loan was agreed with CDP for Euro 75 million for a term of 4 years and 6 months, for
the purpose of financing part of the Group's expenditure on purchasing the "Leonardo Da Vinci" cable-laying vessel.
This loan was drawn down in its entirety on 9 February 2021, with a bullet repayment envisaged at maturity on 28
July 2025. Interest rate swaps have been arranged in respect of this loan, for an overall notional value of Euro 75
million, with the objective of hedging variable rate interest flows over the period 2021-2025.
At 31 December 2021, the fair value of the CDP Loans approximates their related carrying amount.
EIB Loans
On 18 December 2013, Prysmian S.p.A. entered into an initial loan agreement with the European Investment Bank
(EIB) for Euro 100 million, to fund the Group's research & development (R&D) programs in Europe over the period
2013-2016.
The EIB Loan was particularly intended to support projects developed in the Group's R&D centres in six countries
(France, Great Britain, the Netherlands, Spain, Germany and Italy) and represented about 50% of the Prysmian
Group's investment expenditure in Europe during the period concerned.
The EIB Loan, received on 5 February 2014, was repayable in 12 equal half-yearly instalments commencing 5 August
2015 and ending 5 February 2021, when it was repaid in full.
On 10 November 2017, Prysmian S.p.A. entered into a second loan agreement with the EIB for Euro 110 million to
support the Group's R&D programs in Europe over the period 2017-2020. The loan was received on 29 November
2017 and involves a bullet repayment at maturity on 29 November 2024. Interest rate swaps have been arranged
in respect of this loan, for an overall notional value of Euro 110 million, with the objective of hedging variable rate
interest flows over the period 2018-2024.
At 31 December 2021, the fair value of the remaining EIB Loan approximates its related carrying amount.
Term Loan
The Term Loan was drawn down by the Group in June 2018 for the purpose of having the necessary financial resources
to pay the General Cable purchase consideration, to refinance the existing debt of General Cable and its subsidiaries
and to finance acquisition-related fees, commissions, costs and expenses. The Term Loan is for Euro 1 billion and
is repayable on the fifth anniversary of the acquisition closing date (6 June 2023).
The interest rates applied are indexed to 6M and 3M Euribor, depending on the company's choice. The line was
drawn down in full upon acquiring General Cable.
At 31 December 2021, the fair value of the Term Loan approximates its carrying amount.
Interest rate swaps have been arranged in respect of this loan, for an overall notional value of Euro 1,000 million,
with the objective of hedging variable rate interest flows.
Unicredit Loan
On 15 November 2018, Prysmian S.p.A. entered into an agreement with Unicredit for a long-term cash loan for a
maximum amount of Euro 200 million for 5 years from the date of signing. The loan was drawn down in full on
16 November 2018 and is repayable in a lump sum at maturity. The interest rate applied is indexed to 6M and 3M
159
Group Annual Report - EXPLANATORY NOTES
Euribor, depending on the company's choice. At 31 December 2021, the fair value of this loan approximates its
carrying amount.
Mediobanca 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. The loan was drawn down in full on 22 February 2019 and is repayable in a lump
sum at maturity. The interest rate applied is indexed to 6M and 3M Euribor, depending on the company's choice.
The fair value of the loan approximates its carrying amount.
Intesa 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. The loan was drawn down in full on 18 October 2019 and is repayable in a
lump sum at maturity. The fair value of the loan approximates its carrying amount.
The fair value of loans has been determined using valuation techniques that refer to observable market data (Level
2 of the fair value hierarchy).
The following tables summarise the committed lines available to the Group at 31 December 2021 and 31 December
2020:
(Euro/million)
31.12.2021
Total lines
Drawn
Undrawn
Revolving Credit Facility 2019
1,000
-
1,000
CDP Loans
175
(175)
-
EIB Loans
110
(110)
-
Term Loan
1,000
(1,000)
-
Unicredit Loan
200
(200)
-
Mediobanca Loan
100
(100)
-
Intesa Loan
150
(150)
-
Total
2,735
(1,735)
1,000
(Euro/million)
31.12.2020
Total lines
Drawn
Undrawn
Revolving Credit Facility 2019
1,000
-
1,000
CDP Loans
100
(100)
-
EIB Loans
118
(118)
-
Term Loan
1,000
(1,000)
-
Unicredit Loan
200
(200)
-
Mediobanca Loan
100
(100)
-
Intesa Loan
150
(150)
-
Total
2,668
(1,668)
1,000
Bonds
As at 31 December 2021, Prysmian Group had the bond issues in place described in the following paragraphs.
Non-convertible bond issued in 2015
On 30 March 2015, Prysmian S.p.A. completed the placement with institutional investors of an unrated bond, on
the Eurobond market, for a total nominal value of Euro 750 million. The bond, with an issue price of Euro 99.002,
has a 7-year maturity and pays a fixed annual coupon of 2.50%. The individual bonds, maturing on 11 April 2022,
have minimum denominations of Euro 100,000, plus integral multiples of Euro 1,000.
The bond settlement date was 9 April 2015. The bond was admitted to the Luxembourg Stock Exchange, where it
is traded on the related regulated market.
160
Prysmian Group - Annual Report
2021
At 31 December 2021, the non-convertible bond has a fair value of Euro 762 million. Fair value has been determined
with reference to the quoted price in the relevant market (Level 1 of the fair value hierarchy).
Convertible Bond 2017
On 12 January 2017, the Board of Directors approved the placement of an equity-linked bond, known as "Prysmian
S.p.A. Euro 500 million Zero Coupon Equity Linked Bonds due 2022" maturing 17 January 2022 and reserved for
institutional investors. The bond settlement date was 17 January 2017.
At the meeting held on 12 April 2017, the Company's shareholders authorised:
•
the convertibility of the Equity-Linked Bond;
•
the proposal to increase share capital for cash, in single or multiple issues with the exclusion of pre-emptive
rights, by a maximum nominal amount of Euro 1,457,942.70, by issuing, in single or multiple instalments, up
to 14,579,427 ordinary shares of the Company, with the same characteristics as its other outstanding ordinary
shares, exclusively and irrevocably to serve the Bond's conversion.
The accounting treatment for the five-year Convertible Bond 2017 resulted in the recognition of an equity component
of Euro 48 million and a debt component of Euro 452 million, determined at the bond issue date.
On 26 January 2021, the Group announced a partial redemption of the Euro 500 million zero-coupon equity-linked
bond due 2022 (the "2017 Bonds"), up to a face value of Euro 250 million, representing 50% of the bonds in issue.
The partial redemption of the 2017 Bonds took place at a price of Euro 104.25 each.
This partial redemption involved an outlay of Euro 261 million, accounted for by reducing financial debt by Euro 246
million and equity by Euro 13 million and recognising Euro 2 million in expense through profit or loss.
The following table summarises the values of the Convertible Bond 2017 as at 31 December 2021:
(Euro/million)
Issue value of convertible bond
500
Equity reserve for convertible bond
(48)
Issue date net balance
452
Interest - non-monetary
46
Redemption of 50% of convertible bond
(261)
Change in equity upon redemption
13
Balance at 31 December 2021
250
At 31 December 2021, the fair value of the Convertible Bond 2017 (equity component and debt component) is Euro
251 million, all of which attributable to the debt component. Fair value has been determined with reference to the
quoted price in the relevant market (Level 1 of the fair value hierarchy).
The Convertible Bond 2017 was redeemed in full at maturity in January 2022.
161
Group Annual Report - EXPLANATORY NOTES
Convertible Bond 2021
On 26 January 2021, the Group announced the successful placement of an equity-linked bond (the "Bonds") for the
sum of Euro 750 million.
The Bonds have a 5-year maturity and denomination of Euro 100,000 each and are zero coupon. The issue price
is Euro 102.50, representing a yield to maturity of minus 0.49% per annum. The initial price for the conversion of
the Bonds into the Company's ordinary shares is Euro 40.2355, representing a 47.50% premium on the weighted
average price by volume of Prysmian ordinary shares on the Milan Stock Exchange between the start and end of
the book-building process on 26 January 2021.
The Shareholders' Meeting held on 28 April 2021 authorised the convertibility of the equity-linked bond and approved
the proposal for a share capital increase serving the conversion of the convertible bond for a maximum nominal
amount of Euro 1,864,025.50 by issuing up to 18,640,255 ordinary shares with a nominal value of Euro 0.10 each.
As provided for in the Bond regulations, the Group has the option to call all - but not just a part - of the Bonds at
their principal amount from 12 February 2024, should the share price exceed 130% of the conversion price for at
least 20 days within a period of 30 consecutive trading days.
On 14 June 2021, the Bond was admitted to listing on the multilateral trading facility of the Vienna Stock Exchange.
On the issue date, cash and cash equivalents increased by a total of Euro 768 million, against a corresponding
increase in financial debt, of which Euro 703 million for the bond's debt component and Euro 65 million for the
conversion option.
The fair value of the conversion option, amounting to Euro 49 million on 28 April 2021, the date the Shareholders'
Meeting authorised the bond's convertibility, has been reclassified to equity, while the change of Euro 16 million in
fair value between the bond issue date and the date of the extraordinary Shareholders' Meeting has been recognised
as income in profit or loss.
The following table summarises the values of the Convertible Bond 2021 as at 31 December 2021:
(Euro/million)
Value of Convertible Bond 2021
768
Equity reserve for convertible bond
(49)
Change in conversion option fair value
(16)
Issue date net balance
703
Interest - non-monetary
8
Related costs
(4)
Saldo al 31 dicembre 2021
707
At 31 December 2021, the fair value of the Convertible Bond 2021 (equity component and debt component) is Euro 816
million, of which Euro 707 million attributable to the debt component and Euro 109 million to the equity component.
In the absence of trading on the relevant market, the fair value of the bond's debt and equity components has been
determined using valuation techniques that refer to observable market data (Level 2 of the fair value hierarchy).
162
Prysmian Group - Annual Report
2021
Other borrowings from banks and other lenders and Lease liabilities
The following tables report movements in Borrowings from banks and other lenders:
(Euro/million)
CDP
Loans
EIB
Loans
Conv.
Bonds
Non-conv.
Bond
Term
Loan
Unicredit,
Mediobanca and
Intesa Loans
Other
borrowings/
Lease
liabilities
Total
Balance at 31 December 2020
100
118
489
762
997
450
256
3,172
Business combinations
-
-
-
-
-
-
4
4
Currency translation
differences
-
-
-
-
-
-
7
7
New funds
75
-
703
-
-
-
19
797
Repayments
-
(8)
(245)
-
-
-
(75)
(328)
Amortisation of bank and
financial fees and other
expenses
-
-
(3)
2
2
-
-
(1)
New agreements under IFRS 16
-
-
-
-
-
-
63
63
Interest and other
movements
-
-
13
(1)
-
-
1
13
Balance at 31 December 2021
175
110
957
763
999
450
275
3,729
(Euro/million)
CDP
Loans
EIB
Loans
Conv.
Bonds
Non-conv.
Bond
Term
Loan
Unicredit,
Mediobanca and
Intesa Loans
Other
borrowings/
Lease
liabilities
Total
Balance at 31 December 2019
200
135
478
760
996
448
227
3,244
Currency translation
differences
-
-
-
-
-
-
(15)
(15)
New funds
-
-
-
-
-
-
26
26
Repayments
(100)
(17)
-
-
-
-
(61)
(178)
Amortisation of bank and
financial fees and other
expenses
-
-
1
2
1
2
-
6
New agreements under IFRS 16
-
-
-
-
-
-
79
79
Interest and other
movements
-
-
10
-
-
-
-
10
Balance at 31 December 2020
100
118
489
762
997
450
256
3,172
The following tables provide an analysis by maturity and currency of borrowings from banks and other lenders
(excluding lease liabilities) at 31 December 2021 and 2020:
(Euro/million)
31.12.2021
Variable interest rate
Fixed interest rate
Total
Euro
USD
Other
currencies
Euro
USD
Other
currencies
Due within 1 year
8
11
2
1,035
3
10
1,069
Due between 1 and 2 years
1,197
-
-
1
-
-
1,198
Due between 2 and 3 years
458
8
-
-
-
-
466
Due between 3 and 4 years
76
-
-
-
-
-
76
Due between 4 and 5 years
1
-
-
707
-
-
708
Due after more than 5 years
1
-
-
-
-
-
1
Total
1,741
19
2
1,743
3
10
3,518
Average interest rate in
period, as per contract
1.0%
1.6%
7.2%
1.8%
2.3%
5.2%
1.4%
Average interest rate in
period, including IRS effect*
1.3%
1.6%
7.2%
1.8%
2.3%
5.2%
1.5%
*
Interest rate swaps have been put in place to hedge interest rate risk on variable rate loans in Euro. At 31 December 2021, the total hedged amount equates to
73.5% of Euro-denominated debt at that date. Interest rate hedges consist of interest rate swaps which exchange a variable rate (3 or 6-month Euribor for loans in
Euro) with an average fixed rate (fixed rate + spread) of 1.3% for Euro-denominated debt. The percentages representing the average fixed rate refer to 31 December
2021.
163
Group Annual Report - EXPLANATORY NOTES
(Euro/million)
31.12.2020
Variable interest rate
Fixed interest rate
Total
Euro
USD
Other
currencies
Euro
USD
Other
currencies
Due within 1 year
14
9
9
39
2
3
76
Due between 1 and 2 years
-
-
-
1,238
-
-
1,238
Due between 2 and 3 years
1,196
-
-
1
-
-
1,197
Due between 3 and 4 years
459
7
-
-
-
-
466
Due between 4 and 5 years
-
-
-
-
-
-
-
Due after more than 5 years
-
-
-
-
-
-
-
Total
1,669
16
9
1,278
2
3
2,977
Average interest rate in
period, as per contract
1.0%
1.8%
7.2%
2.1%
2.2%
5.3%
1.5%
Average interest rate in
period, including IRS effect
1.3%
1.8%
7.2%
2.1%
2.2%
5.3%
1.7%
Risks relating to sources of finance and to financial investments/receivables are discussed in the section entitled
"Risks factors and uncertainties" forming part of the Directors' Report.
NET FINANCIAL DEBT
(Euro/million)
Note
31.12.2021
31.12.2020
CDP Loans
11
175
100
EIB Loans
11
110
110
Non-convertible bond
11
-
748
Convertible Bond 2021
11
707
-
Convertible Bond 2017
11
-
489
Term Loan
11
998
996
Unicredit Loan
11
200
200
Mediobanca Loan
11
100
100
Intesa Loan
11
150
150
Lease liabilities
11
158
143
Interest rate swaps
8
3
12
Other financial payables
11
8
9
Total long-term financial payables
12
2,609
3,057
EIB Loans
11
-
8
Non-convertible bond
11
763
14
Convertible Bond 2017
11
250
-
Term Loan
11
1
1
Lease liabilities
11
53
52
Interest rate swaps
8
6
7
Forward currency contracts on financial transactions
8
3
9
Other financial payables
11
56
52
Total short-term financial payables
1,132
143
Total financial liabilities
3,741
3,200
Long-term financial receivables
5
3
2
Long-term bank fees
5
1
3
Financial assets at amortised cost
3
4
Forward currency contracts on financial transactions (current)
8
3
4
Short-term financial receivables
5
12
4
Short-term bank fees
5
2
2
Financial assets at fair value through profit or loss
7
244
20
Financial assets at fair value through other comprehensive income
4
11
11
Financial assets held for sale
-
-
1
Cash and cash equivalents
9
1,702
1,163
Total financial assets
1,981
1,214
Net financial debt
1,760
1,986
164
Prysmian Group - Annual Report
2021
The following table presents a reconciliation of the Group's net financial debt to the amount reported in accordance
with the requirements of CONSOB advice notice no. 5/21 of 29 April 2021 concerning compliance with the "Guidelines
on disclosure requirements under the Prospectus Regulation" published by ESMA on 4 March 2021 (reference ESMA32-
382-1138):
(Euro/million)
Note
31.12.2021
31.12.2020
Net financial debt - as reported above
1,760
1,986
Adjustments to exclude:
Long-term financial receivables and other assets
3
6
6
Long-term bank fees
3
1
3
Adjustments to include:
Net non-hedging forward currency contracts on
commercial transactions, excluding non-current assets
5
(6)
6
Net non-hedging metal derivatives, excluding
non-current assets
5
(26)
(16)
Recalculated net financial debt
1,735
1,985
12. TRADE AND OTHER PAYABLES
Details are as follows:
(Euro/million)
31.12.2021
Non-current
Current
Total
Trade payables
-
2,592
2,592
Total trade payables
-
2,592
2,592
Other payables:
Tax and social security
payables
1
204
205
Advances from customers
-
549
549
Payables to employees
-
149
149
Accrued expenses
-
130
130
Other
5
159
164
Total other payables
6
1,191
1,197
Total
6
3,783
3,789
(Euro/million)
31.12.2020
Non-current
Current
Total
Trade payables
-
1,958
1,958
Total trade payables
-
1,958
1,958
Other payables:
Tax and social security
payables
1
218
219
Advances from customers
-
408
408
Payables to employees
1
134
135
Accrued expenses
-
105
105
Other
4
130
134
Total other payables
6
995
1,001
Total
6
2,953
2,959
Trade payables include around Euro 665 million for the supply of strategic metals (copper, aluminium and lead),
whose payment terms are longer than normal for this type of transaction.
165
Group Annual Report - EXPLANATORY NOTES
Advances from customers include the liability for construction contracts, amounting to Euro 454 million at 31
December 2021 and Euro 368 million at 31 December 2020. This liability represents the excess of amounts invoiced by
the Group over costs incurred plus accumulated profits (or losses), recognised using the percentage of completion
method.
The following table breaks down trade and other payables according to the currency in which they are expressed:
(Euro/million)
31.12.2021
31.12.2020
Euro
1,957
1,314
US Dollar
809
774
British Pound
164
181
Chinese Renminbi (Yuan)
183
118
Brazilian Real
106
99
Bahraini Dinar
92
125
Omani Rial
65
39
Mexican Peso
40
38
Canadian Dollar
54
34
Philippine Peso
27
29
Romanian Leu
47
28
Australian Dollar
40
25
UAE Dirham
47
24
Indonesian Rupiah
13
15
Swedish Krona
17
13
Hungarian Forint
17
13
Other currencies
111
90
Total
3,789
2,959
13. PROVISIONS FOR RISKS AND CHARGES
Details are as follows:
(Euro/million)
31.12.2021*
Non-current
Current
Total
Restructuring costs
-
21
21
Legal, contractual and other risks
29
395
424
Environmental risks
5
92
97
Tax risks
12
99
111
Total
46
607
653
*
Provisions for risks at 31 December 2021 include Euro 123 million for potential liabilities.
(Euro/million)
31.12.2020*
Non-current
Current
Total
Restructuring costs
-
31
31
Legal, contractual and other risks
22
349
371
Environmental risks
5
92
97
Tax risks
12
80
92
Total
39
552
591
*
Provisions for risks at 31 December 2020 include Euro 124 million for potential liabilities.
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Prysmian Group - Annual Report
2021
The following table presents the movements in these provisions during the reporting period:
(Euro/million)
Restructuring
costs
Legal, contractual
and other risks
Environmental
risks
Tax risks
Total
Balance at 31 December 2020
31
371
97
92
591
Business combinations
-
1
-
-
1
Increases
8
128
1
19
156
Uses
(17)
(41)
(1)
(3)
(62)
Releases
(1)
(33)
(6)
(1)
(41)
Currency translation differences
-
5
6
11
Other
-
(7)
-
4
(3)
Balance at 31 December 2021
21
424
97
111
653
The provision for contractual, legal and other risks amounts to Euro 424 million at 31 December 2021 (Euro 371
million at 31 December 2020). This provision mainly includes the provision for Euro 179 million related to Antitrust
investigations in progress and legal actions brought by third parties against Group companies as a result of and/or
in connection with decisions adopted by the competent authorities, as described below. The rest of this provision
relates to provisions related to and arising from business combinations and for risks associated with ongoing and
completed contracts.
Antitrust - European Commission proceedings in the high voltage underground and submarine cables business
The European Commission started an investigation in late January 2009 into several European and Asian electrical
cable manufacturers to verify the existence of alleged anti-competitive practices in the high voltage underground
and submarine cables markets.
On 2 April 2014, the European Commission adopted a decision under which it found that, between 18 February 1999
and 28 January 2009, the world's largest cable producers, including Prysmian Cavi e Sistemi S.r.l. ("Prysmian CS"), had
engaged in anti-competitive practices in the European market for high voltage submarine and underground power
cables. The European Commission held Prysmian CS jointly liable with Pirelli & C. S.p.A. ("Pirelli") for the alleged
infringement in the period 18 February 1999 - 28 July 2005, ordering them to pay a fine of Euro 67.3 million, and
it held Prysmian CS jointly liable with Prysmian S.p.A. ("Prysmian") and The Goldman Sachs Group Inc. ("Goldman
Sachs") for the alleged infringement in the period 29 July 2005 - 28 January 2009, ordering them to pay a fine
of Euro 37.3 million. Prysmian, Prysmian CS, Pirelli and Goldman Sachs each filed a separate appeal against this
decision with the General Court of the European Union, in first instance, and later with the Court of Justice of the
European Union. In rulings handed down on 24 September 2020, 28 October 2020 and 27 January 2021 respectively,
the Court of Justice definitively dismissed the appeals brought by Prysmian and Prysmian CS, Pirelli and Goldman
Sachs, thus upholding the liability and fine envisaged under the European Commission's original decision. Further
to the ruling dismissing the appeal by Prysmian and Prysmian CS, the European Commission requested Prysmian
Group to pay the sum of approximately Euro 20 million, corresponding to half of the fine for the period from 29 July
2005 to 28 January 2009. Following the ruling dismissing the Pirelli appeal, the European Commission requested
Prysmian Group to pay the sum of approximately Euro 37 million, corresponding to half of the fine for the period
from 18 February 1999 to 28 July 2005. Using the provisions already set aside in previous years, the Group made
these payments within the required timeframe.
In a ruling handed down on 14 November 2019, the Court of Justice of the European Union also dismissed the
appeal brought by General Cable, thus definitively confirming the fine previously levied against it by the European
Commission. As a result, the Group went ahead and paid a fine for Euro 2 million.
In November 2014 and October 2019 respectively, Pirelli filed two civil actions, recently joined in one single
proceeding, against Prysmian CS and Prysmian with the Court of Milan, seeking (i) to be indemnified from any loss
suffered as a result of the enforcement by the European Commission of its decision and for any expenses incidental
to such enforcement; (ii) to be indemnified from any losses deriving from third-party claims relating to the conduct
forming the subject of the European Commission's decision and (iii) to be compensated for the damages, allegedly
suffered and quantified, resulting from Prysmian CS and Prysmian having requested, in certain pending legal
167
Group Annual Report - EXPLANATORY NOTES
proceedings, that Pirelli be held liable for the unlawful conduct found by the European Commission in the period
from 1999 to 2005. As part of the same proceeding, Prysmian CS and Prysmian, in addition to requesting the full
dismissal of the claims brought by Pirelli, have filed symmetrical and opposing counterclaims to those of Pirelli
in which they have requested (i) to be indemnified from any loss suffered as a result of the enforcement by the
European Commission of its decision and for any expenses incidental to such enforcement; (ii) to be indemnified
from any losses deriving from third-party claims relating to the conduct forming the subject of the European
Commission's decision and (iii) to be compensated for damages suffered as a result of the legal actions brought
by Pirelli. This proceeding is currently pending.
In view of the circumstances described and the developments in the proceedings, the Directors, with the assistance
of their legal advisors, have recognised what they consider to be an adequate level of provisions to cover the
potential liabilities related to the matters in question.
Antitrust - Claims for damages resulting from the European Commission's 2014 decision
During the first few months of 2017, operators belonging to the Vattenfall Group commenced a proceeding before
the London High Court against a number of cable manufacturers, including companies of the Prysmian Group,
to obtain compensation for damages purportedly suffered as a result of the alleged anti-competitive practices
sanctioned by the European Commission. During the month of June 2020, the Prysmian companies concerned filed
their defence and called in contribution another addressee of the EC decision . This proceeding is currently pending.
On 2 April 2019, a writ of summons was served, on behalf of Terna S.p.A., on Pirelli, Nexans and companies of
the Prysmian Group, demanding compensation for damages purportedly suffered as a result of the alleged anti-
competitive practices sanctioned by the European Commission in its April 2014 decision. This proceeding has
been brought before the Court of Milan. On 24 October 2019, the Prysmian Group companies concerned filed their
preliminary defence. By an order dated 3 February 2020, the Court upheld the requests raised by the defendants,
giving Terna until 11 May 2020 to complete its writ of summons and scheduled a hearing for 20 October 2020. Terna
duly completed its summons, which was filed within the required deadline. The proceeding is at evidentiary stage.
On 2 April 2019, a writ of summons was served, on behalf of Electricity & Water Authority of Bahrain, GCC
Interconnection Authority, Kuwait Ministry of Electricity and Water and Oman Electricity Transmission Company,
on a number of cable manufacturers, including companies of the Prysmian Group, on Pirelli & C. S.p.A. and
The Goldman Sachs Group Inc. This proceeding, brought before the Court of Amsterdam, concerns a claim for
compensation of damages purportedly suffered as a result of the alleged anti-competitive practices sanctioned
by the European Commission. On 18 December 2019, the Prysmian Group companies concerned presented their
preliminary defence. The matter was then heard by the Court during a hearing which took place on 8 September 2020.
On 25 November 2020, the Court of Amsterdam handed down a ruling under which it upheld the defences made and
declined jurisdiction over defendants not based in the Netherlands, thus excluding them from the proceeding. On
19 February 2021, the claimants announced that they had filed an appeal against this ruling. The Prysmian Group
companies concerned, together with the other third-party first-instance defendants, have challenged the appeal.
The appeal proceeding is pending.
Further, on 4 April 2019, the Group learned that the following proceedings had been brought before the Court of
London, both of which involving claims for damages purportedly suffered as a result of the alleged anti-competitive
practices sanctioned by the European Commission:
•
proceeding was abandoned after the parties reached a settlement on 31 July 2021;
•
proceeding promoted by Greater Gabbard Offshore Winds Limited and Scottish and Southern Energy (SSE) Group
companies against certain Prysmian Group companies. On 5 September 2019, a writ of summons was served in
which the claimants substantiated and quantified their claim for damages. This proceeding is now at a pre-trial
stage.
With reference to the antitrust damages proceedings brought by the British operators National Grid and Scottish
Power and settled out of court in 2020, in 2021 the Prysmian Group companies involved in these proceedings resumed
the contribution proceeding against Goldman Sachs and other addressees of the EC decision, previously stayed
pending the outcome of the main proceeding brought by National Grid and Scottish Power, in order to obtain partial
168
Prysmian Group - Annual Report
2021
or full compensation for the settlement amounts paid to National Grid and Scottish Power. On 17 December 2021,
the Group and Goldman Sachs reached an agreement by way of which they settled the above proceeding and other
potential antitrust claims.
In view of the circumstances described and the developments in the proceedings, the Directors, with the assistance
of their legal advisors, have recognised what they consider to be an adequate level of provisions to cover the
potential liabilities related to the matters in question.
By statement of claims served respectively on 24 and 25 May 2018, Prysmian and Prysmian CS were summoned by
Nexans France SAS and Nexans SA to appear before the Court of Dortmund (Germany) . The claimants have asked
the Court concerned to ascertain the existence of joint and several liability between Prysmian and Prysmian CS,
on the one hand, and Nexans France SAS and Nexans SA, on the other, for any damages suffered by third parties in
Germany as a result of the alleged cartel in the market for high voltage underground and submarine power cables
sanctioned in the European Commission's decision. The Court concerned, with order dated 3 June 2019, stayed the
proceeding pending the outcome of the appeal against the European Commission's decision brought before the
European Courts by both Prysmian and Nexans. Following the conclusion of the appeal proceedings pending before
the European Court of Justice, Nexans has resumed the previously stayed legal action.
Based on the information currently available and the fact that currently the above proceeding does not foresee
any request for damages, the Directors have decided not to make any provision.
Antitrust - Other investigations
In Brazil, the local antitrust authority initiated investigations, notified to Prysmian in 2011, against a number of
manufacturers of high voltage underground and submarine cables, including Prysmian. On 15 April 2020, the CADE
Tribunal issued the operative part of the decision under which it held Prysmian liable for the alleged infringement
during the period from February 2001 to March 2004 and ordered it to pay a fine of BRL 10.2 million (approximately
Euro 1.8 million). Using the provisions already set aside in previous years, the Group made these payments within the
required timeframe. Prysmian Group has filed an appeal against the CADE ruling. The appeal proceeding is pending.
At the end of February 2016, the Spanish antitrust authority commenced investigations to verify the existence
of anti-competitive practices by local low voltage cable manufacturers and distributors, including the Group's
local subsidiaries. On 24 November 2017, the local antitrust authority notified the Group's Spanish subsidiaries of
a decision under which they were held liable for the alleged infringements in the period from June 2002 to June
2015 and were jointly and severally ordered to pay a fine of Euro 15.6 million. The Group's Spanish subsidiaries have
appealed against this decision. The appeal proceeding is still pending.
The decision of 24 November 2017 also held the Spanish subsidiaries of General Cable liable for breach of local
antitrust law. However, they have obtained immunity from paying the related fine (quantified at about Euro 12.6
million) having filed for leniency and collaborated with the local antitrust authority in its investigations. The
Spanish subsidiaries of General Cable have also appealed against the decision of the local antitrust authority; the
appeal proceeding is still pending.
In view of the circumstances described and the developments in the proceedings, the Directors, with the assistance
of their legal advisors, have recognised what they consider to be an adequate level of provisions to cover the
potential liabilities related to the matters in question.
In addition, in January 2022, an investigation was initiated by the German antitrust authority (Federal Cartel Office)
concerning an alleged coordination of industry-standard metal surcharges in Germany. Further information can
be found in the later note on "Events after the reporting period".
Given the high degree of uncertainty as to the timing and outcome of these ongoing investigations, the Directors
believe they are currently unable to estimate the related risk.
Antitrust - Claims for damages ensuing from other investigations
In February 2020, a writ of summons was served on a number of cable manufacturers, including Prysmian Group's
Spanish subsidiaries, under which companies belonging to the Iberdrola Group have claimed compensation for
damages supposedly suffered as a result of the alleged anti-competitive practices sanctioned by the Spanish
antitrust authority in its decision of 24 November 2017. The proceeding is pending before the Court of Barcelona.
169
Group Annual Report - EXPLANATORY NOTES
In July 2020, a writ of summons was served on a number of cable manufacturers, including Prysmian Group's Spanish
subsidiaries, under which companies belonging to the Endesa Group have claimed compensation for damages
supposedly suffered as a result of the alleged anti-competitive practices sanctioned by the Spanish antitrust
authority in its decision of 24 November 2017. The proceeding is pending before the Court of Barcelona.
In view of the circumstances described and the developments in the proceedings, the Directors, with the assistance
of their legal advisors and adopting a consistent assessment approach, have adjusted the related provisions for
risks to a level deemed appropriate to cover the potential liabilities for the matters in question.
With reference to the above matters, certain Group companies have received a number of notices in which third
parties have claimed compensation for damages, albeit not quantified, allegedly suffered as a result of Prysmian's
alleged involvement in anti-competitive practices sanctioned by the European Commission and the antitrust
authorities in Brazil and Spain.
Based on the information currently available, and believing it unlikely that these potential or liabilities will arise
or otherwise that they are currently unquantifiable, the Directors have decided not to make any provision.
Despite the uncertainty of the outcome of the investigations and legal actions in progress, the amount of this
provision is considered to represent the best estimate of the liability based on the information available to date
and the developments in the proceedings described above.
Provisions for risks associated with ongoing and completed contracts
Provisions for legal, contractual and other risks include those for warranties against completed projects, among
which the most significant is the warranty provision for the Western Link contract. In light of the agreement reached
with the customer in January 2021, which revised the terms of the original contract and helped reduce the Group's
risk exposure in this regard, potential liabilities arising from events that could occur during the warranty period
are considered to be adequately covered by the provisions already set aside.
14. EMPLOYEE BENEFIT OBLIGATIONS
The Group provides a number of post-employment benefits through schemes that include defined benefit plans
and defined contribution plans.
The defined contribution plans require the Group to pay, under legal or contractual obligations, contributions into
public or private insurance institutions. The Group fulfils its obligations through payment of the contributions.
At the financial reporting date, any amounts accrued but not yet paid to such institutions are recorded in "Other
payables", while the related costs, accrued on the basis of employee service, are recognised in "Personnel costs".
The defined benefit plans mainly refer to Pension plans, Statutory severance benefit (for Italian companies),
Medical benefit plans and other benefits such as seniority bonuses.
The liabilities arising under these plans, net of any assets serving such plans, are recognised in Employee benefit
obligations and are measured using actuarial techniques.
Employee benefit obligations are analysed as follows
(Euro/million)
31.12.2021
31.12.2020
Pension plans
359
419
Italian statutory severance benefit
15
15
Medical benefit plans
31
30
Termination and other benefits
41
42
Total
446
506
170
Prysmian Group - Annual Report
2021
Pension plan amendments in 2021
There were no significant amendments to existing pension plans during 2021. The following notes provide more
details about the three main types of benefit: pension plans, statutory severance benefit and medical benefit plans.
PENSION PLANS
Pension plans relate to defined benefit pension schemes that can be "Funded" or "Unfunded".
Pension plan liabilities are generally calculated according to employee length of service with the company and the
remuneration paid in the period preceding cessation of employment.
Liabilities for "Funded pension plans" are funded by contributions paid by the employer and, in some cases, by
employees, into a separately managed pension fund. The fund independently manages and administers the amounts
received, investing in financial assets and paying benefits directly to employees. The Group's contributions to such
funds are defined according to the requirements established in the individual countries.
Liabilities for "Unfunded pension plans" are managed directly by the employer who sees to paying the benefits to
employees. These plans have no assets to cover the liabilities.
Pension plan obligations and assets at 31 December 2021 and 31 December 2020 are analysed as follows:
(Euro/million)
31.12.2021
Germany
Great Britain
France
United
States
Other
countries
Total
Funded pension obligations:
Present value of obligation
-
219
2
141
85
447
Fair value of plan assets
-
(151)
(2)
(132)
(85)
(370)
Asset ceiling
-
-
-
-
-
-
Unfunded pension obligations:
Present value of obligations
230
-
32
5
15
282
Total
230
68
32
14
15
359
(Euro/million)
31.12.2020
Germany
Great Britain
France
United
States
Other
countries
Total
Funded pension obligations:
Present value of obligation
-
226
2
142
88
458
Fair value of plan assets
-
(135)
(2)
(122)
(81)
(340)
Asset ceiling
-
-
-
-
-
-
Unfunded pension obligations:
Present value of obligations
243
-
36
4
18
301
Total
243
91
36
24
25
419
At 31 December 2021, the net value of funded plans in "Other countries" is close to nil and mainly refers to Canada,
Mexico and Spain.
At 31 December 2021, unfunded plans in "Other countries" primarily refer to Sweden and Chile, the present value
of whose obligations amounts to Euro 8 million and Euro 3 million respectively.
171
Group Annual Report - EXPLANATORY NOTES
Changes during the year in pension plan obligations are analysed as follows:
(Euro/million)
2021
2020
Opening defined benefit obligation
759
752
Current service costs
7
7
Interest costs
10
13
Administrative costs and taxes
2
2
Actuarial (gains)/losses recognised in equity - experience
(4)
(3)
Actuarial (gains)/losses recognised in equity - demographic assumptions
(6)
-
Actuarial (gains)/losses recognised in equity - financial assumptions
(31)
52
Disbursements from plan assets
(25)
(24)
Disbursements paid directly by the employer
(12)
(13)
Currency translation differences
29
(29)
Reclassification to assets and liabilities held for sale
-
2
Closing defined benefit obligation
729
759
Changes during the year in pension plan assets are analysed as follows:
(Euro/million)
2021
2020
Opening plan assets
340
343
Interest income on plan assets
6
8
Actuarial gains/(losses) recognised in equity
18
25
Contributions paid in by the employer
20
23
Contributions paid in by plan participants
-
-
Disbursements
(38)
(37)
Plan settlements
-
-
Currency translation differences
24
(22)
Closing plan assets
370
340
At 31 December 2021, pension plan assets consisted of equities (23% versus 37% in 2020), government bonds
(15% versus 12% in 2020), corporate bonds (25% versus 19% in 2020), and other assets (37% versus 32% in
2020).
The value of the asset ceiling was zero at 31 December 2021, like at 31 December 2020.
Pension plan costs and income recognised in the income statement are analysed as follows:
(Euro/million)
2021
Germany
Great Britain
France
United
States
Other
countries
Total
Personnel costs
1
-
3
1
4
9
Interest costs
1
3
-
3
3
10
Expected returns on plan assets
-
(2)
-
(3)
(1)
(6)
Total pension plan costs
2
1
3
1
6
13
(Euro/million)
2020
Germany
Great Britain
France
United
States
Other
countries
Total
Personnel costs
2
-
2
1
4
9
Interest costs
2
4
-
5
2
13
Expected returns on plan assets
-
(2)
-
(4)
(2)
(8)
Total pension plan costs
4
2
2
2
4
14
172
Prysmian Group - Annual Report
2021
More details can be found in Note 20. Personnel costs.
As evident from the preceding tables, the most significant plans at 31 December 2021 in terms of accrued employee
benefit obligations are those managed in the following countries:
•
Germany;
•
Great Britain;
•
France;
•
United States.
Pension plans in these countries account for more than 90% of the related liability. The principal risks to which
they are exposed are described below:
Germany
There are eight pension plans in Germany, most of which final salary plans with the retirement age generally set
at 65. Although most plans are closed to new members, additional costs may need to be recognised in the future.
As at 31 December 2021, the plans had an average duration of 14 years (14.2 years at 31 December 2020).
Total plan membership is made up as follows:
31.12.2021
31.12.2020
Number of participants
Number of participants
Active
962
1,072
Deferred
866
1,263
Pensioners
2,200
2,222
Total membership
4,028
4,557
The German plans do not have any assets that fund the liabilities, in line with the practice in this country; the Group
pays these benefits directly.
The benefits payable in 2022 will amount to Euro 9 million (Euro 9 million at 31 December 2020 for 2021).
The increase in benefits, and so in the recorded liability and service costs, mainly depends on inflation, salary
growth and the life expectancy of plan members. Another variable to consider when determining the amount of
the liability and service costs is the discount rate, identified by reference to market yields of AA corporate bonds
denominated in Euro.
Great Britain
Two defined benefit plans were in operation at 31 December 2021: the Draka pension fund and the Prysmian
pension fund. Both are final salary plans, in which the retirement age is generally set at 65 for the majority of plan
participants. Neither plan has admitted any new members or incurred any new liabilities since 2013. Currently all
employees participate in defined contribution plans.
As at 31 December 2021, the plans had an average duration of approximately 19 years (approximately 19.6 years at
31 December 2020).
Total plan membership is made up as follows:
31.12.2021
31.12.2020
Draka
pension fund
Prysmian
pension fund
Total
Draka
pension fund
Prysmian
pension fund
Total
Number of
participants
Number of
participants
Number of
participants
Number of
participants
Number of
participants
Number of
participants
Active
-
-
-
-
-
-
Deferred
443
521
964
492
547
1,039
Pensioners
424
385
809
458
379
837
Total membership
867
906
1,773
950
926
1,876
173
Group Annual Report - EXPLANATORY NOTES
Both plans operate under trust law and are managed and administered by a Board of Trustees on behalf of members
and in accordance with the terms of the Trust Deed and Rules and current legislation. The assets that fund the
liabilities are held by the Trust, for both plans.
For the purposes of determining the level of funding, the Trustees appoint an actuary to value the plans every three
years, with annual updates. The latest valuations of the Draka pension fund and the Prysmian pension fund were
conducted as at 31 December 2018 and 31 December 2020 respectively. The contribution levels are also set every
three years when performing the valuations to determine the level of plan funding, but can be revised annually. The
Trustees decide on the investment strategy in agreement with the company. The strategies differ for both plans.
In particular, the Draka pension fund has invested its assets as follows: 8% in equities, 41% in bonds and 51% in
other financial instruments. The Prysmian pension fund has invested its assets as follows: 9% in equities, 41% in
bonds and 50% in other financial instruments.
In Great Britain, the main risk for the Group is that mismatches between the expected return and the actual return
on plan assets would require contribution levels to be revised.
The liabilities and service costs are sensitive to the following variables: life expectancy of plan participants and
future growth in benefit levels. Another variable to consider when determining the amount of the liability is the
discount rate, identified according to market yields of AA corporate bonds denominated in pounds sterling.
The benefits payable in 2022 will amount to Euro 5 million (Euro 4 million at 31 December 2020 for 2021).
France
There were five pension plans in operation in France at 31 December 2021, of which four are unfunded retirement
benefit plans and one is a partially funded pension plan.
All the plans generally set the retirement age at 64 for office workers and 63 for other categories. They are all open
to new members, except for the funded plan which does not admit new members or incur new liabilities.
As at 31 December 2021, the plans had an average duration of approximately 10 years (11.47 years at 31 December
2020).
Total plan membership is made up as follows:
31.12.2021
31.12.2020
Number of participants
Number of participants
Active
2,457
2,689
Deferred
-
-
Pensioners
25
25
Total membership
2,482
2,714
In France, the principal risk for the Group is salary growth, which affects the benefits that the company has to pay
the employee. In the case of the retirement benefit plans, the benefits vest only upon attaining retirement age;
consequently, the cost to the company will depend on the probability that an employee does not leave the company
before that date. There are no life expectancy risks relating to these plans. The liabilities and service costs are
sensitive to the following variables: inflation, salary growth, life expectancy of plan participants and the discount
rate, determined according to market yields of AA corporate bonds denominated in Euro.
The main risks for the funded plan are those associated with inflation and life expectancy, both of which affect
contribution levels. The plan's assets are entirely invested in insurance funds, whose main risk is that a mismatch
between the expected return and the actual return on plan assets would require a revision of contribution levels.
United States
There were four pension plans in operation in the United States at 31 December 2021, of which two are funded plans
that pay an income upon retirement; one is a supplementary unfunded plan and another is an unfunded deferred
compensation plan.
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All the plans generally set the retirement age at 65. They are all closed to new members and do not admit new
members or incur new liabilities, except for the "Master Pension Plan" into which it is still possible to pay.
As at 31 December 2021, the plans had an average duration of approximately 9 years (9.2 years at 31 December 2020).
Total plan membership is made up as follows:
31.12.2021
31.12.2020
Number of participants
Number of participants
Active
386
453
Deferred
631
581
Pensioners
2,769
2,896
Total membership
3,786
3,930
The benefits and contributions payable in 2022 will amount to Euro 1 million (Euro 1 million at 31 December 2020
for 2021).
The weighted average actuarial assumptions used to value the pension plans in the principal countries (Germany,
Great Britain, France and United States) are as follows:
31.12.2021
Germany
Great Britain
France
United States
Interest rate
1.05%
1.85%
0,95%
2,70%
Expected future salary
increase
2.46%
-
1,97%
2,50%
Expected increase in
pensions
2.05%
3.57%
1,90%
0,00%
Inflation rate
2.55%
3.60%
1,90%
3,00%
Life expectancy at age 65:
Male
Female
Male
Female
Male
Female
Male
Female
People currently aged 65
20.50
24.00
20.34
22.34
24.16
27.63
20.06
22.00
People currently aged 50
22.60
25.70
20.94
23.32
26.23
29.84
21.19
23.09
31.12.2020
Germany
Great Britain
France
United States
Interest rate
0.60%
1.30%
0,50%
2,30%
Expected future salary
increase
2.26%
-
1,58%
2,50%
Expected increase in
pensions
1.70%
-
1,00%
0,00%
Inflation rate
1.70%
3.10%
1,58%
3,00%
Life expectancy at age 65:
Male
Female
Male
Female
Male
Female
Male
Female
People currently aged 65
20.40
23.80
21.30
23.20
24.16
27.63
19.93
21.83
People currently aged 50
23.60
25.60
22.00
24.10
26.23
29.84
21.05
22.91
The following table presents a sensitivity analysis of the effects of an increase/decrease in the most significant
actuarial assumptions used to determine the present value of benefit obligations, namely the interest rate, inflation
rate and life expectancy.
Inflation rate sensitivity includes those effects relating to assumptions about salary increases and increases in
benefits.
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Group Annual Report - EXPLANATORY NOTES
31.12.2021
Germany
Great Britain
France
United States
Interest rate
- 0.50%
+ 0.50%
- 0.50%
+0.50%
- 0.50%
+ 0.50%
- 0.50%
+ 0.50%
Change in pension plans
7.02%
-6.34%
9.51%
-8.42%
5.21%
-4.82%
4.49%
-4.10%
Inflation rate
-0.25%
+ 0.25%
- 0.25%
+ 0.25%
- 0.25%
+ 0.25%
- 0.25%
+ 0.25%
Change in pension plans
-2.54%
2.54%
-2.14%
2.23%
-2.58%
2.67%
0.00%
0.00%
31.12.2021
Germany
Great Britain
France
United States
1-year increase in life
expectancy
5.92%
5.36%
1.61%
3.19%
31.12.2020
Germany
Great Britain
France
United States
Interest rate
- 0.50%
+ 0.50%
- 0.50%
+0.50%
- 0.50%
+ 0.50%
- 0.50%
+ 0.50%
Change in pension plans
7.35%
-6.63%
10.20%
-9.11%
5.90%
-5.55%
4.62%
-4.34%
Inflation rate
-0.25%
+ 0.25%
- 0.25%
+ 0.25%
- 0.25%
+ 0.25%
- 0.25%
+ 0.25%
Change in pension plans
-3.04%
3.10%
-3.53%
3.69%
-2.90%
2.99%
0.00%
0.00%
31.12.2020
Germany
Great Britain
France
United States
1-year increase in life
expectancy
5.84%
3.51%
1.59%
3.13%
STATUTORY SEVERANCE BENEFIT
Statutory severance benefit refers to Italian companies only and is analysed as follows:
(Euro/million)
2021
2020
Opening balance
15
15
Actuarial (gains)/losses
recognised in equity
1
1
Disbursements
(1)
(1)
Closing balance
15
15
Net actuarial losses of Euro 1 million have been recognised at 31 December 2021, basically reflecting variations in
the associated economic parameters (the discount and inflation rates).
Under Italian law, the amount due to each employee accrues with service and is paid when the employee leaves the
company. The amount due upon termination of employment is calculated on the basis of the length of service and
the taxable remuneration of each employee. The liability is adjusted annually for the official cost of living index
and statutory interest, and is not subject to any vesting conditions or periods, or any funding obligation; there are
therefore no assets that fund this liability.
The benefits are paid in the form of a lump sum, in accordance with the related rules. In certain circumstances, the
benefit plan also allows the payment of partial advances against the full amount of the accrued benefit.
The main risk is the volatility of the inflation rate and the interest rate, as determined by the market yield on AA
corporate bonds denominated in Euro.
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2021
The actuarial assumptions used to value statutory severance benefit are as follows:
31.12.2021
31.12.2020
Interest rate
0.85%
0.50%
Expected future salary increase
1.75%
1.50%
Inflation rate
1.75%
1.50%
The following table presents a sensitivity analysis of the effects of an increase/decrease in the most significant
actuarial assumptions used to determine the present value of benefit obligations, namely the interest rate and
inflation rate:
31.12.2021
31.12.2020
Interest rate
- 0.50%
+ 0.50%
- 0.50%
+ 0.50%
Change in statutory severance benefit
4.45%
-4.15%
4.93%
-4.70%
Inflation rate
- 0.25%
+ 0.25%
- 0.25%
+ 0.25%
Change in statutory severance benefit
-1.37%
1.39%
-1.36%
1.70%
MEDICAL BENEFIT PLANS
Some Group companies provide medical benefit plans for retired employees. In particular, the Group funds medical
benefit plans in Brazil, Canada and the United States. The US plans account for more than 90% of the total obligation
for medical benefit plans.
Apart from interest rate and life expectancy risks, medical benefit plans are particularly susceptible to increases
in the cost of meeting claims. None of the medical benefit plans has any assets to fund the associated obligations,
with benefits paid directly by the employer.
The obligation in respect of medical benefit plans is analysed as follows:
(Euro/million)
2021
2020
Opening balance
30
27
Personnel costs
2
2
Actuarial (gains)/losses recognised
in equity - experience
(2)
5
Disbursements
(1)
(1)
Currency translation differences
2
(3)
Closing balance
31
30
The actuarial assumptions used to value medical benefit plans are as follows:
31.12.2021
31.12.2020
Interest rate
2.83%
2.43%
Expected future salary
increase
-
-
Increase in claims
3.25%
5.08%
Life expectancy at age 65:
Male
Female
Male
Female
People currently aged 65
20.56
22.63
20.49
22.50
People currently aged 50
21.66
23.67
21.58
23.52
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Group Annual Report - EXPLANATORY NOTES
The following table presents a sensitivity analysis of the effects of an increase/decrease in the most significant
actuarial assumptions used to determine the present value of benefit obligations, such as the interest rate, inflation
rate/growth in medical care costs and life expectancy.
31.12.2021
31.12.2020
Interest rate
- 0.50%
+ 0.50%
- 0.50%
+ 0.50%
Change in medical
benefit plans
8.49%
-7.51%
8.83%
-7.90%
Medical inflation rate
- 0.25%
+ 0.25%
- 0.25%
+ 0.25%
Change in medical
benefit plans
-2.63%
2.63%
-4.05%
4.31%
31.12.2021
31.12.2020
1-year increase in life
expectancy
4.09%
4.19%
Headcount
Average headcount in the period is reported below, compared with closing headcount at the end of each period:
2021
Average
%
Closing
%
Blue collar
21,878
74%
21,963
74%
White collar and
management
7,734
26%
7,800
26%
Total
29,612
100%
29,763
100%
2020
Average
%
Closing
%
Blue collar
20,883
73%
20,730
73%
White collar and
management
7,579
27%
7,591
27%
Total
28,462
100%
28,321
100%
15. DEFERRED TAXES
The balance of deferred tax assets at 31 December 2021 is Euro 182 million (Euro 207 million at 31 December 2020)
while that of deferred tax liabilities is Euro 188 million (Euro 195 million at 31 December 2020).
Movements in deferred taxes are analysed as follows:
(Euro/million)
Fixed assets
Provisions*
Tax losses
Other
Total
Balance at 31.12.2019
(284)
173
11
57
(43)
Currency translation
differences
22
(3)
-
2
21
Impact on income statement
28
26
-
(11)
43
Impact on equity
-
8
-
(21)
(13)
Other and reclassifications
1
1
-
3
5
Balance at 31.12.2020
(232)
205
11
30
13
Business combinations
(5)
-
-
-
(5)
Currency translation
differences
(12)
2
-
(6)
(16)
Impact on income statement
22
(2)
(2)
17
35
Impact on equity
-
(7)
-
(22)
(29)
Other and reclassifications
1
(1)
-
(4)
(4)
Balance at 31.12.2021
(226)
197
9
15
(6)
*
These comprise Provisions for risks and charges (current and non-current) and Employee benefit obligations.
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Prysmian Group - Annual Report
2021
The Group has not recognised any deferred tax assets on Euro 1,005 million in carryforward tax losses at 31 December
2021 (Euro 1,052 million at 31 December 2020). Unrecognised deferred tax assets relating to the above carryforward
tax losses and to deductible temporary differences amount to Euro 247 million (Euro 277 million at 31 December
2020).
At 31 December 2021, it has however recognised deferred tax assets of Euro 11 million on carryforward tax losses of
Euro 31 million (Euro 47 million at 31 December 2020).
The following table presents details of carryforward tax losses:
(Euro/million)
31.12.2021
31.12.2020
Carryforward tax losses
1,036
1,099
of which recognised as deferred tax assets
31
47
Carryforward expires within 1 year
11
35
Carryforward expires between 2-5 years
59
53
Carryforward expires beyond 5 years
31
44
Unlimited carryforward
935
967
16. SALES
Details are as follows:
(Euro/million)
2021
2020
Finished goods
11,099
8,825
Construction contracts
1,126
806
Services
77
87
Other
434
298
Total
12,736
10,016
17. CHANGE IN INVENTORIES OF FINISHED GOODS AND WORK IN PROGRESS
Details are as follows:
(Euro/million)
2021
2020
Finished goods
124
14
Work in progress
105
55
Total
229
69
18. OTHER INCOME
Details are as follows:
(Euro/million)
2021
2020
Rental income
2
2
Insurance reimbursements and
indemnities
15
30
Gains on disposal of property
3
20
Other revenue and income
105
47
Total
125
99
179
Group Annual Report - EXPLANATORY NOTES
19. RAW MATERIALS, CONSUMABLES AND SUPPLIES
Details are as follows:
(Euro/million)
2021
2020
Raw materials
9,113
6,492
Change in inventories
(207)
(28)
Total
8,906
6,464
20. PERSONNEL COSTS
Details are as follows:
(Euro/million)
2021
2020
Wages and salaries and social security
1,349
1,270
Fair value - stock options
33
31
Pension plans
10
8
Medical benefit costs
2
2
Termination and other benefits
28
29
Company reorganisation
13
24
Other personnel costs
51
45
Total
1,486
1,409
Share-based payments
At 31 December 2021, the Prysmian Group had share-based compensation plans in place for managers and employees
of Group companies and for members of the Parent Company's Board of Directors. These plans are described below.
Employee share purchase plan (2021) – YES 2.0
The YES Plan is based on financial instruments and is reserved for employees of Prysmian S.p.A. and/or of its
subsidiaries, including some of the Company's Directors.
The Plan has offered the opportunity to purchase Prysmian's ordinary shares on preferential terms, with a maximum
discount of 25% on the stock price, given in the form of treasury shares, except for certain managers for whom the
discount was 15%, and the executive Directors and key management personnel, for whom the discount was 1% on
the stock price. The Plan has therefore qualified as "of particular relevance" within the meaning of art. 84-bis, par.
2 of the Issuer Regulations.
The shares purchased or received free of charge are subject to a retention period, during which they cannot be sold.
The last of the purchase windows envisaged by the Plan closed during the year.
All those who signed up to the Plan also received an entry bonus of six free shares, taken from the Company's
portfolio of treasury shares, only available with their first-time purchase. If an employee had already participated
in the 2013 plan, they received eight shares as an entry bonus to the new plan. For those who had already purchased
shares in a 2017 purchase window, the entry bonus was three shares.
The shares purchased by participants, as well as those received by way of discount and entry bonus, are subject
to a retention period during which they cannot be sold and the length of which varies according to relevant local
regulations.
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Prysmian Group - Annual Report
2021
The fair value of the options has been determined using the Montecarlo binomial pricing model, based on the
following assumptions:
Windows
Grant date
14 November 2016
Share purchase date
from 16 February 2017 to 16 September 2021
End of retention period
from 16 February 2020 to 16 September 2024
Residual life (in years)
0.72
Share price at grant date (Euro)
23.40
Expected volatility
from 31.74% to 36.05%
Risk-free interest rate
from 0.70% to 0.75%
Expected dividend %
2.07%
Option fair value at grant date (Euro)
from €21.57 to €23.15
Costs of Euro 1 million have been recognised as "Personnel costs" in the income statement at 31 December 2021 for
the fair value of options granted under this plan.
On 28 April 2021, the shareholders of Prysmian S.p.A. approved the extension of the share ownership plan for
Prysmian Group employees.
In line with past practice, the extension provides the opportunity to purchase Prysmian's ordinary shares on
preferential terms, with a maximum discount of 25% on the stock price, given in the form of treasury shares. The
shares purchased will be subject to a retention period, during which they cannot be sold. The extension has added
new purchase windows in the years 2022, 2023 and 2024.
Beneficiaries of the Plan also include the executive directors of Prysmian S.p.A. as well as key management
personnel, for whom the discount will be 1%.
The information memorandum, prepared under art. 114-bis of Legislative Decree 58/98 and describing the
characteristics of the above plan, is publicly available on the Company's website at
,
from its registered offices and from Borsa Italiana S.p.A.
Long-term incentive plan 2020-2022
The long-term incentive plan (LTI), approved by the Shareholders' Meeting on 28 April 2020 pursuant to art. 114-bis,
par. 1, of Italian Legislative Decree no. 58/1998, is in response to the following key drivers of change:
•
simplification and alignment with best market practices;
•
sustainability of performance over time;
•
greater participation in the creation of long-term value by extending the number of beneficiaries to a wider
group of managers and professionals;
•
retention to support the phase of post-merger integration with General Cable, especially in certain regions with
a particularly competitive talent market.
The Plan extends to some 800 Group employees and involves the allocation of a number of options calculated
according to the achievement of operational, economic and financial performance conditions. The Plan consists
of the following components: Performance Share, Deferred Share and Matching Share. The Performance Share
component consists of the free allocation of shares to plan participants subject to the achievement of performance
conditions, measured over a three-year period and subject to continued employment.
The vesting period is three years (2020-2022), with disbursement of the shares envisaged in 2023. The Deferred Share
component involves the deferred receipt, through the free allocation of shares subject to continued employment
during the vesting period, of 50% of any bonus earned for the years 2020, 2021 and 2022. The vesting of the annual
bonus depends on the achievement of specific economic, financial, operational and sustainability objectives defined
in advance each year. Lastly, the Matching Share component is combined with the Deferred Shares and consists of
the free allocation to participants of 0.5 additional shares for each Deferred Share granted and arising from deferred
payment of the bonus for each year. In the case of the Chief Executive Officer and Top Management (consisting of
181
Group Annual Report - EXPLANATORY NOTES
about 40 individuals, including Executive Directors, Key Management Personnel, front-line positions reporting to
the CEO and second-line managers of key areas), the Matching Share component is subject to the achievement of
a pre-determined performance condition related to sustainability (ESG).
The actual allocation of shares, in particular with reference to the Performance Shares, is subject to the level of
achievement of the following performance conditions: cumulative Adjusted EBITDA, cumulative Free Cash Flow,
relative TSR measured against a 9-member peer group and ESG, measured by a set of indicators.
The following table provides details about movements in the plan:
31.12.2021
Number of options
Shares vested at start of year
2,074,935
Change in expected participations
(14,437)
Shares vesting in period
2,245,765
Total shares vested at end of year
4,306,263
Costs of Euro 32 million have been recognised as "Personnel costs" in the income statement at 31 December 2021
for the fair value of options granted under this plan.
In accordance with IFRS 2, the options allotted have been measured at their grant date fair value. The fair value
of options related to performance shares, for the entire period of the plan, and to deferred and matching shares
vesting in 2020 has been calculated using the following assumptions:
Grant date
28 April 2020
Residual life at grant date (in years)
2.68
Exercise price (Euro)
-
Risk-free interest rate
-0.70%
Expected dividend %
2.30%
Option fair value (market based) at grant date (Euro)
13.54
Option fair value (not market based) at grant date (Euro)
13.85
As regards deferred and matching shares vesting in 2021, option fair value has been calculated using the following
assumptions:
Grant date
28 April 2021
Residual life at grant date (in years)
1.68
Exercise price (Euro)
-
Risk-free interest rate
-0.72%
Expected dividend %
2.30%
Option fair value (not market based) at grant date (Euro)
23.14
The information memorandum, prepared under art. 114-bis of Legislative Decree 58/98 and describing the
characteristics of the above plan, is publicly available on the Company's website at
,
from its registered offices and from Borsa Italiana S.p.A.
As at 31 December 2021, there are no outstanding loans or guarantees by the Parent Company or its subsidiaries to
any of the directors, senior managers or statutory auditors.
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Prysmian Group - Annual Report
2021
21. AMORTISATION, DEPRECIATION, IMPAIRMENT AND IMPAIRMENT REVERSALS
Details are as follows:
(Euro/million)
2021
2020
Depreciation of buildings, plant, machinery and
equipment
188
182
Depreciation of other property, plant and equipment
18
20
Amortisation of intangible assets
68
66
Depreciation and impairment of right-of-use assets
(IFRS 16)
55
57
Impairment of property, plant and equipment
6
64
Impairment of intangible assets
-
4
Total
335
393
22. OTHER EXPENSES
Details are as follows:
(Euro/million)
2021
2020
Professional services
113
99
Insurance
50
45
Maintenance costs
114
110
Selling costs
91
62
Utilities
211
167
Travel costs
25
24
Vessel charter
46
32
Increases in/(releases of) provisions for risks
96
38
Losses on disposal of assets
1
2
Sundry expenses
108
110
Other costs
930
849
Company reorganisation
8
8
Non-recurring other expenses
38
33
Total
1,831
1,579
Other costs mainly refer to those incurred for project execution.
The Group expensed Euro 95 million in research and development costs in 2021 (Euro 90 million in 2020), insofar
as there were no qualifying conditions to justify their capitalisation.
23. SHARE OF NET PROFIT/(LOSS) OF EQUITY-ACCOUNTED COMPANIES
Details are as follows:
(Euro/million)
2021
2020
Share of net profit/(loss) of associates
27
18
Total
27
18
Further information can be found in Note 3. Equity-accounted investments.
183
Group Annual Report - EXPLANATORY NOTES
24. Finance costs
Details are as follows:
(Euro/million)
2021
2020
Interest on loans
17
15
Interest on non-convertible bond
19
19
Interest on convertible bond 2021
non-monetary component
8
-
Interest on convertible bond 2017
non-monetary component
5
10
Interest Rate Swaps
7
7
Interest on lease liabilities
5
5
Amortisation of bank and financial fees
and other expenses
8
6
Employee benefit interest costs net of
interest on plan assets
5
7
Other bank interest
3
5
Costs for undrawn credit lines
4
3
Sundry bank fees
17
16
Non-recurring other finance costs
2
2
Finance costs for hyperinflation
1
2
Other
9
4
Finance costs
110
101
Net losses on forward currency contracts
-
11
Losses on derivatives
-
11
Foreign currency exchange losses
675
457
Foreign currency exchange losses
675
457
Total finance costs
785
569
25. FINANCE INCOME
Details are as follows:
(Euro/million)
2021
2020
Interest income from banks and other
financial institutions
6
6
Non-recurring finance income
16
-
Other finance income
4
3
Finance income
26
9
Net gains on forward currency contracts
24
-
Gains on derivatives
24
-
Foreign currency exchange gains
639
459
Total finance income
689
468
184
Prysmian Group - Annual Report
2021
26. TAXES
Details are as follows:
(Euro/million)
2021
2020
Current income taxes
201
121
Deferred income taxes
(35)
(43)
Total
166
78
The following table reconciles the effective tax rate with the Parent Company's theoretical tax rate:
(Euro/million)
2021
Tax rate
2020
Tax rate
Profit/(loss) before taxes
476
252
Theoretical tax expense
at Parent Company's nominal
tax rate
114
24.0%
60
24.0%
Differences in nominal tax rates
of foreign subsidiaries
2
0.4%
-
0.0%
Change in tax rates
3
0.6%
-
0.1%
Taxes on dividends
9
1.9%
11
4.4%
Accrual (Release)
of Antritrust provision
5
1.1%
(9)
-3.6%
Impairment of assets
-
0.0%
4
1.5%
WHT expensed/corporate
income tax branch
9
1.9%
3
1.2%
Deferred tax effect on
carryforward tax losses
1
0.2%
-
0.1%
IRAP (Italian regional
business tax) and US State tax
12
2.5%
14
5.4%
Prior year current taxes
(3)
-0.6%
(1)
-0.6%
Prior year deferred tax assets
-
0.0%
(11)
-4.3%
Non-deductible costs/
(non-taxable income) and other
14
2.9%
7
2.8%
Effective income taxes
166
34.9%
78
31.1%
27. EARNINGS/(LOSS) AND DIVIDENDS PER SHARE
Both basic and diluted earnings (loss) per share have been calculated by dividing the net result for the period
attributable to owners of the parent by the average number of the Company's outstanding shares.
Diluted earnings/(loss) per share have been impacted by the deferred and matching share options for 2020 under
the Long-Term Incentive Plan 2020-2022 which vested after approval of the 2020 annual financial report by the
Shareholders' Meeting on 28 April 2021. Diluted earnings/(loss) per share have not however been impacted by the
Convertible Bond 2017 or the Convertible Bond 2021, whose conversion is currently out of the money or by the
deferred and matching share options for 2021 and 2022 and the performance bonus options under the Long-Term
Incentive Plan 2020-2022, since not yet eligible for award at 31 December 2021.
185
Group Annual Report - EXPLANATORY NOTES
(Euro/million)
2021
2020
Net profit/(loss) attributable to owners of the parent
308
178
Weighted average number of ordinary shares (thousands)
263,408
263,274
Basic earnings per share (in Euro)
1.17
0.68
Net profit/(loss) attributable to owners of the parent for
purposes of diluted earnings per share
308
178
Weighted average number of ordinary shares (thousands)
263,408
263,274
Adjustments for:
Dilution from incremental shares arising from bond
conversion into shares
-
-
Dilution from incremental shares arising from exercise of
stock options (thousands)
610
119
Weighted average number of ordinary shares to calculate
diluted
264.018
263.393
earnings per share (thousands)
264,018
263,393
Diluted earnings per share (in Euro)
1.17
0.68
The dividend paid in 2021 amounted to approximately Euro 132 million (Euro 0.50 per share). With reference to the
year ended 31 December 2021, a recommendation to pay a dividend of Euro 0.55 per share, totalling approximately
Euro 145 million, based on the number of outstanding shares, will be presented to the Shareholders' Meeting
convened in single call for 12 April 2022.
The current financial statements do not reflect any liability for the proposed dividend.
28. CONTINGENT LIABILITIES
As a global operator, the Group is exposed to legal risks primarily, by way of example, in the areas of product liability
and environmental, antitrust and tax rules and regulations. The outcome of legal disputes and proceedings currently
in progress cannot be predicted with certainty. An adverse outcome in one or more of these proceedings could
result in the payment of costs that are not covered, or not fully covered, by insurance, which would therefore have
a direct effect on the Group's financial position and results.
As at 31 December 2021, contingent liabilities for which the Group has not recognised any provision for risks and
charges, on the grounds that an outflow of resources is considered unlikely, but for which reliable estimates are
available, amount to approximately Euro 45 million and are mainly related to legal and fiscal matters.
29. COMMITMENTS TO PURCHASE PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
Contractual commitments already entered into with third parties as at 31 December 2021 and not yet reflected in
the financial statements amount to Euro 85 million for investments in property, plant and equipment (Euro 125
million at 31 December 2020); commitments to third parties for investments in intangible assets amount to Euro
5 million at 31 December 2021 (Euro 2 million at 31 December 2020).
30. RECEIVABLES FACTORING
The Group has factored some of its trade receivables on a without-recourse basis. Receivables factored but not
yet paid by customers amounted to Euro 295 million at 31 December 2021 (Euro 256 million at 31 December 2020).
31. FINANCIAL COVENANTS
The credit agreements in place at 31 December 2021, details of which are presented in Note 11, require the Group to
comply with a series of covenants on a consolidated basis. The main covenants, classified by type, are listed below:
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a) Financial covenants
•
Ratio between EBITDA and Net finance costs (as defined in the relevant agreements);
•
Ratio between Net Financial Debt and EBITDA (as defined in the relevant agreements).
The covenants contained in the relevant credit agreements are as follows:
EBITDA / Net finance costs* not less than:
Net financial debt/ EBITDA* not more than:
4,00x
3,00x
*
The ratios are calculated on the basis of the definitions contained in the relevant credit agreements. The Net Financial Debt-EBITDA ratio can go as high as 3.5
following extraordinary transactions like acquisitions, no more than three times, including on non-consecutive occasions.
b) Non-financial covenants
A number of non-financial covenants have been established in line with market practice applying to transactions of
a similar nature and size. These covenants involve restrictions on the grant of secured guarantees to third parties
and on amendments to the Company's by-laws.
Default events
The main default events are as follows:
•
default on loan repayment obligations;
•
breach of financial covenants;
•
breach of some of the non-financial covenants;
•
declaration of bankruptcy by Group companies or their involvement in other insolvency proceedings;
•
issuing of particularly significant court orders;
•
occurrence of events that may adversely and significantly affect the business, the assets or the financial
conditions of the Group.
Should a default event occur, the lenders are entitled to demand full or partial repayment of the amounts lent and
not yet repaid, together with interest and any other amount due. No collateral security is required.
Actual financial ratios reported at 31 December 2021 and 31 December 2020 are as follows:
31.12.2021
31.12.2020
EBITDA / Net finance costs*
15.82x
14.32x
Net financial debt / EBITDA*
1.63x
2.10x
*
The ratios are calculated on the basis of the definitions contained in the relevant credit agreements.
The above financial ratios comply with both covenants contained in the relevant credit agreements and there are
no instances of non-compliance with the financial and non-financial covenants indicated above.
32. RELATED PARTY TRANSACTIONS
Transactions by Prysmian S.p.A. and its subsidiaries with associates mainly refer to:
•
trade relations involving purchases and sales of raw materials and finished goods;
•
services (technical, organisational and general) provided by head office for the benefit of group companies;
•
recharge of royalties for the use of trademarks, patents and technological know-how by group companies.
The related party disclosures also include the compensation paid to Directors, Statutory Auditors and Key
Management Personnel.
All the above transactions form part of the Group's continuing operations.
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The following tables provide a summary of related party transactions and balances for the years ended 31 December
2021 and 31 December 2020:
(Euro/million)
31.12.2021
Equity-accounted
companies
Compensation of
directors, statutory
auditors and key
management
personnel
Total
related
parties
Total
reported
amount
Related party
% of total
Equity-accounted investments
360
-
360
360
100.0%
Trade receivables
0
-
0
1,622
0.0%
Other receivables
3
-
3
661
0.5%
Trade payables
5
-
5
2,592
0.2%
Other payables
-
2
2
1,197
0.2%
Provisions for risks and charges
-
6
6
653
0.9%
(Euro/million)
31.12.2020
Equity-accounted
companies
Compensation of
directors, statutory
auditors and key
management
personnel
Total
related
parties
Total
reported
amount
Related party
% of total
Equity-accounted investments
312
-
312
312
100.0%
Trade receivables
3
-
3
1,374
0.2%
Other receivables
3
-
3
522
0.6%
Trade payables
2
-
2
1,958
0.1%
Other payables
-
5
5
1,001
0.5%
Provisions for risks and charges
-
9
9
591
1.5%
(Euro/million)
2021
Equity-accounted
companies
Compensation of
directors, statutory
auditors and key
management
personnel
Total
related
parties
Total
reported
amount
Related party
% of total
Sales
31
-
31
12,736
0.2%
Other income
5
-
5
125
4.1%
Raw materials. consumables and
supplies
(2)
-
(2)
(8,906)
0.0%
Personnel costs
-
(10)
(10)
(1,486)
0.7%
Other expenses
(5)
(2)
(7)
(1,831)
0.4%
Share of net profit/(loss) of
equity-accounted companies
26
-
26
27
100.0%
(Euro/million)
2020
Equity-accounted
companies
Compensation of
directors, statutory
auditors and key
management
personnel
Total
related
parties
Total
reported
amount
Related party
% of total
Sales
25
-
25
10,016
0.2%
Other income
5
-
5
99
5.1%
Raw materials. consumables and
supplies
(3)
-
(3)
(6,464)
0.0%
Personnel costs
-
(19)
(19)
(1,409)
1.3%
Other expenses
(7)
(1)
(8)
(1,579)
0.5%
Share of net profit/(loss) of
equity-accounted companies
18
-
18
18
100.0%
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Transactions with associates
Trade and other payables refer to goods and services provided in the ordinary course of the Group's business. Trade
and other receivables refer to transactions carried out in the ordinary course of the Group's business.
Top management compensation
Top management compensation is analysed as follows:
(Euro/000)
2021
2020
Salaries and other short-term benefits - fixed part
5,275
7,316
Salaries and other short-term benefits - variable part
1,299
1,836
Other benefits
360
562
Share-based payments
2,563
3,730
Other costs
2,358
-
Total
11,855
13,444
of which Directors
8,134
7,685
The amounts shown in the table are the costs recognised in the income statement during the year.
At 31 December 2021, payables for top management compensation came to Euro 1.7 million, while employee benefit
obligations pertaining to top managers amounted to Euro 0.1 million.
33. COMPENSATION OF DIRECTORS AND STATUTORY AUDITORS
The compensation of the executive and non-executive Directors of Prysmian S.p.A. came to Euro 8.1 million in 2021
(Euro 7.7 million in 2020). The compensation of the Statutory Auditors of Prysmian S.p.A. came to Euro 0.2 million
in 2021, the same as the year before. Compensation includes emoluments, and any other types of remuneration,
pension and medical benefits, received for their service as Directors or Statutory Auditors of Prysmian S.p.A. and
other companies included in the scope of consolidation, and that have constituted an expense for Prysmian.
34. ATYPICAL AND/OR UNUSUAL TRANSACTIONS
In accordance with the disclosures required by Consob Communication DEM/6064293 dated 28 July 2006, it is
reported that no atypical and/or unusual transactions took place during 2021.
35. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS
As required by Consob Communication DEM/6064293 dated 28 July 2006 and in accordance with the ESMA
Guidelines/2015/1415, the following table presents the effects of non-recurring events and transactions on the
income statement:
(Euro/million)
2021
2020
Non-recurring other income/(expenses)
Antitrust
(2)
(9)
Non-recurring other finance costs
Non-recurring other finance costs
14
(2)
Total
12
(11)
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Group Annual Report - EXPLANATORY NOTES
36. STATEMENT OF CASH FLOWS
The increase in net working capital used Euro 28 million in cash flow. After Euro 120 million in tax payments and
Euro 8 million in dividend receipts, operating activities in 2021 therefore generated a net cash inflow of Euro 777
million and also includes cash inflow due to restructuring costs of Euro 24 million as well as cash flow of Euro 58
million mainly resulting from settlement agreements reached with third-counterparties.
Cash flow from acquisitions and/or disposals reported a net outflow of Euro 85 million as a result of business
combinations completed during the reporting period.
Net capital expenditure used Euro 275 million in cash in 2021, a large part of which relating to projects to increase
and rationalise production capacity and to develop new products. More details can be found in Note 1. Property,
plant and equipment of these Explanatory Notes.
Cash flow from financing activities was influenced by the distribution of dividends, amounting to Euro 134 million.
Finance costs paid, net of finance income received, came to Euro 79 million.
37. INFORMATION PURSUANT TO ART. 149-DUODECIES OF THE CONSOB ISSUER REGULATIONS
Pursuant to art. 149-duodecies of the Consob Issuer Regulations, the following table shows the fees in 2021 for
audit work and other services provided by the independent auditors Ernst & Young and companies in the Ernst &
Young network:
(Euro/000)
Recipient
Supplier of services
Fees for 2021
Fees for 2020
Audit services
Parent Company - Prysmian
S.p.A.
Ernst & Young Italy
756
904
Italian subsidiaries
Ernst & Young Italy
424
422
Foreign subsidiaries
Ernst & Young Italy
401
267
Foreign subsidiaries
Ernst & Young
Network
3,027
3,257
Certification services
Parent Company - Prysmian
S.p.A.
Ernst & Young Italy
410
185
Italian subsidiaries
Ernst & Young Italy
2
3
Foreign subsidiaries
Ernst & Young
Network
-
-
Other services
Parent Company - Prysmian
S.p.A.
Ernst & Young Italy
-
-
Italian subsidiaries
Ernst & Young Italy
-
3
Foreign subsidiaries*
Ernst & Young
Network
171
182
Total
5,191
5,223
*
Tax and other services.
38. BASIS OF CONSOLIDATION AND ACCOUNTING POLICIES
The financial statements of Group operating companies used for consolidation purposes have been prepared for
the financial year ended 31 December 2021 and that ended 31 December 2020. They have been adjusted, where
necessary, to bring them into line with Group accounting policies and standards; for those companies with different
financial years to the calendar year, the consolidation has used financial information approved by the respective
Boards of Directors that reflects the Group's financial year.
Subsidiaries
The Group consolidated financial statements include the financial statements of Prysmian S.p.A. (the Parent
Company) and the subsidiaries over which the Parent Company exercises direct or indirect control. Subsidiaries are
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Prysmian Group - Annual Report
2021
consolidated from the date control is acquired until the date such control ceases. Specifically, control exists when
the parent Prysmian S.p.A. has all of the following:
•
decision-making power, meaning the ability to direct the investee's relevant activities, i.e. the activities that
significantly affect the investee's returns;
•
exposure, or rights, to variable returns from its involvement with the investee;
•
the ability to use its power.
The existence of potential voting rights exercisable at the reporting date is also taken into consideration for the
purposes of determining control.
Subsidiaries are consolidated on a line-by-line basis commencing from the date control is effectively obtained
by the Group; at the date of obtaining control, the carrying amount of an investment is eliminated against the
corresponding portion of the investee's equity by allocating its fair value to individual assets, liabilities and
contingent liabilities. Any residual difference, if positive, is recognised as "Goodwill". If the acquisition is achieved
in stages, the entire investment is remeasured at fair value on the date control is obtained; after this date, any
additional acquisitions or disposals of equity interests, without a change of control, are treated as transactions
between owners recognised in equity. Costs incurred for the acquisition are always expensed immediately to profit or
loss; changes in contingent consideration are recognised in profit or loss. The share of equity and share of the result
for the period attributable to non-controlling interests are presented separately within the financial statements.
Subsidiaries cease to be consolidated from the date control is transferred to third parties; the disposal of an equity
interest involving a loss of control results in recognising in profit or loss (i) the gain or loss arising on the difference
between the consideration received and the respective share of equity transferred to third parties, (ii) any amounts
relating to the subsidiary recognised in other comprehensive income that may be reclassified to profit or loss
and (iii) the gain or loss from adjusting any non-controlling interest retained by Prysmian Group to its fair value
calculated at the date control is lost.
Associates and joint arrangements: joint ventures and joint operations
Associates are those entities over which the Group has significant influence. Investments in associates are accounted
for using the equity method and are initially recorded at cost.
Companies managed under contractual arrangements whereby two or more parties, who share control through
unanimous consent, have the power to make relevant decisions and govern the exposure to variable future returns,
qualify as joint operations and as such are accounted for in the joint operator's accounts directly in proportion to
the interest held in the joint operation. In addition to recording the relevant share of assets, liabilities, revenues
and expenses, a joint operator also recognises its obligations under the related arrangement. Equally, if a party
participates in, but does not have joint control of, a joint operation, it nonetheless recognises in its own financial
statements its share of the joint operation's assets and liabilities, revenues and expenses as well as its contractual
obligations under the arrangement.
Other investments in joint ventures, over which significant influence is exercised but which do not qualify as joint
operations, are accounted for using the equity method.
Translation of foreign operation financial statements
The assets and liabilities of consolidated foreign operations expressed in currencies other than the Euro are
translated using the closing exchange rate on the reporting date; revenues and expenses are translated at the
average exchange rate prevailing in the reporting period. The resulting translation differences are presented in
equity, specifically in the "Reserve for other comprehensive income", until disposal of the related foreign operation.
Foreign currency transactions are recorded at the exchange rate prevailing on the date of the transactions. Monetary
assets and liabilities are translated at the closing exchange rate on the reporting date. Exchange differences arising
on translation and those realised on the settlement of transactions are recorded in finance income and costs.
Hyperinflationary economies
IAS 29 - Financial Reporting in Hyperinflationary Economies establishes that if a foreign entity operates in a
hyperinflationary economy, revenues and expenses are translated using the exchange rate current at the reporting
date; accordingly, all amounts in the income statement are restated by applying the change in the general price
index between the date when income and expenses were initially recorded in the financial statements and the
reporting date.
191
Group Annual Report - EXPLANATORY NOTES
Since financial year 2018, companies operating in Argentina have been considered to belong to a high inflation
economy, therefore requiring the application of IAS 29 - Financial Reporting in Hyperinflationary Economies, which
lays down specific procedures for restating the financial statements of companies operating in this type of economy.
With reference to the income statement, income and expenses are restated by applying the change in the general
price index, in order to reflect the loss of the local currency's purchasing power at the reporting date. The income
statements thus restated have been translated into Euro at the closing rates at 31 December 2021 instead of at the
average rates for the reporting period. The effect of applying the standard has been to increase Net sales by Euro
18 million and reduce Net profit by Euro 14 million.
With reference to the statement of financial position, monetary items have not been restated because they are
already expressed in terms of the monetary unit current at the end of the reporting period; non-monetary assets
and liabilities have been restated to reflect the loss in the local currency's purchasing power from the date the
assets and liabilities were originally recorded through until the reporting date.
The overall effect for 2021 is a net expense of Euro 1 million, which has been recognised in the income statement
under Net finance income (costs).
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The exchange rates applied are as follows:
Closing rates at
Period average rates
31.12.2021
31.12.2020
2021
2020
Europe
British Pound
0.840
0.899
0.860
0.890
Swiss Franc
1.033
1.080
1.081
1.071
Hungarian Forint
369.19
363.89
358.52
351.25
Norwegian Krone
9.989
10.470
10.163
10.723
Swedish Krona
10.250
10.034
10.146
10.485
Czech Koruna
24.858
26.242
25.640
26.455
Danish Krone
7.436
7.441
7.437
7.454
Romanian Leu
4.949
4.868
4.921
4.838
Turkish Lira
14.709
9.024
10.460
8.028
Polish Zloty
4.597
4.560
4.565
4.443
Russian Rouble
85.300
91.467
87.153
82.725
North America
US Dollar
1.133
1.227
1.183
1.142
Canadian Dollar
1.439
1.563
1.483
1.530
South America
Colombian Peso
4,599
4,202
4,429
4,216
Brazilian Real
6.320
6.377
6.379
5.891
Argentine Peso
116.341
103.260
112.550
80.638
Chilean Peso
964.350
872.520
898.395
902.955
Costa Rican Colón
727.107
750.556
734.925
668.694
Mexican Peso
23.144
24.416
23.985
24.519
Peruvian Sol
4.519
4.443
4.591
3.996
Oceania
Australian Dollar
1.562
1.590
1.575
1.655
New Zealand Dollar
1.658
1.698
1.672
1.756
Africa
CFA Franc
655.957
655.957
655.957
655.957
Angolan Kwanza
635.082
800.345
743.847
661.847
Tunisian Dinar
3.260
3.294
3.288
3.200
Asia
-
Chinese Renminbi (Yuan)
7.195
8.023
7.628
7.875
United Arab Emirates
Dirham
4.160
4.507
4.344
4.195
Bahraini Dinar
0.426
0.461
0.445
0.429
Hong Kong Dollar
8.833
9.514
9.193
8.859
Singapore Dollar
1.528
1.622
1.589
1.574
Indian Rupee
84.229
89.661
87.439
84.639
Indonesian Rupiah
16,100
17,241
16,921
16,627
Japanese Yen
130.380
126.490
129.877
121.846
Thai Baht
37.653
36.727
37.837
35.708
Philippine Peso
57.763
59.125
58.299
56.615
Omani Rial
0.436
0.472
0.455
0.439
Malaysian Ringgit
4.718
4.934
4.902
4.796
Qatari Riyal
4.123
4.467
4.305
4.158
Saudi Riyal
4.247
4.602
4.435
4.284
193
Group Annual Report - EXPLANATORY NOTES
38.1 TRANSLATION OF TRANSACTIONS IN CURRENCIES OTHER THAN THE FUNCTIONAL CURRENCY
Transactions in currencies other than the functional currency of the company which undertakes the transaction
are translated using the exchange rate applicable at the transaction date.
Draka NK Cables (Asia) Pte Ltd (Singapore), Draka Philippines Inc. (Philippines), Draka Durango S. de R.L. de C.V.,
Draka Mexico Holdings S.A. de C.V., Prysmian Cables y Sistemas de Mexico S. de R.L. de C.V. and NK Mexico Holdings
S.A. de C.V. (Mexico) present their financial statements in a currency other than that of the country they operate
in, as their main transactions are not conducted in the local currency but in the reporting currency.
Foreign currency exchange gains and losses arising on completion of transactions or on the year-end translation
of assets and liabilities denominated in foreign currencies are recognised in profit or loss.
Exchange differences arising on any loans between group companies that form part of the reporting entity's net
investment in a foreign operation are recognised in other comprehensive income and reclassified from equity to
profit or loss on disposal of the net investment.
38.2 PROPERTY, PLANT AND EQUIPMENT
Depreciation and any impairment. Cost includes expenditure directly incurred to prepare the assets for use, as
well as any costs for their dismantling and removal which will be incurred as a consequence of contractual or legal
obligations requiring the asset to be restored to its original condition.
Depreciation is charged on a straight-line, monthly basis using rates that allow assets to be depreciated until the end
of their useful lives. When assets consist of different identifiable components, whose useful lives differ significantly
from each other, each component is depreciated separately using the component approach.
The indicative useful lives estimated by the Group for the various categories of property, plant and equipment are
as follows:
Land
Not depreciated
Buildings
25-50 years
Plant
10-15 years
Machinery
10-20 years
Equipment and Other assets
3-10 years
The residual values and useful lives of property, plant and equipment are reviewed and adjusted, if appropriate, at
least at each full-year reporting period.
From time to time the Group is required to dry dock its cable-laying vessels in order to carry out inspections and
maintenance. Dry-docking costs include the replacement of parts and major repairs and maintenance. These costs
are incurred as part of periodically scheduled inspections and result in future economic benefits. For this reason,
the Group capitalises dry-docking costs as they occur and depreciates them on a straight-line basis over a period
of 3 to 5 years, which is generally the period until the next scheduled dry-docking.
If the period until the next scheduled dry-docking is shorter than expected, any undepreciated dry-docking costs
are immediately expensed to profit or loss before the next scheduled dry-docking.
Right-of-use assets under IFRS 16
A lease is a contract that guarantees the right to use an asset (the leased asset) for a period of time in exchange for
a payment or a series of payments.
Following adoption of the reporting standard IFRS 16 – Leases since 1 January 2019, at the date leased assets become
available for use, lessees shall recognise the rights of use as non-current assets and a corresponding financial liability.
Lease payments are divided into interest expense, recognised in profit or loss, and repayment of principal, accounted
for as a reduction in the financial liability. Right-of-use assets are depreciated every month on a straight-line basis
over the shorter of the lease term and the estimated useful lives of the assets.
Right-of-use assets and lease liabilities are initially measured at the present value of future lease payments.
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The present value of lease liabilities includes the following payments:
•
fixed payments;
•
variable lease payments that depend on an index or a rate;
•
exercise price of a purchase option reasonably certain to be exercised;
•
payments of penalties for terminating the lease if the termination option is reasonably certain to be exercised;
•
optional payments after the non-cancellable period, if the lease is reasonably certain to be extended beyond
the non-cancellable period;
Future lease payments are discounted using the incremental borrowing rate. This is based on the risk-free rate of
the country in which the contract is negotiated and on the term of the lease, and is also adjusted for the Group's
credit spread.
Lease extension options are considered for the purposes of determining the lease term, if reasonably certain to
be exercised.
Right-of-use assets are measured at cost, whose initial amount is equal to the lease liability.
The Group applies the exemption for short-term leases since their recognition would have an insignificant impact
on the financial liability.
The financial liabilities recognised under IFRS 16, amounting to Euro 211 million, are analysed by maturity as follows:
(Euro/million)
31.12.2021
Less than 1 year
From 1 to 2 years
From 2 to 5 years
More than 5 years
Lease liabilities
53
39
58
61
38.3 GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill
Goodwill represents the difference between the cost incurred for acquiring a controlling interest (in a business)
and the fair value of the assets and liabilities identified at the acquisition date. Goodwill is not amortised, but is
tested for impairment at least annually to identify any impairment losses. This test is carried out with reference to
the cash-generating unit ("CGU") or group of CGUs to which goodwill is allocated and at which level it is monitored.
Greater information can be found in Note 2. Goodwill and Other intangible assets.
Other intangible assets
Other intangible assets are recognised in the financial statements at acquisition cost and/or production cost,
including all costs directly attributable to make the assets available for use, net of accumulated amortisation and
any impairment. Amortisation commences when the asset is available for use and is calculated on a straight-line
basis over the asset's estimated useful life. Other intangible assets have a finite useful life.
Other intangible assets include Patents, concessions, licences, trademarks and similar rights and Software.
Patents, concessions, licences, trademarks and similar rights
These assets are amortised on a straight-line basis over their useful lives.
Software
Software licence costs are capitalised on the basis of purchase costs and costs to make the software ready for use.
These costs are amortised on a straight-line basis over the useful life of the software.
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38.4 IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT AND FINITE-LIFE INTANGIBLE ASSETS
Property, plant and equipment and finite-life intangible assets are analysed at each reporting date for any evidence of
impairment. If such evidence is identified, the recoverable amount of these assets is estimated and any impairment
loss relative to carrying amount is recognised in profit or loss. The recoverable amount is the higher of the fair value
of an asset, less costs to sell, and its value in use, where the latter is the present value of the estimated future cash
flows of the asset. The recoverable amount of an asset which does not generate largely independent cash flows
is determined in relation to the cash-generating unit to which the asset belongs. In calculating an asset's value in
use, the expected future cash flows are discounted using a discount rate reflecting current market assessments of
the time value of money, in relation to the period of the investment and the specific risks associated with the asset.
Following adoption of IFRS 16 since 1 January 2019, the carrying amount of the cash-generating units has been
increased to include right-of-use assets. The calculation of value in use excludes payments for lease liabilities.
Additional details concerning the composition of cash-generating units can be found in Note 39. Estimates and
assumptions.
38.5 FINANCIAL ASSETS
In accordance with IFRS 9 - Financial instruments, financial assets are initially recorded at fair value and classified
in one of the following categories on the basis of their nature and the purpose for which they were acquired:
a)
Financial assets at amortised cost
b)
Financial assets at fair value through profit or loss;
c)
Financial assets at fair value through other comprehensive income (OCI).
Financial assets are derecognised when the right to receive cash flows from the instrument expires and the Group
has substantially transferred all the risks and rewards of ownership of the instrument and the related control.
(a) Financial assets at amortised cost
The Group classifies in this category receivables and securities that it expects to hold to maturity, meaning that it
receives payments of interest and principal from such assets on specified due dates. Assets at amortised cost are
classified in the statement of financial position under "Financial assets at amortised cost" and presented as current
or non-current assets depending on whether their contractual maturity is less or more than twelve months from
the reporting date.
These assets are reported at amortised cost and written down if any impairment is identified.
(b) Financial assets at fair value through profit or loss
Financial assets classified in this category are represented by instruments held for trading, having been acquired
for the purpose of selling in the near term.
Financial assets at fair value through profit or loss are measured at fair value, with gains and losses from changes
in fair value reported in the income statement under "Finance income" and "Finance costs", in the period in which
they arise.
Assets in this category are classified as current assets.
(c) Financial assets at fair value through other comprehensive income (OCI)
The Group uses this category to record equity investments it does not expect to dispose of in the near term and
with which it has no controlling relationship, classified as non-current assets, and securities in which it invests its
liquidity and whose disposal date is not known, classified as current assets.
The above equity investments are measured at fair value through OCI. Dividends from such investments are
recognised in finance income.
Securities classified in this category are measured at fair value through OCI. Interest from financial assets classified
at fair value through OCI is recognised in finance income. When these securities are sold, the related equity reserve
is recycled to profit or loss.
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38.6 DERIVATIVES
Metal derivatives
Derivatives on commodity prices not designated in hedge accounting are recognised at fair value through profit
and loss. The related income and expenses are classified in the operating result. In the balance sheet and financial
position they are recognised as current Assets and Liabilities if the maturity of the derivative is within twelve months,
otherwise they are classified as non-current Assets and Liabilities.
As from 1 January 2020, in the case of centrally managed derivatives, and as from 1 July 2020, in the case of
derivatives arranged by subsidiaries in North America, Brazil and China, the Group has designated certain derivatives
denominated in EUR, GBP, USD and RMB entered into with brokers and aimed at mitigating the risk of fluctuations
in copper and aluminium prices, as cash flow hedges, being hedging instruments associated with highly probable
transactions. These derivative financial instruments, which qualify for recognition as hedging instruments, are
designed to hedge the price risk of commodities that are the subject of highly probable future purchase transactions
(hedged items). A derivative that sets the commodity's purchase price is designated as a hedging instrument, since
it relates to a physical commodity purchase that will be made. When the physical purchase is made, the Group
unwinds the buy derivatives with sell derivatives.
The effectiveness of the hedging relationships is assessed from the inception of each derivative instrument until
it is closed out. The fair values of the various derivative financial instruments used as hedging instruments are
presented in Note 7. Derivatives. Movements in the "Cash flow hedge reserve" forming part of equity are reported
in Note 10. Share capital and reserves.
Interest rate derivatives
Interest rate derivatives not designated as hedging instruments are recognised at fair value through profit or loss.
The related income and expenses are classified in finance income and costs. They are recognised as current assets or
liabilities in the statement of financial position if they mature within twelve months, otherwise they are classified
as non-current assets or liabilities.
Interest rate derivatives designated as hedging instruments are recognised at fair value through other comprehensive
income. When the derivative matures, the related reserve is recycled to profit or loss as finance income and costs.
The relationship between the hedged item and the designated interest rate hedge must be documented. The
effectiveness of each hedge is reviewed both at the derivative's inception and during its life cycle. In particular,
interest rate derivatives designated as hedging instruments are intended to hedge the risk of cash flow volatility
linked to finance costs arising from variable rate debt.
The fair value of interest rate derivatives belongs to Level 2 of the fair value hierarchy.
Currency derivatives
Currency derivatives not designated as hedging instruments are recognised at fair value through profit or loss. The
related income and expenses are classified in finance income and costs. They are recognised as current assets or
liabilities in the statement of financial position if they mature within twelve months, otherwise they are classified
as non-current assets or liabilities.
Currency derivatives designated as hedging instruments are recognised at fair value through other comprehensive
income. When the derivative matures, the related reserve is recycled to profit or loss as finance income and costs.
The relationship between the hedged item and the designated currency hedge must be documented. The
effectiveness of each hedge is reviewed both at the derivative's inception and during its life cycle. In particular,
currency derivatives designated as hedging instruments are intended to hedge exchange rate risk on contracts or
orders. These hedging relationships aim to reduce cash flow volatility due to exchange rate fluctuations affecting
future transactions. In particular, the hedged item is the value in the company's unit of account of a cash flow
expressed in another currency that is expected to be received/paid under a contract or an order whose amount
exceeds the minimum thresholds set by the Group Finance Committee: all cash flows thus identified are therefore
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designated as hedged items in the hedging relationship. The reserve originating from changes in the fair value of
derivative instruments is transferred to profit or loss according to the stage of completion of the contract itself,
where it is classified as contract revenue/costs.
The fair value of currency derivatives belongs to Level 2 of the fair value hierarchy.
38.7 TRADE AND OTHER RECEIVABLES
Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost, net
of the allowance for doubtful accounts. Impairment of receivables is recognised on the basis of Expected Credit
Loss (ECL). ECLs are based on the difference between the cash flows due by contract and all the cash flows that the
Group expects to receive, discounted at an original effective interest rate.
The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that
are integral to the contractual terms.
ECLs are recognised in two stages.
•
For credit exposures for which there has not been a significant increase in credit risk since initial recognition,
ECLs are provided for credit losses that result from default events that are possible within the next 12 months
(a 12-month ECL).
•
For those credit exposures for which there has been a significant increase in credit risk since initial recognition,
a loss allowance is required for credit losses expected over the remaining life of the exposure, irrespective of the
timing of the default (a lifetime ECL).
The Group adopts a simplified approach to calculating ECLs for trade receivables and contract assets: it does not
track changes in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each reporting date.
The Group has established a provision matrix that is based on its historical credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic environment.
The Group makes use of without-recourse factoring of trade receivables. These receivables are derecognised because
such transactions transfer substantially all the related risks and rewards of the receivables to the factor.
38.8 INVENTORIES
Inventories are recorded at the lower of purchase or production cost and net realisable value, defined as the
amount the Group expects to obtain from their sale in the normal course of business, net of selling costs. The cost
of inventories of raw materials, ancillaries and consumables, as well as finished products and goods is determined
using the FIFO (first-in, first-out) method.
The exception is inventories of non-ferrous metals (copper, aluminium and lead) and quantities of such metals
contained in semi-finished and finished products, which are valued using the weighted average cost method.
The cost of finished and semi-finished products includes design costs, raw materials, direct labour costs and other
production costs (calculated on the basis of normal operating capacity).
38.9 CONSTRUCTION CONTRACTS
Construction contracts (hereafter also "contracts") are recognised at the value agreed in the contract, in accordance
with the percentage of completion method, taking into account the progress of the project and the expected
contractual risks. The progress of a project is measured by reference to the contract costs incurred at the reporting
date in relation to the total estimated costs for each contract. When the outcome of a contract cannot be estimated
reliably, the contract revenue is recognised only to the extent that the costs incurred are likely to be recovered.
When the outcome of a contract can be estimated reliably, and it is probable that the contract will be profitable,
contract revenue is recognised over the term of the contract. When it is probable that total contract costs will
exceed total contract revenue, the potential loss is recognised immediately as an expense.
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If the contract contains a warranty other than those used in standard market practice, this warranty is recognised
separately.
The Group reports as assets the gross amount due from customers for construction contracts, where the costs
incurred, plus recognised profits (less recognised losses), exceed the billing of work-in-progress; such assets
are reported in "Other receivables". Amounts invoiced but not yet paid by customers are reported under "Trade
receivables".
The Group records as liabilities the gross amount due to customers for all construction contracts where billing
exceeds the costs incurred plus recognised profits (less recognised losses). Such liabilities are reported under
"Other payables".
38.10 CASH AND CASH EQUIVALENTS
Cash and cash equivalents comprise cash, demand bank deposits and other short-term investments, with a maturity
of three months or less. Current account overdrafts are classified as financial payables under current liabilities in
the statement of financial position.
38.11 ASSETS AND LIABILITIES HELD FOR SALE
Assets and liabilities held for sale are classified as such if the carrying amount will be recovered principally through
a sale transaction; for this to be the case, the sale must be highly probable and the related assets/liabilities must
be available for immediate sale in their present condition. Assets/Liabilities held for sale are measured at the lower
of carrying amount and fair value less costs to sell.
38.12 TRADE AND OTHER PAYABLES
Trade and other payables are initially recognised at fair value and subsequently measured at amortised cost.
38.13 BORROWINGS FROM BANKS AND OTHER LENDERS
Borrowings from banks and other lenders are initially recognised at fair value, less directly attributable costs.
Subsequently, they are measured at amortised cost, using the effective interest method. If the estimated expected
cash flows should change, the value of the liabilities is recalculated to reflect this change using the present value
of the expected new cash flows and the effective internal rate originally established. Borrowings from banks and
other lenders are classified as current liabilities, unless the Group has an unconditional right to defer their payment
for at least twelve months after the reporting date.t
Borrowings from banks and other lenders are derecognised when they are extinguished and when the Group has
transferred all the risks and expense relating to such instruments.
38.14 EMPLOYEE BENEFITS
The Group operates both defined contribution plans and defined benefit plans.
Defined contribution plans
A defined contribution plan is a plan under which the Group pays fixed contributions to third-party fund managers
and to which there are no legal or other obligations to pay further contributions should the fund not have sufficient
assets to meet the obligations to employees for current and prior periods. In the case of defined contribution plans,
the Group pays contributions, voluntarily or as established by contract, to public and private pension insurance
funds. The Group has no obligations subsequent to payment of such contributions, which are recognised as personnel
costs on an accrual basis. Prepaid contributions are recognised as an asset which will be repaid or used to offset
future payments, should they be due.
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Defined benefit plans
In defined benefit plans, the total benefit payable to the employee can be quantified only after the employment
relationship ceases, and is linked to one or more factors, such as age, years of service and remuneration; the related
cost is therefore charged to the period's income statement on the basis of an actuarial calculation. The liability
recognised for defined benefit plans corresponds to the present value of the obligation at the reporting date, less
the fair value of the plan assets, where applicable. Obligations for defined benefit plans are determined annually
by an independent actuary using the projected unit credit method. The present value of a defined benefit plan is
determined by discounting the future cash flows at an interest rate equal to that of high-quality corporate bonds
issued in the liability's settlement currency and which reflects the duration of the related pension plan. Actuarial
gains and losses arising from the above adjustments and the changes in actuarial assumptions are recorded among
the components of other comprehensive income.
Past service costs resulting from a plan amendment are recognised immediately as an expense in the period the
plan amendment occurs.
Other post-employment obligations
Some Group companies provide medical benefit plans for retired employees. The expected cost of these benefits is
accrued over the period of employment using the same accounting method as for defined benefit plans. Actuarial
gains and losses arising from the valuation and the effects of changes in the actuarial assumptions are accounted
for in equity. These liabilities are valued annually by a qualified independent actuary.
Termination benefits
The Group recognises termination benefits when it can be shown that the termination of employment complies
with a formal plan communicated to the parties concerned that establishes termination of employment, or when
payment of the benefit is the result of voluntary redundancy incentives. Termination benefits payable more than
twelve months after the reporting date are discounted to present value.
38.15 PROVISIONS FOR RISKS AND CHARGES
Provisions for risks and charges are recognised for losses and charges of a definite nature, whose existence is certain
or probable, but the amount and/or timing of which cannot be determined reliably. A provision is recognised only
when there is a current (legal or constructive) obligation for a future outflow of economic resources as the result
of past events and it is likely that this outflow is required to settle the obligation. Such amount is the best estimate
of the expenditure required to settle the obligation. Where the effect of the time value of money is material and
the obligation settlement date can be estimated reliably, the provisions are stated at the present value of the
expected outlay, using a rate that reflects market conditions, the variation in the time value of money, and risks
specific to the obligation.
Increases in the provision due to changes in the time value of money are accounted for as interest expense. Risks for
which the emergence of a liability is only possible but not remote are reported in the disclosures about commitments
and contingencies and no provision is recognised.
Any contingent liabilities accounted for separately when allocating the cost of a business combination, are measured
at the higher of the amount obtained under the method described above for calculating provisions for risks and
charges and the liability's original present value.
Additional details can be found in Note 28. Contingent liabilities.
Provisions for risks and charges include an estimate of legal costs to be incurred if such costs are incidental to the
discharge of the provision to which they refer.
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38.16 REVENUE RECOGNITION
Revenue is recognised at the fair value of the consideration received for the sale of goods and services in the
ordinary course of the Group's business. Revenue is recognised net of value-added tax, expected returns, rebates
and discounts.
Revenue is accounted for as follows:
Sale of goods
Revenue from the sale of goods is recognised at the point in time when control of the asset is transferred to the
customer, normally coinciding with shipment or delivery of the goods and acceptance by the customer. The Group
checks whether there are conditions in the contract that represent separate performance obligations to which a
portion of the transaction price must be allocated (e.g., warranties), as well as the effects arising from the presence
of any variable consideration, significant financing components or non-cash consideration payable to the customer.
In the case of variable consideration, this is estimated based on the amount to which the Group will be entitled when
the goods are transferred to the customer; such consideration is estimated at contract inception and is recognised
only when it is highly probable. The Group grants discounts to certain customers when the quantity of products
purchased during the period exceeds a threshold specified in the contract. Discounts are offset against amounts
payable by the customer. To estimate the variable consideration for expected discounts, the Group applies the "most
likely amount" method for contracts with a single-volume discount threshold and the "expected value" method for
contracts with multiple thresholds. Generally, the Group receives short-term advances from its customers and the
agreed amount of consideration is not adjusted for the effects of a significant financing component if it expects, at
contract inception, that the period between transfer of the promised good or service to the customer and related
customer payment will not exceed one year.
The method of recognising revenue for construction contracts is outlined in Note 38.9 Construction contracts.
38.17 GOVERNMENT GRANTS
Government grants are recognised on an accrual basis in direct relation to the costs incurred when there is a formal
resolution approving the grant and, when the right to the grant is assured since it is reasonably certain that the
Group will comply with the conditions for its receipt and that the grant will be received.
(a) Grants related to assets
Government grants for property, plant and equipment are recorded as deferred income under "Other payables",
classified as current or non-current liabilities for the long-term and short-term portion of such grants respectively.
Deferred income is recognised in "Other income" in the income statement on a straight-line basis over the useful
life of the asset to which the grant refers.
(b) Grants related to income
Grants other than those related to assets are credited to the income statement as "Other income".
38.18 COST RECOGNITION
Costs are recognised for goods and services acquired or consumed during the reporting period or to make a systematic
allocation to match costs with revenues.
38.19 TAXES
Current taxes are calculated on the basis of taxable income for the year, applying the tax rates in force at the
reporting date.
Deferred taxes are calculated on all differences arising between the tax base of an asset or liability and the carrying
amount, except for goodwill and differences arising from investments in subsidiaries, where the timing of the
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reversal of such differences is controlled by the Group and they are unlikely to reverse in a reasonably foreseeable
future. Deferred tax assets, including those relating to past tax losses, not offset by deferred tax liabilities, are
recognised to the extent it is likely that future taxable profit will be available against which they can be recovered.
Deferred taxes are determined using tax rates that are expected to apply in the years when the differences are
realised or extinguished, on the basis of tax rates that have been enacted or substantively enacted at the reporting
date.
Current and deferred taxes are recognised in the income statement with the exception of those relating to items
recognised directly in equity, in which case the tax effect is accounted for directly in equity. Income taxes are offset
if they are levied by the same taxation authority, if there is a legally enforceable right to offset them and if the net
balance is expected to be settled.
Other taxes not related to income, such as property tax, are accounted for in "Other expenses".
38.20 EARNINGS PER SHARE
(a) Basic earnings per share
Basic earnings per share are calculated by dividing the profit attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the reporting period, excluding treasury shares.
(b) Diluted earnings per share
Diluted earnings per share are calculated by dividing the profit attributable to owners of the parent by the weighted
average number of ordinary shares outstanding during the reporting period, excluding treasury shares. For the
purposes of calculating diluted earnings per share, the weighted average number of outstanding shares is adjusted
so as to include the exercise, by all those entitled, of rights with a potentially dilutive effect, while the profit
attributable to owners of the parent is adjusted to account for any post-tax effects of exercising such rights.
38.21 TREASURY SHARES
Treasury shares are reported as a deduction from equity. The original cost of treasury shares and revenue arising
from any subsequent sales are treated as movements in equity.
39. ESTIMATES AND ASSUMPTIONS
The preparation of financial statements requires Management to apply accounting policies and methods which, at
times, rely on judgements and estimates based on past experience and assumptions deemed to be reasonable and
realistic under the circumstances. The application of these estimates and assumptions affects the amounts reported
in the financial statements, meaning the statement of financial position, the income statement, the statement
of comprehensive income and the statement of cash flows, as well as the accompanying disclosures. Ultimate
amounts, previously reported on the basis of estimates and assumptions, may differ from original estimates because
of uncertainty surrounding the assumptions and conditions on which the estimates were based.
The following is a brief description of the accounting policies that require Prysmian Group's Management to exercise
greater subjectivity of judgement in making estimates and a change in whose underlying assumptions could have
a material impact on the consolidated financial statements.
(a) Provisions for risks and charges
Provisions are recognised for legal and tax risks to reflect the risk of an adverse outcome. The value of the provisions
recorded in the financial statements against such risks represents the best estimate by Management at that date.
This estimate requires the use of assumptions that depend on factors which may change over time and which
could, therefore, materially impact the current estimates made by Management to prepare the Group consolidated
financial statements.
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(b) Impairment of assets
Goodwill
The Group's activities are organised in three operating segments: Projects, Energy and Telecom. The Projects
segment consists of the High Voltage, Submarine Power, Submarine Telecom and Offshore Specialties CGUs; the
Energy segment consists of a number of CGUs corresponding to the Regions or Countries in keeping with the new
organisation structure; lastly, the Telecom segment consists of a single CGU that coincides with the operating
segment itself. Goodwill, acquired on the occasion of business combinations, has been allocated to CGU groups,
corresponding to the operating segments, which are expected to benefit from the synergies of such combinations
and which represent the lowest level at which Management monitors business performance. In accordance with
the accounting standards adopted and related impairment testing procedures, the Group tests annually whether
Goodwill has suffered an impairment loss. The recoverable amount is determined by calculating value in use, a
calculation that requires the use of estimates.
More details about the Goodwill impairment test can be found in Note 2. Goodwill and Other intangible assets.
Property, plant and equipment and finite-life intangible assets
In accordance with the Group's accounting policies and impairment testing procedures, property, plant and
equipment and intangible assets with finite useful lives are tested for impairment, recognised through write-
down, when there are indicators that their carrying amount may be difficult to recover through use. To verify the
existence of these indicators Management has to make subjective judgements based on information available
within the Group and from the market, as well as on past experience. If an impairment loss is identified, the Group
will determine the amount of the loss using suitable valuation techniques. Correct identification of indicators of
potential impairment, as well as its very measurement, depend on factors that may vary over time, thus influencing
the judgements and estimates made by Management.
Prysmian Group has assessed during the course of 2021 whether there was any evidence that its CGUs might be
impaired.
Further information can be found in Note 1. Property, plant and equipment.
(c) Climate change
As more fully explained in the Directors' Report and in the Non-Financial Information Statement, the Group is
implementing an ambitious "Net Zero" strategy, in line with the requirements of the Paris Agreement. At the same
time, the Group is analysing and assessing the risks and opportunities of climate change and has set targets for the
reduction of greenhouse gas emissions classified as Scope 1 and 2 (direct and indirect emissions generated by its
own activities) and as Scope 3 (generated by the value chain).
The consequences in terms of investments, costs and other impacts on cash flows have been considered when
preparing financial forecasts, consistent with the state of progress of this process. The replacement program for
certain assets aimed at achieving the "Net Zero" strategy involves reviewing the useful lives of these assets, with
a consequent acceleration of their depreciation process. The 2021 impairment tests have taken into account the
impacts on investment flows, as far as they can be currently estimated, without any significant effects on the test
results. In addition, the Group considered challenges associated with the commitments made on climate and did
not identify any further aspects that could have a material impact on the impairment tests. It is possible that in the
future the carrying amount of assets or liabilities recognised in the Group's financial statements may be subject to
different impacts as the strategy of managing climate change evolves. However, these aspects are more and more
frequently monitored through coordination between the various company departments.
(d) Depreciation and amortisation
The cost of property, plant and equipment and intangible assets is depreciated/amortised on a straight-line basis
over the estimated useful lives of the assets concerned. The useful economic life of Group property, plant and
equipment and intangible assets is determined by Management when the asset is acquired. This is based on past
experience for similar assets, market conditions and expectations regarding future events that could impact useful
life, including developments in technology. Therefore, actual economic life may differ from estimated useful life.
The Group periodically reviews technological and industry developments to update residual useful lives. This periodic
review may lead to a variation in the depreciation/amortisation period and therefore also in the depreciation/
amortisation charge for future years.
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(e) Recognition of revenues and costs from construction contracts
The Group uses the percentage of completion method to account for long-term contracts. The margins recognised
in the income statement depend on the progress of the contract and its estimated margins upon completion. This
means that if work-in-progress and margins on as yet incomplete work are to be correctly recognised, Management
must have correctly estimated contract revenue and completion costs, including any contract variations and any
cost overruns and penalties that might reduce the expected margin. The percentage of completion method requires
the Group to estimate contract completion costs and involves making estimates dependent on factors that could
potentially change over time and could therefore have a significant impact on the recognition of revenue and
margins in the course of formation.
(f) Taxes
Consolidated companies are subject to different tax jurisdictions. A high level of judgement is needed to establish
the estimated global tax charge, also because of uncertain tax treatments. There are many transactions for which
the relevant tax liability is difficult to estimate at year end. The Group recognises liabilities for ongoing tax risks
on the basis of estimates, possibly made with the assistance of outside experts.
(g) Inventory valuation
Inventories are recorded at the lower of purchase cost (measured using the weighted average cost formula for
non-ferrous metals and the FIFO formula for all others) and net realisable value, net of selling costs. Net realisable
value is in turn represented by the value of firm sales orders in the order book, or failing that by the replacement
cost of the asset or raw material. If significant reductions in the price of non-ferrous metals were to be followed
by order cancellations, the loss in the value of inventories might not be fully offset by the penalties charged to
customers for cancelling their orders.
(h) Employee benefit obligations
The present value of the pension plans reported in the financial statements depends on an independent actuarial
calculation and on a number of different assumptions. Any changes in assumptions and in the discount rate used
are duly reflected in the present value calculation and may have a significant impact on the consolidated figures.
The assumptions used for the actuarial calculation are examined by the Group annually.
Present value is calculated by discounting future cash flows at an interest rate equal to that on high-quality corporate
bonds issued in the currency in which the liability will be settled and which takes account of the duration of the
related pension plan.
Further information can be found in Note 14. Employee benefit obligations and Note 20. Personnel costs.
(i) Incentive and share purchase plan
The employee share purchase plan, directed at almost all the Group's employees, provides an opportunity for
them to obtain shares on preferential terms and conditions. The operation of this plan is described in Note 20.
Personnel costs. The grant of shares is subject to continued employment with the Group in the months between
signing up to one of the plan's purchase windows and the purchase of the shares themselves on the equity market.
The plan's financial and economic impact has therefore been estimated on the basis of the best possible estimates
and information currently available.
The long-term incentive plan 2020-2022 involves the allocation of a number of options calculated according to the
achievement of operational, economic and financial performance conditions. The plan's financial and economic
impact has therefore been estimated on the basis of the best possible estimates and information available at the
valuation date. More details can be found in Note 20. Personnel costs.
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40. EVENTS AFTER THE REPORTING PERIOD
Tax risk management and control system endorsed by the Italian Revenue Agency with admission of the Group's
seven Italian companies to the "Cooperative Compliance" program.
On 3 January 2022, the Group announced that it had been admitted to the Cooperative Compliance program with
the Italian Revenue Agency after the Group’s seven Italian companies successfully passed the rigorous review of the
adequacy of the Tax Control Framework for detecting, measuring, managing and controlling tax risk. Admission to
the program, which applies from tax period 2020, will allow the Group to establish a relationship based on trust and
transparency with the Italian tax authorities, aimed at the pre-emptive analysis of issues with the highest tax risk
and an ever-increasing level of oversight of the most relevant tax issues. Prysmian's entry into the Collaborative
Compliance program is in line with international best practice. For the Group, managing tax risk is a crucial aspect
of ethical, responsible business management, in line with the Group's sustainability strategy based on transparency
and an awareness that taxes constitute a significant source of contribution to the economic and social development
of the countries in which it operates. The development of an effective tax risk management model, the adoption of
a Group Tax Strategy and admission to the Cooperative Compliance program will therefore make it possible, within
the framework of this relationship with the Revenue Agency, to eliminate tax risk, defined as the risk of operating
in conflict with the principles of tax law. In accordance with the law, the admission notified by the Italian Revenue
Agency means that Prysmian S.p.A. and the other six Italian group companies have been added to the list, published
on the Agency's official website, of companies that operate in full transparency with the Italian tax authorities.
Award of a landmark HVDC submarine cable project in the Middle East worth Euro 220 million.
On 14 January 2022, the Group announced that it had signed a Limited Notice to Proceed (LNTP) for the supply of
power cables for a landmark HVDC submarine cable project in the Middle East, worth approximately Euro 220 million.
The LNTP was awarded to Prysmian by Samsung C&T through its EPC consortium with Jan De Nul Group. The new
link, part of the strategic HVDC transmission system for the "Lightning Project" of Abu Dhabi National Oil Company
(ADNOC) and Abu Dhabi National Energy Company PJSC (TAQA), will allow bulk power transmission between the Al
Mirfa converter station in the Abu Dhabi hinterland and the station on the offshore island of Al Ghallan. The project
involves the design, supply, assembly of accessories and site acceptance testing of four single-core 320 kV HVDC
XLPE-insulated cables that will connect the Al Mirfa onshore converter station to Al Ghallan, an artificial offshore
island in the Arabian Gulf, located off the coast of Abu Dhabi in the United Arab Emirates. Under the LNTP, Prysmian
will perform engineering work, commit manufacturing capacity, proceed with partial production of the HVDC
cables in advance of the Full Contract Award and Notice to Proceed (NTP), expected in the third quarter of 2022 and
conditional upon Samsung C&T receiving the related NTP under the main EPC Contract. All HVDC submarine cables
will be manufactured at Arco Felice (Italy), Prysmian Group's centre of excellence for the production of this type
of cable, while HVDC land cables will be manufactured at the Pikkala plant in Finland. The submarine fibre optic
cables will be manufactured at the Nordenham plant (Germany), while Prysmian will draw on its portfolio of asset
management and electronics services to supply a range of cable monitoring solutions.
Investigation by Germany's Federal Cartel Office (FCO)
On 18 January 2022, the Group announced that the German Federal Cartel Office (FCO) had carried out inspections
at some of the Group's sites in Germany. The inspections were conducted as part of an investigation by the FCO
into alleged coordination in setting the standard metal surcharges applied by the industry in Germany. Prysmian
is co-operating with the FCO.
Euro 135 million loan to finance R&D activities
On 3 February 2022, the Group announced that it had finalised a loan from the European Investment Bank (EIB)
for Euro 135 million to support the 2021-2024 European R&D program of the world-leading Group in the power and
telecom cables industry.
The EIB loan is specifically intended to support projects to be developed at R&D centres in five European countries:
France, the Netherlands, Spain, Germany and Italy. A significant share of the funding is earmarked for Italy, which
is home to Prysmian Group's headquarters, R&D offices and a number of plants that are centres of manufacturing
excellence for optical fibres and submarine power transmission cables and systems. Globally, Prysmian Group has 26
R&D centres located in Europe, North and South America and Asia, with a team of over 900 professional researchers,
technicians and operators, and an extensive portfolio of more than 5,500 patents.
205
Group Annual Report - EXPLANATORY NOTES
Prysmian e CDC (Commercial Development Company) announces the finalizations of the purchase of Brayton Point
( Massachusetts)
On 17 February 2022, the Group announced the signing of the contract
for the purchase by Prysmian of the site identified in Brayton Point (Massachusetts). The final
acquisition of the site is subject to securing state permits for the construction of the new plant.
Prysmian Group’s total investment to build the new plant will amount to around $200 million.
Finalisation of the plans for the US localisation of the production footprint of submarine cables also entails
confirmation of the award of the projects for cabling the Commonwealth Wind and Park Wind City offshore wind
projects, for a total of approximately $900 million, by Avangrid Renewables, a subsidiary of AVANGRID (NYSE:AGR).
The Notice to Proceed is yet to be issued.
Milan, 1 March 2022
ON BEHALF OF THE BOARD OF DIRECTORS
THE CHAIRMAN
Claudio De Conto
206
Prysmian Group - Annual Report
2021
SCOPE OF CONSOLIDATION – APPENDIX A
The following companies have been consolidated line-by-line:
FULLY CONSOLIDATED SUBSIDIARIES ON A LINE BY LINE BASIS
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
EUROPE
Austria
Prysmian OEKW GmbH
Wien
Euro
2,053,007.56
100.00%
Prysmian Cavi e Sistemi
S.r.l.
Belgium
Draka Belgium N.V.
Leuven
Euro
61,973.38
98.52%
Draka Holding B.V.
1.48%
Draka Kabel B.V.
Denmark
Prysmian Group Denmark A/S
Albertslund
Danish Krone
40,001,000.00
100.00%
Draka Holding B.V.
Estonia
Prysmian Group Baltics AS
Keila
Euro
1,664,000.00
100.00%
Prysmian Group Finland
OY
Finland
Prysmian Group Finland OY
Kirkkonummi
Euro
100,000.00
77.7972%
Prysmian Cavi e Sistemi
S.r.l.
19.9301%
Draka Holding B.V.
2.2727%
Draka Comteq B.V.
France
Prysmian (French) Holdings S.A.S.
Paron
Euro
129,026,210.00
100.00%
Prysmian Cavi e Sistemi
S.r.l.
Prysmian Cables et Systèmes France
S.A.S.
Sens
Euro
136,800,000.00
100.00%
Prysmian (French)
Holdings S.A.S.
Draka Comteq France S.A.S.
Paron
Euro
246,554,316.00
100.00%
Draka France S.A.S.
Draka Fileca S.A.S.
Sainte
Geneviève
Euro
5,439,700.00
100.00%
Draka France S.A.S.
Draka Paricable S.A.S.
Marne La
Vallée
Euro
5,177,985.00
100.00%
Draka France S.A.S.
Draka France S.A.S.
Marne La
Vallée
Euro
261,551,700.00
100.00%
Draka Holding B.V.
P.O.R. S.A.S.
Marne La
Vallée
Euro
100,000.00
100.00%
Draka France S.A.S.
Silec Cable, S. A. S.
Montreau-
Fault-Yonne
Euro
60,037,000.00
100.00%
Grupo General Cable
Sistemas, S.L.
EHC France s.a.r.l.
Sainte
Geneviève
Euro
310,717
100.00%
EHC Global Inc.
Germany
Prysmian Kabel und Systeme GmbH
Berlin
Euro
15,000,000.00
93.75%
Draka Deutschland
GmbH
6.25%
Prysmian S.p.A.
Prysmian Unterstuetzungseinrichtung
Lynen GmbH
Eschweiler
Deutsche
Mark
50,000.00
100.00%
Prysmian Kabel und
Systeme GmbH
Draka Comteq Berlin GmbH & Co. KG
Berlin
Deutsche
Mark
46,000,000.00
50.10%
Prysmian Netherlands
B.V.
Euro
1.00
49.90%
Draka Deutschland
GmbH
Draka Comteq Germany Verwaltungs
GmbH
Koln
Euro
25,000.00
100.00%
Draka Comteq B.V.
Draka Comteq Germany GmbH & Co. KG
Koln
Euro
5,000,000.00
100.00%
Draka Comteq B.V.
Draka Deutschland Erste Beteiligungs
GmbH
Wuppertal
Euro
25,000.00
100.00%
Draka Holding B.V.
Draka Deutschland GmbH
Wuppertal
Euro
25,000.00
90.00%
Draka Deutschland
Erste Beteiligungs
GmbH
10.00%
Draka Deutschland
Zweite Beteiligungs
GmbH
Draka Deutschland Verwaltungs GmbH
Wuppertal
Deutsche
Mark
50,000.00
100.00%
Prysmian Kabel und
Systeme GmbH
207
Group Annual Report - EXPLANATORY NOTES
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
Draka Deutschland Zweite Beteiligungs
GmbH
Wuppertal
Euro
25,000.00
100.00%
Prysmian Netherlands
B.V.
Draka Service GmbH
Norimberga
Euro
25,000.00
100.00%
Draka Deutschland
GmbH
Höhn GmbH
Wuppertal
Deutsche
Mark
1,000,000.00
100.00%
Draka Deutschland
GmbH
Kaiser Kabel GmbH
Wuppertal
Deutsche
Mark
9,000,000.00
100.00%
Draka Deutschland
GmbH
NKF Holding (Deutschland) GmbH i.L
Wuppertal
Euro
25,000.00
100.00%
Prysmian Netherlands
B.V.
Norddeutsche Seekabelwerke GmbH
Nordenham
Euro
50,025,000.00
100.00%
Grupo General Cable
Sistemas, S.L.
EHC Germany GmbH
Baesweiler
Euro
25,200.00
100.00%
EHC Global Inc
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
U.K.
Prysmian Cables & Systems Ltd.
Eastleigh
British Pound
113,901,120.00
100.00%
Prysmian UK Group Ltd.
Prysmian Construction Company Ltd.
Eastleigh
British Pound
1.00
100.00%
Prysmian Cables &
Systems Ltd.
Prysmian Cables (2000) Ltd.
Eastleigh
British Pound
1.00
100.00%
Prysmian Cables &
Systems Ltd.
Cable Makers Properties & Services Ltd.
Esher
British Pound
39.08
63.84%
Prysmian Cables &
Systems Ltd.
36.16%
Third Parties
Comergy Ltd.
Eastleigh
British Pound
1.00
100.00%
Prysmian Cavi e Sistemi
S.r.l.
Prysmian Pension Scheme Trustee Ltd.
Eastleigh
British Pound
1.00
100.00%
Prysmian S.p.A.
Prysmian UK Group Ltd.
Eastleigh
British Pound
70,011,000.00
100.00%
Draka Holding B.V.
Draka Comteq UK Ltd.
Eastleigh
British Pound
14,000,002.00
100.00%
Prysmian UK Group Ltd.
Draka UK Ltd.
Eastleigh
British Pound
1.00
100.00%
Prysmian UK Group Ltd.
Prysmian PowerLink Services Ltd.
Eastleigh
British Pound
46,000,100.00
100.00%
Prysmian UK Group Ltd.
General Cable Holdings (UK) Limited
London
British Pound
1.00
100.00%
GK Technologies,
Incorporated
General Cable Services Europe Limited
London
British Pound
1.00
100.00%
General Cable Holdings
(UK) Limited
NSW Technology Limited
Aberdeen
British Pound
1.00
100.00%
Norddeutsche
Seekabelwerke GmbH
Prysmian Telecom Cables and Systems
UK Ltd.
Eastleigh
British Pound
1.00
100.00%
Prysmian Cables &
Systems Ltd.
Escalator Handrail (UK) Ltd.
Eastleigh
British Pound
2.00
100.00%
EHC Global Inc.
Ireland
Prysmian Re Company Designated
Activity Company
Dublin
Euro
20,000,000.00
100.00%
Draka Holding B.V.
Italy
Prysmian Cavi e Sistemi S.r.l.
Milan
Euro
50,000,000.00
100.00%
Prysmian S.p.A.
Prysmian Cavi e Sistemi Italia S.r.l.
Milan
Euro
77,143,249.00
100.00%
Prysmian S.p.A.
Prysmian Treasury
S.r.l.
Milan
Euro
80,000,000.00
100.00%
Prysmian S.p.A.
Prysmian PowerLink S.r.l.
Milan
Euro
100,000,000.00
100.00%
Prysmian S.p.A.
Fibre Ottiche Sud - F.O.S. S.r.l.
Battipaglia
Euro
47,700,000.00
100.00%
Prysmian S.p.A.
Prysmian Electronics S.r.l.
Milan
Euro
10,000.00
100.00%
Prysmian Cavi e Sistemi
S.r.l.
Norway
Prysmian Group Norge AS
Drammen
Norwegian
Krone
22,500,000.00
100.00%
Draka Holding B.V.
208
Prysmian Group - Annual Report
2021
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
General Cable Nordic A/S
Drammen
Norwegian
Krone
1,674,000.00
100.00%
Grupo General Cable
Sistemas, S.L.
The Netherlands
Draka Comteq B.V.
Amsterdam
Euro
1,000,000.00
100.00%
Draka Holding B.V.
Draka Comteq Fibre B.V.
Eindhoven
Euro
18,000.00
100.00%
Prysmian Netherlands
Holding B.V.
Draka Holding B.V.
Amsterdam
Euro
52,229,320.50
100.000%
Prysmian S.p.A.
Draka Kabel B.V.
Amsterdam
Euro
2,277,976.68
100.00%
Prysmian Netherlands
B.V.
Donne Draad B.V.
Nieuw
Bergen
Euro
28,134.37
100.00%
Prysmian Netherlands
B.V.
NKF Vastgoed I B.V.
Delft
Euro
18,151.21
99.00%
Draka Holding B.V.
1.00%
Prysmian Netherlands
B.V.
NKF Vastgoed III B.V.
Delft
Euro
18,151.21
99.00%
Draka Deutschland
GmbH
1.00%
Prysmian Netherlands
B.V.
Prysmian Netherlands B.V.
Delft
Euro
1.00
100.00%
Prysmian Netherlands
Holding B.V.
Prysmian Netherlands Holding B.V.
Amsterdam
Euro
1.00
100.00%
Draka Holding B.V.
General Cable Holdings Netherlands C.V.
Amsterdam
Euro
159,319,137.00
95.50%
GK Technologies,
Incorporated
1.00%
GC Global Holdings,
Inc.
3.50%
Phelps Dodge National
Cables Corporation
Poland
Eksa Sp.z.o.o
Sokolów
Polish Zloty
394,000.00
29.949%
Prysmian Cavi e Sistemi
S.r.l.
70.051%
Draka Holding B.V.
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
Portugal
General Cable Investments, SGPS,
Sociedade Unipessoal, S.A.
Funchal
Euro
8,500,020.00
100.00%
Draka Holding B.V.
General Cable Celcat, Energia e
Telecomunicaçoes SA
Pero Pinheiro
Euro
13,500,000.00
100.00%
General Cable
Investments, SGPS,
Sociedade Unipessoal,
S.A.
Czech Republic
Draka Kabely, s.r.o.
Velké Meziříčí
Czech Koruna
255,000,000.00
100.00%
Draka Holding B.V.
Romania
Prysmian Cabluri Si Sisteme S.A.
Slatina
Leu rumeno
103,850,920.00
99.9995%
Draka Holding B.V.
0.0005%
Prysmian Cavi e Sistemi
S.r.l.
Russia
Limited Liability Company Prysmian RUS
Rybinsk city
Russian
Rouble
230,000,000.00
99.00%
Draka Holding B.V.
1.00%
Prysmian Cavi e Sistemi
S.r.l.
Limited Liability Company
"Rybinskelektrokabel"
Rybinsk city
Russian
Rouble
90,312,000.00
100.00%
Limited Liability
Company Prysmian RUS
Slovakia
Prysmian Kablo s.r.o.
Bratislava
Euro
21,246,001.00
99.995%
Prysmian Cavi e Sistemi
S.r.l.
0.005%
Prysmian S.p.A.
Spain
Prysmian Cables Spain, S.A. (Sociedad
Unipersonal)
Vilanova I la
Geltrù
Euro
58,178,234.22
100.00%
Draka Holding, S.L.
Draka Holding, S.L. (Sociedad
Unipersonal)
Santa
Perpetua de
Mogoda
Euro
24,000,000.00
100.00%
Draka Holding B.V.
GC Latin America Holdings, S.L.
Abrera
Euro
151,042,030.00
100%
General Cable Holdings
(Spain), S.L.
209
Group Annual Report - EXPLANATORY NOTES
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
General Cable Holdings (Spain), S.L.
Abrera
Euro
138,304,698.48
99.349%
GK Technologies,
Incorporated
0.6510%
General Cable Overseas
Holdings, LLC
Grupo General Cable Sistemas, S.L.
Abrera
Euro
22,116,018.70
100.00%
Draka Holding B.V.
EHC Spain and Portugal, S.L.
Sevilla
Euro
3,897,315.20
100.000%
EHC Global Inc.
Sweden
Prysmian Group North Europe AB
Nässjö
Swedish
Krona
100,100.00
100.00%
Draka Holding B.V.
Prysmian Group Sverige AB
Nässjö
Swedish
Krona
100,000.00
100.00%
Prysmian Group North
Europe AB
Switzerland
Omnisens S.A.
Morges
Swiss Franc
11,811,719.00
100.00%
Draka Holding B.V.
Turkey
Turk Prysmian Kablo Ve Sistemleri A.S.
Mudanya
Turkish new
Lira
216,733,652.00
83.7464%
Draka Holding B.V.
0.4614%
Turk Prysmian Kablo Ve
Sistemleri A.S.
15.7922%
Third Parties
EHC Turkey Asansör ve Yürüyen Merdiven
Sanayi Limited Şirketi
Istanbul
Turkish new
Lira
10,000.00
100.00%
EHC Global Inc.
Hungary
Prysmian MKM Magyar Kabel Muvek Kft.
Budapest
Hungarian
Forint
5,000,000,000.00
100.00%
Prysmian Cavi e Sistemi
S.r.l.
NORTH AMERICA
Canada
Prysmian Cables and Systems Canada
Ltd.
New
Brunswick
Canadian
Dollar
1,000,000.00
100.00%
Draka Holding B.V.
Draka Elevator Products Incorporated
New
Brunswick
Canadian
Dollar
n/a
100.00%
Prysmian Cables and
Systems USA, LLC
General Cable Company Ltd.
Halifax
Canadian
Dollar
133,302,216.00
100.00%
General Cable Canada
Holdings LLC
EHC Global Inc.
Oshawa
Canadian
Dollar
1,511,769.00
100.00%
Prysmian Cables and
Systems Canada Ltd.
EHC Canada Inc.
Oshawa
Canadian
Dollar
39,308.00
99.9997%
EHC Global Inc.
0.0003%
Prysmian Cables and
Systems Canada Ltd.
Elator Inc.
Oshawa
Canadian
Dollar
100.00
100.00%
EHC Global Inc.
EHC Management Company Inc.
Oshawa
Canadian
Dollar
1.00
100.00%
EHC Global Inc.
Dominican Repuplic
General Cable Caribbean, S.R.L
Santa
Domingo
Oeste
Dominican
Peso
2,100,000.00
99.995%
GK Technologies,
Incorporated
0.005%
General Cable
Industries Inc.
Trinidad and Tobago
General Cable Trinidad Limited
Port of Spain
Trinidadian
Dollar
100.00
100.00%
GK Technologies,
Incorporated
U.S.A.
Prysmian Cables and Systems (US) Inc.
Carson City
US Dollar
330,517,608.00
100.00%
Draka Holding B.V.
Prysmian Cables and Systems USA, LLC
Wilmington
US Dollar
10.00
100.00%
GK Technologies, Inc
Prysmian Construction Services Inc.
Wilmington
US Dollar
1,000.00
100.00%
Prysmian Cables and
Systems USA, LLC
Draka Elevator Products, Inc.
Boston
US Dollar
1.00
100.00%
Prysmian Cables and
Systems USA, LLC
Draka Transport USA, LLC
Boston
US Dollar
-
100.00%
Prysmian Cables and
Systems USA, LLC
GC Global Holdings, Inc.
Wilmington
US Dollar
1,000.00
100.00%
General Cable Overseas
Holdings, LLC
210
Prysmian Group - Annual Report
2021
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
General Cable Canada Holdings LLC
Wilmington
US Dollar
-
100.00%
General Cable
Industries, Inc.
General Cable Corporation
Wilmington
US Dollar
1.00
100.00%
Prysmian Cables and
Systems (US) Inc.
General Cable Industries, Inc.
Wilmington
US Dollar
10.00
100.00%
GK Technologies,
Incorporated
General Cable Overseas Holdings, LLC
Wilmington
US Dollar
-
100.00%
GK Technologies,
Incorporated
General Cable Technologies Corporation
Wilmington
US Dollar
1,000.00
100.00%
General Cable
Industries, Inc.
Phelps Dodge Enfield Corporation
Wilmington
US Dollar
800,000.00
100.00%
General Cable
Industries, Inc.
PHELPS DODGE NATIONAL CABLES
CORPORATION
Wilmington
US Dollar
10.00
100.00%
General Cable
Industries, Inc.
GK Technologies, Incorporated
West Trenton
US Dollar
1,000.00
100.00%
General Cable
Corporation
EHC USA Inc.
Oshawa
US Dollar
1.00
100.00%
EHC Global Inc.
Prysmian Group Speciality Cables, LLC
Wilmington
US Dollar
100.00%
Prysmian Cables and
Systems USA, LLC
CENTRAL/SOUTH AMERICA
Argentina
Prysmian Energia Cables y Sistemas de
Argentina S.A.
Buenos Aires
Argentine
Peso
992,359,215.00
40.01%
Prysmian Consultora
Conductores e
Instalaciones SAIC
59.74%
Draka Holding B.V.
0.11%
Prysmian Cabos e
Sistemas do Brasil S.A.
0.13%
Third Parties
Prysmian Consultora Conductores e
Instalaciones SAIC
Buenos Aires
Argentine
Peso
543,219,572.00
95.00%
Draka Holding B.V.
5.00%
Prysmian Cavi e Sistemi
S.r.l.
Brazil
Prysmian Cabos e Sistemas do Brasil S.A.
Sorocaba
Brazilian Real
910,044,390.56
94.543%
Prysmian Cavi e Sistemi
S.r.l.
0.027%
Prysmian S.p.A.
1.129%
Draka Holding B.V.
4.301%
Draka Comteq B.V.
Draka Comteq Cabos Brasil S.A.
Santa
Catarina
Brazilian Real
27,467,522.00
49.352%
Draka Comteq B.V.
50.648%
Prysmian Cabos e
Sistemas do Brasil S.A.
EHC Brazil Ltda.
Cambé
(Estado do
Paranà)
Brazilian Real
864,183.00
98.90%
EHC Global Inc.
1.10%
EHC Canada Inc.
Omnisens do Brasil sercicos de solucoes
de monitoracao em fibra otica Ltda
Rio de Janeiro
Brazilian Real
626,050.00
100.00%
Omnisens S.A.
Chile
Prysmian Cables Chile SpA
Santiago
Chile Peso
1,900,000,000.00
100.00%
Prysmian Cabos e
Sistemas do Brasil S.A.
Cobre Cerrillos S.A.
Cerrillos
US Dollar
74,574,400.00
99.80%
General Cable Holdings
(Spain), S.L.
0.20%
Third Parties
Colombia
Productora de Cables Procables S.A.S.
Bogotà
Colombian
Peso
1,902,964,285.00
99.96%
GC Latin America
Holdings, S.L.
0.04%
GK Technologies,
Incorporated
Costa Rica
Conducen, S.R.L.
Heredia
Costa Rican
Colón
1,845,117,800.00
100.00%
GC Latin America
Holdings, S.L.
211
Group Annual Report - EXPLANATORY NOTES
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
Ecuador
Cables Electricos Ecuatorianos C.A.
CABLEC
Quito
US Dollar
243,957.00
67.14%
General Cable Holdings
(Spain), S.L.
32.86%
Third Parties
El Salvador
Conducen Phelps Dodge Centroamerica-
El Salvador, S.A. de C.V.
Antiguo
Cuscatlan (La
Libertad)
US Dollar
22,858.00
99.95%
Conducen, S.R.L.
0.05%
Third Parties
Guatemala
Proveedora de Cables y Alambres PDCA
Guatemala, S.A.
Guatemala
City
" Guatemalan
Quetzal"
100,000.00
99.00%
Conducen, S.R.L.
1.00%
Third Parties
Honduras
Electroconductores de Honduras, S.A.
de C.V.
Tegucigalpa
Honduran
Lempira
27,600,000.00
59.39%
General Cable Holdings
(Spain), S.L.
40.61%
GC Latin America
Holdings, S.L.
Mexico
Draka Durango S. de R.L. de C.V.
Durango
Mexican Peso
163,471,787.00
99.996%
Draka Mexico Holdings
S.A. de C.V.
0.004%
Draka Holding B.V.
Draka Mexico Holdings S.A. de C.V.
Durango
Mexican Peso
57,036,501.00
99.999998%
Draka Holding B.V.
0.000002%
Draka Comteq B.V.
NK Mexico Holdings S.A. de C.V.
Città del
Messico
Mexican Peso
n/a
100.00%
Prysmian Group Finland
OY
Prysmian Cables y Sistemas de Mexico S.
de R. L. de C. V.
Durango
Mexican Peso
173,050,500.00
99.9983%
Draka Holding B.V.
0.0017%
Draka Mexico Holdings
S.A. de C.V.
General Cable de Mexico, S.A de C.V.
Tetla
Mexican Peso
1,329,621,471.00
80.41733609%
General Cable
Industries, Inc.
19.58266361%
Conducen, S.R.L.
0.00000015%
General Cable
Technologies
Corporation
0.00000015%
GK Technologies,
Incorporated
General de Cable de Mexico del Norte,
S.A. de C.V.
Piedras
Negras
Mexican Peso
10,000.00
99.80%
GK Technologies,
Incorporated
Mexican Peso
0.20%
General Cable
Industries, Inc.
PDIC Mexico, S.A. de C.V.
San Jose
Mexican Peso
50,000.00
99.998%
Conducen, S.R.L.
San Jose
Mexican Peso
0.002%
Third Parties
Prestolite de Mexico, S.A. de C.V.
Sonora
Mexican Peso
50,000.00
99.80%
General Cable
Industries, Inc.
Mexican Peso
0.20%
GK Technologies,
Incorporated
Servicios Latinoamericanos GC, S.A. de
C.V.
Puebla
Mexican Peso
50,000.00
99.998%
General Cable de
Mexico, S.A de C.V.
0.002%
General Cable
Technologies
Corporation
Panama
Alambres y Cables de Panama, S.A.
Panama
US Dollar
800,000.00
78.08%
General Cable
Industries, Inc.
21.92%
GC Latin America
Holdings, S.L.
Alcap Comercial S.A.
Panama
US Dollar
10,000.00
100.00%
Conducen, S.R.L.
Perù
General Cable Peru S.A.C.
"Santiago de
Surco (Lima)"
Nuevo sol
peruviano
90,327,867.50
99.99999%
GC Latin America
Holdings, S.L.
0.00001%
Third Parties
212
Prysmian Group - Annual Report
2021
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
AFRICA
Angola
General Cable Condel, Cabos de Energia e
Telecomunicaçoes
SA
Luanda
Kwanza
angolano
20,000,000.00
99.80%
General Cable
Celcat, Energia e
Telecomunicaçoes
SA
0.20%
Third Parties
Ivory Coast
SICABLE - Sociète Ivoirienne de Cables
S.A.
Abidjan
CFA Franc
740,000,000.00
51.00%
Prysmian Cables et
Systèmes France S.A.S.
49.00%
Third Parties
South Africa
General Cable Phoenix South Africa Pty.
Ltd.
Illovo
"South
African
Rand"
1,000.00
100.00%
GK Technologies,
Incorporated
National Cables (Pty) Ltd.
Illovo
"South
African
Rand"
101.00
69.30%
Phelps Dodge National
Cables Corporation
30.70%
General Cable Holdings
Netherlands C.V.
Tunisia
Auto Cables Tunisie S.A.
Grombalia
Tunisian Dinar
4,050,000.00
50.998%
Prysmian Cables et
Systèmes France S.A.S.
49.002%
Third Parties
Prysmian Cables and Systems Tunisia S.A.
Menzel
Bouzelfa
Tunisian Dinar
1,850,000.00
99.97%
Prysmian Cables et
Systèmes France S.A.S.
0.005%
Prysmian (French)
Holdings S.A.S.
0.005%
Prysmian Cavi e Sistemi
S.r.l.
0.02%
Third Parties
OCEANIA
Australia
Prysmian Australia Pty Ltd.
Liverpool
Australian
Dollar
56,485,736.00
100.00%
Prysmian Cavi e Sistemi
S.r.l.
New Zeland
Prysmian New Zealand Ltd.
Auckland
New Zeland
Dollar
10,000.00
100.00%
Prysmian Australia Pty
Ltd.
ASIA
Saudi Arabia
Prysmian Powerlink Saudi LLC
Al Khoabar
"Saudi
Arabian
Riyal"
500,000.00
95.00%
Prysmian PowerLink
S.r.l.
5.00%
Third Parties
China
Prysmian Tianjin Cables Co. Ltd.
Tianjin
US Dollar
36,790,000.00
67.00%
Prysmian (China)
Investment Company
Ltd.
33.00%
Third Parties
Prysmian Cable (Shanghai) Co. Ltd.
Shanghai
US Dollar
5,000,000.00
100.00%
Prysmian (China)
Investment Company
Ltd.
Prysmian Wuxi Cable Co. Ltd.
Yixing
(Jiangsu
Province)
US Dollar
29,941,250.00
100.00%
Prysmian (China)
Investment Company
Ltd.
Prysmian Hong Kong Holding Ltd.
Hong Kong
Euro
72,000,000.00
100.00%
Prysmian Cavi e Sistemi
S.r.l.
Prysmian (China) Investment Company
Ltd.
Beijing
Euro
74,152,961.00
100.00%
Prysmian Hong Kong
Holding Ltd.
Nantong Haixun Draka Elevator Products
Co. LTD
Nantong
US Dollar
2,400,000.00
75.00%
Draka Elevator
Products, Inc.
25.00%
Third Parties
Nantong Zhongyao Draka Elevator
Products Co. LTD
Nantong
US Dollar
2,000,000.00
60.00%
Draka Elevator
Products, Inc.
40.00%
Third Parties
213
Group Annual Report - EXPLANATORY NOTES
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
Suzhou Draka Cable Co. Ltd.
Suzhou
Chinese
Renminbi
(Yuan)
304,500,000.00
100.00%
Draka Cableteq Asia
Pacific Holding Pte Ltd.
Prysmian Technology Jiangsu Co. Ltd.
Yixing
Euro
53,300,000.00
100.00%
Prysmian (China)
Investment Company
Ltd.
Prestolite Wire (Shanghai) Company, Ltd
Shanghai
US Dollar
300,000.00
100.00%
General Cable
Industries, Inc.
EHC Escalator Handrail (Shanghai) Co. Ltd.
Shanghai
US Dollar
2,100,000.00
100.00%
EHC Global Inc.
EHC Engineered Polymer (Shanghai) Co. Ltd.
Shanghai
US Dollar
1,600,000.00
100.00%
EHC Global Inc.
EHC Lift Components (Shanghai) Co. Ltd.
Shanghai
US Dollar
200,000.00
100.00%
EHC Global Inc.
EHC Technology Development
(Shanghai) Co. Ltd.
Shanghai
Chinese
Renminbi
(Yuan)
-
100.00%
EHC Escalator Handrail
(Shanghai) Co. Ltd.
Philippines
Draka Philippines Inc.
Cebu
Philippine
Peso
253,652,000.00
99.9999975%
Draka Holding B.V.
0.0000025%
Third Parties
India
Associated Cables Pvt. Ltd.
Mumbai
Indian Rupee
61,261,900.00
100.00%
Oman Cables Industry
(SAOG)
Jaguar Communication Consultancy
Services Private Ltd.
Mumbai
Indian Rupee
122,268,218.00
99.99999%
Prysmian Cavi e Sistemi
S.r.l.
0.000001%
Prysmian S.p.A.
Indonesia
PT.Prysmian Cables Indonesia
Cikampek
US Dollar
67,300,000.00
99.48%
Draka Holding B.V.
0.52%
Prysmian Cavi e Sistemi
S.r.l.
Malaysia
Sindutch Cable Manufacturer Sdn Bhd
Malacca
"Malaysian
Ringgit"
500,000.00
100.00%
Draka Cableteq Asia
Pacific Holding Pte Ltd.
Draka (Malaysia) Sdn Bhd
Malacca
"Malaysian
Ringgit"
8,000,002.00
100.00%
Cable Supply and
Consulting Company
Pte Ltd.
Oman
Oman Cables Industry (SAOG)
Al Rusayl
Omani Riyal
8,970,000.00
51.17%
Draka Holding B.V.
48.83%
Third Parties
Oman Aluminium Processing Industries
(SPC)
Sohar
Omani Riyal
4,366,000.00
100.00%
Oman Cables Industry
(SAOG)
Singapore
Prysmian Cables Asia-Pacific Pte Ltd.
Singapore
Singapore
Dollar
213,324,290.00
100.00%
Draka Holding B.V.
Prysmian Cable Systems Pte Ltd.
Singapore
Singapore
Dollar
25,000.00
50.00%
Draka Holding B.V.
50.00%
Prysmian Cables &
Systems Ltd.
Draka Cableteq Asia Pacific Holding Pte
Ltd.
Singapore
Singapore
Dollar
28,630,503.70
100.00%
Draka Holding B.V.
Singapore Cables Manufacturers Pte Ltd.
Singapore
Singapore
Dollar
1,500,000.00
100.00%
Draka Cableteq Asia
Pacific Holding Pte Ltd.
Cable Supply and Consulting Company
Private Limited
Singapore
Singapore
Dollar
50,000.00
100.00%
Draka Cableteq Asia
Pacific Holding Pte Ltd.
Draka NK Cables (Asia) Pte Ltd.
Singapore
Singapore
Dollar
200,000.00
100.00%
Prysmian Group Finland
OY
Thailand
MCI-Draka Cable Co. Ltd.
Bangkok
Thai Baht
435,900,000.00
70.250172%
Draka Cableteq Asia
Pacific Holding Pte Ltd.
0.000023%
Draka (Malaysia) Sdn Bhd
0.000023%
Sindutch Cable
Manufacturer Sdn Bhd
0.000023%
Singapore Cables
Manufacturers Pte Ltd.
29.749759%
Third Parties
Japan
EHC Japan K.K.
"Chiyoda-ku
Tokyo"
Yen
4,000.00
100.00%
EHC Global Inc.
214
Prysmian Group - Annual Report
2021
The following companies have been accounted for using the equity method:
Legal name
Office
Currency
Share Capital
% ownership
Direct parent company
EUROPE
Germany
Kabeltrommel GmbH & Co.KG
Troisdorf
Euro
10,225,837.65
43.18%
Prysmian Kabel und
Systeme GmbH
1.75%
Norddeutsche
Seekabelwerke GmbH
55.07%
Third parties
Kabeltrommel GmbH
Troisdorf
Deutsche
Mark
51,000
41.18%
Prysmian Kabel und
Systeme GmbH
5.82%
Norddeutsche
Seekabelwerke GmbH
53.00%
Third parties
Nostag GmbH & Co. KG
Oldenburg
Euro
540,000
33.00%
Norddeutsche
Seekabelwerke GmbH
67.00%
Third parties
U.K.
Rodco
Ltd.
Woking
British Pound
5,000,000
40.00%
Prysmian Cables &
Systems Ltd.
60.00%
Third parties
Russia
Elkat Ltd.
Moscow
Russian
Rouble
10,000
40.00%
Prysmian Group Finland
OY
60.00%
Third parties
CENTRAL/SOUTH AMERICA
Chile
Colada Continua Chilena S.A.
Quilicura
(Santiago)
Chile Peso
100
41.00%
Cobre Cerrillos S.A.
59.00%
Third parties
ASIA
China
Yangtze Optical Fibre and Cable Joint
Stock Limited Co.
Wuhan
Chinese
Renminbi
(Yuan)
757,905,108
23.73%
Draka Comteq B.V.
76.27%
Third parties
Yangtze Optical Fibre and Cable
(Shanghai) Co. Ltd.
Shanghai
Chinese
Renminbi
(Yuan)
100,300,000
75.00%
Yangtze Optical Fibre and
Cable Joint Stock Limited
Co.
25.00%
Draka Comteq B.V.
Malaysia
Power Cables Malaysia Sdn Bhd
Selangor
Darul Eshan
"Malaysian
Ringgit"
18,000,000
40.00%
Draka Holding B.V.
60.00%
Third parties
List of other investments not consolidated pursuant to IFRS 10:
Legal name
% ownership
Direct parent company
India
Ravin Cables Limited
51.00%
Prysmian Cavi e Sistemi
S.r.l.
49.00%
Third Parties
United Arab Emirates
Power Plus Cable CO. LLC
49.00%
Ravin Cables Limited
51.00%
Third Parties
AFRICA
South Africa
Pirelli Cables & Systems (Proprietary) Ltd.
100.00%
Prysmian Cavi e Sistemi
S.r.l.
215
Group Annual Report - CERTIFICATION OF THE CONSOLIDATED FINANCIAL STATEMENTS
Certification of the consolidated financial statements
pursuant to art. 81-ter of consob regulation 11971 dated 14 may 1999
and subsequent amendments and additions
1.
The undersigned Valerio Battista, as Chief Executive Officer, Stefano Invernici and Alessandro Brunetti, as
managers responsible for preparing the financial reports of Prysmian S.p.A., certify, also taking account of the
provisions of paragraphs 3 and 4, art. 154-bis of Italian Legislative Decree 58 dated 24 February 1998, that during
2021 the accounting and administrative processes for preparing the consolidated financial statements:
•
have been adequate in relation to the business's characteristics and
•
have been effectively applied.
2
. The adequacy of the accounting and administrative processes for preparing the consolidated financial statements
at 31 December 2021 has been evaluated on the basis of a procedure established by Prysmian in compliance with
the internal control framework established by the Committee of Sponsoring Organizations of the Treadway
Commission, which represents the generally accepted standard model internationally.
It is nonetheless reported that:
•
during 2021, several of Prysmian Group's companies were involved in the information system changeover
project. The process of fine-tuning the new system's operating and accounting functions is still in progress
for some of them; in any case, the system of controls in place ensures uniformity with the Group's system of
procedures and controls.
3.
It is also certified that:
3.1
The consolidated financial statements at 31 December 2021:
a)
have been prepared in accordance with applicable international accounting standards recognised by
the European Union under Regulation (EC) 1606/2002 of the European Parliament and Council dated 19
July 2002;
b)
correspond to the underlying accounting records and books of account;
c)
are able to provide a true and fair view of the issuer's statement of financial position and results of
operations and of the group of companies included in the consolidation.
3.2
The directors' report contains a fair review of performance and the results of operations, and of the situation
of the issuer and the group of companies included in the consolidation, together with a description of the
principal risks and uncertainties to which they are exposed.
Milan, 1 March 2022
Valerio Battista
Stefano Invernici
Alessandro Brunetti
CHIEF EXECUTIVE OFFICER
MANAGERS RESPONSIBLE FOR PREPARING COMPANY FINANCIAL REPORTS
216
Prysmian Group - Annual Report
2021
Indipendent Auditors’ Report
217
Group Annual Report - INDIPENDENT AUDITORS’ REPORT
218
Prysmian Group - Annual Report
2021
219
Group Annual Report - INDIPENDENT AUDITORS’ REPORT
220
Prysmian Group - Annual Report
2021
221
Group Annual Report - INDIPENDENT AUDITORS’ REPORT
222
Prysmian Group - Annual Report
2021
Parent Company Report
223
CONTENTS
04_DIRECTORS’ REPORT
225
Significant events in 2021
225
Financial performance of Prysmian S.p.a.
228
Human Resources, Safety and Environment
232
Direction and Coordination
232
Intercompany and Related party transactions
232
Secondary offices
232
Share Capital and Corporate Governance
232
Atypical and/or unusual Transactions
232
Risk Factors
233
Financial risk management policies
233
Business outlook
233
05_FINANCIAL STATEMENTS
235
Statement of financial position
235
Income Statement
236
Statement of changes in equity
236
Statement of comprehensive income
237
Statement of Cash Flows
239
06_EXPLANATORY NOTES
241
List of investments in subsidiaries at 31 december 2021
293
Intercompany and related party transactions
(disclosure under art. 2428 of the italian civil code)
294
Certification of the financial statements
pursuant to art. 81-ter of Consob regulation 11971
dated 14 may 1999 and subsequent amendments and additions
297
Proposal to approve the financial statements and to allocate net profit for 2021
298
Independent Auditors’ Report
300
Report of the Board of Statutory Auditors
306
225
04_DIRECTORS’ REPORT
Significant events in 2021
Your Employee Shares (YES) Plan
On 28 April 2021, the shareholders of Prysmian S.p.A. approved the extension of the share ownership plan for
Prysmian Group employees, previously approved by the shareholders’ resolution dated 13 April 2016.
The Plan provides the opportunity to purchase Prysmian’s ordinary shares on preferential terms, with a maximum
discount of 25% on the stock price, given in the form of treasury shares. The shares purchased will be subject to a
retention period, during which they cannot be sold. The extension has added new purchase windows in the years
2022, 2023 and 2024.
Beneficiaries of the Plan also include the executive directors of Prysmian S.p.A. as well as key
management personnel, for whom the discount will be 1%.
Diversity & Inclusion to empower “human capital”
On 12 May 2021, the Group announced it was strengthening its commitment to Diversity & Inclusion (D&I) with the
aim of further empowering its human capital. The increase in the percentage of women, both among white-collar
workers and at senior management level, is one of the sustainability parameters to which the variable remuneration
of company managers is linked.
As evidence of the strategic importance of gender and cultural diversity, Prysmian has also set up a new global
Diversity & Inclusion Steering Committee to oversee the achievement of the Group’s objectives. This Committee
is responsible for defining D&I objectives at every level of the organisation and helping decide the actions to be
taken, as well as promoting a cultural change to facilitate D&I within the workplace.
Climate Change
With the intention of further accelerating its pursuit of sustainability, the Group has decided to adopt the UN
Global Compact. Prysmian has launched an ambitious climate change strategy by adopting Science-Based targets
to reduce its CO2 emissions, in line with the COP 21 Paris Agreement, and by supporting the Business Ambition for
1.5°C campaign.
The target of zero net emissions is expected to be achieved between 2035 and 2040 for emissions generated by the
Group’s operations (Scope 1 and 2) and by 2050 for emissions generated by its value chain (Scope 3).
Other significant events
Placement of a Euro 750 million equity-linked bond
On 26 January 2021, the Group announced that the placement of an equity-linked bond (the “Bonds”) had been
finalised for the sum of Euro 750 million.
The Bonds, with a 5-year maturity from 2 February 2021 and denomination of Euro 100,000 each, are zero coupon.
The issue price is Euro 102.50, representing a yield to maturity of minus 0.49% per annum. The initial price for the
conversion of the Bonds into the Company’s ordinary shares is Euro 40.2355, representing a 47.50% premium on
the weighted average price by volume of Prysmian ordinary shares on the Milan Stock Exchange between the start
and end of the book-building process on 26 January 2021.
The Shareholders’ Meeting held on 28 April 2021 authorised the convertibility of the equity-linked bond and approved
the proposal for a share capital increase serving the conversion of the convertible bond for a maximum nominal
amount of Euro 1,864,025.50 by issuing up to 18,640,255 ordinary shares with a nominal value of Euro 0.10 each.
As provided for in the Bond regulations, the Group has the option to call all - but not just a part - of the Bonds at
their principal amount from 12 February 2024, should the share price exceed 130% of the conversion price for at
least 20 days within a period of 30 consecutive trading days.
226
Prysmian Group - Annual Report
2021
Repurchase of the 2017 Bonds
On 26 January 2021, the Group announced a partial redemption of the Company’s outstanding Euro 500 million
zero-coupon equity-linked bonds due in 2022 and issued on 17 January 2017 (the “2017 Bonds”).
The total face value of the 2017 Bonds which the Company redeemed on 2 February 2021 was equal to Euro
250,000,000 representing 50% of the 2017 Bonds originally issued, at a repurchase price of Euro 104.250 per Euro
100,000 in face value.
CDP Loan
On 28 January 2021, a new loan for Euro 75 million over 4.5 years was agreed with Cassa Depositi e Prestiti S.p.A.
(CDP), intended to finance part of the Group’s expenditure to purchase the “Leonardo Da Vinci” cable-laying vessel.
This loan was drawn down in its entirety on 9 February 2021, with a bullet repayment envisaged at maturity on 28
July 2025. Interest rate swaps have been arranged in respect of this loan, for an overall notional value of Euro 75
million, with the objective of hedging variable rate interest flows over the period 2021-2025.
New organisational structure
On 3 February 2021, the Group announced that it had adopted a new organisational structure, in line with international
best practices, with the aim of reinforcing its focus on the strategic opportunities offered by the global transition
to low-carbon energy and digitalisation-based economies.
The introduction of this new structure marks the successful completion of the integration with General Cable, which
has significantly enlarged the Group and broadened its geographical diversification.
Under the leadership of the CEO, the new organisation will pivot around the following key roles:
•
Chief Operating Officer
•
Business Divisions
•
Group Functions
Under the new organisation, the CEO will further intensify the Group’s focus on its organic and non-organic growth
strategy, as well as on accelerating major innovation projects. The two global megatrends of transition to low-
carbon energy and development of telecommunications networks to support digitalisation are among the major
growth opportunities on which the Group will focus to ensure sustainable growth.
In order to leverage the Group’s wide geographic presence and customer proximity, while delivering business
synergies at the same time, the new role of Chief Operating Officer (COO) will oversee the Group’s operational
strategy and performance and results of the Regions, in conjunction with the Group’s three Business Divisions. The
Business Divisions, which report directly to the CEO, are focused on the strategic development of their different
segments, with P&L responsibility for the global Business Units, in conjunction with the COO.
In addition, they drive key decisions on product technology, production allocation and the most important projects.
The Group Functions, reporting directly to the CEO, guide the governance and harmonisation of the main business
processes, providing operational support to all Group entities. To sharpen the focus on ESG objectives, a Group
Chief Sustainability Officer has been appointed.
Approval of the Annual Financial Statements at 31 December 2020, distribution of dividends and appointment
of the Prysmian S.p.A. Board of Directors.
On 28 April 2021, the shareholders of Prysmian S.p.A. approved the financial statements for 2020 and the distribution
of a gross dividend of Euro 0.50 per share, for a total of some Euro 132 million. The dividend was paid out from 26
May 2021, with record date 25 May 2021 and ex-dividend date 24 May 2021. The same Shareholders’ Meeting also
appointed the new members of the Prysmian S.p.A. Board of Directors.
227
Parent Company Report - DIRECTORS’ REPORT
Authorisation to buy back and dispose of treasury shares
On 28 April 2021, the shareholders of Prysmian S.p.A. authorised the Board of Directors to buy back and dispose of
treasury shares. This authorisation provides the opportunity to buy back, on one or more occasions, a maximum
number of shares whose total must not exceed, at any one time, 10% of share capital. Purchases may not exceed
the amount of retained earnings and unrestricted reserves reported in the most recently approved annual financial
statements. The authorisation to buy back treasury shares will last for 18 months commencing from the date of the
Shareholders’ Meeting, while the authorisation to dispose of treasury shares has no time limit. The authorisation
to purchase and dispose of treasury shares is required in order to enable the Group:
•
to have a portfolio of treasury shares (a so-called “stock of shares”) that can be used in any extraordinary
transactions (e.g. mergers, demergers, spin-offs, acquisition of equity investments) and to implement the
shareholder-approved remuneration policies applied to Prysmian Group;
•
to use the treasury shares purchased to service the exercise of rights arising from convertible debt instruments
or instruments exchangeable with financial instruments issued by the Company, its subsidiaries or third parties
(e.g. in takeovers bids and/or stock swaps);
•
to use the treasury shares to satisfy share-based incentive plans or share ownership plans reserved for Prysmian
Group directors and/or employees;
•
to manage the Company’s capital effectively, by creating an investment opportunity, also in view of its available
liquidity.
Treasury shares may be bought back and disposed of in accordance with applicable laws and regulations:
•
at a minimum price no more than 10% below the stock’s official price reported in the trading session on the day
before carrying out each individual transaction;
•
(ii) at a maximum price no more than 10% above the stock’s official price reported in the trading session on the
day before carrying out each individual transaction.
Authorisation of the convertibility of the Equity-linked Bond 2021
The Extraordinary Shareholders’ Meeting held on 28 April 2021 authorised the convertibility of the Euro 750 million
equity-linked bond, approved by the Board of Directors on 26 January 2021 and reserved for institutional investors.
The same meeting also approved the proposal for a share capital increase pursuant to art. 2420-bis, par. 2, of the
Italian Civil Code, in one or more tranches, with the exclusion of pre-emptive rights under art. 2441, par. 5, of the
Italian Civil Code, serving the conversion of the aforementioned convertible bond for a maximum nominal amount
of Euro 1,864,025.50 by issuing up to 18,640,255 of the Company’s ordinary shares with a nominal value of Euro 0.10
each, and thus amending art. 6 of its By-laws accordingly.
228
Prysmian Group - Annual Report
2021
Financial performance of Prysmian S.p.A.
The financial information presented and discussed below has been prepared by reclassifying the accompanying
financial statements for the year ended 31 December 2021, which in turn have been drawn up in accordance with the
International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB)
and endorsed by the European Union, and with the implementation guidance for art. 9 of Legislative Decree 38/2005.
In addition to the standard financial reporting formats and indicators required under IFRS, a number of reclassified
statements and alternative performance indicators have also been presented with the intention of helping users
of the financial statements better evaluate the Company’s economic and financial performance. Such reclassified
statements and performance indicators should not however be treated as substitutes for the accepted ones required
by IFRS.
INCOME STATEMENT
(Euro/thousand)
2021
2020
Sales and other income
292,852
193,553
Operating costs
(71,395)
(65,625)
Other expenses
(165,100)
(117,276)
Amortisation, depreciation and impairment
(29,637)
(22,893)
Operating income
26,720
(12,241)
Net finance income/(costs)
(14,550)
(28,046)
Net income from investments
148,551
111,941
Profit/(loss) before taxes
160,721
71,654
Taxes
(21,754)
8,822
Net profit/loss)
138,967
80,476
If not specifically mentioned below, the more significant changes in individual items within the Prysmian S.p.A.
income statement are discussed in the Explanatory Notes to its financial statements, to which reference should
be made.
The Parent Company’s income statement for 2021 reports Euro 138,967 thousand in net profit, up Euro 58,491
thousand from the previous year.
Sales and other income of Euro 292,852 thousand (Euro 193,553 thousand in 2020) include the income of Prysmian
S.p.A. from ordinary operations. Following the application of IFRS 15, sales and other income also include the net
margin on buying strategic metals and selling them to other Group companies. For information purposes only,
the gross revenue from selling strategic materials to Group companies, for whom the Company acts as an agent,
amounted to Euro 1,819,833 thousand, while the related costs were Euro 1,818,752 thousand. The net margin on
the purchase and sale of strategic materials for the benefit of Group companies therefore amounted to Euro 1,081
thousand in 2021.
Sales and other income also include amounts charged by Prysmian S.p.A. to Group companies for coordination and
other services provided by head office functions and for royalties on patents, know-how and trademarks licensed
to Group companies.
Operating costs of Euro 71,395 thousand in 2021 (Euro 65,625 thousand in 2020) mostly comprise personnel costs
(Euro 64,151 thousand in 2021 versus Euro 61,448 thousand in 2020), with the remainder referring to purchases of
other consumables (Euro 7,000 thousand in 2021 versus Euro 4,439 thousand in 2020) and the fair value change in
metal derivatives (Euro 243 thousand negative in 2021 versus Euro 262 thousand positive in 2020).
In particular, the growth in personnel costs in 2021 primarily reflects recognition of higher costs for stock-option
based incentive plans. Further details can be found in Note 17. Personnel costs of the Explanatory Notes to the
financial statements.
229
Parent Company Report - DIRECTORS’ REPORT
Other expenses of Euro 165,100 thousand in 2021 (Euro 117,276 thousand in 2020) were affected by higher recurring
and non-recurring costs arising from intercompany transactions.
Further details can be found in the Explanatory Notes to the financial statements under Note 26. Significant non-
recurring events and transactions.
Net finance costs of Euro 14,550 thousand (Euro 28,046 thousand in 2020) consist of interest expense on bonds
and loans and the aging costs of foreign currency derivatives, net of finance income earned mostly from fees for
guarantees given on behalf of Group companies.
Net income from investments amounts to Euro 148,551 thousand, compared with Euro 111,941 thousand in the
previous year, and mostly comprises a total of Euro 121,500 in dividends paid by the subsidiaries Draka Holding B.V.,
Prysmian Treasury S.r.l. and Prysmian Cavi e Sistemi S.r.l., Euro 5,000 thousand in impairment of the investment
in Fibre Ottiche Sud – F.O.S. S.r.l. and Euro 32,051 thousand for the increase since the grant date in the fair market
value of stock options under the Long-term incentive (LTI) 2020-2022 plan charged to group companies.
Income taxes report a charge of Euro 21,754 thousand (versus income of Euro 8,822 thousand in 2020), of which
Euro 20,617 thousand in current tax expense and Euro 1,137 thousand in deferred tax expense. More specifically,
current taxes reflect the net effect of the tax charge for the period and net income from Italian companies arising
from the election by the Company and its Italian subsidiaries for a group tax consolidation. Further information
can be found in Note 22. Taxes of the Explanatory Notes to the financial statements.
Research costs are fully expensed to income, while development costs are capitalised if they meet the required
qualifying conditions.
A total of Euro 27,236 thousand in research and development costs were expensed to income in the period under
review (Euro 23,321 thousand in 2020); more details can be found in Note 33. Research and development of the
Explanatory Notes to the financial statements.
STATEMENT OF FINANCIAL POSITION
The Parent Company’s statement of financial position is summarised as follows:
(Euro/thousand)
31 december 2021
31 december 2020
Net fixed assets
5,937,889
5,581,515
of which Investments in subsidiaries
5,719,977
5,367,294
Net working capital
(228,513)
(149,097)
Provisions
(28,372)
(13,672)
Net capital employed
5,681,004
5,418,746
Employee benefit obligations
7,284
7,253
Total equity
2,294,862
2,208,983
Net financial debt
3,378,858
3,202,509
Total equity and sources of funds
5,681,004
5,418,746
Note: the composition and method of calculating the above indicators are detailed in the Directors’ Report within the Group Annual Report.
If not specifically mentioned below, the more significant changes in individual items within the Prysmian S.p.A.
statement of financial position are discussed in the Explanatory Notes to its financial statements, to which reference
should be made. Net fixed assets basically comprise the controlling interests in Prysmian Cavi e Sistemi S.r.l., Draka
Holding B.V. and in the Group’s other Italian companies. The increase of Euro 352,683 thousand in the value of
investments in subsidiaries since 2020 is attributable to the net effect of capital contributions paid to the subsidiaries
Prysmian Cavie e Sistemi S.r.l., Fibre Ottiche Sud - F.O.S. S.r.l. and Prysmian Cavi e Sistemi Italia S.r.l. minus impairment
recognised against the value of the investment in Fibre Ottiche Sud – F.O.S. S.r.l.. The value of investments has also
been impacted by the pay-related component of stock option plans, with underlying Prysmian S.p.A. shares, for
employees of other Group companies.
230
Prysmian Group - Annual Report
2021
Capital expenditure on “Property, plant and equipment” and “Intangible assets” totalled Euro 23,562 thousand
in 2021 (Euro 24,624 thousand in 2020). Expenditure on property, plant and equipment amounted to Euro 2,731
thousand, relating to the purchase of IT infrastructure for the Group and fixed installations for the Prysmian Group
headquarters. Expenditure on intangible assets, totalling Euro 20,831 thousand, related to the ongoing upgrade of
IT systems and Digital Transformation projects, as well as the purchase of new software. More details can be found
in Note 1. Property, plant and equipment and Note 2. Intangible assets of the Explanatory Notes to the financial
statements.
The balance of net fixed assets in 2021 includes net increases of Euro 9,779 thousand to account for leases in
accordance with IFRS 16.
Net working capital is a negative Euro 228,513 thousand and comprises:
•
Euro 337,540 thousand as the net negative balance between trade receivables and trade payables (see Notes 5
and 11 to the financial statements);
•
Euro 109,027 thousand as the net positive balance of other receivables/payables and financial receivables/
payables (see Notes 5 and 11 to the financial statements).
Provisions, presented net related to deferred tax assets, amount to Euro 28,372 thousand at 31 December 2021
(see Notes 4 and 12 to the financial statements) compared with Euro 13,672 thousand at 31 December 2020. The
year-on-year difference primarily reflects adjustments to the provisions for risks and charges.
Equity amounts to Euro 2,294,862 thousand at 31 December 2021, reporting a net increase of Euro 85,879 thousand
since 31 December 2020. A more detailed analysis of the changes in equity can be found in the Statement of Changes
in Equity forming part of the Financial Statements presented in the following pages.
The Group’s consolidated equity at 31 December 2021 and consolidated net profit for 2021 are reconciled with the
corresponding figures for the Parent Company Prysmian S.p.A. in a table presented in the Directors’ Report within
the Group Annual Report.
Net financial debt amounts to Euro 3,378,858 thousand at 31 December 2021, compared with Euro 3,202,509
thousand at 31 December 2020.
231
Parent Company Report - DIRECTORS’ REPORT
The following table presents a detailed breakdown of net financial debt.
(Euro/thousand)
Note
31 december
2021
of which
related
parties
(Note 25)
31 december
2021
of which
related
parties
(Note 25)
Long-term financial payables
CDP Loans
10
174,528
99,767
Mediobanca Loan
10
99,819
99,739
Intesa Loan
10
149,656
149,536
EIB Loans
10
109,931
109,908
Non-convertible bond
10
-
747,822
Convertible Bond 2017
10
-
488,776
Term Loan
10
997,797
996,287
Convertible Bond 2021
10
707,088
-
Unicredit Loan
10
199,681
199,516
Interest rate swaps
7
2,548
12,294
Lease liabilities
10
17,173
13,186
Total long-term financial payables
2,458,221
2,916,830
Short-term financial payables
CDP Loans
10
71
77
Mediobanca Loan
10
144
148
Intesa Loan
10
315
315
EIB Loans
10
4
8,322
Non-convertible bond
10
763,087
13,562
Term Loan
10
703
703
Convertible Bond 2017
10
249,824
-
Unicredit Loan
10
303
319
Lease liabilities
10
5,721
6,068
Short-term loans from Group companies
11
194,941
194,941
258,882
258,882
Other borrowings
10
1,533
1,508
Interest rate swaps
7
6,476
6,503
Total short-term financial payables
1,223,121
296,407
Total financial liabilities
3,681,342
3,213,237
Long-term financial receivables
5
172
134
Long-term bank fees
5
1,420
2,556
Short-term financial receivables
6
199,609
-
-
Short-term loans to Group companies
5
-
-
6,652
6,652
Short-term bank fees
5
1,185
1,136
Cash and cash equivalents
8
100,097
250
Net financial debt
3,378,858
3,202,509
Note 10 of the Explanatory Notes to the financial statements contains a reconciliation of the Company’s net financial
debt to the amount reported in accordance with the requirements of CONSOB communication no. 5/21 of 29 April
2021 concerning compliance with the “Guidelines on disclosure requirements under the Prospectus Regulation”
published by ESMA on 4 March 2021 (reference ESMA32-382-1138).
A more detailed analysis of cash flows can be found in the Statement of Cash Flows, forming part of the Financial
Statements presented in the following pages.
232
Prysmian Group - Annual Report
2021
Human Resources, Safety and Environment
Prysmian S.p.A. had a total of 421 employees at 31 December 2021 (406 at 31 December 2020), of whom 380
management/white-collar staff (364 at 31 December 2020) and 41 blue-collar staff (42 at 31 December 2020).
The Company has taken systematic, ongoing steps to implement all the fundamental activities required to manage
issues concerning the environment, and the health and safety of its employees.
More details can be found in the Group’s Consolidated Disclosure of Non-Financial Information.
Direction and Coordination
Prysmian S.p.A. is not under the direction and coordination of other companies or entities but decides its general
and operational strategy in complete autonomy. Pursuant to art. 2497-bis of the Italian Civil Code, the direct and
indirect subsidiaries of Prysmian S.p.A. have identified it as the entity which exercises direction and coordination
for them. Such direction and coordination involves identifying general and operational strategies for the Group as
a whole and defining and implementing internal control systems, models of governance and corporate structure.
Intercompany and Related party transactions
Information on related party transactions, including that required by the Consob Communication dated 28 July
2006, is presented in Note 25 to the Parent Company Financial Statements.
Secondary offices
The Company does not have any secondary offices.
Share Capital and Corporate Governance
Share capital amounts to Euro 26,814,425 at 31 December 2021, consisting of 268,144,246 ordinary shares (including
4,642,199 treasury shares), with a nominal value of Euro 0.10 each. The total number of outstanding voting shares
is 263,502,047, net of 10,669 treasury shares held indirectly.
Information about Corporate Governance can be found in the Directors’ Report within the Group Annual Report.
Atypical and/or unusual Transactions
In accordance with the disclosures required by Consob Communication DEM/6064293 dated 28 July 2006, it is
reported that no atypical and/or unusual transactions took place during 2021.
233
Parent Company Report - DIRECTORS’ REPORT
Risk Factors
Prysmian S.p.A. is exposed in the normal conduct of its business to a number of financial and non-financial risk
factors which, if they should arise, could even have a material impact on its results of operations and financial
condition. Prysmian S.p.A. adopts specific procedures to manage the risk factors that might influence its business
results. These procedures are the result of corporate policy which has always been directed at maximising value for
shareholders by taking all necessary steps to prevent the risks inherent in the Company’s business.
Based on its financial performance and cash generation in recent years, as well as its financial resources available
at 31 December 2021 and committed undrawn credit lines at that date, the Company believes that, barring any
extraordinary events, there are no material uncertainties that could cast significant doubt upon the business’s
ability to continue to operate on a going concern basis.
More details about risk factors and the system of internal controls can be found in the Directors’ Report within the
Group Annual Report.
Financial risk management policies
Financial risk management policies are discussed in Section C of the Explanatory Notes to the financial statements.
Business outlook
With regard to business outlook, please refer to the Directors’ Report within the Group Annual Report.
235
05_FINANCIAL STATEMENTS
Statement of financial position
(Euro/thousand)
Note
31.12.2021
of which related
parties
(Note 25)
31.12.2020
of which related
parties
(Note 25)
Non-current assets
Property, plant and equipment
1
91,073,444
89,631,033
Intangible assets
2
126,838,617
124,589,988
Investments in subsidiaries
3
5,719,976,842
5,719,976,842
5,367,293,696
5,367,293,696
Derivatives
7
-
-
Deferred tax assets
4
9,400,192
12,810,200
Other receivables
5
96,529,880
94,920,335
43,431,004
40,741,423
Total non-current assets
6,043,818,975
5,637,755,921
Current assets
Trade receivables
5
224,766,271
221,921,987
180,704,286
178,875,508
Other receivables
5
110,065,881
42,993,019
89,695,930
36,045,496
Financial assets at fair value
through profit or loss
6
199,608,525
Derivatives
7
55,257
55,257
302,523
302,523
Cash and cash equivalents
8
100,097,408
250,108
Total current assets
634,593,342
270,952,847
Total assets
6,678,412,317
5,908,708,768
Capital and reserves:
Share capital
9
26,814,425
26,814,425
Reserves
9
2,129,080,464
2,101,692,394
Net profit/(loss)
9
138,966,969
80,476,123
Total equity
2,294,861,858
2,208,982,942
Non-current liabilities
Borrowings from banks and
other lenders
10
2,455,672,985
2,904,536,317
Employee benefit obligations
13
7,283,947
12,333
7,253,442
116,937
Derivatives
7
2,547,820
12,293,989
Other payables
11
281,059
281,059
3,610
3,610
Total non-current liabilities
2,465,785,811
2,924,087,358
Current liabilities
Borrowings from banks and
other lenders
10
1,021,702,243
31,021,591
Provisions for risks and charges
12
37,771,967
5,473,590
26,482,257
5,473,590
Derivatives
7
6,800,066
323,208
6,716,797
213,534
Trade payables
11
562,306,414
11,536,273
421,106,006
10,721,811
Other payables
11
276,213,575
254,787,338
290,311,817
273,196,668
Current tax payables
14
12,970,383
277,163
Total current liabilities
1,917,764,648
775,638,468
Total liabilities
4,383,550,459
3,699,725,826
Total equity and liabilities
6,678,412,317
5,908,708,768
236
Prysmian Group - Annual Report
2021
Income Statement
(Euro/thousand)
Note
2021
of which
related
parties
(Note 25)
2020
of which
related
parties
(Note 25)
Sales and other income
15
292,852,059
222,026,112
193,552,757
186,576,203
Total sales and other income
292,852,059
193,552,757
Raw materials, consumables and supplies
16
(7,000,417)
(4,870,322)
(4,439,240)
(2,254,921)
Fair value change in metal derivatives
(242.806)
(242,806)
262,027
262,027
Personnel costs
17
(64,151,494)
(9,835,072)
(61,447,854)
(12,478,677)
Amortisation, depreciation,
impairment and impairment reversals
18
(29,637,006)
(22,893,075)
Other expenses
19
(165,100,130)
(89,703,663)
(117,276,040)
(31,439,070)
Operating income
26,720,206
(12,241,425)
Finance costs
20
(80,112,904)
(8,221,036)
(73,922,837)
(6,181,705)
Finance income
20
65,562,750
49,547,772
45,877,165
42,571,191
Dividends from subsidiaries
21
153,550,924
153,550,924
144,441,360
144,441,360
(Impairment)/revaluation of investments
3
(5,000,000)
(5,000,000)
(32,500,000)
(32,500,000)
Profit before taxes
160,720,976
71,654,263
Taxes
22
(21,754,007)
12,352,957
8,821,860
2,019,580
Net profit/(loss)
138,966,969
80,476,123
Statement of changes in equity
(Euro/thousand)
Share capital
Share premium
reserve
Capital increase
costs
Legal reserve
Treasury shares
reserve
Extraord-inary
reserve
IAS/IFRS first-
time adoption
reserve
Balance at 31 December 2019
26,814
1,281,071
(14,343)
5,363
97,207
52,688
30,177
Dividend distribution
-
-
-
-
-
-
-
Share-based compensation
-
-
(133)
-
(2,624)
-
-
Allocation of prior year net profit
-
-
-
-
-
-
-
Total comprehensive income/(loss) for the year
-
-
-
-
-
-
-
Balance at 31 December 2020
26,814
1,281,071
(14,476)
5,363
94,583
52,688
30,177
Dividend distribution
-
-
-
-
-
-
-
Share-based compensation
-
-
-
-
(2,122)
-
-
Non-monetary components of convertible bondconvertible bond
-
-
-
-
-
-
-
Total comprehensive income/(loss) for the year
-
-
-
-
-
-
-
Balance at 31 December 2021
26,814
1,281,071
(14,476)
5,363
92,461
52,688
30,177
(*)
At 31 December 2021, the number of treasury shares held came to 4,642,199 with a total nominal value of Euro 464,220.
237
Parent Company Report - FINANCIAL STATEMENTS
Statement of comprehensive income
(Euro/thousand)
Note
2021
2021
Net profit/(loss)
138,967
80,476
Other comprehensive income:
A) Change in cash flow hedge reserve:
7,427
2,252
Profit/(loss) for the year
9
9,773
2,964
Taxes
9
(2,346)
(711)
B) Actuarial gains/(losses) on employee benefits
(*)
(230)
(86)
Profit/(loss) for the year
9
(303)
(113)
Taxes
9
73
27
Total other comprehensive income (A+B)
7,197
2,166
Total other comprehensive income (A+B)
146,164
82,643
(*)
Components of comprehensive income that will not be reclassified to profit or loss in subsequent periods
Capital
contri-
bution reserve
Actuarial
gains/ (losses)
on employee
benefits
Convertible bond
reserve
Stock option
reserve
Cash flow hedge
reserve
Treasury shares
(*)
Share issue
reserve
Retained earnings
Net profit/ (loss)
for the year
Total
6,113
(1,860)
48,189
7,762
(16,540)
(97,207)
759
556,105
178,682
2,160,980
-
-
-
-
-
-
-
-
(65,816)
(65,816)
-
-
30,388
-
2,624
-
921
-
31,176
31.176
-
-
-
-
-
-
341
112,525
(112,866)
-
-
(86)
-
-
2,253
-
-
-
80,476
82,643
6,113
(1,946)
48,189
38,150
(14,287)
(94,583)
1,100
669,551
80,476
2,208,983
-
-
-
-
-
-
-
(51,221)
(80,476)
(131,697)
-
-
-
(51,221)
(80,476)
(131,697)
-
11.175
-
35.281
-
-
36,132
-
-
-
-
-
-
36,132
-
(231)
-
-
7,427
-
-
-
138,967
146,163
6,113
(2,177)
84,321
62,256
(6,860)
(92,461)
1,100
629,505
138,967
2,294,862
239
Parent Company Report - FINANCIAL STATEMENTS
Statement of Cash Flows
(Euro/thousand)
2021
of which
related
parties
(Note 25)
2020
of which
related
parties
(Note 25)
Profit before taxes
160.720.976
71,654,263
Amortisation, depreciation and impairment
29.637.006
22,893,076
Impairment/(revaluation) of investments
5.000.000
5.000.000
32,500,000
32,500,000
Net gains (losses) on disposal of fixed assets
-
2,227
Dividends
(153.550.924)
(153.550.924)
(144,441,360)
(144,441,360)
Share-based compensation
9.440.001
2.563.190
7,116,491
2,957,030
Fair value change in metal derivatives
242.806
242.806
(262,027)
(262,027)
Net finance costs
14.550.154
(41.326.736)
28,045,672
(36,389,486)
Change in trade receivables/payables
97.325.164
(42.232.017)
36,798,461
(17,969,169)
Change in other receivables/payables
26.271.800
(2.196.401)
(7,010,087)
8,441,373
Change in employee benefit obligations
(306.491)
(105.000)
46,729
1,548
Change in provisions for risks and other movements
(440.546)
-
4,605,302
(196,021)
Taxes collected/(paid)
800.700
800.700
21,387,992
26,301,922
A
Cash flow from operating activities
189.690.646
73,336,739
Investments in property, plant and equipment
(2.730.578)
(3,543,445)
Investments in intangible assets
(20.831.017)
(21,206,588)
-
Disposals of intangible assets
-
1,200,000
1,200,000
Investments in financial assets at
fair value through profit or loss
(200.000.000)
Investments to recapitalise subsidiaries
(355.000.000)
(355.000.000)
(110,000,000)
(110,000,000)
Dividends received
121.500.004
121.500.004
123,000,000
123,000,000
B
Cash flow from investing activities
(457.061.591)
(10,550,033)
Capital payments and movements in equity
-
(132,710)
Dividend distribution
(131.067.383)
(65,815,938)
Sale of treasury shares
1.029.405
921,046
Proceeds of new loans
75.000.000
-
Repayment of loans
(8.333.333)
(116,667,000)
Redemption of bonds
(261.000.000)
Proceeds of new bonds
768.750.000
Changes in other net financial receivables/payables
(58.032.601)
(57.288.795)
131,449,964
138,296,214
Finance costs paid
1
(83.576.851)
(7.465.581)
(57,963,571)
(6,051,305)
Finance income received
2
64.449.008
46.440.260
45,609,054
42,529,535
C
Cash flow from financing activities
367.218.245
(62,599,155)
D
Net increase/(decrease
in cash and cash equivalents (A+B+C
99.847.300
187,551
E
Cash and cash equivalents at the beginning of the year
250.108
62,557
F
Cash and cash equivalents at the end of the year (D+E)
100.097.408
250,108
1
Finance costs paid of Euro 83,577 thousand include both interest expense and bank fees paid in 2021.
2
Finance income received of Euro 64,449 thousand includes amounts collected from Group companies for recharged fees for guarantees given.
241
06_EXPLANATORY NOTES
A. General information
Prysmian S.p.A. (the “Company”) is a company incorporated and domiciled in Italy and organised under the laws of
the Republic of Italy. The Company was formed on 12 May 2005 and as from 1 March 2017 has its registered office
in Via Chiese 6, Milan (Italy).
Through its controlling interests in Italian companies and the sub-holding companies Prysmian Cavi e Sistemi
S.r.l. and Draka Holding B.V., the Company indirectly owns equity interests in the Prysmian Group’s operating
companies. The Company and its subsidiaries produce cables and systems and related accessories for the energy
and telecommunications industries, and distribute and sell them around the globe.
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 financial statements contained herein were approved by the Board of Directors of Prysmian S.p.A. on 1 March
2022.
B. Accounting standards
B.1 BASIS OF PREPARATION
The 2021 financial statements represent the Separate Financial Statements of Prysmian S.p.A., the Parent Company
of the Prysmian Group.
The present financial statements have been prepared on a going concern basis, with the Directors having assessed
that there are no financial, operating or other kind of indicators that might provide evidence of material uncertainties
as to the Company’s ability to meet its obligations in the foreseeable future and particularly in the next 12 months.
Section C. Financial risk management and Section C.1 Capital risk management of these Explanatory Notes contain
a description of how the Company manages financial risks, including liquidity and capital risks.
Under Legislative Decree 38 of 28 February 2005 “Exercise of the options envisaged by art. 5 of European Regulation
1606/2002 on international accounting standards”, issuers are required to prepare not only consolidated financial
statements but also separate financial statements for the Parent Company in accordance with the International
Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and published
in the Official Journal of the European Union.
The term “IFRS” refers to all the International Financial Reporting Standards, all the International Accounting
Standards (“IAS”), and all the interpretations of the International Financial Reporting Interpretations Committee
(“IFRIC”).
IFRS have been applied consistently to all the periods presented in this document. The Company’s financial
statements have, therefore, been prepared in accordance with IFRS and related best practice; any future guidance
and new interpretations will be reflected in subsequent years, in the manner established from time to time by the
relevant accounting standards.
The financial statements have been prepared on the historical cost basis, except for the valuation of certain financial
assets and liabilities, including derivatives, for which application of the fair value method is compulsory.
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REPORTING FORMATS AND DISCLOSURES
The Company has elected to present its income statement according to the nature of expenses, whereas assets and
liabilities in the statement of financial position have been classified as either current or non-current. The statement
of cash flows has been prepared using the indirect method.
The Company has also applied the provisions of Consob Resolution 15519 dated 27 July 2006 concerning financial
statement formats and the requirements of Consob Communication 6064293 dated 28 July 2006 regarding
disclosures.
All the amounts shown in the tables in the following Notes are expressed in thousands of Euro, unless otherwise
stated.
The accounting policies and standards adopted are the same as those used for preparing the consolidated financial
statements, to which reference should be made, except as described below.
B.2 NEWLY ADOPTED ACCOUNTING STANDARDS AND PRINCIPLES
The accounting policies and standards used to prepare the current financial statements are consistent with those
used for the 2020 separate financial statements. This means there are no new standards or interpretations that
have been applied for the first time in these financial statements and that have had an impact on them. Full details
can be found in the Explanatory Notes to the Consolidated Financial Statements.
A description of the standards and interpretations applicable from 1 January 2021 and of their effects will now follow..
New standards, interpretations and amendments
The following is a list of new standards, interpretations and amendments whose application became mandatory
from 1 January 2021 but which have not shown to have had a material impact on the separate financial statements
at 31 December 2021:
•
Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021;
•
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: Interest Rate Benchmark Reform - Phase 2;
•
Amendments to IFRS 4 Insurance Contracts: Deferral of IFRS 9.
B.3 ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS NOT YET APPLICABLE
AND NOT ADOPTED EARLY BY THE COMPANY
The following new Standards, Amendments and Interpretations have been issued at the date of preparing the
present report but are not yet applicable:
New Standards, Amendments and Interpretations
Mandatory application
as from
Amendments to IAS 1 Presentation of Financial Statements;
IFRS 3 Business Combinations; IAS 16 Property, Plant and Equipment;
IAS 37 Provisions, Contingent
1 January 2022
Liabilities and Contingent Assets; and Annual Improvements 2018-2020
IFRS 17 Insurance Contracts
1 January 2023
Preliminary review has indicated that the new standards, amendments and interpretations listed above have no
material impact on the Company’s financial statements.
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Parent Company Report - EXPLANATORY NOTES
C. Financial risk management
Prysmian S.p.A. measures and manages its exposure to financial risks in accordance with the Group’s policies.
The main financial risks are centrally coordinated and monitored by the Group Finance Department. Risk management
policies are approved by the Group Finance, Administration and Control Department, which provides written
guidelines on managing the different kinds of risks and on using financial instruments.
The financial risks to which Prysmian S.p.A. is exposed, directly or indirectly through its subsidiaries, are the same
as those of the companies of which it is the Parent Company. Reference should therefore be made to Section C.
Financial risk management of the Explanatory Notes to the Group’s Consolidated Financial Statements.
The principal types of risks to which the Company is exposed are discussed below:
(a) Exchange rate risk
This arises from trade or financial transactions not yet completed and from assets and liabilities in foreign currency
already recognised in the accounts. The Company mitigates this risk by using forward contracts entered into with
the Group’s central treasury company (Prysmian Treasury S.r.l.), which manages the various currency positions.
The principal exchange rates affecting the Company are:
•
Euro/British Pound: in relation to trade transactions on the British market and vice versa;
•
Euro/US Dollar: in relation to trade transactions in US dollars;
•
Euro/Australian Dollar: in relation to trade transactions on the Australian market;
•
Euro/Chinese Renminbi: in relation to trade transactions on the Chinese market;
•
Euro/Singapore Dollar: in relation to trade transactions on the Singapore market.
In 2021, trade flows exposed to the above exchange rates accounted for most of the exposure to exchange rate
risk arising from trade transactions.
It is the Company’s policy to hedge, where possible, exposures in currencies other than its unit of account. In
particular, the Company hedges:
•
firm cash flows: invoiced trade flows and exposures arising from loans receivable and payable;
•
projected cash flows: trade and financial flows arising from firm or highly probable contractual commitments.
The following sensitivity analysis shows the effects on net profit of a 5% and 10% increase/decrease in exchange
rates versus closing exchange rates at 31 December 2021.
(Euro/thousand)
2021
2021
2020
2020
-5%
5%
-5%
5%
British Pound
(152)
138
(79)
72
US Dollar
(130)
118
(580)
525
Australian Dollar
(4)
4
(33)
30
Chinese Renminbi
(4)
4
(78)
71
Singapore Dollar
-
-
(60)
54
Other currencies
(15)
14
(99)
90
Total
(307)
277
(929)
841
(Euro/thousand)
2021
2021
2020
2020
-10%
10%
-10%
10%
British Pound
(322)
263
(168)
137
US Dollar
(275)
225
(1,225)
1,002
Australian Dollar
(9)
8
(69)
56
Chinese Renminbi
(9)
8
(165)
135
Singapore Dollar
-
-
(126)
103
Other currencies
(32)
26
(209)
171
Total
(647)
530
(1,962)
1,605
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When assessing the potential impact of the above, the assets and liabilities in currencies other than their unit of
account were considered, net of any derivatives hedging the above-stated cash flows.
The following sensitivity analysis shows the post-tax effects on equity reserves of an increase/decrease in the fair
value of designated cash flow hedges following a 5% and 10% increase/decrease in exchange rates versus closing
exchange rates at 31 December 2021.
(Euro/thousand)
2021
2021
2020
2020
-5%
5%
-5%
5%
British Pound
31
(28)
48
(53)
Total
31
(28)
48
(53)
(Euro/thousand)
2021
2021
2020
2020
-10%
10%
-10%
10%
British Pound
65
(53)
92
(112)
Total
65
(53)
92
(112)
(b) Interest rate risk
The interest rate risk to which the Company is exposed is mainly due to long-term financial liabilities, carrying both
fixed and variable rates.
Fixed rate debt exposes the Company to a fair value risk. The Company does not operate any particular hedging
policies in relation to the risk arising from such contracts.
The Group Finance Department monitors the exposure to interest rate risk and adopts appropriate hedging strategies
to keep the exposure within the limits defined by the Group Administration, Finance and Control Department,
arranging derivative contracts, if necessary.
The net liabilities considered for sensitivity analysis include variable rate financial receivables and payables and
cash and cash equivalents whose value is influenced by rate volatility. The Company calculates the pre-tax impact
of changes in interest rates on the income statement.
The simulations carried out for balances at 31 December 2021 indicate that, with all other variables remaining equal,
a 25 b.p. increase/decrease in interest rates would have respectively reduced the level of financial payables by Euro
396 thousand (2020: decrease of Euro 1,795 thousand) or increased them by Euro 396 thousand (2020: increase of
Euro 1,795 thousand). This simulation exercise is carried out on a regular basis to ensure that the maximum potential
loss is within the limits set by Management.
(c) Price risk
This risk relates to the possibility of fluctuations in the price of strategic materials, whose purchase price is subject
to market volatility and whose procurement from third-party suppliers is managed centrally by the Company,
which then sells them on to Group operating companies. The Company is exposed to a residual price risk on those
purchasing positions that have not been promptly recharged to Group operating companies. More information
about metal derivatives can be found in Note 7. Derivatives
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Parent Company Report - EXPLANATORY NOTES
(d) Credit risk
The Company does not have excessive concentrations of credit risk insofar as almost all its customers are companies
belonging to the Group. In addition, there are no material past due receivables that have not been written down.
(e) Liquidity risk
Prudent management of the liquidity risk arising from the Company’s normal operations involves having adequate
levels of cash and cash equivalents and short-term securities and access to funds from a sufficient amount of
committed credit lines. The Company’s Finance Department prefers flexible forms of funding in the form of
committed credit lines.
At 31 December 2021, cash and cash equivalents stood at Euro 100,097 thousand, compared with Euro 250 thousand
at 31 December 2020. The Company is able to draw down on the credit lines granted to the Group in the form of
the Revolving Credit Facility 2019 (Euro 1,000 million). More details can be found in the Explanatory Notes to the
Consolidated Financial Statements (Section C. Financial risk management).
The following table presents an analysis, by due date, of the payables and liabilities settled on a net basis. The various
due date categories refer to the period between the reporting date and the contractual maturity of the obligations.
31 december 2021
(Euro/thousand)
Due within
1 year
Due between
1-2 years
Due between
2-5 years
Due after
5 years
Borrowings from banks
and other lenders
1,169,188
1,279,024
1,325,336
62,212
Lease liabilities
5,685
4,302
6,245
6,727
Derivatives
6,816
2,532
-
-
Trade and other payables
838,520
-
-
-
Total
2,020,209
1,285,858
1,331,581
68,939
31 december 2020
(in migliaia di Euro)
Due within
1 year
Due between
1-2 years
Due between
2-5 years
Due after
5 years
Borrowings from banks
and other lenders
67.255
1,263,040
1,669,755
127
Lease liabilities
6.279
2,766
3,658
7,422
Derivatives
6.717
7,084
5,210
-
Trade and other payables
711.418
-
-
-
Total
791.670
1,272,890
1,678,623
7,549
In completion of the disclosures about financial risks, the following is a reconciliation between the classes of
financial assets and liabilities reported in the Company’s statement of financial position and the categories used
by IFRS 7 to identify financial assets and liabilities:
31 december 2021
(Euro/thousand)
Financial assets at
fair value through
profit or loss
Receivables and
other assets at
amortised cost
Financial
liabilities at fair
value through
profit or loss
Financial
liabilities carried
at
amortised
cost
Hedging
derivatives
Trade receivables
-
224,766
-
-
-
Other receivables
-
206,596
-
-
-
Derivatives (assets)
55
-
-
-
-
Cash and cash equivalents
-
100,097
-
-
-
Borrowings from banks
and other lenders
-
-
-
3,477,377
-
Trade payables
-
-
-
562,306
-
Other payables
-
-
-
276,495
-
Derivatives (liabilities)
-
-
41
-
9,307
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Prysmian Group - Annual Report
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31 december 2021
(Euro/thousand)
Financial assets at
fair value through
profit or loss
Receivables and
other assets at
amortised cost
Financial
liabilities at fair
value through
profit or loss
Financial
liabilities carried
at
amortised
cost
Hedging
derivatives
Trade receivables
-
180,704
-
-
-
Other receivables
-
133,127
-
-
-
Derivatives (assets)
296
-
-
-
6
Cash and cash equivalents
-
250
-
-
-
Borrowings from banks
and other lenders
-
-
-
2,935,558
-
Trade payables
-
-
-
421,106
-
Other payables
-
-
-
290,315
-
Derivatives (liabilities)
-
-
33
-
18,978
C.1 CAPITAL RISK MANAGEMENT
The Company’s objective in capital risk management is primarily to safeguard business continuity in order to
guarantee returns for shareholders and benefits for other stakeholders.
The Company also aims to maintain an optimal capital structure in order to reduce the cost of debt and to comply
with a series of covenants under the various credit agreements (Note 10. Borrowings from banks and other lenders
and Note 29. Financial covenants).
The Company also monitors capital on the basis of its gearing ratio (ie. the ratio between net financial debt and
capital). Details of the composition of net financial debt can be found in Note 10.
Borrowings from banks and other lenders. Capital is defined as the sum of equity and net financial debt.
The gearing ratios at 31 December 2021 and 31 December 2020 are shown below
(Euro/thousand)
31 december 2021
31 december 2020
Net financial debt
3,378,858
3,202,509
Equity
2,294,861
2,208,983
Total capital
5,673,719
5,411,492
Gearing ratio
60%
59%
C.2 FAIR VALUE MEASUREMENT
IFRS 13 requires assets and liabilities recognised in the statement of financial position at fair value to be classified
according to a hierarchy that reflects the significance of the inputs used in measuring fair value.
Financial instruments are classified according to the following fair value measurement hierarchy:
•
Level 1:
Fair value is determined with reference to quoted prices (unadjusted) in active markets for identical
financial instruments. Therefore, the emphasis within Level 1 is on determining both of the following:
–
the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market
for the asset or liability; and
–
whether the entity can enter into a transaction for the asset or liability at the price in that market at the measurement
date.
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Parent Company Report - EXPLANATORY NOTES
•
Level 2:
Fair value is determined using valuation techniques where the input is based on observable market data.
The inputs for this level include:
–
quoted prices for similar assets or liabilities in active markets;
–
quoted prices for identical or similar assets or liabilities in markets that are not active;
–
inputs other than quoted prices that are observable for the asset or liability, for example:
•
interest rate and yield curves observable at commonly quoted intervals;
•
implied volatilities;
•
credit spreads;
–
market-corroborated inputs
•
Level
3:
Fair value is determined using valuation techniques where the input is not based on observable market
data.
The following tables present the assets and liabilities that are recurrently measured at fair value:
31 december 2021
(Euro/thousand)
Level 1
Level 2
Level 3
Total
Assets
Financial assets at fair value:
Derivatives through profit or loss
-
55
-
55
Hedging derivatives
-
-
-
-
Total assets
-
55
-
55
Liabilities
Financial liabilities at fair value:
Derivatives through profit or loss
-
41
-
41
Hedging derivatives
-
9,307
-
9,307
Total liabilities
-
9,348
-
9,348
31 december 2020
(Euro/thousand)
Level 1
Level 2
Level 3
Total
Assets
Financial assets at fair value:
Derivatives through profit or loss
-
296
-
296
Hedging derivatives
-
6
-
6
Total assets
-
302
-
302
Liabilities
Financial liabilities at fair value:
Derivatives through profit or loss
-
33
-
33
Hedging derivatives
-
18,978
-
18,978
Total liabilities
-
19,011
-
19,011
C.3 RISKS RELATED TO CLIMATE CHANGE
The Company’s activities are exposed to different types of risks related to climate change, as described in the
Directors’ Group Report and more extensively in the Group’s Non-Financial Information Statement, to which
reference should be made. The Company assesses whether climate risks could have a material impact (e.g., the
introduction of regulations to reduce emissions) and, if so, they are included in the significant assumptions.
The grant of shares is subject to continued employment with the Group in the months between signing up to one of
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Prysmian Group - Annual Report
2021
the plan’s purchase windows and the purchase of the shares themselves on the equity market. The plan’s financial
and economic impact has therefore been estimated on the basis of the best possible estimates and information
currently available.
1. PROPERTY, PLANT AND EQUIPMENT
(Euro/thousand)
Land and
buildings
Plant and
machinery
Equipment
Other assets
Assets under
construction and
advances
Total
Balance at
31 December 2020
53,029
14,710
3,548
11,068
7,276
89,631
Movements in 2021:
Investments
12
8
175
19
2,517
2,731
Increases for leases
(IFRS 16)
1,114
8,665
9,779
Disposals
-
-
-
-
-
-
Depreciation
(2,586)
(735)
(1,245)
(5,476)
-
(10,042)
Impairment
-
-
-
-
(111)
(111)
Reclassifications
1,495
868
202
1,574
(5,054)
(915)
Total movements
35
141
(868)
4,782
(2,648)
1,442
Balance at
31 December 2021
53,064
14,851
2,680
15,850
4,628
91,073
Of which:
Historical cost
74,849
23,527
10,259
33,098
4,739
146,472
Accumulated
depreciation and
impairment
(21,785)
(8,676)
(7,579)
(17,248)
(111)
(55,399)
Net book value
53,064
14,851
2,680
15,850
4,628
91,073
(Euro/thousand)
Land and
buildings
Plant and
machinery
Equipment
Other assets
Assets under
construction and
advances
Total
Balance at
31 December 2019
52,775
15,427
2,924
10,629
10,260
92,015
Movements in 2020:
Investments
487
-
96
265
2,695
3,543
Increases for leases
(IFRS 16)
1,623
-
-
4,481
-
6,104
Disposals
-
-
-
-
-
-
Depreciation
(2,724)
(717)
(1,304)
(5,928)
-
(10,673)
Impairment
-
-
-
-
-
-
Reclassifications
868
-
1,832
1,620
(5,679)
(1,359)
Total movements
254
(717)
624
438
(2,984)
(2,384)
Balance at
31 December 2020
53,029
14,710
3,548
11,068
7,276
89,631
Of which:
Historical cost
73,269
22,652
9,883
23,552
7,276
136,632
Accumulated
depreciation and
impairment
(20,240)
(7,942)
(6,334)
(12,484)
-
(47,001)
Net book value
53,029
14,710
3,548
11,068
7,276
89,631
“Land and buildings”, with a net book value of Euro 53,064 thousand, have recorded a net increase of Euro 35
thousand in 2021, reflecting the net effect of capitalisations (Euro 1,495 thousand), asset depreciation (Euro 2,586
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Parent Company Report - EXPLANATORY NOTES
thousand), the effect of applying IFRS 16 (Euro 1,114 thousand) and new investments (Euro 12 thousand).
“Plant and machinery” (Euro 14,851 thousand) and “Equipment” (Euro 2,680 thousand) mostly refer to
instrumentation used for R&D activities and to various fixed installations within Prysmian Group’s headquarters.
“Other assets” (Euro 15,850 thousand) mainly consist of office furniture and equipment and computer equipment
for Euro 5,845 thousand, and capitalisations under IFRS 16 for Euro 10,005 thousand.
“Assets under construction and advances” (Euro 4,628 thousand) mostly refer to expenditure on plant and machinery
for use in R&D and on other equipment intended for the Prysmian headquarters.
2. INTANGIBLE ASSETS
Details of these line items and related movements are as follows::
(Euro/thousand)
Patents
Concessions,
licences,
trademarks and
similar rights
Software
Other
intangible
assets
Intangibles in
progress and
advances
Total
Balance at
31 December 2020
45
43,597
65,700
84
15,164
124,590
Movements in 2021:
Investments
-
2
5,951
-
14,878
20,831
Disposals
-
-
-
-
-
-
Amortisation
(4)
(5,359)
(14,050)
(84)
-
(19,497)
Reclassifications
-
580
12,275
-
(11,940)
915
Total movements
(4)
(4,777)
4,176
(84)
2,938
2,249
Balance at
31 December 2021
41
38,820
69,876
-
18,103
126,839
Of which:
Historical cost
11,455
69,151
156,078
787
18,103
255,573
Accumulated
amortisation and
impairment
(11,414)
(30,331)
(86,202)
(787)
-
(128,734)
Net book value
41
38,820
69,876
-
18,103
126,839
(Euro/thousand)
Patents
Concessions,
licences,
trademarks and
similar rights
Software
Other
intangible
assets
Intangibles in
progress and
advances
Total
Balance at
31 December 2019
50
40,882
39,263
216
35,163
115,574
Movements in 2020:
Investments
-
1,410
8,856
-
10,815
21,081
Disposals
-
-
(1,202)
-
-
(1,202)
Amortisation
(5)
(4,498)
(7,585)
(133)
-
(12,221)
Reclassifications
-
5,804
26,368
-
(30,813)
1,359
Total movements
(5)
2,715
26,437
(133)
(19,999)
9,016
Balance at
31 December 2020
45
43,597
65,700
84
15,164
124,590
Of which:
Historical cost
11,455
68,569
137,727
787
15,164
233,702
Accumulated
amortisation and
impairment
(11,410)
(24,972)
(72,027)
(704)
-
(109,112)
Net book value
45
43,597
65,700
84
15,164
124,590
In 2021, gross capital expenditure on intangible assets came to Euro 20,831 thousand, most of which attributable to
ongoing enhancement of information systems and Digital Transformation projects. In 2021, the group ERP system
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Prysmian Group - Annual Report
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(SAP 1C) successfully migrated to the new SAP S4/HANA platform. The system, which now manages 78 plants in 28
countries, operates entirely on cloud-based infrastructure and with a simplified database.
Another area of the business that saw significant IT investments was the Treasury function, with consolidation of
its operations on the new SAP Treasury S4 platform.
“Concessions, licences, trademarks and similar rights” amount to Euro 38,820 thousand at 31 December 2021, with
the change since the previous year attributable to amortisation (Euro 5,359 thousand), capitalisations in the year
(Euro 580 thousand) and new investments (Euro 2 thousand).
“Software” amounts to Euro 69,876 thousand at 31 December 2021, with the change since the previous year
attributable to amortisation (Euro 14,050 thousand), capitalisations in the year (Euro 12,275 thousand) and new
investments (Euro 5,951 thousand).
“Intangibles in progress and advances” of Euro 18,103 thousand mostly refer to expenditure on rolling out the above
SAP projects, and on developing other software
3. INVESTMENTS IN SUBSIDIARIES
These present a balance of Euro 5,719,977 thousand at 31 December 2021, having recorded the following movements
over the year:
(Euro/thousand)
31.12.2020
Capital
contributions
Investment
(impairment)/
revaluation
Capital
contributions for
stock options
31.12.2021
Prysmian Cavi e Sistemi S.r.l.
100,421
300,000
1,186
401,607
Draka Holding B.V.
4,788,619
1,364
4,789,983
Prysmian Cavi e Sistemi Italia S.r.l.
91,192
25,000
28
116,220
Prysmian Power Link S.r.l.
219,657
84
219,741
Fibre Ottiche Sud - F.O.S. S.r.l.
80,421
30,000
(5,000)
20
105,441
Prysmian Treasury Srl
83,549
1
83,550
Prysmian Kabel und Systeme
GmbH
3,434
3,434
Draka Kabely SRO
1
1
Total investments in subsidiaries
5,367,294
355,000
(5,000)
2,683
5,719,977
The change in the value of Investments in subsidiaries of Euro 352,683 thousand consists of an increase of Euro
357,683 thousand and a decrease of Euro 5,000 thousand for impairment.
The increase is due to capital contributions paid to Prysmian Cavi e Sistemi S.r.l., Fibre Ottiche Sud - F.O.S. S.r.l. and
Prysmian Cavi e Sistemi Italia S.r.l.
and to increases related to the pay-related component of stock option plans,
with underlying Prysmian S.p.A. shares, for employees of other Group companies, as explained in Note 17.
Personnel costs. Since it is not recharged, this component has been treated like a capital contribution and so reported
as an increase in the value of the investments in the subsidiaries in which the plan beneficiaries are directly or
indirectly employed. These increases are matched by a corresponding movement in the specific equity reserve.
Further information can be found in Note 9. Share capital and reserves.
At the end of the financial year, the Company reviewed whether there was any evidence of impairment. This review
identified the following companies for impairment testing: Draka Holding B.V., Fibre Ottiche Sud – F.O.S. S.r.l.,
Prysmian Cavi e Sistemi Italia S.r.l., and Prysmian Power Link S.r.l.. The carrying amount of the investments in these
subsidiaries was compared with their recoverable amount, defined as the higher of value in use and fair value.
The cash flow projection used to calculate value in use took the post-tax cash flow in the 2022 budget for year one,
projecting this to 2023-2024 using growth rates ranging between 1.02% and 3.4% depending on the individual
company’s country of operation. The WACC (Weighted Average Cost of Capital) used to discount cash flows for
determining value in use was also determined according to company country of operation.
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The values of WACC thus determined were in a range of 5.65% to 8.22%. The perpetuity growth rate for projections
after 2024 was 2%.
It should also be noted that any reasonably possible change in the relevant assumptions used to determine
recoverable amount (+/-0.5% change in the growth rate, and +/-0.5% change in the discount rate) would not
produce significantly different results. Fair value, on the other hand, was calculated using the market multiples
method, with reference to companies in the same sector.
These impairment tests revealed the need for a partial write-down of Euro 5,000 thousand against the value of the
investment in Fibre Ottiche Sud - F.O.S. S.r.l..
The following table summarises key information about investments held in subsidiaries:
Company name
Registered office
Share capital
% interest 2021
% interest 2020
Prysmian Cavi e Sistemi S.r.l.
Milan
Eur 50,000,000
100
100
Draka Holding B.V.
Amsterdam
Eur 52,229,321
100
100
Prysmian Cavi e Sistemi Italia S.r.l.
Milan
Eur 77,143,249
100
100
Prysmian PowerLink S.r.l.
Milan
Eur 100,000,000
100
100
Fibre Ottiche Sud - F.O.S. S.r.l.
Battipaglia
Eur 47,700,000
100
100
Prysmian Treasury S.r.l.
Milan
Eur 80,000,000
100
100
Prysmian Kabel Und Systeme GmbH
Berlin
Eur 15,000,000
6.25
6.25
Prysmian Pension Scheme Trustee Ltd
Hampshire
GBP 1
100
100
Prysmian Kablo SRO(1)
Bratislava
Eur 21,246,001
0.005
0.005
Jaguar Communication Consultancy Services
Private Ltd.
(1)
Mumbai
INR 122,268,218
0.000001
0.00000
Prysmian Cabos e Sistemas do Brasil S.A
(1)
Sorocaba
BRL 910,044,391
0.040177
0.040177
(1) Controlled indirectly
4. DEFERRED TAX ASSETS
Details are as follows::
(Euro/thousand)
31 december 2021
31 december 2020
Deferred tax assets:
Deferred tax assets recoverable beyond 12 months
9,274
12,718
Deferred tax assets recoverable within 12 months
126
92
Total deferred tax assets
9,400
12,810
Movements in deferred taxes are analysed as follows:
(Euro/thousand)
Employee benefit obligations
Provisions for risks
Other
Total
Balance at 31 December 2020
615
5,402
6,794
12,810
Impact on income statement
-
(125)
(1,012)
(1,137)
Impact on equity
73
-
(2,346)
(2,273)
Balance at 31 December 2021
687
5,277
3,436
9,400
Deferred tax assets amount to Euro 9,400 thousand (Euro 12,810 thousand at 31 December 2020) and reflect the
effect of temporary differences between the accounting value of assets and liabilities at 31 December 2021 and
their corresponding tax value. Further information can be found in Note 22. Taxes.
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5. TRADE AND OTHER RECEIVABLES
Details are as follows:
31 december 2021
(Euro/thousand)
Non-current
Current
Total
Trade receivables
-
224,804
224,804
Allowance for doubtful accounts
-
(38)
(38)
Total trade receivables
-
224,766
224,766
Other receivables:
Tax receivables
-
51,211
51,211
Financial receivables
172
-
172
Prepaid finance costs
1,420
1,185
2,605
Receivables from employees
18
1,418
1,436
Other
94,920
56,252
151,172
Total other receivables
96,530
110,066
206,596
Total
96,530
334,832
431,362
31 december 2020
(Euro/thousand)
Non-current
Current
Total
Trade receivables
-
180,742
180,742
Allowance for doubtful accounts
-
(38)
(38)
Total trade receivables
-
180,704
180,704
Other receivables:
Tax receivables
-
40,144
40,144
Financial receivables
134
6,652
6,786
Prepaid finance costs
2,556
1,136
3,692
Receivables from employees
-
1,622
1,622
Other
40,741
40,142
80,883
Total other receivables
43,431
89,696
133,127
Total
43,431
270,400
313,831
The following table breaks down trade and other receivables according to the currency in which they are expressed:
(Euro/thousand)
31 december 2021
31 december 2020
Euro
344,530
254,281
British Pound
23,268
27,210
US Dollar
37,095
18,031
Other currencies
26,469
14,309
Total
431,362
313,831
253
Parent Company Report - EXPLANATORY NOTES
“Trade receivables” at 31 December 2021 mainly refer to amounts charged by Prysmian S.p.A. to its subsidiaries for
head office services and the resale of strategic materials.
The book value of trade receivables approximates their fair value.
Trade receivables are all due within the next year and do not include any material past due balances.
“Tax receivables” of Euro 51,211 thousand mainly refer to:
•
foreign tax credits (Euro 5,385 thousand);
•
VAT credits (Euro 20,116 thousand);
•
R&D tax credits (Euro 3,213 thousand);
•
corporate income tax (IRES) credit for Italian companies participating in the national and world tax consolidation
group (Euro 11,603 thousand);
•
other tax receivables (Euro 10,894 thousand).
“Financial receivables” mainly refer to guarantees given for the benefit of employees.
“Prepaid finance costs” of Euro 2,605 thousand mainly consist of the Company’s share of the costs incurred for the
Revolving Credit Facility opened on 3 April 2019, which are being amortised over the term of the agreement, i.e.
until April 2024.
At 31 December 2021, “Other” receivables of Euro 151,172 thousand mainly comprise:
•
Euro 94,920 thousand in receivables from Group companies for recharges of the LTI (long-term incentive) plan
2020-2022;
•
Euro 11,324 thousand in receivables from Italian Group companies for the transfer of IRES (Italian corporate
income tax) under the national tax consolidation (art. 117 et seq of the Italian Income Tax Code);
•
Euro 31,730 thousand in receivables from Group companies mainly for the chargeback of patent and know-how
licences;
•
Euro 12,779 thousand in prepayments.
The change in “Other” receivables is mainly due to receivables from Group companies for the LTI plan 2020-2022
and to receivables from Italian Group companies for the transfer of IRES (Italian corporate income tax) for the
purposes of the national tax consolidation (Euro 3,538 thousand in 2020).
The book value of financial receivables and other current receivables approximates the respective
fair value.
6. FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets at fair value through profit or loss, amounting to Euro 199,609 thousand (nil at 31 December 2020),
refer to monetary funds in which the Parent Company has temporarily invested its liquidity.
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7. DERIVATIVES
Details of these balances are presented below:
31 december 2021
(Euro/thousand)
Asset
Liability
Non-current
Interest rate derivatives (cash flow hedges)
-
2,548
Total cash flow hedges
-
2,548
Total non-current
-
2,548
Current
Interest rate derivatives (cash flow hedges)
-
6,477
Forward currency contracts on commercial transactions (cash flow
hedges)
-
282
Total cash flow hedges
-
6,759
Forward currency contracts on commercial transactions
18
30
Forward currency contracts for General Cable acquisition
-
-
Metal derivatives
38
12
Total other derivatives
55
41
Total current derivatives
55
6,800
Total
55
9,348
31 december 2020
(Euro/thousand)
Asset
Liability
Non-current
Interest rate derivatives (cash flow hedges)
-
12,294
Total cash flow hedges
-
12,294
Total non-current
-
12,294
Current
Interest rate derivatives (cash flow hedges)
-
6,503
Forward currency contracts on commercial transactions (cash flow
hedges)
6
181
Total cash flow hedges
6
6,684
Forward currency contracts on commercial transactions
25
30
Metal derivatives
272
3
Total other derivatives
296
33
Total current derivatives
303
6,717
Total
303
19,011
255
Parent Company Report - EXPLANATORY NOTES
The above derivatives are mostly with Prysmian Treasury S.r.l., the Group’s central treasury company, except for
Interest Rates Swaps (IRS) transforming variable into fixed rates which are arranged directly with leading financial
institutions.
Forward currency contracts have a notional value of Euro 33,582 thousand at 31 December 2021, of which Euro
19,403 thousand for designated as cash flow hedges relating to a service agreement and currency hedges of metal
purchase and sale transactions.
Metal derivatives have a notional value of Euro 4,450 thousand.
Information about the notional value of Interest Rate Swaps can be found in Note 9. Share capital and reserves -
Cash flow hedge reserve.
8. CASH AND CASH EQUIVALENTS
These amount to Euro 100,097 thousand at 31 December 2021, compared with Euro 250 thousand at 31 December
2020, and relate to the cash held on Euro and foreign currency bank current accounts repayable on demand.
The credit risk associated with cash and cash equivalents is limited insofar as the counterparties are major national
and international banks.
9. SHARE CAPITAL AND RESERVES
Equity amounts to Euro 2,294,862 thousand at 31 December 2021, reporting an increase of Euro 85,879 thousand
since 31 December 2020. The changes over the year are discussed in the following paragraphs on the individual
components of equity.
Share capital
Share capital amounts to Euro 26,814 thousand at 31 December 2021, consisting of 268,144,246 ordinary shares
(including 4,642,199 treasury shares), with a nominal value of Euro 0.10 each. The total number of outstanding
voting shares is 263,502,047, net of 10,669 treasury shares held indirectly.
Share capital at 31 December 2021 is unchanged compared with 31 December 2020.
The following table reconciles the number of outstanding shares at 31 December 2019, at 31 December 2020 and
31 December 2021:
Ordinary shares
Treasury shares
Total
Balance at 31 December 2019
268,144,246
(4,880,493)
263,263,753
Allotments and sales
(1)
131,729
131,729
Balance at 31 December 2020
268,144,246
(4,748,764)
263,395,482
Allotments and sales
(2)
106,565
106,565
Balance at 31 December 2021
268,144,246
(4,642,199)
263,502,047
(1)
Allotment of 75,578 treasury shares under the Group employee share purchase plan (YES Plan) and sale of 56,151 shares.
(2)
Allotment of 60,316 treasury shares under the Group employee share purchase plan (YES Plan) and sale of 46,249 shares.
More details about treasury shares can be found in the subsequent note on “Treasury shares”.
Share premium reserve
This amounts to Euro 1,281,071 thousand at 31 December 2021, the same as at 31 December 2020.
Capital increase costs
This reserve, which reports a post-tax negative balance of Euro 14,476 thousand at 31 December 2021, mainly relates
to the costs incurred for the capital increase serving the public mixed exchange and cash offer for the ordinary shares
of Draka Holding B.V., announced on 22 November 2010 and formalised on 5 January 2011, and the costs incurred
for the capital increase resolved and approved in 2018.
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Legal reserve
This amounts to Euro 5,363 thousand at 31 December 2021, the same as at 31 December 2020.
Treasury shares reserve
This reserve, which amounts to Euro 92,461 thousand at 31 December 2021 (Euro 94,583 thousand at 31 December
2020), complies with statutory requirements (art. 2357-ter of the Italian Civil Code).
Treasury shares
The book value of treasury shares is Euro 92,461 thousand at 31 December 2021 and refers to 4,642,199 ordinary
shares with a total nominal value of Euro 464,220.
Movements in treasury shares have been as follows:
Number
of shares
Total
nominal value
(in Euro)
% of share
capital
Average
unit valu
(in Euro)
Total
carrying value
(in Euro)
At 31 December 2019
4,880,493
488,049
1.82%
20
97,207,246
- Share buyback
-
-
-
-
- Allotments and sales
(131,729)
(13,173)
20
(2,623,713)
At 31 December 2020
4,748,764
474,876
1.77%
20
94,583,532
- Share buyback
-
-
-
- Allotments and sales
(106,565)
(10,657)
20
(2,122,509)
At 31 December 2021
4,642,199
464,220
1.73%
20
92,461,023
During 2021, the number of treasury shares decreased by a total of 106,565 to serve the YES share purchase plan for
Group employees. Of this total, 60,316 shares were allotted to employees who had signed up to the YES employee
share purchase plan, while 46,249 shares were sold to employees of another group company under the same plan.
Extraordinary reserve
This reserve amounts to Euro 52,688 thousand at 31 December 2021 (the same as at 31 December 2020), and was
formed following the apportionment of net profit for 2006, as approved by the shareholders on 28 February 2007.
IAS/IFRS first-time adoption reserve
This reserve was created in accordance with IFRS 1 and reflects the differences arising on first-time adoption of
IAS/IFRS.
It amounts to Euro 30,177 thousand at 31 December 2021, the same as at 31 December 2020.
Capital contribution reserve
This reserve amounts to Euro 6,113 thousand at 31 December 2021, the same as at 31 December 2020.
Actuarial gains/(losses) on employee benefits
The reserve for remeasuring employee benefit plans reports a negative balance at 31 December 2021 of Euro 2,177
thousand for post-tax actuarial losses, recognised in other comprehensive income, in accordance with IAS 19.
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Parent Company Report - EXPLANATORY NOTES
Convertible bond reserve
This reserve amounts to Euro 84,321 thousand (net of the related tax effect) at 31 December 2021, having increased
by Euro 36,132 thousand since 31 December 2020, and refers to the non-monetary components of the Company’s
outstanding convertible bonds, discussed in more detail in Note 10. Borrowings from banks and other lenders.
Stock option reserve
This reserve amounts to Euro 62,256 thousand at 31 December 2021 (Euro 38,150 thousand at 31 December 2020),
reporting a net increase of Euro 24,106 thousand since 31 December 2020 mainly due to:
•
the transfer of Euro 57 thousand in costs to profit or loss for the period (Euro 186 thousand in 2020) in connection
with the YES plan, a stock option plan involving Prysmian S.p.A. shares;
•
an increase of Euro 523 thousand in the carrying amount of investments in subsidiaries, in which beneficiaries
of the YES Plan involving Prysmian S.p.A. shares are directly or indirectly employed;
•
an increase of Euro 33,671 thousand for the Long-term incentive (LTI) plan 2020-2022. Of this total, Euro 9,383
thousand relates to Prysmian S.p.A. personnel, while Euro 24,288 thousand refers to the grant date fair value
of options allotted to LTI plan beneficiaries who are employees of other Group companies, of which Euro 3,108
thousand is not rechargeable;
•
a decrease after reclassifying Euro 10,145 thousand to retained earnings on conclusion of the 2021 YES Plan as
of 31 December 2021.
Further information can be found in Note 17. Personnel costs.
Cash flow hedge reserve
The cash flow hedge reserve, presenting post-tax negative balances of Euro 6,860 thousand at 31 December 2021
and Euro 14,287 thousand at 31 December 2020, reports hedging derivatives that qualify for hedge accounting
under IFRS 9.
On 4 February 2021, the Company entered into derivative contracts for a total value of Euro 75 million to hedge
the Euro 75 million loan outstanding with Cassa Depositi e Prestiti, which came into effect on 9 February 2021 and
matures on 28 July 2025. The maturities and amortisation schedule of these derivatives are consistent with the
terms of the loan.
The notional value of interest rate swaps at 31 December 2021 is therefore Euro 1,285 thousand. Their fair value is
reflected in the reserve of Euro 6,858 thousand reported at 31 December 2021.
Share issue reserve
The share issue reserve amounts to Euro 1,100 thousand at 31 December 2021, the same as at 31 December 2020.
Retained earnings
Retained earnings amount to Euro 629,505 thousand at 31 December 2021, reporting a decrease of Euro 40,047
thousand since 31 December 2020, of which Euro 51,221 thousand drawn from the reserve to pay the 2020 dividend,
net of an increase of Euro 1,029 thousand from selling YES plan shares to employees of a subsidiary and an increase
of Euro 10,145 thousand following a reclassification from the stock option reserve.
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Prysmian Group - Annual Report
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The following table analyses each component of equity, indicating its origin, permitted use and availability for
distribution, as well as how it has been used in previous years.
(Euro/thousand)
Nature/
description
Amount
Permitted use
(A,B,C)
Amount
available for
distribution
Uses in three previous years
to cover
losses
other
purposes
Share capital
26,814
Capital reserves:
.
Capital
contribution
reserve
6,113
A,B,C
6,113
.
Share
premium
reserve
1,281,071
A,B,C
1,281,071
.
Capital
increase
costs
(14,476)
(14,476)
Earnings reserves:
.
Extraordinary
reserve
52,688
A,B,C
52,688
.
IAS/IFRS
first-time
adoption
reserve
30,177
A,B,C
30,177
.
Legal reserve
5,363
B
.
Share
issu
reserve
1,100
A,B,C
1,100
.
Convertible
bond
reserve
84,321
.
Retained
earnings
629,503
A,B,C
629,503
18,339
Measurement
reserves (*):
.
Stock option
reserve
62,256
.
Cash flow hedge
reserve
(6,860)
.
Actuarial
gains
and losses
on employee
benefits
(2,177)
Total reserves
2,129,080
Undistributable
amount
142,904
Distributable amount
1,986,176
A: to increase capital
B: to cover losses
C: distribution to shareholders
(*) These reserves are not available for distribution under art. 6 of Italian Legislative Decree 38/05
Dividend distribution
On 28 April 2021, the shareholders of Prysmian S.p.A. approved the financial statements for 2020 and the distribution
of a gross dividend of Euro 0.50 per share, for a total of some Euro 132 million.
The dividend was paid out from 26 May 2021 to shares outstanding on the record date of 25 May 2021, with the shares
going ex-dividend on 24 May 2021. A recommendation to pay a dividend of Euro 0.55 per share, for a total of some
Euro 145 million in respect of the year ended 31 December 2021, will be presented to the Shareholders’ Meeting
convened in single call for 12 April 2022.
The present financial statements do not reflect any liability for the proposed dividend.
259
Parent Company Report - EXPLANATORY NOTES
10. BORROWINGS FROM BANKS AND OTHER LENDERS
These amount to Euro 3,477,377 thousand at 31 December 2021, compared with Euro 2,935,558 thousand at 31
December 2020.
31 december 2021
(Euro/thousand)
Non-current
Current
Total
Long-term financial payables
Mediobanca Loan
99,819
144
99,963
Intesa Loan
149,656
315
149,971
CDP Loans
174,528
71
174,599
EIB Loans
109,931
4
109,934
Unicredit Loan
199,681
303
199,984
Term Loan
997,797
703
998,500
Non-convertible bond
-
763,087
763,087
Convertible Bond 2021
707,088
-
707,088
Convertible Bond 2017
-
249,824
249,824
Lease liabilities
17,173
5,721
22,895
Other payables to banks and other lenders
-
1,533
1,533
Total
2,455,673
1,021,704
3,477,377
31 december 2020
(Euro/thousand)
Non-current
Current
Total
Long-term financial payables
Mediobanca Loan
99,739
148
99,887
Intesa Loan
149,536
315
149,851
CDP Loans
99,767
77
99,844
EIB Loans
109,908
8,322
118,230
Unicredit Loan
199,516
319
199,835
Term Loan
996,287
703
996,990
Non-convertible bond
747,822
13,562
761,384
Convertible Bond 2017
488,776
-
488,776
Lease liabilities
13,186
6,068
19,254
Other payables to banks and other lenders
-
1,508
1,508
Total
2,904,536
31,022
2,935,558
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Borrowings from banks and other financial institutions and Bonds are analysed as follows:
(Euro/thousand)
31 december 2021
31 december 2020
Mediobanca Loan
99,963
99,887
Intesa Loan
149,971
149,851
CDP Loans
174,599
99,844
EIB Loans
109,934
118,230
Term Loan
998,500
996,990
Unicredit Loan
199,984
199,835
Other borrowings
1,533
1,508
Borrowings from banks and other financial
institutions
1,734,483
1,666,144
Non-convertible bond
763,087
761,384
Convertible Bond 2017
249,824
488,776
Convertible Bond 2021
707,088
-
Total
3,454,482
2,916,304
Credit Agreement:
Prysmian S.p.A. had the following Credit Agreements in place during the course of 2021:
CDP Loans
On 28 October 2019, the Group entered into an agreement with Cassa Depositi e Prestiti S.p.A. (CDP) for a Euro 100
million long-term loan for 4 years and 6 months 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. Interest rate swaps have been arranged in respect of this loan,
for an overall notional value of Euro 100 million, with the objective of hedging variable rate interest flows over the
period 2020-2024.
On 28 January 2021, a second loan was agreed with CDP for Euro 75 million for a term of 4 years and 6 months, for
the purpose of financing part of the Group’s expenditure on purchasing the “Leonardo Da Vinci” cable-laying vessel.
This loan was drawn down in its entirety on 9 February 2021, with a bullet repayment envisaged at maturity on 28
July 2025. Interest rate swaps have been arranged in respect of this loan, for an overall notional value of Euro 75
million, with the objective of hedging variable rate interest flows over the period 2021-2025
At 31 December 2021, the fair value of the CDP Loans approximates their related carrying amount.
Revolving Credit Facility 2019
On 3 April 2019, the Group renewed a Euro 1,000 million five-year revolving credit facility with a syndicate of leading
Italian and international banks. The funds are available for business and working capital needs, including the
refinancing of existing facilities. The Revolving Credit Facility 2019 can also be used for the issue of guarantees. At
31 December 2021, this facility was not being used.
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Parent Company Report - EXPLANATORY NOTES
EIB Loans
On 18 December 2013, Prysmian S.p.A. entered into an initial loan agreement with the European Investment Bank
(EIB) for Euro 100 million, to fund the Group’s research & development (R&D) programs in Europe over the period
2013-2016.
The EIB loan was particularly intended to support projects developed in the Group’s R&D centres in six countries
(France, Great Britain, the Netherlands, Spain, Germany and Italy) and represented about 50% of the Prysmian
Group’s investment expenditure in Europe during the period concerned.
The EIB Loan, received on 5 February 2014, was repayable in 12 equal half-yearly instalments commencing 5 August
2015 and ending 5 February 2021, when it was repaid in full.
On 10 November 2017, Prysmian S.p.A. entered into a second loan agreement with the EIB for Euro 110 million to
support the Group’s R&D programs in Europe over the period 2017-2020. The loan was received on 29 November
2017 and involves a bullet repayment at maturity on 29 November 2024. Interest rate swaps have been arranged
in respect of this loan, for an overall notional value of Euro 110 million, with the objective of hedging variable rate
interest flows over the period 2018-2024.
At 31 December 2021, the fair value of the remaining EIB Loan approximates its related carrying amount.
Term Loan
The Term Loan was drawn down by the Group in June 2018 for the purpose of having the necessary financial resources
to pay the General Cable purchase consideration, to refinance the existing debt of General Cable and its subsidiaries
and to finance acquisition-related fees, commissions, costs and expenses. The Term Loan is for Euro 1 billion and
is repayable on the fifth anniversary of the acquisition closing date (6 June 2023).
The interest rates applied are indexed to 6M and 3M Euribor, depending on the company’s choice. The line was
drawn down in full upon acquiring General Cable.
At 31 December 2021, the fair value of the Term Loan approximates its carrying amount.
Interest rate swaps have been arranged in respect of this loan, for an overall notional value of Euro 1,000 million,
with the objective of hedging variable rate interest flows.
Unicredit Loan
On 15 November 2018, Prysmian S.p.A. entered into an agreement with Unicredit for a long-term cash loan for a
maximum amount of Euro 200 million for 5 years from the date of signing. The loan was drawn down in full on
16 November 2018 and is repayable in a lump sum at maturity. The interest rate applied is indexed to 6M and 3M
Euribor, depending on the company’s choice. At 31 December 2021, the fair value of this loan approximates its
carrying amount.
Mediobanca 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. The loan was drawn down in full on 22 February 2019 and is repayable in a lump
sum at maturity. The interest rate applied is indexed to 6M and 3M Euribor, depending on the company’s choice. At
31 December 2021, the fair value of this loan approximates its carrying amount.
Intesa 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. The loan was drawn down in full on 18 October 2019 and is repayable in a
lump sum at maturity.
At 31 December 2021, the fair value of this loan approximates its carrying amount.
262
Prysmian Group - Annual Report
2021
The following tables summarise the committed lines available to the Company at 31 December 2021 and 31 December
2020:
31 december 2021
(Euro/thousand)
Total lines
Drawn
Undrawn
Revolving Credit Facility 2019
1,000,000
-
1,000,000
CDP Loans
175,000
(175,000)
Intesa Loan
150,000
(150,000)
Mediobanca Loan
100,000
(100,000)
Term Loan
1,000,000
(1,000,000)
Unicredit Loan
200,000
(200,000)
EIB Loans
110,000
(110,000)
Total
2,735,000
(1,735,000)
1,000,000
31 december 2020
(Euro/thousand)
Total lines
Drawn
Undrawn
Revolving Credit Facility 2019
1,000,000
-
1,000,000
CDP Loans
100,000
(100,000)
Intesa Loan
150,000
(150,000)
Mediobanca Loan
100,000
(100,000)
Term Loan
1,000,000
(1,000,000)
Unicredit Loan
200,000
(200,000)
EIB Loans
118,333
(118,333)
Total
2,668,333
(1,668,333)
1,000,000
More details about the nature and drawdown of the Group-level facilities shown above can be found in the Explanatory
Notes to the Consolidated Financial Statements (Note 11. Borrowings from banks and other lenders).
263
Parent Company Report - EXPLANATORY NOTES
Bonds
Prysmian S.p.A. had the following bonds outstanding as at 31 December 2021:
Non-convertible bond issued in 2015
On 30 March 2015, Prysmian S.p.A. completed the placement with institutional investors of an unrated bond, on
the Eurobond market, for a total nominal value of Euro 750 million.
The bond, with an issue price of Euro 99.002, has a 7-year maturity and pays a fixed annual coupon of 2.50%. The
individual bonds, maturing on 11 April 2022, have minimum denominations of Euro 100,000, plus integral multiples
of Euro 1,000.
The bond settlement date was 9 April 2015. The bond was admitted to the Luxembourg Stock Exchange, where it
is traded on the related regulated market.
At 31 December 2021, the non-convertible bond has a fair value of Euro 762 million.
Fair value has been determined with reference to the quoted price in the relevant market (Level 1 of the fair value
hierarchy).
Convertible Bond 2017
On 12 January 2017, the Board of Directors approved the placement of an equity-linked bond, known as “Prysmian
S.p.A. Euro 500 million Zero Coupon Equity Linked Bonds due 2022” maturing 17 January 2022 and reserved for
institutional investors (“Convertible Bond 2017”). The bond settlement date was 17 January 2017.
At the meeting held on 12 April 2017, the Company’s shareholders authorised:
•
the convertibility of the Equity-Linked Bond;
•
the proposal to increase share capital for cash, in single or multiple issues with the exclusion of pre-emptive
rights, by a maximum nominal amount of Euro 1,457,942.70, by issuing, in single or multiple instalments, up
to 14,579,427 ordinary shares of the Company, with the same characteristics as its other outstanding ordinary
shares, exclusively and irrevocably to serve the Bond’s conversion.
The accounting treatment for the Convertible Bond 2017 resulted in the recognition of an equity component of
Euro 48 million and a debt component of Euro 452 million, determined at the bond issue date.
On 26 January 2021, the Group announced a partial redemption of the Euro 500 million zero-coupon equity-linked
related to Convertible Bond 2017 bond due 2022, up to a face value of Euro 250 million, representing 50% of the
bonds in issue. The partial redemption of the Convertible Bond 2017 took place at a price of Euro 104.25 each.
This partial redemption involved an outlay of Euro 261 million, accounted for by reducing financial debt by Euro 246
million and equity by Euro 13 million and recognising Euro 2 million in expense through profit or loss.
264
Prysmian Group - Annual Report
2021
The following table summarises the values of the Convertible Bond 2017 as at 31 December 2021:
(Euro/thousand)
Issue value of convertible bond
500,000
Equity reserve for convertible bond
(48,189)
Issue date net balance
451,811
Interest - non-monetary
45,595
Redemption of 50% of convertible bond
(261,000)
Change in equity upon redemption
13,418
Balance at 31 December 2021
249,824
At 31 December 2021, the fair value of the Convertible Bond 2017 (equity component and debt component) is Euro
251 million, all of which attributable to the debt component. Fair value has been determined with reference to the
quoted price in the relevant market (Level 1 of the fair value hierarchy).
The Convertible Bond 2017 was redeemed in full at maturity in January 2022.
Convertible Bond 2021
On 26 January 2021, the Group announced the successful placement of an equity-linked bond (the “Convertible
Bond 2021”) for the sum of Euro 750 million.
The Convertible Bond has a 5-year maturity and denomination of Euro 100,000 each and are zero coupon. The issue
price is Euro 102.50, representing a yield to maturity of minus 0.49% per annum. The initial price for the conversion
of the Bonds into the Company’s ordinary shares is Euro 40.2355, representing a 47.50% premium on the weighted
average price by volume of Prysmian ordinary shares on the Milan Stock Exchange between the start and end of
the book-building process on 26 January 2021.
The Shareholders’ Meeting held on 28 April 2021 authorised the convertibility of the equity-linked bond and approved
the proposal for a share capital increase serving the conversion of the convertible bond for a maximum nominal
amount of Euro 1,864,025.50 by issuing up to 18,640,255 ordinary shares with a nominal value of Euro 0.10 each.
As provided for in the bond regulations, the Group has the option to call all - but not just a part - of the Bonds at
their principal amount from 12 February 2024, should the share price exceed 130% of the conversion price for at
least 20 days within a period of 30 consecutive trading days.
On 14 June 2021, the bond was admitted to listing on the multilateral trading facility of the Vienna Stock Exchange.
On the issue date, cash and cash equivalents increased by a total of Euro 768 million, against a corresponding
increase in financial debt, of which Euro 703 million for the bond’s debt component and Euro 65 million for the
conversion option.
The fair value of the conversion option, amounting to Euro 49 million on 28 April 2021, the date the Shareholders’
Meeting authorised the bond’s convertibility, has been reclassified to equity, while the change of Euro 16 million in
fair value between the bond issue date and the date of the extraordinary Shareholders’ Meeting has been recognised
as income in profit or loss.
265
Parent Company Report - EXPLANATORY NOTES
The following table summarises the values of the Convertible Bond 2021 as at 31 December 2021:
(Euro/thousand)
Value of Convertible Bond 2021
768,750
Equity reserve for convertible bond
(49,550)
Change in conversion option
(16,130)
Issue date net balance
703,070
Interest - non-monetary
8,314
Related costs
(4,296)
Balance at 31 December 2021
707,088
At 31 December 2021, the fair value of the Convertible Bond 2021 (equity component and debt component) is
Euro 816 million, of which Euro 707 million attributable to the debt component and Euro 109 million to the equity
component.
In the absence of trading on the relevant market, the fair value of the bond’s debt and equity components has been
determined using valuation techniques that refer to observable market data (Level 2 of the fair value hierarchy).
Other borrowings from banks and other lenders and Lease liabilities
The following tables report movements in Borrowings from banks and other lenders:
(in migliaia di
Euro)
CDP
BEI
Unic.
Mediob.
and Intesa
Non
conv.
bond
Conv.
bonds
Term Loan
Other
borrowings
and lease
liabilities
Total
Balance
al 31 december
2020
99,843
118,229
449,572
761,384
488,776
996,990
20,763
2,935,558
New funds
75.000
-
-
703.070
778.070
Repayments/
Conversions
(8,333)
-
(245,277)
(253,610)
Amortisation
of bank and
financial fees
and other
expenses
136
60
366
1,703
(3,239)
1,510
-
535
New IFRS 16
leases
4,118
4,118
Interest
and other
movements
(380)
(22)
(19)
-
13,583
-
(454)
12,708
Total
movements
74,756
(8,295)
347
1,703
468,136
1,510
3,664
541,821
Balance
al 31 december
2021
174,599
109,934
449,919
763,087
956,913
998,500
24,427
3,477,377
266
Prysmian Group - Annual Report
2021
The following tables provide an analysis by maturity and currency of borrowings from banks and other lenders
(excluding lease liabilities) at 31 December 2021 and 2020:
31 december 2021
(Euro/thousand)
Variable rate
Fixed rate
Total
Due within 1 year
3,106
1,012,911
1,016,017
Due between 1 and 2 years
1,197,467
1,197,467
Due between 2 and 3 years
459,126
-
459,126
Due between 3 and 4 years
74,784
-
74,784
Due between 4 and 5 years
-
707,088
707,088
Due after more than 5 years
-
-
-
Total
1,734,483
1,719,999
3,454,482
Average interest rate in period, as per contract
1.0%
1.8%
1.4%
Average interest rate in period,
including IRS effect (a)
1.3%
1.8%
1.5%
a) Interest rate swaps have been put in place to hedge interest rate risk on variable rate loans in Euro. At 31 December 2021, the total hedged amount equates to 73.7%
of Euro-denominated variable-rate debt at that date. Interest rate hedges consist of interest rate swaps which exchange a variable rate (3 or 6-month Euribor for loans
in Euro) with an average fixed rate (fixed rate + spread) of 1.3% for Euro-denominated debt. The percentages representing the average fixed rate refer to 31 December
2021.
31 december 2020
(Euro/thousand)
Variable rate
Fixed rate
Total
Due within 1 year
11,390
13,562
24,951
Due between 1 and 2 years
1
1,236,598
1,236,599
Due between 2 and 3 years
1,195,803
-
1,195,803
Due between 3 and 4 years
458,950
-
458,950
Due between 4 and 5 years
-
-
-
Due after more than 5 years
-
-
-
Total
1,666,144
1,250,160
2,916,303
Average interest rate in period, as per contract
1.0%
2.1%
1.5%
Average interest rate in period
including IRS effect
1.3%
2.1%
1.7%
267
Parent Company Report - EXPLANATORY NOTES
NET FINANCIAL DEBT
Note
31 december
2021
of which
related
parties
(Nota 24)
31 december
2020
of which related
parties
(Nota 24)
Long-term financial payables
CDP Loans
10
174,528
99,767
Mediobanca Loan
10
99,819
99,739
Intesa Loan
10
149,656
149,536
EIB Loans
10
109,931
109,908
Non-convertible bond
10
-
747,822
Convertible Bond 2017
10
-
488,776
Term Loan
10
997,797
996,287
Convertible Bond 2021
10
707,088
-
Unicredit Loan
10
199,681
199,516
Interest rate swaps
7
2,548
12,294
Lease liabilities
10
17,173
13,186
Total long-term financial payables
2,458,221
2,916,830
Short-term financial payables
CDP Loans
10
71
77
Mediobanca Loan
10
144
148
Intesa Loan
10
315
315
EIB Loans
10
4
8,322
Non-convertible bond
10
763,087
13,562
Term Loan
10
703
703
Convertible Bond 2017
10
249,824
-
Unicredit Loan
10
303
319
Lease liabilities
10
5,721
6,068
Short-term loans from Group companies
11
194,941
194,941
258,882
258,882
Other financial payables
10
1,533
1,508
Interest rate swaps
7
6,476
6,503
Total short-term financial payables
1,223,121
296,407
Total financial liabilities
3,681,342
3,213,237
Long-term financial receivables
5
172
134
Long-term bank fees
5
1,420
2,556
Short-term financial receivables
6
199,609
-
-
Short-term loans to Group companies
5
-
-
6,652
6,652
Short-term bank fees
5
1,185
1,136
Cash and cash equivalents
8
100,097
250
Net financial debt
3,378,858
3,202,509
268
Prysmian Group - Annual Report
2021
The following table presents a reconciliation of the Company’s net financial debt to the amount reported in
accordance with the requirements of CONSOB communication no. 5/21 of 29 April 2021 concerning compliance
with the “Guidelines on disclosure requirements under the Prospectus Regulation” published by ESMA on 4 March
2021 (reference ESMA32-382-1138):
Note
31 december
2021
of which
related
parties
(Note 25)
31 december
2020
of which
related
parties
(Note 25)
Net financial debt - as reported above
3,378,858
3,202,509
Adjustments to exclude:
Long-term financial receivables and other assets
5
172
134
Long-term bank fees
5
1,420
2,556
Adjustments to include:
Net non-cash flow hedge forward currency
contracts on commercial transactions, excluding
non-current assets
7
12
12
5
5
Net non-cash flow hedge metal derivatives,
excluding non-current assets
7
(26)
(26)
(269)
(269)
Recalculated net financial debt
3,380,436
3,205,935
11. TRADE AND OTHER PAYABLES
Details are as follows:
31 december 2021
(Euro/thousand)
Non-current
Current
Total
Trade payables
-
562,306
562,306
Total trade payables
-
562,306
562,306
Other payables:
Tax and social security payables
-
8,060
8,060
Advances from customers
-
-
-
Payables to employees
-
10,098
10,098
Accrued expenses
-
401
401
Other
281
62,706
62,706
Financial payables
-
194,949
194,949
Total other payables
281
276,214
276,496
Total
281
838,520
838,802
269
Parent Company Report - EXPLANATORY NOTES
31 december 2020
(Euro/thousand)
Non-current
Current
Total
Trade payables
-
421,106
421,106
Total trade payables
-
421,106
421,106
Other payables:
Tax and social security payables
-
12,328
12,328
Advances from customers
-
-
-
Payables to employees
-
10,713
10,713
Accrued expenses
-
372
372
Other
4
8,017
8,017
Financial payables
-
258,882
258,882
Total other payables
4
290,312
290,316
Total
4
711,418
711,422
Trade payables mainly comprise invoices received from suppliers of strategic metals and only to a minor extent
those received from suppliers of other goods and outside professional services involving organisational, legal and
IT advice.
Other payables comprise:
•
social security payables for contributions on employee wages and salaries and amounts payable into
supplementary pension funds;
•
tax payables mainly for tax withheld from employees and not yet paid to the tax authorities;
•
payables to employees for accrued wages and salaries not yet paid;
•
other payables, mainly referring to amounts owed to Group companies for various reasons;
•
inancial payables of Euro 195 thousand, mainly relating to the intercompany current account with Prysmian
Treasury S.r.l..
Trade payables include around Euro 388,563 thousand for the supply of strategic metals, for which a payment
extension of more than 60 days has been obtained.
The following table breaks down trade and other payables according to the currency in which they are expressed:
(Euro/thousand)
31 december 2021
31 december 2020
Euro
821,844
698,972
US Dollar
10,149
9,176
British Pound
1,609
2,091
Other currencies
5,200
1,183
Total
838,802
711,422
270
Prysmian Group - Annual Report
2021
12. PROVISIONS FOR RISKS AND CHARGES
The following table reports movements in this balance during the reporting period:
(Euro/thousand)
Legal and
contractual risks
Other risks and charges
Total
Balance at 31 december 2020
22,857
3,625
26,482
Movements in 2021:
Increases
762
11,810
12,572
Uses
(788)
-
(788)
Releases
(495)
-
(495)
Other
1
-
1
Total movements
(521)
11,810
11,290
Balance at 31 December 2021
22,337
15,435
37,772
The provision for risks, amounting to Euro 37,772 thousand at 31 December 2021, reports a net increase of Euro
11,290 thousand since 31 December 2020 after adjusting the provision to an appropriate level to cover the potential
liabilities concerned.
This provision includes the provision for the antitrust investigations discussed in the following paragraphs.
Antitrust - European Commission proceedings in the high voltage underground and submarine cables business
The European Commission started an investigation in late January 2009 into several European and Asian electrical
cable manufacturers to verify the existence of alleged anti-competitive practices in the high voltage underground
and submarine cables markets.
On 2 April 2014, the European Commission adopted a decision under which it found that, between 18 February 1999
and 28 January 2009, the world’s largest cable producers, including Prysmian Cavi e Sistemi S.r.l. (“Prysmian CS”), had
engaged in anti-competitive practices in the European market for high voltage submarine and underground power
cables. The European Commission held Prysmian CS jointly liable with Pirelli & C. S.p.A. (“Pirelli”) for the alleged
infringement in the period 18 February 1999 - 28 July 2005, ordering them to pay a fine of Euro 67.3 million, and
it held Prysmian CS jointly liable with Prysmian S.p.A. (“Prysmian”) and The Goldman Sachs Group Inc. (“Goldman
Sachs”) for the alleged infringement in the period 29 July 2005 - 28 January 2009, ordering them to pay a fine
of Euro 37.3 million. Prysmian, Prysmian CS, Pirelli and Goldman Sachs each filed a separate appeal against this
decision with the General Court of the European Union, in first instance, and later with the Court of Justice of the
European Union. In rulings handed down on 24 September 2020, 28 October 2020 and 27 January 2021 respectively,
the Court of Justice definitively dismissed the appeals brought by Prysmian and Prysmian CS, Pirelli and Goldman
Sachs, thus upholding the liability and fine envisaged under the European Commission’s original decision. Further
to the ruling dismissing the appeal by Prysmian and Prysmian CS, the European Commission requested Prysmian
Group to pay the sum of approximately Euro 20 million, corresponding to half of the fine for the period from 29 July
2005 to 28 January 2009. Following the ruling dismissing the Pirelli appeal, the European Commission requested
Prysmian Group to pay the sum of approximately Euro 37 million, corresponding to half of the fine for the period
from 18 February 1999 to 28 July 2005. Using the provisions already set aside in previous years, the Group made
these payments within the required timeframe.
In a ruling handed down on 14 November 2019, the Court of Justice of the European Union also dismissed the
appeal brought by General Cable, thus definitively confirming the fine previously levied against it by the European
Commission. As a result, the Group went ahead and paid a fine for Euro 2 million.
In November 2014 and October 2019 respectively, Pirelli filed two civil actions, recently combined, against Prysmian
CS and Prysmian in the Court of Milan, seeking (i) to be held harmless from any claim brought by the European
Commission in enforcement of its decision and for any expenses incidental to such enforcement; (ii) to be held
harmless from any third-party claims for damages relating to the conduct forming the subject of the European
Commission’s decision and (iii) to be compensated for the damages allegedly suffered and quantified as a result
of Prysmian CS and Prysmian having requested, in certain pending legal actions, that Pirelli be held liable for the
unlawful conduct found by the European Commission in the period from 1999 to 2005.
271
Parent Company Report - EXPLANATORY NOTES
As part of the same proceedings, Prysmian CS and Prysmian, in addition to requesting full dismissal of the claims
brought by Pirelli, have filed symmetrical and opposing counterclaims to those of Pirelli in which they have requested
(i) to be held harmless from any claim brought by the European Commission in enforcement of its decision and
for any expenses incidental to such enforcement; (ii) to be held harmless from any third-party claims for damages
relating to the conduct forming the subject of the European Commission’s decision and (iii) to be compensated for
damages suffered as a result of the legal actions brought by Pirelli. This action is currently pending.
In view of the circumstances described and the developments in the proceedings, the Directors, with the assistance
of their legal advisors, have recognised what they consider to be an adequate level of provisions to cover the
potential liabilities related to the matters in question.
Antitrust - Claims for damages resulting from the European Commission’s 2014 decision
During the first few months of 2017, operators belonging to the Vattenfall Group filed claims in the High Court
of London against a number of cable manufacturers, including companies in the Prysmian Group, to obtain
compensation for damages purportedly suffered as a result of the alleged anti-competitive practices sanctioned
by the European Commission. During the month of June 2020, the Prysmian companies concerned presented
their defence as well as serving a summons on another party to whom the EU decision was addressed. This action
is currently pending.
On 2 April 2019, a writ of summons was served, on behalf of Terna S.p.A., on Pirelli, Nexans and companies in
the Prysmian Group, demanding compensation for damages purportedly suffered as a result of the alleged anti-
competitive practices sanctioned by the European Commission in its April 2014 decision. This action has been
brought before the Court of Milan. On 24 October 2019, the Prysmian Group companies concerned responded by
presenting their preliminary defence. By an order dated 3 February 2020, the Court upheld the points raised by
the defendants, giving Terna until 11 May 2020 to complete its writ of summons and scheduling a hearing for 20
October 2020. Terna duly completed its summons, which was filed within the required deadline. The proceedings
are at a pre-trial stage.
On 2 April 2019, a writ of summons was served, on behalf of Electricity & Water Authority of Bahrain, GCC
Interconnection Authority, Kuwait Ministry of Electricity and Water and Oman Electricity Transmission Company, on
a number of cable manufacturers, including companies in the Prysmian Group, on Pirelli & C. S.p.A. and The Goldman
Sachs Group Inc. This action, brought in the Court of Amsterdam, once again involved a claim for compensation
for damages purportedly suffered as a result of the alleged anti-competitive practices sanctioned by the European
Commission. On 18 December 2019, the Prysmian Group companies concerned presented their preliminary defence,
the hearing of which took place on 8 September 2020. On 25 November 2020, the Court of Amsterdam handed
down a ruling under which it upheld the submissions made and declined jurisdiction over defendants not based in
the Netherlands, thus excluding them from the proceedings. On 19 February 2021, the plaintiffs announced that
they had filed an appeal against this ruling. The Prysmian Group companies concerned, together with the other
third-party first-instance defendants, have entered an appearance in court contesting the plaintiff’s claims. The
appeal decision is pending.
272
Prysmian Group - Annual Report
2021
In addition, on 4 April 2019, the Group learned that the following legal actions had been brought in the Court of
London, both of which involving claims for damages purportedly suffered as a result of the alleged anti-competitive
practices sanctioned by the European Commission.
•
action by Scottish and Southern Energy (SSE) Group companies against certain Prysmian Group companies
involving a series of onshore and submarine projects. These proceedings were abandoned after the parties
reached a settlement on 31 July 2021;
•
action by Greater Gabbard Offshore Winds Limited and Scottish and Southern Energy (SSE) Group companies
against certain Group companies. On 5 September 2019, a writ of summons was served in which the plaintiffs
substantiated and quantified their claim for damages. These proceedings are now at a pre-trial stage.
With reference to the antitrust damages actions brought by the British operators National Grid and Scottish Power
and settled out of court in 2020, in 2021 the Group companies involved in these actions resumed the proceedings
against Goldman Sachs and other parties named in the EU ruling, previously stayed pending the outcome of the
main case brought by National Grid and Scottish Power, in order to obtain partial or full compensation for the
settlement paid to National Grid and Scottish Power. On 17 December 2021, the Group and Goldman Sachs reached
an agreement in settlement of both the above proceedings and other potential antitrust claims.
In view of the circumstances described and the developments in the proceedings, the Directors, with the assistance
of their legal advisors, have recognised what they consider to be an adequate level of provisions to cover the
potential liabilities related to the matters in question.
Prysmian and Prysmian CS were summoned by Nexans France SAS and Nexans SA to appear before the Court of
Dortmund (Germany) in notifications dated 24 and 25 May 2018 respectively. The plaintiffs have asked the Court
concerned to ascertain the existence of joint and several liability between Prysmian and Prysmian CS, on the one
hand, and Nexans France SAS and Nexans SA, on the other, for any damages suffered by third parties in Germany as
a result of the alleged cartel in the market for high voltage underground and submarine power cables sanctioned
in the European Commission’s decision. The Court concerned issued a stay of execution dated 3 June 2019 pending
the outcome of the appeal against the European Commission’s decision brought before the European Courts by both
Prysmian and Nexans. Following the conclusion of the appeal proceedings pending before the European Court of
Justice, Nexans has resumed the previously stayed legal action.
On the basis of the information currently available and the fact that, at this stage, no claim for damages has been
made, the Directors have decided not to make any provision.
Antitrust - Other investigations
In Brazil, the local antitrust authority initiated proceedings against a number of manufacturers of high voltage
underground and submarine cables, including Prysmian, notified of such in 2011. On 15 April 2020, the CADE Tribunal
issued the operative part of the decision under which it held Prysmian liable for the alleged infringement in the
period from February 2001 to March 2004 and ordered it to pay a fine of BRL 10.2 million (approximately Euro
1.8 million). Using the provisions already set aside in previous years, the Group made these payments within the
required timeframe. Prysmian Group has filed an appeal against the CADE ruling. The appeal decision is pending.
In addition, in January 2022, an investigation was initiated by the German antitrust authority (Federal Cartel Office)
concerning alleged coordination in setting the standard metal surcharges applied by the industry in Germany.
Further information can be found in the later note on “Events after the reporting period”.
Given the high degree of uncertainty as to the timing and outcome of these ongoing investigations, the Directors
believe they are currently unable to estimate the related risk.
273
Parent Company Report - EXPLANATORY NOTES
As at 31 December 2021, the amount of the provision reported by Prysmian S.p.A. is approximately Euro 16,123
thousand (Euro 15,894 thousand in 2020).
Despite the uncertainty of the outcome of the investigations and legal actions in progress, the amount of this
provision is considered to represent the best estimate of the liability based on the information now available.
The provision for other risks amounts to Euro 15,435 thousand at 31 December 2021, reporting a net increase of Euro
11,810 thousand over the year. The provision refers to risks deemed probable in connection with tax assessment
notices or tax audits carried out by the competent authorities.
13. EMPLOYEE BENEFIT OBLIGATIONS
Prysmian S.p.A. provides post-employment benefits through schemes that include defined benefit plans, like the
statutory severance benefit and seniority bonuses.
Employee benefit obligations amount to Euro 7,284 thousand at 31 December 2021 (Euro 7,253 thousand at 31
December 2020) and are detailed as follows
(Euro/thousand)
31 dicember 2021
31 dicember 2020
Statutory severance benefit
5,297
4,979
Termination and other benefits
1,987
2,274
Total
7,284
7,253
Employee benefit obligations have had the following impact on the income statement:
(in migliaia di Euro)
31 dicember 2021
31 dicember 2020
Statutory severance benefit
329
330
Termination and other benefits
(195)
111
Total
134
441
STATUTORY SEVERANCE BENEFIT
Details are as follows:
(Euro/thousand)
31 dicember 2021
31 dicember 2020
Opening balance
4,979
4,813
Current service costs
306
295
Interest costs
23
35
Actuarial (gains)/losses recognised in equity
303
113
Disbursements
(314)
(277)
Total movements
318
166
Closing balance
5,297
4,979
The actuarial losses recognised at 31 December 2021 (Euro 303 thousand) mainly relate to the change in the
associated economic parameters (the discount and inflation rates).
Under Italian law, the amount due to each employee accrues with service and is paid when the employee leaves the
company. The amount due upon termination of employment is calculated on the basis of the length of service and
the taxable remuneration of each employee. The liability is adjusted annually for the official cost of living index
and statutory interest, and is not subject to any vesting conditions or periods, or any funding obligation; there are
therefore no assets that fund this liability.
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The rules governing this liability were revised by Legislative Decree 252/2005 and Law 296/2006 (Finance Act
2007): amounts accrued since 2007 by companies with at least 50 employees now have to be paid into the INPS
Treasury Fund or to supplementary pension schemes, as decided by employees, which now take the form of “defined
contribution plans”. All companies nonetheless still account for revaluations of amounts accrued before 2007,
while those companies with fewer than 50 employees continue to accrue amounts for this liability not allocated
to supplementary pension schemes.
The benefits relating to this plan are paid to participants in the form of capital, in accordance with the related rules.
In certain circumstances, the benefit plan also allows the payment of partial advances against the full amount of
the accrued benefit.
The main risk is the volatility of the inflation rate and the discount rate, as determined by the market yield on AA
corporate bonds denominated in Euro. Another risk factor is the possibility that members leave the plan earlier
than expected or that higher advance payments than expected are requested, resulting in an actuarial loss for the
plan, due to an acceleration of cash flows.
The actuarial assumptions used to value statutory severance benefit are as follows:
31 december 2021
31 december 2020
Discount rate
0.85%
0.50%
Expected future salary increase
1.75%
1.50%
Inflation rate
1.75%
1.50%
The following table presents a sensitivity analysis of the effects of an increase/decrease in the most significant
actuarial assumptions used to determine the present value of statutory severance benefit, namely the discount
rate and inflation rate:
31 december 2021
Change in inflation rate
-0.25%
0.25%
Effects on obligation
-1.44%
1.47%
Change in discount rate
-0.50%
0.50%
Effects on obligation
4.67%
-4.28%
Average headcount in the period is reported below, compared with closing headcount at the end of each period:
2021
Average
%
Closing
White collar and management
374
90%
380
90%
Blue collar
41
10%
41
10%
Total
415
100%
421
100%
2020
Average
%
Closing
White collar and management
357
89%
364
90%
Blue collar
42
11%
42
10%
Total
399
100%
406
100%
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Parent Company Report - EXPLANATORY NOTES
14. CURRENT TAX PAYABLES
Current tax payables amount to Euro 12,970 thousand at 31 December 2021 (nil at 31 December 2020). At 31 December
2021, the Company reports a tax credit for IRES (Italian corporate income tax) for the Italian companies that
participate in the national and world tax consolidation, as presented in Note 5. Trade and other receivables.
15. SALES AND OTHER INCOME
This line item reports Euro 292,852 thousand, compared with Euro 193,553 thousand in 2020, and is detailed as follows:
(Euro/thousand)
2021
2020
Royalties
122,651
94,234
Head office services
78,930
65,195
Sundry income
91,271
34,124
of which non-recurring
63,266
2,085
Total
292,852
193,553
Royalties mostly refer to amounts charged to Prysmian Group subsidiaries for the use of patents, know-how and
trademarks; they amount to Euro 122,651 thousand at 31 December 2021 (Euro 94,234 thousand in the previous year).
Head office services of Euro 78,930 thousand (Euro 65,195 thousand in the previous year), refer to charges invoiced by
Prysmian S.p.A., under specific contracts, to its sub-holding company Prysmian Cavi e Sistemi S.r.l. for coordination
and other services provided by head office functions to Group companies.
Sundry income of Euro 91,271 thousand mainly consists of proceeds received under legal settlements, expense
recharges and other miscellaneous income.
In accordance with IFRS 15, sales and other income include the net margin on the purchase and sale of strategic
materials for the benefit of Group companies, amounting to Euro 1,081 thousand in 2021 (Euro 664 thousand in
2020).
16. RAW MATERIALS, CONSUMABLES AND SUPPLIES
Consumables amount to Euro 7,000 thousand, compared with Euro 4,439 thousand in 2020.
17. PERSONNEL COSTS
Details are as follows:
(Euro/thousand)
2021
2020
Wages and salaries
48,636
45,602
of which Fair Value Stock Options
9,440
7,116
Social security
10,235
9,837
Retirement pension costs
2,338
2,309
Statutory severance benefit
306
295
Personnel costs for company reorganisation
1,332
2,310
Other personnel costs
1,305
1,095
Total
64,151
61,448
Personnel costs report an increase of Euro 2,703 thousand on the previous year.
276
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2021
Share-based payments
At 31 December 2021, Prysmian S.p.A. had share-based compensation plans in place for managers and employees
of Group companies and members of the Company’s Board of Directors. These plans are described below.
Employee share purchase plan (2021) – YES 2.0
The YES Plan is based on financial instruments and is reserved for employees of Prysmian S.p.A. and/or of its
subsidiaries, including some of the Company’s Directors.
The Plan has offered the opportunity to purchase Prysmian’s ordinary shares on preferential terms, with a maximum
discount of 25% on the stock price, given in the form of treasury shares, except for certain managers, for whom
the discount was 15%, and the executive Directors and key management personnel, for whom the discount was
1% on the stock price.
The Plan has therefore qualified as “of particular relevance” within the meaning of art. 84-bis, par. 2 of the Issuer
Regulations.
The shares purchased or received free of charge are subject to a retention period, during which they cannot be sold.
The last of the purchase windows envisaged by the Plan closed during the year.
All those who signed up to the Plan also received an entry bonus of three to eight free shares, taken from the
Company’s portfolio of treasury shares, only available with their first-time purchase.
The fair value of the options has been determined using the Montecarlo binomial pricing model, based on the
following assumptions:
Window
Grant date
14 November 2016
Share purchase date
from 16 February 2017 to 16 September 2021
End of retention period
from 16 February 2020 to 16 September 2024
Residual life (in years)
0.72
Share price at grant date (Euro)
23.40
Expected volatility
from 31.74% to 36.05%
Risk-free interest rate
from 0.70% to 0.75%
Expected dividend %
2.07%
Option fair value at grant date (Euro)
from €21.57 to €23.15
Costs of Euro 57 thousand have been recognised as “Personnel costs” in the income statement at 31 December 2021
for the fair value of options granted under this plan.
On 28 April 2021, the shareholders of Prysmian S.p.A. approved the extension of the share ownership plan for
Prysmian Group employees.
In line with past practice, the extension provides the opportunity to purchase Prysmian’s ordinary shares on
preferential terms, with a maximum discount of 25% on the stock price, given in the form of treasury shares. The
shares purchased will be subject to a retention period, during which they cannot be sold. The extension has added
new purchase windows in the years 2022, 2023 and 2024.
Beneficiaries of the Plan also include the executive directors of Prysmian S.p.A. as well as key management
personnel, for whom the discount will be 1%.
277
Parent Company Report - EXPLANATORY NOTES
The information memorandum, prepared under art. 114-bis of Legislative Decree 58/98 and describing the
characteristics of the above plan, is publicly available on the Company’s website at
,
from its registered offices and from Borsa Italiana S.p.A.
Long-term incentive plan 2020-2022
The long-term incentive plan (LTI), approved by the Shareholders’ Meeting on 28 April 2020 pursuant to art. 114-bis,
par. 1, of Italian Legislative Decree no. 58/1998, is in response to the following key drivers of change:
•
simplification and alignment with best market practices;
•
sustainability of performance over time;
•
greater participation in the creation of long-term value by extending the number of beneficiaries to a wider
group of managers and professionals;
•
retention to support the phase of post-merger integration with General Cable, especially in certain regions with
a particularly competitive talent market.
The Plan extends to some 800 Group employees and involves the allocation of a number of options calculated
according to the achievement of operational, economic and financial performance conditions. The Plan consists
of the following components: Performance Share, Deferred Share and Matching Share.
The Performance Share component consists of the free allocation of shares to plan participants subject to the
achievement of performance conditions, measured over a three-year period and subject to continued employment.
The vesting period is three years (2020-2022), with disbursement of the shares envisaged in 2023. The Deferred Share
component involves the deferred receipt, through the free allocation of shares subject to continued employment
during the vesting period, of 50% of any bonus earned for the years 2020, 2021 and 2022. The vesting of the annual
bonus depends on the achievement of specific economic, financial, operational and sustainability objectives
defined in advance each year.
Lastly, the Matching Share component is combined with the Deferred Shares and consists of the free allocation to
participants of 0.5 additional shares for each Deferred Share granted and arising from deferred payment of the bonus
for each year. In the case of the Chief Executive Officer and Top Management (consisting of about 40 individuals,
including Executive Directors, Key Management Personnel, front-line positions reporting to the CEO and second-
line managers of key areas), the Matching Share component is subject to the achievement of a pre-determined
performance condition related to sustainability (ESG).
The actual allocation of shares, in particular with reference to the Performance Shares, is subject to the level of
achievement of the following performance conditions: cumulative Adjusted EBITDA, cumulative Free Cash Flow,
relative TSR measured against a 9-member peer group and ESG, measured by a set of indicators.
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2021
The following table provides details about movements in the plan:
31 december 2021
Number of options
Options at start of year
2,074,935
Granted
2,245,765
Change in expected participations
(14,437)
Cancelled
-
Exercised
-
of which for Prysmian S.p.A. employees
-
Options at end of year
4,306,263
Costs of Euro 9,383 thousand have been recognised as “Personnel costs” in the income statement at 31 December
2021 for the fair value of options granted under this plan.
In accordance with IFRS 2, the options allotted have been measured at their grant date fair value. The fair value of
the options has been determined using the following assumptions:
Grant date
28 april 2020
Residual life at grant date (in years)
2,68
Exercise price (Euro)
-
Risk-free interest rate
-0,70%
Expected dividend %
2,30%
Option fair value (market based) at grant date (Euro)
13,54
Option fair value (not market based) at grant date (Euro)
13,85
As regards deferred and matching shares vesting in 2021, option fair value has been calculated using the following
assumptions:
Grant date
28 April 2021
Residual life at grant date (in years)
1.68
Exercise price (Euro)
-
Risk-free interest rate
-0.72%
Expected dividend %
2.30%
Option fair value (not market based) at grant date (Euro)
23.14
The information memorandum, prepared under art. 114-bis of Legislative Decree 58/98 and describing the
characteristics of the above plan, is publicly available on the Company’s website at
,
from its registered offices and from Borsa Italiana S.p.A.
As at 31 December 2021, there are no outstanding loans or guarantees by the Parent Company or its subsidiaries to
any of the directors, senior managers or statutory auditors.
279
Parent Company Report - EXPLANATORY NOTES
18. AMORTISATION, DEPRECIATION AND IMPAIRMENT
Details are as follows::
(Euro/thousand)
2021
2020
Depreciation of buildings, plant, machinery and equipment
3,405
3,384
Depreciation of other property, plant and equipment
1,355
937
Amortisation of intangible assets
19,497
12,221
Impairment of other assets
100
-
Depreciation and impairment of right-of-use assets (IFRS 16)
5,280
6,351
Total
29,637
22,893
Amortisation and depreciation charges amount to Euro 29,637 thousand in 2021, posting a net increase of Euro
6,744 thousand on the previous year (Euro 22,893 thousand at 31 December 2020), mainly due to higher intangible
asset amortisation
19. OTHER EXPENSES
Other expenses amount to Euro 165,100 thousand in 2021, compared with Euro 117,276 thousand in the previous
year, analysed as follows:.
(Euro/thousand)
2021
2020
Professional services
41,119
37,397
IT costs
33,827
29,719
Insurance
3,263
3,417
Maintenance services
15
50
Operating and other costs
28,488
26,458
Utilities
851
822
Travel costs
1,589
1,145
Rental costs
596
93
Increases in provisions for risks
361
1,020
Release of provisions for risks
(495)
-
Non-recurring other expenses and provisions/(releases):
Increase in provisions for risks
401
15,244
Release of provisions for risks
-
(384)
Business reorganisation costs
1,319
-
Other non-recurring costs
53,766
2,294
Total non-recurring other expenses/(income)
55,486
17,154
Total
165,100
117,276
Professional services of Euro 41,119 thousand (Euro 37,397 thousand in 2020) include costs for the use of personnel
seconded from other Group companies of Euro 11,974 thousand (Euro 10,017 thousand in 2020) and costs incurred
to manage the patents portfolio of Euro 3,593 thousand (Euro 4,067 thousand in 2020).
280
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2021
Professional services also include the compensation of the directors and statutory auditors of Prysmian S.p.A. and the
fees of the independent auditors for audit and related services, details of which can be found in Notes 25, 27 and 31.
Operating and other costs mainly refer to costs incurred for promotional activities and attendance at exhibitions
and trade fairs.
Rental costs amount to Euro 596 thousand (Euro 93 thousand at 31 December 2020).
As regards “Non-recurring other expenses and provisions”, the change primarily reflects the transfer to other Group
companies of Euro 53,500 thousand in proceeds received under legal settlements reached in 2021 with third parties.
20. FINANCE INCOME AND COSTS
Finance costs are detailed as follows:
(Euro/thousand)
2021
2020
Interest on loans
16,435
15,515
Interest on non-convertible bond
18,750
18,750
Interest on Convertible Bond 2017- non-monetary component
5,285
9,934
Interest on Convertible Bond 2021- non-monetary component
8,314
-
Amortisation of bank and financial fees and other expenses
7,305
5,816
Interest on lease liabilities
243
263
Employee benefit interest costs
34
51
Other bank interest
1,044
3,459
Costs for undrawn credit lines
3,649
3,389
Sundry bank fees
248
775
Other
1,419
130
Interest Rate Swaps
7,272
6,922
Non-recurring other finance costs:
Antitrust bank guarantee and interest costs
-
737
Finance costs for partial redemption of convertible bond
1,929
-
Total non-recurring other finance costs
1,929
737
Finance costs
71,928
65,742
Foreign currency exchange losses
8,185
8,181
Total finance costs
80,113
73,923
Amortisation of bank and financial fees and other expenses mainly reflects the Company’s share of the transaction
costs incurred to arrange the loans for the General Cable acquisition and to issue convertible and non-convertible
bonds.
Other bank interest mainly refers to the EIB Loans (Euro 80 thousand), the CDP Loans (Euro 766 thousand) and
interest on the intercompany current account with Prysmian Treasury S.r.l. (Euro 140 thousand).
281
Parent Company Report - EXPLANATORY NOTES
Finance income is detailed as follows:
(Euro/thousand)
2021
2020
Interest income from banks and other financial institutions
104
-
Other finance income
42,426
37,050
Non-recurring other finance income:
Recovery of Antitrust guarantee costs
-
501
Gain on conversion of conv. bond 2021 from equity linked to
convertible
15,638
-
Total non-recurring other finance income
15,638
501
Finance income
58,168
37,551
Foreign currency exchange gains
7,395
8,326
Total finance income
65,563
45,877
Other finance income mainly refers to fees charged to Group companies for guarantees given by the Company for
their benefit.
21. DIVIDENDS FROM SUBSIDIARIES
During 2021, Prysmian S.p.A. recorded a total of Euro 121,500 thousand in dividends received from its subsidiaries
Draka Holding B.V., Prysmian Cavi e Sistemi S.r.l. and Prysmian Treasury S.r.l.. The total amount of dividends also
includes income of Euro 32,051 thousand to account for share-based payments, reflecting the difference between
the grant date fair value of shares and their fair value at the reporting date. For more details, see Note B.2 Share-
based payments.
22. TAXES
Details are as follows:
(Euro/thousand)
2021
2020
Current income taxes
20,617
(3,446)
Deferred income taxes
1,137
(5,376)
Total
21,754
(8,822)
Current income taxes have had a negative impact of Euro 20,617 thousand in 2021, compared with a positive Euro
3,446 thousand in 2020.
Information about deferred taxes can be found in Note 4. Deferred tax assets.
282
Prysmian Group - Annual Report
2021
Taxes charged on profit before taxes differ from those calculated using the theoretical tax rate applying to the
Company for the following reasons:
(Euro/thousand)
2021
Tax rate
2020
Tax rate
Profit before taxes
160,721
71,654
Theoretical tax expense at nominal tax rate
38,573
24.0%
17,197
24.0%
Dividends from subsidiaries
(27,702)
(17.2%)
(28,044)
(39.1%)
Impairment/(Revaluation) of investments in
subsidiaries
1,200
0.7%
7,800
10.9%
Other permanent differences
5,524
3.4%
12,938
18.1%
IRAP for the year
1,333
0.8%
-
0.0%
Other
17,897
11.1%
(3,494)
(4.9%)
Net effect of group tax consolidation for the year
(15,071)
(9.4%)
(15,219)
(21.2%)
Effective income taxes
21,754
13.5%
(8,822)
(12.3%)
“Other” mainly includes provisions for tax risks of Euro 11,810 thousand, the benefits arising from the application
of a higher ACE (Allowance for Corporate Equity) deduction for Prysmian S.p.A. and differences on prior year taxes.
The Company, along with all its Italian resident subsidiaries, participates, as head of the tax group, in a group tax
consolidation, pursuant to art. 117 et seq of the Italian Income Tax Code. The intercompany transactions arising
under such a group tax consolidation are governed by specific rules and an agreement between the participating
companies, which involve common procedures for applying the tax laws and regulations.
The following companies are members of the tax group:
•
Fibre Ottiche Sud – F.O.S. S.r.l.
•
Prysmian Cavi e Sistemi S.r.l.
•
Prysmian Cavi e Sistemi Italia S.r.l.
•
Prysmian Treasury S.r.l.
•
Prysmian Electronics S.r.l.
•
Prysmian PowerLink S.r.l.
The rate used to calculate the tax charge is 24% for IRES (Italian corporate income tax), and 5.57% for IRAP (Italian
regional business tax).
23. CONTINGENT LIABILITIES
As a global operator, the Company is exposed to legal risks primarily, by way of example, in the areas of product
liability, and environmental, antitrust and tax rules and regulations. The outcome of existing or future legal disputes
and proceedings cannot be predicted with certainty. The outcome of such proceedings could result in the payment
of costs that are not covered, or not fully covered, by insurance, which would therefore have a direct effect on the
Company’s financial condition and results.
As at 31 December 2021, the contingent liabilities for which the Company has not recognised any provision for
risks and charges, on the grounds that the related legal and tax cases are considered unlikely to rise to significant
liabilities, amount to approximately Euro 242 thousand.
283
Parent Company Report - EXPLANATORY NOTES
24. COMMITMENTS
The Company has the following types of commitments at 31 December 2021:
a) Commitments to purchase property, plant and equipment and intangible assets
Contractual commitments, already given to third parties at 31 December 2021 and not yet reflected in the financial
statements, amount to Euro 1,677 thousand (Euro 352 thousand at 31 December 2020).
b) Comfort letters in support of bank guarantees given to Group companies
Comfort letters in support of bank guarantees given in the interest of Group companies amount to Euro 74 thousand
at 31 December 2021, all of which relating to P.T. Prysmian Cables Indonesia (Euro 75 thousand at 31 December 2020).
c) Other guarantees given in the interest of Group companies
These amount to Euro 5,503,604 thousand at 31 December 2021 (Euro 3,478,320 thousand at 31 December 2020),
analysed as follows:
(Euro/thousand)
2021
2020
Prysmian Cavi e Sistemi S.r.l.
48,759
56,532
Prysmian Netherlands B.V.
49,258
49,258
Prysmian PowerLink S.r.l.
3,872,694
3,212,521
Prysmian Cables & Systems Limited
28,043
22,024
Prysmian Cables and Systems USA, LLC
1,445,037
80,077
Fibre Ottiche Sud - F.O.S. S.r.l.
13,280
11,402
Prysmian Cables Spain SA
42,720
44,658
Prysmian Re Company Ltd
3,814
1,848
Total
5,503,604
3,478,320
The comfort letters and guarantees given in the interest of Group companies in (b) and (c) mainly refer to projects
and supply contracts and to the offsetting of VAT credits under the Group VAT settlement..
d) Comfort letters in support of bank guarantees given in the interest of the Company
These amount to Euro 50,000 thousand, versus Euro 41,782 thousand in the previous year.
As required by art. 2427 point 22-ter, it is reported that, in addition to the above disclosures about commitments,
there are no other agreements that are not reflected in the statement of financial position that carry material risks
or rewards and which are critical for assessing the Company’s assets and liabilities, financial position and results
of operations.
284
Prysmian Group - Annual Report
2021
25. RELATED PARTY TRANSACTIONS
Transactions between Prysmian S.p.A. and its subsidiaries mainly refer to:
•
services (technical, organisational and general) provided by head office to subsidiaries;
•
charging of royalties for the use of patents to the Group companies that benefit from them;
•
financial transactions entered into by the Parent Company on behalf of, and with, Group companies.
All the above transactions fall within the ordinary course of business of the Parent Company and its subsidiaries.
The related party disclosures also include the compensation paid to Directors, Statutory Auditors and Key
Management Personnel.
More details about related party transactions are provided in the table of “Intercompany and related party
transactions (disclosure under art. 2428 of the Italian Civil Code)” appended to the present Explanatory Notes.
The following tables summarise related party transactions in the year ended 31 December 2021
31 december 2021
(Euro/thousand)
Investments in
subsidiaries
Trade and other
receivables and
derivatives
Trade and other
payables and
derivatives
Employee benefit
obligations and
other provisions
Tax payables
Subsidiaries
5,719,977
359,940
205,187
-
Other related
parties:
Compensation of
directors, statutory
auditors and key
management
personnel
-
-
1,955
5,486
-
Total
5,719,977
359,940
207,142
5,486
-
31 december 2020
(Euro/thousand)
Investments in
subsidiaries
Trade and other
receivables and
derivatives
Trade and other
payables and
derivatives
Employee benefit
obligations and
other provisions
Tax payables
Subsidiaries
5,367,294
255,965
279,984
-
-
Other related
parties:
Compensation of
directors, statutory
auditors and key
management
personnel
-
-
4,152
5,591
-
Total
5,367,294
255,965
284,136
5,591
-
285
Parent Company Report - EXPLANATORY NOTES
2021
(Euro/thousand)
Sales
and other
income
Raw
materials,
consumables
and supplies
Cost of
goods and
services
Fair value
change
in metal
derivatives
Personnel
costs
Finance
income/
(costs)
Dividends/
(Impairment) of
investments
Taxes
Subsidiaries
222,026
4,870
87,712
243
-
38,968
148,551
12,353
Other related
parties:
Compensation
of directors,
statutory
auditors and key
management
personnel
-
-
1,082
-
9,835
-
-
-
Total
222,026
4,870
88,794
243
9,835
38,968
148,551
12,353
2020
(in migliaia
di Euro)
Sales
and other
income
Raw
materials,
consumables
and supplies
Cost of
goods and
services
Fair value
change
in metal
derivatives
Personnel
costs
Finance
income/
(costs)
Dividends/
(Impairment) of
investments
Taxes
Subsidiaries
186,576
2,255
30,664
(262)
0
36,389
111,941
2,020
Other related
parties:
Compensation
of directors,
statutory
auditors and key
management
personnel
-
-
775
-
12,479
-
-
-
Total
186,576
2,255
31,439
(262)
12,479
36,389
111,941
2,020
Transactions with subsidiaries
These refer to services supplied to and received from Group companies and to current account transactions with
the Group’s central treasury company.
Top management compensation
Top management compensation is analysed as follows:
(Euro/thousand)
2021
2020
Salaries and other short-term benefits - fixed part
3,617
5,600
Salaries and other short-term benefits - variable part
1,178
1,439
Other benefits
118
346
Share-based payments
2,563
2,957
Other costs
2,358
-
Total
9,835
10,342
of which Directors
8,134
7,685
286
Prysmian Group - Annual Report
2021
26. SIGNIFICANT NON-RECURRING EVENTS AND TRANSACTIONS
As required by Consob Communication DEM/6064293 dated 28 July 2006, the effects of non-recurring events and
transactions on the Company’s income statement are shown below, involving net non-recurring income totalling
Euro 22,807 thousand in 2021 and net non-recurring expenses of Euro 15,304 thousand in 2020.
(Euro/thousand)
2021
2020
Non-recurring other income
63,266
2,085
Non-recurring other expenses
(54,167)
(17,153)
Non-recurring finance costs
(1,929)
(737)
Non-recurring finance income
15,638
501
Total
22,807
(15,304)
The statement of financial position and net financial debt contain no material amounts in connection with non-
recurring events.
27. COMPENSATION OF DIRECTORS AND STATUTORY AUDITORS
Directors’ compensation amounts to Euro 8,134 thousand in 2021 (Euro 7,685 thousand in 2020). Statutory auditors’
compensation for duties performed in Prysmian S.p.A. amounts to Euro 195 thousand in 2021 (Euro 175 thousand in
2020). Compensation includes emoluments, and any other types of remuneration, pension and medical benefits,
received for their service as directors or statutory auditors of Prysmian S.p.A.. Further details can be found in the
Remuneration Report.
28. ATYPICAL OR UNUSUAL TRANSACTIONS
In accordance with the disclosures required by Consob Communication DEM/6064293 dated 28 July 2006, it is
reported that no atypical and/or unusual transactions took place during the year.
29. GROUP FINANCIAL COVENANTS
The credit agreements in place at 31 December 2021, details of which are presented in Note 10. Borrowings from
banks and other lenders, require the Group to comply with a series of covenants on a consolidated basis. The main
covenants, classified by type, are listed below:
a) Financial covenants
•
Ratio between EBITDA and Net finance costs (as defined in the relevant agreements);
•
Ratio between Net Financial Debt and EBITDA (as defined in the relevant agreements).
The covenants contained in the relevant credit agreements are as follows:
EBITDA/Net finance costs
(1)
not less than:
Net financial debt / EBITDA
(1)
not more than:
4,00x
3,00x
(1)
The ratios are calculated on the basis of the definitions contained in the relevant credit agreements. The Net Financial Debt-EBITDA ratio can go as high as 3.5
following extraordinary transactions like acquisitions, no more than three times, including on non-consecutive occasions.
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Parent Company Report - EXPLANATORY NOTES
b) Non-financial covenants
A number of non-financial covenants have been established in line with market practice applying to transactions
of a similar nature is size. These covenants involve restrictions on the grant of secured guarantees to third parties
and on amendments to the Company’s by-laws.
Default events
The main default events are as follows:
•
default on loan repayment obligations;
•
breach of financial covenants;
•
breach of some of the non-financial covenants;
•
declaration of bankruptcy by Group companies or their involvement in other insolvency proceedings;
•
issuing of particularly significant court orders;
•
occurrence of events that may adversely and significantly affect the business, the assets or the financial
conditions of the Group.
Should a default event occur, the lenders are entitled to demand full or partial repayment of the amounts lent and
not yet repaid, together with interest and any other amount due.
No collateral security is required.
Actual financial ratios reported at period end, calculated at a consolidated level for the Prysmian Group, are as
follows:
31 december 2021
31 december 2020
EBITDA / Net finance costs
(1)
15,82x
14,32x
Net financial debt / EBITDA
(1)
1,63x
2,10x
(1)
The ratios are calculated on the basis of the definitions contained in the relevant credit agreements.
The above financial ratios comply with both covenants contained in the relevant credit agreements and there are
no instances of non-compliance with the financial and non-financial covenants indicated above.
30. STATEMENT OF CASH FLOWS
Operating activities generated a net cash inflow of Euro 189,691 thousand in 2021, inclusive of Euro 801 thousand as
the difference between net taxes paid to tax authorities and those collected from the Group’s Italian companies for
IRES (Italian corporate income tax) transferred under the national tax consolidation (art. 117 et seq of the Italian
Income Tax Code).
Investing activities generated a net cash outflow of Euro 457,062 thousand, primarily from Euro 121,500 thousand
in dividend receipts, as mainly outweighed by Euro 355,000 thousand in capital contributions to subsidiaries and
Euro 200,000 thousand in investments in financial assets.
Financing activities provided a net inflow of Euro 367,218 thousand. This included a total of Euro 8,333 thousand
in loan repayments and Euro 261,000 thousand in bond redemptions. New funds raised in the period consisted of
Euro 75,000 thousand from new loans and Euro 768,750 thousand from new bonds issued.
Net finance costs presented in the income statement amount to Euro 14,550 thousand and include non-cash items;
excluding these items, net cash finance costs reflected in the statement of cash flows amount to Euro 19,128
thousand. Non-cash items included in net finance costs mostly refer to non-cash interest expense on bonds and
to loan arrangement costs.
After all these effects the Company’s overall net cash inflow for 2021 was Euro 99,847 thousand.
288
Prysmian Group - Annual Report
2021
31. INFORMATION PURSUANT TO ART.149-DUODECIES OF THE CONSOB ISSUER REGULATIONS
Pursuant to art. 149-duodecies of the Consob Issuer Regulations, the following table shows the fees in 2021 for
audit work and other services provided by the independent auditors EY S.p.A.:
(Euro/thousand)
Supplier of services
Fees for 2021
Fees for 2021
Audit services
EY S.p.A.
756
904
Certification services
EY S.p.A.
410
295
Total
1,165
1,199
32. STATE AID
With regard to the transparency rules governing state aid contained in art. 1, par. 125-129 of Italian Law 124/2017,
as amended by art. 35 of Legislative Decree 34/2019 (the so-called “growth decree”), published in Italy’s Official
Journal no. 100 dated 30 April 2019, reference should be made to the National State Aid Register for details of the
state aid and de minimis aid reported therein.
33. RESEARCH AND DEVELOPMENT
The Group’s research and development activities are mostly concentrated within Prysmian S.p.A.. The central
team, in coordination with R&D and engineering centres in the various countries, has developed numerous projects
over the year in the field of both energy and telecom cables; significant advances have been made in the area of
materials and optical fibre technology.
R&D costs incurred in 2021 have been expensed in full to income and amounted to Euro 27,236 thousand versus
Euro 23,321 thousand in 2020.
34. ACCOUNTING STANDARDS
DIVIDENDS
Dividend income is recognised in the income statement when the right to receive the dividends is established,
normally coinciding with the shareholders’ resolution declaring the same, irrespective of whether such dividends
are paid out of an investee company’s before or after the acquisition earnings.
The distribution of dividends to shareholders is recognised as a liability in the Company’s financial statements when
the distribution of such dividends is approved.
SHARE-BASED PAYMENTS
Stock options are valued on the basis of the fair value determined on their grant date. This value is charged to
the income statement on a straight-line basis over the option vesting period with a matching entry in equity.
This recognition is based on the estimated number of stock options that will effectively vest in favour of eligible
employees, taking into consideration any conditions applying to their enjoyment, irrespective of the market value
of the shares.
This value is recognised:
1.
as an expense in the income statement, with a matching credit to an equity reserve, for options vesting in favour
of the Company’s employees:
2.
b)
if the related cost is recharged, the part relating to the grant date fair value is recognised in equity, while
the difference between the grant date fair value and the vesting date fair value or reporting date fair value is
recognised as a dividend in the income statement;
3.
c)
as an increase in the value of investments in subsidiaries, with a matching credit to an equity reserve, for
options vesting in favour of employees of Group companies.
289
Parent Company Report - EXPLANATORY NOTES
INVESTMENTS IN SUBSIDIARIES
Investments in subsidiaries are carried at cost, less any impairment losses.
If there is specific evidence of impairment, the value of investments in subsidiaries, determined on the basis of
cost, is tested for impairment. This involves comparing the carrying amount of investments with their recoverable
amount, defined as the higher of fair value, and value in use.
The value of investments is tested for impairment in at least one of the following circumstances:
•
the carrying amount of the investment in the separate financial statements exceeds the carrying amount of
the investee’s net assets, including any associated goodwill, reflected in the consolidated financial statements;
•
the investee’s reported EBITDA is less than 50% of that projected in the business plan, if this performance indicator
is relevant to the company in question;
•
the dividend distributed by the investee exceeds the total comprehensive income of the investee in the period
to which the dividend refers.
If the recoverable amount of an investment is less than its carrying amount, then the carrying amount is reduced
to the recoverable amount. This reduction represents an impairment loss, which is recognised through the income
statement.
For the purposes of impairment testing, the fair value of investments in listed companies is determined with
reference to market value, regardless of the size of holding. The fair value of investments in unlisted companies is
determined using valuation techniques, amongst which the market multiples approach.
Instead, value in use is determined using the “Discounted Cash Flow - equity side” method, which involves calculating
the present value of estimated future cash flows generated by a subsidiary, including cash flows from operating
activities and the consideration arising from the investment’s ultimate sale, net of its cash position at the valuation
date.
If the reasons for a previously recognised impairment loss cease to apply, the carrying amount of the investment
is reinstated but to no more than its original cost, with the related revaluation recognised through the income
statement.
TREASURY SHARES
Treasury shares are reported as a deduction from equity. The original cost of treasury shares and revenue arising
from any subsequent sales are treated as movements in equity.
35. ESTIMATES AND ASSUMPTIONS
The preparation of financial statements requires Management to apply accounting policies and methods which,
at times, rely on subjective judgements and estimates based on past experience and assumptions deemed to be
reasonable and realistic according to the circumstances. The application of these estimates and assumptions
influences the amounts reported in the financial statements, meaning the statement of financial position, the
income statement, the statement of comprehensive income and the statement of cash flows, as well as the
accompanying disclosures. Ultimate amounts, previously reported on the basis of estimates and assumptions,
may differ from original estimates because of uncertainty surrounding the assumptions and conditions on which
the estimates were based.
The following is a brief description of the accounting policies that require the Management of Prysmian S.p.A. to
exercise greater subjectivity of judgement when preparing estimates and a change in whose underlying assumptions
could have a material impact on the financial statements.
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Prysmian Group - Annual Report
2021
a) Provisions for risks and charges
Provisions are recognised for legal and tax risks to reflect the risk of an adverse outcome. The value of the provisions
recorded in the financial statements against such risks represents the best estimate by Management at that date.
This estimate requires the use of assumptions depending on factors which may change over time and which could,
therefore, have a material impact on the current estimates made by Management to prepare the Company’s financial
statements.
b) Impairment of assets
In accordance with the accounting standards applied by the Group, property, plant and equipment and intangible
assets with finite useful lives and equity investments are tested for impairment when indicators suggest it will be
difficult to realise recoverable value through use of the assets, which are written down accordingly. Verification
of the existence of these indicators requires Management to make subjective judgements based on information
available within the Company and from the market, as well as on past experience.
In addition, if a potential impairment loss is identified, the Company determines the amount of such impairment
using suitable valuation techniques. Correct identification of indicators of potential impairment, as well as the
estimates for determining its amount, depend on factors which can vary over time, thus influencing judgements
and estimates made by Management.
Irrespective of the existence of indicators of potential impairment or otherwise, all intangible assets not yet ready
for use must be tested for impairment once a year.
The Company has not recorded any intangible assets with an indefinite useful life in its financial statements.
c) Climate change
As more fully explained in the Directors’ Group Report and in the Non-Financial Information Statement, the Company,
as the Group, is implementing an ambitious “Net Zero” strategy, in line with the requirements of the Paris Agreement.
At the same time, the Prysmian Group is analysing and assessing the risks and opportunities of climate change
and has set targets for the reduction of greenhouse gas emissions classified as Scope 1 and 2 (direct and indirect
emissions generated by its own activities) and as Scope 3 (generated by the value chain).
The consequences in terms of investments, costs and other impacts on cash flows have been considered when
preparing financial forecasts, consistent with the state of progress of this process. The replacement program for
certain assets aimed at achieving the “Net Zero” strategy involves reviewing the useful lives of these assets, with
a consequent acceleration of their depreciation process. The 2021 impairment tests have taken into account the
impacts on investment flows, as far as they can be currently estimated, without any significant effects on the test
results. In addition, the Group considered challenges associated with the commitments made on climate and did
not identify any further aspects that could have a material impact on the impairment tests. It is possible that in
the future the carrying amount of assets or liabilities recognised in the Company’s financial statements may be
subject to different impacts as the strategy of managing climate change evolves. However, these aspects are more
and more frequently monitored through coordination between the various company departments.
d) Depreciation and amortisation
The cost of property, plant and equipment and intangible assets is depreciated/amortised on a straight-line basis
over the estimated useful lives of the assets concerned. The useful economic life of the Company’s property, plant
and equipment and intangible assets is determined by Management when assets are acquired. This is based on past
experience for similar assets, market conditions and expectations regarding future events that could impact useful
life, including developments in technology. Therefore, actual economic life may differ from estimated useful life.
The Company periodically reviews technological and industry developments to update residual useful lives.
This periodic review may lead to a variation in the depreciation/amortisation period and therefore also in the
depreciation/amortisation charge for future years.
291
Parent Company Report - EXPLANATORY NOTES
e) Taxes
Current taxes are calculated on the basis of taxable income for the year, applying the tax rates in force at the
reporting date.
Deferred tax assets are recognised to the extent that it is likely there will be sufficient future taxable income against
which they can be recovered.
f) Employee benefit obligations
The present value of the pension plans reported in the financial statements depends on an independent actuarial
calculation and on a number of different assumptions. Any changes in assumptions and in the discount rate used
are duly reflected in the present value calculation and may have a significant impact on the figures reported in the
financial statements. The assumptions used for the actuarial calculation are examined by the Company annually.
Present value is calculated by discounting future cash flows at an interest rate equal to that on high-quality corporate
bonds issued in the currency in which the liability will be settled and which takes account of the duration of the
related pension plan.
Further information can be found in Note 13. Employee benefit obligations and Note 17. Personnel costs.
g) Incentive and share purchase plans
The employee share purchase plan, directed at almost all the Group’s employees, provides an opportunity for them
to obtain shares on preferential terms and conditions. The operation of this plan is described in Note 17. Personnel
costs.
36. EVENTS AFTER THE REPORTING PERIOD
Tax risk management and control system endorsed by the Italian Revenue Agency with admission of the Group’s
seven Italian companies to the “Cooperative Compliance” program.
On 3 January 2022, the Group announced that it had been admitted to the Cooperative Compliance program with
the Italian Revenue Agency after the Group’s seven Italian companies successfully passed the rigorous review of the
adequacy of the Tax Control Framework for detecting, measuring, managing and controlling tax risk. Admission to
the program, which applies from tax period 2020, will allow the Group to establish a relationship based on trust and
transparency with the Italian tax authorities, aimed at the pre-emptive analysis of issues with the highest tax risk
and an ever-increasing level of oversight of the most relevant tax issues. Prysmian’s entry into the Collaborative
Compliance program is in line with international best practice.
For the Group, managing tax risk is a crucial aspect of ethical, responsible business management, in line with the
Group’s sustainability strategy based on transparency and an awareness that taxes constitute a significant source
of contribution to the economic and social development of the countries in which it operates. The development of
an effective tax risk management model, the adoption of a Group Tax Strategy and admission to the Cooperative
Compliance program will therefore make it possible, within the framework of this relationship with the Revenue
Agency, to eliminate tax risk, defined as the risk of operating in conflict with the principles of tax law.
In accordance with the law, the admission notified by the Italian Revenue Agency means that Prysmian S.p.A. and
the other six Italian group companies have been added to the list, published on the Agency’s official website, of
companies that operate in full transparency with the Italian tax authorities.
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2021
Euro 135 million loan to finance R&D activities
On 3 February 2022, the Group announced that it had finalised a loan from the European Investment Bank (EIB)
for Euro 135 million to support the 2021-2024 European R&D program of the world-leading Group in the power and
telecom cables industry.
The EIB loan is specifically intended to support projects to be developed at R&D centres in five European countries:
France, the Netherlands, Spain, Germany and Italy. A significant share of the funding is earmarked for Italy, which
is home to Prysmian Group’s headquarters, R&D offices and a number of plants that are centres of manufacturing
excellence for optical fibres and submarine power transmission cables and systems. Globally, Prysmian Group has 26
R&D centres located in Europe, North and South America and Asia, with a team of over 900 professional researchers,
technicians and operators, and an extensive portfolio of more than 5,500 patents.
Investigation by Germany’s Federal Cartel Office (FCO)
On 18 January 2022, the Group announced that the German Federal Cartel Office (FCO) had carried out inspections
at some of the Group’s sites in Germany. The inspections were conducted as part of an investigation by the FCO into
alleged coordination in setting the standard metal surcharges applied by the industry in Germany. Prysmian is co-o
37. FILING OF FINANCIAL STATEMENTS
The financial statements of Prysmian S.p.A. at 31 December 2021 will be filed within the legally required term at its
registered office and will be available for viewing on the websites of the company at
, the
central storage mechanism at
and the Italian Stock Exchange at
.
The financial statements of the sub-holding company Prysmian Cavi e Sistemi S.r.l. will be filed at the registered
office in Via Chiese 6, Milan; the financial statements of the sub-holding company Draka Holding B.V. will not be
presented, as permitted by Dutch law.
Milan, 1 March 2022
ON BEHALF OF THE BOARD OF DIRECTORS
THE CHAIRMAN
Claudio De Conto
293
Parent Company Report - EXPLANATORY NOTES
LIST OF INVESTMENTS IN SUBSIDIARIES AT 31 DECEMBER 2021
(Euro/thousand)
Registered
office
Net book
value
% owned
Share capital
in Euro
Total
equity
Prysmian
share
of equity
Net profit/
(loss)
for the year
Italian
subsidiaries
Prysmian Cavi e
Sistemi S.r.l.
Milan,
Via Chiese, 6
401,607
100
50,000
395,913
395,913
28,749
Prysmian Cavi e
Sistemi Italia S.r.l.
Milan,
Via Chiese, 6
116,220
100
77,143
101,833
101,833
(8,291)
Prysmian
PowerLink S.r.l.
Milan,
Via Chiese, 6
219,741
100
100,000
174,734
174,734
23,618
Fibre Ottiche Sud
F.O.S. S.r.l.
Battipaglia,
Strada
Provinciale
135
105,441
100
47,700
132,953
132,953
(12,317)
Prysmian
Treasury S.r.l.
Milan,
Via Chiese, 6
83,550
100
80,000
106,666
106,666
20,838
Total Italian
subsidiaries
926,559
Foreign
subsidiaries
Draka Holding
B.V.
Amsterdam,
Netherlands
4,789,983
100
52,229
4,733,203
4,733,203
122,169
Prysmian Kabel
und Systeme
GmbH
Berlin,
Germany
3,434
6.25
15,000
69,911
4,369
7,024
Prysmian Kablo
SRO
Bratislava,
Slovakia
1
0.005
21,246
13,437
-
3,309
Jaguar
Communication
Consultancy
Services Private
Ltd.
Mumbai,
India
-
0.0000010
1,817
43
-
(343)
Prysmian Cabos e
Sistemas do Brasil
S.A.
Sorocaba,
Brazil
-
0.040177
144,003
157,967
63
1,730
Total foreign
subsidiaries
4,793,418
Grand total
5,719,977
294
Prysmian Group - Annual Report
2021
INTERCOMPANY AND RELATED PARTY TRANSACTIONS
(DISCLOSURE UNDER ART. 2428 OF THE ITALIAN CIVIL CODE)
Costs
Revenue
(Euro/thousand)
Investments in subsidiaries
Receivables
Payables
Goods and services
Finance costs
Goods and services
Finance income
Dividends and
(impairment)/revaluation
of investments
Income (expense) from
group tax consolidation
Prysmian Group Baltics AS
-
8,167
(1)
6
-
65,988
-
-
Associated Cables Pvt. Ltd
-
2
-
-
-
-
-
-
-
Cobre Cerrillos S.A.
-
1,725
63
63
-
948
-
-
-
Conducen, SRL
-
1,083
80
235
-
966
-
-
-
Draka Belgium N.V.
-
(4)
-
-
-
1
-
-
-
Draka Comteq Berlin GmbH &
Co KG
-
237
-
-
-
758
-
-
-
Draka Comteq Cabos Brasil S.A.
-
-
21
-
-
-
-
-
-
Draka Comteq Fibre B.V.
-
487
165
483
-
461
-
-
-
Draka Comteq France SAS
-
2,316
93
259
-
1,398
-
-
-
Draka Comteq Germany GmbH
& Co.KG
-
7,976
2
2
-
66,021
-
-
-
Prysmian Kablo SRO
1
1,031
27
27
-
2,925
-
-
-
Draka Comteq UK Limited
-
285
83
380
-
729
-
-
-
Draka Durango S. de R.L. de C.V.
-
1
21
-
-
1
-
-
-
Draka Elevator Products INC (US)
-
1,259
17
1
-
469
-
-
-
Draka Elevator Products,
Inc. (CA)
-
1
-
-
-
1
-
-
-
Draka Fileca S .A.S.
-
493
-
-
-
655
-
-
-
Draka Holding N.V.
Draka Holding B.V.
4.789.983
5,320
580
1,134
-
1,721
-
123,644
-
Prysmian Group North Europe AB
-
7,385
108
206
-
40,134
-
-
-
Draka Kabely SRO
-
10,092
47
96
-
146,965
-
-
-
Prysmian Group Norge AS
-
1,485
32
60
-
1,176
-
-
-
Draka Paricable S.A.S.
-
-
-
-
-
15
-
-
-
Draka Philippines Inc.
-
717
12
14
-
41,389
-
-
-
Draka Service GmbH
-
1
-
-
-
4
-
-
-
Draka Transport USA LLC
-
733
-
-
-
3,095
-
-
-
EHC Canada Inc.
-
204
-
-
-
-
-
-
-
EHC Escalator Handrail
(Shanghai) Co. Ltd
-
108
-
-
-
-
-
-
-
EURELECTRIC TUNISIE S.A.
-
151
-
-
-
-
-
-
-
Fibre Ottiche Sud F.O.S. S.r.l.
105.440
498
1,066
795
-
488
-
(4,889)
-
General Cable Celcat, Energia e
Telecomunicacoes S.A.
-
5,073
18
25
-
58,336
-
-
-
General Cable Company Ltd.
-
1,301
-
-
-
1,838
-
-
-
General Cable Condel, Cabos de
Energia e Telecomunicacoes S.A.
-
-
-
-
-
(3)
-
-
-
General Cable Corporation
-
30
4
4
-
41
-
-
-
General Cable de Mexico, S.A de
C.V.
-
167
(3)
33
-
433
-
-
-
General Cable Holdings
(Spain), S.L.
-
-
-
-
-
(14)
-
-
-
General Cable Industries, Inc.
-
15,770
5,009
19,957
-
11,364
-
-
-
General Cable Industries, LLC
-
10
-
-
-
11
-
-
-
General Cable Nordic A/S
-
1
-
-
-
1
-
-
-
Prysmian Powerlink Services Ltd.
-
149
-
-
-
33
-
-
-
295
Parent Company Report - EXPLANATORY NOTES
Costs
Revenue
(Euro/thousand)
Investments in subsidiaries
Receivables
Payables
Goods and services
Finance costs
Goods and services
Finance income
Dividends and
(impairment)/revaluation
of investments
Income (expense) from
group tax consolidation
Grupo General Cable Sistemas,
S.L.
-
5,553
104
89
-
80,813
-
-
-
Jaguar Communication
Consultancy Services Private Ltd.
-
208
-
-
-
-
-
-
-
LLC Prysmian RUS
-
632
33
12
-
261
-
-
-
LLC
Rybinskelektrokabel
-
228
96
34
-
-
-
-
-
MCI-Draka Cable Co. Ltd
-
3,022
94
37
-
590
-
-
-
Norddeutsche Seekabelwerke
GmbH
-
888
295
601
-
379
-
-
-
Oman Aluminium Processing
Industries LLC
-
3
1,582
2,655
-
-
-
-
-
Oman Cables Industry (SAOG)
-
232
260
804
-
153
-
-
-
Oman Cables Industry SAOG
-
-
90
-
-
-
-
-
-
Omnisens S.A.
-
376
-
-
-
-
-
-
-
P.O.R. S.A.S.
-
-
1,222
1,222
-
-
-
-
-
P.T. Prysmian Cables Indonesia
-
863
4
(3)
-
1,068
-
-
-
Power Cables Malaysia SND – BHD
-
-
5
-
-
-
-
-
-
Prestolite de Mexico, S.A. de C.V.
-
185
-
-
-
-
-
-
-
Productora de Cables Procables
S.A.S.
-
720
5
16
-
571
-
-
-
Prysmian New Zealand Ltd.
-
104
-
-
-
61
-
-
-
Prysmian - OEKW GmbH
-
132
-
-
-
15
-
-
-
Prysmian (CHINA)
Investment Company Ltd
-
883
43
-
-
27
-
-
-
Prysmian Cables & Systems
Limited
-
23,126
10,357
11,314
-
262,307
348
-
-
Prysmian Cables (Shangai)
Trading CO. Ltd
-
1,260
45
5
-
104
-
-
-
Prysmian Cables and Systems
(US) Inc.
-
1
-
-
-
-
-
-
-
Prysmian Cables and Systems
B.V.
-
15,339
325
392
-
155,028
739
-
-
Prysmian Cables et Systèmes
France S.A.S.
-
21,320
741
1,268
-
221,716
388
-
-
Prysmian Cables y Sistemas de
Mexico S. de R.L. de C.V.
-
297
43
42
-
15
-
-
-
Prysmian Cables Spain, S.A.
(Sociedad Unipersonal).
-
15,099
14,484
14,866
-
94,941
239
-
-
Prysmian Cabluri Si Sisteme S.A.
-
5,130
57
23
-
35,555
-
-
-
Prysmian Cavi e Sistemi Italia
S.r.l.
116,220
8,450
822
1,473
-
29,482
-
839
-
Prysmian Cavi e Sistemi S.r.l.
401,606
43,764
9,203
9,203
-
71,897
-
20,261
2,521
Prysmian Cables and Systems
USA, LLC
-
19,153
907
1,435
-
14,569
2,612
-
-
Prysmian Group Denmark A/S
-
348
-
-
-
67
-
-
-
Prysmian Electronics S.r.l.
-
591
-
48
-
243
-
-
-
Prysmian Energia Cables y
Sistemas de Argentina S.A.
-
47
46
115
-
142
-
-
-
Prysmian Cabos e Sistemas do
Brasil S.A.
-
59
280
441
-
248
-
-
-
Prysmian Group Finland OY
-
23,962
697
1,064
-
170,886
-
-
-
Prysmian Hong Kong Holding
Limited
-
25
-
-
-
98
-
-
-
296
Prysmian Group - Annual Report
2021
Costs
Revenue
(Euro/thousand)
Investments in subsidiaries
Receivables
Payables
Goods and services
Finance costs
Goods and services
Finance income
Dividends and
(impairment)/revaluation
of investments
Income (expense) from
group tax consolidation
Prysmian Kabel und Systeme
GmbH
3,434
12,800
510
934
-
38,416
-
-
-
Prysmian MKM Magyar Kabel
Muvek Kft
-
14,253
35
60
-
268,167
-
-
-
Prysmian Australia PTY Ltd
-
3,254
252
298
-
5,223
-
-
-
Prysmian Cables and Systems
Canada Ltd
-
1,613
21
70
-
4,311
-
-
-
Prysmian Power Link S.r.l.
219,742
32,804
21,187
21,374
-
78,030
32,725
2,131
2,794
Prysmian RE Company
Designated Activity Company
-
-
-
-
-
16
-
-
-
Prysmian Technology Jiangsu
Co. Ltd.
-
622
-
109
-
97
-
-
-
Prysmian Treasury S.r.l.
83,550
6,290
195,306
21
8,221
745
12,497
6,565
7,038
Prysmian Wuxi Cable Company
Ltd
-
2,608
-
-
-
1,013
-
-
-
SILEC Cable, S.A.S.
-
6,398
290
459
-
31,336
-
-
-
Sindutch Cable Manufacturer
Sdn Bhd
-
2,426
5
9
-
1,094
-
-
-
Singapore Cables Manufacturers
Pte Ltd
-
2,596
15
40
-
587
-
-
-
Société Ivoirienne De Cables S.A.
-
5
-
-
-
2
-
-
-
Suzhou Draka Cable Co. Ltd
-
2,267
211
372
-
341
-
-
-
Turk Prysmian Kablo Ve
Sistemleri A.S.
-
5,700
85
130
-
22,165
-
-
-
Grand Total
5,719,977
359,891
267,205
94,817
8,221
2,041,121
49,548
148,551
12,353
297
Parent Company Report - CERTIFICATION OF THE FINANCIAL STATEMENTS
Certification of the financial statements
pursuant to art. 81-ter of consob regulation 11971 dated 14 may 1999 and
subsequent amendments and additions
1.
The undersigned Valerio Battista, as Chief Executive Officer, Stefano Invernici and Alessandro Brunetti, as
managers responsible for preparing the financial reports of Prysmian S.p.A., certify, also taking account of the
provisions of paragraphs 3 and 4, art. 154-bis of Italian Legislative Decree 58 dated 24 February 1998, that during
2021 the accounting and administrative processes for preparing the financial statements:
•
have been adequate in relation to the business’s characteristics and
•
have been effectively applied.
2.
The adequacy of the accounting and administrative processes for preparing the financial statements at 31
December 2021 has been evaluated on the basis of a procedure established by Prysmian in compliance with the
internal control framework published by the Committee of Sponsoring Organizations of the Treadway Commission,
which represents the generally accepted standard model internationally.
3.
It is also certified that:
3.1
The financial statements at 31 December 2021:
•
have been prepared in accordance with applicable international accounting standards recognised
by the European Union under Regulation (EC) 1606/2002 of the European Parliament and Council
dated 19 July 2002;
•
correspond to the underlying accounting records and books of account;
•
are able to provide a true and fair view of the issuer’s statement of financial position and results
of operations.
3.2
T
he directors’ report contains a fair review of performance and the results of operations, and of the issuer’s
situation, together with a description of the principal risks and uncertainties to which it is exposed.
Milan, 1 March 2022
Valerio Battista
Stefano Invernici
Alessandro Brunetti
CHIEF EXECUTIVE OFFICER
MANAGERS RESPONSIBLE FOR PREPARING COMPANY FINANCIAL REPORTS
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Prysmian Group - Annual Report
2021
Proposal to approve the financial statements and
to allocate net profit for 2021
Shareholders,
We are submitting the financial statements for the year ended 31 December 2021 for your approval and recommend
that you adopt the following:
RESOLUTION
The Shareholders’ Meeting
•
acknowledges the report by the Board of Directors,
•
acknowledges the reports by the Board of Statutory Auditors and by the Independent Auditors,
•
has examined the financial statements at 31 December 2021, which close with a net profit of Euro 138,966,969 and
RESOLVES
a)
to approve:
•
the report on operations by the Board of Directors;
•
the financial statements at 31 December 2021;
as presented by the Board of Directors - as a whole and in their individual parts, along with the proposed
provisions - which report a net profit of Euro 138,966,969;
b)
to grant each ordinary voting share (taking account of directly held treasury shares) a gross dividend of Euro
0.55, drawn from net profit for the year and Euro 6 million from the following available earnings reserves: “Retained
earnings”.
The dividend will be paid out from 21 April 2022, with record date 20 April 2022 and ex-div date 19 April 2022.
Milan, 1 March 2022
ON BEHALF OF THE BOARD OF DIRECTORS
THE CHAIRMAN
Claudio De Conto
Prysmian Group - Annual Report
2021
300
Independent Auditors’ Report
301
Parent Company Report - INDEPENDENT AUDITORS’ REPORT
302
Prysmian Group - Annual Report
2021
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Parent Company Report - INDEPENDENT AUDITORS’ REPORT
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2021
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Prysmian Group - Annual Report
2021
Report of the Board of Statutory Auditors
REPORT BY THE BOARD OF STATUTORY AUDITORS
(Art. 153 Legislative Decree 58/1998 and Art. 2429 Italian Civil Code)
Shareholders,
This report describes the activities performed by the Board of Statutory Auditors of
Prysmian S.p.A. (the "Company" and together with its subsidiaries, the "Group")
during the year ended 31 December 2021 (the "Reporting Period").
1.
In fulfilling its supervisory and control activities, the Board of Statutory
Auditors reports that:
a)
it has monitored observance of the law, the Company's By-laws and of
good management practices, in compliance with the relevant legislation, also
taking into account the standards of conduct established by the Italian
Accounting Profession (
Consiglio nazionale dei Dottori Commercialisti ed
Esperti Contabili
);
b)
it has attended meetings of the Board of Directors, the Control and Risks
Committee, the Remuneration and Nomination Committee and the
Sustainability Committee and it has received regular information from the
Directors about the Company's general performance and outlook, with
particular attention to the impact of the Covid-19 pandemic on the Company,
and about transactions with the most significant impact on its results of
operations, financial position and cash flows that were approved and actioned
during the Reporting Period by the Company and Group companies, including
those transactions specifically mentioned in art. 150, par. 1 of Legislative
Decree 58 dated 24 February 1998 (Italy's Unified Financial Act, hereinafter
"UFA"). This information is adequately represented in the Directors' Report,
to which you are referred.
The Board of Statutory Auditors is able to provide reasonable assurance that
the transactions approved and actioned have complied with the law and the
By-laws and have not been not manifestly imprudent, risky, in potential conflict
of interest, in contrast with resolutions adopted by the shareholders in general
meetings, nor such as to compromise the integrity of the Company's net
assets. Resolutions adopted by the Board of Directors have been faithfully
executed by management and the organisation;
c)
it has not observed the existence of atypical and/or unusual transactions
with Group companies, third parties or related parties, nor has it received
information in this regard from the Board of Directors, the Independent
Auditors, or the director in charge of supervising the internal control and risk
management system. The Directors' Report contains adequate information
about the effects of ordinary transactions entered into with subsidiaries on an
arm's length basis that have an important impact on results of operations,
financial position and cash flows. The Board of Statutory Auditors is of the
opinion that related party transactions (including those between Group
307
Parent Company Report - REPORT OF THE BOARD OF STATUTORY AUDITORS
companies) are adequately overseen, also basing its conclusion on the
results of work carried out by the Audit & Compliance department. In this
regard, the Board of Statutory Auditors notes that the Company has adopted
a set of procedures for related party transactions in compliance with the
provisions of Consob Regulation 17221 dated 12 March 2010 and the Consob
Communication dated 24 September 2010, as well as specific rules contained
in the Group's Code of Ethics, which set out how to avoid or manage situations
in which the Directors have a conflict of interest or a personal interest. In
accordance with art. 4 of the above Consob Regulation, the Board of Statutory
Auditors has verified that the procedures adopted by the Company comply
with the Regulation's principles, and that such procedures have been
observed;
d)
it has obtained information about and monitored (i) the adequacy of the
Company's organisational structure, for those aspects falling within the scope
of its remit, and (ii) the observance of good management practices, by
acquiring information from heads of the relevant departments and by holding
meetings with representatives of the auditing firm engaged to perform the
statutory audit (the "Independent Auditors"), including for the purpose of
exchanging relevant information and data; no critical issues have emerged as
a result of these meetings. Nor have any critical issues emerged as a result
of meetings with the Boards of Statutory Auditors and sole Statutory Auditors
of the Company's Italian subsidiaries;
e)
it has monitored and verified, to the extent of its remit:
-
the adequacy of the administration and accounting systems, and their
reliability to fairly represent business operations, particularly in view of
the Covid-19 pandemic;
-
the adequacy of the systems and processes that govern the
production, reporting, measurement and representation of non-
financial results and information established by Legislative Decree
254 dated 30 December 2016, in order to allow for a fair
representation of the aspects of a non-financial nature covered by the
decree, by:
i.
regularly exchanging information with executive directors and
particularly with Managers responsible for preparing company financial
reports, whose role is governed by art. 154-
bis
, UFA;
ii.
examining the reports prepared by the Audit & Compliance
department, including information on the outcome of any remedial
actions implemented as a result of auditing activities;
iii.
obtaining information from the heads of company departments;
iv
. holding meetings and exchanging information with the statutory
auditors of the Italian subsidiaries as permitted by paragraphs 1 and 2
of art. 151, UFA, during which the Board of Statutory Auditors obtained
information about the management and control systems of these
subsidiaries and general trends in their business;
v.
examining the activities of the Independent Auditors and reviewing
the results of their work;
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Prysmian Group - Annual Report
2021
vi.
taking part in the work of the Control and Risks Committee.
These activities have not revealed any anomalies that could be considered
evidence of inadequacies in the internal control and risk management system;
f)
it has held meetings with representatives of the Independent Auditors, EY
S.p.A., engaged to perform the statutory audit, in order to exchange relevant
data and information and to receive information not only about the main risks
to which the Company is exposed and consequent controls adopted, but also
about the tests carried out to audit the accounting system and the correct
recording of business operations in the accounting records. No significant
observations have emerged from these meetings, either by them or by us.
There has also been a continuous exchange of information about the
operational issues arising as a result of the Covid-19 health emergency. In
particular, the Board of Statutory Auditors has monitored the impacts of the
"remote" working methods adopted by the Independent Auditors, assisted by
the Company's personnel, without finding any critical issues;
g)
it has monitored the arrangements for implementing the Corporate
Governance Code for Listed Companies adopted by the Company, as
described in the Report on Corporate Governance and Ownership Structure
approved by the Board of Directors on 1 March 2022. The Board of Statutory
Auditors has also verified the correct application of the criteria and procedures
adopted by the Board of Directors to evaluate the independence of its
members. In addition, the Board of Statutory Auditors has verified that its own
members comply with the requirements for independence and professional
experience, established by the relevant legal and regulatory provisions;
h)
it has examined and obtained information about the activities of an
organisational and procedural nature implemented under Legislative Decree
231 of 8 June 2001 on corporate criminal liability. The Monitoring Board
instituted by the Company has reported on its activities during the Reporting
Period and has not notified the Board of Statutory Auditors of any significant
matters;
i)
it has verified that the information provided by subsidiaries located outside
the European Union is adequate for the audit of the annual and interim
financial reports, as required by art. 15 of the Market Regulations adopted
under Consob resolution 20249 dated 28 December 2017;
j)
it has monitored the implementation of organisational measures connected
with developments in the business, with particular attention to the measures
taken in relation to the Covid-19 health emergency;
k)
it has taken part in induction sessions aimed at deepening its knowledge
of the Company's business sectors and strategies, in line with the
recommendations of the Corporate Governance Code.
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Parent Company Report - REPORT OF THE BOARD OF STATUTORY AUDITORS
In its capacity as the Audit Committee, pursuant to art. 19 of Legislative Decree
39 dated 27 January 2010 as amended by Legislative Decree 135 dated 17 July
2016 implementing Directive 2014/56/EU, during the Reporting Period the Board
of Statutory Auditors has:
a) monitored the financial reporting process, which has proved fit for purpose
in terms of integrity;
b) controlled the effectiveness of the enterprise's internal quality control and
risk management systems, and internal audit function, as regards financial
reporting, without violating its independence;
c) monitored the statutory audit of the Company's separate financial
statements;
d) verified and monitored the independence of the Independent Auditors
pursuant to the provisions of law and in particular regarding the provision of
non-audit services, pursuant to art. 5 of Regulation (EU) 537/2014;
e) issued an opinion under art. 2389, par. 3, of the Italian Civil Code, regarding
the remuneration of directors holding particular offices.
The Board of Statutory Auditors met five times during the Reporting Period and
attended meetings of the Board of Directors, the Control and Risks Committee,
the Remuneration and Nomination Committee and the Sustainability Committee;
it also met with the Boards of Statutory Auditors and sole Statutory Auditors of the
subsidiaries referred to above.
As regards exchange of information with the Monitoring Board (instituted under
Legislative Decree 231/2001), this body has reported periodically to the Board of
Statutory Auditors on its supervisory activities involving the Organisational Model
adopted by the Company under Legislative Decree 231/2001.
Based on the information obtained, the Board of Statutory Auditors considers that
the business is run in accordance with sound management practices and that as
a whole, its organisational structure, system of internal controls and administrative
and accounting systems are appropriate for its business needs.
2.
With regard to relations with the Independent Auditors, EY S.p.A., the Board of
Statutory Auditors, serving in its capacity as the Audit Committee, reports that:
a)
the Independent Auditors have issued unqualified audit reports, dated
today, under art. 14 of Legislative Decree 39 dated 27 January 2010 and
art. 10 of Regulation (EU) 537/2014, on the separate and consolidated
financial statements for the year ended 31 December 2021.
The Independent Auditors' report contains the following opinions and
representations:
i.
the opinion that the separate financial statements and consolidated
financial statements of Prysmian S.p.A. give a true and fair view of
the statement of financial position of the Company and the Group at
31 December 2021, of their results of operations and cash flows for
the year then ended, in compliance with the International Financial
Reporting Standards adopted by the European Union, and with the
provisions that implement art. 9 of Legislative Decree 38 dated 28
310
Prysmian Group - Annual Report
2021
February 2005;
ii. a consistency opinion that the Directors' Reports accompanying the
separate and consolidated financial statements at 31 December
2021 and certain specific information contained in the "Report on
Corporate Governance and Ownership Structure", as specified by
art. 123-bis, par. 4, UFA, for which the Company's directors are
responsible, have been prepared in compliance with the legal
requirements;
iii.
a compliance opinion that the separate and consolidated financial
statements have been prepared in XHTML format, in accordance
with the provisions of European Commission Delegated Regulation
(EU) 2018/815;
iv. a statement that, based on their knowledge and understanding of the
enterprise and related context acquired during the audit, they have
nothing to report with regard to any material errors in the Directors'
Reports.
b) EY S.p.A. has also issued today the additional report to the Board of
Statutory Auditors serving in its capacity as the Audit Committee, in
accordance with art. 11 of Regulation (EU) 537/2014, which will be
forwarded to the Board of Directors as required by current legislation.
c) EY S.p.A. has also issued today their report on the consolidated non-
financial information statement prepared pursuant to art. 3, par. 10 of
Legislative Decree 254 dated 30 December 2016 and art. 5 of Consob
Regulation 20267 dated 18 January 2018, in which it represents that no
evidence has come to its attention that causes it to believe that Prysmian
Group's disclosure of non-financial information for the year ended 31
December 2021 has not been prepared, in all material aspects, in
accordance with the requirements of articles 3 and 4 of the
aforementioned decree.
d) EY S.p.A. has issued today their statement of independence, as required
by art. 6 of the Regulation (EU), from which no evidence emerges that
could compromise their independence. Lastly, the Board of Statutory
Auditors acknowledges the Transparency Report prepared by the
Independent Auditors and published on their website in accordance with
art. 18 of Legislative Decree 39/2010.
e)
In addition to the duties required by law in respect of listed companies, EY
S.p.A. and firms within the EY network have been engaged to perform
additional services other than the statutory audit, the fees for which have
been disclosed in the notes to the consolidated financial statements as
required by art. 149-
duodecies
of the Issuer Regulations. The services
other than the statutory audit were approved beforehand by the Board of
Statutory Auditors, which reviewed their compliance and relevance with
reference to the criteria contained in Regulation (EU) 537/2014.
Having reviewed the statement of independence issued by EY S.p.A. and its
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Parent Company Report - REPORT OF THE BOARD OF STATUTORY AUDITORS
transparency report, as well as the engagements awarded to EY S.p.A. and firms
in its network, the Board of Statutory Auditors believes there are no critical issues
concerning the independence of EY S.p.A..
3. The Board of Statutory Auditors is not aware of any matters or complaints of
which the Shareholders' Meeting should be informed. During the course of its
activities and based on the information obtained, the Board of Statutory
Auditors has not observed any omissions, misconduct, irregularities or any
other circumstances that would require reporting to the external Supervisory
Authority or disclosure in the present report.
4.
The Board of Directors has promptly provided the Board of Statutory Auditors
with copies of the financial statements and the Directors' Report. Within the
scope of its remit, the Board of Statutory Auditors observes that the formats
used are in accordance with the law, that the accounting policies adopted, as
described in the accompanying notes, are adequate in relation to the activities
and operations carried out by the Company, that the procedure adopted for
testing any impairment of assets presented in the financial statements was
approved by the Board of Directors independently and in advance of approving
the financial report and that the financial statements correspond to the facts
and information known to the Board of Statutory Auditors as a result of
attending meetings of the Company's governing bodies and of its own
supervisory activities.
5.
Given the results of specific work performed by the Independent Auditors to
test accounting controls and verify the reliability of the financial statements, as
well as the Board of Statutory Auditors' own supervisory activities, the Board of
Statutory Auditors can find no reasons to object to the approval of the proposed
resolutions presented by the Board of Directors to the Shareholders' Meeting.
Milan, 14 March 2022
On behalf of the Board of Statutory Auditors
Pellegrino Libroia
(Chairman)
Linking the
sustainable future
Explanation of change in name of reporting entity or other means of identification from end of preceding reporting period