Obligation Ansaldo Power S.p.A. 2.75% ( XS1624210933 ) en EUR

Ansaldo Power S.p.A.

100 % ⇌

Italie

XS1624210933 ( en EUR )

2.75% par an ( paiement annuel )

30/05/2024 - Obligation échue

Prospectus brochure de l'obligation Ansaldo Energia S.p.A XS1624210933 en EUR 2.75%, échue

100 000 EUR

350 000 000 EUR

Ansaldo Energia S.p.A. est un fabricant italien d'équipements et de services pour la production d'énergie, spécialisé dans les turbines à gaz, les turbines à vapeur, et les services d'ingénierie et de maintenance pour les centrales électriques.

L'Obligation émise par Ansaldo Power S.p.A. ( Italie ) , en EUR, avec le code ISIN XS1624210933, paye un coupon de 2.75% par an.
Le paiement des coupons est annuel et la maturité de l'Obligation est le 30/05/2024

ANSALDO ENERGIA S.p.A.
(incorporated with limited liability under the laws of the Republic of Italy)
350,000,000 2.750 per cent. Notes due 31 May 2024
The 350,000,000 2.750 per cent. Notes due 31 May 2024 (the "Notes") of Ansaldo Energia S.p.A. (the "Issuer") will be issued
on 31 May 2017 (the "Closing Date") at an issue price of 100 per cent. of their principal amount.
Unless previously redeemed or purchased and cancelled, the Notes will be redeemed at their principal amount on 31 May 2024.
The Notes are subject to redemption in whole at their principal amount at the option of the Issuer at any time in the event of
certain changes affecting taxation in the Republic of Italy. In addition, each holder of a Note may require the Issuer to redeem
such Note at their principal amount upon the occurrence of a Change of Control (as defined below). See "Terms and Conditions
of the Notes -- Redemption and Purchase".
The Notes will bear interest from 31 May 2017 at the rate of 2.750 per cent. per annum, payable annually in arrear on 31 May
each year commencing on 31 May 2018. Payments on the Notes will be made in Euros without deduction for or on account of
taxes imposed or levied by the Republic of Italy to the extent described under "Terms and Conditions of the Notes -- Taxation".
Application has been made for the Notes to be admitted to listing on the official list of the Luxembourg Stock Exchange and
trading on its Euro MTF Market. The Luxembourg Stock Exchange's Euro MTF market is not a regulated market for the
purposes of the Markets in Financial Instruments Directive (Directive 2004/39/EC). This Prospectus constitutes a prospectus
under the Luxembourg Law of 10 July 2005 on Prospectuses for Securities, as amended (the "Luxembourg Prospectus Law")
but is not a prospectus published in accordance with the requirements of the Prospectus Directive 2003/71/EC, as amended.
This Prospectus is available on the Luxembourg Stock Exchange's website (www.bourse.lu), together with the information
incorporated by reference herein. See "Information Incorporated by Reference".
An investment in the Notes involves certain risks. For a discussion of these risks, see "Risk Factors" on page 7.
The Notes will be in bearer form and in the denominations of 100,000 and integral multiples of 1,000 in excess thereof up to
and including 199,000. The Notes will initially be in the form of a temporary global note (the "Temporary Global Note"), which
will be deposited on or around the Closing Date with a common safekeeper for Euroclear Bank SA/NV ("Euroclear") and
Clearstream Banking, société anonyme ("Clearstream, Luxembourg"). The Temporary Global Note will be exchangeable, in
whole or in part, for interests in a permanent global note (the "Permanent Global Note") not earlier than 40 days after the
Closing Date upon certification as to non-U.S. beneficial ownership. Interest payments in respect of the Notes cannot be
collected without such certification of non-U.S. beneficial ownership. The Permanent Global Note will be exchangeable in
certain limited circumstances in whole, but not in part, for Notes in definitive form. See "Summary of Provisions Relating to the
Notes in Global Form".
The Notes have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act")
and are subject to United States tax law requirements. The Notes are being offered outside the United States in accordance
with Regulation S under the Securities Act ("Regulation S"), and may not be offered, sold or delivered within the United States
or to, or for the account or benefit of, U.S. persons except pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act.
Joint Lead Managers
Banca IMI
Barclays
BNP PARIBAS
Commerzbank
Crédit Agricole CIB
HSBC
Santander Global Corporate Banking
Société Générale Corporate & Investment Banking
UniCredit Bank
Co-Manager
UBI Banca
30 May 2017

IMPORTANT NOTICES
The Issuer accepts responsibility for the information contained in this Prospectus and declares that, to
the best of its knowledge, having taken all reasonable care to ensure that such is the case, the
information contained in this Prospectus is in accordance with the facts and contains no omission
likely to affect its import.
This Prospectus should be read in conjunction with al information which is incorporated by reference
in and forms part of this Prospectus (see "Information Incorporated by Reference").
The Issuer has not authorised the making or provision of any representation or information regarding
the Issuer or the Notes other than as contained in this Prospectus or as approved in writing for such
purpose by the Issuer. Any such representation or information should not be relied upon as having
been authorised by the Issuer or the Managers.
Neither the delivery of this Prospectus nor the offering, sale or delivery of any Note shal in any
circumstances create any implication that the information contained herein concerning the Issuer is
correct at any time subsequent to the date hereof or that any other information supplied by the Issuer
in connection with the offering of the Notes is correct as of any time subsequent to the date indicated
in the document containing the same, or that there has been no adverse change, or any event
reasonably likely to involve any adverse change, in the condition (financial or otherwise), results of
operation, business and prospects of the Issuer since the date of this Prospectus. Save as required by
applicable laws or regulations or the rules of any relevant stock exchange, or under the terms and
conditions relating to the Notes, the Issuer wil not provide any post-issuance information to investors.
Neither this Prospectus nor any other information supplied in connection with the offering of the Notes
(a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a
recommendation by the Issuer or any of the Managers that any recipient of this Prospectus or any
other information supplied in connection with the offering of the Notes should purchase any Notes. The
content of this Prospectus should not be construed as providing legal, business, accounting or tax
advice. Each investor contemplating purchasing any Notes should make its own independent
investigation of the financial condition and affairs of the Issuer, and its own appraisal of the Issuer's
creditworthiness, and shal be taken to have consulted its own legal, business, accounting and tax
advisers.
This Prospectus may only be used for the purposes for which it has been published. Neither this
Prospectus nor any other information supplied in connection with the offering of the Notes constitutes
an offer or invitation by or on behalf of the Issuer or the Managers to any person to subscribe for or to
purchase any Notes. The distribution of this Prospectus and the offering, sale and delivery of the
Notes in certain jurisdictions may be restricted by law. Persons into whose possession this Prospectus
comes are required by the Issuer and the Managers to inform themselves about and to observe any
such restrictions. Neither the Issuer nor the Managers represent that this Prospectus may be lawfully
distributed, or that the Notes may be lawful y offered in compliance with any applicable registration or
other requirements in any such jurisdiction or pursuant to an exemption available thereunder, nor do
they assume any responsibility for facilitating any such distribution or offering. In particular, no action
has been taken by the Issuer or the Managers which is intended to permit a public offering of the
Notes or the distribution of this Prospectus in any jurisdiction where action for that purpose is required.
Accordingly, no Notes may be offered or sold, directly or indirectly, and neither this Prospectus nor any
advertisement or other offering material may be distributed or published in any jurisdiction, except
under circumstances that wil result in compliance with any applicable laws and regulations.
For a description of certain restrictions on offers, sales and deliveries of the Notes and on distribution
of this Prospectus and other offering material relating to the Notes, see "Subscription and Sale". In
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particular, the Notes have not been and wil not be registered under the Securities Act and are subject
to United States tax law requirements. Subject to certain exceptions, the Notes may not be offered,
sold or delivered within the United States or to, or for the account or benefit of, U.S. persons.
The language of this Prospectus is English. Certain legislative references and technical terms have
been cited in their original language so that the correct technical meaning may be ascribed to them
under applicable law.
Certain figures included in this Prospectus have been subject to rounding adjustments; accordingly,
figures shown for the same category presented in different tables may vary slightly and figures shown
as totals in certain tables, including percentages, may not be an arithmetic aggregation of the figures
which precede them.
__________________________
FORWARD-LOOKING STATEMENTS
This Prospectus (including the information incorporated by reference in this Prospectus) contains
certain statements that are, or may be deemed to be, forward-looking, including statements with
respect to the business strategies of the Issuer and the Group (as defined below), expansion of
operations, trends in their business and their competitive advantages, information on technological
and regulatory changes and information on exchange rate risk and generally includes all statements
preceded by, followed by or that include the words "believe", "expect", "project", "anticipate", "seek",
"estimate" "aim", "intend", "plan", "continue" or similar expressions. By their nature, forward-looking
statements involve known and unknown risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future. Such forward-looking statements
are not guarantees of future performance and involve risks and uncertainties, and actual results may
differ materially from those in the forward-looking statements as a result of various factors. Potential
investors are cautioned not to place undue reliance on forward-looking statements, which are made
only as at the date of this Prospectus.
The Issuer does not intend, and does not assume any obligation, to update forward-looking
statements set out in this Prospectus. Many factors may cause the Issuer's or the Group's results of
operations, financial condition, liquidity and the development of the industries in which they compete to
differ materially from those expressed or implied by the forward-looking statements contained in this
Prospectus.
The risks described under "Risk Factors" in this Prospectus are not exhaustive. Other sections of this
Prospectus describe additional factors that could adversely affect the Issuer's and the Group's results
of operations, financial condition and liquidity, and the development of the industries in which they
operate. New risks can emerge from time to time, and it is not possible for the Issuer to predict al such
risks, nor can the Issuer assess the impact of all such risks on their business or the extent to which
any risks, or combination of risks and other factors, may cause actual results to differ materially from
those contained in any forward-looking statements. Given these risks and uncertainties, investors
should not rely on forward-looking statements as a prediction of actual results.
___________________________
NON-IFRS FINANCIAL MEASURES
This Prospectus contains certain non-IFRS financial measures including EBIT, Adjusted EBITA and
Adjusted EBITDA.
As used in this Prospectus:
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·
"EBIT" is earnings before Financial income and expense, Share of profits (losses) of equity-
accounted investees, Income taxes and Result from Discontinued Operations;
·
"Adjusted EBITA" is calculated by subtracting from EBIT the following items: (i) any impairment
in goodwil ; (i ) amortisation and impairment, if any, of the portion of the purchase price allocated
to intangible assets as part of business combinations, as required by IFRS 3; (i i) restructuring
costs (including personnel costs deriving from the reorganisation of the company) or other non-
recurring items and (iv) other exceptional costs or income, i.e. connected to particularly
significant events that are not related to the ordinary performance of the business; and
·
"Adjusted EBITDA" is calculated by subtracting from Adjusted EBITA: (i) Depreciation and (i )
Amortisation.
It should be noted that EBIT, Adjusted EBITA and Adjusted EBITDA are not recognised as measures of
performance or liquidity under IFRS and should not be recognised as alternatives to operating income
or net profit or any other performance measures derived in accordance with IFRS or any other
generally accepted accounting principles. EBIT, Adjusted EBITA and Adjusted EBITDA are not
indicative of the historical operating results of the Group (as defined below), nor are meant to be
predictive of future results. EBIT, Adjusted EBITA and Adjusted EBITDA are used by management to
monitor the underlying performance of the business and operations. Since all companies do not
calculate these measures in an identical manner, the Group's presentation may not be consistent with
similar measures used by other companies and, accordingly, investors should not place undue
reliance on these data.
___________________________
ORDERS AND ORDER BACKLOG AS PERFORMANCE INDICATORS
This Prospectus contains certain information relating to the Group's orders and order backlog as at
and for the years ended 31 December 2016 and 2015.
As used in this Prospectus:
·
references to "Orders" are to the aggregate value of contracts entered into during the financial
period that meet the contractual requirements to be recorded in the orders book; and
·
references to "Order backlog" are to the residual value of the projects for which the Group has
a firm commitment that have not been completed, calculated as the dif erence between order
value and the revenues associated with such orders recorded in the Group's financial
statements.
Figures for Orders and Order backlog shown in the Prospectus are included in the Group's financial
statements but are based on unaudited internal management data. As the amount of order backlog is
not necessarily indicative of future revenues, investors should not place undue reliance on the figures
provided. See also "Risk Factors - The Group's orders and order backlog is not necessarily indicative
of future revenues".
__________________________
STABILISATION
In connection with the issue of the Notes, BNP Paribas as stabilising manager (the "Stabilising
Manager") (or persons acting on behalf of the Stabilising Manager) may over-allot Notes or
effect transactions with a view to supporting the price of the Notes at a level higher than that
which might otherwise prevail. However stabilisation may not necessarily occur. Any
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stabilisation action may begin on or after the date on which adequate public disclosure of the
terms of the offer of the Notes is made and, if begun, may cease at any time, but it must end no
later than the earlier of 30 days after the issue date of the Notes and 60 days after the date of
the allotment of the Notes. Any stabilisation action or over-allotment must be conducted by the
Stabilising Manager (or persons acting on behalf of the Stabilising Manager) in accordance
with all applicable laws, regulations and rules.
__________________________
CERTAIN DEFINED TERMS
In this Prospectus, unless otherwise specified:
(i)
references to "billions" are to thousands of mil ions;
(ii)
the "Co-Manager" means Unione di Banche Italiane S.p.A.;
(iii)
references to the "Conditions" are to the terms and conditions relating to the Notes set out in
this Prospectus in the section "Terms and Conditions of the Notes" and any reference to a
numbered "Condition" is to the correspondingly numbered provision of the Conditions;
(iv)
references to "", "EUR" or "Euro" are to the single currency introduced at the start of the third
stage of the European Economic and Monetary Union and as defined in Article 2 of Council
Regulation (EC) No. 974/98 of 3 May 1998 on the introduction of the euro, as amended;
(v)
the "Group" or the "Ansaldo Energia Group" means the group consisting of the Issuer and its
consolidated subsidiaries;
(vi)
references to "IFRS" are to International Financial Reporting Standards, as adopted by the
European Union;
(vii) the "Issuer" or "Ansaldo Energia" or the "Company" means Ansaldo Energia S.p.A.;
(viii) the "Joint Lead Managers" means Banca IMI S.p.A., Banco Santander, S.A., Barclays Bank
PLC, BNP Paribas, Commerzbank Aktiengesel schaft, Crédit Agricole Corporate and Investment
Bank, HSBC Bank plc, Société Générale and UniCredit Bank AG; and
(ix)
the "Managers" means the Joint Lead Managers and the Co-Manager.
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TABLE OF CONTENTS

RISK FACTORS ...................................................................................................................................... 7
INFORMATION INCORPORATED BY REFERENCE ........................................................................... 22
TERMS AND CONDITIONS OF THE NOTES ...................................................................................... 23
SUMMARY OF PROVISIONS RELATING TO THE NOTES IN GLOBAL FORM ................................. 38
DESCRIPTION OF THE ISSUER ......................................................................................................... 41
SUMMARY FINANCIAL INFORMATION OF THE ISSUER .................................................................. 61
TAXATION ............................................................................................................................................. 64
SUBSCRIPTION AND SALE ................................................................................................................. 72
GENERAL INFORMATION.................................................................................................................... 74

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RISK FACTORS
The Issuer believes that the following factors may affect its ability to fulfil its obligations under the
Notes. Most of these factors are contingencies which may or may not occur and the Issuer is not in a
position to express a view on the likelihood of any such contingency occurring. In addition, factors
which are material for the purpose of assessing the market risks associated with the Notes are also
described below.
The Issuer believes that the factors described below represent the principal risks inherent in investing
in the Notes, but the inability of the Issuer to pay interest, principal or other amounts on or in
connection with the Notes may occur for other reasons which may not be considered significant risks
by the Issuer based on information currently available to it or which it may not currently be able to
anticipate. In addition, the order in which the risk factors are presented below is not intended to be
indicative either of the relative likelihood that each risk will materialise or of the magnitude of their
potential impact on the business, financial condition and results of operations of the Issuer.
Prospective investors should also read the detailed information set out elsewhere in this Prospectus
and consider carefully whether an investment in the Notes is suitable for them in the light of the
information in this Prospectus and their personal circumstances, based upon their own judgment and
upon advice from such financial, legal, tax and other advisers as they deem necessary.
Words and expressions defined in "Terms and Conditions of the Notes" or elsewhere in this
Prospectus have the same meaning in this section. Prospective investors should read the whole of
this Prospectus, including the information incorporated by reference.
Factors that may affect the Issuer's ability to fulfil its obligations under the Notes
Adverse macroeconomic and business conditions may adversely affect the Group's business,
financial condition, results of operations and prospects
Since the second half of 2007, disruption in the global financial markets has created increasingly
difficult conditions, including decreased liquidity and availability of credit and greater market volatility,
and continues to affect the functioning of financial markets and the global economy. In Europe,
measures have been taken by governments, international and supranational organisations, and
monetary authorities to provide financial assistance to Eurozone countries in economic difficulty and to
mitigate the possibility of default by certain European countries on their sovereign debt obligations.
However, in spite of such assistance concerns persist regarding the debt and/or deficit burden of
certain Eurozone countries, including Italy, and their ability to meet future financial obligations.
Moreover, restrictions to credit availability and fiscal austerity programmes are affecting demand levels
in affected economies.
Future economic developments and, in consequence, the speed of macroeconomic growth and the
sustainability of the Group's markets are dependent upon the evolution of a number of global and local
factors such as the crisis in the credit markets, economic crises arising from sovereign debt overruns
and related government budget consolidation measures, reduced levels of capital expenditures,
declining consumer and business confidence, increasing unemployment in certain countries,
fluctuating commodity prices, bankruptcies, natural disasters, political crises and other challenges. In
light of the latest economic developments, the high degree of unemployment in certain countries, the
level of public debt in the United States as well as in Greece, Ireland, Italy, Portugal, Spain and other
European countries, uncertainties with respect to the stability of the emerging markets, especially the
Chinese economy, and the potential impact of budget consolidation measures by governments around
the world, the bases for the Group's expectations relating to the overal economic situation and
specific conditions in markets relevant to the Group are subject to considerable uncertainties.
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Numerous other factors, such as fluctuations of energy and raw material prices, as well as global
political conflicts, including those in the North Africa and Eastern Europe (a significant part of the
Group's revenues have historically been generated in Egypt, Algeria and Tunisia, and the Group is
active in Russia) and other regions, continue to have an impact on macroeconomic parameters and
the international capital and credit markets. The uncertainty of economic and political conditions may
have a material adverse impact on the Group's business, financial condition and results of operations.
In addition, the Group's ability to access the capital and financial markets and to refinance its debt to
meet the financial requirements of the Group may be weakened and costs of financing may
significantly increase. This could in turn materially and adversely affect the business, financial
condition, results of operations and prospects of the Issuer.
The Group is exposed to risks associated with conditions specific to the countries or regions
in which it operates
The Group conducts operations in 65 countries worldwide, and, in 2016, 84.3 per cent. of the Group's
consolidated revenues were generated from international (i.e. non-Italian) operations. In particular,
with respect to its operations in emerging markets, the Group operates in North Africa and Eastern
Europe (including Egypt, Algeria, Tunisia and Russia) which have had and could again experience
political and economic instability, civil unrest or violence and corruption, and which in some cases
have legal systems in which the protection of rights and the enforceability of contractual claims are not
guaranteed. In addition, Asian markets are important for the Group's long-term growth strategy, and its
operations in China are influenced by a legal system that is still developing and is subject to change.
In these regions, the Group may also be exposed to higher risks of inflation and exchange rate
fluctuations as well as changes in the law (including tax law) and its interpretation by the relevant
authorities. Finally, in some of the emerging markets in which the Group operates, there may be
limitations on international monetary transactions, import or export restrictions and, occasionally,
potential risks of expropriation. Egypt, for example, experienced severe political instability and
uncertainty in 2013. However, to date, the Group has not experienced a material negative impact in
any of the emerging markets in which it operates, including Egypt.
Developments relating to any of the above risks in an emerging market in which the Group has a
significant presence could result in lower profits or make the repatriation of profits difficult, and may
expose it to penalties, sanctions and reputational damage. The materialisation or worsening of one or
several of the above mentioned risks in any one significant country or in several emerging countries
may have material adverse effects on the Group's business, financial condition, results of operations
and prospects.
The Group operates in competitive markets, which are subject to price pressures and rapid
changes
The worldwide markets for the Group's equipment and services are highly competitive in terms of
pricing, product and service quality, development and introduction time, customer service and
financing terms. In certain of the Group's businesses, it faces downward price pressure and it is or
could be exposed to market downturns or slower growth, which may increase in times of declining
investment activity and demand. The Group faces strong competitors, some of which are larger and
may have greater resources in a given business area, as well as competitors from emerging markets,
which may have a better cost structure. The Group may face competition limiting its ability to enter into
attractive new markets (such as emerging markets experiencing strong demographic growth), as
certain competitors might be more effective and faster in capturing available market opportunities,
which in turn may reduce the Group's market share. These factors alone or in combination may have
a negative impact on the Group's business, financial condition, and results of operations.
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A loss of the Group's key customers or loss of business from its key customers could harm
the Group's operating results.
The Group is exposed to risks related to customer concentration, particularly in the Equipment and
plants business line, whose four largest customers represented approximately 24% of the Group's
revenues for the year ended 31 December 2016 (Source: Internal management data (unaudited)).
Certain of these customers' operations are particularly subject to changes in economic conditions in
the markets in which they operate and globally. Significant declines or a total loss of business from
these key customers could have a material adverse effect on the Group's business, financial condition
and results of operations.
The Group's businesses must keep pace with technological changes and develop new
equipment and services to remain competitive
The markets in which the Group operates experience rapid and significant changes due to the
introduction of innovative technologies. To meet customers' needs in these areas, the Group must
continuously design new, and update existing, equipment and services, and invest in and develop new
technologies. Introducing new technologies requires a significant commitment to research and
development, which in turn requires expenditure of considerable financial resources that may not
always result in success. In addition, volatility in gas prices or aggressive emissions regulations may
create challenges for the Group in meeting its performance and emissions targets in the development
of gas turbines. The Group's sales and profitability may suffer if it invests in technologies that become
obsolete or do not operate as expected or that are not accepted in the marketplace as anticipated, or if
its products or systems are not introduced to the market in a timely manner compared to the Group's
competitors. The Group's operating results depend to a significant extent on its ability to anticipate and
adapt to changes in markets and to reduce the costs of developing high-quality products.
The Group's business may be adversely affected by growth in the renewable power generation
market
The European market, in particular, has experienced growth in renewable power generation market,
with increasing levels of new photovoltaic and wind generator installations. This may cause a shift in
the power source mix away from fossil fuel based power generation, particularly in the event of
improvements in renewable power generation technologies. Such a shift would reduce the market
accessible to the Group's businesses, and may therefore have an adverse effect on its business,
financial condition, results of operations and prospects.
Any failure to enforce and protect its intellectual property rights could adversely affect the
Group's business
The Group relies on proprietary rights and information in the development of its products. There can
be no assurance that any patent or trademark which the Group owns or is able to obtain will
adequately protect the covered products and technologies. Nor can there be any assurance that the
confidentiality agreements and other measures taken by the Group will adequately protect its trade
secrets, know-how or other proprietary information not covered by patents, or that others will not
obtain this information through independent development, indiscretion of employees, industrial
espionage or other means. Such use by competitors could have a material adverse effect on the
Group's business, financial condition or results of operations.
In the future, competitors may obtain patents for technologies which the Group does not possess, or
its proprietary rights and information may become obsolete. Furthermore, there can be no assurance
that the Group's activities wil not infringe on the proprietary rights of others or that it will be able to
obtain licences to use the required technology, on reasonable terms or otherwise. If the Group fails to
obtain the necessary intellectual property rights to protect its proprietary information, or if it encounters
9

difficulties in enforcing intellectual property rights in certain foreign countries, or if it infringes upon the
proprietary rights of others, this could have a material adverse effect on the Group's business,
financial condition, results of operations and prospects.
The Group may face operational failures and quality problems in its value chain processes
The Group's value chain comprises all steps, from research and development to supply chain
management, production, marketing, sales and services. Operational failures in the Group's value
chain processes (or in those of its service providers) could result in quality problems or product, health
and safety, regulatory or environmental risks. Such risks are particularly present in relation to its
production facilities, which have a high degree of organisational and technological complexity. From
time to time, some of the products the Group sells might have quality issues resulting from their design
or manufacture or from the software integrated into them. If the Group is not able to meet such
technological, quality, health and safety, regulatory or environmental standards and requirements, its
reputation, competitiveness and business may be adversely affected. Any operational failures or
quality issues could have a material adverse effect on the Group's business, financial condition and
results of operations.
The Group may face interruption of its supply chain, late delivery of parts, components and
services and rising raw material prices
The Group's financial performance depends in part on reliable and effective supply chain management
for components, sub-assemblies and other materials. Capacity constraints and supply shortages
resulting from ineffective supply chain management may lead to delays and additional cost. The
Group relies on third parties to supply it with parts, components and services. These suppliers may not
have sufficient capacity to meet all of their customers' needs during periods of excess demand.
Although the Group works closely with its suppliers to avoid supply related problems, the Group may
encounter supply problems in the future or may be unable to replace a supplier that fails to meet the
Group's demand. Any shortages and delays in the supply of components or other materials could
materially harm the Group's business. Furthermore, the Group may be exposed to the risk of delays
and interruptions of the supply chain as a consequence of natural disasters if it is unable to identify
alternative sources of supply in a timely manner or at all.
In addition, the Group purchases raw materials including copper and steel alloy based materials,
which exposes it to fluctuations in raw material prices. If the Group is not able to compensate for its
increased costs or pass them on to customers, price increases could have a material adverse impact
on its financial results. In contrast, in times of falling commodity prices, the Group may not be able to
fully benefit from such price decreases, as it attempts to reduce the risk of rising commodity prices by
several means, such as long-term contracting.
The Group's EPC activities expose it to potential liability and potential contract disputes
The Group engages in construction activities for third parties, in which design, construction or systems
failures can result in substantial injury or damage to third parties. The Group may in the future be
named as a defendant in legal proceedings where parties may make a claim for damages or other
remedies with respect to the Group's EPC projects or other matters. In some instances, the Group
may guarantee to a customer that it will complete a project by a scheduled date, or that the project,
when completed, will achieve certain performance standards. If the Group subsequently fails to
complete the project on time, or if the project subsequently fails to meet guaranteed performance
standards, it may be liable to the client for any delay or for the costs of any additional work to bring the
project to the required performance standards, usually in the form of contractually agreed-upon
liquidated damages. To the extent that these events occur, the total costs of the project would exceed
the Group's original estimates and it could experience reduced profits, or, in some cases, a loss from
that project.
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