2018 REGISTRATION DOCUMENT Connect the world . .Now INCLUDING THE 2018 ANNUAL FINANCIAL REPORT Contents PROFILE 1 MESSAGE FROM THE CHAIRMAN Financial statements 166 OF THE BOARD OF DIRECTORS 2 5.1. Consolidated financial statements 168 5.2. Corporate financial statements 248 INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER 4 Information about the share capital 274 Presentation of the Group 6 and ownership and its activities 6.1. Nexans share data 276 6.2. Share capital 278 1.1. Mission, Businesses and Markets 8 6.3. Employee share ownership 281 1.2. Strategy 11 6.4. Shareholders’ Meetings 282 1.3. Key figures 16 6.5. Summary of authorizations to increase the 1.4. Operations during 2018 19 Company’s share capital and their use during 2018 283 1.5. Progress made and difficulties encountered in 2018 27 6.6. Share buybacks 284 1.6. Trends and outlook 28 6.7. Information with a potential impact 1.7. Uncertainties 30 in the event of a public offer 286 1.8. Innovation and Technology (R&D) 31 6.8. Shareholder information 287 1.9. Significant events between the end of the reporting period and the approval of the 2018 management report 32 Additional 288 Corporate 34 information Governance 7.1. Information about the Group and the Company 290 7.2. List of related-party agreements and commitments 296 2.1. Governance structure 36 7.3. Statutory auditors 308 2.2. Management bodies 37 7.4. Statement by the person responsible for the Registration 2.3. Administrative body 40 Document containing an annual financial report 309 2.4. Transactions in the Company’s securities by corporate officers and senior managers 64 Concordance 310 2.5. Compensation and benefits 65 table 8.1. Concordance table of the Registration Document 312 Main risk factors 88 8.2. Concordance table of the annual financial report 315 and risk management within the Group 8.3. Concordance table of the Management Report 316 3.1. Risk factors 90 8.4. Concordance table on the Corporate 3.2. Internal control and risk management 102 Governance Report 317 8.5. Concordance table for Corporate Social Responsibility 318 Non-financial Performance 108 Statement - Corporate Social Responsibility 4.1. People 115 4.2. Planet 129 This Registration document contains Nexans’ annual financial report for fiscal year 2018. 4.3. Products 137 4.4. Partners 141 4.5. Environmental and social indicators – CSR concordance tables 155 4.6. Data compilation methodology for CSR indicators 159 This Registration document was filed with the Autorité des Marchés Financiers (French stock market authorities) 4.7. Report by the appointed independent third party on March 28, 2019, in accordance with article 212-13 of the General Regulations of the AMF. It may be used on the Non-financial Performance Statement provided in connection with a financial transaction only if supplemented by a transaction memorandum which has been in the Management Report 162 reviewed by the AMF. This document has been established by the issuer and is binding upon its signatories. NEXANS 2018 REGISTRATION DOCUMENT PROFILE Nexans’ cabling systems, solutions and services are shaping the future. Cables may well be invisible but they are the heartbeat of our daily lives. Millions of homes, cities and businesses are powered by Nexans’ high-performing, sustainable cabling manufacturing sites in solutions, and billions of terabytes of data per second are carried on our data networks. As a global player in the cable industry, with over 120 years of experience, Nexans works behind the scenes to develop resilient products and state-of-the-art services designed to help our customers meet today’s constantly growing energy 34 and data needs. We are working in partnership with our customers, in the fields of energy infrastructure, energy countries resources, transportation, buildings, telecom and data, to create a safer, smarter, and more efficient future. At the leading edge of the cable industry, Nexans brings energy to life. worldwide Nexans is listed on Euronext Paris. sales presence IN FIGURES Among the 6.5 27,000 Top 20 billion euros in sales(1) employees companies involved in R&D investment and technological innovation (1) At current metal prices. in Europe (2) (2) Sources: http://iri.jrc.ec.europa.eu/scoreboard18.html As a member of the United Nations Global Compact, Nexans is committed to supporting and implementing ten universally-accepted principles in the areas of human rights, labor, the environment and anti-corruption. 2018 REGISTRATION DOCUMENT NEXANS 1 2 NEXANS 2018 REGISTRATION DOCUMENT MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS This coming year will be a year of transformation towards a New Nexans, a streamlined, more agile and more efficient organization, ideally positioned to meet its customers’ needs and make the most of the solid long-term outlook for its markets. 2018 was marked by a change in the governance structure Employee shareholders and employees of the Group are of Nexans where the functions of Chairman of the Board and represented by two directors on Nexans’ Board, which Chief Executive Officer have been separated since 2014. In comprised 13 members at the end of 2018, including seven mid-March, Arnaud Poupart-Lafarge announced that he intended women and eight independent directors as defined in the AFEP- to step down as Chief Executive Officer, and in early July, MEDEF Corporate Governance Code. following a comprehensive internal and external recruitment process, the Board of Directors appointed Christopher Guérin to The Board of Directors met 17 times in 2018, with an average succeed him. annual attendance rate of 88.8%. As it does every year, the Board conducted an appraisal of its own performance as Christopher is 46 years old with an excellent background in well as the performance of its committees, i.e., the Accounts, the cable industry and and in-depth knowledge of the Group, Audit and Risk Committee, the Appointments, Compensation which he joined in 1997. Since 2014 he has served as Senior and Corporate Governance Committee, and the Strategy and Executive Vice President, Europe (excluding the High Voltage Sustainable Development Committee. Business) and has headed the Telecom/Datacom and Power Accessories Business Groups. He successfully turned around our This coming year will be a year of transformation towards a businesses in Europe in a fiercely competitive environment. New Nexans, a streamlined, more agile and more efficient organization, ideally positioned to meet its customers’ needs and In view of the disappointing results for the first six months of make the most of the solid long-term outlook for its markets. the year, a comprehensive three-year transformation plan was presented in early November to be implemented by a At the Annual Shareholders’ Meeting of May 15, 2019, the streamlined 12-person Executive Committee. A restructuring plan Board of Directors will recommend a dividend payment of was submitted to the European Works Council representatives in 0.30 euros per share. January 2019. Nexans pursued its employee share ownership policy and increased the capital reserved for this purpose for the eighth time. Upon completion of this operation, Group employees hold Georges Chodron de Courcel, 4.7% of Nexans’ capital. Chairman of the Board of Directors 2018 REGISTRATION DOCUMENT NEXANS 3 INTERVIEW WITH THE CHIEF EXECUTIVE OFFICER, CHRISTOPHER GUÉRIN Our ability to build the “New Nexans” future world leader in energy services and data management solutions, by 2021, depends on the success of this phase. How do you explain the Group’s 2018 results? operation, and our businesses in Brazil, China and the United States. It appears that between 80% and 85% of our loss-making The Projects business was hit by the postponement of submarine businesses lose money for internal reasons, i.e., excessive costs, high voltage contracts and a sharp drop in land high-voltage sub-optimal inventory or price management, etc. This is actually business. The Cables business delivered strong growth but this good news because we can improve these things. is not reflected in our margins due to an increase in costs not passed on to customers. These developments forced us to revise Before we can get all of our businesses back on the road our outlook on two occasions. to growth, our transformation needs to go further. This is the purpose of the new strategic roadmap towards 2021 unveiled Consolidated sales totaled 4.4 billion euros at current metal in November 2018. prices, representing an organic decline of 0.8%. Consolidated EBITDA came in at 325 million euros, or 7.4% of sales, compared with 9% in 2017. Attributable net income for the year What are the broad focuses was 14 million euros versus 125 million euros in 2017. of your transformation plan? These results led us to rethink of our business model in terms of We want to enhance Nexans’ resilience and change its value resilience, growth and the way we operate. I began this process creation model. as soon as I was appointed last July. To do so, we need to give precedence to selective growth, We stress-tested all of our businesses: 50% of them proved to enhancing our competitive edge and improving our return on be resilient in terms of their contribution to results and may be capital employed and our cash generation. managed with a view to future growth. The other 50% of our businesses require a transformation. These essentially correspond We are lucky to be doing business in what are fundamentally to the land high-voltage business which is the biggest loss-making growth markets focused on the energy transition, e-mobility and (1) Consolidated EBITDA is defined as operating margin before depreciation and amortization. d. 4 NEXANS 2018 REGISTRATION DOCUMENT digitization of the economy.