The year 2011 marked a strategically important turning point for Prysmian. The success of the Draka acquisition, completed last spring, has led to the creation of a new Group, the world leader in the energy and telecom cables industry by size and wealth of technology and expertise possessed by both companies. The integration process has been defined and implemented quickly and effectively and the initial results confirm the cogency of the decisions made by shareholders and management of both companies. The launch of the new organisational structure, together with the development of a new mission, vision and values shared by both organisations, took place in record time already by last July, with the subsequent deployment of all the operating units almost completed by year end. The integration is moving ahead according to plan also on the technology, production and commercial fronts with the new brand strategy and the expected benefits in terms of strengthening the Group's market competitiveness have already started to be seen. The validity of the approach adopted so far to manage the integration process is reflected in the approximately Euro 13 million of synergies already achieved, which exceed, if only by slightly, the original target of Euro 10 million.

The market scenario facing the new Group in 2011 showed signs of a recovery in demand which, although still weak, benefited nearly every business area in different regions around the world. These favourable signs were nonetheless still characterised by extremely competitive terms of sale and unpredictable fluctuations. The Energy segment benefited from a global recovery in volumes in all its business areas, particularly in North Europe, South America and Asia Pacific, while Telecom segment growth mostly came from optical fibre cables in places like North America and Australia.

Our focus on technological innovation and production flexibility, combined with ever increased emphasis on responding quickly to market changes and customer needs, have allowed the Group to close 2011 with a positive growth in its results, even in a market that, despite first-half signs of recovery, is still affected by macroeconomic uncertainties and volatility.

On the sales front, the Group achieved organic growth of +11.2%, a particularly significant result if compared to both 2010 (+3.2%) and 2009 (-17.4%). This growth came from both the energy cables business (+10.5%), where the utilities business area performed particularly well, and the telecom cables business, which reported an excellent +17.4%, a particularly significant result given this business's importance in the new Group (accounting for about 20% of total sales). The geographical breakdown of sales also reveals the growing importance of high-growth emerging countries, which accounted for approximately 30% of total sales. This performance was achieved also thanks to the policy of selectively investing in high-tech and high value-added businesses, consistent with the Group's global strategy.

The speed with which the two commercial teams started to work together helped protect sales even during the integration's initial stages by adopting an effective double-branding policy and by giving visibility from the start to the benefits of the heightened competiveness of the Group's commercial offering. In particular, in the business of submarine cables for offshore wind farms, Prysmian Group is now able to offer the widest range of technologies, from inter-array connections between turbines to cable systems for connection to mainland grids; in the SURF - Oil&Gas business, the Group's range of technologies and products (which already included umbilicals and flexible pipes) has been enlarged with the addition of Draka's DHT (Downhole Technology) cables; in the telecom cables business, the Group can now leverage on the most extensive and competitive product range in the industry. The availability of worldwide fibre production capacity also reduces production and logistics costs, resulting in better margins. In the renewable energy cables business, the enlarged offer is helping improve geographical reach, with a focus on high-growth markets; lastly, in the T&I business, current integration of the product ranges is improving the offer mix, with a focus on high-end products and key global customers.

The major endorsements received by the Group in the form of new contracts have confirmed its market and technological leadership in submarine systems. In the USA the Group was awarded the Hudson Transmission Project to create a new power connection to Manhattan, while in Northern Europe it was awarded four new projects for offshore wind farm connections, confirming its strategic partnership for the development of major renewable energy programmes in Germany. In the telecom cables business, the Group won a tender for the construction of the new broadband network in Australia that will connect 93% of the country's residential and commercial buildings. In Brazil, the Group will supply OPGW overhead cables for the construction of the new Tucurui-Macapà-Manaus telecommunications line, stretching 1,800 km and strategically important for the country. The Group's cables have also achieved important recognition in the oil industry, where, the start of full production by the new flexible pipes plant in Brazil has seen the arrival of the first contracts from Petrobras, confirming the Group's significant level of know-how and technology in this sector.

The validity of its technological and product offering, as well as its reliability and market reputation, are also confirmed by the growth in the Group's submarine cables order book, which, including the major Western Link project acquired at the beginning of 2012, increased to over Euro 2.3 billion at the end of February, assuring sales visibility for more than three years. Sales visibility for high voltage underground cables is for about one year.

The growth in sales has also benefited profitability, with Adjusted EBITDA improving on 2010 to Euro 568 million (inclusive of the consolidation of Draka from 1 March 2011). This figure is at the top end of the expected target range initially announced, confirming once again the Group's ability to respond positively to the expectations of the market and shareholders in general.

The income statement and statement of financial position for the year just ended reflect strong cash generation and a clear improvement in key indicators, such as a level of net debt just above Euro 1 billion, representing a multiple of less than two times Adjusted EBITDA. This allows the Company to enter the current year with a solid balance sheet.

The Group's ability to look to the future with foresight, with the aim of ensuring continued growth and value creation for shareholders, is also evident from its level of investments, which came to approximately Euro 145 million in 2011, most of which to develop high-tech businesses in keeping with the global strategy. The principal projects included completion of the new plant in Brazil for flexible offshore oil drilling pipes, and expansion of production capacity for high voltage cables in China and France, for submarine cables in Italy and Finland, and for optical cables in Brazil.

For a public company like the Prysmian Group, controlled by a wide array of shareholders and institutional and private investors, the continued confidence of the markets and its stakeholders is of paramount importance. The Group's wide and prestigious spectrum of shareholders and the positive opinion on the stock price held by almost all the financial analysts, confirm the validity of the results achieved and appreciation of its strategies.

Valerio Battista, Chief Executive Officer