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Operating RISKS
Risks associated with delivery dates, product quality and
execution of turnkey projects
Some supply and/or installation contracts entered into by the
Prysmian Group include penalties if the agreed delivery date or
qualitative standards are not met.
Contracts awarded for large turnkey projects, notably
those related to the development of submarine links, may
include penalties of this nature which are substantial. If
such penalties were to be applied, in conjunction with any
obligation to compensate any damages as well as the impact
of delayed deliveries on the supply chain for other projects,
this could adversely affect the Group’s activities, results of
operations and statement of financial position.
In order to avert or mitigate such risks the Company conducts
extensive testing of cables and accessories before they are
delivered or installed, will always attempt to limit its potential
contractual liabilities for penalties or damages to the fullest
extent possible, and, in addition, also maintains project
specific insurance policies during the shipping and erection
phases of all submarine turnkey projects.
The scope and level of such insurance policies, however, may
in some cases be restricted by the capacity of the relevant
insurance markets. As a result all potential liabilities may not
be insured or only insured up to a level which is below any
contractually agreed limits.
It is not possible to guarantee that in the future the Group
will always manage to fully and promptly meet commitments
arising from the occurrence of such risks. However, the
Company has not previously received any claims which have
resulted in material, and uninsured, adverse effects.
Risks relating to the operation of industrial facilities
Being an industrial group, the Prysmian Group is potentially
exposed to the risk of stoppage of production at one or more
of its facilities, due, for example, to machinery breakdown,
cancellation of or challenge to permits and licences by
the competent public authorities (also due to changes in
legislation), strikes or shortage of labour, natural disasters,
major disruptions in the supply of raw materials or energy,
sabotage or terrorist attacks.
There has not been any significant disruption in business over
the past three years, except for a prolonged stoppage in late
2011 at the Aubevoye plant in France due to the precautionary
need for asbestos decontamination within the production
site and some temporary disruptions for strikes at the plants
involved in restructuring (Livorno Ferraris in Italy, Derby in
