2014 ANNUAL REPORT

Consolidated Financial Report |

DIRECTORS’ REPORT

2014 Annual Report

Prysmian Group

(1) "Italian Stock Exchange Self-Regulatory Code for Listed Companies - Ed. 2014" drawn up by the Corporate Governance Committee of Borsa Italiana S.p.A.

Customer centrality and satisfaction are a strategic approach

that is implemented by having a fast, smooth organisation

throughout the supply chain, capable of expediting deci-

sion-making and time to market by adapting itself to the

needs of the various industries through continuous invest-

ment in innovation.

One of the ways of implementing customer centricity is

through

"Factory Reliability"

, a process that makes it

possible not only to improve the reliability of planning and

the execution of manufacturing output, in terms of both

mix and volumes in ever faster response times, but also to

have stricter control over inventory levels for every type of

stock (raw materials, intermediate and finished goods); this

enables the Group to deal effectively and efficiently with

upswings and downswings in sales volumes and consequent

variation in manufacturing output.

In addition to the Customer Centricity and Factory Reliability

propositions, Prysmian Group has also started

Supply Chain

Integration

projects with some of its most important global

customers with the goal of improving process effectiveness

and efficiency throughout the supply chain, from the

producers of raw materials and intermediate goods used in

manufacturing through to the end cable user.

Prysmian Group has perfected a market approach over the

years that puts the customer at the centre of its strategic,

organisational and business choices. Its commitment

to analysing customer expectations and their evolution

over time allows the Group to develop organisational and

operating models that translate into fast, efficient and

targeted responses to the markets concerned.

At the heart of this approach is

"Customer Centricity"

which expresses itself in the ability to anticipate and satisfy

customer needs through its constant presence, from product

design through to delivery, and its provision of a level of

service that is monitored against specific, agreed parameters.

The Prysmian Group is able to develop solutions that not only

meet specific standards but also satisfy precise customer

needs. In particular, the Group is able to serve very different

segments and markets thanks to its ad hoc matrix organi-

sational structure that lets it have a local presence even for

major global projects. This means that markets with high local

specificity are served by country commercial and development

teams, and that markets with global products and customers

are followed by integrated business unit teams, while other

segments requiring a local presence and cooperation between

countries draw on the matrix structure's potential.

MARKET APPROACH

CORPORATE GOVERNANCE

The Prysmian Group keeps its corporate governance system constantly in line with latest

recommendations and regulations, adhering to international best practices.

Prysmian is aware of the importance of a good corporate

governance system in order to achieve strategic objectives

and create long-term sustainable value, by having a system

that is

effective

in complying with the legal and regulatory

framework,

efficient

in terms of cost-effectiveness, and

fair

towards all the Group's stakeholders.

Accordingly, the Prysmian Group keeps its corporate gover-

nance system constantly in line with latest recommenda-

tions and regulations, adhering to national and international

best practices.

In addition, the Group has put in place standards, rules and

procedures that govern and guide the conduct of activities

by all its organisational and operating structures, as well

as ensuring that all business transactions are carried out

effectively and transparently.

During 2014, with a view to continuous improvement of its

corporate governance system, Prysmian Group undertook

several initiatives to implement the recommendations of

the Self-Regulatory Code

, adopted by the Group, and to

strengthen the principles of transparency and integrity.

Corporate Governance Structure

. Prysmian's corporate gov-

ernance 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 providing

strategic guidance, 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

matters. The model of governance and control adopted

by Prysmian is the traditional one, with the presence of a

general Shareholders' Meeting, a Board of Directors and a

Board of Statutory Auditors.

An overview of the Company's corporate governance

structure now follows, along with a description of its main

features.