CONSOLIDATED FINANCIAL STATEMENTS >
DIRECTORS’ REPORT
84
| 2013 ANNUAL REPORT | PRYSMIAN GROUP
national and international laws in the segments in which
the Group operates, could require the Group to adopt stricter
standards or could limit its freedom of action in its own areas
of business. These factors could involve compliance costs,
even of significant amount, for its manufacturing facilities or
product specifications.
Risks associated with activities in emerging markets
The Prysmian Group operates and has production facilities
and/or companies in Asia and Latin America. The Group’s
activities in these countries are exposed to different risks
linked to local regulatory and legal systems, the imposition
of tariffs or taxes, political and economic instability, and
exchange rate risks.
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
and financial condition.
FINANCIAL RISKS
The 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 cooperation with the Group’s operating
companies.
The Group Finance, Administration and Control Department
provides written guidelines on monitoring risk management,
as well as for specific areas such as exchange rate risk,
interest rate risk, credit risk, the use of derivative and non-
derivative instruments, and 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 represent a potential risk factor in terms of
raising finance and its associated cost. Prysmian Group
believes that it has significantly mitigated such a risk insofar
as, in recent years, it has always been able to raise sufficient
financial resources, and at a competitive cost. In particular, in
December 2013 the Group obtained a loan for Euro 100 million
from the European Investment Bank (EIB) to fund the Group’s
European R&D plans over the period 2013-2016; in March 2013,
