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2007 ANNUAL REPORT 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:15 Page couv2

CONTENTS

OVERVIEW 01 Nexans at a glance 02 Message from the Chairman 04 The Executive Committee 05 Corporate governance 10 Key figures 12 The Nexans share 14 Shareholders’ information

STRATEGY: GOALS FOR 2009 16 Our goals for 2009 19 2007 results by business

OUR ACTIVITIES IN 2007 22 Europe 24 North America 25 Asia-Pacific 26 Rest of the World

OUR IMPROVEMENTS IN 2007 28 Meeting the needs of our customers 30 Helping our employees develop their potential 32 Improving our efficiency 33 Respecting the environment 35 Nexans, sponsor of the Palace of Versailles

FINANCIAL AND LEGAL INFORMATION 38 Management report 78 Consolidated financial statements 161 Parent company financial statements 182 Legal information

NB : This registration document contains Nexans’ annual financial report for fiscal year 2007

This registration document was filed with the “Autorité des Marchés Financiers” (French stock market authorities) on March 5, 2008, in accordance with article 212-13 of the General regulations of the AMF. It may be used in connection with a financial transaction only if supplemented by a transaction memorandum which has been reviewed by the AMF.* *Free translation from the original French version of the AMF certificate.

This document is a free translation from French into English and has no other value than an informative one. Should there be any difference between the French and English version, only the text in French language shall be deemed authentic and considered as expressing the exact information published by Nexans. 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:17Page1 LEADER 21, EMPLOYEES 900 GLOBAL IN Nexans islistedontheParisstockexchange. levels ofsafetyandperformance. around theworldtosatisfyessentialneedswhilemaintaininghighest andlocalpresence,Nexansoperates leadership, globalexpertise, manufacturing, installation,andmaintenance.Withitstechnological entire valuechain,fromupstreamtodownstream:research,design, quality andrespectfortheenvironment.TheGroup’s coverthe services of Nexans’ productsmeetthemostdemandingrequirementsinterms Local AreaNetwork(LAN)markets. cables andcablingsystemsintheinfrastructure,industry, buildingand anextensiverangeof , offers leader inthecableindustry With energyasthebasisofitsdevelopment, COMMERCIAL ACTIVITIESWORLDWIDE INDUSTRIAL PRESENCEINMORETHAN30COUNTRIES CABLES IN SALESAT CONSTANT METAL PRICES ILO EUROS BILLION 4. 82 Nexans, theworldwide IN OPERATING MARGIN ILONEUROS N MILLIO 409

01 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:18Page2 02 ADVANTAGES OUR TO LEAD ALL THE CHAIRMAN ANDCHIEFEXECUTIVEOFFICER GÉRARD HAUSER, INDUSTR Y 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:18Page3 worldwide. enoughcriticalmass are notcorebusinesses,andtheydooffer activity, whichaccountsfor250millioneurosinsales.Theseactivities of 2008.We arealsolooking intosellingourautomotiveharnesses group, andthedealisslatedforcompletionbyendoffirstquarter euros insales.AnexclusiveagreementhasbeensignedwithaUK-based cable telecominfrastructureactivitiesinSpain,whichrepresent55million We haveenteredintosalesnegotiationsforthedisposalofourcopper- Optimizing ourbusinessportfolio manage ourbusinessportfolio. be atremendoussuccess.Over2008,weplantocontinueactively cable manufacturer. Olex’s operationalconsolidationhasprovento inAsia-PacificwiththeacquisitionofOlex,leadingAustralian industry winding wiresbusinesses.We alsobecametheleaderincable To thisend,between2005and2007,wesoldourdistribution strongsynergies. growing businesses,offering goal istooptimizecapitalemployedsothatitconcentratedinrapidly- to improvetheGroup’s ofgrowth and profitability. profileinterms Our embodies thesetrends.We continuallystrivetodevelopthebestsolutions We liveinanever-changingworld;ourmarketsareshifting;andNexans prospectsforgrowthandprofit. and long-term medium-, strengthened ourpositioninginmarketsthathaveexcellentshort-, regions, andimprovingthevalue-addedofourproductrange,wehave at thecoreofourdevelopment,strengtheningpositionsinhigh-growth have alreadyproventoberelevantandsuccessful.Byplacingenergy One yearafterwelaunchedourthree-yearstrategicplan,choices A relevant,ambitiousstrategy buyback/cancellation programfor70millioneurosinshares. of 2eurospershare,upby67%,andwehavelaunchedashare Based onthesestrongresults,wehaveproposedtodistributeadividend of consolidatedequitybytheend2007. doubled inoneyear, andwereducedournetdebtfrom40%to16% gainsondisposalsin2006, 65%. Netincome,excludingextraordinary of salesatconstantmetalprices.Cashflowfromoperationsrose and building.Ouroperatingmargingrew57%,from5.8%to8.5% all geographicalareasandourthreemainmarkets:infrastructure,industry, sales growthof12%onalike-for-likebasisandimprovedthroughout cable operations(EnergyandTelecom businessescombined)generated Our In 2007,wesetanewrecordforgrowthandperformance. 2007: ahistoricyearfortheGroup sustainable outlookandhasthestrategicadvantagestoleadindustry. astrong, in high-growthmarketsandgeographicalareas,Nexansoffers global slowdown.Moreprofitable,moreresistant,andwell-positioned firepower shouldenableustoenjoysustainedgrowthdespiteapossible the confidencethatIhaveinourGroup.Ourpositioningandfinancial This trendseemscompletelyunjustifiedtomeandinnowayaffects Nexans sawitssharepricefallsharplyduringthesecondhalfof2007. crisis, thedecliningdollar, andrisingoilprices.Likemanyothercompanies, lending The financialmarketshavebeenimpactedbytheUSmortgage and shouldgiverisetoasignificantincreaseinfreecashflow. margin shouldreach7%to10%,dependingontheeconomicenvironment, annual organicsalesgrowthofapproximately6%peryear. Operating and acquireMadeco’s cablemanufacturingbusiness,weexpectaverage andcoppercabletelecominfrastructurebusinessesinSpain harnesses with theGroup’s newscopeofconsolidation,i.e.afterwesellthe 2009. Assuch,wehavereassessedourprospects.For2008-2009, By June2007,wehadalreadyreachedourgoalssetfortheendof Adjusted, strong andsustainableoutlook Group’s prospectsforgrowth. which showsthatMadeco’s confidentaboutour managersarevery completed, Madecowillownapproximately9%ofNexans’capital, arise.Oncethedealis leverage ifotheracquisitionopportunities new Nexansshares,willallowustomaintainourcapacityforfinancial in incashandpartly This acquisition,whichwillbepaidforpartly become theleadingcablemanufacturerinSouthAmerica. metal prices,or490millioneuros.Withthisacquisition,Nexanswill In 2006,thisbusinessrepresented672milliondollarsinsalesatcurrent in SouthAmericawhichshouldbefinalizedtowardthemiddleof2008. is theplannedacquisitionofcablemanufacturingbusinessMadeco continued toexpandinrapidly-developingcountries.Onesuchproject ofacquisitions,theyearhasbeenfullactivity,In terms andwehave

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THE EXECUTIVE COMMITTEE

From left to right: PASCAL PORTEVIN, FRÉDÉRIC VINCENT, FRÉDÉRIC MICHELLAND, Vice-President, Strategic Operations Chief Operating Officer Chief Financial Officer

MICHEL LEMAIRE, VÉRONIQUE GUILLOT-PELPEL, YVON RAAK, Vice-President, Asia-Pacific Area Vice-President Human Resources Vice-President, Europe Area and Communications GÉRARD HAUSER, GORDON THURSFIELD, Chairman and Chief Executive Officer WOLFGANG BEDORF, Vice-President, North America Area 04 Vice-President, Rest of the World Area 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:20Page5 * Offices andpositionsheldinforeign companies. * Offices - DirectorofEssexNexansEurope • Directorshipsexpiredinthepastfiveyears: - DirectorofElectro-Banque : • OtherDirectorshipsandpositionsheld DATE OFAPPOINTMENT: MAY 15,2006 3,305 (VALUE OF ONEUNIT=VALUE OFONESHARE) NUMBER OFEMPLOYEEMUTUALFUNDUNITSINVESTEDINNEXANSSHARES: NUMBER OFNEXANSSHARESHELD:836(ASFEBRUARY 29,2008) 53 YEARSOLD|16RUEDEMONCEAU,75008PARIS Shareholders’ Meeting) (Proposed asaDirectoratthe2008Annual ofNexans Chief OperatingOfficer FRÉDÉRIC VINCENT andCEOofNexans. In 2000,hewasappointedChairman Components sectorofAlcatelin1997. Alcatel CâbleFranceandbecameVice PresidentoftheCablesand and memberoftheGroup’s ExecutiveCommittee.In1996,hejoined and finallySeniorExecutiveVice PresidentofAmericanNationalCan andCEO,firstofPechineyWorldChairman Trade, thenofPechineyRhénalu the PhilipsGroupfrom1965to1975.From19751996,hewas : • Expertise/Experience - DirectorofElectro-Banque • Directorshipsexpiredinthepastfiveyears: - DirectorofAlstom,Faurecia,Aplix,andIpsen • OtherDirectorshipsandpositionsheld: 2009 ANNUALSHAREHOLDERS’MEETING DATE OFTERMEXPIRATION ASCHAIRMANANDCEO: 2010 ANNUALSHAREHOLDERS’MEETING DATE OFTERMEXPIRATION ASDIRECTOR: DATE OFLATEST TERMRENEWAL: MAY 15,2006 DATE OFFIRST APPOINTMENT: OCTOBER17,2000 NUMBER OFNEXANSSHARESHELD:18,268(ASFEBRUARY 29,2008) 66 YEARSOLD|16RUEDEMONCEAU,75008PARIS andCEOofNexans Chairman GÉRARD HAUSER OFFICERS ASOFDECEMBER31,2007 INFORMATION ABOUTMEMBERS OF THEBOARDDIRECTORSANDOTHERCORPORATE GOVERNANCE Held variouspositionsofresponsibilitywithin on May15,2006. Committee in2000,andwasappointedasitsChiefOperatingOfficer andamemberofthe Executive He becameNexans’ChiefFinancialOfficer activity. telecommunications activities,andin1997,ofSaft,Alcatel’s batteries Managing Director(AdministrationandFinance)forAlcatel’s submarine and Componentssectorin1989,1994wasappointedDeputy from1978to1985.MovedAlcatel’sa majorauditingfirm Cables :JoinedAlcatelin1986afterworkingfor • Expertise/Experience Glass Manufacturers)since2004. 2004. HehasbeenthePresidentofAssovetro(theItalianAssociation of AmericaandDeputyCEOofthisGroup,CEO,from2000to North Desjonquères SAFrance.From1996to2000,hewasVice President, units, andsubsidiariesincludingVetrotex ItalieSpaandSaint-Gobain Saint-Gobain GroupasVice PresidentSales,thenmanagedseveraldivisions, : • Expertise/Experience - SeniorVice PresidentofSaint-GobainCorporation* ofSaint-GobainGroup - ChiefOperatingOfficer - DirectorofNybronFlooringInternational* • Directorshipsexpiredinthepastfiveyears: Corporation* - DirectorofSaint-Gobain,JMHuberCorporation*,andSaint-Gobain • OtherDirectorshipsandpositionsheld: DATE OFTERMEXPIRATION: 2011ANNUALSHAREHOLDERS’MEETING DATE OFFIRSTAPPOINTMENT: JUNE15,2001 NUMBER OFNEXANSSHARESHELD:487 VIA CARADOSSON°17,20123MILAN–ITALY THE ITALIAN ASSOCIATION OFGLASSMANUFACTURERS 69 YEARSOLD|PRESIDENTOFASSOVETRO, Director ofNexans GIANPAOLO CACCINI CORPORATE From 1973to1980,heworkedatthe

05 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:21Page6 06 CORPORATE * Offices andpositionsheldinforeign companies. * Offices de ParisSAS,andBNPParibas(Switzerland) SA* ofFinancièreBNPParibasSAS,Compagnie d’Investissement - Chairman • OtherDirectorshipsandpositionsheld: DATE OFTERMEXPIRATION: 2011ANNUALSHAREHOLDERS’MEETING DATE OFFIRSTAPPOINTMENT: JUNE15,2001 NUMBER OFNEXANSSHARESHELD:229 3 RUED’ANTIN,75002PARIS MEMBER OFTHEEXECUTIVECOMMITTEE 57 YEARSOLD|CHIEFOPERATING OFFICEROFBNPPARIBAS AND Director ofNexans GEORGES CHODRONDECOURCEL in 2006tobecomeaSeniorAdvisoratthebankUBS. andmanagerofthebankinParis1985.Heleft Lazard a partner Lazard in1982,thenspentthreeyearsNewYork beforebeingappointed (1978-1981).Hewasrecruitedbythebank Deputy GeneralSecretary and Economics,thentothePresidentofRepublic,beforebeingappointed Valéry ofFinance Giscard d’Estaing (1971-1978),firstattheMinistry under to theCourdesComptes,Advisorforeconomicandindustrialaffairs Advisor :HewassuccessivelyHonorary • Expertise/Experience Safran). Gestion,InstitutPasteur,- DirectorofFondsPartenaires andSagem(now • Directorshipsexpiredinthepastfiveyears: BoardofSafran - MemberoftheSupervisory - DirectorofRenaultandBouyguesTelecom • OtherDirectorshipsandpositionsheld: DATE OFTERMEXPIRATION: 2010ANNUALSHAREHOLDERS’MEETING DATE OFFIRSTAPPOINTMENT: MAY 15, 2006 NUMBER OFNEXANSSHARESHELD:500 65 RUEDECOURCELLES,75008PARIS 67 YEARSOLD|SENIORADVISOROFUBSINVESTMENTBANK Director ofNexans FRANÇOIS POLGEDECOMBRET Associates (CERA)since1997. attheWorldDepartment Bank.Vice PresidentatCambridgeEnergyResearch organizations.Since1984,ConsultantfortheEnergy and international agencies, has beenConsultantforvariouscompanies,banks,government Also professoratIEPParis(1982-1990)andENA(1988-1990).He universities ofGrenoble,ParisXIIINord,andIX-Dauphine(since1991). : • Expertise/Experience None • Directorshipsexpiredinthepastfiveyears: Director ofCambridgeEnergyResearchAssociates • OtherDirectorshipsandpositionsheld: DATE OFTERM EXPIRATION: 2011ANNUALSHAREHOLDERS’MEETING DATE OFFIRST APPOINTMENT: OCTOBER23,2003 NUMBER OFNEXANSSHARESHELD:420 PLACE DUMARÉCHALDELATTRE DETASSIGNY, 75116PARIS DAUPHINE 66 YEARSOLD|PROFESSOROFECONOMICSAT THEUNIVERSITYOFPARIS IX- Director ofNexans JEAN-MARIE CHEVALIER GOVERNANCE Successively professorofeconomicsatthe DATE OFTERMEXPIRATION: 2011ANNUALSHAREHOLDERS’MEETING DATE OFFIRSTAPPOINTMENT: MAY 10, 2007 NUMBER OFNEXANSSHARESHELD:200 BP 174-75755PARIS CEDEX15 33, AVENUE DUMAINE TOUR MAINEMONTPARNASSE 48 YEARSOLD|CHAIRMANOFCDCENTERPRISES, Director ofNexans JÉRÔME GALLOT Director since2003. and HeadoftheFinanceInvestmentBankBNP-Paribas,thenManaging Director in1996.From1999to2003,MemberoftheExecutiveCommittee management positions,becamedeputyCEOin1993,thenManaging : • Expertise/Experience director ofScorVie (nowScorGlobalLife) BoardofSagem(nowSafran).Non-voting - MemberoftheSupervisory Corp* Ltd*, BNPPrimePeregrineHoldingsandParibasSecurities - DirectorofSommerSA*,BNPParibasCanada*,Peregrine Emergis SAS,andBNPParibasUKHoldingsLtd* ofBNPParibasBankPolska*,USFunding*, - Chairman • Directorshipsexpiredinthepastfiveyears: - Non-votingdirectorofExane,ScorSA,andSafran BoardofLagardèreSA - MemberoftheSupervisory AG* ZAO*, BNL*(BancaNazionaledelLavoro),andScorHolding(Switzerland) Vernerde Participations), InvestissementsSAS,ErbéSA*,BNPParibas - DirectorofBouyguesSA,Alstom,F.F.P. (SociétéFoncièreFinancièreet He was appointed Chairman ofCDCEntreprises in2006. He wasappointedChairman Executive CommitteeofCaissedesDépôtsandConsignations. (1997 to2003)beforebecomingVice PresidentandMemberofthe oftheEconomy,of FraudwithintheFrenchMinistry Finance,andIndustry andRepression ofCompetition,ConsumerAffairs, General oftheDepartment Deputy FinanceMinister(1993to1997).HewasappointedDirector Telecommunications, ForeignTrade, thenbecame andPublicServices, successively CabinetDirectoroftheMinistriesIndustry, Post,and Hewas Cooperation (1989to1992),thentheBudgetDepartment. Committee forissuesregardingtheOrganizationEuropeanEconomic General oftheInter-Ministry Comptes forthreeyears,hejoinedtheSecretary : • Expertise/Exprience - Vice PresidentofCaissedesDépôtsetConsignations ofSicavAustral - Chairman Nationale duRhône(CNR) BoardofCNPAssurancesandCompagnie - MemberoftheSupervisory and GalaxyManagementServices - DirectorofSchneiderElectricSA,CréditFoncierdeFrance,GalaxyFund, • Directorshipsexpiredinthepastfiveyears: - Non-votingdirectorofOseo - DirectorofCNPAssurances,ICADE,CaixaSeguros*,andPlasticOmnium SA BoardofNRJGroupandSchneiderElectric -- MemberoftheSupervisory • OtherDirectorshipsandpositionsheld: Joined BNPin1972.Afterholdingseveral After serving asAuditorattheCourdes After serving 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:21Page7 * Offices andpositionsheldinforeign companies. * Offices whereheworked for5years.From1970to1974,heworked Affairs, andEconomic ofInternational ofEquipment,withintheDepartment Ministry : • Expertise/Experience andOptimActif - DirectorofFerma oftheManagementBoardZodiacGroup - Chairman • Directorshipsexpiredinthepastfiveyears: Holding, andZodiacAirlineEquipmentLLC* ofAerazur,- Chairman Aerazur Newco,ZodiacMarine Intertechnique, for IndustrialDevelopment(IDI) BoardoftheInstitute andVice- Chairman oftheSupervisory Chairman C&D AerospaceCanada* Group ofAustralia*,MAGAerospaceIndustriesInc*,C&DZodiac*,and ZodiacAutomotiveUS*,USCorporation*, Seat Services*, Zodiac Espanola*,AutomotiveUK*,AirCruisers*,SicmaAero OY*,EvacMarineHoldingCorp*, Systems Inc*,EvacInternational Inc*, Avox- DirectorofFaurecia,SicmaAeroSeat,Avox-Eros Services • OtherDirectorshipsandpositionsheld: DATE OFTERMEXPIRATION: 2011ANNUALSHAREHOLDERS’MEETING DATE OFFIRSTAPPOINTMENT: MAY 10, 2007 NUMBER OFNEXANSSHARESHELD:100 92130 ISSYLESMOULINEAUX 2, RUEMAURICEMALLET MEMBER OFTHEMANAGEMENTBOARDZODIACGROUP 64 YEARSOLD Director ofNexans JEAN-LOUIS GERONDEAU Director. &Cogroupas Managing signing onwiththeKohlbergKravisRoberts Director EuropefortheCarlyleGroupinLondonfrom2000to2003before Operations, BelgiumandFrance(1995to2000).HewasManaging Consultant, Vice President,SeniorVice President,andVice President Boston ConsultingGroupin1982,whereheworkedsuccessivelyas : • Expertise/Experience BoardofSolsoft and Egencia oftheSupervisory - Chairman - DirectorofLegrandFranceandLuminaParticipation • Directorshipsexpiredinthepastfiveyears: - MemberoftheExecutiveCommitteeSociétéd’InvestissementFamiliale - DirectorofLegrandandTarkett SA andCEOofMediannuaireHolding - Chairman ofthePagesJaunesGroup’s- Chairman BoardofDirectors • OtherDirectorshipsandpositionsheld: DATE OFTERM EXPIRATION: 2011ANNUALSHAREHOLDERS’MEETING DATE OFFIRST APPOINTMENT: JUNE15,2001 NUMBER OFNEXANSSHARESHELD:500 KINGDOM STIRLING SQUARE,7CARLTON GARDENS,LONDONSW1Y5AD–UNITED CO. LTD. 51 YEARSOLD|MANAGINGDIRECTORDEKOHLBERGKRAVIS ROBERTS & Director ofNexans JACQUES GARAÏALDE He beganhiscareerin1965attheFrench After ExxonCorporation,hejoinedthe Department ofCapGeminiwhichshemanageduntil2007. Department In2004,shesetuptheGlobalMarketing Utilities &ChemicalsDepartment. merger withErnst&Young, shewasmadeHeadof theextendedEnergy, Afterthe UtilitiesDepartment. Gemini in1998tosetuptheinternational in1992,beforejoiningCap ofSGN-RéseauEurysis Executive Officer in1989.Shewasappointed Chief and CommercialStrategyDepartment 7) Paris teaching attheuniversitylevel(Maîtredeconférencesof : • Expertise/Experience None • Directorshipsexpiredinthepastfiveyears: - MemberoftheAcadémiedesTechnologies Prime Minister Technology- MemberoftheInformation tothe StrategicBoardreporting - DirectorofLaPosteandTGS-NOPECGeophysicalCompanyASA* • OtherDirectorshipsandpositionsheld: DATE OFTERM EXPIRATION: 2008ANNUALSHAREHOLDERS’MEETING DATE OFFIRST APPOINTMENT: JUNE3,2004 NUMBER OFNEXANSSHARESHELD:1,000 20, AVENUE ANDRÉPROTHIN92927PARIS LADÉFENSECEDEX CAP GEMINI,TOUREUROPLAZA,LADÉFENSE4 OF CAPGEMINI 62 YEARSOLD|VICEPRESIDENT, GLOBALLEADERENERGY, UTILITIES&CHEMICALS Director ofNexans COLETTE LEWINER Board oftheZodiacGroup. asaMemberoftheManagement in 1980.Since2007,hehasserved oftheZodiacManagementBoard in 1974,andwasappointedChairman for McKinsey. oftheZodiacGroup HebecameChief ExecutiveOfficer he joinedtheIndustrialBusinessDivision (1984),thentheLargeBusiness : • Expertise/Experience de RothschildBanque,IfrahFinance,andEntrepriseMinièreetChimique Board of CompagnieFinancièreEdmond - MemberoftheSupervisory - DirectorofThomsonSAandCarboneLorraine • Directorshipsexpiredinthepastfiveyears: Banque - Non-votingdirectorofCompagnieFinancièreEdmonddeRothschild andCEOofFinancièreSavoisienne - Chairman and MobilitySaintHonoré Board of LCFRothschildFinancialServices - MemberoftheSupervisory • OtherDirectorshipsandpositionsheld: DATE OFTERMEXPIRATION: 2011ANNUALSHAREHOLDERS’MEETING DATE OFFIRSTAPPOINTMENT: JUNE15,2001 NUMBER OFNEXANSSHARESHELD:500 47 RUEDUFAUBOURG SAINTHONORÉ,75008PARIS EDMOND DEROTHSCHILDBANQUE 72 YEARSOLD|ADVISORTOTHECHAIRMANOFCOMPAGNIE FINANCIÈRE Director ofNexans ERVIN ROSENBERG she joinedElectricitédeFrancein1979andsetuptheDevelopment He started workingatBNPin1965where He started After severalyearsofphysicsresearchand

07 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:21 Page 8

CORPORATE GOVERNANCE

Division (1985). He was appointed Director of the Large Business Division PROPOSAL SUBMITTED TO THE ANNUAL in 1993 and was appointed successively a member of the General SHAREHOLDERS’ MEETING TO BE HELD ON Management Committee of BNP and then Central Director in 1994, before APRIL 22, 2008 (HELD UPON SECOND being appointed honorary Deputy Managing Director in 2000. He joined CALL): RENEWAL OF DIRECTORS’ TERM Compagnie Financière Edmond de Rothschild Banque in 2000 as Advisor OF OFFICE AND APPOINTMENT to the Chairman of the Management Board. He also served as a member OF NEW DIRECTORS TO THE BOARD of the Supervisory Board from 2000 to 2006, and in 2006, he became a non-voting director of Compagnie Financière Edmond de Rothschild Banque.

NICOLAS DE TAVERNOST The renewal, for a period of four years, of the term of office of Mrs. Colette Lewiner and the appointment, for a four-year term, of Mr. Frédéric Director of Nexans Vincent, Chief operating officer of Nexans since May 2006 (see the 57 YEARS OLD description on page 5), and Mr. Guillermo Luksic Craig (see below), as CHAIRMAN OF THE MANAGEMENT BOARD OF THE M6 GROUP two new directors, will be submitted for approval at the next Shareholders' 89, AVENUE CHARLES DE GAULLE 92575 NEUILLY CEDEX Meeting. NUMBER OF NEXANS SHARES HELD: 501 DATE OF FIRST APPOINTMENT: MAY 10, 2007 DATE OF TERM EXPIRATION: 2011 ANNUAL SHAREHOLDERS’ MEETING GUILLERMO LUKSIC CRAIG • Other Directorships and positions held: 52 YEARS OLD - Member of the Supervisory Board of Ediradio SA (RTL) • Expertise/Experience : : Guillermo Luksic Craig is Chairman of the - Director of Antena 3* and GL Events SA, and within the M6 Group, Board of Directors of Quiñenco, a business conglomerate listed in Chile, Extension TV SA, TF6 Gestion SA, and Société Nouvelle de Distribution SA of which he is also a shareholder. He began his career in 1975 with the - President of the Association of European Commercial Television (ACT)* Quiñenco group and was appointed Chairman of the Board in 1982. He • Directorships expired in the past five years: is currently Chairman of the Boards of Directors of the Chilean companies Director of Business Interactif and Hotel Saint Dominique (on his own behalf) Madeco, CCU (beverage company held by Quiñenco and its strategic • Expertise/Experience : First of all employed by the French Ministry partner Heineken, listed in Chile and in the United States), CNT Telefónica of International Commerce (1974) then appointed General Secretary of del Sur (a leading telecommunications company in the south of Chile), the French Chamber of Commerce in Zurich (1976), he joined the cabinet and Viña San Pedro (a company specialized in wine production). Since of the Secretary of State of Post and Telecommunications in 1977 where 2001, he has been a member of the Board of Directors of the second he was posted in 1981 to the Telecommunications Department and then largest bank in the country, Banco de Chile. In 2005, he was appointed to the public services division of the Video Communications Department. member of the Board of Directors of Antofagasta plc, a London-based He joined Lyonnaise des Eaux in 1986 as Director of the Audiovisual Chilean mining company with extensive investments in Chile. He is member activities. He has been Managing Director of M6 since its creation in 1987, of and advisor to management bodies of various nonprofit organizations, and was made Chairman of the M6 Group in 2000. including the Ena Craig foundation and the Centro de Estudios Publico. He is also a trustee of the Finis Terrae University in Chile.

SUMMARY OF THE TERM OF OFFICE ORGANIZATION OF THE BOARD EXPIRATION DATES OF NEXANS BOARD OF DIRECTORS MEMBERS Since its listing on the stock exchange, Nexans has adopted a number of rules relating to corporate governance with a view to ensuring transparency Year: Board member: of information with respect to both its directors and its shareholders.

2008 C. Lewiner The Board of Directors is currently made up of 11 members. They come 2010 G. Hauser from diverse backgrounds and were selected for their expertise and experience F. Polge de Combret in industry, banking or consultancy, enabling them to give informed opinions 2011 G. Caccini and advice in the best interests of the Company. JM. Chevalier The Combined Shareholders’ Meeting of June 3, 2004 decided to reduce G. Chodron de Courcel the length of Directors’ term of office from six to four years, starting with J. Gallot terms beginning during the 2004 financial year. J. Garaïalde JL. Gerondeau No category of shareholder is represented on the Board of Directors, E. Rosenberg and there is no Director elected by the employees. N. de Tavernost 08 * Offices and positions held in foreign companies. 001_036_Rapport_Activite_GB_v12.qxd 29/04/0818:09Page9 obligations. towards Nexansandtheirprivate interestsand/oranyoftheirother of anypossibleconflictsinterestbetweentheBoardmembers’duties conditions,theCompanyisnotaware negotiated andsignedundernormal (as investmentadvisorsand/ormanagers).Suchcontractshavingbeen agreements withNexansforcommercialand/orfinancialtransactions and/or seniormanagersforcompaniesthatmayenterintocontractual as corporateofficers As mentionedabove,someBoardmembersserve ABSENCE OFCONFLICTSINTEREST • • • • To thebestknowledgeofCompany, duringthepastfiveyears: bytheCompanyoracompanywithin itsGroup. of acorporateofficer No loansorguaranteeshavebeengrantedestablishedforthebenefit the Companyoranyofitssubsidiaries. contractsbetweenanyoftheBoardmembersand There arenoservice There arenofamilylinksbetweentheBoardmembers. the recommendationsofViénot-Bouton Report. inaccordance with more thanhalfoftheBoardmembers,aproportion Eight outoftheelevendirectorsarethereforeindependent,representing de Tavernost. Louis Gerondeau,ColetteLewiner, FrançoisPolgedeCombret,andNicolas Caccini, Jean-MarieChevalier, JérômeGallot,JacquesGaraïalde,Jean- The otherdirectorsaredeemedtobeindependentdirectors:Gianpaolo banks withwhomtheGrouphasbusinessrelationships. Financière EdmonddeRothschildBanque,respectively, whicharetwo Rosenberg, owingtotheirpositionswithinBNPParibasandLaCompagnie oftheCompany,Officer andGeorgesChodrondeCourcelErvin Gérard Hauser, andChiefExecutive inviewofhispositionasChairman Rosenberghavedeclaredthattheyarenotindependentdirectors: and Ervin Based onthesecriteria,GérardHauser, GeorgesChodrondeCourcel, concerned. theindependenceandfreedomofjudgmentdirectors they couldaffect andnaturesuchthat whether theserelationshipsareofanimportance and financialshareofbusinessgiventothem.Theaimisdetermine such companies,whichisfixedat10%,orinrespectofinvestmentbanks accordingtothelevelofsalesmade independence willbedetermined with businessesandbanksinwhichanyofitsdirectorshaveaninterest, thatintheGroup’sRegulations. Thelatterspecifiesinparticular relations Viénot-Bouton ofJune2003asreflectedintheCompany’s Report Internal independencedefinedinthecombined with regardtothecriteriagoverning Each year, theBoardofDirectorsreviewssituationeachitsmembers pany. inthemanagementofbusinessapublic com- or fromparticipating bodyofapubliccompany,an administrative,executive,orsupervisory on orderfromserving no Boardmemberhasbeenprohibitedbycourt authorities; orregulatory sanction byanystatutory public no Boardmemberhasbeenthesubjectofanincriminationorofficial into receivership,orliquidationofacompany; no Boardmemberhasbeenassociatedwithanybankruptcy, placing no Boardmemberhasbeenconvictedoffraud; insider trading. interest inNexans’capital,withtheexceptionofanyregulationsgoverning Board membersarenotsubjecttoanyrestrictionsonthesaleoftheirownership ofwhichaBoardmemberhasbeenselected. undertheterms or otherparties, shareholders,customers,suppliers, have beenconcludedwiththeprimary with Madecodescribedonpage47,noagreementsorarrangements of thisRegistrationdocumentandtheagreementsrelatingtotransaction transactionsdiscussedonpages195and196 fromtherelated-party Apart • • • • 61of thisRegistrationdocument: presentedbytheBoardofDirectorsonpage in theManagementReport changes tothemethodsforsettingandpayingDirectors’feesdescribed The BoardofDirectorsMeetingonMarch27,2007approvedthefollowing OF THEBOARDDIRECTORS COMPENSATION PAID TOMEMBERS this Registrationdocument. and theCompany’s ControlProceduresonpages200to209of Internal document, andintheChairman’s onthe BoardofDirectors’Operations Report presented bytheBoardofDirectorsonpages59to63thisRegistration and Nexans’seniormanagersareprovidedintheManagementReport regardingtheBoardofDirectors,itsvariousCommittees, Additional information ADDITIONAL INFORMATION and disclosedtotheAMF. Committee membersinrelationtotheCompany’s securitiesduring2007 and Executive the transactionscompletedbyNexans’corporateofficers Directors onpages64and65ofthisRegistrationdocumentsummarizes presentedbythe Boardof The tableincludedintheManagementReport AND FINANCIALCODE L.621-18-2 OFTHEFRENCHMONETARY SECURITIES, ASREQUIREDBYARTICLE MANAGERS RELATING TOTHECOMPANY’S BY CORPORATE OFFICERSANDSENIOR SUMMARY OFTRANSACTIONSCOMPLETED per year. receives 3,000eurospermeeting,subjecttoa12,000maximum each ofthemembersAppointmentsandCompensationCommittee 3,000 eurospermeeting,subjecttoa12,000maximumyear; each ofthemembersAccountsandAuditCommitteereceives 12,000 eurosmaximumperDirector; 2,000 eurosforeachBoardMeetingattended,subjecttoa receivesanadditional each oftheDirectors,includingChairman, for thefixedportion; receives17,500euros each oftheDirectors,includingChairman,

09 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:21Page10 10 5,449 186 50 07 06 05 07 06 05 Group’s productrange. increase inhighvalue-addedbusinessesthe to anincreaseinbusinessactivitiesaswell positivetrendcanbeattributed 2006. Thisvery Operating marginjumped57%comparedwith In millionsofeuros OPERATING MARGIN dynamic salesthroughoutallitsgeographicalAreas,ininfrastructure,industry, andbuildingsalike. This increasereflectsthe12.1%organicgrowthincableactivities,buoyedbyGroup’s comparable scopeofconsolidation(like-for-like), theincreasecameto4.8%over2006. Sales atconstantnon-ferrousmetalpricesclimbed8.5%;basedonexchangeratesanda In millionsofeuros METAL PRICES NON-FERROUS SALES AT CURRENT KEY FIGURES STRONGER 7,489 260 7,412 409 + 57 % PERFORMANCE 4,263 4.4% 50 07 06 05 50 07 06 05 In millionsofeuros METAL PRICES NON-FERROUS SALES AT CONSTANT In % NON-FERROUS METAL PRICES OPERATING MARGINAT CONSTANT 4,442 5.8% 4,822 8.5% + 8.5 % 163 50 07 06 05 in oneyear. disposals in2006,netincomehasdoubled gainsonasset Excluding extraordinary 189millioneurosin2007. to with operatingmargin.Netincomecame Net incomeforthefiscalyeargrewinline In millionsofeuros ATTRIBUTABLE NETINCOME 241 90 189 +

+2 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:22Page11 78.5% 120 50 07 06 05 expenditures was industry (22%). expenditures wasindustry high;theGroup’svery nextbiggestareafor infrastructure operations(40%),wheredemandis expenditures wasallocatedtoenergy ofplanned 2007. Thelargestportion line withtheplanannouncedatbeginningof The amountoftheGroup’s expenditureswasin In millionsofeuros MANUFACTURING CAPITAL EXPENDITURES consolidation. * Atcurrentexchangeratesandscopeof Én Change comparedwith2006*: PRICES CONSTANT NON-FERROUSMETAL 2007 SALESBYACTIVITYAT Electrical wires Telecom Energy 165 174 10.5% + 5.5 % 11.0% + 20% – 37% + 8% 66% 1,278 50 07 06 05 solid 16%(comparedwith40%in2006). net debt/totalequityratio,whichstoodata lower netdebtenabledtheGrouptoits Group’s significantequityanditsconsiderably income overtheyear(197millioneuros).The Total equityroseinlinewiththeincrease In millionsofeuros TOTAL EQUITY Change comparedwith2006*: METAL PRICES ORIGIN AT CONSTANT NON-FERROUS 2007 SALESBYGEOGRAPHICALAREA Europe Rest oftheWorld Asia-Pacific America North 1,589 1,758 14% + 10.6 % 12% 8% + 106% + 13% – 18% + 6% 65% 374 50 07 06 05 requirements. taken tolowerworkingcapital operations alongwithsuccessfulinitiatives considerably highercashflowfrom These positiveresultscanbeattributedto compared with633millioneurosin2006. 2007 (downto290millioneuros) The Groupcutitsnetdebtinhalfover In millionsofeuros NET DEBT Change comparedwith2006: NON-FERROUS METAL PRICES GEOGRAPHICAL AREAAT CONSTANT 2007 OPERATING MARGINBY operations =–14millioneuros Note: Operatingmarginonunallocated Europe Rest oftheWorld Asia-Pacific America North 633 290 - 19% 54.2 % 12% 8% + 163% + 78% + 23% – 15%

11 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:26Page12 12 (1) Inmillionsofeuros.(2)numbershares.(3)Dailyaverageovertheyear. Share turnover Number ofissuedsharesasDecember31 Average dailytradingvolume Market capitalizationasofDecember31 Change intheSBF120overyear Change overtheyear Year closingprice Lowest Highest STOCK MARKETDATA (THROUGH12/31/2007) NEXANS’ SHAREPRICEFROMJANUARY 1,2007TOFEBRUARY 22,2008 2,196 millioneurosasofDecember31,2007 MARKET CAPITALIZATION • • • (COMPARTMENT A) NEXANS ISLISTEDONEURONEXTPARIS THE NEXANSSHARE T Share priceineuros(exceptratios) Par value:1euro Deferred settlementservice ISIN Code:FR0000044448 raded volumes 1,000,000 1,200,000 200,000 400,000 600,000 800,000 29/12/06 0 (3) 27/02/07 (2) 13/04/07 (1) 05/06/07 16/08/07 • • INDEXES 236,127 sharesin2007 AVERAGE DAILY TRADINGVOLUME CACMid 100:2.24%oftheindexasDecember31,2007 SBF 120:0.18%oftheindexasDecember31,2007 568352,6,5 23,507,322 25,264,955 25,678,355 2,195.5 236,127 – 11.9% 131.71 0.92% 15/10/07 + 0.3% 82.69 2007 85.5 20/12/07 2,450.70 +141.7% 153,335 +19.1% 0.65% 39.75 2006 97 97 22/02/08 ------0 30 60 90 120 150 Share price ineuros securities of traded Volume 104,831 + 38.7% + 25.2% 943.35 0.49% 40.13 41.44 28.91 2005 001_036_Rapport_Activite_GB_v12.qxd 28/04/0816:46Page13 (6) 2007dividendproposedtotheAnnual Shareholders’MeetingonApril22,2008. (5) BasedontheDecember31shareprice. bonds,stockoptions,andrights)areexchangedfor (4) securities (warrants,convertible pershareifallconvertible Earnings (3) Basedontheweightedaveragenumber ofsharesoutstanding. (2) Equityexcludingminorityinterestdivided bythenumberofsharesoutstandingonDecember31. (1) IFRSdata,restatedforthechangerelatingtorecognitionofnon-ferrousmetal inventories. PER SHAREDATA * Breakdownofnewsharesissued:exerciseoptions. - Fully-dilutedEPS - BasicEPS Average numberofsharesin2007usedtocalculate: of December31,2007 Number offullydilutedsharesas OCEANE bonds Stock options of December31,2007 Number ofsharesas New sharesissued* 25,264,955 Cancelled shares Number ofsharesasDecember31,2006 CHANGES INCAPITAL IN2007 tion onApril29,2008. Meeting onApril22,2008,fordistribu- ProposedtotheAnnualShareholders’ * In euros NET DIVIDEND Dividend yield Net dividend PER Diluted EPS EPS Net assets In euros(exceptratios) 1.00 50 07* 06 05 shares and consequently reduce net earnings pershare. shares andconsequentlyreducenetearnings (5) (3) 1.20 (2) (4) (6) (5) 2.00 + 67 % an in2006. gains capital * Excludingextraordinary In euros EARNINGS PERSHARE 7.73 50 07 06 05 10.25 25,678,355 Share capital 29,895,603 25,553,906 7.41 30,542,642 3,794,037 1,070,250 413,400 + 93 % * – Non-identified Individual Employee Rest oftheWorld Institutional shareholders United States Institutional shareholders Europe Other institutionalshareholders United KingdomandIreland Institutional shareholders France • • • AS OFDECEMBER31,2007 ESTIMATED OWNERSHIPSTRUCTURE resolutions atanAnnualShareholders’Meeting. rights attachedtosharespresentorrepresentedwhenvotingon voting rightsand16%inthecaseofdouble A shareholder’s votingrightsarelimitedto8%inthecaseofsingle doublevotingrights. carry Shares registeredinthenameofsameholderforatleasttwoyears Institutional shareholders Estimated numberofshareholders:approximately50,000 Total numberofvotingrights:25,899,075 Total numberofshares:25,678,355 hrhles10% 1.0 shareholders hrhles1. % 11.3 shareholders 2007 2.3% 2.00 11.5 6.67 7.41 67.0 shareholders commonshares,whichwouldincrease the numberof 10.25 2006 1.2% 1.20 8.93 61.3 9.5 Share capital 2005 51% 35.1 % 12.9 % 15.4 % 18.9 2.5% . % 1.6 . % 3.8 7.73 6.63 51.1 5.2 1.0 (1) 13 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 16:46 Page 14

SHAREHOLDER INFORMATION

ACTIVE DIALOGUE WITH OUR SHAREHOLDERS Registered shares are not subject to safe custody fees, and may receive Nexans strives to earn the loyalty of its shareholders by consistently double voting rights after two years. They also allow the shareholder to improving its performance, so that its share price climbs and the receive invitations to the Group’s shareholder meetings and a personal Group can continue to increase its dividend. mailing of information about the Company. Investors wishing to Nexans is also concerned with good corporate governance, and purchase pure registered shares should contact their financial interme- provides its investors with faithful, transparent information, while diary, who will then obtain the necessary registration documents from putting all its efforts into keeping its commitments. Société Générale.

A WIDE RANGE OF FINANCIAL INFORMATION Nexans strives to earn the trust of its shareholders, and provides reg- FINANCIAL CALENDAR ular, complete, and transparent information using a variety of means for different shareholder needs. The Group publishes an Annual Report-Registration Document, a Annual Shareholders’ Meeting April 22, 2008 shorter version, the Activity Report, and three Shareholders’ Publication of 2008 first quarter sales April 22, 2008 Newsletters. All Nexans’ shareholder information is available on the Payment of the dividend April 29, 2008 Group website, www.nexans.com, with a Shareholder’s Corner under “Financial Information” on the home page. Individual shareholders’ information meetings* For a quick response to questions, contact us or send an e-mail to April 3, 2008 Saint-Étienne June 5, 2008 Lille [email protected]. September 30, 2008 Nice November 24, 2008 Reims DIRECT DIALOGUE The Group gave five presentations for shareholders in Marseille, * These dates are subject to change Clermont-Ferrand, Lille, Strasbourg, and Bordeaux, and for the first time organized a seminar on cables in Paris that was extremely well-received. Shareholders only have to own one share to become a member of the Shareholders’ Club and receive personalized information and SHAREHOLDERS’ CONTACT invitations to special events. Investor Relations Department Nexans’ senior managers also held meetings with analysts and investors. Nexans – 16, rue de Monceau 75008 Paris Tel.: +33 (0)1 56 69 84 56 SECURITIES SERVICES Fax: +33 (0)1 56 69 86 40 Nexans’ securities services are provided by Société Générale, E-mail: [email protected] 32, rue du Champ de Tir Our financial information is also available on the Group’s BP 81236 - 44312 Nantes Cedex 3 website: www.nexans.com Tel.: +33 (0) 825 820 000 - Fax: +33 (0) 2 51 85 53 42 14 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:30 Page 15

STRATEGY GOALS FOR 2009

To boost our development, To become more profitable, more resilient, more focused, and more efficient thanks to increased synergies...... with energy as the basis of our development. 15 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:27Page16 16 NETWORKS (LAN)* BUILDING, ANDLOCALAREA INFRASTRUCTURE, INDUSTRY, STRATEGY: * LANsarecommunicationsystemsthatcan linkPCsandperipheraldevicesthatarelocatedwithinafewkilometersofeach othe (2) Changeinnetdebt. Madeco). of andcoppertelecominfrastructure cablesinSpain,andacquisition (1) Organicgrowthforthecablebusinesses,andafterchangesinscope(disposal ofcableharnesses handling, automobiles,aerospace,electronicsandrobotics. oil &gas,nuclearpower, railwayrollingstock,shipbuilding,material differentiate itselffromitscompetitors.Thesemarketsegmentsinclude marketsegmentsinwhich itcan energy andtransport-related Nexans planstoincreaseitspositions market The Industry focused culture. entering newprofitableregionalmarkets,andimprovingitscustomer- areaoftheworld,byenrichingitsproductrange, expansion inevery power networks,whichofferunprecedentedprospectsfor Nexans isworkingtostrengthenitsleadershippositionin market The Energyinfrastructure innovation. advantages intermsoftechnologyand The Group hassignificantcompetitive accordance withdifferentbusinesscycles. andfunctionin and operatingsynergies, activities, whichofferstrong business,technical Nexans hasestablishedsolidpositionsinthese 4 depending ontheeconomicenvironment Operating marginofbetween7and10%, Average annualorganicgrowthof TARGETS FOR2009INFIGURES CORE ACTIVITIES:ENERGY GOALS FOR2009 6% into profitable,high-growth (1) TELECOM INFRASTRUCTURE systems combiningcables,connectors,administrationandsecurity. basedonhighvalue-added Nexans developsproductsandservices The LocalAreaNetworksmarket(LAN)* clearly acknowledgedbycustomers. market in localmarkets.Nexansplanstoenrichitsofferingthis The buildingactivityallowsNexanstoremainsolidlyestablished The Buildingmarket which allow for internet connectionspeedsofupto100Mbit/s. which allowforinternet telephone networks);andsystemstodeployFiber-to-the-Home (FTTH), (high-speed datatransferthroughcoppercablesinpublicswitched solutions:xDSLapplications Nexans focusesonhigh-performing The Telecom market infrastructure being targeted. ensureprofitability, onlyspecificnichesare To This activitycompletestheGroup’s offering. 1 (i.e. netincome,Groupshareexcludingnon-recurringitems) 30% Positive COMPLEMENTARY ACTIVITY: of earnings fromoperationspaidoutindividends of earnings by focusingonhigh-endproducts,whoseaddedvalueis net cash flow starting from2008 net cashflowstarting r. (2) 001_036_Rapport_Activite_GB_v12.qxd 29/04/08 18:09 Page 17

2 ACTIVITIES FOCUSED 5 GROWTH-ORIENTED AREAS ON INTERNAL NEEDS: ELECTRICAL Nexans is constantly developing and WIRES AND WIRERODS strengthening its geographical presence by focusing on high-growth countries and on Nexans’ electrical wires and wirerod activities promising activities and markets within each allow Nexans to ensure high-quality supplies. Area. However, these activities tie up sizeable capital, which is not fully offset by margins on sales to Europe outside customers. Consequently, the Group is Nexans has advanced manufacturing capacity in Europe and scaling back these activities to focus on internal is continuing to make selective capital investments, for example, needs. in Norway (high-voltage submarine cables and umbilicals), Germany (power accessories), and Eastern Europe (special cables for various industries).

2 ACTIVITIES EARMARKED FOR SALE: North America CABLE HARNESSES AND Nexans is adding capacity to keep in step with major COPPER TELECOM CABLES IN SPAIN development and interconnection projects involving power transmission and distribution networks, and is investing to satisfy demand for the roll out of 10 Gbit Local Area Networks. As part of its decision to manage business more pro-actively, Nexans is exploring Asia-Pacific opportunities for selling its non-core cable In this Area, Nexans focuses on high-tech and value added products. harnesses and copper telecom cable activities The Group has built up solid, successful business positions in Australia, in Spain, whose market positions prevent them Japan, China, Korea and Vietnam. It plans to continue strengthening from achieving critical mass. capacity in these countries.

Rest of the World Nexans has successfully steered the focus of its business units towards 3 PRIORITIES TO ENSURE TARGETS energy infrastructure and industrial applications. The Group is adding ARE REACHED to production facilities in Turkey, Morocco and Brazil and is expanding positions in Russia and the Middle East. Nexans is enriching its products’ offering, expanding into new profitable regional markets, South America and strengthening its customer-focused culture to Once the Madeco transaction is completed, Nexans will be the better satisfy clients expectations and provide leading cable manufacturer in South America, which will allow the them with complete solutions. Group to constitute a new development Area. 17 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:27Page18 18 for production ofsubmarinecablesandumbilicals. cable manufacturerinSouthAmerica. into Nexansthisyear. Madecoistheleading Madeco’ industrial applications. copper cablesandinstrumentationfor overhead lines. ratingsystemsfor in thermal the worldexpert building market.AcquisitionofTheValley Group, activity STRATEGY: Capital expenditure:174millioneuros 2007: STRATEGY INACTION cables. Wirerod productioncutbyone-third. 04 06 05 03 02 01 high-voltage terrestrialcables. . Disposalofwindingwirebusinesses. Production capacityincreaseplanned BELGIUM Increased manufacturingcapacityforthe NORWAY Agreement signedfortheacquisitionof CHILE ofproductioninsulatedenergy Start-up BRAZIL inthebuilding Strong marginsearned CANADA Increased productionofaerospace UNITED STATES Broadened rangeofcablesforthe s cablesbusiness,whichwillbeslotted GOALS FOR2009 02 01 04 and specialcablessplitbetweendif of locally basedintegrators. for aerospacecables,tomeetdemandfrom scheduledfor2008. Start-up to UK market. forthe Development ofLANbusiness,inparticular of cablesfortheoilandgasindustr production sites. 03 09 08 07 12 10 11 serve theenergyinfrastructuremarketsegment. serve cables fortheAirbusA380andA350aircraft. Production oflow-voltage,medium-voltage ITALY Capital investmentsintheproduction FRANCE Start-up ofhigh-voltagecableproduction. Start-up EGYPT ofproductioncapacities Planned start-up MOROCCO Creation ofacableproductionplant RUSSIA Production steppedupinthemanufacturing TURKEY 07 06 11 05 08 12 y. ferent 10 09 13 for high-voltageterrestrialcables. in Disposal ofwindingwirebusinesses. cable industrial cablesinShanghai.Newtelecom production fortelecomnetworks. cables inHanoi.Currentlyreorganizingcable production site. instrumentation cablesfortheoilandgasindustr 14 18 17 16 15 13 association withViscas. 16 production plantsetupinNanning. Currently increasingproductioncapacity AUSTRALIA productionofsubmarinecables Started JAPAN Doubled capacityformanufacturing CHINA production ofpowerandindustrial Started VIETNAM Increased specializationateach KOREA Production expandedtoencompass LEBANON 15 18 14 17 y. 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:34 Page 19

2007 RESULTS BY BUSINESS*

ENERGY CABLES TELECOM CABLES • 78.5% OF GROUP SALES (UP 12.1% FROM 2006) • 11% OF GROUP SALES (UP 12% FROM 2006) • 89.2% OF GROUP OPERATING MARGIN • 12.2% OF GROUP OPERATING MARGIN

Positions Positions As the leading global manufacturer of power cables, Nexans holds Nexans is extremely well-positioned in the supply of telecom cables solid positions in energy infrastructure markets in Europe, North in Europe and LAN cables in the United States. The Group is focusing America and the Asia-Pacific region. Worldwide, it is the leading expansion on high-growth Asian markets (China, Korea, and Vietnam). supplier of cables for the shipbuilding, railway rolling stock and Thanks to its highly effective solutions for high-bandwidth transmission petrochemical industries. and connectivity, the Group also has strong positions in local loop, ADSL, and xDSL technologies. 2007 results • Sales from the energy business rose 12.1% to 3.78 billion euros. 2007 results Organic growth came in at 10.2% in energy infrastructure, 17.5% • Sales of telecom cables rose 12% like-for like (constant scope and in industrial cables and 10.4% in low-voltage cables for buildings. exchange rates) to 529 million euros. Despite slow market growth • Operating margin totaled 365 million euros, or 9.7% of sales. worldwide, Nexans’ business was fueled by enhanced customer investments in railway infrastructure and high-speed LAN cables. Trends Organic growth reached 9.9% in telecom infrastructure and 13.9% • The outlook for the energy infrastructure market segment worldwide in Local Area Networks through the Group’s offering of high value- is excellent, due to the need for network reliability, modernization, added cabling systems. development, and interconnection. • Operating margin totaled 49 million euros, or 9.3% of sales. High-voltage submarine cables will be a major growth driver as large-scale projects get underway. Oil & gas is one of the most dynamic industries in the global economy at the present time. Energy needs and environmental constraints are fuelling demand for renewable energy sources. Across all these fields, Nexans has ensured a technological head start and is already testing out tomorrow’s solutions, such as superconductor cables. • In the industry market, Nexans provides advanced solutions for automobiles, aerospace, robotics, shipbuilding and material handling. The Group plans to dispose of its cable harness business, the profile of which does not overlap with other core activities. • In the building market, Nexans has anticipated the upcoming changes in EU standards, supplying high-performing fire-resistant and fire-reaction cables.

* The sales figures given in this section have been calculated at constant metal prices, scope and exchange rates. Operating margin has been calculated on the basis of sales at constant non-ferrous metal prices. 19 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:34 Page 20

2007 RESULTS BY BUSINESS

Trends 2007 results In the telecom business, Nexans is continuing to implement a selective • Sales from the electrical wires business dropped by 32.8% like- strategy focused on promoting high-performing solutions. for-like (constant scope and exchange rates) to 502 million euros. • The booming market for high-speed internet access has prompted In organic terms, sales of wirerods declined by 38.1% after the Group operators to invest in xDSL networks, which allow to meet users’ made a deliberate decision to cut volumes sold to outside customers growing needs for extra bandwidth. Companies’ demand for higher (down 45% on average, in tons). Sales of bare electrical wires fell bandwidth shows no signs of abating, and numbers of cable 13.7% on an organic basis with more marked declines in France subscribers continue to rise steadily. and Germany. • Growth drivers for Nexans going forward include unbundling, • Under the terms of previous agreements, the winding wires Local Area Network expansion, second lines in European households businesses in Canada and China were sold to US firm Superior Essex for internet access, and telecom infrastructure deployment in developing in late April and late July respectively last year. These disposals countries. The Group is a member of the FTTH Council Europe, which concerned the Simcoe site in Canada and the 80% holding in Nexans lobbies to speed up the deployment of high-speed optical fiber access Tianjin Magnet Wires and Cables, in China. Nexans also completed across Europe, and has developed a full range of cables, connectors the sale of winding wire activities in Europe in June last year through and patchcords complying with future standards. the sale of its remaining 40% stake in Essex Nexans to Superior Despite having a leading edge in terms of technology, Nexans lacks Essex. the scale to remain competitive in copper telecom infrastructure. • Operating margin for electrical wires totaled 8.5 million, or 1.7% of sales.

ELECTRICAL WIRES Trends • 10.4% OF GROUP SALES Nexans plans to continue refocusing these business activities on its (DOWN 32.8% FROM 2006) own requirements and will halt deliveries of wirerods to external • OPERATING MARGIN OF 8.5 MILLION EUROS customers in Europe.

Nexans manufactures wirerods, the cable industry’s base product. A large portion of goods produced are purchased by other business units within the Group as a way of guaranteeing a high-quality supply. Nexans has started refocusing the electrical wires business on its own needs. Winding wires are used as magnetic parts in engines, household appliances, cars, etc., and are sold mainly to parts suppliers in the automobile, railway, and aerospace industries. Nexans completed the disposal of this business during 2007. 20 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:34 Page 21

OUR ACTIVITIES * IN 2007

Against a backdrop of stronger competition and further increases in raw materials and energy prices, Nexans consolidated its global leadership position in the cable industry and boosted its operating and financial performance. The Group reinforced its manufacturing capacities, continued to post very robust growth in the energy infrastructure sector and enhanced its positions in the industry market, in particular in the oil and gas, aerospace and material handling industries. Nexans also successfully integrated Olex, Australia’s leading cable manufacturer, and announced the acquisition in 2008 of the cable activities of Madeco, the leading cable manufacturer in South America. These acquisitions should further strengthen the Group’s positions in high growth regions.

*For comparison purposes, the sales figures given in this section have been calculated at constant metal prices, scope, exchange rates and accounting methods. 21 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page22 22 requirements. close to50%inlinewiththeGroup’s strategytorefocusonitsown customersdroppedby all markets.Salesofelectricalwirestoexternal stronggrowthacross The cableandcablingsystemsactivitiesreported ofsalesandprofits. goodyearinterms The EuropeAreahadavery PERFORMANCE IN FURTHER STRONGIMPROVEMENTS Europe. Switzerland andNorthern cables) andstronggrowthinopticalfibercablesBelgium,France, cables, sustainedbusinessintherailwaymarketsegment(signaling indemandforcopper In thetelecombusiness,2007sawarecovery several countries(France,Norway, Sweden,BeneluxandSwitzerland). Low-voltage cablesforthebuildingmarketenjoyedrobustdemandin in manysegments. strong years ofsales.Demandforindustrialcableshasbeenparticularly The orderbookforhigh-voltagecablesnowstandsatclosetotwo interconnection projectsanddynamicoil,gaswindpowermarkets. for submarinecablesandumbilicalswasdrivenupsharplybylarge The Groupisbenefitingfromthedevelopmentofpowernetworks.Demand markets alike. and export Nexans enjoyedgenerallyfavorableeconomicconditionsonthedomestic A FAVORABLE ENVIRONMENT OUR ** High-voltageactivityassignedtothe Europe Area. THE UNITEDKINGDOM. IRELAND, ITALY, THENETHERLANDS,NORWAY, POLAND,PORTUGAL, ROMANIA,SERBIA,SLOVAKIA, SLOVENIA,SPAIN, SWEDEN,SWITZERLAND, * AUSTRIA,THEBALTIC STATES, BELGIUM,BULGARIA,CROATIA, THECZECHREPUBLIC,DENMARK,FINLAND,FRANCE,GERMANY, GREECE,HUNGAR ACTIVITIES EUROPE 15,184 EMPLOYEES IN 2007 EARNINGS INALLMARKETS A VERY GOODYEARFOR BOTHSALESAND COUNTRIES PLANTS IN 17 is tobeexpanded. In high-voltageterrestrialcables,capacityattheCharleroiplantinBelgium strongglobaldemandforhigh-voltagesubmarinecables. for thevery uptheTokyomore than50%andstarted BayplantinJapan**tocater by The GrouphasincreasedcapacityatitsHaldenfacilityinNorway and A350. enable themanufacturingofhighvalue-addedcablesforAirbusA380 Slovakia. InvestmentsaretobemadeattheDraveilplantinFrance forindustrial vehicleshasbeentransferredto production ofharnesses hasbeenstopped,and fortheaerospace industry of cableharnesses and Battipaglia,havebeenspecialized.InBelgium,themanufacture ofmanufacturingplants.InItaly,performance thetwomainsites,Latina More than113millioneuroshavebeeninvestedinenhancingthe ONGOING INVESTMENT initiatives towardsthemostprofitableandvalue-enhancingmarketsegments. efficient manufacturingandlogisticsoperationssteeringcommercial in thelasttwoyears,whichaimedatachievingmoreproductiveand Nexans reapedtherewardsofstreamliningandinvestmentscarriedout 3, (UP 7.2%ON2006) 215 SALES: * M€ 265 OPERATING MARGIN: M€ Y, 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:34 Page 23

RECORD DEMAND FOR HIGH-VOLTAGE CABLES A HIKE IN BUILDING SECTOR MARGINS AND UMBILICALS The building sector also enjoyed strong growth with sales climbing 11.8% Sales of high-voltage cables have risen by 20.5%. This activity has and a sharp improvement in operating margin. registered record order levels in Europe, the Middle East and Asia. Several Nexans continued to extend its range of fire-resistant products. In the new major worldwide technological breakthroughs were made in the area of fire safety, Nexans is already prepared for the new European field of high-voltage submarine cables in 2007. Commission Construction Products Directive (CPD), which will set new Notable achievements and contracts signed in 2007 include the NorNed fire-reaction and fire-resistance standards for all cables. The Group project to connect the Norwegian and Dutch power networks, the new has developed a new range of cables with improved fire reaction properties high-voltage link between the Balearic Isles and Spain, and the Horns (ALSECURE®) and a range of fire-resistant cables that ensure the continued Rev 2 offshore windfarm currently being built in Denmark. In the umbilicals operation of safety systems during emergency conditions (ALSECURE® sector, Nexans supplied an innovative direct electrical heating system PLUS). These ranges were first launched in France, Benelux, Spain, for the submarine pipelines used at the Tyrihans oil & gas field off the Denmark and Sweden in 2005, and then in the UK, which has particularly coast of Norway. stringent requirements for safety cables, in 2006.

GOOD PERFORMANCES IN MEDIUM-VOLTAGE HEALTHY DEMAND FOR TELECOM AND DATA AND ACCESSORIES TRANSMISSION CABLES Sales of low and medium-voltage cables and connection accessories The telecom infrastructure activity has registered 16.5% growth. Demand increased by 7.6%. for copper cables has picked up. Nexans signed two contracts with Medium-voltage cables for power networks benefited from strong demand Telecom Italia, covering the management of supply to many centers in France, Switzerland, Norway, Sweden (where the network is being that span the whole of Italy. Sales of optical fiber cables and connectivity buried), and the UK, where networks are being upgraded ahead of accessories were up significantly in Belgium, France, Switzerland and the 2012 Olympic Games. To meet the demand, the Group called on Northern Europe. its Greek, Italian and Swiss manufacturing plants to support the local In the Local Area Networks activity, Nexans cabling systems registered units. strong growth at the upper end of the range with a complete offering that Power accessories continued to show strong growth, reflecting the includes cables, connectors and “intelligent systems”. This offering has reliability, quality and scope of the products that Nexans offers. The been particularly successful in businesses with strong reliability and safety Group masters a wide range of technologies including epoxy resins, requirements such as airports, data centers and equity trading rooms. polyurethanes, silicon, thermo-retractable and cold shrink. In 2007, the Group gained very significant market share in France and Spain, OUTLOOK but also in Eastern Europe. Going forward, Nexans will be able to draw on optimized manufacturing capacity to serve the major European markets, a wide range of products STRONG RESULTS IN INDUSTRIAL CABLES and services and a proactive sales organization that is ready to seize Sales of industrial cables increased by 17.2%, with significantly higher the many opportunities offered by an enlarged Europe and by export volumes in high value-added segments. All sites contributed to these markets. strong performances. Several capacity increases are either underway or planned in Europe to In France, sales of cables for the aerospace, oil & gas, nuclear power, supply the surging demand for high-voltage submarine and terrestrial material handling, railway rolling stock and shipbuilding industries cables, and industrial cables for the wind power, oil & gas and nuclear jumped 34.8%. power market segments. In Germany, where business is focused on cables for the robotics, railway, At the same time the Group is concentrating a lot of effort into optimizing automobile, material handling and shipbuilding industries, sales rose its manufacturing plants. Nexans is looking at ways of optimizing by 13%. production between the various units that supply the industry market and In Sweden, where Nexans supplies in particular industrial vehicle has already taken steps to develop synergies. Finally the Group has manufacturers, growth exceeded 19.3%. decided to stop supplying wirerod to external customers in Europe Sales of cable harnesses were up 14.5% thanks mainly to the popularity in an effort to reduce its working capital requirement. of upmarket German cars. New production sites have been opened in Slovakia and Ukraine to round out the existing production network in Czech Republic and Romania. 23 24 001_036_Rapport_Activite_GB_v12.qxd 28/04/0816:10Page24 office inVenezuela tokeepupwith growth inthismarket. these sales.Nexanshasreinforced itsteamsinMexicoandopenedan accountedforthebulkof and Asianplants.Theoil&gasindustry in salesofhigh-technologycablesmanufacturedattheGroup’s European bythesalesforcehasledtocontinuedstronggrowth effort A concerted has continuedtoimproveintheaerospaceandshipbuildingbusinesses. the Grouptokeepupwithvigorousdemandinthisindustry. Profitability Carolina)hasenabled aerospace cableproductionlineinElmCity(North Sales ofindustrialcablesjumped22.8%.Theramp-upthenew STRONG GROWTHININDUSTRIALCABLES excellent. since joiningNexans.Saleshavemorethandoubledandorderlevelsare plant. TheValley Group**subsidiary, acquired inearly2007,hasflourished Energy infrastructurecablesalesfellby13.4%duetothestrikeatQuebec improved significantly, reaching11.9%versus7.9%in2006. Simcoe manufacturingplantinOntariototheEssexgroup.Operatingmargin from thewindingwirebusinessundergoodconditions,withsaleof to reducewirerodsales(–29%).Nexansalsofullywithdrew deliberate efforts lasted severalmonths.Thedeclineintotalrevenuesismainlyattributableto Cable salesgrewby5.4%despiteastrikeattheplantinQuebecwhich A ROBUSTPERFORMANCE strong demandinthetelecomandLANactivities. buoyant.TheGroupenjoyed whichwasvery in theaerospaceindustry particularly exports, stronggrowthinindustry Dollar depreciationledtovery andindustrialbuildingmarketsegments remainedstrong. but tertiary The buildingmarketslowedduetoasharpdeclineinnewhousingstarts, US andCanada. by networksupgradesandlargeinterconnectionprojectsbetweenthe In theUnitedStates,demandforenergyinfrastructurecableswasboosted led toincreasedcompetition. weakened inthebuildingmarketandrecorddeclinesUSdollar In Canada,theenergyinfrastructuremarketremainedrobust,butdemand copper priceandaweakUSdollar. 2007 wascharacterizedbyamixedenvironmentwithhighlyvolatile A MIXEDENVIRONMENT OUR ** non-consolidatedsubsidiary. NORTH ACTIVITIES AMERICA 1, EMPLOYEES *CANADA, THEUNITEDSTATES, MEXICO,CENTRALAMERICA,ANDTHECARIBBEAN 870 IN 2007 COUNTRIES PLANTS IN 3 SHARP RISEINPROFITABILITY end strategyhashelpedtokeepprofitabilitystrong. highspeedDSLcoppercables (10GB).Thishigh- tosalesofvery start value-added offeringscombiningcablesandconnectorsastrong Sales ofLANcablesleaptup15.6%thankstothesuccesshigh American buildingmarket. for theNorth for commercialbuildings,theGroupnowhasacompleteproductoffering Following thelaunchinChester(UnitedStates)ofanewrangesolutions a majorplayerinthissegment. impacted bytheslackdemandinresidentialbuildingsinceitisnot where theGroupisstronglypositioned.Nexanswasonlymarginally andindustrial marketsegments, Demand remainedstronginthetertiary good. levels werevery Sales ofcablesforthebuildingmarketroseby6.1%andprofitability TELECOMNETWORKACTIVITIES AND HIGH PROFITABILITY INTHEBUILDING positions. andindustrialsegments,whereitholdssolid and focusonthetertiary In thebuildingmarket,itislookingtostepupstockandcostcontrolefforts LAN cablesandstrengthencapacityforaerospacein2008. The Groupisplanningtodoubleitsproductioncapacityfor10GB for themanufactureofmedium-voltagecables. reinforce productivityatitsQuebecplant,whichprovidesasolidbase reduceproductionofelectricalwiresand Nexans intendstofurther development ofhighspeeddatatransmissionproducts. andthe inthecapitalgoodsandtransportation infrastructure, exports bydemandinenergy In 2008salesareexpectedtobesupported OUTLOOK (DOWN 10.2%ON2006) 662 SALES M€ * OPERATING MARGIN: 79 M€ 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page25 Hainan Island. has beensignedinChinatoprovide submarinecablestolinkupthe Tokyo Bay**planthasalsogoneaccordingtoplan.Afirstmajorcontract ofproductionhigh-voltagesubmarinecablesatthe The start-up euros totheAsia-PacificArea. exceededexpectations.Olexcontributedsalesof284million earnings both industrialandcommercialsynergiesontarget.2007sales At operatinglevel,theintegrationofOlexwentremarkablywell,with OLEX: ASUCCESSFULINTEGRATION of sales). 2007, theArearegisteredoperatingmarginof50millioneuros(8.8% substantially improveitsoperatingmarginintheAsia-PacificArea. In This strategictransactionhasenabledNexanstodoubleitssalesand and LilydaleinAustraliaatNewPlymouthZealand. industry. ThecompanyhasthreemanufacturingplantslocatedatTottenham forthemining for powernetworksandinspecialcables,particular and Asia-Pacificattheendof2006.Olexiswellpositionedincables the acquisitionofOlex,leadingcablemanufacturerinAustralia significantly strengtheneditsmanufacturingandsalesresources,with Russia.TheGroup as welltoJapan,Australia,OceaniaandEastern toASEANcountries, Nexans’ plantsinChina,KoreaandVietnam export SOLID MANUFACTURING CAPACITIES strong. projects arenumerousanddemandforoverheadpowerlinesremained While thebuildingmarketremaineddullinNewZealand,industrial building market. andthe continued toinvestrobustlyinenergyinfrastructure,industry andAustralia intheJapaneseeconomywasconfirmed The recovery of 10%. 8% andChinabrokeallpreviousrecords,registeringgrowthinexcess GDP growthexceeded5%inKorea.TheVietnamese economyadvanced competition. leading tostrongdemandforcablesinallmarketsdespitestronger The developingAsianeconomiescontinuedtogrowatahealthypace, A DYNAMICENVIRONMENT ** High-voltageactivityassignedtothe Europe Area. ASIA-PACIFIC 2,273 EMPLOYEES IMPROVED SALESANDPROFITABILITY STRONGER POSITIONS, COUNTRIES PLANTS IN 6 *SOUTH-EAST ASIA,AUSTRALIA,CHINA,KOREA,INDIA,JAPAN, NEWZEALAND,OCEANIA,VIETNAM N AT CONSTANT EXCHANGERATES) AND (+13.6% EXCL.OLEXACQUISITION 571 SALES: M€ in allactivitiesexcepttelecomcables. In Vietnam, whereNexansoperatesthreeplants,growthwasregistered of automobilecableshasgreatlyimproved. results. Asfiercecompetitionweighsonprices,efficiencyinthemanufacture cables, Nexanshasfocusedonlarge-scaleprojects,withimproving demand intheshipbuildingandoffshoreoil&gasindustries.InLAN In Korea,newcapacityhasenabledtheGrouptokeepupwithstrong Group solditswindingwiresbusinessinTianjin. applications havecontinuedtoregisterstronggrowth.Meanwhile,the sites manufacturingLANcablesandforshipbuildingindustrial will soonproducesignalingcablesfortherailwaymarket.Thetwoother Guangxi province.Thisplantmanufacturescoppertelecomcablesand In China,NexansopenedathirdmanufacturingsiteatNanninginthe relating totheacquisitionofOlex.Operatingmarginalsoimproved. Organic growthreached13.6%intheArea,excludingchangesscope STRONG GROWTHANDANEWPLANTINCHINA a sitejointlyownedbyNexansLIOAinHanoi. In Vietnam,manufacturingtelecomnetworkcables at Nexanswillstart Area. theneedsof A rubbermixingplantistobebuiltinKoreaserve to doublemanufacturingcapacityinShanghai2008. installationsandtelecommunications.Nexansislooking shipbuilding, port as nuclearpower, railwayrollingstock, aerospaceandairports, standardsapply,on highvalue-addedsegmentswhereinternational such as wellthedevelopmentoflocalindustry. Itwillcontinuetoconcentrate customers In China,Nexansisbenefitingfromthearrivalofitsinternational demand forhigh-voltageandspecialindustrialcables. In Australia,theGroupisplanningsubstantialinvestmenttomeetgrowing high-technology products. Nexans’ developmentinAsiashouldcontinueastheGroupfocuseson OUTLOOK OPERATING MARGIN: 50 M€ *

25 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page26 26 Turkey, andtowardsSub-SaharanAfrica. totheMiddleEast,CISandRussia inrelationwith Lebanon areexported cables fortheoil&gasindustry. Halfofallcablesmanufacturedin In Lebanon,Nexanshasalsodiversifiedproductionbymanufacturing industry. has consolidatedproductioncapacityininstrumentationcablesfor toCIScountrieswerebuoyantinallmarketsandtheGroup Exports market conditionsinTurkey, whereNexanshastwomanufacturingplants. Sales oflow-andmedium-voltagecableshavebenefitedfromhealthy LEBANON AND STRONG PERFORMANCESINTURKEY energy marketaswellcablesforthebuildingandindustrialmarkets. manufacturing insulatedcoppercablesforthecountry’s also started lines andcablesfortelecominfrastructureLANs,Nexanshasnow activeinBrazilsupplyingaluminumcablesforoverhead Already very positive trends. all enjoyedstrongmomentum.Themostrecentactivitiesalsofollowed intheMiddleEast:Group’sfor theoilindustry mainmarket segments lines inBrazil,buildingTurkey, energyinfrastructureandspecialcables The RestoftheWorld Arearegisteredorganicgrowthof14.5%.Overhead HEALTHY GROWTH operators. notably fromIndian,ChineseandMiddleEastern solid growthandstrongdemandforcables.Competitionisincreasing, projects.MostAfricancountries areregistering industrial andtertiary reinforce energyinfrastructure,interconnectnetworksanddevelopmajor The MiddleEastandCentralAsiaareusingoilgasresourcesto industries. mining andtransportation transmission programs,aswellsignificantneedsintheoil&gas, demandunderpinnedby largeelectrificationandenergy with firm around4billiondollars, The SouthAmericancablemarketisworth countries enjoyedpositivetrendsin2007. Soviet Republics.Alltheseregionsand East, Russia,andtheformer The RestoftheWorld AreacomprisesSouthAmerica,Africa, theMiddle IN MOSTAREAS A BURGEONINGECONOMICCLIMATE OUR ** Common Market for Eastern and Southern Africa. andSouthern ** CommonMarketforEastern REST OFTHE * SOUTHAMERICA,RUSSIA,THECOMMONWEALTH OFINDEPENDENTSTATES (CIS),TURKEY, MOROCCO,EGYPT, LEBANON, ACTIVITIES 2, BUOYANT IN2007 HIGH POTENTIALREGIONS, EMPLOYEES 571 IN 2007 THE MIDDLEEAST, PAKISTAN, SOUTHAFRICA. COUNTRIES PLANTS IN 5 WORLD in Congo. power transmissioninfrastructureinNigerandtheminingindustry The Grouphaswonseverallargecontractsinoil&gasNigeria,aerial with Nexans. manufacturer in2007,EACisdevelopinganactivecommercialpartnership entire greatlakesregion.HavingacquiredaSouthAfricancable African Cables(EAC),whichhasacommercialnetworkthatspansthe withEast COMESA** countries,whereNexansworksinpartnership mostlytarget andformedium-voltagecables.Exports & gasindustry In Egypt,TheGrouphasenhanceditsproductioncapacitiesfortheoil A newaerospacecablesactivityistobelaunched. renovate socialhousingandfromstrongdemandforautomobilecables. In Morocco,Nexanshasbenefitedfrommajorprogramstobuildand NEW DEVELOPMENTSINMOROCCOANDEGYPT networks markets. The unitwillmainlyproducepowercablesforthebuildingandenergy operatingin2008. In Russia,thenewOuglichplantisexpectedtostart their economiesbetween2006and2010. Gulf CooperationCouncilarelookingtoinvest700billiondollars in favorableintheMiddleEast:sixcountries The outlookisvery the CentralAsianRepublics,wheregrowthisupbeat. for Europe.ThesamecanbesaidTurkey, focusedon whichisvery Morocco alsorepresentsacloseandcompetitivemanufacturingbase Brazil andMoroccohaveembarkedonmajorsocialhousingprograms. are alsobeingconsidered. interconnection projectsbetweenAngola,Zaire,MozambiqueandKenya in LatinAmericaandRussia,aswellAfrica,wheremajor goodopportunities Urban andruralelectrificationprogramsoffervery and distribution,oil&gas,automobilesbuilding. focused itsoperationsonthemostprofitablemarkets:energytransmission Nexans hasconsiderablegrowthpotentialinthesecountries,and OUTLOOK (UP 14.5%ON2006) 374 SALES: M€ 31 OPERATING MARGIN M€ * 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page27 IMPROVEMENTS IN OUR ftetechnicalandenergynetworksatthePalaceofVersailles. the of •Amajorsponsorshipproject–restoration energy inparticular systems andcontrols•Progressinsustainabledevelopment,renewable eco-design andrecycling•Improvedenvironmentalmanagement and productivity, functions•Innovationin logistics andsupport a newprofit-sharingpolicy•Newimprovementsforindustrialefficiency •A“NexansUniversity”,newtraining programs,and performance customers’ needs,andnewproductssolutionstoenhancetheir A neworganizationalstructure,tobetterunderstandandmeetour 2007

27 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page28 28 SATISFYING OUR comprehensive solutions. the Group’s resourcestobringcustomersappropriateand and spanseveralcountries.Thesemanagershaveaccesstoallof relationships withmajorcustomers,whoseneedsareoftendiverse Key AccountManagershavealsobeenappointedtostrengthen related tothismarket. andmonitorindustrialR&Doperations tosupervise Departments organization reliesontheIndustrialManagementandTechnical segment hasbeenentrustedtoaGlobalSegmentManager. Thenew market,eachprioritymarket geographic Area.FortheIndustry and Building–regionalmanagersareinplaceforeachmajor managers foreachofitsthreeprincipalmarkets–Industry, Infrastructure development.Ithasappointeddedicated in theirinternational Group hasdevelopedaspecificorganizationtohelpitscustomers systems, designedfirstandforemosttorespondlocalneeds,the organization locally andworldwide.Inadditiontocountry-level itscustomers, understanding ofmarketexpectationsandbetterserve Nexans hasadapteditssalesandoperatingsystemstoimprove GETTING CLOSERTOOURCUSTOMERS organizational structuremeetsalloftheseobjectives. andestablishingacloserelationshipofmutualtrust.Ournew new products,developingservices, them. Italsomeansbetterunderstandingandsatisfyingtheirrequirements,speedinguptime-to-marketfor Making customersthefocusofourGroup IMPROVEMENTS IN 2007 OUR CUSTOMERS between theresearch,marketingandproductionteams. Technical Managerforeachmarket,whoensurescoordination structure wasreinforcedin2007withtheappointmentofaCorporate dedicated tospecificproductsorakeytechnology. Thisorganizational America.Eachofthesecenters is Centers inEuropeandNorth Downstream, appliedresearchisconductedinsixCompetence upstream researchonconductors. The NexansMetallurgyCenter(NMC)inLens,France,carriesout for theaerospaceandautomotiveindustries. forcables,andweightvolumereduction,in particular properties reliability incomplexorextremeenvironments,flame-retardant toimprove cable and theirworkisfocusedonpolymerproperties teams workalongsideuniversitiesandwell-knownresearchinstitutions on thebasiccablecomponents:sheathandinsulation.TheNRC Nexans’ ResearchCenter(NRC)isdedicatedtoupstreamresearch GLOBAL RESEARCHANDDEVELOPMENT naturally meansrespectingourcommitmentsto 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page29 effect thatcouldleadtoamajorpoweroutage. solutions tosafeguardoverheadlines,avoidanypossibledomino morecurrent),aswelladvanced aerial cables(whichcancarry Itdevelopscompositeconductorsfor wind turbinesandwindfarms. andcablingsystemsfor cables, umbilicalsforoffshoreplatforms, The Groupisconsideredabenchmarkinhigh-voltagesubmarine Nexans isattheleadingedgeofmanytomorrow’s technologies. TECHNOLOGICAL LEADERSHIP jointdevelopmentprojectswithcustomers. and undertake adapt itsprogramstochangesincustomers’plansandrequirements, technical teamsandenabletheGrouptoimproveitsproposals, CTIs facilitatedialoguebetweenNexans’engineersandthecustomers’ automotive.These marketsegments,inparticular customers incertain Nexans hasappointedCustomerTechnical (CTI)for Interfaces the businessunitsandGroup’s CompetenceCenters. linkbetween customers’ requirements.Theyprovideanimportant trials, anddemonstratehowNexans’solutionseffectivelymeet comparative all enableNexanstospeeduptime-to-market,perform Holland (UnitedStates).Theyregularlyreceivecustomers,andabove material handlingatLyon (France),andLANcablingsystemsatNew centers arededicatedtoroboticsattheNurembergplant(Germany), centers thatrefineandtestcablesunderactual-useconditions.These In severalmajorGroupplants,Nexanshascreatedapplication installation. lowercostsandfacilitateequipment that boostperformance, an in-depthunderstandingoftheirapplicationstoprovidesolutions toitscustomersandrelieson Nexans actsasatechnologypartner INNOVATION INSTEPWITHCUSTOMER NEEDS - 1.25%ofsalesinvestedinR&Dprojects. - 63patentsfiledin2007 - Almost600researchers,engineersandtechnicians - Nineresearchcenters KEY FIGURES GroupPrize. an internal etc.Theseinnovationswereawarded andfreightterminals, in ports and TVonboard,highlyavailablesolutionsformaterialhandling for shipsandintegratedLANmarksystemsbringingdata,internet as compact,ultraflexiblecablesforwindturbines,ultra-fine to 125°C.TheGrouplaunchedseveralnewproductsin2007,such cables forcarssuchashalogen-freethatareheatresistantup applications, includingDuoTrack forrailwaysignalingandspecial Nexans alsooffersawiderangeofinnovativecablesforindustrial of fire-retardantandfire-resistantcables. is developingeasy-to-installcablesandaccessoriesafullrange (compared toprevioussystems).Inthebuildingmarket,Group 40 timesmoreopticalfibertobeinterconnectedinalimitedspace cable solutions.TheNS3compactclosets,launchedin2007,allow In telecoms,Nexansofferscosteffectivemicro-blownopticalfiber AND MORECOSTEFFECTIVESOLUTIONS EASIER, MOREEFFICIENT R&D spending(inmillionsofeuros) INDICATORS Number ofpatentsfiled 2007 2007 60.2 63 2006 2006 54.6 59 2005 2005 53.6 57 29 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:34 Page 30

OUR IMPROVEMENTS IN 2007

DEVELOPING OUR TEAMS

Developing skills, promoting customer focus, building commitment, sharing knowledge and best practices, and providing the resources necessary for business growth and development: by building up its teams and helping them express their potential, Nexans is preparing for sustained international expansion.

ANTICIPATING HUMAN RESOURCES NEEDS Through training, each employee can improve his or her skills and Nexans supports its employees by helping them develop their skills thus better contribute to the Group’s success. Training allows best in line with the Group’s needs, and by encouraging manager mobility. practices to be shared and unites employees around common values, The Group Human Resources Department sets common policies and goals and methods. procedures and coordinates essential issues such as manager career In 2007, over half of the Group’s total workforce received training, development, compensation guidelines, training programs, workplace and the Nexans University was created with a view to promoting safety, employee access to IT systems, and performance reviews. the "Nexans Way" in all the main fields of management and on Teams were strengthened across the Group in 2007, and shared an international scale, and encouraging the dissemination of best indicators are now in place on an international scale. practices. The forward-looking management of skills needs and career paths is becoming more widespread, led, at both Group and country level, WORKPLACE HEALTH AND SAFETY: FOCUS ON PREVENTION by a Career Management Committee. Annual performance reviews Nexans is committed to protecting its employees’ health and safety are being put in place for all employees and succession plans for and to ensuring the safety of installations at all sites. In 2007, the managers are reviewed each year. Group carried out frequent information and awareness-raising In 2007, Nexans prepared a skills model for all managers, setting campaigns on safety in the workplace and at home, and has out the skills required for certain functions. implemented strict on-site programs. Certain Nexans plants in ATTRACTING TALENT AND DEVELOPING TRAINING Switzerland, Norway and Turkey have already obtained OHSAS The Group also drives growth through recruitment. When hiring 18001 certification. engineers and managers, Nexans gives priority to young graduates During the year an action plan was drawn up to improve electric able to work in an international environment: 54% of employees safety in the employees’ day-to-day work. A thorough analysis hired in 2007 were under 30 years old. Internal promotion and was made of the most frequent problems and new procedures mobility are encouraged. were rolled out. Eleven sites were accident free in 2007, compared The main management positions available can be viewed on the with six the previous year. Group’s intranet site, and a new charter for expatriate employees was drawn up during the year. 30 001_036_Rapport_Activite_GB_v12.qxd 29/04/0818:09Page31 B:Keysocialdataisgivenonpages70to75. NB plans. plan. TheGroupregularlyoffersglobalemployeeshareownership investment more managersandin2008willimplementalong-term country. Nexans hasalsodecidedtoopenitsstockoptionplans have similarprogramsdependingontheregulationsineffecteach subsidiaries profit-sharing schemesandmanyofitsinternational Almost allofNexans’Frenchsubsidiarieshavesetupemployee scheme andabonustiedtotheirentity’s results. entity.particular Thesalesteamsarealsoeligibleforaprofit-sharing oftheGroupor which arelinkedtothefinancialperformance oftheyear,a variablebonustiedtogoalssetatthestart someof plus The compensationpaidtomanagerscomprisesafixedsalary whiletakingintoaccountlocalconditions. of transparencyandfairness policy isneeded.Nexanshasestablishedsuchainspirit To buildemployeecommitment,anattractive,coherentcompensation AN ATTRACTIVE COMPENSATION POLICY develop theirabilitytoadaptnewworkingconditions. measuresinplacetohelpemployees Group isputtinganticipatory Onawiderscale,the offers trainingandpersonalizedsupport. it staff, eitherwithinthecompanyorelsewhere.Whennecessary When Nexansisrequiredtorestructure,itdoesitsutmostredeploy charter.in aformal tobeprovidedarenowsetout conditions regardingtheinformation disposals andinter-European and restructuringprojects.Theterms providedduringacquisitions, information exchanges mainlyconcerned and twoadditionalmeetingswereheldbycouncilofficers.The The EuropeanWorks meetingsin2007, Councilheldthreeplenary representing 13countries,wererenewed. office ofthemembersNewco,EuropeanWorks Council of 70 collectiveagreementsweresigned,andinEuropetheterms Nexans maintainsanopendialoguewithunions.In2007,over AN OPENLABORDIALOGUE Employee agepyramid Women Men Workforce compositionin2007 * 2,151excludingautomotivecableharnesses. Total employees INDICATORS al harnesses). cable The averageabsenteeismratewas4.07% as awhole. Training in2007averaged18.2hoursperperson Number ofnewhires(includingautomotivecableharnesses) 10% 12% 14% 16% 0% 2% 4% 6% 8% 15-20 years 21,898 4,248* 21-25 years 2007 2007 26-30 years 31-35 years 36-40 years 21,150 41-45 years 3,086 2006 2006 46-50 years (excluding automotive 51- 55 51- years across theworkforce 56-60 years 19,584 61-65 years 26.8% 73.2% 2,300 2005 2005 2007 2006 66-70 years 31 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page32 32 IMPROVING requirements, andbettercustomer service. management,decreasedworkingcapital more efficientinventory improving itsflexibility, andinvestinginsystemsthatallowfor All overtheworld,Nexansismakingitsprocessesmorereliable, …AND INCREASINGSALESEFFICIENCY control andscrapreduction,throughProgram+inparticular. programs havebeensetupwithrespecttoenergyefficiency, quality In thefaceofhigherrawmaterialsandenergyprices,anumber of andlaunchpriorityactionplans. to assesstheirperformance describes theidealplantandcanbeusedasabasisformanagers from 28countriesmettodiscusstheNexansGuideBook,which practices andinnovationsinkeyareas.In2007,plantmanagers networks, andseminarswillcontributetothedisseminationofbest involvement fromallNexans’teams.Databases,inter-functions in plantsandincreasecustomersatisfaction,whichrequiresstrong The maingoalofProgram+istoimproveoperatingperformance for logistics,Sales+sales. Program+ formanufacturingandindustrialimprovements,Service+ Nexans ismanagingongoingimprovementprogramsinallsectors: IMPROVING OPERATING PERFORMANCE… plants worldwide. atallofits 3-year investmentplantoupgradeoperatingperformance Nexans alsodedicatedasignificantshareofits500millioneuro/ was transferredtoTurkey. in Europe.ItsItaliansiteswerespecialized,andLANcableproduction In 2007,theGroupcarriedonitsmanufacturingimprovementprogram itsglobalcustomers. meet thegrowingdemandinthesemarketsandserve Africa,SouthAmericaandAsiato Europe,North capacity inEastern hasspecializedplantsindevelopedcountries,andisgrowingits It tocontrolcostsandadjuststructuralchangesin demand. effort The Groupisconstantlyimprovingitsmanufacturingoperationsinan AN EVER-MORECOMPETITIVEINDUSTRIALBASE and optimizingpurchasingprocessesmanufacturingcapacities. Group isbecomingmoreresponsiveandcompetitive,improvingproductquality, streamlininglogistics, ofitsday-to-dayoperationsandtosharethebenefitstheseimprovements.The to improvetheefficiency dedicatedtoitscustomer’sAs apartner , Nexansiscontinuallystriving performance OUR IMPROVEMENTS IN 2007 (OTIF) performance indicator.(OTIF) performance date.ThisismeasuredthroughtheOnTime InFull promised delivery ensuring thatcustomersreceiveexactlywhattheyorderedonthe and shipping.Theirgoalistohelpstrengthencustomerloyaltyby management coordinate productionschedules,procurement,inventory delivery, Nexans hasalsoappointedsupplychainmanagerswho possible,fromorderprocessingthroughtocustomer the bestservice inprioritymarketsassoontheyarise. Toseize opportunities provide SalesDeveloperswhohelpthesalesteams appointed country-level best practiceswithintheGroupandothercompanies.Nexanshas The salesteamsbenefitfrommethodsdevelopedinaccordancewith to trainingandhumanresourcesmanagement. ofthefunction,notablythanks processes andtheenhancedexpertise cost savings.Theseactionsarebackedbyin-depthworkonpurchasing by thepurchasingfunctionwhileatsametimegeneratingextensive andequipmenthasbeenimplementedto increasecontrol services risk managementhasbeenbolstered.Asystematicapproach to and NewZealand,resultinginimprovedsynergies.Finally, supply wide contractshavebeenextendedtonewcountriesincludingAustralia comparison ofpricesbetweensuppliersandcountries,group- supply. Costsavingshavebeengeneratedthankstoasystematic contractswithmajormetalproducersworldwidetosecure long-term IT, transport, services, and advisory maintenance).Ithassigned equipment, energy,work (temporary andpackaging)services of itsproducts(copper, aluminum,plastics,additives,components, and qualitativecontrol,byitsPurchasingteams,ofthesupplyall quantitative to realizethesesavings,Nexanshasincreasedtheinternal forsavings. Inorder sales andthereforepresentahugeopportunity Purchases representtheequivalentofapproximately80%Nexans’ OPTIMIZED PURCHASING EFFICIENCY 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page33 PROTECTING Department. directlytotheStrategic Operations whichreports Department, The environmentalpolicyissteeredbytheIndustrialManagement programs ongoodenvironmentalpractices. processes, acontinuousimprovementprogramandemployeetraining risks connectedwiththeGroup’s productsandmanufacturing Management Charter, andincludesathoroughanalysisofthe Nexans’ environmentalandsafetypolicyisoutlinedinaRisk STRICT ENVIRONMENTAL MANAGEMENT logistics options. Packaging choicesarebeingoptimized,as,onawiderscale lengthsand scrap. is beingimprovedinordertoreduceshort cleaner andconsumelessenergyrawmaterials.Qualitycontrol Nexans alsotakescaretodevelopmanufacturingprocessesthatare process. features ofthevariousoptions,involvingsuppliersinselection & ManagementExplorer)softwaretocomparetheenvironmental Nexans’ productdevelopersuseEIME(EnvironmentalInformation To helpengineersidentifythebestproductiontechniquesavailable, intense mechanicalstress. pressure, extremeclimates,corrosion,andfire,aswellunder are resistantintoughenvironments,suchasdeepwaters,high toensurethatNexans’products In-depth researchisperformed process end-of-lifeproducts. that cablecomponentscanbeeasilydismantled,makingiteasierto and materialsthatareeasiertorecycle;designingsystemsso sheaths, halogens,andsolvents;selectingnon-pollutingmaterials entire lifecycle.ThisincludeseliminatingleadstabilizersinPVC needs whilehavingminimumimpactontheenvironmentovertheir Nexans doesitsutmosttodevelopproductsthatmeetcustomers’ ECO-DESIGN ANDECO-PRODUCTION equipment, respectthelandscapeandmarinelife,encourageuseofcleanrenewableenergy. The Groupworksalongsideitscustomerstoprovidesolutionsthatenhancethesafetyofbothpeopleand consumption ofenergy, waterandmaterials,facilitateproductrecycling. toprotecttheenvironment,control its Nexans hasstepped-upitsefforts THE ENVIRONMENT best practices,whichareorganizedbysubjectmatter. andenablessitestoshare site compilestheavailableinformation procedures andtoolsavailabletoeachsiteadedicatedintranet A GroupEnvironmentalManualdescribesalltheobjectives, departments. Risk Management,HumanResourcesandCommunications Operations, IndustrialManagement,Technical, Purchasing,Legal, The EnvironmentCommitteeincludesrepresentativesfromtheStrategic which willbetestedatthreesitesin2008. and definedamethodforcalculatinggreenhousegasemissions, aprogramforanalyzinghistoricsoilstudies Nexans alsoundertook 14001 certification. this labelin2007,and37siteshadalreadyobtainedtheISO to therisksposedbyGroup’s activities.Sixteensitesreceived EHPlabel,speciallyadapted had alreadyreceivedtheinternal inthisongoingimprovementprogram,and50 ofthem participated By theendof2007,almostallNexans’siteshadonceagain Hautement ProtégéorHighlyProtectedEnvironment). plants canbeawardedtheNexansEHPlabel(Environement Group’s manufacturingplants–areaudited.Followingtheaudit, senttoall environmental issues–coveredbyanin-depthsurvey has beenoperationalforseveralyears.Underthissystem,twelve The Group’s environmentalmanagementsystem internal voluntary REGULAR AUDITSANDEHPLABEL

33 001_036_Rapport_Activite_GB_v12.qxd 29/04/08 18:09 Page 34

OUR IMPROVEMENTS IN 2007

INVESTMENTS OF 4.49 MILLION EUROS A MAJOR PLAYER IN RECYCLING Nexans’ environmental priorities include protecting the soil, managing The Group is highly committed to recycling its manufacturing waste, water and hazardous fluids, eliminating PCB transformers, replacing and in 2007 recycled a total of 26,930 tons of waste, including oil-burning boilers and old heating systems with less polluting gas 21,993 tons of production waste from most of its European sites, boilers and systems that consume less energy, and treating air and and 4,937 tons of end-of-life cables collected directly from customers. gaseous effluents. The Group is particularly focused on phasing In 2008, Nexans set up a partnering arrangement between its out single-wall underground storage tanks. Ongoing improvements subsidiary RIPS and Suez Environnement subsidiary Sita, with a view are also being made in the retention of liquids, fire extinction water to strengthening recycling activities. and wastewater. In 2007, investments in wastewater management and treatment were made at many sites, including Halden in Norway, Fumay in France, Chester in the United States and Montréal in Canada. Investments to replace heating units or save energy were made at Chauny in France, Mönchengladbach in Germany, and Milton in the United States.

INDICATORS Consumption

2007 2006(1) 2005(1)

Energy consumption 1,715,000 MWh 1,615,000 MWh 1,480,800 MWh of which electricity 913,000 MWh 893,200 MWh 838,100 MWh Waste 93,500 t 97,500 t 91,300 t of which special waste (in tons) 6,200 t 4 800 t 7,400 t Number of sites monitored 98* 91 79 Water consumption 4,743,000 m3 4,452,000 m3 4,430,000 m3 Solvent consumption 740 t (2) 1,500 t (3) 1,500 t (3) Copper consumption 718,000 t 841,000 t 809,000 t Aluminum consumption 154,000 t 140,000 t 133,000 t

(*) Olex is included in the 2007 indicators. (1) Based on previous scope of consolidation. (2) The Simcoe plant has left the consolidated group. Only solvents are taken into account for environmental impact considerations. (3) Including acids and bases (300 t) in addition to solvents.

N.B. Key environmental data is given on pages 68 to 70. 34 001_036_Rapport_Activite_GB_v12.qxd 29/04/0818:09Page35 NEXANS event offire,thesehalogen-freecablesfromtheALSECURE Inthe Nexans cableswillhaveenhancedfire-reactionproperties. To ensureprotectionofthesiteaswell personalandvisitors’safety, and refurbishingtheGrovesofBallroomBathsApollo. revamping theunguidedvisitorsreceptionhallinDufourPavilion, oftheGrandLodgings, an energycenterunderthecourtyard thepowernetworks,creating current safetystandards,modernizing This projectentailsbringingtheRoyalOperabuildinginlinewith ofthe“GrandVersailles”itself andinitsdomain,aspart project. to restoringVersailles’ technicalnetworks,bothwithinthePalace Within Nexanswillcontribute thescopeofthisskillspartnership, STRINGENT SAFETYREQUIREMENTS and Lyon plants. These cablesaremanufacturedattheAutun,Bourg-en-Bresse,Fumay Trianon, theGrand LodgingsandtheRoyalOperahouse. power cables,telecomandopticalfiberdatacablesforthe is toprovide,exclusivelyandfreeofcharge,thelow-medium-voltage Museum andEstateofthePalaceVersailles. Nexans Inconcreteterms, sponsorship agreementwiththePublicCorporationofNational itscommitmenttotheprojectthroughacorporate Nexans formalized With thebackingofGroup’s ExecutiveCommittee,onJune19,2007 DONATION OFCABLESANDSKILLS-PARTNERSHIP and notoxicgases. littlesmoke will enablesafetydevicestokeepworking,andemitvery emblematic historicalmonuments. sponsorship projectsinceitscreation,markingdedicationtosafeguardingoneoftheworld’s most totherenovationofPalaceVersailles.expertise Since June2007,Nexanshasbeencontributingitscablingandbuilding OUR IMPROVEMENTS OF VERSAILLES SPONSOR OFTHEPALACE IN 2007 ® range A LONG-TERMPARTNERSHIP also part oftheGrandVersaillesalso part project. remain involved,throughtherenovationofPetitParc,whichis At theendofthisfirstphasesponsorship,Nexanswouldliketo the BallroomandofBathsApolloisinpipeline. Pavilion willberevampedandtherefurbishmentofGroves Finally, thereceptionhallforunguidedindividualvisitorsinDufour networks. Work thePalace’s in2008tomodernize willalsostart energy be created,aswellpremisestohousethePalace’s facilities. service In Spring2008,theenergycenterunderGrandLodgingswill in theOperahousewerebroughtintolinewithcurrentrequirements. in theTrianon domain. Attheendofyearsafetystandards inOctober2007, The firststageintherenovationworkgotunderway , will alsobeimproved. beauty andarchitecturalglory. Visitor receptionandsafety to bringthePalaceanditsdomainbacktheiroriginal the GrandVersailles project,a17-yearrenovationprogram In 2003,theFrenchStateandPalaceofVersailles launched seven millionvisitorseachyear. 1979, isoneoftheworld’s mostvisitedmonuments,receiving The PalaceofVersailles, aUNESCOworldheritagesitesince THE GRANDVERSAILLESPROJECT This isNexans’mostambitious

35 001_036_Rapport_Activite_GB_v12.qxd 28/04/0812:34Page36 36 037_077_Rapport_Gestion_GB_V12.qxd 28/04/0812:46Page37 INFORMATION FINANCIAL ANDLEGAL 161 ontheconsolidatedfinancialstatements Auditors’report Statutory 159 Notestotheconsolidatedfinancialstatements 85 Consolidatedstatementofchangesinequity 83 Consolidatedstatementofcashflows 82 Consolidatedbalancesheet 80 Consolidatedincomestatement 79 78 38 1 Concordancetable 212 PersonresponsiblefortheRegistrationdocument 211 ontheChairman’s Auditors’ report report Statutory 210 Chairman’s ontheBoardofDirectors’ operations report 200 agreements onrelated-party Auditors’ report Statutory 197 agreements Related-party 195 AuditorsofNexans 194 onthecompany’s Information capitalandvotingrights 188 onthecompanyanditscapital Generalinformation 187 Shareholders’ rightsandobligations 185 Otherlegalinformation 183 182 ontheparentcompanyfinancialstatements Auditors’report Statutory 181 Miscellaneous information 178 Notestothe income statement 177 Notestothe balance sheet 169 Notestothe parent companyfinancialstatements 167 Listofsubsidiaries andassociates 166 Incomestatement 164 Balancesheet 162 and thecompany’s controlprocedure internal CONSOLIDATED FINANCIALSTATEMENTS MANAGEMENT REPORT LEGAL INFORMATION PARENT COMPANY FINANCIALSTATEMENTS

37 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 38

MANAGEMENT REPORT PRESENTED BY THE BOARD OF DIRECTORS TO THE ANNUAL SHAREHOLDERS’ MEETING (Year ended December 31, 2007)

The purpose of this report is to present an overview of the operations Based on constant non-ferrous metal prices, constant exchange rates and results of the Nexans Group and its parent company for the year and a comparable scope of consolidation, net sales growth came to ended December 31, 2007. It is based on the parent company’s 4.8%. This overall increase reflects mixed performances across the financial statements and consolidated financial statements at Group’s businesses. Cable operations (Energy and Telecom December 31, 2007. businesses combined) generated organic sales growth of 12.1%, whereas sales for the Electrical Wires business contracted 32.8% Nexans’ shares are traded on the Euronext Paris market year-on-year following the launch of measures to focus operations (Compartment A) of NYSE Euronext, and are included in the SBF purely on the Group’s internal requirements. 120 index. The Company’s estimated ownership structure, broken down by shareholder category, was as follows at March 15, 2007: Operating margin amounted to 409 million euros in 2007, or 8.5% (i) institutional investors – France: 24.5%; the UK and Ireland: 28.4%; of sales at constant non-ferrous metal prices (5.5% at current other European countries: 8.8%; USA: 25.6%; other countries: 1.9%; non-ferrous metal prices), compared with 260 million euros, or 5.8% (ii) private investors and employees: 9.6%; and (iii) unidentified of sales at constant non-ferrous metal prices (3.5% at current non-fer- shareholders: 1.2%. rous metal prices) one year earlier. EBITDA (earnings before interest, tax, depreciation and amortization) amounted to 510 million euros, or 10.6% of sales at constant metal prices, versus the 2006 figure of 354 million euros, or 8.0% of sales at constant non-ferrous metal 1 OPERATIONS DURING prices. Consolidated income before taxes decreased to 281 million euros 2007 from 297 million euros in 2006 when the figure included a 149 million euro pre-tax gain on the sale of the Group’s distribution business in Switzerland. 1.1 CONSOLIDATED RESULTS The Group ended the year with attributable net income of OF THE NEXANS GROUP 189 million euros compared with 241 million euros in 2006.

1.1.1 Overview Net sales for 2007 totaled 7,412 million euros, compared with 7,489 million euros in 2006. At constant non-ferrous metal prices, net sales rose 8.5% from 4,442 million euros in 2006 to 4,822 million euros. The 2007 net sales figure includes 284 million euros contributed by Olex, an Australian company acquired by the Group in late 2006 which corresponded to the most significant change in scope of consolidation for the year. 38 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 39

1.1.2 Analysis of the Group’s consolidated Nexans won a number of major high-voltage cable contracts during results (Sales figures by origin at constant the year, notably for connecting islands to mainland power non-ferrous metal prices) networks which has boosted the Group’s order book for the coming months and years. 1.1.2.1 BY BUSINESS

ENERGY (*) • Medium-voltage cables reported 16.4% sales growth in 2007, Energy sales amounted to 3,780 million euros (up 20.3% on 2006, reflecting the first-time consolidation of the Olex group. Olex was and 12.1% on a like-for-like basis, based on comparable scope of the main contributor to medium-voltage cable sales during the consolidation and constant exchange rates). The main impact on the year. Like-for-like sales growth was 2.7% for the year as a whole, scope of consolidation during the period resulted from the acquisi- with the increase coming in slightly higher for the second half than tion of Olex. for the first six months. This moderate organic growth figure reflects the impact of the strike at the Group’s Quebec plant in Canada Energy Infrastructure which only ended in April 2007. Energy Infrastructure sales climbed 10.2% on a like-for-like basis in In Europe, demand was high in Scandinavia as well as in France 2007. Year-on-year growth was stronger during the second half of and Switzerland. Germany was a main growth driver in the manu- the year, reaching 13.4% versus 6.5% for the first six months. facture of low high-voltage cables for export infrastructure contracts This solid second-half performance was driven by a sharp rise in and other export projects. sales of high-voltage cables during the period. In North America, sales generated by medium-voltage cable opera- • Sales reported by high-voltage cable operations rose by 19.6% for tions were 5.1% higher in the second half of the year than in the first 2007 as a whole and by 30.9% during the second half of the six months, which saw a 24.9% year-on-year contraction, mainly due year. In the terrestrial cables sector, sales performance for the year to the strike at the Quebec facility. Altogether, the year-on-year reflected contracts signed primarily in the Middle East (Qatar decrease came to 13.4%. Lastly, as a result of the capacity invest- 400kV, 220kV and 66kV, Abu Dhabi 400kV, Kuwait 132kV) as ments, sales continued to rise in fast-developing countries, with Egypt well as a steady stream of business with power network operators and Lebanon reporting increases of 18% and 63.3% respectively. in France, Belgium and Spain. Submarine and umbilical cable sales • Power Accessories sales jumped 19.8%. This performance reflects derived from (i) the NorNed contract (a subsea transmission link significant market share gains in France and Spain achieved connecting Norway and the Netherlands); (ii) the Long Island on the strength of the quality and reliability of Nexans’ range of Replacement Cable contract in the United States (a network cold-shrink joints. upgrading project); (iii) a Norwegian contract relating to the supply of a direct electrical heating (DEH) system for the subsea flowlines Industrial cables in the Tyrihans oil & gas field in the Norwegian Sea, (iv) the contract The Industrial cables activity posted a 17.5% increase on a signed with the Abu Dhabi Water & Electricity Authority to supply like-for-like basis. and install the cables to create a new power link between Abu Sales of special cables were up 19.1%, thanks to especially strong Dhabi’s mainland network and Delma Island; and (v) the contract growth in the market segments pinpointed by the Group as awarded in first-half 2007 to manufacture and install a 500kV sub- particular priorities – the oil, gas, shipbuilding, railway, robotic and marine power link to connect Hainan Island at the south end of automotive industries. China to the Chinese mainland in Guangdong province. Sales of electronic cables for industrial markets rose 15.9% on the The ramp-up in second-half 2007 of the Group’s new Tokyo Bay back of robust growth in the Chinese and US aeronautical and facility in Japan – a joint venture set up with Viscas that is majority special cables markets. controlled by Nexans – was also a strong growth driver in the Sales of harnesses advanced 14.5%, fueled by business expansion second six months of the year. At the same time, demand was in Europe that was driven by successful high-end products for the extremely high in 2007 for submarine cables used for the remote German automotive industry. Competition is increasingly tough in this operation of underwater robots and vehicles, led by continued sector, however, with strong pressure on prices and rising labor costs developments in the oil & gas industry. in the Group’s plants, particularly in Romania.

(*) In accordance with the Group’s new segmentation as set out in its strategic plan, submarine cables used for the remote operation of underwater robots and vehicles are now included in the Energy Infrastructure activity, and electronic cables are classified as part of the Industry activity based on similarities between end-markets and customers. As a result, these cables are included within the Energy business for 2007 rather than in Telecom as was previously the case. Net sales generated by these operations in 2007 totaled 213 million euros (based on constant non-ferrous metal prices) compared with 160 million euros in 2006. 39 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 40

Manufacturing workload was high in Europe in 2007 and measures TELECOM were rolled out aimed at optimizing production processes to keep up Sales of Telecom cables advanced 8.3% to 529 million euros (up 12% with an increase in order volumes. These measures also helped to like-for-like). Despite an operating backdrop marked by overall low significantly lift profitability. growth in this market, Nexans reaped the full benefits of increased Industrial cables growth was also driven by an increase in investments in railway infrastructure and high-speed LAN cables. production capacity, particularly in Brazil, China, Turkey, Romania Telecom Infrastructure and Morocco. Like-for-like sales rose 9.9%. Growth in the second half of the year Low-voltage cables for the building market was affected by the termination of a joint venture in Vietnam at the Like-for-like sales of low-voltage cables for the building market end of June. Excluding this impact, organic growth for the activity climbed 10.4%. would have been 12.7% for the year as a whole. Volumes were slightly up on 2006 in Europe, except in Germany Sales of copper telecom cables picked up in 2007, particularly in where the Group adopted a targeted sales approach as a result of Spain and Norway. Overall sales growth during the year was also extremely low market prices that had a negative impact on sales. boosted by the success of the Group’s tailored offering developed for As in 2006, sales in the second half of the year were lower than in railway networks, notably in the United Kingdom and Germany. the first half. Prices, however, remained sustained throughout the year. Demand for optical fiber cables continued to grow in Northern In North America, sales picked up in first-half 2007 after a weak Europe, with the expansion of local loop networks. At the same time, showing in the second half of 2006. Nexans was only marginally sales of connectivity accessories rose 13.2%, buoyed by export mar- affected by the sharp falloff in the residential building market in the kets and especially in North Africa, Vietnam and the Philippines due United States triggered by the subprime crisis as the Group mainly to the use of xDSL technologies. In addition, accessory sales for the operates in the industrial and commercial building market segments. optical fiber market were boosted by the development of FTTx The slide in the US dollar heightened competition in Canada, projects. however, as the country became a more attractive market for US Local Area Networks (LAN) producers. Consequently, Nexans had to adopt a more defensive Nexans reported like-for-like sales growth of 13.9% in this activity, position, leading to narrower margins but without dampening powered by the Group’s European and US offering of high value- profitability which remained very satisfactory. added systems that are firmly focused on the high end of the market. In the Rest of the World Area, sales growth was buoyant, especially In line with this strategy, supplies of category 6 and 7 cables increa- in Turkey, Lebanon and Morocco. sed in Europe during the year. Also in 2007 Nexans’ proprietary Operating margin for the Energy business rose to 365 million euros system offering reaped the benefits of synergies generated following in 2007 from 242 million euros in 2006, representing 9.7% of sales the acquisition of a UK-based business in this field in the second half at constant non-ferrous metal prices, compared with 7.7% one year of 2005. As a result the Group has notched up a growing number of earlier. All three activities within this business were significant contract wins for private infrastructure projects such as for airports and contributors to the overall rise in profitability. As a percentage of banks. sales at constant non-ferrous metal prices, operating margin for the In the United States, Nexans registered sales growth of 15.6% in the Energy Infrastructure activity was up 2.2 points to 9.3% while the LAN activity on a constant exchange rate basis. Nexans offers a Industrial cables activity reported a 3.1 point increase to 8.7% and flexible system for copper LAN cables which is particularly suited to low-voltage cables for the building market posted a 0.7 point rise to the US market and provides a solid source of profitability. Sales of 6, 11.1%, representing an exceptional level of profitability. 6+ and 10 Gbit/s category cables rose in 2007, and demand for In 2007, the Energy business pursued its drive to generate category 5 cables remained strong. production costs savings, and fixed costs remained stable as a Operating margin for the Telecom business climbed to 49 million euros percentage of sales at constant non-ferrous metal prices. (9.3% of sales at constant non-ferrous metal prices) from 40 million euros in 2006 (8.2% of sales at constant non-ferrous metal prices). This per- formance was achieved as a result of firm margins as well as higher pro- fitability levels turned in by the LAN activity following the reorganiza- tion measures implemented in 2006 (including the discontinuation of production activities at Abbey Wood in the United Kingdom and the expansion of business volumes in China). Telecom Infrastructure and Local Area Networks reported respective operating margins of 7.2% and 11.1% as a percentage of sales at constant non-ferrous metal prices, representing increases of 0.2 and 1.9 points. 40 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 41

ELECTRICAL WIRES 1.1.2.2 BY GEOGRAPHICAL AREA Sales in the Electrical Wires business in 2007 were 502 million euros, EUROPE down 37.4% on the previous year or 32.8% on a like-for-like basis. Europe recorded sales of 3,215 million euros in 2007, up 6.4% on Wirerods 2006, or 7.2% like-for-like. This moderate growth trajectory reflects Like-for-like wirerod sales fell 38.1% year on year, reflecting the the combined impact of lower sales for the electrical wires business Group’s strategy of focusing its continuous casting operations solely and a 13.9% like-for-like rise in sales of cables. on internal requirements. The Energy Infrastructure activity registered overall sales growth of Consequently, tonnages sold outside the Group dropped by 45% on 14.6% on a like-for-like basis for 2007. This full-year increase was average in Europe and North America whereas Nexans Group plants 3.6 points higher than the growth recorded for the first half of the increased their levels of internal supplies. year as a result of the excellent second-half performance turned in by Bare wires high-voltage cables and accessories. Sales of bare wires contracted 13.7% in 2007. The decline was more Year-on-year, sales for high-voltage cables jumped 20.5%, driven by pronounced in France, where Nexans sells mostly standard further investments in (i) submarine cable power transmission; (ii) products, compared with Germany where the Group focuses on spe- terrestrial network interconnections, particularly in the Middle East; cial products, mainly for the automotive industry. and (iii) the oil & gas industry. Against this backdrop, Nexans has Winding wires built up an order book representing almost two years worth of sales. In accordance with agreements signed in late January 2007 with the The sharp rise in high-voltage cable sales is underpinned by capital US group Superior Essex, at the end of April Nexans sold its expenditure programs implemented over the last two years in Norway Canadian winding wire operations carried out at the Simcoe plant. and Japan (for the joint venture set up with Viscas). The Group is now In late July 2007, Nexans completed the sale of its Chinese winding well poised to meet increasing demand while continuing to enhance wire operations (corresponding to the Group’s majority stake in performance. Nexans Tianjin Magnet Wire and Cables). Sales of low- and medium-voltage cables and accessories were up In addition, in June 2007 Nexans sold to its joint venture partner its 7.6% on 2006, led by strong momentum in the infrastructure project minority 40% interest in the European winding wire company Essex sector – notably for windfarms – as well as robust demand Nexans. throughout the year for low- and medium-voltage power cables across As a result of these developments as well as higher wirerod prices Europe. In 2007, production for Northern Europe was offloaded to during the year, the operating margin of the Electrical Wires busi- facilities in Greece, Italy and Switzerland which had available ness rose to 8 million euros (1.7% of sales at constant metal prices). capacity. In 2006 this business reported a negative operating margin of 4 mil- These factors, coupled with the impact of enhanced management lion euros including the impact of a 12 million euro non-recurring procedures for major projects and an upswing in margins, lifted provision recorded in relation to a legal dispute. profitability in 2007 despite the recognition of non-recurring expenses relating to (i) the start-up of outsourcing by Norway of the UNALLOCATED OPERATIONS manufacturing of new products to the Tokyo Bay facility in Japan, Certain specific or centralized activities carried out for the Group as and (ii) the roll-out of manufacturing reorganization measures in Italy. a whole give rise to expenses that cannot be allocated to the Group’s businesses or geographical Areas. These amounts are not material on The Industrial cables activity posted a 17.2% sales increase on a like- a consolidated level and represented a negative operating margin for-like basis. impact of 14 million euros in 2007, versus a negative 18 million euros Performance was especially robust in the special cables sector: in 2006 or a negative 14 million euros on a like-for-like basis. • Sales of cables for the oil & gas, material handling and shipbuilding industries in France rose 34.8%. • Sales growth was 13% in Germany, where business is focused on cables for the robotic, railway, automotive, material handling and shipbuilding industries. 41 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 42

• Sales climbed 19.3% in Sweden, where Nexans supplies Electrical wires saw a sharp 36.7% contraction in sales as a result of industrial vehicle manufacturers which export to Eastern Europe. Nexans’ strategy to focus on the Group’s wirerod operations solely on its own internal requirements. In the bare wire sector, total sales Production workload was high throughout 2007 and Nexans has decreased 13.7% but Germany posted a significant upturn in implemented specific training measures and action plans for both profitability compared with 2006 thanks to its strategy of sales and manufacturing employees in order to effectively showcase concentrating on specific products. the Group’s product offering while simultaneously optimizing production capacity. The combination of these factors drove a sharp Profitability in Europe increased significantly during 2007 due to a increase in profitability for this activity during the year. generally favorable economic environment, the Group’s stronger presence in higher growth markets, and a targeted capital Sales held firm in 2007 for electronic and data cables, with expenditure strategy. Operating margin rose to 265 million euros expansion in specific applications offsetting a slowdown for data from 149 million euros in 2006 and represented 8.2% of sales at cables in Europe. constant non-ferrous metal prices compared with 4.9% one year Cable harness sales climbed 14.5%. Although Nexans has earlier. European business units accounted for 65% of Nexans’ total increased its production capacity to meet extremely strong demand operating margin and 67% of consolidated sales (at constant in Europe, this sector was affected by higher labor costs, particularly non-ferrous metal prices). In addition, 65% of the Group’s capital in Romania, as well as increased price pressure from customers. expenditure for the year was invested in Europe. New manufacturing plants were opened during the year in Eastern Europe (Slovakia and Ukraine) where further productivity gains can NORTH AMERICA be achieved. Nexans generated sales of 662 million in North America during 2007, At the same time, with a view to restoring profitability levels in down 18.6% on 2006 or 10.2% like-for-like. This decline primarily Belgium, aeronautical harness operations were discontinued. reflects the intentional scaling back of wirerod sales. On a standalone Harness operations for industrial vehicles – which were already basis, however, cable sales climbed 5.4% year-on-year despite the largely outsourced to Eastern Europe – were transferred to Slovakia negative impact resulting from the strike at the Quebec plant which during the year. A workforce reorganization plan was implemented lasted until April. Excluding the impact of this strike, organic growth for at the Huizingen plant during 2007 following completion of the cable sales would have been 9.9%. related negotiations at the beginning of the second half of the year. In the Energy Infrastructure activity, sales retreated 13.4% at constant The Building activity also registered a substantial rise in sales, with like exchange rates. Meaningful year-on-year comparisons are difficult, for-like growth coming in at 11.8%. This rise was propelled by robust however, due to the strike at the Quebec plant after which work business levels in the industrial and commercial building market gradually picked up as from May 2007. Excluding the impact of this segments in France, Norway, Sweden and the Netherlands. strike the activity would have reported sales growth of 5.4%. Profitability was also substantially higher thanks to stringent cost The market as a whole remained buoyant in 2007 thanks to the control measures. Lastly, product mix and price levels were consistent continued upgrading of power distribution networks in both Canada with the second half of 2006. and the United States. Nexans expanded its presence in Western The Telecom Infrastructure activity reported like-for-like sales growth Canada during the year and profitability for the Energy Infrastructure of 16.5%. During the year this activity experienced an upswing in segment was also driven up by the renewal of a group of sales of optical fiber cables, notably in Sweden and Norway, as well medium-term contracts that took place in the second half of 2006. as a turnaround in sales of copper cables for telecom operators, The Quebec plant won a major windfarm contract in second-half particularly in Spain and Norway. The Telecom Infrastructure activity 2007, laying solid foundations for a fresh start after the strike earlier also reaped the benefits of sustained volumes in the railway market in the year. segment in a large number of European countries.

In the LAN market, sales edged back 3.6%, reflecting the closure of the Abbey Wood plant in the United Kingdom as only a portion of this plant’s business was transferred to the Tuzla plant in Turkey. In Belgium, however, cabling systems sales rose sharply, as did operating margin 42 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 43

In the industrial cables activity sales climbed 22.8% at constant ASIA-PACIFIC exchange rates, with business volumes and profitability in the Since January 1, 2007, the Group’s sales in the Asia-Pacific Area aeronautical and shipbuilding market segments once again on an have included the contribution of Olex. The first-time consolidation of upward trend. Olex accounted for a portion of the year-on-year increase in sales in this Area, which surged from 277 million euros to 571 million euros. In the Building activity, sales increased 6.1% at constant exchange At constant exchange rates and based on the scope of consolidation rates. This performance reflects strong demand on the west coast of prior to the Olex acquisition, sales growth for the region came to Canada for equipping both industrial and residential buildings. 13.6%. However, in the rest of North America – and particularly in the United Operating margin also increased sharply, up from 19 million euros States – the residential market contracted as a result of the sub-prime (or 6.8% of sales at constant non-ferrous metal prices) in 2006 to crisis, but Nexans was only marginally affected by this downturn as 50 million euros (or 8.8% of sales at constant non-ferrous metal the Group is not a major player in the residential building market prices). On a like-for-like basis, operating margin rose from 8.3% of segment. The overall sales increase was achieved thanks to the sales to 8.8%, fueled by the pricing strategy implemented during the Group’s extended product offering following capital expenditure year and additional manufacturing capacity in China. programs implemented in 2006 in connection with the launch of a new range for the commercial building sector. In Korea, like-for-like sales edged up by 1.8%. Throughout the first six months of 2007 earnings were on a par with Sales of cables for the shipbuilding industry increased, propelled by the second half of 2006. They subsequently shifted downwards, new production capacity that came on stream in late 2006. This however, due primarily to the slide of the US dollar against the market segment was buoyed by the strong expansion of shipyards in Canadian dollar, which gave US producers a competitive edge. the region. At December 31, 2007, Nexans’ key customers in Korea Despite this adverse factor, the Area’s profitability levels for the had particularly strong order books. Building activity significantly outstripped those for Europe. Growth was also robust in the LAN activity, spurred by the strong positioning of the Group’s Korean plants for major infrastructure In the Telecom Local Area Networks activity sales of LAN cables projects such as Incheon airport near Seoul. expanded 15.6% at constant exchange rates, fueled by the continued Sales of cables for the automotive industry contracted, however, due roll-out of the Group’s strategy to focus on top-end products, as well to a fiercely competitive environment. as by the start-up of sales of very high speed copper cables Sales of cables for energy infrastructure – comprising low-voltage (10Gbit/s). Volumes rose against a stable market backdrop and cables and cables for power distribution networks – were also down margins remained high thanks to the top-end product offering. on 2006. Electrical wires, experienced a 28.8% decline in sales on a like-for In China, like-for-like sales soared 51.5% against 2006, and like basis. Nexans purposefully reduced its wirerod continuous profitability levels continued on the upward trend. All of the Group’s casting production in Montreal with the aim of optimizing return on cable and systems manufacturing operations saw their performance capital employed. Tight control over operating costs combined with boosted by growth in demand in China, and they reaped the higher margins helped to push up profitability for this business’s benefits of capital expenditure programs implemented in 2006 recurring operations compared with 2006. In addition, steps were (including LAN cables at the Kanghua plant in Shanghai, the taken to correct the situation related to the exceptional dispute that development of a new site in Nanning in the south of China with the impacted results in 2006. aim of increasing the production of telecom infrastructure cables, During the year Nexans completed its withdrawal from the winding and investments at the Shanghai facility dedicated to the wires operations in North America by selling its Simcoe plant in shipbuilding industry). Ontario, Canada to the Superior Essex Group. This business was The Group continued its capital expenditure program in 2007 with deconsolidated at end-April 2007. a view to developing local production in 2008 in several industrial Operating margin in North America rose to 79 million euros in market segments, such as the railway and material handling 2007 from 64 million euros the previous year, representing 11.9% industries. of sales at constant non-ferrous metal prices, versus 7.9%. Lastly, the Group’s sale of its winding wire operations in Tianjin to Superior Essex was completed during the year, and this business has been deconsolidated since July 31, 2007. 43 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 44

Vietnam, reported a 19.6% increase in like-for-like sales. The rise REST OF THE WORLD was particularly pronounced in the energy cables business, as a result Sales for the Rest of the World Area came to 374 million euros in of the gradual start-up of the Nexans LIOA plant in Hanoi. In 2007, up 13% on 2006, or 14.5% like-for-like. Business levels in the December 2007, a full test system for medium-voltage cables was second half of the year were on a par with those in the first half, with installed at this plant – the first of its type to be used at a cable production keeping apace with growth in the Area’s markets thanks manufacturer in Vietnam. This system will enable Nexans LIOA to to optimum use of available capacity. In addition, the Group pursued provide both export and domestic markets with products meeting inter- its major capacity investment programs in Egypt and Russia during national quality standards. the year as scheduled and sales of the corresponding products will Second-half sales in this country came in lower than in the begin in 2008. corresponding period of 2006, however, due to a temporary Operating margin totaled 31 million euros versus 36 million euros stoppage of operations at the Vina Daesung plant which produces for 2006. This year-on-year decline was primarily attributable to cables for telecom infrastructure networks. This joint venture had to operations in Turkey and arose largely as a result of (i) additional discontinue operations in June as the partnership agreement with the expenses incurred to launch new operations (a range of industrial and local co-venturer was not renewed. The company’s operations are LAN cables developed following the installation of new equipment in currently being transferred to a site shared with Nexans LiOA and 2006 and 2007) whose full benefits will only be felt in 2008; and the transfer is scheduled for completion during the first quarter of (ii) the cost of over-consumption of raw materials due to the learning 2008. curve related to these new operations. As expected however, the In Australia, Olex was fully integrated into the Group, one year after country did see a rise in business levels during the year. its acquisition. In Morocco, sales for 2007 were 5.3% higher than in 2006 on a During the year, Olex reported sales of 419 million euros at current like-for-like basis, although the picture was mixed across the non-ferrous metal prices, compared with 330 million in 2006 prior country’s various markets. to its consolidation within the Nexans Group. Profitability was in line Sales of cables were up on 2006, buoyed by growth for automotive with targets and above the average for the Area, representing 10% cables as well as by the Moroccan unit’s strong positioning in cables of sales at constant non-ferrous metal prices after the recognition of for the building and power distribution markets. These factors, along an amortization expense corresponding to the allocation of with the success of exports to West Africa, enabled Moroccan acquisition goodwill. operations to hold firm despite a reduction in orders from the Olex – which generates 48% of its sales (at constant non-ferrous metal country’s national energy operator – Office National de l’Electricité prices) in Energy Infrastructure – has strengthened Nexans’ – which is undergoing a restructuring process. presence in this market. Electrical equipment operations – particularly batteries – were scaled Nexans has identified commercial, technical and procurement back during the first half of the year following a rise in lead prices. synergies between Olex and the rest of the Group, which it is in the Nevertheless, thanks to productivity investments made during 2007 process of leveraging. Olex’s sales, manufacturing and finance teams and the impact of price adjustments, the unit ended the year with a are now fully integrated into the Group’s operating processes. satisfactory sales and profitability outlook. This manufacturing plant is also currently working on expanding its export sales of transformers to West Africa.

In Brazil, like-for-like sales were up 11.2% on 2006. The country’s traditional markets of power transmission and distribution via overhead lines were once again very promising, and the order book for aluminum cables was extremely healthy. However, second-half 2007 saw delays in the completion of certain high-voltage overhead lines as the time required for obtaining the relevant environmental permits was longer than anticipated. The insulated copper conductor cable activity started operations in the second half of the year, essentially for low- and medium-voltage energy networks. The major program to obtain approval for the unit’s cables to be used in the oil industry continued as planned, with a view to enabling the business to fully develop in 2008 in a high-growth market. 44 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 45

In Turkey, like-for-like sales increased 19.3% compared with 2006. Following on from strong growth during the first half of the year, the 2 OTHER ITEMS OF 2007 focus of operations in Turkey was shifted to higher added-value mar- CONSOLIDATED RESULTS kets and products. Sales of copper cables for telecom operators were discontinued in order to concentrate on developing export sales of instrumentation cables for the oil industry. At the same time, 2.1 CORE EXPOSURE EFFECT the Denizli plant enjoyed robust demand for low- and medium-voltage The core exposure effect totaled 20 million euros at December 31, 2007. power cables in its domestic market but sales of low-voltage cables This amount corresponds to the change in the value of the Group’s core to the UK were down on the previous year. exposure during the year as calculated by the weighted average cost The country continued to ramp up production of LAN cables for the method – an effect that arises from applying the accounting policy European market and the Tuzla site is now qualified to deliver to all described in Note 1.b to the consolidated financial statements. It is not Nexans’ major international customers. Expansion in this activity included in operating margin as changes in value of inventories that are was stronger than expected in 2007 for high-end products. included in operating margin are measured based on replacement cost in accordance with the Group’s accounting policies. Lebanon reported another year of enhanced performance both in terms of sales and profitability. Sales climbed 49.1% at constant exchange rates, driven in the first half of the year by domestic 2.2 NET IMPAIRMENT OF FIXED ASSETS orders, including for reconstruction work following the hostilities that AND GOODWILL broke out in the summer of 2006. Second-half 2007 saw further Net asset impairment totaled 21 million euros for the year ended robust expansion in export sales to other Middle Eastern countries December 31, 2007. and Sub-Saharan Africa. The plant is currently working at full The impairment losses recorded in 2007 related to various factors but capacity and the capital expenditure incurred in 2007 has already were in line with the trends identified at previous balance sheet dates. enabled the unit to expand its offering of cables for the oil industry. The main impairment losses for the year related to the Group’s upstream Sales in Egypt, were on a par with 2006 on a reported basis and up businesses (wirerods and bare wires) which have now been almost fully 3.2% at constant exchange rates. Demand for copper cables for written down. This reflects the impact on capital employed in these telecom networks vanished almost completely in the second half of the businesses caused by rises in raw material prices as well as the Group’s year but this was offset by a rise in sales for more profitable decision to focus these operations purely on its own internal requirements. medium-voltage cables achieved as a result of the major capital expenditure program launched in 2006. At end-2007 the Egyptian Infrastructure cables in Italy were once again written down significantly unit had the requisite capacity to manufacture high-voltage cables in in 2007 as the value in use of the cash generating unit (CGU) to which the short-term for the member countries of COMESA (The Common these assets belong is not sufficiently high based on the unit’s current Market for Eastern and Southern Africa). performance. Additional impairment losses were also recorded in relation to the building cables business in Germany, for similar reasons. In Russia, the Group implemented its first capital spending program An impairment loss was recognized for the Telecom infrastructure cables to step up its presence in power cables markets for the building and CGU in Spain in order to align its carrying amount with its probable power distribution markets. Building work is still under way and the market value. These impairment losses represented an aggregate amount unit is expected to begin sales operations in 2008. of 59 million euros.

An additional impairment loss of 4 million euros was also recorded for the goodwill relating to Liban Câbles following an unfavorable change in the applicable discounting rate due to a rise in the market risk pre- mium as a result of the heightened geopolitical tension in Lebanon.

Inversely, a number of impairment losses were reversed during the year relating to (i) China and, to a lesser extent Morocco and Brazil, where the reversals were significant on account of a strong growth outlook for these countries, particularly in view of the robust margin gains achieved in 2007; (ii) Germany, for Infrastructure cable operations following measures implemented to focus on higher value-added products; and (iii) Switzerland, as business levels continued to pick up in this country. Altogether, reversals of impairment losses amounted to 42 million euros in 2007. 45 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 46

2.3 RESTRUCTURING COSTS In 2006, Nexans recorded a 149 million euro gain on the sale of its Restructuring costs came to 14 million euros compared with distribution business in Switzerland (Electro-Matériel SA) to Rexel in 48 million euros in 2006. the first half of the year. In 2007 these expenses related mainly to (i) the cost of transferring machines in connection with the manufacturing restructuring measures carried out in Italy; and (ii) the restructuring plan concerning 2.6 NET FINANCIAL EXPENSE the Group’s harness operations in Belgium under which certain of The Group recorded a net financial expense of 81 million euros in these operations were discontinued and the majority of the 2007, compared with 69 million euros the previous year. This rise remaining business was transferred to Slovakia. stemmed from higher interest expense as a result of the financing The Belgian restructuring plan involved 66 people and included required for the Olex acquisition, as well as from an increase in the assistance measures negotiated with the employee representative average cost of financing further to the Group’s decision to extend bodies, aimed at reducing the impact of the plan on the members the average maturity of its borrowings from six to eight years. of staff concerned.

2.7 INCOME TAXES 2.4 CHANGES IN FAIR VALUE OF In view of the improved earnings performance of a large number of NON-FERROUS METAL DERIVATIVES its subsidiaries, the Group’s corporate income tax charge came to Nexans uses futures contracts negotiated primarily on the London 84 million euros in 2007 (representing an effective tax rate of 29.8%), Metal Exchange (LME) to reduce its exposure to non-ferrous metal compared with 48 million euros in 2006. The 2006 figure was price fluctuations (copper and aluminum). However, due to the sharp particularly low as the gain on the disposal of the Group’s volatility in non-ferrous metal prices over the past several months, the distribution business in Switzerland was tax exempt. Group has taken measures to enable a large portion of these derivative instruments to be classified as cash flow hedges as defined in IAS 39. As from November 1, 2006, when these 2.8 PRINCIPAL CASH FLOWS instruments (i) are used to hedge future transactions (e.g., copper FOR THE YEAR cathode purchases) that are highly probable but not yet invoiced, and Cash flow from operations amounted to 374 million euros in 2007, (ii) meet the requirements in IAS 39 for cash flow hedge accounting; versus 226 million euros in 2006. This amount was primarily used to they are accounted for similarly to foreign exchange hedges that finance (i) a capital expenditure program representing a gross qualify for hedge accounting as follows: the portion of the investment of 168 million euros; and (ii) a dividend payout of unrealized gain or loss on the hedging instrument that is determined 32 million euros. The net impact of the Group’s company to be an “effective” hedge is recognized directly in equity, and the acquisitions and divestments in 2007 was a cash inflow of ineffective portion is recognized in “Changes in fair value of 15 million euros. non-ferrous metal derivatives”. Gains or losses previously Working capital requirement came in 243 million euros lower than recognized in equity are taken to the income statement in the period in 2006, totaling 1,222 million euros versus 1,465 million euros. in which the hedged item (e.g. copper cathode purchases) affects The Group’s decision to refocus its electrical wires production solely income. on internal requirements contributed to the decrease, while around one third was due to reduced working capital requirement for “Changes in fair value of non-ferrous derivative instruments” also continuous casting operations. The overall reduction reflects includes the impact of setting up this system and the recycling to particular efforts made by the Group during the year, as well as the income of 2006 hedging positions that were unwound in 2007. favorable impact of a number of factors such as the receipt of down payments on high-voltage cable contracts for orders taken in 2007. At December 31, 2007 the Group had scaled back its net debt to 2.5 NET GAINS ON ASSET DISPOSALS 290 million euros from 632 million euros at end-2006. The 4 million euro gain recorded under this item in 2007 primarily includes 3 million euros in additional purchase consideration received in connection with Nexans’ transfer of a 60% stake in its 2.9 BALANCE SHEET winding wires business when Essex Nexans was originally formed. At December 31, 2007 the Group’s balance sheet showed: This additional consideration was payable in accordance with the • 1,758 million euros in total equity. terms of the joint venture agreement and based on Essex Nexans’ • Net debt of 290 million euros, representing a 342 million euro EBITDA for 2006. reduction on December 31, 2006. The gearing ratio (net debt/total equity) was 16.5%. 46 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 47

• Working capital requirement of 1,222 million euros, representing this share transfer Madeco will receive 2.5 million newly-issued 16.6% of sales at current copper prices for the year, down 1.6 Nexans shares, giving it an approximately 9% stake in Nexans’ points on December 31, 2006. capital (based on a total of 28.1 million shares). Madeco will • Provisions for contingencies and charges – including for pensions undertake not to sell these shares for a twelve-month period and retirement benefit obligations – totaling 434 million euros, on following completion of the transaction. a par with the 469 million euros recorded at December 31, 2006. The completion of this acquisition is still subject to (i) the signature of • Fixed assets amounting to 1,192 million euros at December 31, a final agreement which is scheduled for February 2008; (ii) ratifica- 2007 compared with 1,155 million euros one year earlier. This tion by both Madeco’s and Nexans’ shareholders; and (iii) regulatory change takes into account the definitive calculation of the goodwill approval. At the Annual Shareholders’ Meeting to be held to approve arising on the Olex acquisition in accordance with the accounting the financial statements for the year ended December 31, 2007, method described in Note 11 to the consolidated financial Nexans’ shareholders will also be asked to approve the issuance of statements (goodwill reduced from 184 million euros to 131 mil- the above-mentioned shares as consideration for Madeco’s asset lion euros). Additional purchase consideration totaling 26 million transfer as well as the appointment of a Madeco group representa- euros was paid in 2007 in relation to the Olex acquisition. tive as a member of Nexans’ Board of Directors. • Total capital expenditure of 168 million euros, exceeding the depreciation expense for the year. Changes in scope of consolidation • “Assets and groups of assets held for sale” and “Liabilities related The main changes in scope of consolidation for 2007 were as to groups of assets held for sale” representing a net amount of 105 follows: million euros, versus 38 million euros at December 31, 2006. This On November 30, 2007 Nexans acquired 70% of the shares in increase reflects the application of IFRS 5 in relation to units for Multinacional Trade – a Spanish electrical equipment distributor – for which the Group is examining divestment opportunities. 7.4 million euros. At the same time, the companies entered into a three-year put/call agreement in relation to the residual 30% of Multinacional Trade’s capital. For the twelve month period from 2.10 OTHER SIGNIFICANT EVENTS November 2006 to November 2007 Multinacional Trade OF THE YEAR generated sales of about 25 million euros. Its principal supplier during Framework agreement to acquire the Madeco group that timeframe was Nexans, which accounted for some 70% of the On November 15, 2007 Nexans entered into a framework company’s total purchases. agreement with Madeco to acquire the Chile-based group’s cables operations. Multinacional Trade has only been consolidated since December 31, 2007 as the impact of this acquisition on Nexans’ consolidated At current metal prices the 2006 sales of the Madeco group cables net sales, operating margin and net income figures for 2007 was not business totaled 672 million US dollars (490 million euros based on material. Total goodwill arising on the transaction (taking into account the average 2007 exchange rate), and were generated in three major the put/call agreement) amounted to 6.2 million euros at December markets – cables for the infrastructure, industry and building (as well 31, 2007, before fair value adjustments. as electrical wires to a lesser extent). In first-half 2007, Madeco’s cable operations broke down as follows by country – 43% in Brazil, At December 31, 2006, the Group had entered into negotiations to South America’s largest market; 28% in Chile; 18% in Peru; 6% in sell its remaining winding wires business in Canada and China, and Argentina; and 5% in Colombia. at that date the balance sheet items of the entities concerned were classified under assets held for sale in accordance with IFRS 5. The structure of the acquisition is as follows: • Part of the purchase will take the form of an acquisition of shares in In late April 2007, the Group completed the sale of its Simcoe plant certain Madeco subsidiaries dedicated to the cables business. The in Canada to the US Group Superior Essex for 9.8 million euros (not sale price – comprising a cash payment and the assumption of including the 7 million euro positive impact resulting from subsequent liabilities – will total 422 million US dollars (approximately recoveries of operating working capital items that were excluded from 287 million euros at the 2007 closing rate). the transaction). The sale gave rise to a capital gain of 0.2 million • The remainder of the transaction will involve Madeco transferring euros, which was recognized in the income statement under to Nexans all of the shares held by Madeco in the group’s other “Net gains on asset disposals”. For the first four months of 2007, subsidiaries dedicated to the cables business. As consideration for the Simcoe plant reported net sales at current metals prices and operating margin of 33 million euros and 2 million euros respectively. 47 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 48

The sale of Nexans Tianjin Magnet Wires and Cables was completed in July 2007. The transaction gave rise to a capital loss of 3 PROGRESS MADE 1.6 million euros which was recorded under "Net gains on asset AND DIFFICULTIES disposals" and reduced net debt by 11.2 million euros. In first-half 2007 Nexans Tianjin Magnet Wires and Cables reported net sales ENCOUNTERED at current metals prices and operating margin of 19 million euros IN 2007 and 1 million euros respectively.

Also in 2007, Superior Essex exercised its option to purchase the 40% During the year the Group moved forward in several key areas, minority interest held by Nexans in Essex Nexans – a joint venture including controlling costs and growth, adapting the organizational set up in 2005 to combine the European winding wire operations of structure to market requirements, building up support and Superior Essex and Nexans. The sale of this 40% stake was coordination processes for manufacturing operations, leveraging completed on June 28, 2007 for an amount of 22.4 million euros purchases, and developing information systems. and gave rise to a 0.2 million euro gain (recognized in the income statement under “Net gains on asset disposals”). In addition, Essex Controlling costs and growth Nexans repaid 11.3 million euros to Nexans, corresponding to Controlling fixed and direct costs was a main focus for the Group in financing granted to the joint venture. 2007 as its businesses continued to expand. Efforts made to contain direct costs and enhance the product mix improved the variable cost In accordance with the applicable contractual provisions, and in view margin considerably. These factors were particularly important for of Essex Nexans’ EBITDA for the 2006 fiscal year, Nexans also businesses such as the Group’s high-voltage operations. Over the past received 3 million euros in additional purchase consideration in two years Nexans has invested heavily in additional equipment and first-half 2007 relating to the 60% stake in the winding wires has strengthened its teams with a view to keeping apace with market business that was transferred when the Essex Nexans joint venture growth, as illustrated by the start-up of operations at the Tokyo Bay was originally formed. This consideration was included in the income plant in Japan. The expenses incurred in relation to the programs statement under “Net gains on asset disposals”. implemented have generally been kept within the allocated budgets. Bond issue Adapting the organizational structure On May 2, 2007, Nexans issued 350 million euros worth of 10-year Nexan’s commercial and operational structure was reorganized bonds. The issue was taken up by a wide-ranging European investor during the year to more effectively reflect the key priorities set out in base, mainly comprising French and UK investors (35% and 34% the Group’s Strategic Plan. Expansion hinges on three markets – respectively). The purpose of the issue was to (i) refinance the Group’s Infrastructure, Industry and Building. The product offering for these existing debt – notably arising from the Olex acquisition; (ii) diversify markets required enhanced coordination in order to better serve its sources of financing; and (iii) extend the average maturity of its customer needs and improve profitability, and a specific organizational borrowings. structure has now been set up for each one. The main features of the bond issue were as follows: Building up support and coordination processes • Amount: 350 million euros • Managing major projects: the Industrial Management Department • Coupon: 5.75% provides its expertise to the Group’s various business units for all • Settlement date: May 2, 2007 major capital expenditure projects, helping them to (i) select • Maturity date: May 2, 2017 machinery and equipment that meet the Group’s technological • Issue price: 99.266% requirements; and (ii) resolve any technical difficulties that may arise • Spread: 140 basis points above the 10-year swap rate during the start-up phase. In 2007, the Department’s teams gave • Issue rating: BB (Standard & Poor’s). their input for the Group’s plants in Vietnam and China, as well as at Denizli and Tuzla in Turkey, Ouglich (Russia), Lorena (Brazil) and Cairo (Egypt). They also helped with the restructuring plans for the plants in Latina and Battipaglia in Italy, as well as with streamlining production processes between the Cheongwon and Eumsung plants in Korea.

• Monitoring production capacities: cross-functional projects aimed at optimizing manufacturing capacity have been launched in order to fully leverage existing capacity and be able to swiftly meet strong 48 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 49

demand while containing capital expenditure. Measures This approach is based on participation by all of the Group’s units, implemented in 2007 concerned plants in the Group’s industry and as well as regular comparisons of prices and suppliers on a infrastructure markets and helped boost their profitability. worldwide scale. In 2007, the Group continued to extend its contracts to new countries and generated further sourcing synergies • Tracking the performance of manufacturing plants: the Industrial that were put to the use of new facilities, particularly Olex’s plants. Management Department tracks indicators for substantially all of the Group’s cable manufacturing plants on a monthly basis. In • Controlling supply risks: the Group’s policy is to have at least two 2007, these indicators showed that customer service had suppliers for any raw material or component used in improved, based on On Time In Full Delivery indicators, and that manufacturing its products. However, in some cases there may be there was a decrease in the number of disputes and accidents. just one supplier. Nexans’ Purchasing Department has launched a program aimed at eliminating this kind of situation by the end of Nexans’ methods and technologies were successfully transferred 2009, with the help of the Group’s Research and Development to Olex during the year, and pilot measures rolled out across all the teams. Significant progress has already been made in this area. In medium-voltage sites resulted in a significant reduction in the cost 2007, Nexans experienced supply stoppages from some suppliers of raw materials. due to extremely tight market conditions for certain raw materials, • Continuous improvement : in line with its continuous improvement such as additives for polymers and technical polymers. The Group strategy, Nexans has developed a performance appraisal tool for was able to successfully deal with these difficulties however, with its manufacturing sites based on excellence criteria covering the no impact on cable output. following five areas: • Strengthening supplier relations: in tandem with diversifying its - Performance of manufacturing processes, supply sources, Nexans continued to enter into Group-wide - Customer focus, contracts during the year with the aim of strengthening contractual - Resource management, relations with certain of its suppliers as part of its continuous - Product knowledge and innovation capacities, improvement strategy. One of the underlying objectives of this move - Expertise and know-how. is for the suppliers concerned to share their innovation capacities Each plant can use this tool to assess its own performance and with Nexans. compare it with other equivalent units in order to draw up a specific action plan. • Increasing the expertise of the Group’s Purchasing teams: follo- wing on from the purchasing skills appraisal system set up in early • Training : as part of the Group’s training strategy, the Industrial 2007, a training program is currently being rolled out with a view Management Department has issued a Nexans guide on best to honing the methods and processes used by the purchasing teams. practices for manufacturing, as well as a manual on extrusion best practices. In 2007, the Industrial Management Department Developing information systems provided twelve training modules – including seven related to the The Group’s IT strategic plan was implemented during the year in extrusion business – which were followed by over 100 engineers accordance with the main commitments undertaken with Group and technicians. Management and the countries in which Nexans operates. One of the key objectives in 2007 was to upgrade the Group’s IT • Cross-functional measures: : in 2007, these measures included infrastructure in line with Nexans’ ongoing modernization program awareness-raising programs concerning the importance of safety for the systems it uses for its core businesses. A specific focal point was in electrical testing. In addition, an audit program was put in place negotiating framework agreements in order to forge strong in conjunction with Bureau Veritas in order to set up on-site partnerships with worldwide leaders in the IT industry. For example, procedures for ensuring that guidelines are properly applied. the Group signed a five-year contract with BT to supply and operate Leveraging purchases its long-distance virtual private network. By having this single During 2007 Nexans continued to strengthen the quantitative and network for all of Nexans’ subsidiaries, the Group will be able to qualitative controls performed by its Purchasing teams for the supplies double the broadband speed at its sites and improve the security and of products and services used by the Group. The related action points continuity of its connections while maintaining stable costs. Another were geared to the following objectives: integral component of the contract with BT is IP telephony which will • Reducing purchase prices as far as possible and gaining a be progressively put in place, generating major savings for all competitive edge: in addition to continually and systematically long-distance internal calls. renegotiating purchasing conditions, the Group has set up a HP has become the Group’s main partner for supplying IT hardware specific program for seeking out suppliers in low-cost countries, and hosting applications. In addition, a standard configuration for which has enabled it to purchase raw materials and components Nexans’ future workstations has been defined as part of a joint at lower prices than those customarily applied in the source region. 49 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 50

project between the Group’s headquarters teams and • The roll-out of high-voltage contracts – a process that proved representatives from each country. These newly configured complex in some cases. he roll-out of high-voltage contracts – workstations – which are simple to use (based on a Microsoft a process that proved complex in some cases. product) – will be installed on a gradual basis as existing hardware • Highly volatile commodity prices and exchange rates is replaced.

Also in 2007, Nexans continued to bring integrated business management applications on stream. For instance, SAP was rolled out in Spain, and Switzerland prepared all its sites for migration in 4 RESEARCH early January 2008. At the same time, more than 10 Microsoft Navision projects are currently being set up for the Group’s less AND DEVELOPMENT complex sites including in China, Egypt, Ireland, Japan, Lebanon, Nexans’ R&D program is designed to maintain and improve the Romania and Vietnam. Group’s market positioning by developing new products and An updated manufacturing planning tool has also been put in place improving the quality and efficiency of its manufacturing processes. within the Group. Based on an existing product, this tool is intended A total of 60.2 million euros were used for R&D programs in 2007 to effectively control and shorten delivery lead times, especially in – representing close to 1.25% of net sales – compared with high-workload periods. It has already been implemented in 54.6 million euros in 2006. Switzerland and Greece, and is currently being set up in Sweden, Nexans’ R&D teams comprise some 450 people equipped with Australia and Korea. France and Belgium already had a previous state-of-the-art technical devices. They work on long-term projects version of the product which they are in the process of upgrading. – including developing new insulation and sheathing materials – which are primarily managed by the Nexans Research Center, as The Group’s Internet and e-service portals – which used to be well as on short and medium-term projects, such as creating and stand-alone services with different design formats – have been testing new products and systems or using computer modeling to reworked. The Nexans website is now more user-friendly – accelerate time-to-market for higher-performing products or products particularly for customers – as the information is organized based on that meet new customer specifications. Some 63 patents have been each individual market. Customers also have the facility of being registered for the Group’s various areas of activity, reflecting the provided with a personalized extranet service for monitoring their quality of its technical teams. business with the Group. The number of hits on the website has more than doubled since the reworked site went online. In line with Nexans’ strategic plan, a new R&D organizational structure has been set up, with specific technical managers IT security remains a priority for Nexans, and penetration-intrusion appointed for each of the Group’s markets (Infrastructure, Industry and tests conducted on an annual basis have yielded excellent results. In Building). These managers are responsible for leading the Group’s addition, Nexans is a member of the working groups organized by networks of researchers while bridging the gap between the market the CIGREF (French corporate IT association), which has enabled the and Nexans’ R&D teams. As the use of copper and aluminum is Group to widen its prevention measures based on the experience of central to the Group’s business and has major financial and other major French corporations. technical implications, the role of the Nexans Metallurgy Center has For the year ended December 31, 2007 IT costs represented 1.2% been reinforced. The purpose of this Center is to assist the Group’s of net sales at constant copper prices, which is below the maximum various units and offer innovative solutions from the casting process ratio set by the Group. right through to the production of conductors. The Metallurgy Center’s work in 2007 included research into new conductors (aluminum, Difficulties encountered in 2007 mainly concerned the following: copper alloys and composites). • High workload periods for manufacturing plants in the Industry market, which sometimes resulted in delays in delivery lead times. One of the other key R&D areas in 2007 was research into Corrective measures have been implemented to address these enhancing the fire-resistant properties of cables. This involved problems. (i) creating a ceramifiable composite that meets the International • Significant growth in the high-voltage sector which required the Electrotechnical Commission (IEC) and the European EN fire Group to take specific measures while bolstering the efficiency of resistance standards; and its manufacturing plants, all within a short timeframe. In addition, (ii) developing a software application to simulate the propagation of the transfer of technologies to the Tokyo Bay plant required the fire on cable harnesses. involvement of a significant proportion of the French and Norwegian high-voltage teams. 50 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 51

Six Competence Centers work in close conjunction with the Nexans • Activities that need to be strategically rethought – Telecom Research Center and Nexans Metallurgy Center and are in charge Infrastructure and Local Area Networks of Nexans’ applied research. The work of all these R&D teams is • Activities earmarked for being gradually scaled back – wirerods, complemented by all of the Group’s units, whose proximity to bare wires and winding wires. customers ensures that Nexans’ new products are adapted to their The developments in 2007 – an exceptional year for the cable requirements. industry – demonstrated the effectiveness of the objectives and prio- The main projects worked on by those teams in 2007 concerned the rities set in the Strategic Plan: following: • A comprehensive range of Nexans products used by various • Energy Infrastructure markets expanded significantly in order to telecom operators for Fiber To The Home (FTTH) cabling, keep up with growth in developing economies. Growth in the • EDF-approved insulation for low-voltage cables for nuclear power Infrastructure market in developed countries was also robust, driven plants by interconnections, upscaling of networks and the ramp-up of wind • A uniform range of products for 10Gbit/s Ethernet Local Area energy. Network (LAN) applications. • Industrial markets experienced strong growth, especially the transport • The supply of new cables for the aeronautical industry that are and energy-related sectors, such as oil & gas. highly resistant to fire and electrical breakdown. • Building markets reported a record year for profits, with margins • Norwegian standard NEK606 accreditation for elastomer cables holding firm despite a context of only slightly higher volumes in designed for shipbuilding, which are resistant to hydrocarbon muds. Europe and reduced volumes in the United States. • The manufacture of an initial prototype for overhead lines using a • There was stronger-than-expected demand for 10 Gb/s lines in the composite material developed by Nexans, that can resist LAN market, which fueled high growth in value terms. In addition, operating temperatures of up to 180°C. the start-up of FTTH connections in Europe spurred an upturn in sales • Installation of the superconductor electric transmission system for the of optical fiber cables. Long Island Power Authority. Both ends of the cable have been Despite the year-end being marked by a change in the economic connected and cooling and electrical tests are currently in process. climate, due to the subprime mortgage crisis in the US, the fall of the dollar, and a hike in oil prices, the fundamentals underpinning long-term growth in worldwide demand for Energy cables are solid. These include (i) unprecedented demand for electricity; (ii) the need 5 TRENDS for upgrades of energy distribution networks in developed countries and the extension of these networks to emerging economies; (iii) the In January 2008, Nexans presented the Board of Directors with an introduction of new renewable sources of energy; and (iv) the update of its 2007-2009 Strategic Plan in order to (i) provide a expansion of energy- and transport-related industries in developing status report on the implementation of the plan; and (ii) propose a countries. number of amendments. Following on from its achievements in 2007 and in order to factor in The original key objectives of the Plan were to: new trends and developments, Nexans has updated its Strategic • increase profitability; Plan with a view to: • reduce exposure to short-term business cycles; • Partnering stronger-than-anticipated growth for high-voltage • and focus on a smaller number of market segments that offer effec- terrestrial and submarine cables : The Group’s capital expenditure tive opportunities to foster synergies. program in this domain has been revised upwards slightly in order to take into account extra manufacturing capacity in the light of an The main measure for achieving these objectives entailed concentra- increasing number of projects that will lead to a considerable rise ting Nexans future business development and leadership within the in sales targets by 2009. Energy business on the Infrastructure, Industry and Building activities. • Continuing to scale back the wirerod business, by gradually The overall strategy was broken down based on the Group’s ceasing deliveries to non-Group customers in Europe. business lines and distinguishing between: • Speeding up expansion in the Industry market • The Group’s core activities of Energy Infrastructure, Industry, and • Enlarging the industrial cables activity by increasing production of Building, for which the following objectives were set: : rubber insulated cables. This will involve stepping up capacity in - Energy Infrastructure: strengthening the Group’s leading position Europe for wind power products, extending the Chinese in a fast-growing market, with the aim of expanding in a number manufacturing plant, and setting up a rubber compound plant in of high-potential segments. Korea to serve the entire Asia region. - Industry : building up a strong position in certain market segments. - Building : using this core business as a base for expanding in 51 local markets. 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 52

• Pursuing – and even accelerating – the streamlining of Industrial cable operations between French and German plants and reviewing 6 PRINCIPAL RISKS the sustainability of certain operations in Europe dedicated to the AND UNCERTAINTIES building market. TO WHICH THE In addition to these changes the Group has decided to continue with its proactive strategy of rotating assets by : GROUP IS EXPOSED • Exploring opportunities to divest (i) part of its copper Telecom Infrastructure operations, where its current positioning is such that it cannot achieve critical mass; and (ii) its harness operations for 6.1 GENERAL RISKS automotive harnesses, which no longer fit with its strategic cables activities. 6.1.1 Risks related to contractual liability • Strengthening its presence in new fast-growing and profitable The Group systematically assesses the risks underlying the major geographic markets through transactions such as the planned contracts it signs. Particular focus is placed on ensuring that the acquisition of the Madeco group’s cable business in South America. Group’s sales teams pinpoint the risks inherent in sales contracts and involve the Group’s Legal Department in contractual negotiations. In the period spanning 2008 to 2009, the newly structured Group (i.e. taking into account (i) the divestment of its harness operations and Product liability the sale of Santander’s copper Telecom Infrastructure cables in Spain; The nature of Nexans’ business exposes it to product liability claims and (ii) the Madeco acquisition, Nexans aims to achieve: and claims for damage to property or third parties allegedly caused • Average organic growth of around 6% per year for its cables by its products. Nexans provides warranties concerning the activities, with expansion continuing to outpace the underlying performance of its products, which may cover a long period of time. markets on account of the capital spending programs implemented. In addition, warranties given to Nexans pursuant to contracts for the • An operating margin of between 7% and 10% depending on the supply of the materials and components used in the Group’s products general economic context, and particularly on the level of demand may be less extensive than the warranties Nexans gives to its for cables in the building market. customers, for example, in the optical fiber sector. • Positive free cash flow*. Contracts relating to turnkey projects The forward-looking information given above is based on the follo- Approximately 10% of Nexans’ consolidated net sales (based on wing assumptions: constant non-ferrous metal prices) derive from contracts for the supply • Standard copper and aluminum prices of 1,500 euros per ton and and installation of cables as part of turnkey infrastructure projects. 1,200 euros per ton, respectively. These contracts relate primarily to high-voltage terrestrial and • A copper price of 4,400 euros per ton over the entire period. submarine cables. Individual contracts often have a high value and • Constant exchange rates (euro against other currencies), using the contain penalty and liability clauses that are applicable if Nexans rates in effect at year-end 2007. does not comply with the delivery schedule and/or with quality • The same global economic climate as experienced over the past requirements (for example, technical defects requiring intervention few years, with a slowdown in growth in North America relative to after installation due to product non-conformity resulting from Europe and continued strong growth for the world economy as a production anomalies). whole, driven by developing countries. If these clauses are invoked, the amount of penalties involved, the • Sustained annual growth for the global cable market between 2007 size of claims for damages or the financial impact on the project due and 2010 (at constant copper prices), buoyed by increasing to delays could have a significant adverse effect on Nexans’ demand in Brazil, Russia, India and China. financial position and income. • Continued growth in the infrastructure, transport and oil & gas markets.

(*) Free cash flow: Cash flow from operations plus (or minus) changes in working capital requirement, less capital expenditure net of proceeds from sales of property, plant and

52 equipment, less the payment of dividends. 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 53

Nexans may be required to pay late-delivery penalties in relation to 6.1.3 Risks related to raw materials and these contracts. The penalties are taken into account when calculating supplies the margins the Group recognizes on said contracts, as described in Copper, aluminum and plastic are the main raw materials used by Note 1.h to the consolidated financial statements. Nexans. Therefore, price fluctuations and the availability of products have a direct effect on its business. Nexans has so far always been Quality control and insurance able to obtain adequate supplies at reasonable prices. A global In order to limit product liability risk the Group has put in place copper shortage or interruptions of supplies could have an adverse stringent product quality control procedures. A large number of effect even though Nexans has diversified its sources of supply as Nexans’ units are ISO 9001 or 9002 certified. In addition, each unit much as possible in order to reduce these risks. The situation is to some monitors a set of indicators on a monthly basis in order to assess extent similar for petroleum by-products such as polyethylene, PVC progress made in terms of quality and customer satisfaction. and plasticizers. The inability to source raw materials at reasonable Nexans currently has product liability insurance that it considers to prices could therefore adversely affect Nexans’ business and income. be in line with industry standards, and whose coverage amounts The Group’s policy is always to have at least two suppliers for any largely exceed any past claims. However, Nexans cannot guarantee raw material or component used in manufacturing its products. There that its insurance policies would provide sufficient coverage for all are nonetheless certain isolated cases where the Group uses a sole forms of liability claim (see section 6.1.9 below) as although the supplier, particularly for the materials used to make high-voltage coverage amounts are high, they are capped at annual levels and cables. Nexans’ Purchasing Department has launched a program the policies contain standard exclusion clauses, notably concerning which is aimed at reducing this kind of situation, with the help of the the cost of the product itself and late-delivery penalties. Research and Development Department.

6.1.2 Risks related to dependence on customers As part of its strategic purchasing policy to secure the supply of Nexans’ activities are spread across a variety of businesses certain raw materials in terms of both volume and price (i.e., the LME (e.g. energy, telecommunications, electrical wires), and it has many price plus a premium), the Group has signed copper cathode different types of end-customer – including distributors, equipment purchasing contracts with two suppliers covering up to 2009. The manufacturers, industrial operators and public operators – in a wide annual volume purchased under these contracts is set in the November range of countries. This diversity acts as a safeguard for the Group of the preceding year, and for 2008 the Group made firm purchase as a whole and no customer accounts for more than 4% of commitments for approximately 350,000 tonnes of copper. To cover consolidated net sales. However, certain customers may represent a its remaining copper cathode requirements the Group enters into significant portion of a production unit’s business, and the loss of one purchasing contracts with other suppliers that include pre-determined such customer may have a significant impact on a local level, volumes. leading to the closure of the manufacturing facility concerned. In view of the market for aluminum wirerods, in order to secure its supplies the Group has given firm purchase commitments to several In addition, given the level of operating income involved and the leading international producers for amounts sufficient to cover its difficult market conditions, the loss of one customer, particularly in needs for 2008 through 2012, representing approximately 50,000 niche markets such as shipbuilding and aerospace, could have an tonnes per year. impact on Nexans’ income. It should be noted that as these products are listed on regulated Lastly, the demand for certain products depends on the economic markets the Group could sell any quantities of copper or aluminum environment of the related business sector, such as in the oil industry. that are purchased under firm commitments but not subsequently used, although it may incur a loss related to the bid/offer spread on the premium.

In parallel, in view of the Group’s prominent role in the submarine high-voltage and umbilical cables market, it needs a cable-laying vessel capable of performing the Group’s installation contracts within the timeframes required. As there is a limited market for such vessels, in November 2006, Nexans acquired the cable laying vessel, Bourbon Skagerrak, from Bourbon Cable AS, a Norwegian 53 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 54

subsidiary of the French group Bourbon. This vessel – which has customers (“Original Equipment Manufacturers”) are shifting away been renamed Nexans Skagerrak – is one of the few in the world from standardized products, meaning that Nexans must be specially designed to transport and lay umbilical cables and increasingly flexible and develop new solutions in order to high-voltage submarine cables. Before the acquisition, Nexans had accommodate increasingly demanding specifications. The principal operated this vessel through an exclusive long-term chartering competitive factors in the cable industry are cost, service, product contract. quality and availability, geographical coverage and the range of products offered. An increase in raw material, energy or transportation costs could have a significant impact on Nexans’ business or income. In this environment, Nexans must constantly invest and improve its performance in order to retain any competitive edge it may have in 6.1.4 Geopolitical risks in high-growth areas certain markets. In addition, Nexans continues to focus on the R&D, Certain high-growth countries account for significant portion of the logistics, and marketing aspects of its businesses in order to stand out Group’s expansion but some of these areas are exposed to major from the competition. At the same time, faced with constant geopolitical risks. However, the Group generates no more than 3% downward pressure on prices, the Group strives to reduce costs of its net sales at current non-ferrous metal prices in countries which through continuously streamlining its production processes as well as are classified by Coface as having a very uncertain economic and plans to boost its manufacturing performance. political environment or representing a very high risk that could result in a deterioration in payment behavior. 6.1.6 Risks related to technologies used In order to remain competitive, Nexans must anticipate advances in 6.1.5 Risks related to the Group’s competitive technology when developing its own products and manufacturing environment processes. The demand for low-energy consumption, recyclable and less The cable industry remains relatively fragmented both regionally polluting products as well as better value products and services requires and internationally, and the cable, wire and cabling system markets the creation of innovative manufacturing processes, the use of new are highly competitive. The number and size of Nexans’ competitors materials and the development of new wires and cables. Most of the vary depending on the market, geographical Area and product line markets in which Nexans has a presence tend to favor the use of highly concerned. Consequently, the Group has several competitors in each technological products; it is therefore important that Nexans undertakes of its businesses. Furthermore, for some businesses and in certain research providing it with access to the technologies necessary and valued regional markets, Nexans’ main competitors may have a stronger by the market. Moreover, despite the significant work conducted by the position or have access to greater know-how or resources. Group’s Research and Development Department and the ongoing monitoring of potentially competitive technologies, there is no guarantee In recent years, cable makers have faced a global crisis in the that (i) the technologies currently used by Nexans will not ultimately be telecommunications markets and the steady increase in trade of replaced by new technologies developed by its main competitors; or (ii) certain types of low value-added cable among countries in a given its competitors will not allege patent infringement; or (iii) Nexans will be region. This has led a number of market players to launch able to successfully launch new products that respond exactly to customer restructuring programs to reduce excess production capacity. Aside demand. from these corrective measures, however, there have been no radical changes to the structure of the industry and it remains relatively Nexans is regularly involved in patent infringement claims filed either by fragmented both on a regional and global scale. itself against third parties or by competitors against the Group. Until now, the financial consequences of such disputes have not been material for Conditions have become more favorable for the industry since 2005 the Group. There are currently two patent infringement disputes in and capacity is being used more effectively. New players are process. Although Nexans considers that it is not guilty of patent entering the field, encouraged by the development of new markets, infringement, it cannot guarantee that the outcome of the related legal especially in developing countries. proceedings will be favorable for the Group. As certain of the Group’s products (cables, wires and accessories) • In March 2005, Kvaerner filed a claim against Nexans Norway must comply with industry specifications and are interchangeable with alleging infringement of a patent relating to umbilical cables. the products of its main domestic and international competitors, Kvaerner is claiming NOK 310 million (approximately 39 million Nexans faces stiff competition in most of its markets in terms of price, euros) in damages. Nexans believes that the patent concerned is delivery lead times and service. In the industry market, OEM not applicable to its products and manufacturing processes, and has itself launched proceedings in Norway and the Netherlands to invalidate Kvaerner’s patent. In 2007, Nexans obtained a favorable court ruling in the Netherlands under which the scope of 54 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 55

application of the Kvaerner patent was restricted. Following this In general, various types of environmental claims are filed against judgment, Kvaerner filed an application to amend its patent and the Group in the normal course of business. Based on the amounts clarified the scope of application of the disputed patent. claimed and the status of the proceedings concerned, together with Consequently, in early 2008 Nexans withdrew the suit it had filed its evaluation of the risks involved and its provisioning policy, Nexans in Norway. The claim filed by Kvaerner in 2005 is still pending but believes that there is little risk that these claims will significantly affect Nexans considers the residual risk in relation to this case to be its financial position or income. extremely low. At December 31, 2007, provisions recognized for environmental • In the United States Nexans has filed a claim to invalidate a patent risks amounted to 7.3 million euros. They primarily include an amount filed by General Cable relating to certain LAN data cables set aside for a lawsuit in Duisburg, Germany, filed by the purchasers marketed by Nexans. General Cable has filed a counterclaim of a plot of land and a city council relating to soil and ground water against Nexans for patent infringement. contamination. This soil contamination is long-standing and Nexans’ full liability has not been established although analyses are currently underway. Nexans has, however, recorded a specific 6.1.7 Risks related to environmental provision to cover any responsibility it may have for cleanup costs. regulations As is the case for any industrial player, Nexans is subject to Provisions for environmental risks also include amounts relating to numerous environmental laws and regulations in the countries where the cleanup of a landfill site at the Group’s Swedish subsidiary as it operates. These laws and regulations impose increasingly strict well as other costs for current or planned site rehabilitation and soil environmental standards, particularly in relation to atmospheric cleanup operations due to the use of products such as solvents and pollution, wastewater disposal, the emission, use and handling of oils. Additional expenses may also be incurred for the clean-up of toxic materials and waste, waste disposal methods, and site closed sites and sites earmarked for sale, but the Group expects the cleanups and rehabilitation. Consequently, Nexans is exposed to the related amounts to be less than the market value of the sites in possibility of liability claims being filed against it, and of incurring question. significant costs (e.g. for liability with respect to current or past Nexans believes that any unprovisioned costs for potential site activities or related to assets sold). The Group has a voluntary rehabilitation should not have a significant impact on its earnings. internal environmental management system that has been operational for several years and whose underlying objective is to Nexans cannot guarantee that future events, in particular changes in enable the Group’s sites to receive EHP certification (“Environnement legislation or the development or discovery of new facts or conditions, Hautement Protégé” or Highly Protected Environment). EHP certifica- will not lead to additional costs that could have a significant adverse tion is granted following an audit based on an in-depth question- effect on its business, financial position or income. naire dealing with 12 environmental themes that is sent to the Group’s manufacturing facilities. See section 16.1 below for more information.

In France, the Environment Ministry (Ministère de l’aménagement du territoire et de l’environnement) has published a national directory of potentially polluted sites and launched a program to examine and rehabilitate these sites. Four of Nexans’ sites are concerned by these measures.

In the United States, Nexans is subject to several federal and state environmental laws, which could make certain categories of entity defined by law liable for the full amount of cleanup costs relating to environmental pollution, even if no fault is determined and the relevant operations comply with the applicable regulations. Nexans is not currently involved in any proceedings of this type. However it cannot guarantee that no such proceedings will arise in the future, which could in turn negatively impact the Group. 55 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 56

6.1.8 Nexans’ position on asbestos and Lebanon. Additional coverage has been taken out for the recently The manufacture of Nexans products does not involve any handling acquired cable-laying vessel, Skagerrak. of asbestos. The short-term credit risk policy has been gradually rolled out coun- In the past (and particularly to comply with French army specifica- try by country as part of a global, multi-year program that was rene- tions), asbestos was used to a limited extent to improve the insulation wed on January 1, 2008 for two years. At the end of 2007, conso- of certain kinds of cables designed for military purposes. It was also lidated companies covered by this policy accounted for 80% of the used in the manufacture of enamel furnaces at two sites in France, Group’s net sales. but this activity was discontinued several decades ago. With respect to third-party liability resulting from aeronautical or aero- To date, 48 people in France have been classified as suffering from space products, coverage for losses caused to third parties is limited an asbestos-related occupational disease, of which 11 have filed to the occurrence of severe accidents or decisions to ground aircraft proceedings against their employer (TLM). In addition, some 93 made by domestic or international civil aviation authorities, and exclu- employees (41 at Nexans Wires and 52 at SCCC) are currently des all other kinds of liability. It is possible that an extremely rare but undergoing medical supervision. highly serious claim could considerably exceed the related sales gene- rated and significantly affect Nexans’ operating income. Management does not believe that this risk is likely to have a signifi- cant impact on the Group’s financial position or earnings. Finally, there is a trend among third parties, customers and suppliers, as well as in the insurance market, towards increased litigation to limit 6.1.9 Risk coverage or expand the scope of contractual undertakings. The possibility of In addition to local mandatory insurance coverage and individual legal action being taken creates further uncertainties as to the amount insurance taken out directly by the Group’s various units, Nexans of risk transferred. has had a Group insurance program in place since 2003. The financial assets recognized in the Group’s balance sheet are not Companies in which Nexans has more than a 50% stake are eligi- insured against political risk. Risks related to acts of terrorism are cove- ble to participate in this program. red by the insurance legally required in certain countries. The overall coverage under this program did not change signifi- cantly during 2007 compared with 2006 and was renewed on In 2007, the supervisory authorities of the Grand Duchy of January 1, 2008 at similar levels. Luxembourg approved the formation of a captive reinsurer which has been operational since January 1, 2008. Aimed at optimizing The main types of insurance coverage under this program are as and managing the Group’s risk retention strategy, this captive reinsu- follows: rer handles property and casualty and business interruption pro- • property and casualty and business interruption, grams, as well as short-term credit risks and transportation risks. It ope- • third-party operating and product liability, rates on a program-by-program basis, with a maximum amount of • transportation, coverage per loss and a cumulative cap per insurance year. It is • contractor’s all risk insurance for terrestrial projects, scheduled to become progressively more involved in Nexans’ insu- • third-party aerospace and aeronautical liability, rance program in line with opportunities and limitations in the insu- • short-term credit risk to secure accounts receivable from certain rance market. domestic and export customers, • directors’ liability. The Group relies on the expertise of a global network of insurance brokers to assist it in the control and management of the risks to The limits on these policies are based on a historical analysis of claims which it is exposed in all the countries where it operates. In addition, experience and on the advice of the Group’s brokers. They generally it has maintained its commitment to reducing industrial risks by put- exceed the maximum amount of insured claims experienced by the ting in place a specific three-year investment program for 2008 Group in the past. These policies are, however, subject to coverage through 2010, designed jointly by the Industrial Management exclusions that result in limitations on the transfer of risk. Department and experts from the Group’s property and casualty The property and casualty and business interruption policy is subject insurer. These experts visit the manufacturing sites on an annual basis, to limitations applicable to certain units. making targeted recommendations on how to improve risk prevention and safety, as well as subsequently monitoring that the recommenda- Certain countries or regions are currently excluded from the Group’s tions have been implemented. insurance program (e.g. Nigeria) and some geographical areas have more limited coverage for risks related to natural catastrophes, inclu- ding areas with high seismic risk such as Greece, Italy, Turkey, Japan 56 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 57

6.2 FINANCIAL RISKS payments, and irrevocable letters of credit confirmed by banks appro- The financial risks to which the Nexans Group is exposed are as ved by the Treasury Department. For its other markets Nexans has set follows: up an insurance program relating to the risk of non-recovery of cus- • Liquidity risks tomer receivables through a short-term credit insurance policy for sales • Interest rate risks in local and export markets. This credit insurance policy – which has • Foreign exchange risks been taken out with the specialist international insurer, Coface – • Metal price risks covers companies representing approximately 80% of the Group’s • Counterparty credit risks net sales. By agreement with the insurer, certain customers represen- All of these risks are described in detail in Note 25 to the consolidated ting a very low risk of default over the short term are excluded from financial statements. A sensitivity analysis for 2007 is also provided the credit insurance policy. in the same note. As part of its insurance coverage, Coface provides Nexans with access to a database concerning the credit risk associated with each customer. This enables each unit to manage its risk by monitoring 6.3 CUSTOMER CREDIT RISKS customer outstandings against the insured credit limits, and in the The diversification of Nexans’ businesses, customers and geogra- event of default, to limit the impact on its cash position and income to phic base provides Group-level protection against credit risk. any amount over the coverage limit and the policy deductible (gene- With respect to Nexans’ internal practices to reduce customer credit rally 10% of the insured amount). Outstandings in excess of the risk, for certain major export markets the Group implements secured amounts covered by the credit insurance policy are subject to perio- payment methods including down payments on orders, progress dic review by the Country Managers and their financial controllers.

2007 2006 2005 2004 2004 after (in millions of euros) IAS 32-39

Gross trade receivables 1,129 1,313 1,147 879 749

Provisions (37) (41) (42) (43) (43)

Net amount 1,092 1,272 1,105 836 706

Provisions as a percentage – 3.3% – 3.1% – 3.7% – 4.9% – 5.7%

Provisions in 2007 were on a par with 2006, reflecting the fact that the level of default risk on the Group’s trade receivables remained stable. 57 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 58

7 SIGNIFICANT EVENTS 9 PROPOSED AFTER THE BALANCE APPROPRIATION SHEET DATE OF INCOME

None. The Annual Shareholders’ Meeting will be asked to approve the appropriation of net income for the year – totaling 110,030,505 euros – as follows:

• Retained earnings brought forward 8 PARENT COMPANY from prior years 141,672,302 euros BUSINESS OVERVIEW • 2007 net income 110,030,505 euros • Legal reserve 41,341 euros

Nexans serves as the Group’s holding company, manages its finan- Total distributable income 251,661,466 euros cing, and centralizes its cash holdings.

Nexans also plays a central role in collecting intra-Group royalty Appropriation of income: fees for R&D, which it then allocates among its subsidiaries accor- (Based on the number of shares comprising the share capital at ding to the R&D programs they carry out for the benefit of the entire December 31, 2007) Group. • Dividend payment of 2 euros per share representing a total dividend of 51,356,710 euros The parent Company’s sales for the year ended December 31, 2007 • Retained earnings 200,304,756 euros totaled 13,262,694 euros, and came primarily from services billed Total 251,661,466 euros to its subsidiaries. Net income for the year grew to 110,030,505 euros from 88,094,875 euros in 2006. This increase primarily The Annual Shareholders’ Meeting will be asked to approve the pay- reflects a rise in the Company’s net financial income, which consis- ment of a dividend of 2 euros per share, corresponding to a total ted mainly of a dividend paid to Nexans by its subsidiary, Nexans dividend payout of 51,356,710 euros based on the number of shares Participations. A net tax consolidation loss of 672,422 euros was comprising the share capital at December 31, 2007. recognized during the period. However, this amount may be increased (implying a decrease in retai- The Company’s equity at end-2007 was 1,416,217,646 euros, com- ned earnings) by a maximum total amount of 9,622,074 euros taking pared with 1,329,901,775 euros at December 31, 2006. into account the 4,811,037 maximum additional shares that may be issued from January 1, 2008 through the date of the Annual Shareholders’ Meeting held to approve the dividend payment as a result of (i) the exercise of stock options, (ii) subscriptions for shares issued under the employee share issue, to be implemented prior to said Shareholders’ Meeting pursuant to a decision of the Board of Directors’ meeting held on July 24, 2007 and (iii) the conversion of outstanding convertible bonds.

The Annual Shareholders’ Meeting will be asked to approve the pay- ment of such dividends as from April 29, 2008.

In the event that Nexans still holds treasury stock at the time the divi- dend is paid, the amount corresponding to the dividends not paid on these shares shall be appropriated to retained earnings.

All of the Company’s shares are of the same category and the total amount of dividends paid will qualify for the 40% relief provided for in article 158, paragraph 3, sub-paragraph 2 of the French General Tax Code (information disclosed in accordance with article 243 bis of said Code). 58 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 59

The Annual Shareholders’ Meeting takes cognizance of the Board of Directors’ statement that the amount of dividends paid for the last three years and the dividends qualifying for the 50% or 40% relief were as follows:

2004 2005 2006 (paid in 2005) (paid in 2006) (paid in 2007)

Dividend per share €0.50 €1.00 €1.20

Number of shares qualifying 21,136,773 21,661,745 25,539,805

Total amount €10,568,386.50 €21,661,745.00 €30,647,766.00

For 2004, all the shares were of the same category and qualified for the 50% relief. For 2005 and 2006, all the shares were of the same 12 BOARD OF DIRECTORS category and qualified for the 40% relief. AND SENIOR MANAGEMENT

10 FIVE-YEAR FINANCIAL At the Shareholders’ Meeting held on May 10, 2007, Nexans’ sha- reholders re-elected the following directors for a four-year term: SUMMARY Gianpaolo Caccini, Jean-Marie Chevalier, Georges Chodron de Courcel, Jacques Garaïalde and Ervin Rosenberg. The Annual In accordance with article R.225-102 of the French Commercial Shareholders’ Meeting also approved the appointment of three new Code, a table detailing the Company’s financial results for the last five directors for a four-year term: Jérôme Gallot, Jean-Louis Gerondeau financial years is appended to this report. and Nicolas de Tavernost, all of whom are considered to be inde- pendent with regard to Nexans.

The terms of office of the members of the Board of Directors expire as follows: 11 NON-TAX DEDUCTIBLE Year term expires Director EXPENSES • 2008 Colette Lewiner • 2010 Gérard Hauser No non tax-deductible expenses, as defined in article 39, para- François Polge de Combret graph 4 of the French General Tax Code, were incurred during 2007. • 2011 Gianpaolo Caccini Jean-Marie Chevalier Georges Chodron de Courcel Jérôme Gallot Jacques Garaïalde Jean-Louis Gerondeau Ervin Rosenberg Nicolas de Tavernost

Also, the Board of Directors’ Meeting of May 10, 2007 changed the composition of the Accounts and Audit Committee, whose members now comprise Georges Chodron de Courcel, Jean-Louis Gerondeau and Jérôme Gallot (Committee Chairman). 59 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 60

12.1 DIRECTORSHIPS AND OTHER POSITIONS HELD IN OTHER COMPANIES BY NEXANS’ CORPORATE OFFICERS IN 2007

List of directorships and positions held during financial year 2007 in all other companies

Gérard Hauser – Chairman and CEO of Nexans – Director of Alstom, Faurecia, Aplix, Ipsen

Frédéric Vincent – Chief Operating Officer of Nexans – Director of Electro-Banque, Essex Nexans Europe – Chairman and Director of Nexans USA Inc.* – Director of Nexans Canada Inc.*, International Cables Co.*, Nexans Energy USA Inc.*, Liban Câbles Contracting SAL*, Liban Câbles Holding SAL*, Liban Câbles Packing SAL*, Liban Câbles SAL*

Gianpaolo Caccini – President of Assovetro, the Italian Association of Glass Manufacturers – Director of Saint Gobain, JM Huber Corporation*, Saint Gobain Corporation*

Georges Chodron de Courcel – Chief Operating Officer of BNP Paribas – Member of the Executive Committee of BNP Paribas – Chairman of Financière BNP Paribas SAS, Compagnie d’Investissement de Paris SAS, BNP Paribas (Switzerland) SA* – Director of Bouygues SA, Alstom, F.F.P. (Société Foncière Financière et de Participations), Verner Investissements SAS, Erbé SA*, BNP Paribas ZAO*, BNL (Banca Nazionale del Lavoro)*, Scor Holding (Switzerland) AG* – Member of the Supervisory Board of Lagardère SA – Non-voting director of Exane, Scor SA and Safran

Jacques GaraÏalde – Managing Director of Kohlberg Kravis Roberts & Co. Ltd. – Chairman of the PagesJaunes Group’s Board of Directors – Chairman and CEO of Médiannuaire Holding – Director of Legrand, Tarkett SA – Member of the Executive Committee of Société d’Investissement Familiale

Ervin Rosenberg – Advisor to the Chairman of Compagnie Financière Edmond de Rothschild Banque – Director of Carbone Lorraine – Member of the Supervisory Boards of LCF Rothschild Financial Services, Mobility Saint Honoré – Chairman and CEO of Financière Savoisienne – Non-voting director of Compagnie Financière Edmond de Rothschild Banque

Jean-Marie Chevalier – Professor of Economics at Université Paris IX-Dauphine – Director of Cambridge Energy Research Associates

Colette Lewiner – Vice President, Global Leader Energy, Utilities & Chemicals of Cap Gemini – Director of La Poste, TGS-NOPEC Geophysical Company ASA* – Member of the Information Technology Strategic Board reporting to the Prime Minister – Member of the Académie des Technologies

François Polge de Combret – Senior Advisor for UBS Investment Bank – Director of Renault, Bouygues Telecom – Member of the Supervisory Board of Safran

(*) Directorships and positions held in non-French companies. 60 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 61

List of directorships and positions held during financial year 2007 in all other companies

Jérôme Gallot – Chairman of CDC Entreprises – Director of ICADE, Caixa Seguros*, Plastic Omnium, CNP Assurances – Member of the Supervisory Board of CNP Assurances, Compagnie Nationale du Rhône (CNR), NRJ Group, Schneider Electric SA – Non-voting director of Oseo

Jean-Louis Gerondeau – Member of the Management Board of Zodiac – Director of Faurecia, Sicma Aero Seat, Avox-Eros Services Inc*, Avox Systems Inc*, Evac International OY*, Evac OY*, Marine Holding Corp*, Zodiac Espanola*, Zodiac Automotive UK*, Air Cruisers*, Sicma Aero Seat Services*, Zodiac Automotive US*, Zodiac US Corporation*, Zodiac Group of Australia*, MAG Aerospace Industries Inc*, C&D Zodiac*, C&D Aerospace Canada* – Chairman and Vice Chairman of the Supervisory Board of the Institute for Industrial Development (IDI) – Chairman of Aerazur, Intertechnique, Aerazur Newco, Zodiac Marine Holding, Zodiac Airline Equipment LLC*

Nicolas de Tavernost – Chairman of the Management Board of M6 – Member of the Supervisory Board of RTL – Director of Antena 3*, GL Event SA, Extension TV SA, TF6 Gestion SA, Société Nouvelle de Distribution SA – President of the Association of European Commercial Television (ACT)*

(*) Directorships and positions held in non-French companies.

12.2 DIRECTORS’ INTERESTS • each of the members of the Accounts and Audit Committee recei- AND COMPENSATION PAID DURING ves 3,000 euros per meeting, subject to a ceiling of 12,000 euros THE YEAR per year; • each of the members of the Appointments and Compensation 12.2.1 Compensation paid to members Committee receives 3,000 euros per meeting, subject to a ceiling of the Board of Directors of 12,000 euros per year. The annual amount of Directors’ fees granted to Directors was set at Based on these allocation methods, Gianpaolo Caccini, Georges 400,000 euros by the shareholders at the Shareholders’ Meeting held on Chodron de Courcel, François Polge de Combret and Ervin May 15, 2006, for the financial year beginning January 1, 2006. Rosenberg received 38,500 euros for 2007; Gérard Hauser, Jean- The methods for allocating the Directors’ fees determined by the Board of Marie Chevalier, Colette Lewiner and Jacques Garaïalde received Directors include the calculation of a fixed portion and a variable portion 29,500 euros; Jérôme Gallot received 27,267 euros ; Jean-Louis based on the Directors’ attendance at Board Meetings and their member- Gerondeau received 25,267 euros and Nicolas de Tavernost recei- ship of committees. ved 21,267 euros. The outgoing Directors received the following amounts: 13,233 euros for Jean-Louis Vinciguerra, 8,233 euros for The Board of Directors’ meeting of March 27, 2007 decided that the fol- Patrick Puy and 6,233 euros for Yves Lyon-Caen. lowing methods would be used for allocating the Directors’ fees: The total amount of Directors’ fees allocated for 2007 and paid to • each of the Directors, including the Chairman, receives 17,500 euros the members of the Board of Directors at the end of the year was for the fixed portion; 345,801 euros. Taking into account the amount paid in May 2007 • each of the Directors, including the Chairman, receives an additio- to the outgoing Directors, the total Directors’ fees allocated for 2007 nal 2,000 euros for each Board Meeting attended, subject to a cei- amounted to 373,500 euros. ling of 12,000 euros per Director; 61 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 62

12.2.2 Compensation paid to the Chairman and CEO The components of the Chairman and CEO’s compensation are as follows:

Due for 2006 Paid in 2006 Due for 2007 Paid in 2007 (in euros) (in euros) (in euros) (in euros)

Fixed compensation 791,670 791,670 800,000 800,000

Variable compensation 858,880 712,000 1,400,000 858,880

Directors’ fees 25,000 50,000(1) 29,500 29,500

Other benefits 1,836 1,836 1,836 1,836

TOTAL 1,677,386 1,555,506(2) 2,231,336 1,690,216(2)

(1) Comprised of 25,000 euros paid for each of the years 2005 and 2006. (2) Pre-tax total gross compensation (based on annual payroll returns).

In accordance with the decisions of the Board of Directors’ meeting with one of the principal subsidiaries of the Group which was signed of November 23, 2006, the Chairman and CEO’s variable compen- before Nexans went public. This contract has been suspended for sation for 2007 represents 100% of his basic salary (previously the duration of his service as Chairman and CEO but will come back 80%) and varies between 0% and 175% of said salary (previously into force automatically if he ceases to serve as such for any reason 0% to 150%), depending on his performance in relation to the objec- whatsoever. If the contract is terminated for any reason, he is subject tives set by the Board of Directors. For 2007, 60% of this variable to a non-compete clause that provides for the payment of an amount compensation was based on quantitative targets, by reference to ope- equal to his total gross compensation received over the 12 months rating income and ROCE, and 40% was based on qualitative perso- prior to the discontinuance of his service as Chairman of Nexans. In nal objectives. addition, in the event of dismissal (except for gross negligence or misconduct), he will also be entitled to a severance payment equal to The Chairman and CEO is eligible for the supplementary pension plan his total gross compensation received over the 12 months preceding set up for members of the Group’s management. the discontinuance of his service as Chairman of Nexans. The Chairman and CEO is not entitled to any severance payment if his term of office is terminated. He holds an employment contract

12.2.3 Compensation paid to the Chief Operating Officer The components of the Chief Operating Officer’s compensation are as follows:

Due for 2006(1) Paid in 2006 Due for 2007 Paid in 2007 (in euros) (in euros) (in euros) (in euros)

Fixed compensation 287,505 287,505 460,000 460,000

Variable compensation and bonuses 336,996 – 406,990 436,996(2)

Other benefits 2,618 2,618 4,188 4,188

TOTAL 627,119 290,123 871,178 901,184(3)

(1) Prorated since May 15, 2006 when his term of office as Chief Operating Officer commenced. (2) Including 100,000 euros paid under his employment contract which applied until the commencement of his term of office as Chief Operating Officer. (3) Pre-tax total gross compensation (based on annual payroll returns). 62 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 63

In accordance with the decisions of Board of Directors’ meeting of 12.3 PROVISIONS November 23, 2006, the Chief Operating Officer’s variable compen- The total provisions recognized at December 31, 2007 in relation to sation for 2007 has not changed and still represents 60% of his pension plans, retirement benefits, or other benefits to be paid to the basic salary. His variable remuneration for 2007 varies between 0% Chairman and CEO and the Chief Operating Officer amounted to and 100% of said salary (previously 90%), depending on his perfor- 7.7 million euros. mance in relation to the objectives set by the Board of Directors. For 2007, 70% of the Chief Operating Officer’s variable compensation was calculated based on quantitative targets, by reference to opera- 12.4 INFORMATION AS TO EVENTS THAT ting income and operating ROCE, and 30% was based on qualita- COULD TAKE PLACE IN THE CASE tive personal objectives. OF A PUBLIC OFFER In addition to the amounts described in Sections 12.2.2 and The Chief Operating Officer is eligible for the supplementary pen- 12.2.3 above regarding the Chairman and CEO and Chief sion plan set up for members of the Group’s management. Operating Officer, other Nexans Executive Committee mem- The Chief Operating Officer is not entitled to any severance payment bers holding employment contracts will be entitled to severance if his term of office is terminated. He holds an employment contract pay equal to two times their total gross annual salary if dismis- with Nexans which has been suspended for the duration of his ser- sed for reasons other than gross negligence or misconduct. This vice as Chief Operating Officer but this contract will come back into amount will be payable in addition to the severance payment force automatically if he ceases to serve as such for any reason what- due in accordance with the applicable collective agreement for soever. In the event of dismissal (except for gross negligence or mis- all but two members, for whom the total severance pay is fixed conduct), he will be entitled to the severance payment due in accor- at two times their total gross annual salary. dance with the applicable collective agreement plus a severance In the case of a public offer involving Nexans shares, mem- payment equal to twenty-four times his most recent monthly salary bers of the Nexans Executive Committee (including the (including bonus) prior to the discontinuance of his service as Chief Chairman and CEO and the Chief Operating Officer) and Operating Officer. Nexans employees may exercise their stock options immedia- tely and sell the Nexans shares received from the exercise any- time during the period that the public offer is in effect. 63 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 64

12.5 SUMMARY OF TRANSACTIONS MADE BY CORPORATE OFFICERS AND SENIOR MANAGERS RELATING TO THE COMPANY’S SECURITIES, AS REQUIRED BY ARTICLE L.621-18-2 OF THE FRENCH MONETARY AND FINANCIAL CODE The following table summarizes the transactions made by Nexans’ corporate officers and Executive Committee members in relation to the Company’s securities during 2007 and disclosed to the AMF (Autorité des Marchés Financiers):

Corporate officer Transaction Transaction Financial Unit price Transaction date 2007 instrument (euros) total (gross) (euros)

Jean-Louis Gerondeau 26/06 Acquisition Shares 120.48 12,133

Gérard Hauser 01/02 Subscription Exercise of options 11.62 367,471 Hedge 103.82 02/02 Subscription Exercise of options 11.62 62,911 Hedge 103.20 12/02 Subscription Exercise of options 11.62 5,368 Hedge 103.21 Subscription Exercise of options 27.82 347,750 Hedge 103.21 21/05 Sale Shares 113.26 3,703,602

Frédéric Vincent 28/02 Subscription Exercise of options 11.62 217,875 Hedge 94.95 25/04 Subscription Exercise of options 11.62 72,625 Sale Shares 107.09 669,312 21/05 Sale Shares 113.26 2,123,625

Executive Committee member Transaction Transaction Financial Unit price Transaction date 2007 instrument (euros) total (euros)

Véronique Guillot-Pelpel 29/05 Subscription Exercise of options 11.62 188,825 18/06 Acquisition Employee mutual 121.64 14,329 fund units invested in Nexans shares 26/11 Sale Shares 89.95 325,169

Michel Lemaire 02/02 Subscription Exercise of options 11.62 72,625 Hedge 87.29 Subscription Exercise of options 27.82 278,200 Hedge 82.16 18/06 Acquisition Employee mutual 121.64 14,329 fund units invested in Nexans shares

Pascal Portevin 23/04 Subscription Exercise of options 11.62 627 Sale Shares 108.10 5,837 25/04 Subscription Exercise of options 11.62 23,240 26/04 Subscription Exercise of options 11.62 48,758 Sale Shares 108.10 453,588 15/05 Sale Shares 115.26 2,161,125 18/06 Acquisition Employee mutual 121.64 3,800 fund units invested in Nexans shares 20/11 Subscription Exercise of options 27.82 278,200 Hedge 91.62

Persons related to Pascal Portevin 11/05 Sale Shares 112.27 112,270 64 11/05 Sale Shares 112.27 112,270

* Not including the transaction of April 20, 2007 declared in the name of Michel Lemaire, which was not completed. 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 65

Executive Committee member Transaction Transaction Financial Unit price Transaction date 2007 instrument (euros) total (euros)

Yvon Raak 05/02 Sale Shares 103.60 105,983 19/04 Subscription Exercise of options 11.62 72,625 23/04 Subscription Exercise of options 27.82 347,750 Hedge 108.03 24/04 Sale Employee mutual 107.23 58,818 fund units invested in Nexans shares 15/05 Sale Shares 115.26 1,440,750 18/06 Acquisition Employee mutual 121.64 14,329 fund units invested in Nexans shares

Persons related to Yvon Raak 05/02 Sale Shares 102.60 112,860 05/02 Sale Shares 102.50 112,750 02/05 Sale Shares 107.62 336,312 10/05 Sale Shares 114 37,050 16/05 Sale Shares 114.36 320,208

Bruno Thomas 12/03 Acquisition Employee mutual 93.23 10,000 fund units invested in Nexans shares 16/04 Sale Shares 102.34 1,279,250 21/05 Subscription Exercise of options 11.62 145,250 18/06 Acquisition Employee mutual 121.64 14,329 fund units invested in Nexans shares 07/09 Subscription Exercise of options 27.82 278,200

Gordon Thursfield 25/04 Subscription Exercise of options 11.62 29,050 Sale Shares 107.11 267,775 16/05 Sale Shares 113.53 22,706 65 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 66

• JPMorgan Asset Management (UK), owned by JPMorgan Chase & 13 INFORMATION Co., acting on behalf of subsidiaries engaged in third-party asset ON NEXANS’ SHARE management, reported on July 12 and 18, 2007 that it had increased its interest in Nexans to above 5% of the Company’s OWNERSHIP voting rights on July 4, 2007 and subsequently reduced its interests AND VOTING RIGHTS to below that threshold on July 5, 2007. JPMorgan Asset Management (UK) reported that following these transactions, it held 1,339,139 shares, or 5.23% of the share capital and 4.96% Based on information received pursuant to article L. 233-7 of the of the voting rights on behalf of said parties; French Commercial Code, the only shareholders holding more than • JPMorgan Asset Management (UK), owned by JPMorgan Chase & 5% of the Company’s share capital or voting rights at December 31, Co. reported on August 16, 2007 that it had reduced its interest in 2007 were: Nexans to below 5% of the Company’s share capital on August 9, • FMR Corp. (USA) and Fidelity International Limited (FIL)(Bermuda). 2007 and that it held 1,253,515 shares, or 4.89% of the capital The following entities crossed legal disclosure thresholds in relation to and 4.64% of the voting rights on that date; the Company’s share capital and voting rights during the year: • Dodge & Cox (USA) reported on August 28 and 31, 2007 that it • Morgan Stanley & Co International Ltd., owned by Morgan Stanley, had reduced its interest in Nexans to below 10% of the Company’s reported on January 9 and 10, 2007, respectively, that it had voting rights on August 23, 2007 and subsequently, to below increased its interest in Nexans to above 5% of the Company’s 5% of the Company’s share capital on August 28, 2007. Following share capital on January 8, 2007, and subsequently reduced these transactions, Dodge & Cox (USA) reported that it held its interest to below that threshold on January 9, 2007. 1,266,440 shares representing 2,532,880 voting rights, or Morgan Stanley reported that at January 9, 2007, it owned 4.94% of the share capital and 9.38% of the voting rights; 607,493 shares, or 2.41% of the share capital and 2.39% of the • JPMorgan Asset Management (UK), owned by JPMorgan Chase & voting rights; Co., acting on behalf of subsidiaries engaged in third-party asset • Dodge & Cox (USA) reported on March 6, 2007 that it had increa- management, reported on September 5, 2007 that had increased sed its interest in Nexans to above 10% of the Company’s voting its interest in Nexans to above 5% of the Company’s capital on rights on February 28, 2007 and that it held 1,866,440 shares August 30, 2007 and that it held 1,284,378 shares, or 5.01% of representing 3,032,880 voting rights, or 7.35% of the share capi- the capital and 4.75% of the voting rights on that date; tal and 11.33% of the voting rights on that date; • Dodge & Cox (USA) reported on September 6, 2007 that it had • JP Morgan Asset Management (UK), owned by JP Morgan Chase reduced its interest in Nexans to below 5% of the Company’s & Co., acting on behalf of subsidiaries engaged in third-party voting rights on August 31, 2007 and that following this transac- asset management, reported on May 24, 2007 that it had increa- tion, it held 1,266,440 shares, or 4.94% of the share capital and sed its interest in Nexans to above 5% of the Company’s share 4.90% of the voting rights. Dodge & Cox (USA) crossed this legal capital on May 15, 2007 and that it held 1,299,870 shares, or disclosure threshold as a result of the loss of double voting rights 5.11% of the share capital and 4.85% of the voting rights on upon the conversion of its Nexans’ shares to bearer shares; behalf of said third parties; • FMR Corp. (USA) and Fidelity International Limited (FIL) (Bermuda) • Natixis S.A. (Paris) reported on June 12 and 18, 2007, that it had reported on September 20, 2007 that they had increased their increased its interest in Nexans to above 5% of the Company’s interests in Nexans to above 10% of the Company’s share capital share capital and voting rights on June 1, 2007 and subsequently and voting rights on September 13, 2007 and that they held reduced its interest to below that threshold on June 8, 2007. Natixis 2,616,254 shares, or 10.21% of the share capital and 10.12% of S.A. (Paris) reported that following these transactions, it held the voting rights. They stated that they do not intend to purchase 910,777 shares, or 3.56% of the share capital and 3.38% of the Nexans shares and voting rights in order to hold a controlling inte- voting rights; rest in Nexans or in order to be represented on the Board of • FMR Corp. and Fidelity International Limited (FIL) (USA), acting on Directors; behalf of mutual funds managed by their subsidiaries and invested • JPMorgan Asset Management (UK), owned by JPMorgan Chase & in Nexans shares, reported on June 22, 2007 that they had increa- Co., acting on behalf of subsidiaries engaged in third-party asset sed their interests in Nexans to above 5% of the Company’s share management, reported on November 22, 2007 that it had redu- capital and voting rights on June 18, 2007 and that they held ced its interest in Nexans to below 5% of the Company’s share capi- 1,399,342 shares, or 5.47% of the capital and 5.19% of the voting tal on November 15, 2007 and that it held 1,276,358 shares, or rights on behalf of said funds on that date; 4.98% of the capital and 4.94% of the voting rights. 66 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 67

Employees owned 1% of the Company’s share capital at December payable in arrears on January 1 each year and their gross yield- 31, 2007, of which 91% was held through employee mutual funds. to-maturity is 3.75% (if they are not converted and/or exchanged for shares and if they are not redeemed in advance). The option to At December 31, 2007, the Company’s share capital was convert or exchange the bonds can be exercised by the OCEANE 25,678,355 euros divided into 25,678,355 shares with a par value bondholders from July 7, 2006 until the 7th business day preceding of one (1) euro each. This amount includes the impact of 360,975 the scheduled or early redemption date at the rate of one share stock options exercised between January 1 and June 30, 2007 and per bond (subject to any adjustments required by law). At 52,425 stock options exercised between July 1, 2007 and December December 31, 2007, all the 1.50% July 7, 2006 to January 1, 31, 2007. 2013 OCEANE bonds were outstanding. At December 31, 2007, 220,720 shares carried double voting rights • In 2007, Nexans announced that it will launch an employee share and the total number of voting rights was 25,899,075. Pursuant to ownership plan through the issue of up to 500,000 new shares the Company’s bylaws, when voting at Shareholders’ Meetings, no reserved for Group employees participating in a company savings shareholder, whether acting on his own behalf or as proxy for ano- plan. The implementation of the plan has been postponed until ther shareholder, may exercise more than 8% (or 16% for shares 2008. It will be the Group’s third international employee share with double voting rights) of the voting rights attached to shares held ownership plan. Employees may subscribe for the shares through by shareholders present or represented at the meeting concerned. an employee mutual fund (except in certain countries due to local constraints) and may choose between (i) a “classic offering”, enabling employees to subscribe for Nexans shares at a 20% dis- count compared to the reference price and (ii) a “leveraged offe- ring” which guarantees the employees’ investments and a return cor- 14 SHARE BUYBACK responding to a multiple of the potential increase in the Nexans PROGRAM share price. In this way, Nexans is hoping to strengthen relations with its employees in France and elsewhere, and to involve them The Shareholders’ Meeting of May 10, 2007 authorized the more closely in the Group’s development and future results. Company to purchase or sell its own shares pursuant to the terms • At December 31, 2007, 1,070,250 employee stock options were and conditions fixed by said Meeting. As the Board did not use outstanding, representing 4.17% of the share capital. Each of this authorization during the year, the Company did not hold any these options entitles the holder to subscribe for one Nexans share. treasury shares at December 31, 2007. A table summarizing the outstanding authorizations granted by the Shareholders’ Meeting to the Board of Directors relating to capital increases is appended hereto. This table also lists how each capital 15 UTILIZATION increase authorization was used during 2007. OF AUTHORIZATIONS TO INCREASE THE COMPANY’S SHARE CAPITAL

• On July 7, 2006, Nexans carried out a public issue of 3,794,037 OCEANE bonds each with a nominal value of 73.8 euros, convertible into new shares and/or exchangeable for existing shares, for a total value of approximately 280 million euros. The prospectus for this issue was approved by the AMF on June 29, 2006 under no. 06-242. The term of the bond issue was set at 6 years and 178 days. Unless the Company exercises its early redemption option, the bonds will be redeemed in full on January 1, 2013 at a price of 85.7556 per bond, representing 116% of the total face value. The bonds carry interest at 1.50% per annum, 67 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 68

A Group environmental manual, approved by the Executive 16 MANAGEMENT Committee, was drawn up in January 2005 and issued to all produc- BY NEXANS OF tion sites. It describes the Nexans environmental management approach, in particular the performance targets, procedures, emer- THE SOCIAL AND gency plans and tools available at each site, and serves as a refe- ENVIRONMENTAL rence document for the plants’ environmental management systems. It describes the Group’s organization and the role of Country CONSEQUENCES Management in implementing the Group’s Environmental Policy. OF ITS OPERATIONS In accordance with ISO 14001, all the Group’s facilities are revie- wed annually by means of a questionnaire covering 12 environmen- tal issues, each rated according to a scoring grid. The questionnaire 16.1 ENVIRONMENTAL CONSEQUENCES also lists the investments made by Nexans during the year to improve OF THE GROUP’S OPERATIONS environmental performance. The scoring grid changes each year, consistent with regulatory developments and the areas that the Group 16.1.1 Nexans policy on environmental issues wishes to improve. In 2007 as in 2006, the points reviewed inclu- The environment and the safety of property and employees are of pri- ded water recycling at plants (to limit consumption), waste recycling mary importance to Nexans. The Group’s policy is outlined in the and reuse, identification of major environmental risks (accompanied Risk Management Charter signed by the Chairman, which is sent to by specific crisis management plans), and storage of hazardous all sites worldwide and available on the intranet. This charter covers liquids. improvement in performance through the audit of production sites, Once the questionnaires have been analyzed, recommendations are and the assessment of risks relating to products and manufacturing sent to the sites in the form of summaries and graphs so that problems processes. can be solved through action plans tailored to the improvement of Nexans’ commitment to environmental protection is also reflected in environmental management at specific sites. Recommendations are its policy of training its employees in environmental best practices. monitored on an annual basis.

Environmental policy is the responsibility of the Group’s Industrial Since 2003, the Group has been using a specialist outside company Management Department, which reports directly to the Strategic to audit issues covered by the questionnaire. Around 25 sites are audi- Operations Department. The Industrial Management Department ted each year, and, if found to be well-managed environmentally, supervises industrial strategy, investment budgets, and the manage- are awarded the Nexans EHP label, denoting compliance with the ment of major industrial projects. The Department also manages cross- highest environmental standards. Of 26 sites audited in 2007, 16 organizational projects, in particular product and process develop- were awarded this label: three in France, three in Germany, three in ment, as well as the Group’s plant and machinery. In each of these Korea, two in Norway, two in Belgium, two in the USA and one in areas it ensures that conservation and environmental protection requi- Ireland. rements are fully complied with. By the end of 2007, a total of 50 Group sites had received the EHP The environmental rules and targets set by the Industrial Management label – five more than in 2006. Department apply to Group operations worldwide, including inter- The sites that did not receive the EHP label were given recommenda- national subsidiaries. tions on how to achieve the required level, and initiated corrective The performance improvement program for production sites is moni- actions accordingly. These actions are included in the plants’ three- tored by the Environment Committee, which comprises members year plans. from the Strategic Operations, Industrial Management, Technical, The environmental audit program, which is the same for all the sites Purchasing, Legal, Risk Management, and Human Resources & audited, is a means of checking data on the consumption of mate- Communications Departments. rials (water, solvents, energy, packaging, etc.), discharges into the Environmental management: measures taken to ensure compliance air and water, soil protection, the condition of storage facilities, with applicable rules waste volumes and recycling methods, and the impact of the Group’s The Group’s objective is to reduce pollution risks and control environ- activities in terms of noise. In addition to this highly efficient system, mental costs (consumption of energy, raw materials and hazardous some of the Group’s plants are undergoing ISO 14001 certification. substances, waste disposal and recycling). In all, 37 of the Group’s plants have attained this certification, four more than in 2006. 68 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 69

16.1.2 Environmental consequences Waste recycling of the Group’s operations and measures The Nexans Group is highly committed to waste recycling and in taken to limit their impact 2007 recycled 21,993 tons of cable waste from most of the Group’s The environmental impact of Nexans’ operations can be summari- European sites, along with 4,937 tons of end-of-life cables collected zed by sector, as follows: directly from Nexans customers, making a total of 26,930 tons of waste recycled. In 2008, the Group set up a joint-venture with Sita Copper and aluminum metallurgy with a view to strengthening its recycling activities. The main resources used by the Group are energy (natural gas) and water, which is used for steam and cooling. Most of the water consu- Through sorting of factory waste and recycling of cable waste, the med is recycled (95%). majority of the Group’s waste – including wood, paper, cardboard, ferrous metals, machine oil, batteries and special waste – is utilized Power and copper telecom cables in some way. Conductor manufacturing (drawing and stranding) consumes electri- cal power for annealing and oily water for drawing lubrication. Specific investments have also been made in this regard. For exam- Wastewater is filtered, treated and recycled. ple, the Lens plant in France started refining bare copper waste to make wire rod in 2007. Wirerod production at this plant reached Extrusion cable manufacturing requires large quantities of water for 23,000 tons in 2007. cooling. This water is recycled, ensuring that consumption remains low. Environmental indicators The following indicators are used to monitor year-on-year changes in Air emissions are low as they are treated by filter extractors specific environmental impact: to each facility.

Solvent consumption is very low considering the extremely large quan- tities of cables produced, and pertains primarily to marking inks, which are covered by specific handling procedures (storage in small cabinets, and fume hoods used for cleaning ink jets and wheels).

2007 2006(1) 2005(1)

Energy consumption 1,715,000 MWh 1,615,000 MWh 1,480,800 MWh

of which electricity 913,000 MWh 893,200 MWh 838,100 MWh

Waste 93,500 t 97,500 t 91,300 t

of which special waste (in tons) 6,200 t 4,800 t 7,400 t

Number of sites monitored 98* 91 79

Water consumption 4 743,000 m3 4,452,000 m3 4,430,000 m3

Solvent consumption 740 t(2) 1,500 t(3) 1,500 t(3)

Copper consumption 718,000 t 841,000 t 809,000 t

Aluminum consumption 154,000 t 140,000 t 133,000 t

(*) Olex is included in the 2007 indicators (1) Based on previous scope of consolidation (2) The Simcoe plant has left the consolidated group. Only solvents are taken into account for environmental impact considerations (3) Including acids and bases (300 t) in addition to solvents 69 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 70

These are estimated amounts, based on data collected. In addition to Environmental expenditure the initiatives previously described, the Group is giving priority to: In 2007, environment-related costs amounted to €7.3 million, and • Measures to eradicate PCB transformers by 2010 under a multi-year mainly concerned environment taxes (such as water tax), maintenance plan (mainly in France, see investment schedule below), (purchase of filters, for example), analysis, tests, license fees and • Replacement of oil-burning boilers with less polluting gas boilers, permits. and replacement of old heating units with modern units consuming less energy, • Treatment of air and gaseous effluents via ventilation, vacuum and processing systems, • Phase-out of single-wall underground storage tanks. Particular attention is paid to the storage of liquids (such as oil) both in dedicated storage areas and operational areas.

Environment-related investments and provisions for environmental risks

Investments Environment-related investments by production plants were as follows:

2007 Soil and water Air protection Waste reduction Noise Elimination (in thousands of euros) protection and energy savings and miscellaneous of PCB transformers (in France)

Amount 1,338 2,428 263 10 448

TOTAL 4,487

In 2006, environment-related investment totaled €4,368 million.

Provisions for risk At December 31, 2007, provisions of €7,304 million had been set aside for environmental risks. Additional expenses may be incurred for the clean-up of closed sites and sites likely to be sold, but the Group expects these amounts to be less than the market value of the sites in question.

16.2 SOCIAL ASPECTS

16.2.1 Headcount Group headcount increased by 3.5% in 2007, with implementation of the Group’s strategic plan and a strong determination to bring in the human resources needed for growth.

Group Headcount

Area 2005 2006 2007

Europe 14,274 14,372 15,184

Asia-Pacific 1,270 2,459 2,273

North America 1,835 1,961 1,870

Rest of the World 2,205 2,358 2,571

Nexans 19,584 21,150 21,898 70 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 71

Europe Asia-Pacific Some 69.3% of Nexans staff are employed in Europe. Numbers Asia-Pacific saw employee numbers drop by 7.6%, with sale of the increased by 5.5% in 2007, mainly as a result of robust business in winding wires businesses in Tianjin, China, and liquidation of the Vina the energy infrastructure market, especially in Norway, and in the Daesung joint-venture in Vietnam. A buoyant Chinese cables market, automotive harness businesses in Central Europe. however, led to many new hires.

North America Rest of the World Headcount fell by 4.6% in North America, with the departure of 145 The workforce escalated by 9% in the Rest of the World in line with employees on disposal of the winding wires businesses in Canada. brisk expansion in rapidly developing countries such as Turkey and Headcount increased in Mexico as a result of growth in truck harnes- Brazil. sing operations.

Employee gender breakdown Percentage of female employees at December 31, 2007

Europe North Asia- Rest of Total America Pacific the World

TOTAL 31.4 27.1 17.6 6.8 26.8

Managers 18.2 20.9 22.1 19.5 19.3

Non-managers 33.0 27.9 16.4 4.4 27.8

Women accounted for 26.8% of Nexans’ employees worldwide in This positive trend is bolstered by national policies in certain coun- 2007. This percentage is on the increase thanks to specific actions tries, such as the United States, under the “Equal Opportunity taken, especially in France. Employer” program, and France, where a gender equality oversight committee has been formed to monitor key issues such as salary dis- Management positions are open to female employees of Nexans in crepancies. many countries around the world. Indeed, women make up approxi- mately 19% of the Group’s managerial personnel worldwide.

Personnel changes per Area (*)

Europe North Asia- Rest of Group America Pacific the World total

Natural departures excl. retirements – 619 – 96 – 192 – 130 – 1,037

Layoffs –177 0 – 1 –1 – 179

Retirements –132 – 25 – 11 – 14 – 182

New hires 1,265 165 329 392 2,151

Change in scope – 4 – 145 – 175 0 – 324

(*) Excluding automotive cable harnesses.

There was a vigorous increase in the number of new hires in 2007, thanks to bullish growth worldwide. Recruitment was carefully targeted to the Group’s requirements. 71 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 72

Global mobility Nexans continues to support global mobility as a way of transferring The group consolidated its global mobility policy to ensure equal treat- expertise, enhancing employees’ personal and professional deve- ment for all expatriate employees, whatever their country of origin. lopment, encouraging growth, and conveying the Group’s corporate Studies into social security and tax charges are systematically perfor- culture. med to reduce costs for the Group.

Employee age pyramid The average age of the Group’s employees is 41.3 years. 2006 2007 16%

14%

12%

10%

8%

6%

4%

2%

0%

15-20 years 21-25 years 26-30 years 31-35 years 36-40 years 41-45 years 46-50 years 51- 55 years 56-60 years 61-65 years 66-70 years

The employee age pyramid highlights the demographic challenges quarters of them were employed on permanent contracts. The currently faced by the Group: Group is stepping up external communications with regard to its businesses and career opportunities through frequent participation • In Europe, the population is aging. To meet the demands of its stra- in student forums. tegic plan, the Group will have to deal with significant recruitment needs between now and 2009. Recruitment policies have been • Although staff are younger in emerging countries, with an average put in place to attract qualified personnel and young talent. In 2007, age of 38.6 years, Nexans must nonetheless face up to increasin- almost 50% of new hires in Europe (outside the automotive cable gly tight labor markets in its quest to hire qualified personnel. harness business) were under 30 years of age and more than three

Seniority (*)

35%

30%

25%

20%

15%

10%

5%

0%

0-6 months 6 months -1 year 1-2 years 2-3 years 3-5 years 5-10 years 10-15 ans 15-20 years More than 20 years

(*) Excluding automotive cable harnesses. 72 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 73

The average length of service within the Group (excluding automo- Absenteeism tive cable harnesses) is 13 years, reflecting strong loyalty among The absentee rate across the Group (excluding automotive cable har- employees. This loyalty is one of the Group’s key values. nesses) was 4.07% in 2007, unchanged from 2006. Reducing absenteeism remains a priority for many sites, and signifi- Overtime and contracted labor cant action was taken in this regard during the year. Awareness-rai- Overtime and contracted labor are two of the methods used for mat- sing campaigns in Spain have reduced non-attendance by more ching workforce to production cycles and coping with workload than half, with rates dropping from 12% in 2005 to less than 5.3% peaks. in 2007. In 2007, overtime represented 4.02% of total hours worked. The use Illness and accidents are the two main causes of absenteeism within of overtime varies considerably with Area: 0.8% in Europe, 4.93% the Group, accounting for 73.1% and 7.67% of absences respecti- in North America, 6.20% in Asia-Pacific, and 15.15% in the Rest of vely. the World. Since illness accounts for such a high proportion of absenteeism, Contract employees (mainly in manufacturing and maintenance) many countries have set up investigative procedures to monitor and represented an average of 6.7% of total full-time equivalent head- anticipate employee illness. The main aim here is to identify the causes count across Nexans sites in 2007. of illness with a view to taking preventive measures.

16.2.1.1 RESTRUCTURING 16.2.3 Compensation In its restructuring plans, Nexans is particularly attentive to dialogue An attractive compensation policy with employee representative bodies. Measures are in place to keep To build employee commitment, an attractive, coherent compensation lay-offs to a minimum and, as far as possible, ensure that employees policy is needed. Nexans has established such a policy in a spirit of are redeployed to other Group subsidiaries or establishments. These transparency and fairness while taking into account the local condi- measures are instigated in accordance with legislation in the coun- tions at each site. tries concerned. The compensation paid to engineers and managers is made up of a The Group is also putting anticipatory measures in place to help fixed salary plus a variable bonus tied to goals set at the start of the employees develop versatility and maximize their redeployment year; some of these goals are linked to the financial performance of potential. the Group or the particular entity. A Career Management Committee In 2007, the Group restructured its Belgian subsidiary Nexans was set up in July 2006 to review the salaries of the Group’s 70 top Harnesses, as a result of which 66 employees were laid off. managers each year and coordinate their salary increase schedules.

Payroll expenses and salary increases 16.2.2 Working time Nexans’ payroll expenses in 2007 totaled €909 million, or 18.9% Working time per Area Because Nexans operations extend to 31 different countries, person- of sales at constant non-ferrous metal prices. The increase on the pre- nel, in manufacturing, logistics, sales, and administrative functions, vious year’s figure is mainly due to the Olex acquisition and a rise in are subject to a variety of national legislations. Group headcount overall. For non-shift, full-time employees, the number of working hours per Because salary increases are country-specific, an average figure year varies from 1,435 to 2,393, giving a weighted Group-wide ave- would not be representative. rage of 1,863 hours. Shift-work takes different forms at different sites, with employees wor- Employee profit-sharing, incentive schemes and savings plan king three 8-hour shifts, for example, or under a continuous opera- Additional compensation and benefits vary from country to country, tions regime. The resulting flexibility means the Group can optimize and can take several different forms, including profit-sharing schemes, production and consistently meet its clients’ needs. incentive plans and employee savings plans (under which the employer may match up to 60% of employee contributions). Part-time employees In first quarter 2008 Nexans will launch an employee share owner- Part-time work is practiced in almost every country in which the Group ship plan by means of a share issue for employees (see Chapter 15). has operations. Of the total workforce, 3.4% of employees work on In this way, Nexans is hoping to strengthen relations with its a part-time basis. employees in France and elsewhere, and to involve them more clo- sely in the Group’s developments and future results. Fixed-term/permanent contracts At December 31, 2007, employees hired under fixed-term contracts accounted for 10.9% of the total workforce, up 1.1 points on last year’s figure. 73 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 74

16.2.4 Labor relations 16.2.5 Health and Safety Open and active social dialogue Health and safety has long been a major day-to-day priority in Nexans is particularly attentive to social dialogue with employees and Nexans’ human resources policy. In 2007, accident seriousness was unions, and is continually endeavoring to enhance labor relations. significantly reduced, and the number of accident-free sites rose to The Nexans European Works Council holds regular meetings during eleven, from six in 2006. which the executive management team and employee representati- Almost a third of all employees received training on workplace safety ves can exchange points of view on issues such as implementation of with a view to accident prevention. the strategic plan, the Group’s business outlook, social indicators, and In addition, specific programs were implemented or maintained in measures taken to ensure and improve employee safety and working several countries. These included: conditions. Greece: ten surveillance audits were carried out by external audi- The European Works Council held three plenary meetings in 2007, tors. and two additional meetings were held by council officers. China: a rigorous accident-monitoring policy was implemented, a Following discussions, a charter was written up to set out measures security manual is issued to all new recruits, and all employees for informing and consulting with the works council in the event of undergo a full medical check-up related to their working conditions. any major change affecting the Group’s European operations. North America: an audit program was launched with a view to In-depth negotiations and discussions took place between Group monitoring safety and ensuring that it becomes a key consideration management and unions in 2007, and over 70 agreements were for all concerned. signed. The close relationship between management and employee Determination to improve working conditions and prevent work- representative bodies is highly conducive to the atmosphere of trust place accidents has resulted in several Group sites obtaining or retai- that reigns within the Group’s various businesses. ning national workplace health and safety certification. Sites in The main agreements signed were: Switzerland, Norway and Turkey were awarded the OHSAS 18001 In Europe: certificate, and a site in China was classified “Grade-Green enter- • Spain: agreement on working conditions, in particular on the prise in Safety”. number of working hours per day and per year; agreement on paid leave; 16.2.6 Training • Greece: agreement on salary increases and on working condi- The Group recently launched the “Nexans University”, with the inten- tions during the heat wave of summer 2007; tion of offering specific training programs to develop employee poten- • Italy: agreements on restructuring of Italian sites and on producti- tial, propagate best practice and enhance expertise within the Group. vity increases. The new center will also encourage the development and upkeep of networks between the Group’s various functions, as well as between In Asia-Pacific: countries. • Korea: agreement on salary increases and on collective bargaining In 2007, Nexans University offered an induction program for new processes; managers, and provided two other priority programs on copper • Australia and New Zealand: agreement on salary increases. management and training for trainers. In Rest of the World: • Brazil: agreement on salary increases and the absorption of infla- tion; • Morocco: agreement on salaries, bonuses and indemnities; agree- ment on the budget for social and cultural activities.

In North America: • Canada: agreement on salaries/pensions (Milton, Ontario); agree- ment on social investment and the company’s attractiveness (Weyburn, Saskatchewan); agreement on working conditions (Québec City, Québec). 74 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 75

Training also became a priority at country-level, with the number of 16.2.8 Community initiatives training hours increasing by over 35% in 2007 and over half the As well as supporting a wealth of community initiatives, in 2007 the Group’s total workforce receiving training. Group undertook its first major corporate sponsorship project: the restoration of the Palace of Versailles. Through involvement in this Training in 2007 averaged 18.2 hours per person across the work- project, Nexans demonstrated its commitment to world heritage pro- force as a whole, and 24.5 hours per employee included on training tection while highlighting the quality of its cables and cabling systems. programs. The Palace of Versailles, one of France’s most emblematic historical The Olex acquisition accounts for the upsurge in these figures year- monuments, needed renovating to ensure it would continue to fulfill on-year. its important cultural and tourist missions. As corporate sponsor, Training plans are in place at all Group units. Main training priorities Nexans provided, exclusively and free of charge, low- and high-vol- in 2007 were technical skills, health & safety, and languages (English, tage power cables, along with copper and optical fiber data cables mainly), accounting for 26.6%, 18.8% and 10% respectively of all for the Trianon, the Grand Commun and the Royal Opéra buildings. training hours provided. High-profile corporate sponsorship operations should not, however, overshadow Nexans’ contributions to local initiatives, in the form of 16.2.7 Disabled employees financial support for many local programs benefiting employees and Employing people with disabilities is a crucial matter in many coun- their families, and local communities in general. tries in which Nexans is located. Accordingly, each unit seeks to comply with the relevant legal requirements in its particular country. In Germany, for example, the Group funded a research competition In Turkey, for example, handicapped persons make up 3% of the for students aged 11 to 21. This year’s competition dealt with topics overall workforce, allowing the Company to meet its requirements such as “the behavior of metals in corrosive environments”. And in there. Korea, to mark the 120th anniversary of Franco-Korean relations, However, because Nexans’ activities comprise a particularly heavy Nexans sponsored an exhibition entitled “Robert Combas : Savoir manufacturing component, there may be a discrepancy between the Faire” at the Seoul Museum of Arts. In Turkey, Nexans actively sup- legal minimum and the actual number of disabled persons employed ports UNICEF in its campaigns to build schools and encourage edu- at the plants. A number of action plans have been set up to help cation in disadvantaged areas, particularly for young girls. plants in various countries comply with local requirements. In 2007, the overall headcount of Nexans France comprised 3.8% of disabled persons. The Group is working to increase this propor- tion, through measures such as specially-adapted workstations, and by developing relations with specialist organizations dealing with January 30, 2008 employment for the handicapped. The Board of Directors Represented by Gérard Hauser, Chairman and Chief Executive Officer 75 037_077_Rapport_Gestion_GB_V12.qxd 28/04/08 12:46 Page 76

FIVE-YEAR FINANCIAL SUMMARY – PARENT COMPANY

NATURE OF THE INDICATIONS 2007 2006 2005 2004 2003

I - CAPITAL AT YEAR-END a) Share capital (in thousands of euros) 25,678 25,265 23,507 23,190 23,129 b) Number of shares in issue 25,678,355 25,264,955 23,507,322 23,189,947 23,128,972

II - RESULTS OF OPERATIONS (IN THOUSANDS OF EUROS) a) Net sales 13,263 13,061 10,809 10,265 8,233 b) Income/loss before tax, employee profit-sharing, depreciation, amortization and provisions 92,939 134,305 44,704 – 8,067 8,068 c) Income taxes 672 – 249 249 169 0 d) Employee profit-sharing 74 152 117 124 117 e) Net Income/loss 110,031 88,095 43,228 – 12,231 7,770 f) Dividends 31,648 21,662 10,568 5,865

III - PER SHARE DATA (IN EUROS) a) Earnings/(loss) per share after tax and employee profit-sharing, but before depreciation, amortization and provisions 3.59 5.32 1.90 – 0.35 0.35 b) Earnings/(loss) per share 4.28 3.49 1.84 – 0.53 0.34 c) Dividend per share 1.20 1.00 0.50 0.20

IV - EMPLOYEES a) Average number of employees 6 6 7 7 7 b) Total payroll (in thousands of euros) 3,351 3,556 3,401 2,947 2,693 c) Employee benefits (in thousands of euros) 1,117 1,185 1,134 973 889 76 037_077_Rapport_Gestion_GB_V12.qxd 28/04/0812:46Page77 (3) The decision to allocate stock options taken by the Board of Directors on January 30wasimplementedbythedecisionof (3) The decisiontoallocatestockoptionstakenbytheBoardofDirectorsonJanuary The maximumparvalueofthecapitalincreaseswhichcould takeplacecorrespondstothemaximumnumberofshareswhichcould beissuedastheparvalueofoneCompany (2) (1) The abbreviation“R…”standsforthenumber oftheresolutionsubmittedforapprovaltoShareholders’MeetingMay10, 2007. Allocation ofstockoptions(R21) plan (R20) for membersofanemployeesavings Issue ofsharesorsecuritiesreserved or additionalpaid-incapital(R19) income by capitalizingreserves, Share issuetobepaidup of securities(R18) of contributioninkind Share issueinpayment if oversubscribed(R17) (R16) andgreenshoeoption preferential subscriptionrights for neworexistingshareswithout warrants attached,bondsconvertible redeemable forshares,bondswith bonds,bonds Issue ofconvertible (R 17) greenshoe optionifoversubscribed subscription rights(R15)and Issue ofshareswithpreferential THE COMPANY’S SHARECAPITAL ANDTHEIRUSEDURING2007 TABLE SUMMARIZINGOUTSTANDING AUTHORIZATIONS TOINCREASE Meeting ofMay10,2007 to theAnnualShareholders’ Resolutions submitted share isequaltooneeuro. (1) for eachresolution €4 000,000(shares) of thesharecapital €500,000,000 (debt securities) €10,000,000 Maximum 10% €10,000,000 (2) €500,000 €500,000 to severalresolutions Global limitapplicable Overall limitof €21,000,000 €10,000,000 (2) Chief Executive Officer of February 15,2007. ofFebruary ChiefExecutiveOfficer powers grantedtotheChief Executive OfficerandChief Board ofDirectors’meeting Operating Officertoissue Use during2007 a maximumof500,000 on January 30,2007 on January allocated bytheBoard 29,000 stockoptions of July24,2007: – – – – of Directors new shares (3) 77 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:45Page78 FINANCIAL STATEMENTS 78 159 Statutory Auditors’report Statutory 159 Notestotheconsolidatedfinancialstatements: 85 Consolidatedstatementofchangesinequity 83 Consolidatedstatementofcashflows 82 Consolidatedbalancesheet 80 Consolidatedincomestatement 79 – Othernotes bybusinesslineandgeographicArea – Information – Significanteventsoftheyear ofsignificantaccountingpolicies – Summary CONSOLIDATED 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page79 ATTRIBUTABLE NETINCOMEFROMCONTINUING *** Effect relatingtotherevaluation of coreexposureatweightedaveragecost. *** Effect (see Note1.b.).Thefiguresinthe”Restated” columnfor2005havebeenadjustedtoreflecttheimpactofthischange. ** SinceDecember31,2006,theGroup’s financialstatements havebeenpreparedtakingintoaccountachangerelatingtotherecognition ofnon-ferrousmetalinventories indicatorsusedtomeasuretheGroup’s* Performance operationalperformance. pershare - dilutedearnings pershare - basicearnings EQUITY HOLDERSOFTHECOMPANY (INEUROS) NET INCOMEPERSHAREATTRIBUTABLE TO - dilutedlosspershare - basiclosspershare OPERATIONS PERSHARE (INEUROS) NET INCOME/(LOSS)FROMDISCONTINUED pershare - dilutedearnings pershare - basicearnings OPERATIONS PERSHARE(INEUROS) Attributable tominorityinterests Attributable toequityholdersoftheCompany NET INCOME Net lossfromdiscontinuedoperations NET INCOMEFROMCONTINUINGOPERATIONS Income taxes INCOME BEFORETAXES Share innetincomeofassociates Other financialexpenses Income fromcashandequivalents Cost ofdebt(gross) OPERATING INCOME Restructuring costs Net gainsonassetdisposals Changes infairvalueofnon-ferrousmetalderivatives Net assetimpairment Core exposureeffect*** OPERATING MARGIN* R&D costs Administrative andsellingexpenses GROSS PROFIT Cost ofsalesatconstantmetalprices* Cost ofsales NET SALESAT CONSTANT METAL PRICES* Metal priceeffect* NET SALES CONSOLIDATED INCOMESTATEMENT in millionsofeuros (1.dd) &(10) (1.dd) &(10) (1.dd) &(10) 1o 7 2)(9 3)(4) (32) (99) (21) (1.o) &(7) (1.h) &(3) (1.h) &(3) (1.i) &(3) 2.)(4 4)(4 (24) (24) (48) (14) (22.b) oe 072006 2007 Notes 1g 3)()3 33 33 (7) (36) (1.g) (8.b) 1k 6)(5 5)(52) (52) (55) (60) (1.k) 1j 01793 107 20 (1.j) 9 8)(8 3)(26) (36) (17) (48) (17) (84) (36) (9) (37) (5) (6) ,2 ,4 ,6 4,263 4,263 5,449 4,442 5,449 4,822 7,489 7,412 390 376 360 (3,640) (4,825) (3,640) (4,825) (3,756) (6,802) (3,930) (6,521) 251 306 116 (1,186) (1,186) (3,046) (2,591) ,789 ,34,46 5,12 6,63 7,73 8,93 10,25 6,67 6,36 7,41 7,30 8,52 9,90 9,10 10,44 6,67 7,41 ,0(,7 18)(1,89) (2,18) (1,89) (2,18) (0,17) (0,19) 0,00 0,00 43 32 36 (386) (386) (372) (423) 8 9 5 189 254 297 225 281 290 363 186 362 186 623 260 623 409 687 892 9 4 7 117 163 172 218 244 249 197 197 8 4 6 108 163 241 189 5)(5 2)(26) (26) (45) (57) 312 13 7 5 434 34 151 4 – 4 4)(46) (46) (4) 3 3 ettd*Reported Restated** 0 (0) (0) 9 7 2005 9 7 – 79 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page80 80 CONSOLIDATED sheet (seeNote11). ** Taking intoaccountthefairvalueadjustmentsmadefollowingcompletionofinitialaccounting fortheOlexacquisition inrelationtotheOlexgroup’s openingbalance Note 1.b.).Thefiguresinthe”Restated”columnfor2005havebeenadjustedtoreflectimpactofthischange. * SinceDecember31,2006,theGroup’s financialstatementshavebeenpreparedtakingintoaccount achangerelatingtotherecognition ofnon-ferrousmetalinventories(see TOTAL ASSETS CURRENT ASSETS Assets andgroupsofassetsheldforsale Cash andcashequivalents Other currentfinancialassets Other currentnon-financialassets Current incometaxreceivables Trade receivables Amounts duefromcustomersonconstructioncontracts Inventories andworkinprogress NON-CURRENT ASSETS Other non-currentassets Deferred taxassets Other non-currentfinancialassets Investments inassociates Property, plantandequipment Intangible assets Goodwill At December31,inmillionsofeuros ASSETS CONSOLIDATED BALANCESHEET FINANCIAL STATEMENTS Notes (9.d) 8a 150 (8.a) 1)12174 192 (11) 1)622717117 155 117 155 287 1105 105 563 622 1105 125 874 1272 (19) (18) 1328 1092 1158 (17) (16) 110 (15) 101 (14) (12) 1)888078942 778 830 858 (13) ,2 ,8 ,0 1,194 1,001 1,283 1,227 ,3 ,9 ,4 3,324 2,130 3,442 2,441 4,497 3,214 4,630 3,403 072006** 2007 163 48 83 28 11 1 – 97 60 77 79 50 22 7 – ettd Reported Restated* 53 82 81 47 54 56 14 18 9 – 2005 76 88 81 47 54 56 14 18 9 – 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page81 sheet (seeNote11). ** Taking intoaccount thefairvalueadjustmentsmadefollowingcompletionofinitialaccountingforOlexacquisition inrelationtotheOlexgroup’s openingbalance Note 1.b.).Thefiguresinthe”Restated”columnfor2005havebeenadjustedto reflecttheimpactofthischange. * SinceDecember31,2006,theGroup’s financialstatementshavebeenpreparedtakingintoaccountachangerelatingtotherecognition ofnon-ferrousmetalinventories(see TOTAL EQUITYANDLIABILITIES CURRENT LIABILITIES Liabilities relatedtogroupsofassetsheldforsale Other currentfinancialliabilities Other currentnon-financialliabilities Current incometaxpayables Trade payables Amounts duetocustomersonconstructioncontracts Customer depositsandadvances debt Short-term provisions Short-term NON-CURRENT LIABILITIES Other non-currentpayables Deferred taxliabilities debt Other long-term bonds Convertible provisions Long-term employeebenefitobligations Other long-term Pension andotherretirementbenefitobligations TOTAL EQUITY Minority interests EQUITY EXCLUDINGMINORITYINTERESTS Net incomeattributabletoequityholdersoftheCompany Reserves Treasury stock Additional paid-incapital Capital stock At December31,inmillionsofeuros EQUITY ANDLIABILITIES Notes (8.a) (9.d) 2)282717117 117 247 258 (23) 2)316539369 369 665 301 (23) (22) (22) (20) 2)332038308 308 290 313 (24) 353 353 353 336 (23) 322 (21) ,5 ,8 ,7 1,160 1,278 1,589 1,758 ,5 2 2 522 522 728 1,058 1,083 1,201 1,551 1,722 ,3 ,9 ,4 3,324 1,642 3,442 1,642 4,497 2,180 4,630 1,814 ,3 ,2 ,1 1,019 1,019 1,127 1,133 072006** 2007 1 1 9 692 692 917 817 128 (40) 23 158 374 8 4 6 108 163 241 189 36 47 26 72 25 45 85 32 59 15 – – 39 71 47 25 89 27 22 94 39 39 17 7 – (28) (28) – ettd Reported Restated* 77 70 33 24 83 39 33 31 18 10 5 4 – 2005 77 70 33 24 83 39 33 31 18 10 5 4 – 81 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page82 82 CONSOLIDATED respectively), anddeductinggrosscostof debtandcurrentincometaxcharge. **** TheGroupalsousesthe”operating cashflow”conceptwhichiscalculatedafteraddingbackrestructuringcosts(22 million eurosand40million eurosin2007and2006 andnegativegoodwill(17millioneuros),stock optionexpense(3.4millioneuros). of changesinfairvaluederivatives(16millioneuros),goodwillimpairment the income taxcharge(48millioneuros),thenon-cashimpact In 2006,thisitemprimarilyrelatedto:capitalgainsonthedisposalofElectro-Matériel (150millioneuros),offsetting expense recordedintheincomestatementforchangesfairvalueofmetaland foreign exchangederivatives(54millioneuros) theGroup’s (i)offsetting *** OtherrestatementsfortheyearendedDecember31,2007primarilyconcerned incometaxcharge(84 million euros);and(ii)thecancellationof Note 1.b.).Thefiguresinthe”Restated”columnfor2005havebeenadjustedto reflecttheimpactofthischange. ** SinceDecember31,2006,theGroup’s financialstatementshavebeenpreparedtakingintoaccountachangerelatingtotherecognition ofnon-ferrousmetalinventories(see * Impactrelatingtotherevaluationofcoreexposureatweightedaveragecost-no cashimpact(seeNote1.p). bankloansandoverdrafts Of whichshort-term Of whichcashandequivalentsrecordedasassetsinthebalance sheet CASH ANDEQUIVALENTS AT YEAR-END CASH ANDEQUIVALENTS AT BEGINNINGOFYEAR NET INCREASE(DECREASE)INCASHANDEQUIVALENTS 116 Impact ofchangesinscopeconsolidation-discontinuedoperations ofcurrencytranslationdifferences Net effect 116 NET CASH(USEDIN)GENERATED FROMFINANCINGACTIVITIES Dividends paid Interest paid 201 Proceeds fromissuanceofsharespaidupincash borrowings Proceeds from(repaymentof)short-term 48 borrowings Proceeds from(repaymentof)long-term AFTER INVESTINGACTIVITIES NET CHANGEINCASHANDEQUIVALENTS NET CASHUSEDININVESTINGACTIVITIES (2) Proceeds fromsaleofsharesinconsolidatedcompanies,netcashtransferred Purchase ofsharesinconsolidatedcompanies,netcashacquired Decrease (increase)inloansgranted Capital expenditures Proceeds fromdisposalsofproperty, plantandequipmentintangibleassets NET CASHGENERATED FROM(USEDIN)OPERATING ACTIVITIES NET CHANGEINCURRENTASSETSANDLIABILITIES ofcurrentassetsandaccruedcontractcosts Impairment Income taxpaid Other assetsandliabilities Increase (decrease)inpayablesandaccruedexpenses Decrease (increase)ininventories Decrease (increase)inreceivables GROSS COSTOFDEBTANDTAX**** CASH FLOWSFROMOPERATIONS BEFORE Other restatements*** Core exposureimpact* Cost ofdebt(gross) ofassets andimpairment Depreciation, amortization Minority interests Net incomeattributabletoequityholdersoftheCompany CONSOLIDATED STATEMENT OFCASHFLOWS in millionsofeuros FINANCIAL STATEMENTS oe 072006 2007 Notes 2)(0)227 77 77 282 276 (409) 344 (23) (23) 2 3)(6)(8 (28) (28) (365) (36) (2) 15 9 040 40 497 (125) 17 37 4)(42) (42) (327) (147) 18 11 10 (130) (130) (171) (168) 7 3 2 (2) (2) (3) 573 9 8 1 117 117 287 594 8 1 2 121 121 117 287 2 30 4)(44) (44) (330) 427 223 223 290 473 0 24 25 (225) (225) (294) 100 0 7 4 (4) (4) 170 306 2 8 1 117 117 287 622 (64) (64) (21) (308) (11) 101 129 108 (70) 129 163 118 178 241 122 189 2)(0)(93) (107) (20) 3)(3 1)(12) (28) (23) (12) (23) (23) (45) (32) (36) (46) (46) (58) (80) 74 626 26 45 57 1(8)(0)(404) (404) (181) 61 4 2(4 (14) (14) 12 (4) 6 4 1 310 310 242 (6) 7399 4 7 2 7 – . 1 1 8 (10) 10 (10) 10 2 6 – – ettd*Reported Restated** 7 (7) (7) 3 (3) (3) 9 (9) (9) 3 7 – 2005 3 7 – – 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page83

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Number Capital Addi- Treasury Reserves Net income Equity Minority Total of shares stock tional stock for the excluding interests equity outstanding paid-in Consolidated Changes Cumulative Total year minority capital retained in fair translation reserves attributable interests earnings value adjustments to equity in millions of euros and other holders

JANUARY 1, 2005** 20,968,748 23 1,014 (28) (153) 5 (4) (153) 58 915 70 985 Change relating to the recognition of non-ferrous metal inventories 29 29 34 63 63 (core exposure effect)* JANUARY 1, 2005 RESTATED* 20,968,748 23 1,014 (28) (124) 5 (4) (124) 92 978 70 1,048 Reclassification of prior-year income to retained earnings 92 92 (92) Dividends paid (10) (10) (10) (2) (12) Available-for-sale financial assets Translation adjustments 73 73 73 8 81 Cash flow hedges - increase/(decrease) (6) (6) (6) (6) Cash flow hedges - recycling to income (5) (5) (5) (5) Income and expenses recognized directly in equity (11) 73 62 62 8 70 Net income (prior to the change relating to the recognition 108 108 9 117 of non-ferrous metal inventories - core exposure effect*) Impact on income of change relating to the recognition 55 55 0 55 of non-ferrous metal inventories - core exposure effect * TOTAL RECOGNIZED INCOME AND EXPENSES (11) 73 62 163 225 17 242 Capital increases Employee stock option plans: - Service cost 2222 - Proceeds from share issues 317,375 0 5 55 Other 0 0 (8) (8) DECEMBER 31, 2005 RESTATED* 21,286,123 24 1,019 (28) (40) (6) 69 23 163 1,201 77 1,278 Reclassification of prior-year income to retained earnings 163 163 (163) Dividends paid (22) (22) (22) (2) (24) Available-for sale financial assets Translation adjustments (27) (27) (2) (29) Cash flow hedges - increase/(decrease) (14) (14) 1 (13) Cash flow hedges - recycling to income 666 Income and expenses recognized directly in equity (8) (27) (35) (35) (1) (36) Net income 241 241 3 244 TOTAL RECOGNIZED INCOME AND EXPENSES (8) (27) (35) 241 206 2 208 Capital increases 65,797 0 2 22 Employee stock option plans: - Service cost 4444 - Proceeds from share issues 378,875 0 6 66 Conversion of OCEANE bonds (3.125% - 01/2010) 3,534,160 3 114 117 117 OCEANE equity component (1.5% - 01/2013) 34 34 34 34 Changes in scope of consolidation (buyout of minority interests) (37) (37) Other (2) (14) 28 (2) (6) (8) 4 (2) 2 DECEMBER 31, 2006 25,264,955 25 1, 127 136 (14) 36 158 241 1,551 38 1,589

* Since December 31, 2006, the financial statements have been prepared taking into account a change relating to the recognition of non-ferrous metal inventories (see Note 1.b). The figures in the ”Restated” lines for 2005 have been adjusted to reflect the impact of this change. 83 ** After adoption of IAS 32 and 39. 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page84 84 CONSOLIDATED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONT’D)

Number Capital Addi- Treasury Reserves Net income Equity Minority Total of shares stock tional stock for the excluding interests equity outstanding paid-in Consolidated Changes Cumulative Total year minority capital retained in fair translation reserves attributable interests earnings value adjustments to equity in millions of euros and other holders

DECEMBER 31, 2006 25,264,955 25 1,127 136 (14) 36 158 241 1,551 38 1,589 Reclassification of prior-year income to retained earnings 241 241 (241)

Dividends paid (31) (31) (31) (1) (32) FINANCIAL STATEMENTS Available-for-sale financial assets 1111 Translation adjustments (24) (24) (24) (1) (24) Cash flow hedges - increase/(decrease) 16 16 16 16 Cash flow hedges - recycling to income 13 13 13 13 Income and expenses recognized directly in equity 1 29 (24) 6 6 (1) 5 Net income for the year 189 189 7 197 TOTAL RECOGNIZED INCOME AND EXPENSES 1 29 (24) 6 189 195 7 202 Capital increases Employee stock option plans: - Service cost 6666 - Proceeds from share issues 413,400 0 7 77 Conversion of OCEANE bonds (3.125% - 01/2010) OCEANE equity component (1.5% - 01/2013) Changes in scope of consolidation (buyout of minority interests) (8) (8) Other (16) 10 (6) (6) 0 (6) DECEMBER 31, 2007 25,678,355 26 1,133 337 25 12 374 189 1,722 36 1,758 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 85

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At the date of transition to IFRS the other optional exemptions provided NOTE 1 SUMMARY for under IFRS 1 were either not applied by the Group or did not OF SIGNIFICANT have a material impact on the consolidated financial statements. The Group opted to apply IAS 32 and IAS 39 concerning financial ACCOUNTING instruments as from January 1, 2005. POLICIES The impacts of the Group’s transition to IFRS are described in the document entitled ”Transition to IFRS” which accompanied the A GENERAL PRINCIPLES Nexans’ 2004 Annual Report. Nexans is a French joint stock corporation (société anonyme) gov- NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS TO erned by the laws and regulations applicable to commercial compa- PUBLISHED STANDARDS EFFECTIVE IN 2007 nies in France, notably the French Commercial Code (Code de • IAS 1 (Amendment), Presentation of Financial Statements – Capital Commerce). Nexans was formed on January 7, 1994 (under the Disclosures (applicable to annual periods beginning on or after name Atalec). Its headquarters are at 16, rue de Monceau, 75008 January 1, 2007). The disclosures required under this Amendment Paris, France and it is listed on the Paris stock exchange (compartment are provided in Note 1.r. A of Euronext Paris). • IFRS 7, Financial Instruments: Disclosures (applicable to annual peri- The consolidated financial statements are presented in euros rounded ods beginning on or after January 1, 2007). As IFRS 7 does not to the nearest million. These consolidated financial statements were contain any specific transitional provisions, the Group has applied approved by the Board of Directors on January 30, 2008 and will this new standard retrospectively to 2006 and 2005 in accordance become final upon approval by the Annual Shareholders’ Meeting, with IAS 8, except where such application was impractical in which which will take place on April 22, 2008. case this has been disclosed in the notes to the financial state- The significant accounting policies used in the preparation of these ments. consolidated financial statements are set out below. Except where • Application of the following interpretations was mandatory in 2007 otherwise indicated, these policies have been applied consistently to but did not have any impact on the Group’s financial statements: all the financial years presented. - IFRIC 7, Applying the Restatement Approach under IAS 29, Financial Reporting in Hyperinflationary Economies. BASIS OF PREPARATION - IFRIC 8, Scope of IFRS 2. The consolidated financial statements of the Nexans Group have - IFRIC 9, Reassessment of Embedded Derivatives. been prepared in accordance with International Financial - IFRIC 10, Interim Financial Reporting and Impairment. Reporting Standards (IFRS), as adopted by the European Union. The historical cost convention has been applied, except for (i) deriv- Standards, amendments and interpretations to existing atives; (ii) available-for-sale financial assets; and (iii) other finan- standards that are not yet effective and have not been cial assets at fair value through profit or loss that are included in early adopted by the Group the calculation of net debt. These three categories are all measured • IAS 1 (Revised 2007), Presentation of Financial Statements. The aim at fair value. of the revised version of IAS 1 – which will be effective for annual periods beginning on or after January 1, 2009 – is to improve users’ Exemptions applied on the first-time adoption of IFRS ability to analyze and compare the information given in financial The Group elected to apply the following exemptions as permitted statements. The Group has not yet decided whether it intends to under IFRS 1, First-time Adoption of International Financial Reporting early adopt this revised standard as from January 1, 2008. Standards: • IAS 23 (Amendment), Borrowing Costs. The amended version of • Cumulative translation adjustments arising on the translation of the IAS 23 – which was published on March 29, 2007 and whose financial statements of foreign entities were recognized in consoli- application is mandatory for annual periods beginning on or after dated retained earnings at January 1, 2004. January 1, 2009 – requires an entity to capitalize borrowing costs • All cumulative actuarial gains and losses on employee benefit obli- directly attributable to the acquisition, construction or production of gations were recorded in consolidated retained earnings at January a qualifying asset as part of the cost of that asset. The option of 1, 2004. immediately expensing those borrowing costs will be removed. • Business combinations that occurred prior to January 1, 2004 The Group believes that this amendment will not have a material were not restated. impact on its consolidated financial statements but is currently ana- • IFRS 2, Share-based Payment was only applied to equity instruments lyzing the situation to confirm this position. granted after November 7, 2002. 85 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 86

CONSOLIDATED FINANCIAL STATEMENTS

• IFRS 8 Operating Segments. This standard – which will supersede The critical judgments made by Management in applying the Group’s IAS 14 for annual periods beginning on or after January 1, 2009 accounting policies within the consolidated financial statements are – may affect the presentation of the Group’s segment reporting. listed below, together with the key sources of estimation uncertainty. The Group is currently assessing the impact of this new standard They are expanded upon in the notes pertaining to the specific items. on the definition of its operating and geographic segments. This • The recoverable amount of certain items of property, plant and assessment will take into account the Group’s internal reporting equipment (see Note 13). system as well as the changes caused by its geographic expan- • The recoverable amount of goodwill (see Note 11). sion. The Group does not expect to early adopt IFRS 8 in 2008. • Margins on long-term contracts (see Note 1.h). • IFRIC 11 IFRS 2 – Group and Treasury Share Transactions (effec- • Deferred tax assets not recognized in prior periods relating to tive for annual periods beginning on or after March 1, 2007). IFRIC unused tax losses (see Note 9). 11 provides guidance on how to apply IFRS 2 in the following cir- • The measurement of pension liabilities and other employee bene- cumstances: (i) share-based payment involving an entity’s own fits (see Note 21). equity instruments in which the entity chooses or is required to buy • Provisions and contingent liabilities (see Notes 22 and 30). its own equity instruments (treasury shares) to settle the share-based The impact of changes in accounting estimates is recognized over payment obligation; and (ii) where a subsidiary grants rights to the period of the change if it only affects that period or over the equity instruments of its parent to its employees. period of the change and subsequent periods if they are also affected The Group does not anticipate that IFRIC 11 will have a material by the change. impact on its consolidated financial statements. • IFRIC 12 Service Concession Arrangements (effective for annual B CHANGE RELATING TO THE periods beginning on or after January 1, 2008). This interpretation RECOGNITION OF NON-FERROUS METAL is not relevant to the Group’s operations. INVENTORIES • IFRIC 13 Customer Loyalty Programmes (effective for annual peri- Following the application of IFRS from January 1, 2004, ods beginning on or after July 1, 2008). This interpretation is not Nexans included non-ferrous metal inventories referred to as expected to have any impact on the Group’s consolidated finan- ”core exposure” in property, plant, and equipment. Core exposure cial statements. represents the quantities required for the Group’s plants to operate • IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum properly. Its volume is kept stable and its levels are constantly replen- Funding Requirements and their Interaction (effective for annual peri- ished. For this reason, core exposure is not hedged by forward ods beginning on or after January 1, 2008). The Group is cur- sales contracts. As an item of property, plant and equipment, it was rently assessing the impact of this interpretation on its consolidated stated at historical cost at January 1, 2004 and was not depreci- financial statements. Its effect is not expected to be material, how- ated as (i) its residual value was greater than its carrying amount; ever, as it will only affect certain entities with specific pension plans and (ii) it has an indefinite useful life. Inventories of non-ferrous metals in place. other than those classified as core exposure were recognized as inventories and measured using the weighted average cost method. Estimates The accounting policy applied is described on page 10 of the doc- The preparation of consolidated financial statements requires ument entitled ”Transition to IFRS” which accompanied the Nexans’ Management to exercise its judgment and make estimates and 2004 Annual Report. assumptions that impact: • The application of the Group’s accounting policies; At December 31, 2006 Nexans decided to reclassify as inven- • Assets (impairment of goodwill, property, plant and equipment tories the core exposure previously recognized under property, and intangible assets; and the recognition of deferred tax assets); plant and equipment. As a result, the related amounts are now • Liabilities (provisions and pension liabilities); measured using the weighted average cost method. The financial • Income and expenses (the measurement of margins on construc- statements for 2005 have been restated using this new classifica- tion contracts) tion in order to facilitate year-on-year comparisons. The estimates and underlying assumptions are based on past experi- The policy adopted at transition to IFRS of recognizing core expo- ence and other factors considered reasonable under the circum- sure as property, plant and equipment was designed to neutralize in stances. They serve as the basis for any judgment required for deter- the income statement the impact on core exposure of changes in metal mining the carrying amounts of assets and liabilities when such prices, in line with the Group’s metal risk management policy (prior amounts cannot be obtained directly from other sources. Actual to transition to IFRS the Nexans Group used the LIFO method). The amounts may differ from these estimates. change introduced by Nexans as of December 31, 2006 (use of the 86 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 87

weighted average cost method in the same way as for other invento- working capital included in non-monetary assets that must be tested ries) stemmed from a review of the IFRS applicable to this particular for impairment whenever there is an indication that the asset may be case, which other European groups faced with the same issue have impaired. This in turn led to an increase in the amount of impairment also undertaken. The new approach better reflects the value of inven- recognized in respect of certain cash-generating units at December tories in the balance sheet given the very significant rises in non-fer- 31, 2005. rous metal prices over the past few years. In sum, the new core exposure accounting treatment Due to rising non-ferrous metal prices, the revaluation of the Group’s gave rise to the following restatements of consolidated core exposure resulting from the use of the weighted average cost equity at January 1 and December 31, 2005, as well as method instead of historical cost gave rise to an increase in the consolidated income for 2005:

Reported Core exposure Additional Deferred tax Restated in millions of euros amounts revaluation impairment impact amounts

Consolidated equity at: (including minority interests)

January 1, 2005 (after application of IAS 32 and 39) 985 76 – (13) 1,048

December 31, 2005 1,160 169 (28) (23) 1,278

Net income 2005:

- Attributable to equity holders of the Company 108 93 (28) (10) 163

- Attributable to minority interests 9 0 (0) 9

TOTAL 117 93 (28) (10) 172

Additional tables in Notes 7, 9, 11, 13 and 16 provide information over 20%. Investments in associates (including the related amount of on the other changes to the 2005 financial statements. goodwill) are initially recognized in the balance sheet at cost and are subsequently adjusted for post-acquisition changes in the Group’s C CONSOLIDATION METHODS share in the net assets of the associate, less any impairment in value. The Nexans Group’s consolidated financial statements include the The consolidated income statement includes the share in net income financial statements prepared of (i) Nexans SA; (ii) the subsidiaries of associates for the period. over which Nexans exercises control; and (iii) associates accounted The type of control or influence exercised by the Group is assessed for by the equity method. The financial statements of subsidiaries and on a case-by-case basis using the presumptions set out in IAS 27, 28 associates are prepared for the same period as those of the parent and 31. A list of the Group’s main subsidiaries and associates is pro- company. Adjustments are made to harmonize any differences in vided in Note 31. accounting methods that may exist. The Group does not currently have any joint ventures within the meaning of IAS 31. Intra-group balances and transactions, including any intra-group prof- its, are eliminated in consolidation. Intra-group losses are also elimi- Subsidiaries (companies controlled by Nexans) are fully consolidated nated but are considered to be an indicator that the asset may be from the date the Group takes over control through the date on which impaired (see Note 1.o). control is transferred outside the Group. Control is defined as the direct or indirect power to govern the financial and operating poli- cies of a company in order to benefit from its activities. D TRANSLATION OF FINANCIAL STATEMENTS DENOMINATED Other companies over which the Group exercises significant influ- IN FOREIGN CURRENCIES ence, but which are not subsidiaries or joint ventures, are classified The Group’s financial statements are presented in euros. The bal- as associates and accounted for by the equity method. Significant ance sheets of the Group’s foreign operations whose functional cur- influence is the power to participate in the financial and operating rency is not the euro are translated into euros at the year-end policy decisions of a company without holding a controlling interest. exchange rate and income statement and cash flow statement items It is presumed to exist when the Group’s direct or indirect interest is 87 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 88

CONSOLIDATED FINANCIAL STATEMENTS

are translated at the average annual exchange rate. The resulting 2006) had been determined on a provisional basis only. Final adjust- exchange differences are included in equity under ”Cumulative trans- ments to these provisional values were recognized during the second lation adjustments”. half of 2007. In accordance with IFRS 3, the comparative informa- tion contained in the 2006 consolidated balance sheet has been pre- Functional currency is the currency of the primary economic environ- sented as if the initial accounting had been completed from the acqui- ment in which the entity operates and in the majority of cases corre- sition date (see Note 11). sponds to the local currency.

When a foreign operation is sold, any related translation adjust- G PRESENTATION OF IFRS ments recorded after the first-time adoption of IFRS and included FINANCIAL STATEMENTS in ”Cumulative translation adjustments” are taken to the income In accordance with IAS 1 ”Presentation of Financial Statements”, statement. consolidated balance sheet items are classified as current or non-cur- rent. Assets and liabilities related to the operating cycle and those that Since January 1, 2006, no Group subsidiary has been located in a are expected to be recovered or settled within 12 months of the bal- ”hyperinflationary” economy within the meaning of IAS 29. ance sheet date are classified as current, and all other assets and liabilities are classified as non-current. In compliance with IAS 12, all E TRANSLATION OF FOREIGN CURRENCY deferred tax assets and liabilities are classified as non-current. TRANSACTIONS Foreign currency transactions are translated at the exchange rate Assets and liabilities, income and expenses, and cash inflows and out- prevailing at the transaction date. In accordance with IAS 21 flows are not offset, except as provided by the applicable account- ”The Effects of Changes in Foreign Exchange Rates”, foreign currency ing standards. monetary items are translated at the closing rate on the balance The consolidated income statement is presented by function (rather sheet date. Any exchange gains and losses arising on translation are than by nature of expenses). Total payroll is presented in Note 4. recorded as financial income or expense. As depreciation and amortization of non-current assets are almost Foreign exchange derivatives are measured and recognized in accor- exclusively related to production activities the corresponding dance with the principles described in Note 1.cc. expenses are included in ”Cost of sales”.

The ”Changes in fair value of non-ferrous metal derivatives” line was F BUSINESS COMBINATIONS created in the income statement in compliance with IAS 32 and IAS Business combinations are accounted for using the purchase method. 39 as of January 1, 2005, to distinguish fair value adjustments relat- On the first-time consolidation of a subsidiary, the assets, liabilities ing to derivatives (forward purchases and sales of metals on organ- and contingent liabilities of the acquiree are recognized at fair value ized markets, notably the LME) that do not qualify as cash flow hedges in compliance with IFRS 3. Goodwill arising on the acquisition is deter- under IFRS (see Note 1.cc) from changes in fair value of the risks mined at the date of the takeover as the difference between the cost hedged in the underlying commercial contracts. of the business combination and the Group’s interest in the fair value of the acquiree’s identifiable assets, liabilities and contingent liabili- In the statement of cash flows, cash flows from operating activities ties at the acquisition date (see Note 1.l). are presented using the indirect method, whereby net income attrib- utable to equity holders of the Company is adjusted for the effects of The cost of a business combination is measured as the fair value of transactions of a non-cash nature and for changes in working capital the assets given and/or equity instruments issued and liabilities requirement. incurred or assumed in exchange for control of the acquiree, plus costs directly attributable to the acquisition. Some business combinations The Statement of Changes in Equity includes information on (i) the include an adjustment to the purchase price for future events. These amounts of transactions with equity holders acting in their capacity adjustments are included in the cost of the business combination at as equity holders; (ii) the balance of retained earnings at the begin- the acquisition date if the adjustment is probable and can be meas- ning of the period and at the balance sheet date; and (iii) a reconcil- ured reliably. iation between the carrying amount of each class of contributed equity and each reserve at the beginning and end of the period. The Group has a period of 12 months from the acquisition date to finalize the accounting treatment of a business combination. Note The presentation methods have been consistently applied from one 11 to the consolidated financial statements at December 31, 2006 year to the next. stated that the fair values assigned to the assets, liabilities and contin- gent liabilities of the Olex group (consolidated as of December 31, 88 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 89

H SALES I OPERATING MARGIN Operating margin measures the Group’s operating performance Net sales and comprises gross profit (which includes indirect production costs), Net sales (at current metal prices) represent sales of goods and serv- administrative and selling expenses and research and development ices deriving from the Group’s main activities net of value added taxes costs (see Note 1.k). Share-based payments (Note 1.t), pension oper- (VAT). In accordance with IAS 18, revenue is recognized when the ating costs (Note 1.u) and employee profit-sharing are allocated by risks and rewards of ownership of the goods are transferred to the function to the appropriate lines in the income statement based on cost buyer and the amount of the revenue can be reliably measured. accounting principles. Sales are measured at the fair value of the consideration received or Operating margin is measured before the impact of (i) revaluing due, which takes into account the financial impact of payment defer- core exposure using the weighted average cost method (see below); rals when they are significant. (ii) changes in fair value of non-ferrous metal derivatives; (iii) restruc- turing costs; (iv) gains and losses on asset disposals; (v) impairment Construction contracts losses recorded on property, plant and equipment or on goodwill IAS 11 defines a construction contract as a contract specifically following impairment tests; (vi) financial income and expense; (vii) negotiated for the construction of an asset or a combination of income tax; (viii) share in net income of associates; and (ix) net income assets that are closely interrelated or interdependent in terms of from discontinued operations. their design, technology and function or their ultimate purpose or use. They essentially cover the Group’s high-voltage cable and J CORE EXPOSURE EFFECT umbilical cable activities. The core exposure effect corresponds to the change in the value of Sales and revenue from construction contracts are recognized on a per- the Group’s core exposure during the period as calculated by the centage-of-completion basis. The percentage of completion is deter- weighted average cost method. This impact results from the change mined based on technical milestones defined in the contract or on the described in Note 1.b. and is excluded from operating margin, in line costs incurred compared to total estimated costs for the contract. When with the Group’s business model. it is probable that total costs will exceed total contract revenue, the expected loss is recognized immediately in cost of sales. Work in K RESEARCH AND DEVELOPMENT COSTS progress on construction contracts is stated at production cost, exclud- Expenditure on research activities is recognized as an expense in the ing administrative and selling expenses and interest expense. Changes period in which it is incurred. in provisions for penalties are charged to sales. Development costs are recognized as an intangible asset provided Down payments received for construction contracts before the corre- the following can be demonstrated: sponding work is performed are recorded in ”Customer deposits • The technical and industrial feasibility of the project; and advances” on the liabilities side of the balance sheet. For each • Nexans’ intention to complete the project and to use or market the construction contract, the amount of costs incurred plus profits recog- ensuing products; nized is compared to the sum of losses recognized and intermediate • The existence of a potential market (with adequate assurance in billings. If the balance obtained is positive, it is included in assets terms of volume and price) for the output of the product resulting under ”Amounts due from customers on construction contracts” and from the project, or the product’s internal usefulness; if it is negative it is recorded under ”Amounts due to customers on • The availability of adequate resources required to complete the proj- construction contracts” in liabilities. ect; • The ability to reliably measure the related costs. Net sales (and cost of sales) at constant metal prices On an operating level, the effects of fluctuations in metal prices are These costs are amortized over the estimated useful life of the project passed on in the selling price. concerned, from the date the related product is made available. To neutralize the effect of fluctuations in non-ferrous metal prices Research and development costs to be rebilled to customers under and thus measure the underlying trend in its business, the Group the terms of construction contracts are included in ”Amounts due presents the sales figure based on a constant price for copper and from (or due to) customers on construction contracts”. aluminum (the cost of sales figure is adjusted in the same way). For 2005, 2006 and 2007 these reference prices have been fixed at 1,500 euros per tonne for copper and 1,200 euros per tonne for aluminum. 89 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 90

CONSOLIDATED FINANCIAL STATEMENTS

L GOODWILL M PUT OPTIONS GIVEN TO MINORITY In compliance with IFRS 3 ”Business combinations”, goodwill is not SHAREHOLDERS amortized; instead it is tested at least annually for impairment – in the In compliance with IAS 32, put options given to minority sharehold- last quarter of the year – and whenever there is an indication that it ers in subsidiaries are recognized as financial liabilities at their dis- may be impaired. counted value. Apart from the derecognition of the corresponding minority interests, the offsetting entry for these financial liabilities is not In accordance with IAS 36 these impairment tests are carried out at clearly specified in the applicable standards. the level of cash-generating units (CGUs) as determined by the Group by comparing their recoverable amount with the book value of their Pending IFRIC guidance, and based on current standard market capital employed (non-current assets and working capital require- practices, the Group has opted to record in goodwill the difference ment). In 2007, the Group amended the structure of its CGUs to reflect between the discounted value of the exercise price of the options and the synergies achieved as a result of its 2007-2009 strategic busi- the amount of minority interests removed from equity. This goodwill is ness plan. Up until 2006 the Group’s CGUs primarily corresponded adjusted each year to reflect the change in the exercise price of the to legal entities but they now include certain cross-functional group- options and the change in minority interests. This accounting treat- ings between entities or business sub-segments which have increas- ment, which has no impact on net income for the period, best reflects ingly integrated cash flows. This change in the definition of the the reality of the transaction, to the extent that it corresponds to the Group’s CGUs did not have a material impact on the consolidated treatment that would be applied if the options were exercised imme- financial statements. diately. However, if any interpretations or standards are issued that do not permit such treatment it will have to be modified accordingly. The impairment test methods used by the Group are described in Note 1.o. When the recoverable amount of the CGU or group of N PROPERTY, PLANT AND EQUIPMENT CGUs is lower than its carrying amount, an impairment loss is AND INTANGIBLE ASSETS recorded in the income statement under ”Net asset impairment”. (EXCLUDING GOODWILL) This impairment is allocated first to reduce the carrying amount Property, plant and equipment and intangible assets are stated at of any goodwill allocated to the unit and then to the other assets cost less any accumulated depreciation or amortization and any accu- of the unit pro-rata on the basis of the carrying amount of each mulated impairment losses. When they are acquired under a business asset in the unit. In accordance with IFRIC 10, impairment losses combination, their cost is identified as their fair value. recognized in a previous annual or interim period in respect of goodwill may not be reversed. The Group applies the cost model for the measurement of property, plant and equipment and intangible assets rather than the allowed After verifying the identification process of the assets and liabilities alternative method that consists of regularly revaluing categories of acquired and their valuation, any negative goodwill is immediately assets. Government grants are recognized as a deduction from the recorded in the income statement. gross amount of the assets to which they relate. As IFRS does not currently provide any detailed guidance on how Intangible assets primarily correspond to the following: to account for the acquisition of minority interests, when the Group • Trademarks and customer relationships acquired in business com- acquires an additional interest in an entity that it already controls binations. Except in rare cases, trademarks are deemed to have an the difference between the purchase cost of the minority interest indefinite useful life. Customer relationships are amortized on a and the Group’s equity in the underlying net assets is recognized straight-line basis over the period during which the related economic in goodwill, without making any fair value adjustments to the assets benefits are expected to flow to the Group (between 10 and and liabilities acquired. The Group will apply a different account- 25 years). ing treatment following the outcome of Phase II of the IASB’s • The costs for acquired or developed software, usually intended for Business Combinations project. internal use, to the extent that their cost can be reliably measured and it is probable that they will generate future economic benefits. These assets are amortized by the straight-line method over their estimated useful lives (generally three years).

Items of property, plant and equipment are depreciated by the straight- line method based on the following estimated useful lives: 90 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 91

Industrial buildings and equipment: For operating assets that the Group intends to hold and use over the • Buildings for industrial use 20 years long term, the recoverable amount of a CGU corresponds to the • Infrastructure and fixtures 10-20 years higher of fair value less costs to sell (where determinable) and value • Equipment and machinery in use. Where the Group has decided to sell particular operations, - Heavy mechanical components 30 years the carrying amount of the related assets is written down to fair value - Medium mechanical components 20 years less costs to sell. Where negotiations in relation to such a sale are in - Light mechanical components 10 years progress, fair value less costs to sell is determined based on the best - Electrical and electronic components 10 years estimate of the outcome of the negotiations at the balance sheet date. - Small equipment and tools 3 years Value in use is calculated on the basis of the future operating cash Buildings for administrative and commercial use 20-40 years flows determined in the Group’s budget process and strategic plan, which represent Management’s best estimate of the economic condi- The depreciation method and periods are reviewed at each year-end. tions that will prevail during the remainder of the asset’s useful life. The residual value of the assets is taken into account in the deprecia- The assumptions are made on the basis of past experience and exter- ble amount when it is deemed significant. Replacement costs are nal sources of information, such as discount rates and non-ferrous capitalized to the extent that they satisfy the criteria in IAS 16. metal future prices.

In accordance with IAS 36 (see Note 1.o), property, plant and equip- Whenever there is an indication that a cash-generating unit (CGU) ment and intangible assets are tested for impairment when events or may be impaired, the CGU concerned is tested for impairment in changes in the market environment or internal sources of information accordance with IAS 36 based on the following: indicate that the asset may be impaired. Intangible assets with indef- • The Asset CGU chosen (see Note 1.l for Goodwill CGUs). An inite useful lives are tested for impairment at least once a year. Asset CGU is a line or group of product lines that represents the

Property, plant and equipment and intangible assets are derecog- smallest identifiable group of assets that generates cash inflows nized when the risks and rewards incidental to ownership of the that are largely independent of the cash inflows from other assets asset are transferred or when there is no future economic benefit or groups of assets. Following the adoption of its 2007-2009 expected from the asset’s use or sale. Any gain or loss arising from Strategic Plan and in line with the approach used for its Goodwill the derecognition of an asset (difference between the net disposal pro- CGUs, in 2007 Nexans amended the structure of its Asset CGUs ceeds and the carrying amount of the asset) is included in the income to take into account the growing synergies between product lines statement for the year the asset is derecognized (in the line ”Net within a single legal entity or country, or within the same sub- gains/(losses) on asset disposals”). segment of a business (such as high-voltage cables). These changes did not, however, have a material impact on the In compliance with the benchmark method in IAS 23, borrowing costs Group’s financial statements. are expensed as incurred. • A discount rate corresponding to the expected market rate of return Assets acquired through leases that have the features of a financing for a similar investment, specific to each geographic area, regard- arrangement are capitalized. Finance leases are not material for the less of the sources of financing (see Note 7). The discount rates Group. Leases under which a significant portion of the risks and used are post-tax rates applied to post-tax cash flows. The recover- rewards incidental to ownership is retained by the lessor are classi- able amounts determined using these post-tax rates are the same fied as operating leases. Payments made under operating leases (net as those that would be obtained by using pre-tax rates applied to of benefits received from the lessor) are expensed on a straight-line pre-tax cash flows as required in IAS 36. basis over the term of the lease. • Five-year business plans based on the Group’s Budget and Strategic Plan for the first three years, and an extrapolation calculated in O IMPAIRMENT TESTS conjunction with local management for the last two years. At each balance sheet date, the Group assesses whether there is an • The impact of changes in non-ferrous metal prices on future operat- indication that an asset may be impaired. Impairment tests are also ing cash flows, determined on the basis of 5-year metal futures carried out whenever events or changes in the market environment indi- prices as at the date of the impairment tests, and assuming that the cate that property plant and equipment or intangible assets (including current hedging policy will be continued. goodwill), may have suffered an impairment. An impairment loss is rec- • Extrapolation of cash flows beyond 5 years based on growth rates ognized where necessary for the amount by which the asset’s carry- specific to each geographic area and business segment. ing amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. 91 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 92

CONSOLIDATED FINANCIAL STATEMENTS

The Group has defined indications of impairment based on (i) gen- the asset and the estimated value of future cash flows, discounted at eral financial information (e.g. operating performance during the the initial effective interest rate. current year, comparisons between actual data and forecasts); and The carrying amount of the asset is written down and the amount of (ii) indicators specific to each business or segment, such as changes the loss is recognized in the income statement under ”Administrative in metal prices or the loss of significant contracts. These indications and selling expenses”. Where a receivable is irrecoverable, it is are based on both internal and external sources of information. derecognized and offset by the reversal of the corresponding impair- ment loss. When a previously derecognized receivable is recovered Impairment losses (net of reversals) are recorded in the income state- the amount is credited to ”Administrative and selling expenses” in ment under ”Net asset impairment”. the income statement. P INVENTORIES AND WORK R EQUITY IN PROGRESS In addition to capital stock, consolidated equity includes the following: Inventories and work in progress are stated at the lower of cost and • ”Additional paid-in capital”, which corresponds to the excess paid net realizable value. The costs incurred in bringing the inventories to by shareholders of the parent company over the par-value price of their present location and conditions can be analyzed as follows: a stock issue. • Raw materials: purchase cost according to the weighted average • ”Consolidated retained earnings”, comprising the non-distributed cost (WAC) method; net income of the parent company as well as the Group’s share in • Finished goods and work in progress: cost of materials and direct the retained earnings of fully-consolidated companies and compa- labor and share of indirect production costs according to the nies accounted for by the equity method since their first-time consol- weighted average cost (WAC) method. idation date. Net realizable value is the estimated sale price in the ordinary course • ”Changes in fair value and other”, which primarily includes of business, less estimated completion costs and the costs necessary changes in market value of (i) derivatives designated as cash flow to carry out the sale. If the carrying amount of non-ferrous metals is hedges (see Note 1.cc), and (ii) available-for-sale financial assets higher than their market value at the balance sheet date, an impair- (see Note 1.y). ment loss is only recognized when the legal entity to which the assets • ”Cumulative translation adjustments”, used to record currency trans- are allocated has a negative production margin. lation adjustments deriving from the translation of the financial state- ments of foreign subsidiaries (as from January 1, 2004 – the date In compliance with the benchmark method in IAS 23, inventories do of the Group’s first-time adoption of IFRS). not include borrowing costs, which are expensed as incurred. • Minority interests. Inventories include core exposure, which represents the amounts The Group considers that this definition of equity corresponds to the required for the Group’s plants to operate effectively. Its volume is kept notion of capital within the meaning of IAS 1. Without setting a par- stable and its levels are constantly replenished. Changes in this com- ticular limit, Nexans closely monitors its debt-to-equity ratio in order ponent of inventory are shown in a separate line of the income state- to ensure that (i) banking covenants are comfortably respected (see ment (see Note 1.j above) and are included as part of cash flow from Note 23.f); and (ii) the Group has room to maneuver if it needs to operating activities in the cash flow statement. raise new financing such as for an acquisition.

Q TRADE RECEIVABLES It is Group policy to account for transactions with minority interests in Trade receivables are initially recognized at fair value and subse- the same manner as transactions with unrelated third parties. Gains quently measured using the amortized cost method. Interest free and losses on disposals to minority interests are recognized in the short-term operating receivables are recognized at nominal value as income statement. The acquisition of shares from minority interests the impact of discounting is not material. generates goodwill as described in Note 1.l. Impairment of trade receivables is recorded whenever there is an The costs directly attributable to the issue of new shares or options objective indication that the Group will not be able to collect the full are recognized in equity as a deduction from the proceeds of the amounts due under the conditions originally provided for at the time issue, net of tax. of the transaction. The following are indicators of impairment of a receivable: (i) major financial difficulties for the debtor; (ii) the prob- Dividend payouts to the Group’s shareholders are recognized as ability that the debtor will undergo bankruptcy or a financial restruc- a liability in the Group’s financial statements in the period in which turing; and (iii) a payment default. The amount of the impairment loss the dividends are approved by Nexans’ shareholders. recorded represents the difference between the carrying amount of 92 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 93

S TREASURY STOCK • Actuarial gains and losses – corresponding to experience adjust- The purchase cost of treasury shares is deducted from equity. Gains ments and the effects of changes in actuarial assumptions – occur- and losses on the sale of these shares do not affect the income ring since January 1, 2004 are not immediately recognized in the statement. income statement, in application of the corridor method. Under this method, actuarial gains and losses that exceed 10% of the greater T SHARE-BASED PAYMENTS of the defined benefit obligation and the fair value of corresponding Stock options are granted to managers and certain Group employ- plan assets are amortized over the expected average remaining ees. In accordance with IFRS 2 ”Share-based Payment”, options are working lives of the participating employees. measured at fair value at the grant date (corresponding to the date • When the calculation of the benefit obligation results in an asset for on which the related plan is announced) using the Black & Scholes the Group, the recognized amount cannot exceed the total net option pricing model. Any changes in value after the grant date do amount of the following: (i) unrecognized cumulative net actuarial not affect the recognized amounts. losses and unrecognized past service cost; and (ii) the present value of available refunds and reductions in future contributions to the The value of an option primarily depends on market data at the grant plan. In accordance with paragraph 58A of IAS 19 the Group date (price and volatility of the share, risk-free interest rate and ensures that the application of these principles does not result in a expected dividends) and on its expected life – an assumption that is gain being recognized solely as a result of an actuarial loss or past determined by the Group taking into account various parameters service cost in the current period or in a loss being recognized solely including minimum holding periods prescribed by law. The value of as a result of an actuarial gain in the current period. granted options is recorded in payroll expenses on a straight-line basis from the grant date to the end of the vesting period, with a correspon- The financial component of the annual pension expense (interest cost ding adjustment to equity. after deducting the expected return on plan assets) is included in finan- cial expenses (see Note 5). The Group has also set up employee stock ownership plans that enti- tle employees to purchase shares at a discount to the market price. Provisions for jubilee and other long-service benefits paid during the These plans are accounted for in accordance with IFRS 2 taking into employees’ service are valued based on actuarial calculations com- account the valuation effect of the five-year compulsory holding parable to the calculations used for pension benefit obligations, with- period. out any possibility of deferring the related actuarial gains and losses. They are included in the balance sheet under ”Provisions”. U PENSIONS, STATUTORY RETIREMENT BONUSES AND OTHER EMPLOYEE V PROVISIONS BENEFITS Provisions are recognized when the Group has a present obligation In accordance with the laws and practices of each country where (legal or constructive) resulting from a past event, when it is probable Nexans operates, the Group provides pensions, early retirement that an outflow of resources embodying economic benefits will be benefits and statutory retirement bonuses. required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. For basic and other defined contribution plans, expenses correspond If the effect of discounting is material, the provisions are determined to contributions made. No provision is recognized, as the Group has by discounting expected future cash flows applying a pretax dis- no payment obligation beyond the contributions due for each account- count rate that reflects current market assessments of the time value of ing period. money. The discounting impact is recognized in financial income For defined benefit pension and similar plans, provisions are deter- and expense and the effects of any rate fluctuations are recognized mined as follows: in the same account for which the provision was accrued. • Using the projected unit credit method, which sees each service A provision is set aside to fully cover restructuring costs when it relates period as giving rise to an additional unit of benefit entitlement and to an obligation by the Group to another party resulting from a measures each unit separately to build up the final obligation. These Management or Board decision, communicated before the balance calculations take into account assumptions with respect to mortal- sheet date to those affected by it. Such costs primarily relate to sever- ity, staff turnover, discounting, projection of future salaries and the ance payments, early retirement, costs for unworked notice periods, return on plan assets. training costs of employees whose employment contracts have been • The amount recognized in the balance sheet corresponds to the terminated, and other costs linked to the shutdown of facilities. Asset value of the obligation less the fair value of plan assets at the retirements and impairment of inventories and other assets directly balance sheet date. linked to restructuring measures are also recorded under restructur- ing costs in the income statement. 93 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 94

CONSOLIDATED FINANCIAL STATEMENTS

W DEFERRED TAX Presentation in the income statement Deferred taxes are recognized for temporary differences arising A group of assets sold, held for sale or whose operations have been between the carrying amount and tax basis of assets and liabilities, discontinued is a major component of the entity if: as well as for tax losses available for carryforward. However, in • It represents a separate major line of business or geographic area accordance with IAS 12 a deferred tax asset or liability is not recog- of operations; nized for any temporary difference resulting from goodwill for which • It is part of a single coordinated plan to dispose of a separate amortization is not deductible for tax purposes, or from the initial major line of business or geographic area of operations; or recognition of an asset or liability in a transaction which is not a busi- • It is a subsidiary acquired exclusively for resale. ness combination and, at the time of the transaction, affects neither Where a group of assets sold, held for sale or whose operations accounting profit nor taxable profit. have been discontinued is a major component of the entity, it is clas- Deferred tax assets are recognized only to the extent that it is proba- sified as a discontinued operation and its income and expenses are ble that taxable profit will be available against which the deductible presented on a separate line of the income statement (net income from temporary differences can be utilized, based on medium-term earn- discontinued operations) comprising the total of: ings forecasts for the company concerned. The Group ensures that the • The post-tax profit or loss of discontinued operations; and forecasts used for calculating deferred taxes are consistent with those • The post-tax gain or loss recognized on the measurement to fair used for impairment testing. value less costs to sell or on the disposal of the assets or groups of assets held for sale constituting the discontinued operation. Deferred taxes are measured based on tax rates (and tax laws) that have been enacted or substantively enacted by the balance sheet When a group of assets previously presented as ”held for sale” ceases date. All amounts resulting from changes to the tax rate are recorded to satisfy the criteria in IFRS 5, each related asset and liability com- in equity or in net income in the year in which the tax rate change is ponent is reclassified in the consolidated balance sheet. enacted or substantively enacted, based on the initial recognition method for the corresponding deferred taxes. Y FINANCIAL ASSETS Financial assets are initially recognized at fair value plus transaction A deferred tax liability is recognized for all taxable temporary differ- costs directly attributable to the acquisition. ences associated with investments in subsidiaries, branches and asso- ciates, and interests in joint ventures, except to the extent that (i) the At subsequent reporting dates measurement and recognition depend Group is able to control the timing of the reversal of the temporary on the classification of the financial asset concerned: difference; and (ii) it is probable that the temporary difference will • Cash equivalents are measured at fair value through profit or loss. not reverse in the foreseeable future. • Other investments – which primarily correspond to investments in non-consolidated entities – are classified as available-for-sale finan- Deferred tax assets and liabilities are offset if the entity is legally enti- cial assets. At each balance sheet date, the fair value of invest- tled to offset current tax assets and liabilities and if the deferred tax ments quoted in an organized financial market is determined by assets and liabilities relate to taxes levied by the same taxation reference to the published market price. For unlisted securities if their authority. fair value cannot be determined reliably they are measured at his- torical cost. Changes in fair value are recorded in equity on a sep- X ASSETS HELD FOR SALE arate line and are taken to the income statement upon disposal of the asset. Presentation in the balance sheet • Loans and receivables are measured at amortized cost using the Non-current assets or groups of assets held for sale, as defined by effective interest rate. IFRS 5, are presented on a separate line on the assets side of the balance sheet. Liabilities related to groups of assets held for sale are In the case of the last two categories, an impairment loss is recorded shown on the liabilities side, also on a separate line. Non-current if there is an objective indication that the financial asset is impaired, assets classified as assets held for sale cease to be depreciated from such as a significant or prolonged decline in value. Any such impair- the date on which they fulfill the classification criteria for assets ment losses are irreversible for equity instruments classified as held for sale. available-for-sale, and for unlisted shares in non-consolidated entities measured at cost. 94 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 95

Z CASH AND CASH EQUIVALENTS CC DERIVATIVE INSTRUMENTS Cash and cash equivalents – whose changes are shown in the consolidated statement of cash flows – comprise the following: Foreign exchange hedges • Cash and cash equivalents on the assets side of the balance sheet, The Group uses derivatives (forward purchases and sales of foreign which include cash on hand, demand deposits and other short- currencies) to hedge the risk of fluctuations in foreign currency term highly liquid investments that are readily convertible to a known exchange rates. These instruments are measured at fair value, calcu- amount of cash and are subject to an insignificant risk of changes lated by reference to the forward exchange rates prevailing at the bal- in value. ance sheet date for contracts with similar maturity profiles. • Bank overdrafts repayable on demand which form an integral part When these operations hedge highly probable future transactions of the entity’s cash management. (forecast cash flows or firm orders) that have not yet been invoiced, and to the extent that they satisfy the conditions for cash flow hedge AA FINANCIAL LIABILITIES accounting, the change in the fair value of the derivative comprises Financial liabilities are initially recognized at fair value, correspon- two elements: the ”effective” portion of the unrealized gain or loss on ding to their issue price less transaction costs directly attributable to the hedge, which is recognized directly in equity, and the ”ineffec- the acquisition or issue of the financial liability. If the liability is issued tive” portion, which is recognized in net financial income/(expense). at a premium or discount, the premium or discount is amortized over Any gains or losses previously recognized in equity are recycled to the life of the liability using the effective interest method. The effective the income statement in the period in which the hedged firm commit- interest method calculates the interest rate that is necessary to discount ment impacts income, for example when the forecast sale is invoiced. the cash flows associated with the financial liability through maturity These gains or losses are included in operating margin when they to the net carrying amount at initial recognition. relate to commercial transactions.

BB HYBRID INSTRUMENTS - OCEANE Only derivatives negotiated with external counterparties are deemed CONVERTIBLE/EXCHANGEABLE BONDS as eligible for hedge accounting. In compliance with IAS 32 ”Financial Instruments: Presentation”, if a Changes in fair value of derivatives that do not qualify for hedge financial instrument has both a liability and an equity component, the accounting are recognized directly in the income statement as finan- issuer must account for these components separately according to cial income or expense. Derivatives that do not qualify for hedge their nature. accounting include instruments used as economic hedges that were This treatment applies to OCEANE bonds which are convertible into never or are no longer designated as hedges. new shares and/or exchangeable for existing shares, with the con- version option meeting the definition of an equity instrument. Hedging of risks associated with fluctuations The liability component is measured on the issue date on the basis of in non-ferrous metal prices contractual future cash flows discounted applying the market rate Forward purchases of non-ferrous metals which require physical deliv- (taking into account the issuer’s credit risk) for a similar instrument but ery of the related assets are not included within the scope of IAS 39 which is not convertible/redeemable for shares. and are recognized at the time of delivery.

The value of the conversion option is calculated as the difference Nexans uses futures contracts negotiated primarily on the London between the issue price of the bonds and the value of the liability Metal Exchange (LME) to reduce its exposure to fluctuations in non- component. This amount is recognized in equity. ferrous metal prices (copper and aluminum). These contracts are set- tled net in cash and constitute derivative instruments falling within the Following initial measurement of the liability and equity components, scope of IAS 39. the liability component is measured at amortized cost. The interest expense relating to the liability is calculated using the Due to the sharp volatility in non-ferrous metal prices over the past effective interest method. several years, the Group has taken measures to enable a significant portion of these financial instruments to be classified as cash flow hedges as defined in IAS 39. Consequently, since November 1, 2006, where these instruments hedge highly probable future trans- actions (such as copper cathode purchases) that have not yet been invoiced, and to the extent that they satisfy the criteria for applying cash flow hedge accounting, they are accounted for in a similar 95 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 96

CONSOLIDATED FINANCIAL STATEMENTS

manner to the foreign exchange derivatives described above: the por- tion of the unrealized gain or loss on the hedging instrument that is NOTE 2 SIGNIFICANT determined to be an ”effective” hedge is recognized directly in equity, EVENTS and the ineffective portion is recognized in ”Changes in fair value of non-ferrous metal derivatives”. Gains or losses previously recognized OF THE YEAR in equity are recycled to the income statement within operating margin in the period in which the hedged item (i.e. the purchase of the copper A FRAMEWORK AGREEMENT TO ACQUIRE cathodes) affects income. THE MADECO GROUP On November 15, 2007 Nexans entered into a framework Changes in fair value of derivatives that do not qualify for hedge agreement with Madeco to acquire the Chile-based group’s accounting are recognized directly in income for the period under cables operations. ”Changes in fair value of non-ferrous metal derivatives”. At current metal prices the 2006 sales of the Madeco group cables DD EARNINGS PER SHARE business totaled 672 million US dollars (490 million euros based on Basic earnings per share are calculated by dividing net income attrib- the average 2007 exchange rate), and were generated in three major utable to ordinary equity holders of the parent company by the segments – cables for the infrastructure, industry and building sectors weighted average number of ordinary shares outstanding during the (as well as electrical wires to a lesser extent). In first-half 2007, period. The average number of ordinary shares outstanding during Madeco’s cable operations broke down as follows by country – the period is the number of ordinary shares outstanding at the begin- 43% in Brazil, South America’s largest market; 28% in Chile; 18% in ning of the period, adjusted for the number of ordinary shares bought Peru; 6% in Argentina; and 5% in Colombia back or issued during the period. The structure of the acquisition is as follows: Diluted earnings per share are calculated by dividing: • Part of the purchase will take the form of an acquisition of shares in • net income attributable to ordinary shareholders of the parent com- certain Madeco subsidiaries dedicated to the cables business. pany adjusted for the finance cost recognized in the period in The sale price – comprising a cash payment and the assumption respect of the Group’s convertible bonds; by of liabilities – will total 422 million US dollars (approximately • the weighted average number of shares outstanding during the 287 million euros at the 2007 closing rate). period, as adjusted for the effects of all dilutive potential ordinary • The remainder of the transaction will involve Madeco transferring shares and excluding treasury shares which are deducted from to Nexans all of the shares held by Madeco in the group’s other sub- equity. The Group’s stock options and convertible bonds are sidiaries dedicated to the cables business. As consideration for this deemed to be dilutive potential ordinary shares. share transfer Madeco will receive 2.5 million newly-issued Nexans shares, giving it an approximately 9% stake in Nexans’ capital For stock options, the diluted weighted average number of shares (based on a total of 28.1 million shares). Madeco will undertake outstanding is calculated using the treasury stock method as pro- not to sell these shares for a twelve-month period following comple- vided for in IAS 33. Under this method the assumed proceeds from tion of the transaction. exercise of the rights attached to the dilutive instruments are regarded as having been used to repurchase ordinary shares at the average Based on Nexans’ closing share price of 85.50 euros at December market price during the period. The number of shares thus obtained 31, 2007 the transaction represents an enterprise value (including is then deducted from the total number of shares used for the diluted minority interests) of some 763 million US dollars (518 million euros). earnings per share calculation. On this basis it would give rise to goodwill of approximately 220 mil- lion euros before adjustments to the provisional fair values assigned to the assets acquired and liabilities assumed.

The completion of this acquisition is still subject to (i) the signature of a final agreement which is scheduled for February 2008; (ii) ratifica- tion by both Madeco’s and Nexans’ shareholders; and (iii) regulatory approval. At the Annual General Meeting to be held to approve the financial statements for the year ended December 31, 2007, Nexans’ shareholders will also be asked to approve the issuance of the above- mentioned shares as consideration for Madeco’s asset transfer as well as the appointment of a Madeco group representative as a member of Nexans’ Board of Directors. 96 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 97

B CHANGES IN SCOPE OF CONSOLIDATION In accordance with the applicable contractual provisions, and in The main changes in scope of consolidation for 2007 were as follows: view of Essex Nexans’ EBITDA for the 2006 fiscal year, Nexans • On November 30, 2007 Nexans acquired 70% of the shares in also received 3 million euros in additional purchase consideration Multinacional Trade – a Spanish electrical equipment distributor – in first-half 2007 relating to the 60% stake in the winding wires for 7.4 million euros. At the same time, the companies entered into business that was transferred when the Essex Nexans joint venture a three-year put/call agreement in relation to the residual 30% of was originally formed. This consideration was also included in the Multinacional Trade’s capital. For the twelve month period from income statement under ”Net gains on asset disposals”. November 2006 to November 2007 Multinacional Trade gener- The main changes in the scope of consolidation in 2006 and 2005 ated sales of about 25 million euros. Its principal supplier during were as follows: that timeframe was Nexans, which accounted for some 70% of the • On December 1, 2006, Nexans acquired 100% of the Australian company’s total purchases. group Olex, the cable industry leader in Australasia, for 515 mil- Multinacional Trade has only been consolidated since December lion Australian dollars (around 310 million euros). In accordance 31, 2007 as the impact of this acquisition on Nexans’ consolidated with the terms of the acquisition agreement, in 2007 the Nexans net sales, operating margin and net income figures for 2007 was Group paid 41 million Australian dollars (around 26 million euros) not material. Total goodwill arising on the transaction (taking into in additional purchase consideration, calculated based on changes account the minority put) amounted to 6.2 million euros at in the net assets of the Olex sub-group. December 31, 2007, before fair value adjustments which will be Olex has only been consolidated since December 31, 2006, as recorded in 2008. the company’s impact on the Group’s net sales, operating margin • At December 31, 2006, the Group had entered into negotiations to and net income for the year then ended was not material. sell its remaining winding wires business in Canada and China, In accordance with IFRS 3, Nexans completed the fair value meas- and at that date the balance sheet items of the entities concerned urement of the Olex group’s assets and liabilities during the were classified under assets held for sale in accordance with IFRS 5. second half of 2007. The main fair value adjustments made relate In late April 2007, the Group completed the sale of its Simcoe to property, plant and equipment (primarily machinery and equip- facility in Canada to the US Group Superior Essex for 9.8 million ment) as well as intangible assets (customer relationships and euros (not including the 7 million euro positive impact resulting trademarks). The financial statements at December 31, 2006 from subsequent recoveries of working capital items that were have been restated to take into account this final allocation of excluded from the transaction). The sale gave rise to a capital gain fair values (see also Note 11). of 0.2 million euros, which was recognized in the income state- Including these adjustments to the provisional fair values of the ment under ”Net gains on asset disposals”. For the first four assets acquired and liabilities assumed, in 2007 the Olex group months of 2007, the Simcoe facility reported net sales at current generated 419 million in net sales at current metal prices and oper- metals prices and operating margin of 33 million euros and 2 mil- ating margin of 28 million euros. lion euros respectively. • During the second half of 2006, Nexans founded a Japanese sub- The sale of Nexans Tianjin Magnet Wires and Cables was com- sidiary, Nippon High Voltage Cable Corp. (NVC), of which it pleted in July 2007. The transaction gave rise to a capital loss of owns 66%, the remaining 34% being held by Viscas (JV Furukawa 1.6 million euros which was recorded under ”Net gains on asset Electric Co., Ltd. and Fujikura Ltd), which transferred its existing disposals”, and reduced net debt by 11.2 million euros. In first-half factory in Tokyo Bay to NVC. NVC has been consolidated since 2007 Nexans Tianjin Magnet Wires and Cables reported net December 31, 2006. It will be dedicated to producing high-voltage sales at current metals prices and operating margin of 19 million undersea cables exclusively for its two shareholders and will not euros and 1 million euros respectively. carry out any other commercial activities. NVC contributed 14 mil- • Also in 2007, Superior Essex exercised its option to purchase the lion euros to the Group’s net sales at current metals prices in 2007 40% minority interest held by Nexans in Essex Nexans – a joint ven- and still reported a negative operating margin as it remained in ture set up in 2005 to combine the European winding wire opera- the production ramp-up phase. tions of Superior Essex and Nexans. The sale of this 40% stake was completed on June 28, 2007 for an amount of 22.4 million euros and gave rise to a 0.2 million euro gain (recognized in the income statement under ”Net gains on asset disposals”). In addi- tion, Essex Nexans repaid 11.3 million euros to Nexans, correspon- ding to financing granted to the joint venture. 97 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 98

CONSOLIDATED FINANCIAL STATEMENTS

• On February 1, 2006, Nexans disposed of its Swiss distribution C BOND ISSUE business (Electro-Matériel SA) for 206 million euros, generating a On May 2, 2007, Nexans issued 350 million euros worth of capital gain of 149 million euros. In 2005, Electro-Matériel SA 10-year bonds. The issue was taken up by a wide-ranging European generated net sales of 189 million euros, EBITDA (before contribu- investor base, mainly comprising French and UK investors (which tion to head office costs) of 21.3 million euros and an operating accounted for 35% and 34% respectively). The purpose of the bond margin (on the same basis) in excess of 18 million euros. Electro- issue was to refinance the Group’s existing debt, diversify its sources Matériel SA’s contribution to net sales at current metal prices and of financing, and extend the average maturity of its borrowings. operating margin in January 2006 amounted to 16 million euros The main features of the bond issue were as follows: and 1 million euros respectively. • Amount: 350 million euros. • In 2005, Nexans’ winding wires business in Europe was transferred • Coupon: 5.75%. to Essex Nexans, a joint venture set up with the Superior Essex • Settlement date: May 2, 2007. Group, in which Nexans retained a 41% minority stake (reduced • Maturity date: May 2, 2017. to 40% in early 2006 and then sold in full in first-half 2007 as • Issue price: 99.266%. described above). Essex Nexans was accounted for using the equity • Spread: 140 basis points above the 10-year swap rate. method from October 21, 2005 until the Group sold its interest. • Issue rating: BB (Standard & Poor’s). Income up to the sale was recorded as income from discontinued operations in line with IFRS 5 (see Note 8). D DIVIDENDS • Nexans sold its Norwegian distribution subsidiary Nexans At the Annual General Meeting of May 10, 2007, the Company’s Distribusjon on August 28, 2005, for 45 million euros, generating shareholders approved the payment of a 1.20 euro dividend per a net capital gain of 33 million euros. This company contributed share. 75 million euros to 2005 net sales (8 months). The dividend payout – representing an aggregate amount of 30.6 mil- lion euros – was made on May 15, 2007. 98 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 99

These data do not include discontinued operations as they do not NOTE 3 INFORMATION represent material amounts at Group level. Information on discontin- BY BUSINESS LINE ued operations is presented separately in Note 8 below. The tables below relate to the following business lines: AND GEOGRAPHIC • Electrical wires – comprising wirerods, electrical wires and the AREA winding wires production operations that are not in the process of being sold. • Energy(1) – comprising power cables for energy infrastructures (low-, Segment information is presented as follows: medium – and high-voltage cables and related accessories), spe- • By business line – the Group’s primary reporting format – as risks cialty cables for industry (including specialty cables for electronic and rates of return are mainly affected by differences between the applications) and equipment cables for the building sector. products offered; and • Telecom - which includes cables for private telecommunications • By geographic area. networks, junction components for telecommunication network Transfer prices between the various segments are generally the same cables, and copper and optical fiber cables for public telecommu- as those applied for transactions with parties outside the Group. nication networks. • Other - mainly comprising certain specific or centralized activities The segment information presented is based on the same accounting carried out for the Group as a whole that give rise to expenses not policies as those used for the consolidated financial statements, as allocated to the business lines, as well as eliminations relating to described in the notes to the financial statements. Consequently: inter-segment transactions. • Figures from 2006 onwards have been prepared subsequent to the change relating to the recognition of non-ferrous metal invento- ries (see Note 1.b). 2005 figures have been restated to reflect the impact of this change. • 2006 figures have been restated to take into account the fair value adjustments recorded in second-half 2007 following the comple- tion of the initial accounting for the Olex group acquisition (see Note 11).

The performance of each segment is measured based on operating margin.

(1) In accordance with the Group’s new segmentation as set out in its strategic plan, since January 1, 2007 submarine cables used for the remote operation of underwater robots and vehicles have been included in the Energy infrastructure segment, and electronic cables have been classified as part of the Industry segment based on similarities between end-markets and customers. As a result, these cables have been included within the Energy business line for 2007 rather than in Telecom as was previously the case. 2006 data presented in Note 3 have not been restated. Net sales generated by these operations in 2007 amounted to 213 million euros (based on constant non-ferrous metal prices) compared with 160 million euros in 2006. 99 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page100 100 Net salesatconstantmetalpricesand2007 CONSOLIDATED Number ofemployees Share innetincomeofassociates Investments inassociates Total segmentliabilities***** Total segmentassets**** Property, plantandequipment, net Capital expenditure Restructuring costs EBITDA*** losses Reversals ofimpairment losses Impairment Depreciation andamortization Operating margin exchange rates Net salesatconstantmetalprices Net salesatcurrentmetalprices DECEMBER 31,2006 Number ofemployees Share innetincomeofassociates Investments inassociates Total segmentliabilities***** Total segmentassets**** Property, plantandequipment,net Capital expenditure Restructuring costs EBITDA*** losses Reversals ofimpairment losses Impairment Depreciation andamortization Operating margin Net salesatconstantmetalprices Net salesatcurrentmetalprices DECEMBER 31,2007 INFORMATION BYBUSINESSLINE A in millionsofeuros (1) FINANCIAL STATEMENTS lcrclEeg* Telecom Energy** Electrical ,4 592326782 3,276 15,952 1,140 472 3,104 1,163 ,3 ,8 648 781 2,983 4,298 1,133 3,438 638 5,270 2,603 wires 6 ,2 399 2,725 662 847 2,183 18,089 270 779 3,014 400 1 3 100 732 416 879 281 529 3,780 845 5)(61) (54) (21) (34) 1)(2 (19) (62) (10) 4137 14 759 141 13 10 22––––2 441 12 363143 643 23 5 1)(24) (19) (5) (3) 4 233 (4) (13) (76) (3) 3 296 6 1 365 9 – –––––– – 19 38 (8) ––––3 ––––1 17 98 14 67 62 48 85 49 (9) (7) 8 4 loae)eliminations* allocated) o o segment (or not Other (14) (18) (14) 22 10 41 56 1(,1)7,412 (1,110) 11 50 4,822 (343) 11 84 20 (4) (1) (2) (5) (9) (4) 4 4,373 (375) 9 31 4,442 7,489 (331) (1,038) 9 9 – – – Inter- 21,150 – 893 174 – – 171 – (128) – – 355 – 510 – – 21,898 – – – – (101) – 3,826 – 260 – 3,740 – 409 – – 1,298 – 1,329 – 829 – Group total (63) (48) (14) (95) 27 42 2 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page101 operating liabilities. In 2007, segment liabilities included 39.4 million euros worth ofliabilitiesheldbyentitiesfor operating liabilities.In2007,segmentliabilitiesincluded39.4millioneurosworth ***** net. ofassetsownedbyentitiesheldforsale,which34.9millionwas recordedunderproperty,In 2007,segmentassetsincluded145.4millioneurosworth plantandequipment, construction contracts,otheroperatingreceivablesandgoodwill. **** Segment assetsincludeproperty, plant and equipmentintangibleassets,inventories,tradereceivables,advancestosuppliers, amountsduefromcustomerson *** Operatingmarginexcludingdepreciationandamortization. ** Ofwhichnetsales(atcurrentmetalprices)relatedtoconstructioncontracts:511millioneurosin2007(394 in2006). * Inter-segmenteliminationsmostlystemfromtheupstreamElectricalWiresbusiness. Number ofemployees Total segmentliabilities***** Total segmentassets**** Property, plantandequipment,net (1) OfwhichOlexatDecember31,2006. Number ofemployees Share innetincomeofassociates Investments inassociates Total segmentliabilities***** Total segmentassets**** Property, plantandequipment,net Capital expenditure Restructuring costs EBITDA*** losses Reversals ofimpairment losses Impairment Depreciation andamortization Operating margin exchange rates Net salesatconstantmetalprices Net salesatcurrentmetalprices DECEMBER 31,2005RESTATED Net salesatconstantmetalpricesand2006 in millionsofeuros Segment liabilitiesincludetradepayables,amountsduetocustomersonconstruction contracts,customerdepositsandadvances, accruedcontractcostsandother lcrclEeg* Telecom Energy** Electrical ,6 417343792 3,473 14,157 1,162 631 2,883 1,076 ,5 ,6 630 677 2,865 3,342 1,056 1,991 wires 6 ,3 398 1,936 562 8 3 112 639 281 1)(1 (20) (61) (10) 17 232 15 648146 498 96 0 1)(2 (18) (12) (22) (4) (14) (0) 102 6 4 171 6 92 – 394–––3 – – –––––– – 27–––2 15 8 9–––9 3–––8 1 20 45 25 (6) 3 – sale. loae)eliminations* allocated) o o segment (or not Other (12) (16) 0(9)4,301 (298) 10 36 0(9)4,263 5,449 (298) (573) 10 10 48 38 (3) (4) 1 – – Inter- 19,584 – 129 – 280 – – – – 2,933 – 186 – – – 1,079 – 778 – Group total (24) (55) (95) 2 9 21 18 9 7 3 4 101 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page102 102 CONSOLIDATED *** IncludingCorporateactivities. acquisition (seeNote3.a). ** ThefiguresatDecember31,2006have beenrestatedtotakeintoaccountthefairvalueadjustmentsmadefollowingcompletion oftheinitialaccountingforOlexgroup suppliers, otheroperatingreceivablesand goodwill. * Segmentassetsincludeproperty, plantandequipmentintangibleassets,inventories,tradereceivables,amountsduefrom customers onconstructioncontracts,advancesto Number ofemployees Total segmentassets* Property, plantandequipment, net Capital expenditure Operating margin and 2006exchangerates Net salesatconstantmetalprices Net salesatconstantmetalprices Net salesatcurrentmetalprices Inter-area salesatcurrentmetalprices (before inter-areaeliminations) Net salesatcurrentmetalprices DECEMBER 31,2005RESTATED Number ofemployees Total segmentassets* Property, plantandequipment,net Capital expenditure Operating margin and 2007exchangerates Net salesatconstantmetalprices (31) Net salesatconstantmetalprices Net salesatcurrentmetalpricess (15) Inter-area salesatcurrentmetalprices (before inter-areaeliminations) Net salesatcurrentmetalprices (1) DECEMBER 31,2006** Number ofemployees (432) Total segmentassets* Property, plantandequipment,net (83) Capital expenditure Operating margin (1,032) Net salesatconstantmetalprices Net salesatcurrentmetalprices Inter-area salesatcurrentmetalprices (before inter-areaeliminations) Net salesatcurrentmetalprices DECEMBER 31,2007 INFORMATION BYGEOGRAPHICAREA B in millionsofeuros FINANCIAL STATEMENTS rne* emn te uoenNrhAi-Restof Asia- North OtherEuropean Germany France*** ,2 5 ,0 7 5 8 4,301 283 259 777 1,406 553 1,024 4,373 326 261 769 404 1,180 1,397 582 1,037 ,2 ,8 ,6 ,3 ,7 ,0 19,584 2,205 1,270 1,835 7,766 2,685 3,823 21,150 2,359 2,459 1,960 7,807 2,707 3,858 21,898 2,571 2,269 1,870 8,407 2,862 3,919 ,2 5 ,1 5 4 7 4,263 5,449 275 322 247 348 299 753 302 1,152 1,412 1,553 1,153 553 1,846 649 1,024 4,442 1,473 692 7,489 331 2,065 469 277 519 429 813 435 1,743 1,402 1,821 1,745 582 4,822 2,175 852 1,037 7,412 374 2,175 911 560 571 3,112 591 871 662 886 1,332 1,511 1,958 1,333 621 2,390 852 1,083 1,839 935 2,871 52 4)(9)()()(26) (3) (1) (293) (43) (592) (50) (6) (2) (354) (59) (937) 7 363 121 874 165 105 3,740 158 372 640 307 1,062 386 120 973 146 822 18 18 30 28 35 165 61 533 35 27 6 onre mrc aii theWorld Pacific America countries 8 0 1 3 3,826 332 616 305 989 1 2 66 778 2,933 250 68 220 86 365 125 860 213 829 91 153 88 235 893 121 153 90 264 2 85 1409 31 50 78 123 21 41 129 186 12 28 14 11 12 41 52 73 24 64 174 29 16 10 55 26 93 260 37 19 63 72 0171 30 6 Group total – – – – – – 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page103 * SeeNote21. OTHER FINANCIALEXPENSES Other onemployeebenefitplanassets* Expected return Discounting impactonemployeebenefitobligations* Net exchangegain(loss) Provisions Dividends receivedfromnon-consolidatedcompanies NOTE 5 euros and2.4millionfor2007,20062005respectively. information. SeeNote20forfurther 3.4million Payroll costsintheabovetableincludeshare-basedpaymentsaccordancewithIFRS2.Theseamountstotaled5.6millioneuros, for theperiodandnorelatedprovisionisrecorded. (Frenchcompaniesonly)atDecember31.Costsincurredinrelationto thistrainingentitlementarerecognizedasexpenses * Aggregatenumberoftraininghoursaccumulatedbystaff trainingentitlement* Staff ofconsolidatedcompaniesatyear-end Staff Payroll costs(includingpayrolltaxes) NOTE 4 2005 2006 2007 NETSALESAT CURRENTMETAL PRICESBYGEOGRAPHICMARKET C in millionsofeuros in millionsofeuros OTHER FINANCIALEXPENSES STAFF ANDSTAFF TRAININGENTITLEMENT PAYROLL, rneGermany France 4 1 ,5 ,2 0 0 5,449 7,489 7,412 601 896 996 407 512 993 1,127 1,729 1,380 1,957 2,512 2,283 616 852 762 740 987 998 nme fepoes 1882,5 19,584 21,150 21,898 (number ofemployees) (in millionsofeuros) uoenAmerica European countries Other i or)20002905149,318 209,085 280,000 (in hours) North 2007 2007 909 (37) (34) (19) 19 4 5 (5) (5) (4) 0 1 aii theWorld Pacific sa Restof Asia- 2006 2006 813 (36) (33) (18) 18 1 1 Group 2005 2005 total 800 (17) (36) 19 (0) 4 1 103 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page104 104 CONSOLIDATED • previous balancesheetdates: related tovariousfactorsbutwereinlinewiththetrendsidentifiedat lossesrecordedin2007 The 21millioneurosinnetimpairment ness units(seeNotes1.land1.o). dataprovidedbyitsbusi- assets, basedonestimatedmedium-term tests ongoodwill,property, plantandequipmentintangible ofeachyeartheGroupcarriesoutimpairment quarter In thefourth Principal movements * SeeNote1.b. NET ASSETIMPAIRMENT Negative goodwillrecognizedintheincomestatement losses-goodwill Impairment losses-non-currentassets Reversals ofimpairment losses-non-currentassets Impairment NOTE 7 * In2006,disposalofElectro-Matériel(Switzerland)(seeNote2). NET GAINSONASSETDISPOSALS Other Net gainsondisposalofinvestments* Net gainsondisposalofnon-currentassets NOTE 6 In 2005,disposalofNexansDistribusjon(Norway). in millionsofeuros in millionsofeuros to align its carrying amountwithitsprobablemarketvalueinview to alignitscarrying ognized fortheTelecom infrastructurecables CGUinSpainorder losswasrec- forsimilarreasons.Animpairment ness inGermany were alsorecordedinrelationtothebuildingsectorcablesbusi- on theunit’s losses Additionalimpairment currentperformance. (CGU) towhichtheseassetsbelongisnotsufficientlyhighbased cantly in2007asthevalueuseofcash-generatingunit Infrastructure cablesinItalywereonceagainwrittendownsignifi- requirements. purely onitsowninternal prices aswelltheGroup’ employed inthesebusinessescausedbyrisesrawmaterial been almostfullywrittendown.Thisreflectstheimpactoncapital upstream businesses(wirerodsandelectricalwires)whichhavenow lossesfortheyearrelatedtoGroup’sThe mainimpairment NET GAINSONASSETDISPOSALS NET ASSETIMPAIRMENT s decisiontofocustheseoperations FINANCIAL STATEMENTS • electrical wiresandtheremainderofwindingbusiness in (i)theGroup’smarily concerned upstreambusinesses(wirerods, lossesfor2006pri- The aggregate109millioneurosinimpairment 2007 outlook forthesecountries,par where thereversalsweresignificantonaccountofastronggrowth year relatingto(i)Chinaand,alesserextentMoroccoandBrazil, Inversely, losseswerereversedduringthe anumberofimpairment mium asaresultoftheheightenedgeopoliticaltensioninLebanon. applicable discountingrateduetoariseinthemarketriskpre- relating toLibanCâblesfollowinganunfavorablechangeinthe losswasalsorecordedforthegoodwill An additionalimpairment euros. lossesrepresentedanaggregateamountof59million impairment of thedisposalprocesscurrentlyunderway(seeNote8).These euros in2007. Altogether, lossesamountedto42million reversalsof impairment extent, asbusinesslevelscontinuedtopickupinthiscountry. value-added products;and(iii)Switzerland,althoughtoalesser operations followingmeasuresimplementedtofocusonhigher gains achievedin2007;(ii)Germany, for Infrastructurecable (21) (59) 42 (4) 2006 2007 (109) (99) (19) 27 4 1 3 2 –11 ticularly inviewoftherobustmargin Restated* 2006 151 149 (32) (49) 21 (6) 1 2 2005 Reported 2005 (14) 34 33 (4) 8 0 2 – 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 105

Canada and China) where capital employed was particularly Discount rate Discount rate Perpetuity impacted by the rise in raw material prices; (ii) the Energy infrastruc- (before tax) (after tax) growth ture cables business in Germany, Italy, Greece, Egypt and South applied to applied to rate Korea; and (iii) goodwill relating to Liban Câbles, ICC (Egypt), future future cash flows cash flows Nexans Tianjin and Nexans Inc. (representing aggregate goodwill impairment of 19 million euros). Conversely, the turnaround in (i) the 2007 industrial cables business in Switzerland and Germany; (ii) the spe- Europe cialty cables business for electronic applications in France; and (iii) (euro zone) 13.5% 9.0% 0.5% - 2.0% the building sector cables business in the United States, enabled the United States 12.9% 9.0% 2.0% Group to reverse 27 million euros worth of impairment losses in 2006. Canada 12.9% 9.0% 0.5% - 2.0% As described in Note 1.b, the revaluation of core exposure result- Australia 12.8% 10.0% 3.0% ing from the use of the weighted average cost method as from China 12% 11.0% 4.0% 2006 gave rise to an increase in the working capital requirement included in non-monetary assets which are subject to impairment Korea 13.3% 10.0% 2.0% - 4.0% tests whenever there is an indication that they may be impaired. Brazil 16.2% 11.5% 4.0% This in turn led to an increase in the amount of impairment losses Turkey 16.7% 13.5% 3.0% previously recognized at December 31, 2005 in respect of cer- Lebanon 20.2% 18.0% 5.0% tain cash-generating units:

• Impairment losses recorded in 2005 related primarily to the spe- 2006 cialty cables business for electronic applications in Belgium, the Europe 10.6% 8.0% 2% industrial cables business in Switzerland and Belgium, the private North America 11.9% 9.0% 2% network cables business in the United Kingdom and the telecom China 11.9% 10.0% 2% infrastructure cables business in Spain. Reversals of impairment losses related to the building sector business in France, the telecom Korea 10.2% 8.0% 2% infrastructure cables business in Morocco and the metallurgy busi- Egypt 14.4% 12.0% 2% ness in China. Brazil 15.2% 11.0% 2% • In the restated 2005 financial statements, additional impairment Turkey 16.7% 12.0% 2% losses were recognized for the specialty cables business for elec- Lebanon 17.8% 15.5% 2% tronic applications in France and Brazil, the specialty cables busi- ness in Germany and Switzerland and certain corporate assets in 2005 Germany. The Group also recognized goodwill impairment in Europe 10.2% 7.7% 2% relation to Nexans Inc and Nexans Brazil. North America 10.2% 7.7% 2%

Main assumptions China 10.5% 8.8% 2% The main assumptions applied by geographic area when preparing Korea 11.4% 8.9% 2% the business plans in connection with impairment testing are listed Egypt 11.1% 9.2% 2% below. Apart from in North America, the discount rate applied has Brazil 17.6% 12.8% 2% increased for all areas due to a rise in long-term interest rates as well Turkey 20.7% 14.8% 2% as an upward revision of certain market risk premiums for a number of specific countries. Lebanon 18.5% 16.1% 2% 105 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 106

CONSOLIDATED FINANCIAL STATEMENTS

The estimated cash flows used for the Group’s impairment tests are based on 5-year metal price trends as at end-October 2007. The ter- NOTE 8 DISCONTINUED minal value applied approximates the latest available market forecast OPERATIONS value. The aluminum and copper price forecasts used were as follows (12-month average prices): AND ASSETS

Euro / tonne Copper Aluminium HELD FOR SALE

2008 5,367 1,798 At December 31, 2007 negotiations were under way with a third 2009 5,042 1,817 party relating to the sale of the Group’s Telecom infrastructure cables 2010 4,673 1,797 business in Spain. The Group has also launched a consultation process with a financial intermediary with a view to selling its Harness 2011 4,313 1,756 business (including the ”automotive” and ”railway” sub-segments). In 2012 3,963 1,713 accordance with IFRS 5, the assets and liabilities relating to these busi- Terminal value 3,728 1,627 nesses have been classified under ”Assets and groups of assets held for sale” and ”Liabilities related to groups of assets held for sale” in At December 31, 2007, Australia was the only cash-generating unit the consolidated balance sheet, as have the Group’s remaining wind- that held intangible assets with indefinite useful lives and goodwill rep- ing wires assets in Italy. However, as the above operations do not meet resenting a material amount at Group level. These items respectively the criteria in IFRS 5 for separate presentation in the income statement, totaled 15 million euros and 131 million euros. The recoverable the related income and expense items have been included line by amount of this CGU was determined based on its value in use in line in the corresponding income statement headings for continuing accordance with the method described in Note 1.o, using the latest operations in the Group’s consolidated income statement for 2007. available medium-term forecasts (2008-2010) approved by Group At December 31, 2006 negotiations were underway to dispose of Management. The other key assumptions used for these cash flow the Group’s remaining winding wires businesses in Canada and projections are described above. China (these sales were completed in 2007 – see Note 2). In accor- dance with IFRS 5, the balance sheet items relating to these busi- Sensitivity analyses nesses were reclassified in Nexans’ consolidated balance sheet at Impairment calculations are based on the latest projections approved December 31, 2006 along with those operations that had already by Group management as well as the main assumptions described been divested or discontinued (i.e. the remaining assets and liabili- above. At December 31, 2007 the main sensitivity factors were as ties of the Italian winding wires business closed at end-2005) and follows: presented on two separate lines – ”Assets and groups of assets held • A 1% increase in the discount rate used for the ”France Building for sale” on the assets side and ”Liabilities related to groups of Cables” CGU would result in an additional impairment loss of assets held for sale” on the liabilities side. However, as these oper- approximately 29 million euros. ations do not meet the criteria in IFRS 5 for separate presentation in the income statement, the related income and expense items have • If retail prices from 2008 onwards were maintained at a similar been included line by line in the corresponding income statement level to those observed in 2007, 18 million euros in accumulated headings for continuing operations in the Group’s consolidated impairment losses recorded for the ”France Building Cables” CGU income statement for 2006 and 2007. would be reversed. At December 31, 2005 the above-described balance sheet head- • A 1% increase in the discount rate used for the ”Germany Industrial ings also included the assets and liabilities of Electro-Matériel, which Cables” CGU would lead to an additional impairment loss of 19 was divested on February 1, 2006 (see Note 2). In the income state- million euros. ment, the European winding wires businesses that were sold (”European business”) or discontinued (”Italian business”) during 2005 have been presented on a separate line called ”Net loss from discontinued operations” since that date. 106 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page107 NET LOSS Post-tax lossfromdisposalofdiscontinuedoperations POST-TAX LOSSOFDISCONTINUEDOPERATIONS Income taxes LOSS BEFORETAXES Cost ofdebt of non-ferrousmetalderivatives changesinfairvalue Restructuring costs,impairment, Operating margin Net salesatconstantmetalprices Net sales(afteraddingbacktothediscontinuedbusinesses) The incomestatementfordiscontinuedoperations2007,2006and2005isasfollows: INCOME STATEMENT FORDISCONTINUEDOPERATIONS B HELD FORSALE LIABILITIES RELATED TOGROUPSOFASSETS Other liabilities Trade payables Financial liabilities Provisions Pension andotherretirementbenefitobligations HELD FORSALE TOTAL ASSETSANDGROUPSOF Other assetsheldforsale ASSETS OFBUSINESSESHELDFORSALE Trade receivablesandotherassets Inventories andworkinprogress,net Property, plantandequipmentintangibleassets ASSETSANDGROUPSOFHELDFORSALE-BALANCESHEET A At December31,inmillionsofeuros in millionsofeuros 2007 2007 150 150 45 71 11 10 37 46 57 47 152 071 301 3 (0) (1) (2) – – – – – – – – – – – 2006 2006 22 60 60 29 25 (4) (4) (4) (4) 0 6 – 2005 2005 131 146 (46) (40) (40) (37) 39 81 81 21 31 29 (6) 6 – – 107 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page108 108 INCREASE/(DECREASE) INCASHANDEQUIVALENTS CONSOLIDATED Germany andNorhAmerica. Germany Nexans SAheadsataxgroupinFrancethatcomprised12companies2007.Othergroupshavebeensetupwherepossible, including in * SeeNote1.b. INCOME TAX CHARGE Deferred incometax(charge)benefit,net Current incometaxcharge ANALYSIS OF THEINCOMETAX CHARGE A NOTE 9 OF DISCONTINUEDOPERATIONS (1)+(2)+(3)+(4)+(5) Impact ofchangeinscopediscontinuedoperations(5) Net cashusedinfinancingactivities(4) Net cashusedininvestingactivities(3) Net changeincurrentassetsandliabilities(2) Cash flowsfromoperations(1) CASHFLOWSOFDISCONTINUEDOPERATIONS C in millionsofeuros in millionsofeuros INCOME TAX FINANCIAL STATEMENTS 2007 2007 (84) (64) (19) – – – – – – 062005 2006 2006 4)(6 (26) (36) (48) 5)(6 (46) (46) (58) 01 20 10 10 (1) (1) (5) 5 – – ettd Reported Restated* 2005 19 (7) (3) (9) 3 3 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page109 - Previouslyunrecognizedandunusedtaxlossesotherdeductible in fairvalueandother”to ”Changes Deferred taxesrelatingtotheGroup’s atDecember 31,2007fromthesubcategory OCEANEbondswerereclassifiedwithinReserves TOTAL Foreign exchangederivatives-cashflowhedges Metal derivatives-cashflowhedges bonds OCEANE convertible/exchangeable BY TYPEOFUNDERLYING included inequity–totaled23millioneurosandcanbeanalyzedasfollows: At December31,2007,deferredtaxesrecognizeddirectlyinequity–primarilyrelatingtofairvalueadjustmentsonfinancial DEFERREDTAXES RECOGNIZEDDIRECTLY INEQUITY C relating topriorperiodswasnotmaterialfortheyearspresentedabove. The theoreticalincometaxexpenseiscalculatedbyapplyingtheparentcompany’s taxpayable taxratetopre-taxconsolidatedincome.Income EFFECTIVE TAX RATE ACTUAL INCOMETAX EXPENSE - Other - Tax credits - Impactofchangesintaxrates differences - Unusedtaxlossesandotherdeductibletemporary - Expensesnotdeductiblefortaxpurposes incurrenttaxratesofforeigncountries - Differences of: Effect THEORETICAL INCOMETAX EXPENSE Standard taxrateapplicableinFrance(in%) INCOME BEFORETAXES The effectiveincometaxratewasasfollowsfor2007,2006and2005: EFFECTIVEINCOMETAX RATE B - Incomenotsubjecttotaxortaxedatareducedrate - Utilizationduringtheperiodofunusedtaxlosses (primarily gainsondisposalsofsecurities) nowrecognizedasdeferredtaxassets. differences temporary not previouslyrecognizedasdeferredtaxassets differences and otherdeductibletemporary for theperiodnotrecognizedasdeferredtaxassets in millionsofeuros in millionsofeuros ”Consolidated retained earnings”. Deferred taxes on cash flow hedges are recorded in ”Changes in fair valueandother”. Deferredtaxesoncashflowhedgesarerecordedin”Changesfair ”Consolidated retainedearnings”. 98%1.1 13.78% 16.31% 29.84% 44%3.3 34.43% 34.43% 34.43% 2007 281 (97) (84) (10) (13) 24 11 (6) 1 0–– 6 –11 2006 2007 (102) 297 (48) 2)1 (23) (15) (10) 50 (2) 2 3 310 – – – instruments Reported 2005 2006 189 (65) (26) (10) 20 9 1 8 1 – – – 109 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page110 110 DEFERRED TAX ASSETS(GROSS) CONSOLIDATED profit willbeavailableagainstwhichthetaxlossescanutilized. nies whosebusinessplansshowthatitisprobablefuturetaxable Deferred taxassetsarerecognizedfortheunusedlossesofcompa- ative instrumentsandtheoptioncomponentofOCEANEbonds. ments relatingtofinancialinstrumentssuchasthefairvalueofderiv- differences”mainlyincludeconsolidation adjust- ”Other temporary acquisition, primarilycorrespondingtoanadditional30millioneurodeferredtax liabilityrelatingtoproperty, plantandequipment andintangibleassets. ** ThefiguresatDecember31,2006havebeenrestatedtotakeintoaccountthe fairvalueadjustmentsmadefollowingcompletion oftheinitialaccountingforOlex group * SeeNote1.b. Of whichdeferredtaxliabilities Of whichrecognizeddeferredtaxassets NET DEFERREDTAXES Unrecognized deferredtaxassets AND DEFERREDTAX LIABILITIES DEFERRED TAX ASSETS(GROSS) Tax lossescarriedforward differences Other temporary Provisions Inventories intangible assets Property, plantandequipment Of whichdeferredtaxliabilities Of whichrecognizeddeferredtaxassets NET DEFERREDTAXES Unrecognized deferredtaxassets AND DEFERREDTAX LIABILITIES Tax lossescarriedforward differences Other temporary Provisions Inventories intangible assets Property, plantandequipment differenceinthefollowingtable: Deferred taxesarepresentedbytypeoftemporary DEFERREDTAXES RECORDEDINTHEBALANCESHEET D At December31,inmillionsofeuros At December31,inmillionsofeuros FINANCIAL STATEMENTS 06*Ipc nTas uiesCagsIpc te 2007 Other Impact Changes Business Trans- Impacton 2006** 32 4––4 0(199) 50 – 48 – – 34 (332) 3 4)1–(4 2)(0 162 (50) (23) (54) – 1 (47) 335 2 4)––(4 225 2 – (54) – – (43) 320 (94) 5 (34) 7(4 2)(5 (44) (15) (23) – – 1 (34) 27 29 22 9 1)1–()(3 (37) – (23) (6) – 1 (13) 3 7––––––48 16–––– 0 h noelto ob-i a on intax combi- lation the income statement Restated* 05Ipc nTasainBsns Ohr2006** Other Business Translation Impacton 2005 39 56 (399) 1 (47) 419 4 (107) 447 1)52 (14) (45) (33) 20 31 5 0 3––––9 –––––– h noeajs-combi- adjust- the income ttmn ments statement dut na adjust- described inparagraphe)below. thetaxlosses was notsufficientlyprobable.Thesemainlyconcern euros werenotrecognizedastheGroupdeemedthattheirrecovery amounts of199millioneuros,332eurosand399 At December31,2007,2006and2005,deferredtaxassetsinthe ments ––––1 ––––233 9 0 7 2 –––– in ae equity rates tions 2)(3 335 (13) (24) – – 2)()3 (2) (24) – 22 – 12 (27) – – – – nations 0 1(332) 11 (0) (0) (0) 1)27 (12) 2 2)320 (21) 1 0 (34) 8 4)(24) (40) (85) (94) (28) 0 7 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 111

E TAX LOSSES CARRIED FORWARD 1.w. Net deferred tax assets recognized in the balance sheet on the Unused tax losses carried forward represented potential tax benefits basis of these business plans amounted to 32 million euros at of 225 million euros at December 31, 2007 (320 million euros and December 31, 2007 (52 million euros at December 31, 2006), 447 million euros at December 31, 2006 and 2005, respectively), including 27 million euros for the Group’s German subsidiaries (23 including (i) 157 million euros relating to the Group’s German sub- million euros at December 31, 2006 and 16 million euros at sidiaries (205 million euros and 279 million euros at December 31, December 31, 2005). No net deferred tax assets were recorded in 2006 and 2005, respectively); and (ii) 15 million euros relating to relation to French subsidiaries at December 31, 2007 as these com- French subsidiaries (55 million euros at December 31, 2006 and 76 panies had a net deferred tax liability at that date, compared with a million euros at December 31, 2005). net deferred tax asset position at December 31, 2006 and 2005 (restated) amounting to 25 million euros and 20 million euros respec- For countries in a net deferred tax position after offsetting deferred tively. Tax losses may be carried forward indefinitely in both France tax assets and deferred tax liabilities arising from temporary differ- and Germany. ences, the net deferred tax asset recognized in the balance sheet is determined based on updated business plans as described in Note The potential tax benefits deriving from tax losses carried forward break down as follows by expiry date:

in millions of euros 2007 2006 2005 Year y+1 36 13 30 Year y+2 to y+4 53252 Year y+5 and subsequent years 184 275 365 TOTAL 225 320 447

F TAXABLE TEMPORARY DIFFERENCES RELATING TO INTERESTS IN SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES No deferred tax liabilities have been recognized in relation to tem- porary differences where (i) the Group is able to control the timing of the reversal of the temporary difference and it is probable that the tem- porary difference will not reverse in the foreseeable future; or (ii) the reversal of the temporary difference will not give rise to a tax pay- ment (notably concerning the abolition in France of capital gains tax on sales of securities as from 2007). 111 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 112

CONSOLIDATED FINANCIAL STATEMENTS

NOTE 10 EARNINGS PER SHARE The following table presents a reconciliation of basic earnings per share and diluted earnings per share:

2007 2006 2005 Restated* Reported

NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY (IN MILLIONS OF EUROS) 189 241 163 108 Impact of interest expense (OCEANE convertible/ exchangeable bonds) 10 7 5 5 ADJUSTED NET INCOME (IN MILLIONS OF EUROS) 199 248 168 113 Average number of shares outstanding 25,553,906 23,529,530 21,146,263 21,146,263 Average number of OCEANE bonds 3,794,037 3,463,868 3,552,632 3,552,632 Average number of stock options 547,659 794,369 712,570 712,570 Average number of diluted shares 29,895,603 27,787,767 25,411,465 25,411,465

ATTRIBUTABLE NET INCOME FROM CONTINUING OPERATIONS PER SHARE (IN EUROS) - basic earnings per share 7.41 10.44 9.90 7.30 - diluted earnings per share 6.67 9.10 8.52 6.36 NET INCOME/(LOSS) FROM DISCONTINUED OPERATIONS PER SHARE (IN EUROS) - basic earnings per share 0.00 (0.19) (2.18) (2.18) - diluted earnings per share 0.00 (0.16) (1.89) (1.89)

NET INCOME PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY (IN EUROS) - basic earnings per share 7.41 10.25 7.73 5.12 - diluted earnings per share 6.67 8.93 6.63 4.46

* See Note 1.b. 112 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page113 • • During 2007,themainadditionstogoodwillrelatedfollowing: Main movements assumptions describedinNotes1.l,1.oand7. there isanindicationthatitmaybeimpaired,usingthemethodsand atleastonceayearandwhenever Goodwill istestedforimpairment **** Taking intoconsiderationthefinalallocationofgoodwillrelatingtoOlex(seebelow). *** SeeNote1.b. ** PutoptionsgrantedtominorityshareholdersintheLibanCâblesgroup(seeNote20.e). * Includingclassificationasassetsandgroupsofheldforsale(IFRS5). DECEMBER 31,2007 Other movements* Translation adjustments losses Impairment Disposals Business combinations DECEMBER 31,2006 Other movements* Translation adjustments losses Impairment Disposals Business combinations**** DECEMBER 31,2005RESTATED*** Other movements* Translation adjustments losses Impairment Disposals Business combinations Change relatedtocoreexposure*** First-time adoptionofIAS32and39** JANUARY 1,2005RESTATED*** NOTE 11 in millionsofeuros ital (seeNote1.mand2). option relatingtotheremaining30% ofMultinacionalT 2007. Theamountrecognizedtakesintoaccountaminorityput rise toprovisionalgoodwillof6millioneurosatDecember31, The purchaseofa70%interestinMultinacionalTrade whichgave lion eurosatDecember31,2007. total goodwillrecognizedinrelationtoOlexamounted131mil- the finalpurchasepriceallocationconcer connection withtheacquisitionofOlexgroup(seeNote2).After The 26millioneurosinadditionalpurchaseconsiderationpaid GOODWILL ning thisacquisition,the rade’s cap- • The mainmovementsingoodwill2006wereasfollows: in viewoftheplanneddivestmentthisbusiness(seeNote8). operationsinaccordancewithIFRS5 of goodwillrelatingtoharness (see Note7).”Othermovements”primarilyreflectthereclassification lossesrecordedin2007relatedtoLibanCâbles Goodwill impairment Further detailsareprovidedbelow.Further lion eurosinadditionalpurchaseconsiderationpaid2007). lion eurosatDecember31,2007(takingintoaccountthe26mil- pleted in2007andtherelatedgoodwillwasreducedto131mil- euros. Theinitialaccountingofthebusinesscombinationwascom- Provisional goodwillonthisacquisitionamountedto184million leader–forapproximately310 million euros. cable industry 1, 2006acquisitionoftheAustraliangroupOlex–Australasia’ Additional recognizedgoodwillprimarilyrelatedtotheDecember Gross 216 197 112 (10) 88 77 35 10 (5) (1) (5) (2) 2 0 3 – – – – – – Impairment losses Impairment (24) (23) (19) (6) (4) (6) 2 1 2 – – – – – – – – – – – – Carrying amount Carrying 192 174 112 (19) 82 77 35 10 (8) (3) (4) (5) (2) (6) 2 0 3 – – – – s 113 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 114

CONSOLIDATED FINANCIAL STATEMENTS

• 19 million euros in goodwill impairment losses were recognized In 2005, apart from the impact of translation adjustments, the main due to an increase in capital employed caused by the rise in non- change in goodwill was due to the inclusion of the put option granted ferrous metal prices. These impairment losses primarily concerned to minority shareholders in the Liban Câbles group in connection with Liban Câbles. the first-time adoption of IAS 32 and IAS 39. In the restated 2005 finan- cial statements, additional goodwill impairment losses have also been recognized in relation to Nexans Inc and Nexans Brazil (see Note 7).

Information on acquisitions and disposals carried out in 2007, 2006 and 2005 is set out in the table below: (the main changes in scope of consolidation are described in Note 2).

Acquisitions Disposals

in millions of euros 2007 2006* 2005 2007** 2006 2005

ACQUISITION/SALE PRICE 36 393 2 45 201 84 Including portion paid/received in cash and cash equivalents 36 393 2 45 201 84 Purchase price excluding the purchase of minority interests 36 347–––– ASSETS Non-current assets 0 194 1 8 27 30 Inventories 3 71 2 12 20 39 Receivables 5 56 5 23 25 116 Cash and cash equivalents 1 18 0 (10) 4 2 Other assets 0 4 0 22 – – LIABILITIES Provisions 3 15 1 (0) 0 14 Debt 4 20 2 6 (16) 37 Other liabilities – 66 3 7 33 81 NET ASSETS ACQUIRED/DISPOSED OF (INCLUDING MINORITY INTERESTS) 1 242 3 44 57 54 Minority interest in net assets acquired – (11) 0 – – – NET ATTRIBUTABLE ASSETS AT THE BALANCE SHEET DATE 1 231 3 – – –

* Taking into consideration the final allocation of goodwill relating to Olex (see below). ** The figures for 2007 disposals do not include the impact of the legal reorganization carried out in Vietnam. 114 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 115

Final allocation of goodwill arising on the acquisition of Olex The difference between the reported provisional goodwill relating to the Olex group at December 31, 2006 and restated final goodwill at the same date breaks down as follows:

in millions of euros index

PROVISIONAL GOODWILL AT DECEMBER 31, 2006 184 Additional allocation to property, plant and equipment (14) a) Allocation to trademarks (15) b) Allocation to customer relationships (77) b) Additional net deferred tax liabilities + 30 c) Other (3) FINAL GOODWILL AT DECEMBER 31, 2006 105

a) In 2007 Nexans measured the fair value as at the acquisition date • Customer relationships, in view of Olex’s very solid customer port- of all of the Olex group’s property, plant and equipment, including folio. A specific valuation process was set up for each of the main land, buildings and industrial equipment. These valuations were per- market sub-segments in order to factor in different earnings and formed with the assistance of specialized consulting firms. risk profiles. The intangible asset recognized for customer relation- ships is being amortized over an average of twenty years, based Including the 30 million euros provisionally allocated to property, on Olex’s very high capacity to retain customers and its historically plant and equipment in 2006, following the above valuations the total extremely low turnover level for principal customers. amount of the purchase price allocated to this item came to 44 mil- lion euros. These assets are being depreciated over an average of c) These deferred tax liabilities were recognized in relation to the 10 years. adjustments made to the provisional fair values of intangible assets and property, plant and equipment. b) Also in 2007 Nexans measured the fair value of the Olex group’s intangible assets. Two main categories of intangible assets were The above adjustments did not have an impact on 2006 net income identified in connection with this valuation: or equity as Olex has only been consolidated since December 31, • The Olex trademark, which has a strong reputation. However, the 2006. At December 31, 2006, further to the additional allocation fair value assigned to the trademark was assessed taking into analyses, the Group reclassified an 8 million euro commitment related account its regional reach and the fact that the group only operates to ”Other long-term employee benefit obligations” from current to non- on an industrial segment. The Olex trademark is not amortizable current liabilities. as it is deemed to have an indefinite useful life. 115 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page116 116 CONSOLIDATED ** AfterfinaladjustmentstoprovisionalfairvaluesrelatingtheOlexacquisition(seeNote11). * Includingclassificationasassetsandgroupsofheldforsale(IFRS5). DECEMBER 31,2007 Other movements* Translation adjustments Business combinations Disposals Acquisitions DECEMBER 31,2006 Other movements* Translation adjustments Business combinations** Disposals Acquisitions DECEMBER 31,2005REPORTED Other movements* Translation adjustments Business combinations Disposals Acquisitions JANUARY 1,2005 CHANGESINTHEGROSSVALUE OFINTANGIBLE ASSETS A NOTE 12 in millionsofeuros INTANGIBLE ASSETS FINANCIAL STATEMENTS rdmrsCsoesSfwr aet n te Total Other Patentsand Software Customers Trademarks 15 15 15 (0) 0210(2)1 – – – – – – – –– – – – – – – relationships 77 77 77 (2) – – – – – – – – – – – – – 37 031 46 34 13 3 30 24 (0) (0) (0) (2) (2) (0) (0) 2 3 3 5 0 2 1 Gross value licenses (0) (0) (4) (0) 5 5 7 0 0 1 – – – – – – – 0143 10 2144 12 (1) (0) (1) (0) (0) (0) (3) (0) 6 1 3 4 1 2 0 38 94 (1) (0) (1) (2) (2) (0) (3) 3 1 6 5 1 4 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page117 * Includingclassificationasassetsandgroupsofheldforsale(IFRS5). DECEMBER 31,2007 Other movements* Translation adjustments Business combinations Reversals ondisposals expense Amortization DECEMBER 31,2006 Other movements* Translation adjustments Business combinations Disposals expense Amortization DECEMBER 31,2005REPORTED Other movements* Translation adjustments Business combinations Disposals expense Amortization JANUARY 1,2005 CHANGESINAMORTIZATION B in millionsofeuros AND IMPAIRMENT OFINTANGIBLE ASSETS rdmrsCsoe otaePtnsad te Total Patents Other CustomerSoftware and Trademarks – – – – – –– – – – – –– – – – – –– – – – relationships licenses Amortization andimpairment Amortization (0) (0) 431 342 3 4 – – – – – – – – – – – – 53332 3 3 25 83435 4 3 28 30 3 7 20 (2) (0) (0) (0) (0) (2) (2) (0) 0 1 4 0 5 4 3 (0) (0) (0) (4) 0 0 0 – – – – – – – – (0) (1) (0) (0) (0) (0) (0) (0) (0) 0 0 0 0 0 0 10 (0) (1) (0) (0) (2) (2) (0) (2) (0) 0 2 0 4 4 117 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page118 118 CONSOLIDATED Property, leasesaccountforless than1%oftotalproperty, plantandequipment acquiredunderfinanceleasesandlong-term plantandequipment. *** AfterfinaladjustmentstoprovisionalfairvaluesrelatingtheOlexacquisition(seeNote11). ** SeeNote1.b. * Includingclassificationasassetsandgroupsofheldforsale(IFRS5). DECEMBER 31,2007 Other movements* Translation adjustments Business combinations Disposals Acquisitions DECEMBER 31,2006 Other movements* Translation adjustments Business combinations*** Disposals Acquisitions DECEMBER 31,2005RESTATED** Reclassification ofcoreexposureasinventory** DECEMBER 31,2005REPORTED Other movements* Translation adjustments Business combinations Disposals Acquisitions JANUARY 1,2005REPORTED CHANGESINTHEGROSSVALUE OFPROPERTY, PLANTANDEQUIPMENT A NOTE 13 in millionsofeuros NOTE 13PROPERTY, PLANTANDEQUIPMENT FINANCIAL STATEMENTS adBidnsPlant,equip- Buildings Land (11) 55 55 63 64 62 11 (2) (2) (0) (1) (1) (0) 0 1 01561 1 1 4 0 8 1,781 1,781 585 585 0 1,794 605 0 1802 603 1,689 616 (11) (46) 17 11 17 19 (4) (4) (9) (5) (5) (2) 6 4 Gross value ahnr assetsunder machinery etad(including ment and (14) (51) (30) (33) (53) (47) 51 50 40 61 18 90 27 1 construction) Other 12 (142) (142) 18 (110) (118) 5 2,622 255 8 2,754 285 6 2,683 2,825 262 404 1 2,775 312 103 114 (15) (53) (11) (16) (51) 68 13 (2) (5) (2) 6 Total 125 172 166 126 (72) (79) (71) (65) (22) (50) (82) 94 (6) 2 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page119 10 millioneurosatDecember31,2006and2005,respectively). commitments topurchaseproperty,Firm plantandequipmentamountedto39millioneurosatDecember 31,2007(20millioneuros OTHERINFORMATION C *** AfterfinaladjustmentstoprovisionalfairvaluesrelatingtheOlexacquisition. ** SeeNote1.band7. * Includingclassificationasassetsandgroupsofheldforsale(IFRS5). DECEMBER 31,2007 Other movements* Translation adjustments Business combinations Reversals ondisposals losses** Reversals ofimpairment losses** Impairment Depreciation expense DECEMBER 31,2006*** Other movements* Translation adjustments Business combinations*** Reversals ondisposals losses** Reversals ofimpairment losses** Impairment Depreciation expense DECEMBER 31,2005RESTATED** (coreexposure)** metal inventory Change relatingtorecognitionofnonferrous DECEMBER 31,2005REPORTED Other movements* Translation adjustments Business combinations Reversals ondisposals losses** Reversals ofimpairment losses** Impairment Depreciation expense JANUARY 1,2005 CHANGESINDEPRECIATION ANDIMPAIRMENT OFPROPERTY, PLANTANDEQUIPMENT B in millionsofeuros adBidnsP at qi te Total Other Land Buildings Plant, equip 10 (0) (0) (0) (0) (0) (0) (0) (0) 9 9 8 9 0 0 0 0 0 2 0 0 – – – – – 1 1,300 415 1,278 415 6 1,266 460 1 1,313 417 1,215 429 Depreciation andimpairment (44) 16 17 19 27 11 (3) (3) (9) (6) (4) (3) (0) (5) (0) 0 8 3 7 – – machinery ment and 106 (69) (44) (93) (24) (36) (35) (37) (23) 69 66 70 44 18 22 36 (6) (7) (3) (2) (7) 7 6 1,896 161 8 1,905 180 1,883 180 0 1,946 208 1,834 181 (41) (15) 10 30 (5) (1) (3) (9) (2) (8) (0) 7 8 2 1 1 4 – – – – 106 (55) (83) (62) (72) (11) (33) (49) (43) (23) (42) 99 92 91 59 21 22 48 14 and (7) (2) (7) 119 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 120

CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 INVESTMENTS IN ASSOCIATES – SUMMARY FINANCIAL DATA

A EQUITY VALUE

At December 31, in millions of euros Percentage ownership 2007 2006 2005 Essex Nexans 40% – 22 17 Other 1–1 TOTAL 12218

When Essex Nexans was set up, Superior Essex was granted a purchase option exercisable at a price approximating the equity value as from October 21, 2006. This option was exercised during the first half of 2007 (see Note 2). At December 31, 2007, the Group had only one associate accounted for by the equity method – Recycables, based in France and 36.5% owned by Nexans. Recycables – which has been set up in partnership with the Sita group and will begin operations in 2008 – will be dedicated to recy- cling manufacturing waste.

B FINANCIAL DATA RELATING TO ASSOCIATES

Condensed balance sheet

At December 31, in millions of euros 2007 2006* 2005* Property, plant and equipment – 20 31 Working capital requirement – 68 61 Other – (4) (7) TOTAL CAPITAL EMPLOYED – 85 85 Net debt (1) 30 40 Equity 15545 TOTAL FINANCING – 85 85

Condensed income statement

in millions of euros 2007 2006 2005 Sales at current metal prices – 509 45 Operating margin – 14 (0) Net income – 9 (1)

* These data include the estimated accounts of Essex Nexans at December 31, 2006 (the final accounts were not available at the date Nexans’ financial statements were approved by the Board of Directors). For 2005, the condensed income statement covers the period from October 21 to December 31, 2005. 120 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page121 Impairment lossesrecordedforavailable-for-salesecuritieswereasfollowsin2005,2006and2007: Impairment * SeeNote1.b NET AMOUNT Finished products Industrial workinprogress Raw materialsandsupplies NOTE 16 2005 2006 2007 TOTAL Other loansandreceivables Long-term to sharesinnon-consolidatedcompaniesandhavenomaturity). The maturityscheduleforthesefinancialassetsatDecember31,2007ispresentedbelow(excludingavailable-for-salesecurities whichcorrespond in first-half2007followingthesaleofGroup’s residualinterestinitsEuropeanwindingwiresoperations. bearing interestat8.97%.Thisloanwasgrantedin2005aspar Loans andreceivablesatDecember31,20062005includedan11.3millioneurosubordinatedloangrantedtoEssexNexansLacroix &Kress TOTAL Other Available-for-sale securities loansandreceivables Long-term NOTE 15 items atDecember31,2007,2006or2005. receivables”and there werenopast-duebalancesin relationtothese loans”and”Otherlong-term lossesarerecordedfor”Long-term No impairment At December31,inmillionsofeuros At December31,inmillionsofeuros in millionsofeuros in millionsofeuros OTHER NON-CURRENTFINANCIALASSETS INVENTORIES ANDWORKINPROGRESS t ofthesaleNexans’windingwiresbusinesstoSuperiorEssex andwasrepaid Carrying amount Carrying tJn diin Disposals Additions At Jan.1 1,158 16 2007 9 9 510 260 388 10 4301 6114 er1to5years < 1year – – – 1,328 2006 2007 349 186 793 28 18 4 491 6 2007 – – – Restated* 2006 874 324 180 371 50 25 16 te AtDec.31 Other 1 (7) 7 – 2005 > 5years Reported 2005 563 210 125 228 56 16 22 16 5 7 9 9 121 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 122

CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17 TRADE RECEIVABLES

At December 31, 2007, 108 million euros worth of receivables had been sold to a bank (124 million euros and 135 million euros at December 31, 2006 and 2005, respectively). However, in view of the terms of the sale the receivables concerned do not qualify for derecognition under IAS 39. The receivables sale program in which the Group’s main French operating subsidiaries participate was renewed for one year on December 13, 2007, covering an amount of 120 million euros. Subsidiaries with wirerod operations are no longer included in this program as their business now only covers the Group’s internal needs and they consequently have no external receivables that could be sold under the program.

At December 31, in millions of euros 2007 2006 2005 Gross value 1,129 1,313 1,147 Provisions for impairment in value (37) (41) (42) NET VALUE 1,092 1,272 1,105

Changes in provisions for impairment of trade receivables can be analyzed as follows:

At Jan. 1 Additions Utilizations Reversals Other (trans- At Dec. 31 (surplus lation adjust- provisions) ments, IFRS 5 in millions of euros requirements) 2007 41 4 (3) (3) (2) 37 2006 42 7 (5) (2) (1) 41 2005 52 5 (11) (3) (1) 42

Receivables more than 30 days past due at the year-end and which had not yet been written down were as follows:

Between 30 and 90 days More than 90 days in millions of euros past due past due December 31, 2007 12 21 December 31, 2006 918 December 31, 2005 819

Receivables past due but not written down mainly relate to leading industrial groups, energy companies or major resellers. They historically represent an extremely low level of default and are generally located in geographic areas where contractual payment dates are customarily exceeded. 122 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 123

NOTE 18 OTHER CURRENT FINANCIAL ASSETS

At December 31, in millions of euros 2007 2006 2005 Advances and progress payments 11 10 7 Prepaid expenses 992 Derivative instruments 38 27 47 Other operating receivables 23 28 64 Other non-operating receivables 24 26 14 Other 21 6 23 GROSS VALUE 126 106 156 PROVISIONS FOR IMPAIRMENT IN VALUE (1) (1) (1) NET VALUE 125 105 155

Derivative instruments correspond to foreign exchange derivatives and non-ferrous metal forward contracts whose fair value represents an unre- alized gain (see Note 26 for further information).

NOTE 19 CASH AND CASH EQUIVALENTS

At December 31, in millions of euros 2007 2006 2005 Cash on hand 181 188 12 Money market funds (SICAV) 215 99 – Commercial paper – – 105 Certificates of deposit 226 – – TOTAL CASH AND CASH EQUIVALENTS 622 287 117

In addition to cash on hand, the line ”cash and cash equivalents” consists primarily of money market funds (SICAV), commercial paper and certificates of deposit.

NOTE 20 EQUITY B DIVIDENDS At the Annual General Meeting, shareholders will be invited to A COMPOSITION OF CAPITAL STOCK approve the payment of a dividend of 2 euros per share, represent- ing an aggregate dividend of 51.4 million euros based on At December 31, 2007 Nexans’ capital stock comprised 25,678,355 shares making up the Company’s capital stock at 25,678,355 fully paid-up shares (25,264,955 at December 31, December 31, 2007. 2006 and 23,507,322* at December 31, 2005), with a par value of 1 euro each. Including the impact of the 220,720 shares carrying In the event that Nexans holds treasury stock at the time the dividend double voting rights, the total number of voting rights was is paid out, the amount corresponding to unpaid dividends on these 25,899,075 at December 31, 2007 (25,544,195 at December shares will be appropriated to retained earnings. The total amount of 31, 2006 including the impact of 279,240 shares carrying double the dividend could be increased in order to reflect the number of voting rights). additional shares that may be issued between January 1, 2008 and the date of the Annual General Meeting convened to approve the dividend distribution, following transactions such as: * Including 2,221,199 treasury shares. • the exercise of stock options 123 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 124

CONSOLIDATED FINANCIAL STATEMENTS

• the issuance of new shares in connection with the employee rights C TREASURY STOCK issue decided by the Board of Directors on July 24, 2007 which is Following the cancellation of all the 2,221,199 treasury shares held scheduled to be carried out before the Annual General Meeting at December 31, 2005, Nexans did not hold any of its own shares (see paragraph g below) at December 31, 2007 or 2006. As these treasury shares were • the conversion of OCEANE bonds. deducted from equity at December 31, 2005, their cancellation had no impact on income or on total equity. At the Annual General Meeting held on May 10, 2007 to approve the financial statements for the year ended December 31, 2006, the D STOCK OPTIONS Company’s shareholders authorized the payment of a dividend of At December 31, 2007, there were 1,070,250 stock options out- 1.20 euros per share – representing a total amount of 30.6 million standing, each exercisable for one newly-issued share, and in total euros – which was paid out on May 15, 2007. representing 4.2% of the Company’s capital stock. At December 31, At the Annual General Meeting held on May 15, 2006 to approve 2006 and 2005 a total of 1,462,775 and 1,498,650 options were the financial statements for the year ended December 31, 2005, the outstanding, exercisable for 5.8% and 6.4% of capital stock respec- Company’s shareholders authorized the payment of a dividend of tively. The options outstanding at December 31, 2007 can be ana- 1 euro per share, which was paid out on May 19, 2006. lyzed as follows:

Grant date

Grant date Number of Number of Exercise Exercise period options options price originally outstanding at (in euros) granted the year-end

November 16, 2001 531,500 26,000 17.45 From November 16, 2002 (vesting at 25% per year) to November 15, 2009 January 18, 2002 5,000 – 16.70 From January 18, 2003 (vesting at 25% per year) to January 17, 2010 March 13, 2002 8,000 – 19.94 From March 13, 2003 (vesting at 25% per year) to March 12, 2010 April 4, 2003 644,500 68,300 11.62 From April 4, 2004 (vesting at 25% per year) to April 3, 2011 November 16, 2004 403,000 302,000 27.82 From November 16, 2005 (vesting at 25% per year) to November 15, 2012 November 23, 2005 344,000 301,950 40.13 From November 23, 2006 (vesting at 25% per year) to November 22, 2013 November 23, 2006 343,000 343,000 76.09 From November 23, 2007 (vesting at 25% per year) to November 22, 2014 February 15, 2007 29,000 29,000 100.94 From February 15, 2009 (vesting at 50%) February 15, 2010 and February 15, 2011 (vesting at an additional 25% per year) to February 14, 2015 TOTAL 2,308,000 1,070,250 124 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page125 ment (3.4millioneurosin2006and2.42005). euro stockoptionexpensewasrecognizedinthe2007incomestate- period, withacorrespondingadjustmenttoequity. A5.6million on astraight-linebasisfromthegrantdatetoendofvesting The fairvalueofthestockoptionsisrecordedasapayrollexpense 25% peryear. with theremaindervestingoverfollowingtwoyearsatarate of 15, 2007planwherehalfoftheoptionsvestafteratwo-yearperiod, over afour-year periodfromthegrantdate,exceptforFebruary the lastthreeyears.Theoptionsvestbytranchesof25%peryear mined byreferencetothehistoricvolatilityofNexansshareover applicable tooptionbeneficiaries.Thevolatilityappliedwasdeter- takingintoaccounttaxlaws The estimatedlifeofoptionsisdetermined 1,2005. January the scopeofIFRS2,sincerightswerefullyvestedpriorto firsttrancheoftheplandatedApril4,2003doesnotfallwithin The 1,2005werenotvaluedandarerecognized. at January Options grantedpriortoNovember7,2002whichhadnotvested Fair valueoftheoption(ineuros) Dividend rate(%) Risk-free interestrate(%) Volatility (in%) Average estimatedlifeoftheoptions Share priceupongrant(ineuros) Grant date Including optionsexercisableattheyear-end OPTIONS OUTSTANDING AT THEYEAR-END Options expiredduringtheyear Options exercisedduringtheyear Options cancelledduringtheyear Options grantedduringtheyear OPTIONS OUTSTANDING AT BEGINNINGOFTHEYEAR Changes inthenumberofoptionsoutstanding The assumptionsappliedtovaluetheoptionsimpactingincomeforyearareasfollows: Valuation ofoptions pi ,20 o.1,20 o.2,20 o.2,20 Feb.15,2007 Nov. 23,2006 Nov. 23,2005 Nov. 16,2004 April 4,2003 50 50 30 00 00 % 30.00 % 30.00 % 33.00 % 35.00 % 35.00 5 years .0% 2.00 .4% 3.54 11.62 3.49 5 years .0% 1.60 .4% 3.44 27.82 minority interests. (ii) 3millioneurosunderfinancialliabilities;andthebalance has beenrecognizedasfollows:(i)2millioneurosundergoodwill; company’s capital.Thisputoption,whichisvalidforthreeyears, Trade relatingtoNexans’acquisitionoftheremaining30%that to theputoptiongrantedminorityshareholdersinMultinacional A similaraccountingtreatmentwasappliedatDecember31,2007 Note7). 2006 (see writtendownatDecember31,2007and 31, partially millioneurobalanceisrecognizedasgoodwill.Thegoodwillwas 3 ment tominorityinterestsintheamountof1millioneuros.The ties intheamountof4millioneuros,withacorrespondingadjust- 2005 thisputoptionhasbeenrecognizedunderfinancialliabili- sidered asafinancialliabilityunderIAS32.SinceDecember31, the LibanCâblesgroup(representing7%ofcapitalstock)iscon- Nexans’ commitmenttobuythesharesofminorityshareholdersin MINORITY PUTOPTIONSGRANTEDTO E 8.65 SHAREHOLDERS er ,5yas4,75years 5,75years 5 years .0% 1.50 .4% 3.04 40.13 11.75 1,462,775 1,070,250 ubro Weighted average Number of (413,400) 517,000 29,000 options 815 – (8,125) .0% 1.50 .0% 3.70 60 100.94 76.09 22.79 –– exercise price 100.94 37.69 47.46 .0% 1.50 .0% 4.00 28.22 16.78 36.40

125 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 126

CONSOLIDATED FINANCIAL STATEMENTS

F EQUITY COMPONENT OF THE OCEANE CONVERTIBLE/EXCHANGEABLE BONDS NOTE 21 PENSIONS AND In accordance with IAS 32, the portion of the July 2006 OCEANE OTHER RETIREMENT bond issue that corresponds to the value of the options embedded in the instrument is recorded under ”consolidated retained earnings” BENEFIT within equity, representing an amount of 34 million euros. OBLIGATIONS

G EMPLOYEE SHARE OWNERSHIP PLAN There are a large number of retirement schemes in place within the In 2007, Nexans announced its intention to carry out an employee Group. rights issue involving the issuance of a maximum of 500,000 shares to members of an employee share ownership plan. • In France, each Group employee is eligible for state pension schemes and is entitled to a statutory retirement bonus paid by the This issue, which has been postponed to 2008, will be the third inter- employer. national employee rights issue carried out by the Group. Employees will be able to subscribe for the shares through a corporate mutual • In other countries, pension schemes are subject to local legislation, fund, where permitted by local regulations, based on the following and to the business and historical practices of the subsidiary con- structures: (i) a ”classic” structure, whereby employees subscribe for cerned. Nexans takes care to ensure that the plan assets of its main Nexans shares at a per-share price based on a 20% discount to the open pension schemes approximate the value of the Group’s under- market price; or (ii) a ”leveraged” structure, whereby employees are lying obligations. Unfunded schemes mainly relate to closed plans. provided with a capital guarantee plus a multiple based on share The Group Consolidation Department determines the basic assump- performance. The aim of these share ownership plans is to strengthen tions used for the actuarial calculations required to measure obliga- the Group’s relationship with its employees, both in France and tions under defined benefit plans, in conjunction with actuaries in each abroad, and to closely associate them with Nexans’ future expan- country concerned. Specific assumptions, such as staff turnover and sion and earnings. salary increases, are set on a per-company basis, taking into consid- eration local job market trends and forecasts specific to each entity.

The average weighted rates used per country are listed below (together, these countries represent over 90% of the Group’s pension obligations at December 31, 2007). 126 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page127 Asia America North Other Europeancountries Germany France 2005 Asia-Pacific America North Other Europeancountries Germany France 2006 Australia United States Canada Switzerland Norway Germany France 2007 concerned. andthematurityof onplanassetswasestimatedbyreferencetothecompositionofportfolio return The expectedlong-term bonds were used. Inthosecountrieswherethereisnodeepmarketinsuchbonds,theyieldsongovernment pension plansconcerned. byreferencetomarketyieldsonhigh-qualitycorporatebondswithsimilarmaturities tothoseofthe The discountratesappliedweredetermined Discount rate 5.16% 4.85% 5.11% 5.00% 6.00% 3.50% 4.97% 3.40% 4.25% 4.25% 3.51% 4.50% 4.50% 4.75% 4.80% 5.25% 5.25% Estimated future salary increases salary 4.00% 5.56% 4.15% 4.00% 5.00% 2.25% 3.97% 2.33% 2.13% 2.50% 2.38% 2.25% 2.50% 4.00% 4.50% 2.25% 2.50% return onplanassets return Expected long-term Expected long-term theassets 7.00% 5.06% 7.00% 7.00% 7.00% 4.00% 3.75% 4.02% 4.50% 4.25% 4.50% 7.00% 5.70% 4.00% N/A N/A N/A

127 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page128 128 CONSOLIDATED FAIR VALUE OFPLANASSETSAT DECEMBER31 Other (translationadjustments) Benefits paid andsettlements Curtailments Acquisitions anddisposals Employee contributions Employer contributions Actuarial gains/(losses) onplanassets Expected return FAIR VALUE OFPLANASSETSAT JANUARY 1 Plan assets PRESENT VALUE OFBENEFITOBLIGATION AT DECEMBER31 Other (translationadjustments) Actuarial (gains)/losses Benefits paid andsettlements Curtailments Acquisitions anddisposals Amendments Employee contributions Interest cost cost Service PRESENT VALUE OFBENEFITOBLIGATION AT JANUARY 1 Valuation ofbenefitobligation Operatingexpenses Of which: NET COSTFORTHEPERIOD Impact ofassetceiling retirementbenefits Supplementary andsettlements ofcurtailments Effect ofactuarialgainsandlosses Amortization cost Past service onplanassets Expected return Interest cost cost Service Retirement costsfortheperiod in millionsofeuros Financial expenses FINANCIAL STATEMENTS 2007 775 744 379 387 (36) (17) (27) (12) (51) (14) (21) (10) (34) (16) (15) 19 19 32 23 23 23 35 20 32 17 34 16 (2) 8 21 4 (3) (8) (1) (1) (2) (1) 0 224 111 124 1 5 – 2006 775 863 387 464 (32) (19) (23) (79) (79) (22) (46) (18) (32) (17) (14) 18 18 12 (4) (5) (1) 1 0 – 2005 822 863 464 423 (38) (12) (19) (27) (54) (21) (35) (20) (17) 19 19 14 36 19 (1) (1) 0 0 0 – 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page129 Other (Gains)/losses fromexperienceadjustments Total (gains)/lossesfromchangesinassumptions Other turnover Staff Mortality increases Salary Discounting (Gains)/losses onplanamendments TOTAL (GAINS)/LOSSESGENERATED DURING THEYEAR Actuarial gainsandlossesgeneratedin20072006canbeanalyzedasfollows: andsettlementsrecordedin2007 substantiallyreflectedthesaleofSimcoesite(seeNote2). The effectsofcurtailments ognized intheincomestatement8millioneurosactuarialgainsgeneratedfromthisplanduringperiod. accounting treatmentontheGroup’s 2007consolidatedincomewasa2millioneuroexpenseasinaccordancewithIAS19,Nexans theGroup’sThe 10millioneuroexpensecorrespondingtotheassetceilingimpactin2007concerned Swisssubsidiary. Thenetimpact ofthis *Of whichamountrelatedtoassetsheldforsale(seeNote8): NET PROVISIONRECOGNIZEDAT DECEMBER31* Other impacts(translationadjustments,acquisitions/disposals,etc.) Utilization Expense/(income) recognizedintheincomestatement NET PROVISIONRECOGNIZEDAT JANUARY 1 Change inprovisions NET PROVISIONRECOGNIZED Unrecognized surplus(duetoassetceiling) cost Unrecognized pastservice Unrecognized actuarial(gains)/losses BENEFIT OBLIGATION NETOFPLANASSETS Present valueofunfundedbenefitobligation FUNDED STATUS OFBENEFITOBLIGATION Fair valueofplanassets funded Present valueofbenefitobligationswhollyorpartially Funded status in millionsofeuros Actuarial gainsandlosses(inmillionsofeuros) 2007 (325) (365) (309) (435) 325 336 379 (56) (48) 36 39 3 1 1 2006 2007 (336) (388) (331) (444) 353 336 387 (57) (17) 3)2 (38) (47) (22) 32 51 (2) (2) 0 41 70 43 1 (3) 7 (1) – –– –– also rec- 2005 2006 (353) (399) (362) (501) 353 370 464 (37) (50) 12 38 45 (5) 1 9 6 – 129 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page130 130 CONSOLIDATED * Excluding provisions for other long-term employeebenefitobligations,whichasfrom2007arerecordedonaseparatelineof the consolidatedbalancesheet. * Excludingprovisionsforotherlong-term Of whichlong-term Of whichshort-term TOTAL Other provisions* Restructuring provisions Accrued contractcosts ANALYSIS BYNATURE A 100% 464 NOTE 22 100% 387 plans in2007was32millioneuros. 31% Contributions undertheseplansarerecognizedimmediatelyasanexpense.Theamountofcontributionspaidinrelationtodefined contribution contributionsifthefunddoesnotholdsufficient assetstopaybenefits. fixed contributionandhasnolegalorconstructiveobligationtopayfurther 100% 142 Other retirementschemesforwhichtheGroup’ 379 Employer contributionsrelatingtodefinedbenefitplansareestimatedat21millioneurosfor2008. 35% FAIR 7% VALUE OFPLANASSETSAT DECEMBER31 135 Other Cash 25 Real estate 36% Bonds andotherfixedincomeproducts Equities 135 The Group’s ofplanassetsbreaksdownasfollows: portfolio of theupwardrevisionannuityindexationassumptioninNorway. Actuarial gainsin2007wereprimarilyduetohigherinterestratesduringtheyear, notablyinthe euro zone.”Other”mainlyreflects theimpact At December31 At December31,inmillionsofeuros PROVISIONS FINANCIAL STATEMENTS s employeesareeligiblecorrespondtodefinedcontributionplansunderwhichthe Group paysa (in millions of euros) 6 3 9 9 2 47% 220 49% 191 43% 165 2007 28% 32 26% 22 (inmillions % of euros) 2007 97 2006 08% 30 44% 4% 14 16 53 14 74 9 36 81 48 16 25 72 57 14 32 51 (inmillions % 2006 117 44 of euros) 2005 29% 42 57% 6% 35 26 2005 87 30 % 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page131 as itwasnolongerrequired(seeNote30). The 11millioneuroprovisionrecordedunderaccruedcontractcosts inprioryearstocovertheMekolegaldisputewasreversed (surplus)in2007 availableatthepriorbalancesheetdate(includingprovisionsforexpiredcustomerwarranties). information Surplus provisionsarereversedwhentherelatedcontingencynolonger existsorhasbeensettledforaloweramountthantheestimate based on provisions forconstructioncontractsinprogress,whichareaccountedaccordancewiththemethoddescribedNote1.h. warranties, loss-makingcontractsandpenaltiesundercommercial(seeNote30oncontingentliabilitiesdisputes). Theydonotinclude relatingtocustomer Provisions foraccruedcontractcostsareprimarilysetupbytheGroupasaresultofitscontractualresponsibilities,particularly visions setupandreversedinthesameyear. The aboveprovisionshavenotbeendiscountedastheeffectofdiscountingwouldmaterial.tabledoesn employeebenefits,whichasfrom2007arerecordedonaseparatelineoftheconsolidated balancesheet. ** Excludingprovisionsforotherlong-term * Includingclassificationasliabilitiesrelatedtoassetsandgroupsofheldforsale(IFRS5). DECEMBER 31,2007 Other* Business combinations Reversals (surplusprovisions) Reversals (provisionsused) Additions DECEMBER 31,2006 Other* Business combinations Reversals (surplusprovisions) Reversals (provisionsused) Additions DECEMBER 31,2005 Other* Business combinations Reversals (surplusprovisions) Reversals (provisionsused) Additions JANUARY 1,2005 Movements intheseprovisionswereasfollowsduring2005,2006and2007: in millionsofeuros TOTAL Accrued contract Accrued TOTAL 117 (21) (38) (25) (50) (24) (37) 97 87 98 45 88 51 (2) (6) 9252 7 1 –––– costs (15) (18) (19) (16) 57 51 51 48 29 33 20 (8) (5) (1) (1) (2) 1 Restructuring Restructuring provisions (40) (31) (18) 44 32 30 38 13 51 27 (4) (3) (3) (1) (3) – –

ot includepro- provisions** Other 16 14 (1) (1) (1) (2) (3) (4) (2) (1) 9 9 5 3 4 4 3 131 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page132 132 in During 2007,a13millioneurorestructuringprovisionwassetaside,primarilytocoverthereorganizationofGroup’s operations harness CONSOLIDATED See Note 2.c for further information. Note2.cforfurther See 5.75%. bonds –whichweretakenupbyEuropeaninvestorsareredeemable infullonMay2,2017andpayinterestatanannualrateof In May2007,theGroupcarriedouta350millioneurobondissue, madeupof7,000bondswithanominalvalue50,000euroseach. These * Includingaccruedinterest. NET DEBT Cash andcashequivalents GROSS DEBT bankloansandoverdrafts Short-term borrowings* Short-term borrowings* Other long-term bonds* OCEANE convertible/exchangeable Bonds redeemablein2017* ANALYSIS BYNATURE A NOTE 23 Italy andSpain. staffreductionsinGermany,During 2005,restructuringcostsforwhichprovisionswererecordedprimarilyconcerned France,th were implementedtocutcapacity, notablyinItaly, andSpain. France,Germany Wood intheUnitedKingdom,whichemployed93people;andMarseilleFrance(TLM)34people.Othersmaller-scale plans In 2006restructuringcostsincurredmainlyrelatedtotheclosureofthreeplants–OpglabbeekinBelgium,whichemployed123 people; Abbey RESTRUCTURING PROVISIONSAT YEAR-END Translation adjustmentsandother movements New restructuringplansandadjustmentstoprior-yearestimates andretirementsofassets Impairment Utilization fortheperiod RESTRUCTURING PROVISIONSAT BEGINNINGOFYEAR ANALYSIS OFMOVEMENTSINRESTRUCTURINGPROVISIONS B in millionsofeuros At December31,inmillionsofeuros Belgium. NET DEBT FINANCIAL STATEMENTS 2007 2007 290 912 622 256 262 359 (18) 32 44 28 (3) 8 9 2006 2006 632 919 287 662 250 (40) 44 30 48 5 7 – (3) – – e UnitedKingdom, 2005 2005 374 491 117 365 121 (31) 30 38 24 3 5 – – 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page133 ed using the effective interestratemethod. ed usingtheeffective ** OfwhichcostsrelatingtotheOCEANEbondsissuedin2004andredeemed inJune2006:2millioneurosinterestpaidand millioneurosinadditionalinterestcalculat- * SeeNote1.bb. TOTAL FINANCIALEXPENSE Additional interestcalculatedatrateexcludingtheoption* Contractual interestpaid Income statement AMOUNT RECOGNIZEDUNDERFINANCIALLIABILITIES Accrued interest bond(liabilitycomponent)* Convertible EQUITY COMPONENT(RETAINED EARNINGS)* Balance sheet in anamountof34millioneuros. oftheOCEANEbondscorrespondingtovalueoptionisincluded inequity, 1,2013.InaccordancewithIAS32,theportion January 3,794,037 bonds,eachwithanominalvalueof73.80euros,coupon1.5%andredeemableatprice85.76euros per bond on On July7,2006,NexanscarriedoutanotherOCEANEbondissueforanaggregatenominalamountof280millioneuros.The c ment paymentmadeperbondtoOCEANEbondholders);and(ii)a117millioneuroincreaseinconsolidatedequity. The conversionoftheOCEANEbondsresultedin(i)a110millioneuroreductionconsolidateddebt(takingintoaccount1.80 euroadjust- intoshares,withtheremaining18,472beingredeemedattheirnominalvalueof38euroseach. converted cised theiroptiontoreceiveshares,ataratioofoneNexansshareperOCEANEbond.Atotal3,534,160bondswereth On June16,2006,NexansredeemedinadvancetheOCEANEbondsissuedJuly2004.Substantiallyallofbondholders OCEANECONVERTIBLE/EXCHANGEABLE BONDS C NET (DEBT)/CASHAT YEAR-END Impact ofassetsandgroupsheldforsale(IFRS5) NET (INCREASE)/DECREASEINDEBT Impact ofIAS32-39 NET (DEBT)/CASHAT BEGINNINGOFYEAR CHANGEINNETDEBT B in millionsofeuros in millionsofeuros At December31,inmillionsofeuros 2007 2007 2007 (290) (632) 343 262 242 (15) (11) 34 084 8 20 (4) (1) 2006 ** 2006 2006 (632) (263) (374) 250 242 (11) 34 (4) (7) 5 omprised 2005 2005 2005 (374) (180) erefore (115) 121 117 (80) 18 exer- (8) (4) (4) 1 133 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page134 134 CONSOLIDATED TOTAL bankloansandoverdrafts Short-term borrowings Short-term borrowings Other long-term bonds OCEANE convertible/exchangeable Bonds redeemablein2017 Maturity scheduleatDec.31,2007 information). structure onaweeklybasis(seeparagraphfbelowandNote25forfurther Nexans SAistheGroup’s monitorsNexansSA’s mainfinancingvehicle.TheTreasuryandMetalsDepartment availableliquidityand financing ANALYSIS BYMATURITY (INCLUDINGACCRUEDINTEREST) E indices(seeNote25.b). All oftheGroup’s debtisatvariableratesbasedonmonetary short-term The Group’s debtisatfixedinterestrates. medium-andlong-term subsidiarieslocatedintheMiddleEastandAsia. ** USdollardebtconcerns interestrate. * Effective TOTAL Other US dollar** Euro debt Short-term ** Correspondingtominorityputoptions(seeNote1.m). interestrate. * Effective TOTAL Other US dollar and bondsredeemablein2017) Euro (excludingOCEANEbonds Euro (bondsredeemablein2017) exchangeable bonds) Euro (OCEANEconvertible/ debt Long-term ANALYSIS BYCURRENCYANDINTERESTRATE D At December31 in millionsofeuros At December31 (including accruedinterest) (excluding accrued interest on long-term debt) (excluding accruedinterestonlong-term FINANCIAL STATEMENTS rnia neetPicplItrs rnia neetPicplInterest Principal Interest Principal Interest Principal Interest Principal u ihn1ya u n1t er Duebeyond5years Duein1to5years Due within1year 8 449 7 0 6 226 966 105 679 97 4 24 284 25 /* .845 8** 4.51 5.28 N/A** 2 2007 2007 .141 .32462365 662 284 3.03 4.14 126 5.41 257 629 6.46 6.20 5.99 6–––––256– –– 28–8–––– .159 5.28 5.91 4.61 121 250 262 6.56 6.23 6.23 73543525 325 4 325 17 – 4 – 316 575 146 5.92 2.60 5.78 3.89 7.77 4.27 0–8 5 0 5 201 350 101 350 81 – 20 – 5.95 – 8 – 4 – 4 – – –––––– – Weighted averageEIR*(%) Weighted averageEIR*(%) 2006 2006 5.35 – – 2005 2005 359 – 2007 2007 52 86 – in millionsofeuros in millionsofeuros 2006 2006 28 59 7 – – TOTAL 2005 2005 42 7 2 4 – 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 135

F OTHER INFORMATION ratio covenants (net debt/EBITDA <2.95, and net debt/equity includ- At December 31, 2007, Nexans and its subsidiaries had access to ing minority interests <1.15). These ratios were well within the spec- 580 million euros under a committed medium-term revolving facility, ified limits at December 31, 2007 and at the date the Board of none of which had been drawn down. In accordance with the provi- Directors approved the financial statements. sions of the related contract, in October 2007 Nexans asked the If any of the revolving facility covenants were breached, any undrawn participating banks to extend this credit facility by one year, until credit lines would become unavailable and any amounts outstand- October 17, 2012. All the banks except one agreed to grant this ing would be repayable, either immediately or after a cure period of extension. Consequently, Nexans’ committed revolving facility now thirty days depending on the nature of the breach. expires in two tranches – 34 million euros on October 17, 2011 and 546 million euros on October 17, 2012. G PLEDGED COLLATERAL The syndicated revolving facility agreement is subject to standard Collateral pledged by the Group to secure borrowings broke down covenants (negative pledge, pari-passu, cross default) and financial as follows by type of asset at December 31, 2007, 2006 and 2005:

At December 31, in millions of euros 2007 2006 2005 Property, plant and equipment pledged as collateral 5 11 15 Intangible assets pledged as collateral – – – Inventories pledged as collateral – – – Financial assets pledged as collateral – – –

TOTAL PLEDGED COLLATERAL 5 11 15

NOTE 24 OTHER CURRENT FINANCIAL LIABILITIES

At December 31, in millions of euros 2007 2006 2005

Derivative instruments 26 12 9

Other operating liabilities 236 214 235

Other non-operating liabilities 47 58 59

Other 465

TOTAL 313 290 308

Derivative instruments correspond to foreign exchange derivatives and non-ferrous metal forward contracts whose fair value represents an unre- alized loss (see Note 26).

”Other operating liabilities” mainly include payroll liabilities and related taxes.

Substantially all of these liabilities are payable within 12 months of the balance sheet date. 135 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 136

CONSOLIDATED FINANCIAL STATEMENTS

Nexans SA which covered 68.8% and 69.3% of the Group’s gross NOTE 25 FINANCIAL RISKS external debt at December 31, 2007 and December 31, 2006 respectively.

Liquidity, foreign exchange and interest rate risks, as well as risks Recourse to bank borrowings is limited, thanks to the Group’s use relating to non-ferrous metals, are managed by the Group Treasury of diversified sources of funding, including the 2006 convertible and Metals Department which forms part of the Group Finance bond issue and the 2007 ordinary bond issue. Bank financing pri- Department. marily comprises a 580 million euro syndicated revolving facility, with a maximum 12.25% risk exposure for each participating bank. Where permitted by local regulations, the Group Treasury and Metals Department manages foreign exchange and interest rate The Treasury and Metals Department monitors both the parent com- risks for the subsidiaries on a centralized basis, and also manages pany’s treasury positions and refinancing structure on a weekly their access to liquidity through a cash pooling system. basis. It also tracks the Group’s overall liquidity position via a weekly reporting schedule that gives the cash position of the Group The key subsidiaries that do not have access to the centralized and each of its subsidiaries. Bank borrowings taken out by sub- cash management system are located in Turkey, Lebanon, Egypt, sidiaries that are not part of the centralized cash management Morocco, China, Korea, Vietnam and Brazil. These subsidiaries, system must be approved in advance by the Treasury and Metals which have their own banking partners, are nevertheless subject to Department and may not have maturity dates exceeding 12 months, Group procedures regarding (i) their choice of banks; (ii) foreign unless express authorization is obtained. exchange and interest rate risk management; and (iii) hedging non-ferrous metal risks. The key liquidity indicators used by the Group are (i) the unused amount of credit facilities; and (ii) available cash and cash equiva- lents. The table below sets out the Group’s liquidity facilities at A LIQUIDITY RISKS December 31, 2007. The Group has a centralized cash management system which pools subsidiaries’ liquid resources, enabling the use of these resources to be optimized as subsidiaries’ credit balances in the main curren- cies are transferred to the parent company’s central cash pooling accounts. The Group’s financing is primarily provided through

Main liquidity indicators for the Group at December 31, 2007

Ceiling Utilization Available in millions of euros amount

UNCONFIRMED FACILITIES Commercial paper program 500 0 N/A Nexans SA unconfirmed bank lines** 200 4 196 Cash pooling overdraft 69 2 67

CONFIRMED FACILITIES Syndicated revolving facility 580 0 580 Convertible bonds redeemable in 2013* 280 280 0 Ordinary bonds redeemable in 2017* 350 350 0

TOTAL 1 979 636 843

CASH AND CASH EQUIVALENTS 622

* Nominal amount including the conversion option where applicable. ** At the value date.

The Group also monitors its net debt position on a quarterly basis (see Note 23 for definition of net debt). 136 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page137 unhedged foreignexchangepositions. involved. Atthebalancesheet date,Nexanshadnomaterial Where thishappens,thepositions arelimitedinamountsandtenor positionsbeingkeptopen. this hedgingactivitymayresultin certain forecast transactions.Theforeignexchangeoperationsarisingfrom foreseeable contractualcommercialtransactionsaswelltocertain Nexans hedgesitsforeignexchangeriskoncashflowsrelating to Hedging foreignexchangerisksonoperatingcashflows oftheGroup’sminum ishedgedaspart overall metals hedgingstrategy. US dollarexposureonpurchasesofcopperand,toalesserextent,alu- except inspecificcases;and(ii)thehedgingpolicydescribedbelow. ture wherebytheGroup’s stronglocalpresence subsidiarieshaveavery risk onoperatingcashflowsismoderatedueto(i)itsoperationalstruc- Management considersthattheGroup’s sensitivitytoforeignexchange Risks relatingtooperatingcashflows FOREIGNEXCHANGERISK C bondsredeemablein2017. the OCEANEbondsandordinary December 31,2007substantiallyallofthisdebtcorrespondedto The Group’s debtisatfixedrates.At medium-andlong-term lion eurosatDecember31,2006. variable interestrates,comparedtoanetliabilitypositionof375mil- a netassetpositionof338millioneurosinrelationtoexposure changes ininterestrates.AtDecember31,2007theGroupwas are alsoatvariablerates,whichlimitstheGroup’s netexposureto cashinvestments indices(EONIA,EuribororLibor).Short-term etary All oftheGroup’s debtisatvariableratesbasedonmon- short-term * Includingaccruedinterest. NET DEBT* NET FIXEDRATE POSITION Financial assets Financial liabilities Fixed rate NET VARIABLE RATE POSITION Financial assets Financial liabilities Variable rate The followingtablebreaksdowntheGroup’s financial assetsandliabilitiesbetweenfixedvariablerates. does notexposeittospecificinterestraterisks. Nexans didnothaveanyinterestratehedgesinplaceatDecember31,2007,2006or2005.TheGroupconsidersthatitsfinancing structure Nexans carefullymonitorsinterestratetrendsinordertosetupsuitablehedginginstrumentswhereappropriate. INTERESTRATE RISK B At December31,inmillionsofeuros urn Non-current Current 31 1 9 7 5 632 254 378 290 611 (321) (338) (622) 284 861629 611 18 861629 611 18 2007 eign exchangerisk. are notincludedinthetablebelow, astheydonotgenerateany for- bilities thataredenominatedinthe localentity’s functionalcurrency krone.Foreigncurrencyassetsandlia- the euroandNorwegian on whichtheGroupisexposedtoexchangeriskareUSdollar, close to90%oftheGroup’s netsalesin2007.Themaincurrencies their foreignexchangepositions.Thesesubsidiariesaccountedfor on ing atDecember31,2007forentitiesthatsubmitmonthlyreports foreigncurrencypurchases andsalesoutstand- nal amountofforward commitments denominatedinforeigncurrenciesaswellthenomi- The tablebelowsetsoutalloftheGroup’s assets,liabilitiesandfuture Net positionatDecember31,2007 functional currencyoftheentityconcerned. transactions isforoperatingcashflowstobedenominatedinthe currency transactionswiththeirlocalbanks.Theobjectiveofthese Othersubsidiariesenterinto forward Group TreasuryDepartment. cash managementsystemthesetransactionsarecarriedoutwiththe rency transactions.Forsubsidiariesthataremembersofthecentral cur- ing subsidiaries,whosetreasurerssetuphedgesusingforward Foreign exchangeriskisidentifiedatthelevelofGroup’s operat- pre-definedrange. within acertain stipulating thatthebidwillonlyremainvalidifexchangerates to takeintoaccounttheexposureforeignexchangerisk,suchas – theGroupincludesadditionalsafeguardswhenpresentingitsbids the Group.Wherethisiscase–notablyininfrastructuremarkets bids arenotsystematicallyhedged,whichcouldgenerateacostfor operates.Foreignexchangerisksarisingonthese entity concerned bidsaremadeinacurrencyotherthanthatwhich the Certain – 38 375 (338) 62 (287) (622) oa urn Non-current Current Total 8 662 284 –– 5 257 254 3 5 257 254 3 2006 – (287) Total 375 662

137 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 138

CONSOLIDATED FINANCIAL STATEMENTS

Foreign exchange risk exposure at Dec. 31, 2007*

in millions of foreign currency units USD NOK EUR Trade receivables 172 – 66 Trade payables (205) – (58) Bank accounts 10 (170) 17 Loans/borrowings 93 – (29) Commitments (future cash flows) 277 11 315 TOTAL EXPOSURE 346 (159) 311 Net nominal amount of hedges (363) 159 (228) RESIDUAL NET EXPOSURE (16) – 83

* Excluding Lebanon, Egypt, Vietnam and Brazil.

The Group’s residual net exposure to foreign exchange risks prima- Foreign currency translation risk rily correspond to bids that are not hedged as they are not deemed The Group’s main foreign currency translation risk relates to the trans- to be sufficiently probable. Where foreign exchange risk arises in rela- lation of the net assets and profit or loss of its subsidiaries based in tion to these transactions it is factored into the price submitted in the US dollar zones. This risk is not hedged as Group Management con- related bid or the bid documentation stipulates that the submitted price siders it to be extremely limited. The situation could change in the will only be valid if exchange rates remain within a range defined future, however, as a result of the acquisition of Madeco. with the customer.

Verifying the correct application of procedures D METAL PRICE RISK The Group verifies that its foreign exchange risk management proce- The Group’s policy for managing non-ferrous metal risks is defined dures are properly applied by means of monthly reports to the Group and overseen by the Group Treasury and Metals Department and is Treasury Department. The reports contain details on the subsidiaries’ implemented by the subsidiaries that purchase copper and aluminum. firm and estimated cash flows in each currency and the related hedges The Group’s main exposure to metal price risk arises from fluctua- that have been put in place. tions in copper prices.

In addition, the Group Treasury and Metals Department has set up an on-site audit system for the subsidiaries whereby representatives Impact on operating income of the Department conduct visits at regular intervals to ensure that In order to offset the risks arising due to the volatility of non-ferrous the relevant procedures have been properly understood and metal prices (copper and, to a lesser extent, aluminum), Nexans applied. Lastly, the Internal Audit Department also systematically passes on metal prices in its own selling price, and hedges the related reviews the proper application of procedures relating to the identi- risk either by setting up a physical hedge at the same price or by enter- fication and hedging of foreign exchange risks during its visits to ing into futures contracts on the London, New York and, to a lesser the Group’s subsidiaries. extent, Shanghai, metal exchanges.

In order for this mechanism to function properly, the units must have Foreign exchange risk related to a permanent level of metal inventories which is referred to as core the acquisition of Madeco exposure. Core exposure represents the minimum amounts that are Part of the acquisition price for Madeco is payable in dollars, thus necessary for the production units to operate appropriately and is exposing the Group to a foreign exchange risk. As Group not intended to be sold off. Consequently, the quantities of metal cor- Management considered this acquisition to be highly probable but responding to core exposure are not hedged. not yet certain at December 31, 2007 a portion of the cash pur- The Group verifies that its price risk management procedures are chase price was hedged at that date through a forward purchase of properly applied by means of a monthly reporting system which 100 million US dollars at rates reflecting those prevailing when the details each legal entity’s exposure to copper and aluminum price framework agreement was signed on November 15, 2007. These risk in both tonnage and value terms. derivatives were accounted for as cash flow hedges at the year-end. 138 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 139

Nexans does not generate any income from speculative trading of Impact on financing needs metals. In addition, the Group considers that its operating margin is Fluctuations in copper and aluminum prices have a significant impact only slightly sensitive to changes in copper and aluminum prices as on the Group’s financing needs, as a rise in copper prices implies an a result of the following: increase in working capital requirement. Prices have fluctuated sig- nificantly over the past five years. • In 2006 the Group decided to recognize core exposure at weighted average cost in inventories instead of at historic cost under prop- Having decreased sharply at the beginning of 2007 the price of erty, plant and equipment as was previously the case (see Note 1.b). copper swung steeply upwards in the following three months, reach- This means that the measurement of core exposure is now subject ing USD 8,320 per tonne in early May. Between May and September to changes in copper and aluminum prices. However, the impact it remained extremely volatile, ranging between USD 6,740 and USD of changes in the value of core exposure is recorded below oper- 8,110. After peaking at USD 8,180 per tonne, in October the copper ating margin as it is not subject to the Group’s metal prices risk price fell to between USD 6,500 and USD 7,000, with the cash to management policy. three month spread returning to a contango position as from November. This high volatility occurred in tandem with the slide in • Positions in tonnes and value in excess of the core exposure must the dollar against the euro. Over the full twelve months of 2007 be balanced for both copper and aluminum, in order to neutralize copper traded at an average price of USD 7,097 per tonne and the the effect of any changes in metal prices. EUR/USD exchange rate rose from 1.32 to 1.47. Taken on a stand- The Group’s operating margin is nevertheless still partially exposed alone basis, copper price fluctuations had a neutral impact on the to metal price risks for certain product lines, such as copper cables Group’s financing needs during the year. for cabling systems and building sector products. In these markets, In 2006, the price of copper surged over the first few months of the any increases in copper prices are generally passed on in the selling year, rising from USD 4,537 at the start of January to a historic high price, but with a time lag that can place a certain amount of pressure of USD 8,788 on May 12, representing an increase of over 93% in on margins. The fierce competition in these markets can also affect the less than five months. It then fell during the second half of 2006 and timescale within which price increases are passed on. ended the year at USD 6,290, representing an increase of 39% over As with foreign exchange risk, the risk of fluctuations in copper and the full twelve months. In euro terms, the price of copper rose 25% other metal prices is not systematically hedged when making bids. over 2006 as a whole including the impact of the fall in the US dollar This type of risk is limited, however, thanks to the use of similar prac- against the euro between the start and end of the year, having nev- tices to those described above concerning the management of foreign ertheless reached 78% between January and May. This increase exchange risk. In particular, it is increasingly being borne by the generated an additional financing need of some 270 million euros Group’s potential customers, especially in infrastructure markets. for the Group in 2006.

The Group’s main copper commitments At December 31, 2007 and 2006 the Group’s main copper expo- sures concerned the following:

At December 31, in tonnes 2007 2006

CASH SETTLEMENT OBLIGATIONS* Purchases 86,499 70,165 Sales 22,073 38,431

PHYSICAL SETTLEMENT OBLIGATIONS* Purchases** 75,746 92,877 Sales 139,988 124,138

* Excluding subsidiaries that are not included in the metals reporting system, which represent less than 5% of the Group’s copper sales (in tonnes). These figures only include obligations at set prices at the balance sheet date. ** Excluding purchases negotiated as part of Take or Pay contracts whose price was not set at the balance sheet date, but including inventories (apart from core exposure) whose price was set at the balance sheet date. 139 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 140

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with its risk management policy the Group only enters Metal derivatives into physically-settled contracts for operational purposes and only uses Non-ferrous metal hedging transactions give rise to a counterparty the cash-settled contracts for hedging purposes. Nexans’ main sub- risk when they are carried out on commodity exchanges. Nexans sidiaries document their hedging relationships in compliance with carries out transactions on the LME, COMEX and, to a limited extent, the requirements of IAS 39 relating to cash flow hedges. If all of the on SHFE. Transactions on these organized markets are used to hedge Group’s cash-settled positions at December 31, 2007 had been sold the Group’s copper, and to a lesser extent aluminum and lead risks. on the market they would have generated a loss of 11.2 million euros, Substantially all of the transactions are standard buy and sell trades. compared with a gain of 9.1 million euros for the sale of cash-settled The risk borne by the Group for these derivatives is restricted to a positions at December 31, 2006. one-month period as a result of the Group’s policy of closing out its transactions with each broker at the end of every month. E CREDIT RISK Counterparty risk raises on foreign exchange and metals derivatives, F MARKET RISK SENSITIVITY ANALYSIS in addition to customer risk. Nexans’ principal exposure to market risks – including interest rates, copper prices and the US dollar exchange rate – is assessed below Customer risk by way of a sensitivity analysis relating to the impact that a theoreti- The Group considers that it is not exposed to significant customer cal change in interest rates and exchange rates or prices would have credit risk as it has a broad customer base, with no single customer on consolidated income and equity. representing more than 5% of Nexans’ total outstanding receivables Sensitivity to interest rates at December 31, 2007. • The Group’s long-term debt is at fixed rates (convertible bonds and The Group also applies strict customer selection procedures prior to ordinary bonds redeemable in 2017) and is therefore not affected entering into any commercial relationship, and has set up appropri- by changes in interest rates. Only short-term bank borrowings are ate insurance policies within its various subsidiaries. at variable rates.

• The Group’s other financial assets and liabilities are only sensitive Foreign exchange derivatives to changes in interest rates in exceptional cases as they mostly For all subsidiaries that are members of the central cash manage- have short-term maturities. The related impact is therefore deemed ment system, foreign exchange transactions are carried out with the to be negligible. Group Treasury and Metals Department, which in turn hedges its posi- tions with banks. In order to keep counterparty risk as low as possi- • Changes in interest rates do not directly impact consolidated equity ble, Nexans only authorizes such transactions with banks that have as the Group does not have any significant cash flow hedges in medium and long-term ratings of at least AA– from Standard & Poor’s place using interest rate derivatives nor does it have any material and Aa3 from Moody’s. For other subsidiaries, the same criteria apply hedges of net investments in foreign operations. but exceptions may be made for subsidiaries located in countries A 50 basis-point increase in interest rates (excluding the spread) with sovereign ratings that are below the specified threshold. In this would have had the following impacts on the Group’s annual finan- case, the subsidiaries concerned must carry out transactions involv- cial expenses for 2007 and 2006 (data not presented for 2005): ing a counterparty risk with agencies or subsidiaries of banking groups whose parent company satisfies the above risk criteria.

Counterparty risk for local subsidiaries is regularly monitored by the Group Treasury and Metals Department, via a monthly reporting schedule that states the overall volume of external commitments made by each subsidiary in relation to foreign exchange hedges.

For the Group’s main subsidiaries that are exposed to foreign exchange risk, at December 31, 2007 and 2006, outstanding for- ward purchases of foreign currency represented respective notional amounts of 681 million euros and 592 million euros, while unex- pired forward sales amounted to 1,321 million euros and 1,122 mil- lion euros. In view of the rigorous counterparty selection process described above, the Group does not consider that it is exposed to credit risk on these commitments. 140 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 141

Weighted average Average Impact on financial effective interest rate short-term expenses of a 50 bp for short-term debt debt assumption increase in interest rates (see Note 23.d) (in millions of euros) (in millions of euros)

DECEMBER 31, 2007 Euro 4.27% 130 0.65 US dollar 4.61% 34 0.17

DECEMBER 31, 2006 Euro 3.89% 500 2.5 US dollar 5.91% 140 0.7

Sensitivity to changes in copper prices The simulation below is based on the following assumptions: Fluctuations in copper prices can impact both consolidated income • A 10% increase in copper prices. and equity as well as working capital requirement (2). • All working capital requirement components would be impacted A rise in copper prices would result in: by the increase in copper prices. • An increase in working capital requirement, and therefore financ- • 120,000 and 155,000 tonnes of copper included in working cap- ing needs. ital requirement at December 31, 2007 and 2006 respectively. • A rise in the fair value of the Group’s portfolio of cash-settled copper • Short-term interest rate (3-month Euribor) of 4.3% and 3.8% respec- derivatives (the Group is generally a net buyer). tively in 2007 and 2006. • A positive revaluation of the Group’s core exposure. • A worst-case scenario, in which the increase in working capital A rise in working capital requirement would increase the Group’s requirement would be constant throughout the year, leading to an financial expenses. annualized increase in financial expense.

An increase in the fair value of cash-settled copper derivatives would • 83,000 and 81,000 tonnes of copper classified as core exposure positively affect either consolidated operating income or equity based at December 31, 2007 and 2006 respectively. on the accounting treatment used for these derivative instruments (the • A theoretical income tax rate of 34.43%. derivatives of the Group’s main subsidiaries are documented as cash flow hedges within the meaning of IAS 39).

A revaluation of the Group’s core exposure would positively affect consolidated operating income.

At December 31, in millions of euros 2007 2006 Impact on operating income 54 38 Impact on net financial expense (3) (3) Net impact on income (after tax) 34 23 Impact on equity* (after tax) 10 11

* Excluding net income for the period.

(2) Sensitivity calculations are based on an increase in copper prices. A fall in copper prices would have the opposite effect. 141 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 142

CONSOLIDATED FINANCIAL STATEMENTS

A rise in copper prices could also result in additional impairment • The main impacts on the consolidated financial statements stem from losses for certain non-current assets, in accordance with the require- the revaluation of the Group’s portfolio of derivative instruments. ments of IAS 36, which would negatively impact consolidated oper- The impact on equity related to designated cash flow hedges and ating income. However, this impact was not taken into account in the the impact on income have been separated out. This revaluation above simulation as it is impossible to identify a direct linear effect. It effect is offset by the revaluation of underlying USD positions in the would be necessary to reestimate all of the related forecast cash- Group’s trade receivables and trade payables portfolios as well as flows in order to work out the overall impact on impairment losses. net debt.

• The Group’s other financial assets and liabilities are rarely subject Sensitivity to the US dollar exchange rate to foreign exchange risk and have therefore not been included in • The US dollar is the main foreign currency to which the Group is this simulation. exposed. • Foreign currency translation impacts have not been taken into • The simulation below is based on a 10% decrease in the US dollar account in the following calculation for 2007 and 2006. No sim- against the world’s other major currencies compared with the rates ulation has been performed for 2005. prevailing at December 31, 2007 and 2006, i.e. using USD/EUR exchange rates of 1.62 and 1.45 respectively.

Sensitivity at December 31, 2007 Impact on income Impact on equity* in millions of euros (net after tax**) (after tax**) Trade receivables (7) N/A Cash and cash equivalents (1) N/A Trade payables 8 N/A Gross debt (3) N/A NET POSITION - USD UNDERLYINGS (3) Portfolio of forward purchases*** (61) (17) Portfolio of forward sales*** 64 29 NET POSITION - USD DERIVATIVES 3 12 NET IMPACT ON THE GROUP 0 12

* Excluding net income for the period. ** Using a theoretical income tax rate of 34.43%. *** Forward purchases and sales that comprise an exposure to USD.

Sensitivity at December 31, 2006 Impact on income Impact on equity* in millions of euros (net after tax**) (after tax**) Trade receivables (8) N/A Cash and cash equivalents (3) N/A Trade payables 8 N/A Gross debt 1 N/A NET POSITION - USD UNDERLYINGS (2) Portfolio of forward purchases*** (58) (10) Portfolio of forward sales*** 55 24 NET POSITION - USD DERIVATIVES (3) 14 NET IMPACT ON THE GROUP (5) 14

* Excluding net income for the period. ** Using a theoretical income tax rate of 34.43%. *** Forward purchases and sales that comprise an exposure to USD. 142 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 143

Sensitivity to the Norwegian krone • The simulation below is based on similar assumptions to those used • The Norwegian krone (NOK) is an essential counterparty currency for the US dollar (a 10% fall in the Norwegian krone against the used in contracts for high-voltage submarine cables. world’s other major currencies), i.e. using NOK/EUR exchange rates of 8.75 and 9.06 at December 31, 2007 and 2006 respectively.

Sensitivity at December 31, 2007 Impact on income Impact on equity* in millions of euros (net after tax**) (after tax**) Trade receivables 3 N/A Cash and cash equivalents 3 N/A Trade payables (1) N/A Gross debt 0 N/A NET POSITION - NOK UNDERLYINGS 5 Portfolio of forward purchases*** (50) 13 Portfolio of forward sales*** 51 (43) NET POSITION - NOK DERIVATIVES 1 (30) NET IMPACT ON THE GROUP 6 (30)

* Excluding net income for the period. ** Theoretical income tax rate of 34.43%. *** Forward purchases and sales that comprise an exposure to NOK.

Sensitivity at December 31, 2006 Impact on income Impact on equity* in millions of euros (net after tax**) (after tax**) Trade receivables 3 N/A Cash and cash equivalents 1 N/A Trade payables (1) N/A Gross debt 0 N/A NET POSITION - NOK UNDERLYINGS 3 Portfolio of forward purchases*** (29) 5 Portfolio of forward sales*** 32 (28) NET POSITION - NOK DERIVATIVES 3 (23) NET IMPACT ON THE GROUP 6 (23)

* Excluding net income for the period. ** Theoretical income tax rate of 34.43%. *** Forward purchases and sales that comprise an exposure to NOK. 143 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 144

CONSOLIDATED FINANCIAL STATEMENTS

G CONTRACTUAL OBLIGATIONS THAT MAY Lastly, under the framework agreement signed on November 15, GIVE RISE TO INDEMNITY PAYMENTS 2007 with Madeco relating to the purchase of the Madeco group’s Group companies have made commitments to banks and other third cable operations (see Note 2), Nexans has undertaken to pay parties, in particular financial institutions, which have issued guaran- Madeco a fixed sum of 21 million US dollars if Madeco terminates tees or performance warranties to customers, and guarantees to the agreement on account of Nexans breaching one of its main con- secure advances received from customers (423 million euros, 330 mil- tractual obligations. Unless the final sale agreement provides other- lion euros and 346 million euros at December 31, 2007, 2006 and wise, this undertaking is expected to remain in force until the acqui- 2005 respectively). sition is completed.

Group companies do not generally set up bank guarantees when giving product warranties to customers and sellers’ warranties to pur- chasers of divested businesses. When it is probable that Nexans will NOTE 26 DERIVATIVE be required to make payments under this type of warranty due to fac- INSTRUMENTS tors such as delivery delays or disputes over contract performance, a provision is recorded for the estimated risk (see Note 22). When A FAIR VALUE such a payment is merely possible rather than probable it is dis- The fair value of the derivative instruments used by the Group to hedge closed as a contingent liability if the amount concerned is sufficiently foreign exchange risk and the risk associated with fluctuations in material (see Note 30). non-ferrous metal prices is presented in the following table:

At December 31, in millions of euros 2007 2006 2005

ASSETS Foreign exchange derivatives - Cash flow hedges* 21 6 0 Metal derivatives - Cash flow hedges* 2 8 – Foreign exchange derivatives - Held for trading* 7 1 2 Metal derivatives - Held for trading* 8 12 44 SUB-TOTAL - ASSETS 38 27 47

LIABILITIES Foreign exchange derivatives - Cash flow hedges* 1 3 8 Metal derivatives - Cash flow hedges* 15 8 – Foreign exchange derivatives - Held for trading* 4 2 1 Metal derivatives - Held for trading* 6 0 0 SUB-TOTAL - LIABILITIES 26 13 9

* Within the meaning of IAS 32/39.

These amounts have been included in ”Other current financial assets” The above amounts cannot be directly reconciled with amounts and ”Other current financial liabilities” on the consolidated balance recorded in equity under ”Changes in fair value and other” as certain sheet since January 1, 2005. Derivatives primarily comprise forward positions may be rolled-over while retaining the hedge accounting purchases and sales. qualification. 144 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page145 * WithinthemeaningofIAS32/39. 18 TOTAL Interest ratederivatives Foreign exchangederivatives Metal derivatives The followingtablesprovideabreakdownoftheincomestatementimpactderivativesin2007,2006and2005. BREAKDOWNOFTHEINCOMESTATEMENT IMPACT OFDERIVATIVES C * Signconvention:Buyerpositionsarepresentedaspositiveamountsandsellernegativeamounts. Net metalpositions* Net foreignexchangepositions* Net notionalcommitmentsfor2007,2006and2005arepresentedbelow: ** Signconvention:Buyerpositionsarepresentedaspositiveamountsandsellernegativeamounts. * WithinthemeaningofIAS32/39. SUB-TOTAL -LIABILITIES Metal derivatives-Heldfortrading* Foreign exchangederivatives-Heldfortrading* Metal derivatives-Cashflowhedges* Foreign exchangederivatives-Cashflowhedges* LIABILITIES** SUB-TOTAL -ASSETS Metal derivatives-Heldfortrading* Foreign exchangederivatives-Heldfortrading* Metal derivatives-Cashflowhedges* Foreign exchangederivatives-Cashflowhedges* ASSETS** value atDecember31,2007isincludedinliabilities(alsonetofbuyerandsellerpositions). fair valueatDecember31,2007isincludedinassets(netofbuyerandsellerpositions)thenotionalamountcontracts with anegativefair The tablebelowsetsoutthenotionalamountsofderivativecontracts,brokendownbycurrency. Thenotionalamountofcontracts withapositive NOTIONALAMOUNTS B At December31,2007inmillionsofeuros in millionsofeuros 2007 At December31,2007inmillionsofeuros edfrtaig egsrcce Udryn Derivative Underlying hedgesrecycled held fortrading* an n ossGainsand losses Gains andlosses ndrvtvs oncashflow on derivatives N/A 11 (7) to income* (23) (25) 0 2 30 1(6)(6)(778) (163) (266) 21 (370) (126) (312) 348 123 10 USD 69 55 68 1–––1 ––––– N/A N/A N/A –– Fair value hedges* NOK 21 6 5 2)478 (20) 156 (6) (6) 27 3)(607) (38) (257) – 132 – – – 2007 N/A N/A N/A (640) 3 6 248 161 339 Ineffectiveness* EUR 15 (9) 9 15 (240) (135) – 2006 N/A (530) (15) (15) Other 0 1)107 (19) 10 (1) 202 – statement income impact 2005 (176) Total Total (27) (32) 0 69 69 1 5 0 145 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page146 146 CONSOLIDATED • Analysis: * WithinthemeaningofIAS32/39. 4 TOTAL Interest ratederivatives Foreign exchangederivatives Metal derivatives * WithinthemeaningofIAS32/39. (3) TOTAL Interest ratederivatives Foreign exchangederivatives Metal derivatives in millionsofeuros 2005 in millionsofeuros 2006 in fairvalueofnon-ferrousmetalderivatives”. onaspecificlineoftheincomestatementcalled”Changes reported ofderivativesaccountedforascashflowhedges,are portion derivatives classifiedasheldfortrading,welltheineffective within operatingmargin.Unrealizedgainsandlossesonmetal cled gainsandlossesonmetalcashflowhedgesarerecorded All realizedgainsandlossesonmetalderivativesincludingrecy- metal derivatives(seeNote1.cc). adoption atNovember1,2006ofcashflowhedgeaccountingfor nized inequityatDecember31,2006followingthefirst-time 25.1 millioneurolosscorrespondingtothecumulativerecog- 1,2007.In2007,theseincludeda cled toincomesinceJanuary ing tocashflowhedgesformetalshavethereforeonlybeenrecy- as financialassets/liabilitiesheldfortrading.Gainsandlossesrelat- November 1,2006.Previously in placetodesignatemetalderivativesascashflowhedgessince Metal derivatives:TheGrouphasonlytherequireddocumentation edfrtaig egsrcce Udryn Derivative Underlying hedges recycled held fortrading* Derivative Underlying hedges recycled held fortrading* an n ossGainsandlosses Gains andlosses Gainsandlosses Gains andlosses ndrvtvs oncashflow on derivatives oncashflow on derivatives FINANCIAL STATEMENTS , allmetalderivativeswereclassified N/A N/A (10) 38 34 (7) to income* to income* N/A N/A N/A N/A (6) (6) 5 5 • • N/A N/A N/A N/A N/A N/A ment isrecordedin”Costofdebt(gross)”. Note 25above.Anyimpactofthesederivativesontheincomestate- Group levelasaresultoftheriskmanagementpolicydescribedin Interest ratederivatives:derivativesarenotmaterialat relationship aregenerallycalculatedonlyusingthespotrate. points,asthecashflowsinhedging responds totheforward The ineffectivepor liabilities atthebalancesheetdate(seeNote27b). is thereforeoffsetbytherevaluationofunderlyingassetsand inated inforeigncurrencies.Theirimpactontheincomestatement rily correspondtoeconomichedgesofassetsandliabilitiesdenom- Foreign exchangederivativesclassifiedasheldfortradingprima- derivatives arerecordedasotherfinancialincomeorexpenses. alized andrealizedgainslossesrelatingtoforeignexchange income statementareincludedinoperatingmargin.Allotherunre- hedges relatingtocommercialtransactionsthatarerecycledthe Foreign exchangederivatives:Gainsandlossesoncashflow –– –– Fair value Fair value hedges* hedges* tion offoreignexchangederivativesprimarilycor- N/A N/A N/A N/A N/A N/A Ineffectiveness* Ineffectiveness* N/A N/A N/A (12) (12) 14 0 1 statement statement income income impact impact N/A N/A Total Total (28) (21) 34 10 (7) 4 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page147 NON-CURRENT Beyond 5years Between 4and5years Between 3and4years Between 2and3years Between 1and2years CURRENT Within 1year Metal derivatives: NON-CURRENT Beyond 5years Between 4and5years Between 3and4years Between 2and3years Between 1and2years CURRENT Within 1year Foreign exchangederivatives: relatingtoDecember31,2005. accurate information at December31),irrespectiveofwhethertheyqualifiedforhedgeaccountingthebalancesheetdate.Itwasnotpossibleto provide sufficiently The followingscheduleincludesallforeignexchangeandmetalderivativesoutstandingatDecember31,20072006(basedon fair value TERMOFDERIVATIVES D At December31,inmillionsofeuros At December31,inmillionsofeuros Assets Assets 10 21 10 21 0048 7031 0038 1000 6031 0 0 2007 2007 Liabilities Liabilities 21 21 5 01 5 0 Assets Assets 16 16 4 4 2006 2006 Liabilities Liabilities 0 4 0 4 147 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page148 148 Derivatives notdesignated Derivatives designated Derivatives designated Commercial receivables CONSOLIDATED ✔ financial liabilities Other currentandnon-current as hedges Gross debt LIABILITIES Cash andcashequivalents financial assets Other currentandnon-current as hedges Available-for-sale securities ASSETS The Grouphasdefinedthefollowingmaincategoriesoffinancialassetsandliabilities: CATEGORIES OFFINANCIALASSETSANDLIABILITIES A NOTE 27 as hedges as hedges Commercial payables Derivatives notdesignated At December31,inmillionsofeuros : Accountingmethodapplied. Amounts duetocustomers on constructioncontracts Amounts duefromcustomers Conver T ncntuto otat are taotzdcs 128 cost carriedatamortized on constructioncontracts Other financialliabilities and advances Trade receivables Customer deposits Ordinar rade payables tible bonds y bonds FINANCIAL INSTRUMENTS ADDITIONAL DISCLOSURESCONCERNING FINANCIAL STATEMENTS N/A N/A category category are taotzdcs 359 cost carried atamortized are taotzdcs 59 cost carried atamortized on n eevbe 1,092 Loans andreceivables are taotzdcs 292 cost carried atamortized profit orloss profit orloss financial assets IAS 39 are taotzdcs 817 profit orloss cost carried atamortized are taotzdcs 287 cost carried atamortized Available-for-sale Financial liabilities Financial liabilities at fairvaluethrough Financial assets Loans andreceivables Loans andreceivables Financial liabilities Financial liabilities Financial liabilities Financial liabilities Financial liabilities at fairvaluethrough Financial assets at fairvaluethrough are taotzdcs 262 cost carried atamortized Financial liabilities e.3,cost Dec. 31, Carrying Carrying mut are t are are t are tvalue Carriedat Carriedat Carried Carried at amount 2007 622 163 16 23 15 18 10 97 taotzd at cost at amortized ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Accounting treatmentunderIAS39 ✔✔ arvlefairvalue fair value hog ihDec.31, with through profit changes osin loss or recognized or ✔ ✔ ✔ equity ✔ ✔ 1,092 2007 622 128 312 292 817 287 163 254 Fair 59 15 18 10 16 97 23 at 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 149

• The fair value of other non-current financial assets is the • The Group’s fixed rate debt mainly comprises its ordinary bonds same as their carrying amount. as well as the liability component of its OCEANE convertible/ exchangeable bonds, whose fair value may differ from the • Available-for-sale securities include 14 million euros worth carrying amount in view of the fact that the bonds are carried at of securities measured at cost as no market value was available. In amortized cost. addition, the Group could not determine the fair value of these securities based on a valuation technique as it was neither possible • The fair value of other current and non-current financial to reliably estimate the present value of future cash flows nor to liabilities, including commercial payables, is the same as their obtain prices on comparable transactions. carrying amount.

• The fair value of other current financial assets, including The following tables provide a similar breakdown of financial assets commercial receivables, is the same as their carrying amount. and liabilities by category for 2006 and 2005. 149 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page150 150 Other currentandnon-current Other currentandnon-current Derivatives notdesignated Derivatives designated Commercial receivables CONSOLIDATED ✔ financial liabilities as hedges Gross debt LIABILITIES financial assets as hedges Available-for-sale securities ASSETS as hedges as hedges Derivatives designated Derivatives notdesignated Commercial payables Cash andcashequivalents At December31,inmillionsofeuros : Accountingmethodapplied. T Other financialliabilities Amounts duetocustomers on constructioncontracts Amounts duefromcustomers Conver ncntuto otat are taotzdcs 71 cost carriedatamortized on constructioncontracts and advances Trade receivables Customer deposits Ordinar rade payables tible bonds y bonds FINANCIAL STATEMENTS N/A N/A category category carried at amortized cost carried atamortized carried atfairvalue cost at amortized on n eevbe 1,272 Loans andreceivables IAS 39 are taotzdcs 917 through profitorloss cost carried atamortized 669 cost carried atamortized through profitorloss profit orloss financial assets Financial liabilities are taotzdcs 278 cost carried atamortized Loans andreceivables Available-for-sale Financial liabilities Financial liabilities Financial liabilities Loans andreceivables Financial liabilities Financial liabilities Financial liabilities at fairvalue Financial assets Financial assets at fairvaluethrough are taotzdcs 250 cost carried atamortized Financial liabilities e.3,cost Dec. 31, Carrying Carrying mut are t are are t are tvalue Carriedat Carriedat Carried Carried at amount 2006 287 112 39 11 14 13 16 77 taotzd at cost at amortized 0 2 ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Accounting treatmentunderIAS39 ✔✔ arvlefairvalue fair value hog ihDec.31, with through profit changes osin loss or recognized or ✔ ✔ ✔ equity ✔ ✔ 1,272 2006 287 917 669 112 278 251 Fair 11 14 71 39 13 16 77 at 0 2 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page151 Derivatives notdesignated Derivatives designated Derivatives designated Commercial receivables ✔ financial liabilities as hedges Gross debt LIABILITIES financial assets as hedges Available-for-sale securities ASSETS Other currentandnon-current Other currentandnon-current as hedges as hedges Derivatives notdesignated Commercial payables Cash andcashequivalents At December31,inmillionsofeuros : Accountingmethodapplied. T Other financialliabilities Amounts duetocustomers on constructioncontracts Amounts duefromcustomers Conver ncntuto otat are taotzdcs 70 cost carriedatamortized on constructioncontracts and advances Trade receivables Customer deposits Ordinar rade payables tible bonds y bonds category category are taotzdcs 0 cost carried atamortized are taotzdcs 18 cost carried atamortized on n eevbe 1,105 Loans andreceivables IAS 39 profit orloss 692 cost carried atamortized 370 cost carried atamortized through profitorloss profit orloss financial assets Financial liabilities Financial liabilities are taotzdcs 299 cost carried atamortized N/A Loans andreceivables N/A Available-for-sale Financial liabilities Financial liabilities Loans andreceivables Financial liabilities Financial liabilities Financial liabilities at fairvalue Financial assets at fairvaluethrough Financial assetsatfair value through are taotzdcs 121 cost carried atamortized Financial liabilities e.3,cost Dec. 31, Carrying Carrying mut are t are are t are tvalue Carriedat Carriedat Carried Carried at amount 2005 117 142 46 22 47 taotzd at cost at amortized 1 8 0 ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ ✔ Accounting treatmentunderIAS39 ✔✔ arvlefairvalue fair value hog ihDec.31, with through profit changes osin loss or recognized or ✔ ✔ ✔ equity ✔ ✔ 1,105 2005 117 692 370 142 299 123 Fair 70 18 46 22 47 at 0 1 8 0 151 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 152

CONSOLIDATED FINANCIAL STATEMENTS

B CALCULATIONS OF NET GAINS AND LOSSES The Group was unable to obtain sufficiently accurate information relating to calculations of net gains and losses on financial assets and liabilities for 2005.

2007 Net gains/losses Interest On subsequent remeasurement On disposal 2007 total Fair value Translation Impairment in millions of euros adjustments adjustments Available-for-sale financial assets 0 N/A N/A 0 – 0 Loans and receivables 0 N/A (53) (1) – (54) Financial assets and liabilities at fair value through profit or loss N/A 10 N/A N/A N/A 10 Financial liabilities carried at amortized cost (57) N/A 31 N/A (26) TOTAL (57) 10 (22) (1) 0 (70)

2006 Net gains/losses Interest On subsequent remeasurement On disposal 2006 total Fair value Translation Impairment in millions of euros adjustments adjustments Available-for-sale financial assets – N/A N/A 0 0 0 Loans and receivables 1 N/A (1) (5) 0 (5) Financial assets and liabilities at fair value through profit or loss N/A (11) N/A N/A N/A (11) Financial liabilities carried at amortized cost (45) N/A (2) N/A N/A (47) TOTAL (44) (11) (3) (5) 0 (63)

• Gains and losses relating to interest are recorded under ”Cost of debt” when they relate to aggregates included in consolidated net debt (see Note 23). When they relate to operating payables and receivables they are recorded under operating margin.

• Gains and losses arising from translation adjustments are recorded as other financial income or expenses.

• Impairment of loans and operating receivables is recognized within operating margin.

• The accounting treatment of the income statement impact of changes in fair value of derivatives is described in Note 26 c) above. Other than the impact of foreign exchange derivatives and metal derivatives, gains and losses relating to financial assets and liabilities at fair value through profit or loss include fair value adjustments recognized in cash and cash equivalents in an amount of 13 million euros in 2007 and 12 million euros in 2006. These amounts are calculated taking into account interest received and paid on the instruments concerned, as well as realized and unrealized gains. 152 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page153 eeu rmascae anycrepnst omriltascin are u ihEsxNxn uoeu ni ue2,20 seNt 2). (seeNote Revenue fromassociatesmainlycorrespondstocommercialtransactionscarriedoutwithEssexNexansEuropeupuntilJune28,2007 - Associates - Jointventures - Non-consolidatedsubsidiaries COST OFSALES - Associates - Jointventures - Non-consolidatedsubsidiaries REVENUE INCOMESTATEMENT A The mainitemsaffectedareasfollows: Management (whosetotalcompensationispresentedintablecbelow). commercialorfinancialtransactionscarriedoutwithassociates,non-consolidated companiesand transactionsprimarilyconcern Related party NOTE 29 At December31,2005 At December31,2006 At December31,2007 Future minimumpaymentsundernon-cancelableoperatingleaseswereasfollowsatDecember31,2007,2006and2005: NOTE 28 in millionsofeuros in millionsofeuros OPERATING LEASES RELATED PARTY TRANSACTIONS Total 53 51 60 ihn1ya Between1 Within 1year 2007 27 16 18 3160 176 93 22 2 4 0 (4) (2) (0) 00 000 Payments duebymaturity and 5years 2006 26 33 34 17 (4) 5 years Beyond 2005 13 (4) 2 8 0 – 153 078_160_Rapport_Financier_GB_v15.qxd 28/04/0812:48Page154 154 CONSOLIDATED A newcorporateofficer’s positionofChiefOperatingOfficerwascreatedin2006. costandinterestfortheyearrelatingtodefinedbenefitschemes. ** Thisitemincludestheservice * Amountspaidduringtheyear. TOTAL COMPENSATION Accruals forpensionobligations** Termination benefits Stock options Benefits inkind Compensation underemploymentcontracts* Directors’ fees positions* Compensation forcorporateofficer Nexans’ DirectorsandmembersoftheExecutiveCommittee MANAGEMENTCOMPENSATION C - Associates - Jointventures - Non-consolidatedsubsidiaries OTHER LIABILITIES - Associates - Jointventures - Non-consolidatedsubsidiaries DEBT/(FINANCIAL RECEIVABLES) - Associates - Jointventures - Non-consolidatedsubsidiaries ASSETS BALANCESHEET B At December31,inmillionsofeuro in millionsofeuros FINANCIAL STATEMENTS 2007 2007 14.8 3.1 0.0 3.2 0.1 4.8 0.4 3.2 (2) 010 000 0 0 000 01 000 3 2006 2006 13.4 3.1 1.9 1.1 0.0 4.8 0.3 2.2 (11) (1) 4 0 6 5 2005 2005 10.9 2.7 0.0 1.5 0.0 4.6 0.3 1.8 (11) (7) 1 4 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 155

Contingent liabilities relating to disputes and proceedings NOTE 30 CONTINGENT The Group has not recognized any provisions in relation to the LIABILITIES following cases, as the recognition criteria were not satisfied: AND DISPUTES • In March 2005, Kvaerner filed a claim against Nexans Norway alleging infringement of a patent involving umbilical cables. Although certain cases were resolved in 2007, there are still a number Kvaerner is claiming NOK 310 million (approximately 39 million of disputes outstanding relating to the Group’s operations. euros) in damages. Nexans believes that the patent concerned is Management considers that the provisions recognized in the finan- not applicable to its products and manufacturing processes, and cial statements are sufficient to cover the related contingencies, and has itself launched proceedings in Norway and the Netherlands to does not believe that the resolution of the disputes concerned will mate- invalidate Kvaerner’s patent. In 2007, Nexans obtained a favor- rially impact the Group’s results. Depending on the circumstances, this able court ruling in the Netherlands under which the scope of appli- assessment takes into account the Group’s insurance coverage and cation of the Kvaerner patent was restricted. Following this judg- independent evaluations of the probability of judgment being entered ment, Kvaerner filed an application to amend the disputed patent against Nexans. and clarified its scope of application. Consequently, in early 2008 Nexans withdrew the suit it had filed in Norway. The claim filed by

Disputes and proceedings giving rise to the recognition of Kvaerner in 2005 is still pending but Nexans considers the resid- provisions ual risk in relation to this case to be very low. • The most significant ongoing dispute for which provisions were • The Group also has an outstanding dispute relating to cables recognized involved cables supplied by Nexans for corvettes for manufactured by one of the Group’s European subsidiaries and the South African navy (the Meko case). The supply of certain of sold to a harness manufacturer. This manufacturer then sold the these cables was subcontracted to a South African manufacturer. cables to another equipment manufacturer, which in turn sold After the cables were installed on the first two corvettes, it was dis- them to a European automaker. Nexans’ subsidiary was not covered that the cables supplied by the subcontractor were non- informed of the end customer’s technical specifications. The end compliant. All the cables already installed were therefore removed customer used Nexans’ cables along with switches in its wipers sys- and replaced. The customer then claimed damages amounting to tems, and some of the cables allegedly broke. The subsidiary con- approximately 36 million euros, which was contested by Nexans. siders that the cables sold met the specifications agreed with its cus- This dispute was resolved during the second quarter of 2007. tomer, the harness manufacturer. At this stage, Nexans has very Consequently, the 11 million euro provision recorded at December little information on any problems identified in vehicles on the 31, 2006 was reversed (surplus) at June 30, 2007 as it was no road or their causes. Nexans’ direct customer has notified the sub- longer required. sidiary that it reserves the right to join the subsidiary as a third party • When it submits tender offers, the Group may be subject to govern- to the case if a claim is made against it by its customer, the auto- mental investigations which require provisions to be set up to cover mobile equipment manufacturer, but has not specified on what the potential risk of the Group being ordered to pay fines. In the basis Nexans’ subsidiary could be held liable. No legal proceed- last quarter of 2007, Nexans mainly paid 9.5 million euros under ings have yet been taken but the automaker undertook a recall a settlement agreement entered into in relation to proceedings that could affect around 350,000 installed switches in order to brought before the French Competition Council (Conseil de la replace the faulty parts. Concurrence) in 2003. Although it is not yet possible to ascertain the impact of the disputes and proceedings in process, Nexans currently does not consider that they will have a material impact on its consolidated financial position. It is, however, not in a position to exclude any such possibility. 155 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 156

CONSOLIDATED FINANCIAL STATEMENTS

NOTE 31 MAIN CONSOLIDATED COMPANIES

The main changes in scope of consolidation in 2007, 2006 and 2005 are presented in Note 2. The table below lists the main entities included in the Group’s scope of consolidation at December 31, 2007.

Companies by country Principal % control % interest Consolidation activity method*

FRANCE Nexans** Holding 100% 100% Parent company Nexans Participations Holding 100% 100% Nexans France Energy and Telecom 100% 100% Nexans Interface Telecom 100% 100% Eurocable Energy 100% 100% Société Lensoise de Cuivre Electrical wires 100% 100% Société de Coulée Continue du Cuivre Electrical wires 100% 100% Nexans Wires Electrical wires 100% 100% Rips Energy 100% 100% Recycables Energy 36,50 % 36,50% Equity method Alsafil Electrical wires 100% 100% Nexans Power Accessories France Energy 100% 100%

BELGIUM Nexans Benelux Energy 100% 100% Nexans Harnesses Energy 100% 100% Nexans Cabling Solutions NV Energy and Telecom 100% 100% Opticable SA NV Telecom 75,00% 75,00%

GERMANY Nexans Deutschland GmbH Holding 100% 100% Nexans Deutschland Industries GmbH & Co KG Energy and Telecom 100% 100% Kabelmetal Electro GmbH Energy 100% 100% Nexans Superconductors GmbH Energy 100% 100% Metrofunkkabel Union GmbH Energy 100% 100% Nexans Auto Electric GmbH *** Energy 100% 100% GPH Nexans Power Accessories Germany GmbH Energy 100% 100%

NORTHERN EUROPE Nexans Nederland BV Energy 100% 100% Nexans Norway A/S Energy and Telecom 100% 100% Nexans Suisse SA Energy and Telecom 100% 100% Confecta AG Energy 100% 100% Tri Wire Ltd Electrical wires 100% 100% Nexans Re**** Holding 100% 100% Nexans Logistics Ltd Energy 100% 100% Nexans UK Ltd Energy and Telecom 100% 100% Nexans Ireland Ltd Energy 100% 100% Nexans IKO Sweden AB Energy and Telecom 100% 100% 156 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 157

Companies by country Principal % control % interest Consolidation activity method*

Nexans Jydsk Denmark Energy and Telecom 100% 100% Axjo Kabel AG Energy 100% 100% Matema AB Energy 100% 100%

SOUTHERN EUROPE Multinacional Trade Energy 70,00% 70,00% Nexans Italia SpA Energy and Telecom 99,99% 99,99% Nexans Wires Italia SpA Electrical wires 100% 100% Cabloswiss Energy 99,99% 99,99% Nexans Iberia SL Energy and Telecom 100% 100% Nexans Hellas SA** Energy and Telecom 71,75% 71,75% Nexans Turkiye Iletisim Endustri ve Ticaret AS Energy and Telecom 100% 100%

EASTERN EUROPE Nexans Romania Energy 100% 100% Nexans CIS Russia Energy 100% 100%

AMERICAS Nexans Canada Inc Energy and Telecom 100% 100% Nexans Brasil S/A Energy and Telecom 99,95% 99,95% Nexans USA Inc Holding 100% 100% Nexans Energy USA Inc Energy 100% 100% Nexans Inc Telecom 100% 100%

AFRICA & MIDDLE EAST Liban Câbles SAL Energy and Telecom 93% 93% International Cables Company Ltd Energy and Telecom 98% 91,02% Nexans Maroc** Energy 83,59% 83,59% Sirmel Energy 83,24% 69,58%

ASIA-PACIFIC ***** Nexans (Shanghai) Electrical Materials Co Ltd Telecom 100% 100% Shanghai Nexans Kang Hua Cable Co Ltd Telecom 100% 100% Nexans Shanghai Wire & Cables Co Ltd Energy 100% 100% Nexans Korea Ltd Energy and Telecom 99,51% 99,51% Kukdong Electric Wire Co. Ltd Energy and Telecom 97,90% 97,90% Daeyoung Cable Energy and Telecom 99,51% 99,51% Nexans LIOA Cable Company Energy 60% 60% Nexans Vietnam Power Cable Co Energy 59,05% 58,76% Nanning Huasun Cables Ltd Co Telecom 100% 99,51% Nippon High Voltage Cable Corporation Energy 66% 66% OLEX Australia Pty Ltd Energy and Telecom 100% 100% OLEX New Zealand Ltd Energy and Telecom 100% 100%

* The companies are fully consolidated, unless otherwise specified. ** Listed companies. *** Nexans Auto Electric GmbH – a company based in Germany – itself consolidates various sub-subsidiaries, including in Romania, the Czech Republic, Slovakia and Mexico. **** A Luxembourg-based company set up in December 2007 which will be the Group’s reinsurance entity as from January 2008. ***** The Vina Deasung Cable Co. joint venture was liquidated in the second half of 2007 as part of a legal reorganization of the Group’s operations in Vietnam. 157 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 158

CONSOLIDATED FINANCIAL STATEMENTS

NOTE 32 EVENTS AFTER THE BALANCE SHEET DATE

No significant events have occurred since the balance sheet date for which disclosure is required in this report. 158 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 159

STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED* FINANCIAL STATEMENTS (Year ended December 31, 2007)

To the Shareholders, Following our appointment as Statutory Auditors by your Shareholders’ Meeting, we have audited the accompanying consolidated financial statements of Nexans for the year ended December 31, 2007. These consolidated financial statements have been approved by the Board of Directors. Our role is to express an opinion on these financial statements based on our audit.

1. OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance that the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements give a true and fair view of the assets, liabilities and financial position of the consolidated group of companies as of December 31, 2007, and of the results of its operations for the year then ended, in accordance with IFRS as adopted by the European Union.

2. JUSTIFICATION OF OUR ASSESSMENTS In accordance with the requirements of article L.823-9 of the French Commercial Code (Code de commerce) relating to the justification of our assessments, we bring your attention to the following matters:

Impairment of assets During the last quarter of each year, your Company tests goodwill for impairment and also performs a review to determine if there is any indication of impairment of non-current assets, as described in Section o, “Impairment tests” of Note 1 “Summary of significant accounting policies” to the consolidated financial statements. We have reviewed the methods used to carry out these impairment tests as well as the corresponding cash flow forecasts and assumptions, and have verified that Notes 1.o, 7 and 11 to the consolidated financial statements provide appropriate information.

Deferred tax assets Your Company recognizes deferred tax assets in its consolidated balance sheet on the basis of business plans and earnings forecasts, as described in Section w, “Deferred tax,” of Note 1 “Summary of significant accounting policies” and Note 9 “Income tax” to the consolidated financial statements. We assessed the information and assumptions upon which those estimates were based, reviewed the calculations made by the Company and compared the accounting estimates for previous periods with actual figures to ensure that the estimates were consistent with those for the previous period and with those used for impairment testing. As part of our assessment, we ensured that those estimates were reasonable. The assessments were made in the context of our audit of the consolidated financial statements taken as a whole and therefore contributed to the opinion we formed which is expressed in the first part of this report.

*This is a free translation into English of the Statutory Auditors’ report issued in the French language and is provided solely for the convenience of English speaking readers. The Statutory Auditors’ report includes information specifically required by French law in all audit reports, whether qualified or not. This information is presented below the opinion on the consolidated financial statements and includes an explanatory paragraph discussing the auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to provide separate assurance on individual account captions or on information taken outside of the consolidated financial statements. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France. 159 078_160_Rapport_Financier_GB_v15.qxd 28/04/08 12:48 Page 160

CONSOLIDATED FINANCIAL STATEMENTS

3. SPECIFIC VERIFICATION In accordance with professional standards applicable in France, we have also verified the information provided in the Group’s management report.

We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements.

Neuilly-sur-Seine and Paris La Défense, January 31, 2008

The Statutory Auditors

PricewaterhouseCoopers Audit Salustro Reydel Member of KPMG International

Dominique Ménard Benoît Lebrun Partner Partner 160 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page161 FINANCIAL STATEMENTS PARENT COMPANY 177 20-Itemsrelatingtoseveralbalancesheetlines 176 19-Translation adjustments 176 18-Accruedexpenses&income 176 17-Deferredcharges–Bondredemptionpremiums 175 16-Prepaidexpensesanddeferredincome 175 15-Liabilitiesbymaturity 174 14-Operatingliabilities 174 13-Borrowings 173 12-Provisions 173 11-Stockoptions 172 10-Equity 172 9-Breakdownofsharecapital 171 8-Marketablesecuritiesandcashatbankinhand 171 7-Receivablesbymaturity 6-Operatingreceivables 171 5-Non-currentfinancialassets 170 4-Property, plantandequipment 169 3-Intangibleassets 169 169 169 ofsignificantaccountingpolicies 2-Summary 1-Significantevents 167 167 167 166 166 164 162 181 29-Marketrisks 180 28-Off-balancesheetcommitments 179 27-Managementcompensation 179 26-Numberofemployees 179 25-Consolidation–Relatedcompanies 178 178 24-Incometax 177 23-Non-recurringitems 177 activitiesbefore tax 22-Incomefromordinary 177 21-Netsales 177 PORTFOLIO OFTRANSFERABLESECURITIES STATUTORY AUDITORS’REPORT FINANCIAL STATEMENTS ON THEPARENT COMPANY NOTES TOTHEBALANCESHEET FINANCIAL STATEMENTS NOTES TOTHEPARENT COMPANY LIST OFSUBSIDIARIESANDASSOCIATES INCOME STATEMENT BALANCE SHEET MISCELLANEOUS INFORMATION NOTES TOTHEINCOMESTATEMENT

161 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page162 162 Bond redemptionpremiums PARENT COMPANY FINANCIALSTATEMENTS te on 181–7,9 13,114 71,891 TOTAL ASSETS Unrealized foreignexchangelosses 304,107 – Deferred charges 198,581 CURRENT ASSETS Prepaid expenses 1,059,441 – 71,891 6 Marketable securities 1,085,622 Miscellaneous Issued capitalcalledbutunpaid (19,000) Other receivables 198,581 Trade receivables 6 Receivables 1,104,622 Prepayments tosuppliers Goods heldforresale – Semi-finished andfinishedgoods – Work inprogress–Services W Raw materialsandsupplies Inventories andworkinprogress 194 FIXED ASSETS 6 Other financialassets Other loans securities Other long-term (32) Loans tosubsidiaries Other equityinterests Investments inassociates–equitymethod Financial assets 226 Advances andpaymentsonaccount Fixed assetsinprogress Other itemsofproperty, plantandequipment andequipment Machinery Buildings Land Property, plantandequipment Advances andpaymentsonaccount Other intangibleassets Goodwill Concessions, patentsandsimilarrights Research anddevelopmentcosts costs Start-up Intangible assets Issued, uncalledcapital BALANCE SHEET–ASSETS Cash atbankandinhand Accruals At December31 ork inprogress–Production (in thousandsofeuros) rs mutDepreciation, Gross amount ,7,7 1,3)136731,376,668 1,356,743 (19,032) 1,375,775 ,8,2 1,3)233502,233,617 2,363,590 (19,032) 2,382,622 963,532 441,483 447,272 63,304 11,445 37,357 5,901 449 29 57 –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– –––– and provisions amortization amortization – 6,3 810,455 963,532 – 46,870 – 63,304 11,445 – – – – 73741,950 37,357 – 4,8 99,043 441,483 – 4,7 655,153 447,272 – 5,901 2007 449 29 57 4,543 9,283 2006 107 – – 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page163 Accruals Other liabilities Due tosuppliersoffixedassets Miscellaneous liabilities Accrued taxesandpayrollcosts Trade payables Operating liabilities Other borrowings Bank borrowings Other bonds TOTAL EQUITYAND LIABILITIES Unrealized foreignexchangegains TOTAL LIABILITIES Deferred income Conver Debt PROVISIONS FORCONTINGENCIESANDCHARGES Provisions forcharges Provisions forcontingencies OTHER EQUITY Conditional advances Non-voting loanstock TOTAL EQUITY Regulated provisions Investment grants Net incomefortheyear Retained earnings Other reserves Regulated reserves andcontractualreserves Statutory Legal reserve Revaluation reserve Additional paid-incapital Share capital(fullypaid-up) BALANCE SHEET–EQUITYANDLIABILITIES At December31 tible bonds (in thousandsofeuros) ,1,1 1,329,902 1,416,218 ,6,9 2,233,617 2,363,590 ,3,1 1,129,790 1,136,310 4,1 903,715 947,315 0,7 196,811 205,271 327,408 363,398 329,560 4,7 84,401 141,672 110,031 30226,030 33,022 56825,265 25,678 8,689 343,891 6,385 2,526 2007 400 9 – 591 57 57 –– –– –– –– –– –– –– –– –– –– –– –– 88,095 7,637 1,938 2,351 2006 – – – 163 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page164 164 Provisions forcontingenciesandcharges Depreciation and amortization –otherassets Depreciation andamortization -currentassets Impairment -fixedassets Impairment –fixedassets Depreciation andamortization andprovisions Depreciation, amortization Payroll charges Wages andsalaries Taxes otherthanonincome charges Other purchasesandexternal Reversals ofdepreciation,amor Operating grants Own workcapitalized PARENT COMPANY FINANCIALSTATEMENTS OPERATING INCOME/(LOSS) TOTAL OPERATING EXPENSES Other expenses Change ininventories(rawmaterialsandsupplies) (including customsduties) Purchases ofrawmaterialsandsupplies Change ininventories(goodsforresale) Purchases ofgoodsforresale(includingcustomsduties) TOTAL OPERATING REVENUES Other revenues expense transfers Changes ininventoriesoffinishedgoodsandwork-in-progress NET SALES Sales ofservices Sales ofmanufacturedproducts Sales ofgoodsheldforresale INCOME STATEMENT (in thousandsofeuros) tization andprovisions, 12,607 12,607 France –––– –––– Export 5 32313,061 13,263 656 5 32313,061 13,263 656 1,3)(9,385) (12,833) 85527,051 28,545 57317,666 15,713 56116,887 15,681 1,092 2,037 6,924 2,406 2,450 2007 7 315 374 32 –– –– –– –– –– – –– –– – –– – 1,025 1,636 5,697 1,491 4,605 2006 – – – – 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page165 Employee profit-sharing NET INCOME/(LOSS) TOTAL EXPENSES TOTAL REVENUES Income tax 873 NET NON-RECURRINGINCOME/(LOSS) TOTAL NON-RECURRINGEXPENSES andprovisions Exceptional additionstodepreciation,amortization 26,181 Non-recurring expensesoncapitaltransactions Non-recurring expensesonrevenuetransactions 1,028 TOTAL NON-RECURRINGINCOME Provision reversalsandexpensetransfers Non-recurring incomefromcapitaltransactions 499 Non-recurring incomefromrevenuetransactions INCOME/LOSS FROMORDINARY ACTIVITIESBEFORETAX NET FINANCIALINCOME/(LOSS) TOTAL FINANCIALEXPENSES Net lossesondisposalsofmarketablesecurities Foreign exchangelosses Interest paid andprovisions–Financialassets Amortization TOTAL FINANCIALINCOME Net gainsondisposalsofmarketablesecurities Foreign exchangegains Provision reversalsandexpensetransfers Other interestincome Income fromothercapitalizedsecuritiesandreceivables Dividend income Financial income Loss contributionorprofittransferred Profit contributionorLosstransferred Joint ventures (in thousandsofeuros) 7,5 221,373 276,158 1,3 88,095 309,467 110,031 386,189 4,6 192,573 246,867 1,7 87,409 110,770 289,367 370,470 2,0 96,794 123,603 0,3 114,375 209,837 111,508 205,749 29,810 40,285 135,416 56,996 77,736 ,1 48,591 7,219 3,309 2007 7 (249) 672 74 6 6 6 1,847 – – – 2,435 – – – – –– –– 29,607 2,435 1,847 2006 588 152 257 – – – – – 165 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page166 166 PARENT COMPANY FINANCIALSTATEMENTS 3- MoneyMarketfunds 2 -Sharesinforeigncompanies 1 -SharesinFrenchcompanies PORTFOLIO OFTRANSFERABLESECURITIES 168,700 67,892 – shares representing3.28%ofthecompany’s afterdeductingtreasury (2) TheownershippercentageofNexansKoreaisdetermined (1) AmountinthousandsofKRW(SouthKoreanwon)1,000=0.73825euroatDecember31,2007. 1,434,483 Other investments 218,400 848,001 (10%-50% owned) Foreign associates 237,400 848,001 (10%-50% owned) French associates 25,000 (over 50%-owned) Foreign subsidiaries 49,914 (over 50%-owned) French subsidiaries 100.00% 100.00% amountoflessthan1%Nexans’sharecapital B -Aggregatedataforinvestmentswithacarrying 124,410 Chungcheongbuk -SouthKorea 769,836 Nexans Korea 70,000 233,975 2) ASSOCIATES (10%-50%owned) (SIREN registr.number 314613431) Paris–France Nexans Participations (SIREN registr. number428593230) Nexans FranceParis- 1) SUBSIDIARIES(over50%-owned) amountinexcessof1%Nexans’sharecapital A -Subsidiariesandassociateswithacarrying (At December31,2007) LIST OFSUBSIDIARIESANDASSOCIATES CPR CashSICAV fund Kukdong ElectricWireCo. Nexans Participations Natixis EuriborSICAV fund Nexans Korea Nexans France Company name (in thousandsofeuros) Value Financial informations (1) fcrec nt)of currencyunits) of currencyunits) 777048,0,3 35.53% 82,803,636 17,707,074 i huad (inthousands (in thousands aia ec.sae ownership (excl.share capital hr oa qiy ecnaeDvdnsGosvle e au NtslsNetincome Netsales Netvalue Grossvalue Dividends Percentage Total equity Share shares/units held 55826100 848,001 100.00 15,598,246 00000100 3,0 1,0)218,400 (19,000) 237,400 12,169,830 100.00 10,000,000 capital) Number of 131,080 5,166 2,832 (2) 55 16,940 35.53 i huad (ntosns i huad (ntosns (inthousands (inthousands (inthousands (inthousands (in thousands 9.72 eevdo hrs ofshares ofshares received of euros) ,6 6901,4 0,1,6 4,117,162 207,714,568 16,940 16,940 2,769 rs au Impairment Grossvalue % 107,532 108,214 of euros) ,8 2,281 2,281 held 2,281 capital. fers fcrec nt)ofcurrencyunits) ofcurrency units) of euros) held 848,001 – – 16,940 – 107,532 – 108,214 – Carrying Carrying amount 2,281 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:52 Page 167

NOTES NOTE 2 SUMMARY TO THE PARENT COMPANY OF SIGNIFICANT FINANCIAL STATEMENTS ACCOUNTING POLICIES The notes below relate to the balance sheet at December 31, 2007, prior to the appropriation of income, as well as to the income state- The financial statements of Nexans SA have been prepared in accor- ment for the year then ended. dance with French generally accepted accounting principles.

The financial year ran from January 1 to December 31, 2007. The The balance sheet at December 31, 2007 and the income statement balance sheet total was 2,363,590,000 euros and net income for the year then ended have been prepared on a going concern basis amounted to 110,031,000 euros. in accordance with the principles of prudence and segregation of accounting periods. Accounting policies have been applied consis- The following tables are presented in thousands of euros, rounded to tently from one year to the next. the nearest thousand. Accounting entries are based on the historical cost method.

SHARE ACQUISITION COSTS NOTE 1 SIGNIFICANT Equity interests acquired as from January 1, 2007 are recorded at cost, representing the purchase price plus any directly attributable EVENTS expenses, in accordance with (i) the option available under CRC stan- dard 2004-06, effective from January 1, 2005, and (ii) recommen- The following significant events took place during 2007: dation 2007-C issued by the Emerging Issues Task Force of the French • on May 2, 2007 Nexans carried out a 350 million euros bond issue National Accounting Board (Comité d’Urgence du Conseil National comprising 7,000 bonds with a par value of 50,000 euros each. de la Comptabilité) on June 15, 2007 setting out the procedures appli- These bonds – which were issued at 99.266% of their par value cable when accounting for share acquisition costs. (49,633 euros) and pay 5.75% interest – are redeemable at par This alternative tax treatment has been applied prospectively, in com- on May 2, 2017; pliance with Article 314-2.2 of CRC standard 99-03.

• on July 24, 2007 the Board of Directors decided to carry out an INTANGIBLE ASSETS employee rights issue representing a maximum of 500,000 new This item includes “Concessions, patents and similar rights” measured shares. This issue has been postponed until the first quarter of 2008; at historical cost and amortized over their estimated useful lives, cor- • 413,400 new shares were issued following the exercise of stock responding to between 5 and 20 years. options; FINANCIAL ASSETS • 26,181,000 euros were reversed from the provision for impairment of equity interests; Equity interests • the Company received a total of 77,736,000 euros in dividends The gross value of equity interests recorded in the balance sheet prior from subsidiaries, primarily from Nexans Participations to December 31, 2006 corresponds to the purchase price (exclud- (49,914,000 euros) and Nexans France (25,000,000 euros); ing incidental expenses) or their transfer value. Equity interests acquired as from January 1, 2007 are stated at their • the Company purchased patents representing 226,000 euros. purchase price plus any directly attributable transaction expenses, in accordance with the option available under CRC standard 2004-06 (see above).

A provision for impairment in value is booked when the carrying amount of these interests exceeds their fair value. Fair value is deter- mined on the basis of value in use, which is calculated using a multi- criteria approach that takes into account revalued net assets as well as yield. 167 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:52 Page 168

PARENT COMPANY FINANCIAL STATEMENTS

Loans to subsidiaries CASH AT BANK AND IN HAND, Current account advances and loans granted by the Central Treasury DEBT AND OTHER BORROWINGS Department to Nexans’ direct subsidiaries are recorded under “Loans Within the framework of the Nexans Group centralized treasury to subsidiaries”. management system:

• very short-term loans and Centralized Treasury current accounts in Other loans debit (with terms of less than 3 months) relating to Nexans’ indirect This item primarily concerns long-term loans granted to indirect sub- subsidiaries are included in “Cash at bank and in hand”; sidiaries. • borrowings and Centralized Treasury current accounts in credit Other financial assets are included in “Other borrowings”. • Treasury shares Treasury shares purchased as part of a share buyback program, RECEIVABLES, PAYABLES AND CASH as authorized by the Annual General Meeting, are recorded in DENOMINATED IN FOREIGN CURRENCIES “Other financial assets” at cost, as there is no intention of use Receivables and payables denominated in foreign currencies are specified by the Board of Directors. translated into euros at the exchange rate prevailing at the balance At the balance sheet date, these shares are compared to the aver- sheet date: age Nexans share price for the month of December. A provision is set aside if the carrying amount exceeds the average share price. • Hedged foreign currency receivables and payables do not have any impact on the income statement as the gains and losses on the • Financial assets in progress currency hedging instruments are accounted for on a symmetrical Expenses incurred as part of the acquisition of an equity interest basis with the losses or gains on the underlying hedged items. whose completion is deemed to be highly probable are recorded • In accordance with the principle of prudence a provision for unre- under "Other financial assets". alized foreign exchange losses is recorded for unhedged foreign currency receivables and payables. Unrealized gains have no MARKETABLE SECURITIES, impact on the income statement. OTHER RECEIVABLES Marketable securities correspond to short-term cash investments. Cash and cash equivalents denominated in foreign currencies are translated into euros at the year-end exchange rate and any resulting Money market funds foreign exchange gains or losses are recognized in the income Money market funds are stated at the lower of cost or market value. statement.

Certificates of deposit FINANCIAL INSTRUMENTS Certificates of deposit are stated at nominal amount at the time of Nexans manages market risks – primarily arising from changes in issue. Any accrued interest is recorded in the financial statements at exchange rates – by using derivative financial instruments, notably the balance sheet date. currency swaps. These instruments are used solely for hedging purposes. RECEIVABLES Gains and losses on these hedging instruments are accounted for in Receivables are stated at nominal value. “Other receivables” mainly the income statement on a symmetrical basis with the losses or gains includes current accounts with indirect subsidiaries with terms of on the underlying hedged items. At the balance sheet date any unre- between three months and one year. A provision for impairment is alized gains are recorded in "Other receivables" and unrealized recorded when it is doubtful that the receivable will be collected. losses are included in "Other liabilities". 168 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:52 Page 169

REGULATED PROVISIONS The Company records all the provisions authorized under the appli- NOTES cable tax laws. The provisions are reversed in the legally prescribed TO THE BALANCE SHEET manner and timeframes.

PROVISIONS FOR CONTINGENCIES NOTE 3 AND CHARGES INTANGIBLE ASSETS Provisions are recognized when Nexans has a present legal or con- In January 2007 Nexans acquired a number of patents in the amount structive obligation resulting from a past event, where it is probable of 226,000 euros with probable useful lives estimated at 7 years. that an outflow of resources embodying economic benefits will be nec- After 32,000 euros in amortization recorded for the year, the essary to settle the obligation and where the amount of the obligation residual value of these patents was 194,000 euros at the balance can be reliably measured. sheet date.

BONDS WITH REDEMPTION PREMIUMS Ordinary and convertible bonds with redemption premiums are rec- ognized as a liability in the balance sheet at their gross value, includ- NOTE 4 PROPERTY, PLANT ing the premium. This applies even when the premium payment is con- AND EQUIPMENT tingent on the bonds not being converted into shares.

The redemption premium is recognized as an asset and is amortized At December 31, 2007, property, plant and equipment comprised over the term of the bonds concerned. non-depreciable miscellaneous fixtures in the amount of 6,000 euros.

NOTE 5 NON-CURRENT FINANCIAL ASSETS

Other equity Loans to Other loans Other Total interests subsidiaries financial

(in thousands of euros) assets

Gross value At December 31, 2006 1,104,622 304,107 13,114 – 1,421,844 Acquisitions-increases – 198,581 71,891 449 270,921 Disposals-reductions – (304,107) (13,114) – (317,221) AT DECEMBER 31, 2007 1,104,622 198,581 71,891 449 1,375,544

Provisions At December 31, 2006 (45,181) – – – (45,181) Additions ––––– Reversals 26,181–––26,181 AT DECEMBER 31, 2007 (19,000) – – – (19,000)

Net non-current financial assets At December 31, 2006 1,059,441 304,107 13,114 – 1,376,663 AT DECEMBER 31, 2007 1,085,622 198,581 71,891 449 1,356,544 169 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:52 Page 170

PARENT COMPANY FINANCIAL STATEMENTS

5.1 OTHER EQUITY INTERESTS 5.3 OTHER LOANS “Other equity interests” mainly comprises shares held in the follow- At December 31, 2007 this item corresponded to loans to: ing companies: • Nexans Australia Pty for 1,699,000 euros. • Nexans France: 10,000,000 shares with a gross value of • Nexans USA for USD 61,998,000, representing 42,116,000 euros. 237,400,000 euros, with accumulated impairment losses of • Nexans Inc. for USD 20,666,000, representing 14,038,000 euros. 19,000,000 euros at December 31, 2007. • Nexans Energy Inc. for USD 20,666,000, representing • Nexans Participations: 15,598,246 shares with a value of 14,038,000 euros. 848,001,000 euros. These amounts include accrued interest. • Nexans Korea: 12,169,830 shares with a value of 16,940,000 euros. 5.4 OTHER FINANCIAL ASSETS • Kukdong Electric Wire Co: 131,080 shares with a value of At December 31, 2007 "Other financial assets" comprised costs 2,281,000 euros. directly attributable to the planned acquisition of Madeco. 5.2 LOANS TO SUBSIDIARIES This line primarily comprises short-term loans granted to the follow- ing direct subsidiaries: • Nexans Participations for 90,013,000 euros (including 113,000 euros in accrued interest). • Nexans France for 108,124,000 euros (including 224,000 euros in accrued interest).

NOTE 6 OPERATING RECEIVABLES

Net values at December 31 (in thousands of euros) 2007 2006

PREPAYMENTS TO SUPPLIERS –– TRADE RECEIVABLES 11,445 9,283 Other receivables: Prepaid payroll taxes 25 15 Income taxes 3,015 3,380 Prepaid and recoverable VAT 1,489 1,249 Group and associates: tax consolidation 1,279 3,226 Group and associates: other current accounts* 44,689 37,286 Other debtors 12,806 1,714 SUB-TOTAL – OTHER RECEIVABLES 63,304 46,870 TOTAL 74,749 56,153

*Other current accounts correspond to Central Treasury current accounts with indirect subsidiaries with terms of between three months and one year. 170 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page171 • • Cash atbankandinhandcorrespondsto: on osbiire 9,8 9,8 – • • 198,581 Marketable securitiescomprisethefollowing: 198,581 NOTE 8 TOTAL Other receivables TOTAL Other loans Loans tosubsidiaries Fixed assets NOTE 7 T Current assets rade receivables Gross values,atDecember31 bank accountbalancesamountingto34,066,000euros. with maturitiesoflessthanthreemonths,totaling413,206,000euros; the balanceofloansgrantedbyNexanstoitsindirectsubsidiaries 225,000,000 ofdepositrepresentinganominalamount of certificates an unrealizedgainof313,000eurosatDecember31,2007; money marketfundsintheamountof215,746,000,representing euros andaccruedinterestof737,000euros. RECEIVABLES BYMATURITY AND INHAND CASH AT BANK SECURITIES AND MARKETABLE (in thousandsofeuros) Gross amount 270,472 74,749 71,891 63,304 11,445 There arenofounder’s inprofits. sharesorotherrightsofparticipation doublevotingrights. which carry shares registeredinthenameofsameholderforatleasttwoyears, thesamerights,exceptfor are fullypaidup,inthesameclassandcarry 25,678,355 shares,eachwithaparvalueof1euro.Alltheseshares At December31,2007,theCompany’s sharecapitalcomprised NOTE 9 Due withinoneyear OF SHARECAPITAL BREAKDOWN 203,812 74,749 63,304 11,445 5,231 Due beyondoneyear 66,660 66,660 – – – 171 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page172 172 AT DEC.31,2007BEFORE • PARENT COMPANY FINANCIALSTATEMENTS (2) 50%vestingaftertwoyearsandthebalance vestingatanannualrateof25%thereafter. (1) Vesting atarateof25%peryear. TOTAL 15,2007 February November 23,2006 November 23,2005 November 16,2004 April 4,2003 March 13,2002 18,2002 January November 16,2001 At December31,2007therewere1,070,250outstandingstockoptionsheldbyemployees,representing4.17%oftheCompany’s share capital. NOTE 11 • (1) Othermovementscanbeanalyzedasfollows: APPROPRIATION OFNETINCOME 2007 netincome Other movements Appropriation of2006netincome before appropriationofnetincome At Dec.31,2006 MOVEMENTSDURINGTHEYEAR 10.1 NOTE 10 Date ofgrant 6,520,000 The issueof413,400newshareswithapremium 30,648,000 eurosindividendspaidtoNexansshareholders. (in thousandsofeuros) euros followingtheexerciseofstockoptions. (1) EQUITY STOCK OPTIONS ubro pin Exerciseprice Number ofoptions at theyear-end 1,070,250 outstanding (in 343,000 301,950 302,000 56811630256–116210011,416,218 110,031 141,672 – 2,526 1,136,310 25,678 68,300 29,000 26,000 52511970231–8,0 8051,329,902 88,095 84,401 – 2,351 1,129,790 25,265 aia adi aia eev éevserig fortheyear earnings réserves reserve paid-incapital capital hr diinlLglOhrRtie e noe Total Netincome Retained Other Legal Additional Share 1 6,520 413 – – – – €100.94 – 7 799(88,095) 87,919 – 176 – €76.09 €40.13 €27.82 €16.70 €11.62 €19.94 €17.45 euros) General Meeting. July 24,2007whichisscheduledtotakeplacebeforesaidAnnual (ii) theemployeerightsissueapprovedbyBoardofDirectorson dividend payment,asaresultof(i)theexercisestockoptions;and/or and thedateofAnnualGeneralMeetingcalledtoapprove 1,2008 any additionalsharesthatmaybeissuedbetweenJanuary The totalamountofthedividendmaybeincreasedtotakeaccount 25,678,355 sharesoutstandingatDecember31,2007. senting anaggregateamountof51,356,710eurosbasedonthe approve thepaymentofadividend2.00eurospershare,repre- At thenextAnnualGeneralMeeting,shareholderswillbeinvitedto DIVIDENDPAYMENT 10.2 – – (30,648) – – November 23,2007 November 23,2006 November 16,2005 November 16,2002 February 15,2009 February January 18,2003 January March 13,2003 Exercise period April 4,2004 1,3 110,031 110,031 – (1) (1) (1) (1) (2) – November22,2014 – November22,2013 – November15,2012 – November15,2009 (1) (1) – February 14,2015 – February – January 17,2010 – January – March12,2010 (1) – April3,2011 (23,715) – – 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page173 to adjust when necessary itsfinancingrequirements. to adjustwhennecessary bankcreditfacilities 2007, Nexanssporadicallyusedunconfirmed As thecommercialpapermarkethasbeenunavailablesinceApril May andthebalancesheetdate. drawdownsagainstthislineweremadebetween line andnofurther credit repayment oftheamountsdrawndownunderconfirmed rate of5.75%.Theproceedsfromthisbondissueallowedforthe redeemable infullonMay2,2017andpayinterestatanannual These bonds–whichweretakenupbyEuropeaninvestorsare 7,000bondswithanominalvalueof50,000euroseach. made upof In May2007,theGroupcarriedouta350millioneurosbondissue, 2006 andredeemablein2013. and proceedsfromtheOCEANEbondsissuedbyGroupinJuly creditline rily metthroughtheuseofa580millioneurosconfirmed Until May2007theCompany’s liquidityrequirementswereprima- AT DECEMBER31,2007 Repayments, reductions New borrowings At December31,2006 NOTE 13 Provisions forcontingenciesandcharges Regulated provisions NOTE 12 of whichexercisableattheendperiod OPTIONS OUTSTANDING AT THEENDOFPERIOD Options expiredduringtheperiod Options exercisedduringtheperiod Options cancelledduringtheperiod Options grantedduringtheperiod OPTIONS OUTSTANDING AT THEBEGINNINGOFPERIOD Change innumberofoutstandingoptions (in thousandsofeuros) At December31 Provisions forforeignexchangelosses (in thousandsofeuros) BORROWINGS PROVISIONS 9,5 ,8 195,633 6,385 692,958 367,598 2,0 4,9 4,8 43,000 147,783 343,891 327,408 208 (343,891) (2,048) Bonds Overdrafts embn (centralized bank term and short- ,8 47,850 6,385 loans thirty daysdependingonthenatureofbreach. thirty ing wouldberepayable,eitherimmediatelyorafteracureperiod of credit lineswouldbecomeunavailableandanyamountsoutstand- If anyoftherevolvingfacilitycovenantswerebreached,undrawn the financialstatements. December 31,2007,andatthedateBoardofDirectorsapproved equity <1.15).Nexansfullycompliedwiththeseratiosboth at dated netdebt/EBITDA<2.95,andconsolidateddebt/total consolidated financialstatementsoftheNexansGroup(consoli- covenants inrespectoffinancialratioscalculatedbasedonthe covenants (negativesurety, pari-passuandcrossdefault)to The Company’s loan creditlineissubjecttothecustomary confirmed 2006 –––– – consborrowings accounts treasury) Current (43,000) – Increase 57 te Investment- Other – – Decrease payables related ,3 904,613 9,637 ,0 377,592 3,609 ,2 868,110 6,028 – Number ofoptions (341,089) – 1,462,775 1,462,775 1,070,250 (413,400) 517,000 29,000 (8,125) 2007 Total 57 - 173 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page174 174 Other liabilities Due tosuppliersoffixedassets Accrued taxesandpayrollcosts Trade payables Other borrowings Bank borrowings Other bonds - Tax consolidationsuspenseaccount - Accruedtaxes PARENT COMPANY FINANCIALSTATEMENTS TOTAL Deferred income bonds Convertible NOTE 15 TOTAL SUB-TOTAL MISCELLANEOUSLIABILITIES - Otherpayables - Accruedexpenses - Duetosuppliersoffixedassets Miscellaneous liabilities SUB-TOTAL ACCRUEDTAXES ANDPAYROLL COSTS - Groupcompanies:taxconsolidation - Employee-relatedpayablesandaccruedpayrollcosts taxesandpayrollcosts: Accrued TRADE PAYABLES CUSTOMER DEPOSITSANDADVANCES NOTE 14 At December31 At December31 (in thousandsofeuros) (in thousandsofeuros) OPERATING LIABILITIES LIABILITIES BYMATURITY 4,1 271,427 947,315 0,7 205,271 205,271 6,9 13,398 363,398 329,560 30233,022 33,022 mutoeya n 5years 1and oneyear amount 8,689 6,385 rs Dewti Debten Duebeyond Duebetween Duewithin Gross 400 591 –––– 8,689 6,385 4,200 400 63 21135,605 42,111 30226,030 33,022 27516,740 22,795 5 years ,8 7,637 8,689 1,909 2,691 5,628 2007 5 675,635 253 400 253 344 61,711 56 – – 350,000 – 325,360 – – – – –– – 1,938 1,585 3,433 4,272 2006 275 227 – – – – – – 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page175 Issue costs of other borrowings 943 _ 269 – 674 over the term of overtheterm 674 – 269 _ 943 Issue costsofotherborrowings te odisecss_24023–227over11years 2,227 – 223 2,450 _ Other bondissuecosts su ot o ovril od ,0 0 ,0 over7years 3,000 – 600 _ 3,600 bonds Issue costsforconvertible 7. DEFERREDCHARGES 17 .1 NOTE 17 income statementoverthelifeofbonds. Deferred incomecorrespondstothegainrealizedoninterest-ratehedgerelatingMay2007bondissue.Thisisbeing takentothe TOTAL Other Financial NOTE 16 of thebonds,inanamount223,000eurosperyear onastraight-linebasis overthelife theMay2007bondissue.Theyarebeingamortized The costsrecognizedunderthisitemin2007concern TOTAL At December31 (in thousandsofeuros) (in thousandsofeuros) PREPAID EXPENSESANDDEFERREDINCOME BOND REDEMPTIONPREMIUMS DEFERRED CHARGES- tDc 1 eonzd mrie Cagdt AtDec.31, Chargedto Amortized Recognized At Dec.31, . ,4 ,5 1,092 2,450 4,543 06drn uigthe 2007 during issue 2006 h eidtepro premium theperiod the period Amount xessIcm xessIncome Expenses Income Expenses 95117– 107 591 29 5,901 – 9–4 – 40 – 29 9 7– 67 591 – 2007 Straight-line basis Straight-line basis Straight-line basis (2007 to2017) (2006 à2012) the borrowings 2006 of deferral Method

175 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page176 176 Group andassociates:interestonothercurrentaccounts PARENT COMPANY FINANCIALSTATEMENTS A provisionhasbeenrecordedtocoverunrealizedforeignexchange lossesarisingontranslation. NOTE 19 Other receivables ofoverthreemonths Group andassociates:interestoncurrentaccountswithterms Prepaid andrecoverabletaxes Trade receivables Deposits withfinancialinstitutions Interest onloans Loans tosubsidiaries incomerelatingto: Accrued Other liabilities Other taxes Payroll taxes Employee-related liabilities Group andassociates Investment-related payables Accrued payables Other borrowings Bank borrowings Interest onbonds expensesrelatingto: Accrued NOTE 18 TOTAL redemption premium 2007-2017 5.75%Otherbonds bonds redemptionpremium 2006-2013 1.50%OCEANE 7,163,000 euros. to onastraight-linebasisoverthelifeofbonds.Therelatedexpensefor2007amounted Bond redemptionpremiumsareamortized BONDREDEMPTIONPREMIUMS 17.2 (in thousandsofeuros) At December31 (in thousandsofeuros) TRANSLATION ADJUSTMENTS ACCRUED EXPENSES&INCOME frcgiin premium of recognition 064,6 ,1 1906921,0 34,959 10,401 6,992 41,950 3,410 45,360 2006 072,569 2007 er Gross Year mriainpeimfrteya mriain premium amortization fortheyear premium amortization cuuae e mriainAccumulated Amortization Net Accumulated January 1,2007 January – – 1907,163 41,950 171 December 31,2007 17,598 1,314 8,700 1,190 9,927 2,290 1,652 1,296 3,900 8,040 2007 708 207 737 1,638 337 400 28 49 – –– – 7 2,398 171 37,357 1,831 2,048 1,333 7,627 1,281 2,896 6,621 1,231 2006 550 968 935 Net 56 53 28 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:52 Page 177

NOTE 20 ITEMS RELATING TO SEVERAL BALANCE SHEET LINES

N/A

NOTES TO THE INCOME STATEMENT

NOTE 21 NET SALES

Nexans’ 2007 net sales came to 13,263,000 euros, and primarily related to the invoicing of services provided to its subsidiaries.

NOTE 22 INCOME FROM ORDINARY ACTIVITIES BEFORE TAX

(in thousands of euros) 2007 2006 Sales of services 13,263 13,061 Other revenues –– Operating expense transfers 2,450 4,605 Operating expenses excluding depreciation and amortization (27,421) (26,026) Depreciation and amortization (1,124) (1,025) Dividend income 77,736 135,416 Other net financial income 26,906 9,096 Net additions to/reversals of financial provisions 18,962 (47,718) TOTAL 110,771 87,409

NOTE 23 NON-RECURRING ITEMS

Non-recurring items mainly correspond to gains or losses on sales of equity interest.

NOTE 24 INCOME TAX

Income from ordinary Non-recurring TOTAL activities income and employee

(in thousands of euros) profit-sharing

PRE-TAX INCOME 110,771 (68) 110,703 Income tax: - At standard rate – – – - At reduced rate – – – - Benefit/(charge) from tax consolidation – (672) (672) NET INCOME 110,771 (740) 110,031 177 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page178 178 PARENT COMPANY FINANCIALSTATEMENTS Financial income Dividend income Financial expenses INCOME STATEMENT ITEMS Other liabilities Other borrowings Trade payables Liabilities Cash atbankandinhand Central Treasury ofover3months currentaccountswithterms Other receivables,net Trade receivables Prepayments tosuppliers Other loans Loans tosubsidiaries Other equityinterests Assets BALANCE SHEETITEMS The mainbalancesheetandincomestatementitemsaffectedareasfollows: subsidiariesandassociates transactionsprimarilyconcern Related party Nexans publishesconsolidatedfinancialstatements. NOTE 25 MISCELLANEOUS INFORMATION 39-4oftheFrenchGeneralTaxNo nontax-deductibleexpenses,asdefinedinArticle Code,wereincurredduring2007. at thebalancesheetdate,whichrepresentsanunrecognizedtaxassetof12,664,000euros. was recognized forward ofthetaxconsolidationagreementunderwhichNexansSAisliableforglobalcharge,alosscarry As part wouldhavebeenliableifithadtaxedonastand-alone basis. tax andothercontributionsforwhicheachsubsidiary corporateincome tothecorporateincometaxpayableonconsolidatednetofgroupcorresponds tothe bution ofeachsubsidiary taxationperiod, thecontri- dateisDecember31,2011.Forevery fiveyearsandthecurrentexpiry This optionisautomaticallyrenewableevery 223Aetseq.oftheFrenchGeneralTaxdation groupinaccordancewitharticle Code. 1,2002,wassignedpursuanttotheoptionmadebyNexans toadoptaFrenchta This agreement,whichcameintoforceonJanuary Nexans hassignedataxconsolidationagreementwithitsFrenchsubsidiariesinwhichitdirectlyorindirectlyholdsaninterest ofmorethan95%. (in thousandsofeuros) CONSOLIDATION –RELATED COMPANIES 1,085,622 0,7 153,811 205,271 604,806 413,206 304,107 198,581 40238,919 135,416 54,002 77,736 13,114 11,445 71,891 46937,286 44,689 4,993 2,690 8,689 5,287 2007 –– 1,059,441 x consoli- 9,056 9,283 3,433 6,334 3,226 2006 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page179 Unused creditfacility:580millioneuros. COMMITMENTSRECEIVED 28.3 signature ofthefinalagreementbetweentwoparties. breaching anyoneofitsmaincontractualobligations.Thisobligation isexpectedtoremaininforceuntiltheacquisition completed, subjectto theagreementonaccountof topayMadecoafixedsumofUSD21,000,000ifterminates operations, Nexanshasundertaken In addition,undertheframeworkagreementsignedonNovember 15,2007withMadecorelatingtothepurchaseofgroup’s cable euros atDecember31,2007. subsidiaries,amounting to1, The Companyhasgrantedparentcompanyguaranteescoveringthe contractualobligationsofcertain COMMITMENTSGIVEN 28.2 See Note29. RECIPROCALCOMMITMENTS 28.1 NOTE 28 Nexans’ directorsreceived374,000eurosindirectors’feesrespectof2007. (3) Including25,000eurospaidinrespectof2005and2006. (2) Thesumoftheseamountscorrespondstothetotalgrosspre-taxcompensationindicatedabove. (1) Compensationpaidin2007for2006and2005. TOTAL Other benefits Directors’ fees Basic salary The variouscomponentsoftheircompensationwereasfollows: Chief OperatingOfficer’s employmentcontractthat appliedpriortohisappointmentasacorporateofficer. Chief OperatingOfficerwas2,591,000euros.Thisamountincludes100,000eurosinvariablecompensationfor2006accordance withthe andChiefExecutive Officer,In 2007,thetotalpre-taxamountofgrosscompensation,benefitsanddirectors'feespaidtoChairman andthe NOTE 27 TOTAL Blue-collar workers Other white-collarworkers Managerial employees NOTE 26 Variable compensation (2) (2) (2) NUMBER OFEMPLOYEES(ANNUALAVERAGE) OFF-BALANCE SHEETCOMMITMENTS MANAGEMENT COMPENSATION (1) ,0 1,274 3,103 1,807 1,260 2007 2007 30 6 62 6 –– – 491,379,000 1,196 1,079 Nexans 2006 2006 50 8 (3) (2) 179 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page180 180 PARENT COMPANY FINANCIALSTATEMENTS Fair values were determined basedontheinterestratesandexchangeprevailingatDecember31,2007. Fair valuesweredetermined Currency swaps Forwards TOTAL Subsidiaries Banks At December31,2007,theoff-balancesheetfinancialinstrumentsheldtohedgeforeignexchangerisksbrokedownasfollows: financial payablesandreceivables. The financialinstrumentsheldbyNexansatDecember31,2007wereusedtohedgeforeignexchangerisksstemmingfromcommercia rate risks. managementsystemforitssubsidiarieswhichisalsousedtomanage foreignexchange andinterest The Grouphassetupacentralizedtreasury NOTE 29 N/A PROPERTY LEASECOMMITMENTS 28.4 The earliest/latest expiry datesforoff-balancesheetfinancialinstrumentsare: The earliest/latestexpiry Third parties MARKET RISKS Buyer positions (fair value) (17,304) 16,486 (818) Seller positions aur ,20 June29,2012 June29,2012 3,2008 January 4,2008 January (fair value) (34,225) 41,200 6,975 aletLatest Earliest Expiry date Expiry T otal position (fair value) (17,739) 23,896 6,157 l and/or 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:52Page181 Neuilly-sur-Seine and Paris La Défense, February 29,2008 Neuilly-sur-Seine andParisLaDéfense,February principal shareholders. In accordancewiththelaw, containstheappropriatedisclosuresasregardside wehaveverifiedthattheManagementReport orchangeinfuncti other commitmentsmadeintheirfavorconnectionwith,orsubsequentto,appointment,termination, inrespectofremunerationgrantedtocompanyofficers andany providedintheManagementReport thefairpresentationofinformation • Directors, andinthedocumentsaddressedtoshareholderswithrespectfinancialpositionstatemen of theBoardof providedintheManagementReport withthefinancialstatementsofinformation thefairpresentationandconformity • This report shouldbereadinconjunction with,andconstruedinaccordanceFrenchlawprofessionalauditing standards applicableinFrance. This report takenoutsideofthefinancial statements. captions oroninformation assessments wereconsideredforthepurpose ofissuinganauditopiniononthefinancialstatementstakenasawholeand not to provideseparateassuranceonindividualaccount significant accounting andauditingmatters.These paragraphdiscussingtheAuditors’assessments ofcertain the opiniononfinancialstatementsand includesanexplanatory ispresented below whether qualifiedornot.Thisinformation specificallyrequiredbyFrenchlawinsuchreports, includesinformation Auditors’ report speaking readers.TheStatutory issuedinFrenchand isprovidedsolelyfortheconvenience ofEnglish Auditors’report *This isafreetranslationintoEnglish oftheStatutory W We thespecificverificationsrequiredbylawinaccordancewithprofessionalstandardsapplicableFrance. havealsoperformed 3. Specificverificationsandinformation ofthisreport. whichisexpressedinthefirstpart formed The assessmentsweremadeinthecontextofourauditfinancialstatementstakenasawholeandthereforecontributedto theopinionwe ofourassessments,wealsoensuredthatthoseestimates werereasonable. As part Company, andreviewingthemanagement’s processforapprovingthoseestimates. Assets”. Ourworkconsistedofassessingthedataandassumptionsonwhichthoseestimateswerebased,reviewingcalculations madebythe ofsignificantaccounting policies:Financial estimated onthebasisoftheirvalueinuse,exceedsfairvalue,asdescribedNote2“Summary Your amount, ofitsequityinvestmentsandloansgrantedtosubsidiarieswhentheircarrying Companyrecordsaprovisionforimpairment ofequityinvestments Provision forimpairment was correctlyapplied. As par Change inthetaxoptionusedtoaccountforshareacquisitioncosts assessments, webringyourattentiontothefollowingmatters: L.823-9oftheFrenchCommercialCode( In accordancewiththerequirementsofarticle 2. Justificationofourassessments which addressesthechangeintaxoptionusedbyCompanywhenaccountingforshareacquisitioncosts. ofsignificantaccountingpolicies:ShareAcquisition Costs”, Without qualifyingtheaboveopinion,webringyourattentiontoNote2 “Summary 31, 2007,andoftheresultsitsoperationsforyearthenendedinaccordancewithaccountingrulesprinciplesapplicable inFrance. In ouropinion,thefinancialstatementsgiveatrueandfairviewofCompany’s financialpositionanditsassetsliabilities asofDecember our auditprovidesareasonablebasisforopinion. used andsignificantestimatesmadebymanagement,aswellevaluatingtheoverallpresentationoffinancialstatements. We believethat principles theamountsanddisclosuresinfinancialstatements.Anauditalsoincludesassessingaccounting basis, evidencesupporting the audittoobtainreasonableassurancethatfinancialstatementsarefreeofmaterialmisstatement.Anincludesexamining, onatest We conductedourauditinaccordancewiththeprofessionalstandardsapplicableFrance.Thoserequirethatweplan andper 1. Opiniononthefinancialstatements These financialstatementshavebeenapprovedbytheBoardofDirectors.Ourroleistoexpressanopiniononthese basedonouraudit. requiredbylaw. thespecificverificationsandinformation • thejustificationofourassessments, • theauditofaccompanyingfinancialstatementsNexansS.A., • In compliancewiththeassignmententrustedtousbyyourShareholders’Meetings,weherebyrepor To theShareholders, (YEAR ENDEDDECEMBER31,2007) ON THEFINANCIALSTATEMENTS* STATUTORY AUDITORS’REPORT e have no matters to report regarding: e havenomatterstoreport t ofourassessmenttheaccountingprinciplesandmethodsappliedbyNexans,weensuredthatchangeinoptionreferred toabove PricewaterhouseCoopers Audit Dominique Ménard Partner The Statutory Auditors The Statutory Member ofKPMGInternational Salustro Reydel, Benoît Lebrun Code decommerce)relatingtothejustificationofour Partner t toyou,fortheyearendedDecember31,2007,on: ts; on. ntity ofthe form 181 161_215_Rapport_Activite_GB_v21.qxd 28/04/0816:59Page182 182 INFORMATION LEGAL 1 Concordance table 212 Personresponsible fortheregistrationdocument 211 ontheChairman’s Auditors’report report Statutory 210 Chairman’s ontheBoardofDirectors’operations report 200 agreements onrelated-party Auditors’report Statutory 197 agreements Related-party 195 AuditorsofNexans 194 onthecompany’s Information capitalandvotingrights 188 onthecompanyanditscapital Generalinformation 187 Shareholders’rightsandobligations 185 Otherlegalinformation 183 and thecompany’s controlprocedures internal 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page183 • • • ofmention: are worthy events whichtookplaceafterthecloseoffinancialyear2007 Madeco (seesectiononMaterialContractsbelow),thefollowing signing ofanagreementfortheacquisitioncablebusiness erable sensitivitytofluctuationsinnon-ferrousmetalspricesandthe In additiontotheseasonalnatureofGroup’s business,itsconsid- OR TRADINGPOSITION CHANGE INTHEGROUP’SFINANCIAL TREND INFORMATION/SIGNIFICANT tration document. inthisregis- ing theGrouparedescribedinManagementReport significant impactontheGroup’s Themaindisputesinvolv- earnings. Managementbelievesthattheywillnothavea claims concerned, of judgmentbeingenteredagainstNexansandtheamount nized andtheinsurancecoverageinplace,aswelllikelihood the Group’s businessbutinviewoftheprovisions already recog- numberofcontingenciesanddisputesexistinrelationto A certain DISPUTES OTHER LEGALINFORMATION turer, isclaiming17million eurosandhaslaunchedarecall. thatitscustomer,equipment manufacturerconfirmed thevehiclemanufac- maker.equipment manufactureragainsttheharness Theautomobile initiatedbytheautomobile hearinginGermany involved inapreliminary statements regardingcablessoldtoacablehar Regarding thedisputedescribedinNote30toconsolidatedfinancial in closecooperationwithitsIndianpartner. the creationofajointventuremajority-heldbyNexansandmanaged agreement withPolycab,theIndianleaderincableindustr 19,2008,Nexansannouncedthatithadsignedadraft On February so purchased. gram forupto70millioneuros,withtheintentioncancelshares Nexans BoardofDirectorsdecidedtolaunchasharebuybackpro- zation grantedbytheShareholders´MeetingofMay10,2007, chased. AtitsmeetingofJanuar up to70millioneuros,withtheintentioncancelsharessopur- Board ofDirectorsdecidedtolaunchasharebuybackprogramfor granted bytheShareholders´MeetingofMay10,2007,Nexans 30,2008,pursuanttotheauthorization At itsmeetingofJanuary y 30,2008,pursuanttotheauthori- ness maker, Nexanswas y, for • entire Group. member oftheGroupasignificantobligationorcommitmentfor member oftheGroupthatincludeprovisionsimposinguponany courseofbusiness)executedbyany entered intointhenormal Nexans isnotawareofanyothercontract(otherthanthecontracts • courseofbusiness. outside itsnormal tration document,Nexansenteredintotwoagreementsthatare In thetwoyearsimmediatelyprecedingpublicationofthisregis- MATERIAL CONTRACTS cial ortradingposition. December 31,2007thatislikelytohaveamaterialimpactonitsfinan- fromtheaboveevents,Nexansisnotawareofanyeventsince Apart Madeco (seeManagementRepor for theacquisitionofcablebusinessChileancompany On November15,2007,Nexanssignedaframeworkagreement and expirationoftheagreement. yen, failuretocomplywithanessentialclauseoftheagreement, financing toNVCinacumulativeamountexceeding3,420million circumstances includearefusalbyViscas toprovideadditional percentage ofNVC’s netassetvaluetheyrepresent.These sell allitsNVCsharestoNexansatapricecorrespondingthe circumstances,Viscascertain willbeentitled,orevenrequired,to in NVCwithoutpriorapprovalfromtheotherparty. However, under and isleasingitsplantfromViscas.maysellshares Neitherparty foritsoperationsfromViscas, equipment andmachinesnecessary 34%–owned byViscas Corporation.NVCpurchasedthe and activities. NVCis66%–ownedbyNexansParticipations outanyothercommercial norcarry not selltootherparties are soldonlytoitsdirectand/orindirectshareholders.NVCdoes new company, NipponHigh-Voltage CableCorporation,orNVC, Japan formanufacturinghigh-voltagecables.Cablesmadebythe document). The final agreement was signed on February 21,2008. document). ThefinalagreementwassignedonFebruary company V In 2006,NexanssignedanagreementwiththeJapanese iscas Corporation in order to form ajointventurein iscas Corporationinordertoform t, page47ofthisregistration

183 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page184 184 and Industry. and 2009,mostofwhichwillbedevotedtoEnergyInfrastructure The Groupplanstoinvestjustover500millioneurosbetween2007 • • • • LEGAL • follows: 174 millioneurosin2007.Theamountfor2007breaksdownas follows: 129millioneurosin2005,1712006and Nexans’ grosscapitalexpenditureoverthelastthreeyearswasas CAPITAL EXPENDITURE • well asbyinvestmentsinhigh-growthareas. market,as voltage cablesandintheprioritysegmentsofIndustry 2007 wasmarkedbyincreasesintheproductioncapacityofhigh- power cablesusingitsnewproductionlines. high andmedium-voltagepowercables.Brazilhasmanufactured kets in2008.EgyptandT will producecablesfortheEnergyInfrastructureandBuildingmar- In theRestofWorld, anewplantisbeingbuiltinRussia,which and theKukdongplantinKorea. ity forelastomercablesbyexpandingtheShanghaiplantinChina In Asia,investmentscenteredaroundincreasingproductioncapac- ity expansionprojectforUSbuildingcables. America,investmentsweremadetocompletethe capac- In North posites. ting costs,bycontinuingtorecyclecopperwasteandusecom- tries withloweremploymentcosts.Again,theGroupfocusedoncut- incoun- automobiles; thedevelopmentanddistributionofharnesses cables intheprioritysegments:petrochemicals,nuclearenergy, in theareaofpoweraccessories;increasingcapacityforspecial Europe aresub-contracted;strengtheningproductionandlogistics the plantinTokyo Bay, Japan,towhichhigh-voltageoperationsin Asia-Pacific (10%),RestoftheW America(6%), By geographicalArea:Europe(67%),North and Other(6%). Infrastructure (3%),LocalAreaNetworks(5%),ElectricalW (22%),Building(16%),TelecomBy market:Energy(42%),Industry duction capacityforsubmarinehigh-voltagecables,par In Europe,investmentswerefocusedprimarilyonincreasingpro- INFORMATION urkey haveinvestedintheproductionof orld (17%). ticularly at ires (6%) increased productioncapacityforspecialtycables. equipment; expansionoftheplantinShanghaiandgenerally, Australia; completionoftheRussianplantandinstallation high-voltage cablesinJapanandterrestrialBelgium 2008 and2009:increaseintheproductioncapacityforsubmarine The majorprojectsapprovedin2007willhavesignificantresults document. consequences oftheGroup'soperations),inthisregistration (Environmental addressed insection16.1oftheManagementReport The environmentalissuesraisedbytheuseofintangibleassetsare Group’s expansionintohigh-growthmarkets. market,andthe cables andintheprioritysegmentsofIndustry increasedproductioncapacityforhigh-voltage 2007 mainlytosupport plantandequipmentwasacquiredin real estateassets.Property As anindustrialgroup,Nexansdoesnotownsignificantnon-operating plant, andequipment). (i.e., anamountexceeding5%oftheGroup’s total grossproperty, individually representamaterialamountfortheGroupaswhole business. NoneoftheGroup’s itemsofproperty, plantandequipment the world,andtheyrepresentawiderangeofsizestypes The Group’s plantsandfacilitiesarelocatedin52 countriesaround PROPERTY, PLANT, ANDEQUIPMENT 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page185 • • conditions: Shareholders’ Meetingsissubjecttocompliancewiththefollowing in,toapostalvoteorberepresented at “The righttoparticipate ofincorporation: added tothearticles French commercialcode.Accordinglythefollowingparagraphwas sectionofthe December 11,2006,whichamendstheregulatory in shareholders’meetingsintroducedbydecreen°2006-1566of order tocomplywiththerulesapplicablemethodsofparticipating ofincorporationrelatingtoshareholders’meetings,in the articles 20of The Shareholders'MeetingofMay10,2007amendedArticle bylaw. andmethodssetforth in accordancewiththeterms mean ofcommunication,providedtheycanprovideproofidentity, oranyother Meeting usingremotetransmissionmethods(Internet) If theBoardofDirectorssoresolves,anyshareholdermayvoteat tions arebindingonall,includingabsentordissentingshareholders. the Shareholders’Meetingrepresentsallshareholders.Itsresolu- bylaw.the provisionssetforth Whentherequiredquorumisreached, Shareholders’ Meetingsareconvenedandvoteinaccordancewith THE ARTICLES OFINCORPORATION) SHAREHOLDERS’ MEETINGS(AR SHAREHOLDERS’ RIGHTSANDOBLIGATIONS or votebyremotetransmissionmethods(Internet). holders authorizedbytheBoardofDirectorstosendtheirproxyform process authorizedbythedecreeofDecember11,2006forshare- incorporation totakeintoaccountthenewelectronicsignature of 20ofthearticles Shareholders' MeetingalsoamendedArticle timeperiod.The ashorter latest), unlesstheapplicablelawpermits business daybeforethemeetingisheld(by3p.m.Paristimeat votes ofshareholderstobevalid,theymustreceivedatleastone of theCompany’s ofincorporationprovidingthatforpostal articles 20 The Shareholders’MeetingalsoapprovedanadditiontoArticle cer the ownersofbearer sharesmusthaveobtainedaparticipation Company; Company orbythefinancialinter istered inthenameofownershareaccountsheldby the mustbereg- sharesofowners ofsharesheldinregisteredform tificate inaccordancewithapplicablelaw”. mediary appointedbythe mediary TICLE 20OF any restrictionsonthesecuritiesheld. tion, includingtheiridentity, thenumberofsecuritiestheyhold,and ororganiza- be communicatedtoitbyanyauthorizedintermediary holders ofsecuritieswhichconferimmediateorfuturevotingrights relatingtoitsshareholdersor regulations, requirethatinformation The Companymay, inaccordancewithprevailinglawsand in accordancewithprevailinglawandregulations. signatures ondisclosures,transactionorpaymentordersbecertified exempted byapplicablelaw, theCompanymayrequirethat fers shallbemadeinaccordancewithapplicablelaw. Unless from accounttoaccount.Allshareregistrations,paymentsandtrans- intermediary. Transfers ofregisteredshareswillbemadebytransfer name intheshareregisterheldbyissueroranaccredited intheshareholder’sOwnership ofsharesisevidencedbyanentry fifteen days,inthesamemannerasdescribedabove. the above-mentionedthresholdsmustalsonotifyCompanywithin Any shareholderwhosestakeinthesharecapitalfallsbelowanyof should havebeendisclosed. corresponding toanyshareswhichexceedthethresholdsand subject toapplicablelaw, thevotingrights theshareholdershallforfeit In theeventofnon-compliancewithforegoingprovisionsand also providenotificationoftheacquisitiondate(s). suant totheforegoingparagraph,havebeenincluded.Heorshemust thatallsharesheldordeemedtobe heldpur- notification mustcertify above,thepersonmaking the In eachnotificationfiledassetforth L.233-7etseq.oftheFrenchCommercial Code. covered byarticles ofshareholding be takenintoaccountaswellalltheforms crossed. To thethresholds,allshares heldindirectlyshall determine threshold ofamultiple2%thesharecapitalorvotingrightsis mustbecarriedouteachtimethe The samedisclosureformalities receiptrequested. fication shallbesentbyregisteredletterwithreturn period offifteendaysfromthetimethresholdiscrossed;thisnoti- must notifytheCompanyoftotalnumbersharesheldwithina Company attainsorexceeds2%ofthesharecapitalvotingrights legal entityand/oranyexistingshareholderwhoseinterestinthe fractionsoftheCompany’scertain sharecapital,anyindividualor theCompanywhenitsholdingsexceed a shareholdertoinform at theshareholder’s discretion.Inadditiontothelegal obligationof Fully paid-upsharesmaybeheldineitherregisteredorbearerform, Shares areregistereduntiltheyfullypaidup. OF INCORPORATION) THRESHOLDS (ARTICLE 7OFTHEARTICLES FORM OFSHARESANDLEGALDISCLOSURE

185 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page186 186 LEGAL cle L.225-106oftheCommercial Code. received, inaccordancewiththelegalobligationscontainedarti- oftheMeetingwhenvotingpursuanttoproxies to theChairman intheforegoingparagraphshallnotapply The limitationdetermined L.233-7etseq.oftheCommercialCode. ered byarticles ofshareholdingcov- be takenintoaccount,aswellalltheforms resented. To thislimitation,allsharesheldindirectlyshall determine more than16%ofthevotingrightsallshareholderspresentorrep- voting rightsexercisedmaynotunderanycircumstancesrepresent into accountonlytheadditionalvotingrights.However, thetotal when votinginpersonorbyproxy, thislimitmaybeexceededtaking Ifashareholderisalsoentitledtodoublevotingrightseither cerned. rights ofallshareholderspresentorrepresentedatthemeetingcon- a numberofvotingrightsrepresentingmorethan8%the or byproxy, ashareholderwithsinglevotingrightsmaynotexercise when votingonresolutionsatShareholders’Meetingseitherinperson Regardless ofthenumbershareshelddirectlyand/orindirectly, INCORPORATION) (ARTICLE 21OFTHEARTICLES OF LIMITATIONS ONVOTINGRIGHTS succession. or anintervivos shareholder, orinconnectionwiththesettlementofmaritalestate ofatransfersharesincludedintheestatedeceased part following thetransferfromoneregisteredshareholdertoanotheras the above-mentionedtwo-yearqualifyingperiodshallcontinuetorun, However, registeredshareswillnotlosetheirdoublevotingrights,and ownership istransferredautomaticallylosetheirdoublevotingrights. tobearersharesorwhose Any registeredsharesthatareconverted been registeredinthenameofsameholderforatleasttwoyears. Double votingrightsareattachedtoallfullypaid-upsharesthathave THE ARTICLES OFINCORPORATION) DOUBLE VOTINGRIGHTS(ARTICLE 21OF andSpecialShareholders’Meetings. Extraordinary rights areexercisablebythebeneficialowneratallOrdinary, equal tothenumberofsharesthatheorsheholdsrepresents.Voting each Shareholders’Meetingattendeeshallhaveanumberofvotes Subject toapplicablelawandtheCompany’s ofincorporation, articles THE ARTICLES OFINCORPORATION) VOTING RIGHTS(ARTICLE 21OF INFORMATION donation toaspouseorrelativeinthedirectlineof to bepaid. thedateonwhichdividendis Board ofDirectorsshalldetermine In theeventofinterimdividends,Shareholders’Meetingor ofsharesinsteadcash. the form ofthefinaldividendoranyinterim in receiving allorpart The Shareholders’Meetingmayoffershareholderstheoptionof distributable incomeforthefinancialyear. distributions aremade.However, dividendswillfirstbepaidoutof accountfromwhichthe olution shallindicatespecificallythereserve ment adividendorasanexceptionaldividend.Inthiscase,theres- eithertocreateorsupple- reserves amounts takenfromdiscretionary In addition,theShareholders’Meetingmayresolvetodistribute ofadividend. form oftheamounttoshareholdersin decide todistributeallorpart or ortogeneralspecialreserves, said incometoretainedearnings of Directors, theShareholders’Meetingmayappropriateallorpart fromprioryears.OntherecommendationofBoard forward asexplainedabove,plusanyprofitsbrought made tothelegalreserve fromprioryearsandanytransfer less anylossesbroughtforward Income availablefordistributionconsistsofnetincometheyear fallsbelowone-tenthofsharecapital,whateverthereason. reserve transfersaremadeonthesamebasisiflegal share capital.Further representsonetenthofthe untilsuchtimeasthelegalreserve reserve fromprioryears,istransferredtothelegal losses broughtforward as recordedontheincomestatement.5%ofnetincome,lessany after provisions,constitutesthenetincomeorlossforfinancialyear The differencebetweenrevenueandexpensesforthefinancialyear, OF INCORPORATION) (ARTICLE 23OFTHEARTICLES APPROPRIATION OFINCOME 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page187 any interestinthecapitalofNexans. floated ontheParisstockmarketin2001.Alcatelnolongerholds frommostofAlcatel’sNexans wasformed cableactivitiesand was 7,2093. January of99years,whichwillexpireon on October17,2000),foraterm “Atalec” (changedto“Nexans”attheShareholders’Meetingheld 5,1994,underthename The CompanywasincorporatedonJanuary DATE OFINCORPORATION ANDTERM 221-1etseqoftheGeneralRegulationsAMF.articles whichmustbepublishedinaccordancewith regulated information Nexans’ websiteatwww.nexans.com. siteincludesthe Theinternet visions ofapplicablelawsandregulations,and,insomecases,on viewed attheCompany’s registeredofficeinaccordancewiththepro- Auditors,andallothercorporatedocumentsmaybe the Statutory mitted totheShareholders’MeetingsbyBoardofDirectorsand sub- ofincorporation,financialstatements,reports Nexans’ articles DOCUMENTS AVAILABLE TOTHEPUBLIC 393 525852.ItsAPEcodeis6420Z. The CompanyisregisteredintheParisTrade Registerundernumber TRADE REGISTERNUMBER French CommercialCode. theprovisionsof ing corporationsinFrance,andparticular Nexans isaFrench LEGAL FORMANDGOVERNINGLAWS 16, ruedeMonceau,75008Paris,France Nexans Corporate Nameandregisteredoffice: COMPANY PROFILE GENERAL INFORMATION ONTHECOMPANY société anonyme,subjecttoallthelawsgovern- or relatedpurposes. ofincorporationorto any similar Company indicatedinthearticles directly orindirectly, toanyofthepurposes inwholeorpart, transactions, involvingbothsecuritiesandrealestate,relatedeither well as,ingeneral,anyandallindustrial,commercialfinancial foreign groups,regardlessoftheircorporatepurposeandactivity, as associations,Frenchand other companies,regardlessoftheirform, incidental tothesepurposes.Theacquisitionofshareholdingsin whichare as wellallactivitiesrelatingtooperationsandservices sion andcommunications(cables,batteriesothercomponents), eral anyandallmeansofproductionorpowertransmis- the aerospaceindustry, nuclearpower, andmetallurgy, andingen- field ofenergy, technology, telecommunications, information electronics, orotherapplicationsinthe for domestic,industrial,civilian,military operation andsaleofanyallequipment,materialssoftware The Company’s purposesinallcountriesarethedesign, manufacture, INCORPORATION) ARTICLE 2OFTHEARTICLES OF CORPORATE PURPOSE(SUMMARY OF The financial year begins on January 1andendsonDecember31. The financialyearbeginsonJanuary FINANCIAL YEAR

187 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page188 188 aur 0 08 Capitalincreaserelated 30,2008 January Capitalincreaserelated Capitalincreaserelated 1,2006 February July 20,2005 Capitalincreaserelated Capitalincreaserelated 2,2005 February July 20,2004 uy2,20 Capitalincrease related July 24,2007 LEGAL poration asofthepublicationdatethis registrationdocument. ofincor- amendedthearticles 1,2008,uponexerciseofstockoptions,astheBoard ofDirectors hadnotformally * Thisamountdoesnotincludenewshares issuedsinceJanuary Capitalincreaserelated December 12,2003 CHANGES INNEXANS’SHARECAPITAL OVERTHELASTFIVEYEARS published. Company's sharecapitaliftheyhavechangedfromthelastfigures the AMFtotalnumberofvotingrightsandsharescomprising Nexans publishesonitswebsite(www.nexans.com) to andreports 223-16oftheGeneralRegulationsAMF,Article eachmonth L.233-8IIoftheCommercialCodeand In accordancewithArticle VOTING RIGHTS INFORMATION ONTHECOMPANY’S CAPITAL AND ac 9 06Capitalreductionby March 29,2006 aur 0 07Capitalincreaserelated 30,2007 January Capitalincreaserelatedtotheexercise Employeeshare June 26,2006 May 12,2006 Capitalincreaserelated 30,2004 January Date INFORMATION Transaction issue 65,797 shares canceling treasury related totheexerciseofstockoptions to theexerciseofstockoptions to theexerciseofstockoptions to theexerciseofstockoptions to theexerciseofstockoptions to theexerciseofstockoptions to theexerciseofstockoptions to theexerciseofstockoptions to theexerciseofstockoptions of OCEANEbonds of stockoptionsandconversion sudcneldtesae nraerdcinsaecptlofshares share capital increase/reduction theshares issued/cancelled ubro Parvalue Number of 2,221,199 3,534,160 197,275 360,975 312,825 120,100 Shares 17,000 34,475 15,500 52,425 66,050 1,500 25,899,075. voting rightsandthetotalnumberofwastherefore At December31,2007,therewere220,720shareswithdouble NUMBER OFVOTINGRIGHTS shares withaparvalueof1euroeach. ital amountedto25,678,355eurosrepresentedby in thisregistrationdocument,atDecember31,2007,thesharecap- included As indicatedintheBoardofDirectors'ManagementReport, SHARE CAPITAL €1 €1 €1 €1 €1 €1 €1 €1 €1 €1 €1 €1 of Par valueof 22119€1261321,286,123 €21,286,123 €2,221,199 38695€5189525,198,905 €25,198,905 €3,846,985 3095€5659025,625,930 €25,625,930 €360,975 23,387,222 €23,387,222 €197,275 1010€3573223,507,322 €23,507,322 €120,100 1,0 2,8,4 23,189,947 €23,189,947 23,172,947 €17,000 €23,172,947 23,138,472 €34,475 €23,138,472 €15,500 6,9 2,5,2 21,351,920 €21,351,920 €65,797 5,2 2,7,5 25,678,355 €25,678,355 €52,425 25,264,955 €25,264,955 €66,050 aia muto number amountof capital 150€3129223,122,972 €23,122,972 €1,500 oa Total Total 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page189 Nexans’ sharecapitalnorofanyagreementthatifimplementedcould subsequentlytriggerachangeofcontroltheCompany. Nexans isnotawareoftheexistenceanyindividualorlegalentity that,directlyorindirectly, exercises controlover actingalone orinconcert, To thebestofCompany’s knowledge,noshareholderotherthanthosecitedaboveholds morethan5%ofthesharecapitalor voting rights. the dateofpublicationthisdocument. To thebestofCompany’s 30,2 knowledge,nolegalthresholdsotherthanthosementioned abovewerecrossedbetweenJanuary 23,2008andthattheyheld5.17%ofthecapital5.13%votingrightsondate. capital andvotingrightsonJanuary 30,2008thattheyhadincreasedtheirstakeinNexanstoover 5%ofthe and BarclaysGlobalInvestors(Deutschland)AGdeclaredonJanuary tration document,themanagementcompaniesBarclaysGlobalInvestorsLimited,N.A.,F included inthisregis- In additiontothelegaldisclosurethresholdscrossedasalreadydescribedinBoardofDirectors’ManagementReport Meeting. rights) and16%(inthecaseofdoublevotingrightsattachedtosharesheldbyshareholderspresentorrepresented whenvotingonresolutionsataShareholders’ doublevotingrights.Ashareholder’s(1) Sharesregisteredinthenameofsameholderforatleasttwoyearscarry voting rights arelimitedto8%(inthecaseofsinglevoting TOTAL Unidentified shareholders Treasury stock Other individualinvestors Employees Other institutionalinvestors Ltd FMR CorpetFidelityInternational ESTIMATED BREAKDOWNOFSHARE CAPITAL ANDVOTINGRIGHTSAT DECEMBER31,2007 – Unidentified – Treasurystock – Employees – Individuals – Institutionalinvestors(RestoftheWorld) – Institutionalinvestors(Europe) – Institutionalinvestors(UKandIreland) – Institutionalinvestors(UnitedStates) – Institutionalinvestors(France) The mainshareholdersatDecember31,2007werethefollowing: submitted totheAMF(theFrenchfinancialmarketsauthority). atDecember31,2007anddeclarations fiable bearersharesurvey) is, tothebestofCompany’s knowledge,basedon theTPI(identi- presentedbelowisdatedDecember31,2007,and The information OWNERSHIP STRUCTURE 25,678,355 18,902,944 1,001,662 2,892,310 2,616,254 265,185 11.3% 12.9% 35.1% 18.9% 15.4% of shares ubrPercentage Number 3.8% 1.0% 1.6% 0% SHARE CAPITAL – for 1%(ofwhich91%isheldthroughemployeemutualfunds(FCPE)). share capitalandvotingrightsemployeeshareholdersaccounted At December31,2007,Boardmembersheld0.1%oftheCompany’s approximately 50,000. The Companyestimatesthetotalnumberofitsshareholderstobe 100% 11.3% 73.7% 10.2% 3.8% 1.0% – 25,899,075 18,902,944 voting rights 2,915,510 1,001,662 2,616,254 ubro Percentage Number of 462,705 VOTING RIGHTS – und Advisors, (1) 008 and 100% 11.3% 73.0% 10.1% 3.9% 1.8% – 189 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page190 190 Institutional LEGAL Each optionentitlestheholdertosubscribeforoneNexansshare. At December31,2007,1,070,250optionstosubscribeforNexans shares,representing4.17%ofthesharecapital,wereoutstandi their holderstherighttosubscribefornewNexanssharesbeissued inconnectionwithacapitalincrease. itability. Accordingly, 15,2007atanexercisepriceof100.94 euroseach.These optionsgive 29,000stockoptionsweregrantedonFebruary Directors decidedtoadoptanewstockoptionplan,allowexecutiveswhohadrecentlyjoinedtheGroupshareinitsdevelopment andprof- Shareholders’ MeetingofMay15,2006,theBoard of andExtraordinary In 2007,pursuanttotheauthorizationgrantedbyOrdinary SHARE EQUIVALENTS: STOCKOPTIONS 1,2013OCEANEbondswereoutstanding. At December31,2007,allthe1.50%July7,2006toJanuary one shareperbond(subjecttoanyadjustmentsrequiredbylaw). cised bytheOCEANEbondholdersfromJuly7,2006until7thbusinessdayprecedingscheduledorearlyredemptiondate at therateof orexchangethebonds canbeexer- and/orexchangedforsharesandiftheyare notredeemedinadvance).Theoptiontoconvert not converted 1eachyearandtheir grossyield-to-maturityis3.75% (iftheyare interestat1.50%perannum,payableinarrearsonJanuary The bondscarry of thetotalfacevalue. 1,2013atapriceof85.7556perbond,representing 116% exercises itsearlyredemptionoption,thebondswillberedeemedinfullonJanuary ofthebondissuewassetat6yearsand178days.UnlessC approved bytheAMFonJune29,2006underno.06-242.Theterm issuewas new sharesand/orexchangeableforexistingshares,atotalvalueofapproximately280millioneuros.Theprospectusthis into On July7,2006,Nexanscarriedoutapublicissueof3,794,037OCEANEbondseachwithnominalvalue73.8euros,convertible SHARE EQUIVALENTS: OCEANEBONDS 83.0 83.8 21,519,198 Unidentified 85.5 Treasury stock 77.9 investors Other individual 18,449,781 the BoardofDirectors Members of 88.8 Employees 80.3 investors 18,736,049 Ownership structure CHANGES INNEXANS’OWNERSHIPSTRUCTUREOVERTHELASTTHREEYEARS INFORMATION ,4,9 . . ,6,2 . . ,6,0 1211.2 11.2 – 2,869,605 9.4 7.8 2,221,199 7.0 1,669,521 – 7.3 9.5 6.6 2,221,199 1,549,297 4,2 . . ,8,6 . . ,0,6 . 3.9 3.9 1,001,662 5.1 4.6 1,088,261 2.6 2.4 548,727 2,3 . . 5,0 . . 6,8 . 1.8 1.0 265,185 1.6 1.1 257,607 1.1 1.0 226,631 fsae hr oigo hrssaevtn fsae hr voting share ofshares voting share ofshares voting share of shares ubr f%o ubr%o fNme f%of %of Number %of %of Number %of %of Number 704020.2 0.2 47,044 Estimated situationasof March 31,2005 aia rights capital Estimated situationasof ,5 MN 275010.1 0.1 22,705 NM NM 7,153 February 28,2006 February aia rights capital Estimated situationasof of December31,2007 – – – aia rights capital ompany ng. 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:53 Page 191

STOCK OPTIONS ALLOCATION POLICY

At its meeting of July 24, 2007, the Board of Directors decided to change the Group’s Stock Options Allocation Policy.

In order to involve a greater number of key executives in the Group’s success and increase the conditionality attached to the variable portion of their compensation, the Board decided to grant stock options on an annual basis in tandem with a long-term incentive plan available to a greater number of managers. This combination of cash and stock options and the introduction of annual grants will make it possible to reduce the number of options granted each year and therefore, to reduce the dilution of the capital.

The new policy was implemented for the stock option plan adopted on February 22, 2008.

BREAKDOWN BY CATEGORY OF BENEFICIARY OF STOCK OPTIONS GRANTED DURING FINANCIAL YEAR 2007

Grant Number of Number of Unit price Maturity date beneficiaries options granted

Corporate officer – Gérard Hauser – – – – – – Frédéric Vincent – – – – –

Group employees 10 largest beneficiaries February 15, 2007 5 29,000 €100.94 Feb.14, 2015

BREAKDOWN BY CATEGORY OF SUBSCRIBER OF SHARES ISSUED DURING 2007 UPON EXERCISE OF STOCK OPTIONS

Number of Number of Exercise price subscribers shares issued

Corporate officers: – Gérard Hauser (Chairman and CEO) 1 37,500 €11.62 (April 4, 2003 plan) 12,500 €27.82 (November 16, 2004 plan) – Frédéric Vincent (Chief Operating Officer) 1 25,000 €11.62 (April 4, 2003 plan)

Group employees 10 largest subscribers 10 73,900 €11.62 (April 4, 2003 plan)

2 5,900 €17.45 (November 16, 2004 plan)

7 59,500 €27.82 (November 16, 2004 plan) 191 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page192 192 – Employees, Corporate – to thebenefitof: of whichsharestobeissued to beissuedonexerciseofoptions, Total numberofshares LEGAL a fDcme 1 07 8,5 ,0 ,0 4,5 0,0 33,925 ofoffice untiltheterm ofthesharesissueduponexerciseoptionsmustbeheldinregisteredform year andonequarter oftheexercisableoptionsgrantedtocorporateofficers must be paidupeach The exercisepriceis71.23euros.UnderPlanNo.7,onequarter 21,2016. 22,2008andwillexpireonFebruary onFebruary shares (77,500forthe10largestbeneficiaries).Theexerciseperiodstarted 101,000 65,000 22,2008,theBoardofDirectorsdecidedtogrant306,650stockoptions,allowingcorporateofficerssubscribefor On February 548,950 26,000 3,000 8,000 (as ofDecember31,2007) 21,250 options 2,000 Total numberofoutstanding (as ofDecember31,2007) 484,250 cancelled Total numberofoptions (as ofDecember31,2007) Exercise terms Exercise price(ineuros) Expiration date period Grant date Shareholders’ Meeting and Extraordinary Date ofOrdinary RECORD OFSTOCKOPTIONSGRANTED tr aeo xrieNvme 6 aur 8 ac 3 April4, March13, 18, January November16, dateofexercise Start Total numberofsharessubscribed officers 55,000 officers 0lretbnfcais1100500800240029009,0 6,0 29,000 166,000 91,000 209,000 204,000 8,000 5,000 181,000 10 largestbeneficiaries INFORMATION oebr1,Jnay1,Mrh1,April3, March12, 17, January November 15, April4, March13, 18, January November 16, One quarter One quarter One quarter One quarter One quarter One quarter One quarter Onequarter Onequarter Onequarter Onequarter Onequarter Onequarter One quarter ahya ahya ahya ahya ahya ahya eachyear eachyear eachyear eachyear eachyear eachyear each year 3,0 ,0 ,0 4,0 0,0 4,0 4,0 29,000 343,000 344,000 403,000 644,500 8,000 5,000 531,500 1.5€67 1.4€16 2.2€01 7.9€100.94 €76.09 €40.13 €27.82 €11.62 €19.94 €16.70 €17.45 0921 0021 0221 042015 2014 2013 2012 2011 2007 2010 2006 2010 2005 2009 2004 2003 2002 2002 2001 0220 0320 0520 072009 2007 2006 2005 2004 2003 2003 2002 April 2,2001 Plan n°1 0 0 000125,000 50,000 0 83032003190330029,000 343,000 301,950 302,000 68,300 0 27,250 0 ue2,20 ue5 03May15,2006 June5,2003 June 25,2002 lnn2Pa ° lnn4Pa ° Plann°6 Plann°5 Plann°4 Plann°3 Plan n°2 oebr1, oebr2, November23, November23, November 16, oebr1,Nvme 3 November23, November23, November 16, oebr1,Nvme 2 November22, November22, November 16, 8,125 0 120,000 0 oftheholderexpires. 0 – and 25%each e.5 2009 Feb.15, year thereafter February 15, February February 15, February February 14, February 50% on 0 0 – 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page193 without considerationtoGroupemployeesor Allocation ofexistingornewlyissuedshares and greenshoeoptionifoversubscribed attached withoutpreferentialsubscriptionrights the signingofanamendmenttohisemploymentcontract. benefittoFrédéricVincentments, ofthepaymentatermination intheeventthathe isremovedfromhispositionasChiefOperating Officerand agree- A resolutionwillalsobesubmittedtotheShareholders’Meetingregarding theapproval,underprocedureapplicabletorelated-party fa mlyesvnspa €400,000 share isequalto1euro. share isequalto1euro. (2) Themaximumparvalueofthecapitalincreaseswhichcouldtakeplacecorresponds tothemaximumnumberofshareswhichcould beissued astheparvalueofoneCompany €250,000 €400,000 (2) Themaximumparvalueofthecapitalincreaseswhichcouldtakeplacecorresponds tothemaximumnumberofshareswhichcould beissued astheparvalueofoneCompany (1) Theabbreviation“R…”standsforthenumberofresolutionsubmittedapproval totheShareholders'MeetingofApril 22, 2008. (1) Theabbreviation“R…”standsforthenumberofresolutionsubmittedapproval totheShareholders'MeetingofApril 22, 2008. €10,000,000 categoriesofGroupemployees(R19) certain categoriesofGroupemployees(R19) certain without considerationtoGroupemployeesor Allocation ofexistingornewlyissuedshares (R18) (R18) Allocation ofstockoptions <15%ofsharecapital Allocation ofstockoptions (R17) (R17) of anemployeesavingsplan €3,800,000:shares €10,000,000 of anemployeesavingsplan formembers Issue ofsharesorsecuritiesreserved formembers Issue ofsharesorsecuritiesreserved €10,000,000 income oradditionalpaid-incapital(R16) income oradditionalpaid-incapital(R16) Share issuetobepaidupbycapitalizingreserves, Share issuetobepaidupbycapitalizingreserves, (R15) (R15) Share issueinpaymentofthecontributionkindsecurities Share issueinpaymentofthecontributionkindsecurities (R13 andR14) (R13 andR14) and greenshoeoptionifoversubscribed attached withoutpreferentialsubscriptionrights redeemable forshares,bondswithwarrants bonds,bonds Issue ofconvertible/exchangeable (R12 andR14) and greenshoeoptionifoversubscribed Issue ofshareswithpreferentialsubscriptionrights Resolutions andconditionsprescribedbylaw.share equivalents,anddelegatethepowerstodososubjectterms issuesharesand April 22,2008,toallowtheBoardofDirectors,atitsdiscretionandwithinframeworksetbyShareholders’Meeting, Meetingon oftheconditionsandlimitscontainedinresolutionstobesubmitted the Shareholders' The tablebelowprovidesasummary www.nexans.com. websiteat bytheBoardofDirectorspresentingthemisavailableonNexans The fulltextoftheproposedresolutionsaswellreport cial statements). holders limittheeffectiveperiodsoftheseauthorizationstooneyear(untilendShareholders’Meetingcalleda with orwithoutpreferentialsubscriptionrights,sharesandshareequivalents.TheBoardofDirectorswill,asinthepast,recommend thattheshare- Shareholders' MeetingtobeheldonApril22,2008(onsecondcall)severalresolutionsgrantauthorizationstheBoardof Directorstoissue, tothe As alltheseauthorizationsexpireatthenextShareholders’Meeting,BoardofDirectorsintendstoseektheirrenewalbysubmitting authorizations during2007. Shareholders'Meetingtoincreasetheshare capital,and theuseofsuch zations ineffectgrantedtotheBoardofDirectorsbyExtraordinary tableofthe current authori- oftheBoardDirectorsincludedinthisregistrationdocumentissummary Attached totheManagementReport AND SHAREEQUIVALENTS AUTHORIZATIONS TOBEGIVEN THEBOARDOFDIRECTORSTOISSUESHARES the signingofanamendmenttohisemploymentcontract. benefittoFrédéricVincentments, ofthepaymentatermination intheeventthathe isremovedfromhispositionasChiefOperating Officerand agree- A resolutionwillalsobesubmittedtotheShareholders’Meetingregarding theapproval,underprocedureapplicabletorelated-party (1) Maximum foreachresolution €400,000,000: debtsecurities Maximum foreachresolution €400,000,000: debtsecurities Maximum of10%the <15% ofsharecapital €3,800,000: shares €10,000,000 10% ofthe €400,000 share capital €400,000 €250,000 share capital (2) €10,000,000 (2) €10,000,000 Global limitapplicable to severalresolutions Global limitapplicable to severalresolutions Overall limitof of thesharecapital approximately 2% €20,900,000 Overall limitof €10,000,000 €20,900,000 €500,000 pprove the2008finan- (2) (2)

193 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page194 194 LEGAL FEES PAID BYNEXANSTOTHEAUDITORS AUDITORS OFNEXANS Term expiresatthe2012GeneralShareholder’Meeting Appointed onMay15,2006 represented byDominiqueMénard 63, ruedeVilliers, 92200Neuilly-sur-Seine, Versailles) (Compagnie RégionaledesCommissairesauxComptesde • PricewaterhouseCoopersAudit Term expiresatthe2009GeneralShareholders’Meeting Appointed onJune5,2003 represented byBenoîtLebrun 1, CoursValmy, 92923Paris-LaDéfensecedex, (Compagnie RégionaledesCommissairesauxcomptesdeParis) • SalustroReydel,memberofKPMGInternational STATUTORY AUDITORS evc 72 9 4 34 9 20% 397 4% 43 14% 294 2% 27 service Other audit-related IT consulting Tax advice 2 -Otherservices Sub-total Other contractual audits and Statutory 1 -Auditservices Total Sub-total INFORMATION ,2 9 ,1 4 8 7 ,9 96% 1,892 97% 987 94% 1,919 99% 1,127 ,3 0%20210 ,2 0%198100% 1,968 100% 1,021 100% 2,032 100% 1,136 ,0 7 ,2 0 4 2 ,9 76% 1,495 92% 944 80% 1,625 97% 1,100 €’000s KPMG International 0% 0 0% 0 0% 0 0% 0 83%1 64% 4 76 2% 18 % 3 68 % 1 9 1 43%7 % 4 0% 76 0 % 3 2% 34 16 % 6 2% 113 45 % 1 % 0 9 0 % 2007 PricewaterhouseCoopers €’000s May 15,2006,andwerenotrenewed. expired attheendofGeneralShareholders’Meeting &Young)Frinault &Autres(Ernst andtheSubstituteAuditor PascalMacioce ofBarbier ofoffice reference inthisregistrationdocument.Theterms relatedtofinancialyears2004and2005incorporatedby information &Young)Barbier Frinault&Autres(Ernst auditedthehistoricalfinancial Term expiresatthe2012GeneralShareholders’Meeting Appointed onMay15,2006 63, ruedeVilliers, 92200Neuilly-sur-Seine • ÉtienneBoris Term expiresatthe2009GeneralShareholders’Meeting Appointed onJune5,2003 1, CoursValmy, 92923Paris-LaDéfensecedex • FrançoisChevreux SUBSTITUTE AUDITORS Audit % €’000s KPMG International % 2006 PricewaterhouseCoopers €’000s Audit % 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page195 The feepaidfor2004andsharedamongthebanksproratatotheirpar institutions includingBNPParibas(aslenderandswinglinelender).wasalsoappointedasthesyndicateagent. December 28,2004.This“€450,000,000multi-currencyrevolvingfacilityagreement”wasexecutedbyNexans(asborrower)and 14 credit on The BoardofDirectorsresolvedonNovember16,2004toauthorizeasyndicatedloan,andloanagreementwas executed • 2,227,000 euros. andLazard-IXIS.Thefeepaidfor2004sharedamongtheguarantors was The guarantorsareBNPParibas,GoldmanSachsInternational, resentations andwarrantiesgivenbyNexansinconsiderationforpaymentNexans. toplacethebondsorsubscribeitselfonba nominal valueof135millioneuros,andthebanksyndicateundertook toissueOCEANEbondsrepresenting a maximum with abanksyndicate(includingBNPParibas).Pursuanttothisagreement,Nexansundertook agreementauthorizedbytheBoardofDirectorsonJuly5,2004, wasexecutedon July6,2004 able forexistingshares),aglobalunderwriting 215,000 euros. was totheircontributions payable undertheagreementweredecreased.Thefeepaidfor2005andsharedamongbanksinproportion to 5yearsfromthedateamendmentwasexecuted,withpossibilityofextendingit7years;andspreadscommitment fees oftheloanagreementwasext Directors onSeptember26,2005,andexecutedOctober17,2005.Underthisamendment,theterm annual agencyfeeof12,500eurosbeforetax.Anamendmenttothecostandstructureagreementwasauthorizedby the Board of As par • CORPORATE OFFICERINVOLVED: GEORGESCHODRONDECOURCEL, 1.1 PRIORAGREEMENTSREMAININGINFORCE 2007 1 agreementsthatwereenteredintoorremainedinforce2007. oftheregulatedrelated-party The followingisasummary L.225-38oftheFrenchCommercialCode(Year byArticle governed endedDecember31,2007) LIST OFREGULATED RELATED-PARTY AGREEMENTS Global underwriting agreementforOCEANEbondsissuedin2004 Global underwriting Syndicated loanagreementofDecember28,2004andthefirstamendmentthereto t of the issue of Nexans’ 3.125% July 15, 2004 / January 1, 2010 OCEANE bonds (bonds convertible intonewsharesand/or 1,2010OCEANEbonds(bondsconvertible t oftheissueNexans’3.125%July15,2004/January NEXANS BOARDMEMBERANDCHIEFOPERATING OFFICEROFBNPPARIBAS ticipation intheloanwas780,400euros.BNPParibasalso receivesan sis of certain rep- sis ofcertain exchange- ended

195 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page196 196 • obligationstothelenders.Theamendmentalsomodifiedcommissionfeeschedule. lated, andclarifiedNexans’reporting Nexans BoardofDirectorsonMay15,2006andexecutedJune30,2006,changedthecovenant’s calcu- financialratiosandhowtheyare 2006 andsharedamongthelendersinpropor October 30,2006,increasedtheamountavailableundercreditfacilityby130millioneurostoatotalof580euros. Thefeepaidfor A thirdamendmenttothesyndicatedloanagreement,approvedbyNexansBoardofDirectorsonSeptember27,2006andexecuted on LEGAL As par • AGREEMENTEXECUTEDIN2007 2 On May15,2006,theNexansBoardofDirectorsapprovedandexecutedanamendmenttoFrédéricV • CORPORATE OFFICERINVOLVED: FRÉDÉRICVINCENT, 1.2 As par • A secondamendmenttothesyndicatedloanagreementwasrequiredfollowingGroup’ • Corporate &Investmentbanking.Thefeepaidin2006andsharedamongtheguarantorswas4,200,000euros. resentations andwarrantiesgivenbyNexansinconsiderationforpaymentNexans.TheguarantorsareBNPParibasSociété Général toplacethebondsorsubscribeitselfonba nominal valueof280millioneuros,andthebanksyndicateundertook toissueOCEANEbondsrepresentinga 2006 withtwobanks(includingBNPParibas).Pursuanttothisagreement,Nexansundertook agreementauthorizedbytheBoardofDirectorsonJune26,2006, wasexecuted on June29, able forexistingshares),aglobalunderwriting The guarantorsareBNPParibas,SociétéGénéraleandUBS. feepaidfor2007was2,450,000euros. warranties givenbyNexansandinconsiderationforpayment Nexans. representations and toplacethebondsorsubscribeitselfonbasisofcertain 350 millioneuros,andthebanksyndicateundertook of toissuebondsrepresentingamaximum nominalvalue Société GénéraleandUBSLimited).Pursuanttothisagreement, Nexans undertook jointlyandfor equalamou executed onApril25,2007withabanksyndicate(comprising BNP Paribasasleadbank,participating asChiefOperatingOfficer.(including bonus)priortothediscontinuanceofhisservice in accordancewiththeapplicablecollectiveagreementplusaseverancepaymentequaltotwenty-fourtimeshismostrecentmont whatsoever. Inaddition,ifheisdismissedforreasonsotherthangrossnegligenceormisconduct, hewillbeentitledtotheseverance paymentdue foranyreason ofofficebutwillcomebackintoforcebyoperationlawifhispositionasChiefOperatingOfficeristerminated during histerm ofofficeasChiefOperatingOfficer.ensure thatheisprotectedunderthesameconditionsduringhisterm Thisemploymentcontract issuspended Corporate Officer involved: Georges Chodron de Courcel, Nexans Board Member and Chief Operating Officer ofBNPParibas involved:GeorgesChodrondeCourcel,NexansBoardMemberandChiefOperatingOfficer Corporate Officer Amendment toFrédéricVincent’s employmentcontract Second amendmenttothesyndicatedloanagreementofDecember28,2004 Third amendmenttothesyndicatedloanagreementofDecember28,2004 Global underwriting agreementforOCEANEbondsissuedin2006 Global underwriting t of the issue of Nexans’ 1.50% July 7, 2006 / January 1, 2010 OCEANE bonds (bonds convertible intonewsharesand/orex 1,2010OCEANEbonds(bondsconvertible t oftheissueNexans’1.50%July7,2006/January t of the issue of Nexans 5.75% 2017 bonds, an underwriting agreementauthorizedbytheBoardofDirectorsonMarch27,2007 was t oftheissueNexans5.75%2017bonds,anunderwriting NEXANS CHIEFOPERATING OFFICERSINCEMAY 15,2006 INFORMATION tion totheircontributionswas405,000euros. s transitiontoIFRS.Thisamendment,appr incent’s employmentcontractin order to sis of certain rep- sis ofcertain oved bythe hly salary maximum change- nts with 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page197 read inconjunctionwith,andconstrued accordancewith,Frenchlawandprofessionalauditingstandardsapplicablein France shouldbe issuedinFrenchandisprovidedsolelyfor the convenience ofEnglishspeakingreaders.Thisreport Auditors’report *This isafreetranslationintoEnglishofthe Statutory 2- The secondamendment toFrédéricVincent’s employmentcontractprovides,inparticular, thatifheisdismissedforreasons other thangross 1- benefit payabletoFrédéricVincentThe termination intheeventthatheisremovedfromhis positionasChiefOperatingOfficer, willbeequal Terms andconditions execution ofanewamendmenttohisemploymentcontract. benefittoFrédéricVincent,the allocationofatermination intheeventthatheisremovedfromhispositionasChiefOperati 22,2008theNexansBoardofDirectorsa Following arecommendationbytheAppointmentsandCompensationCommittee,onFebruary Nature andpurpose of anamendmenttohisemploymentcontract. benefittoFrédéricVincent,Allocation ofatermination intheeventthatheisremovedfromhispositionasChiefOperatingOfficer, andexecution Agreement enteredintowiththeChiefOperatingOfficer, FrédéricVincent 2007 was2,450,000euros. given byNexansandinconsiderationforpaymentNexans.TheguarantorsareBNPParibas,SociétéGénéraleUBS. feepaid for representations andwarranties toplacethebonds orsubscribethebondsitselfonbasisofcertain euros, andthebanksyndicateundertook toissuebondsrepresentingamaximumnominalvalueof350 million Pursuant totheagreementexecutedonApril25,2007,Nexansundertook Terms andconditions Société GénéraleandUBSLimited). agreementwithabanksyndicate(comprisingBNPParibasasleadmanager,underwriting jointlyandforequalamounts with participating On March27,2007,aspar Nature andpurpose agreement Global underwriting of BNPParibas asaNexansBoardMemberandChiefOperatingOffice Agreement enteredintowithBNPParibas;GeorgesChodrondeCourcelserving giventousagreeswiththeunderlyingdocuments. dures toverifythattheinformation We proce- carriedoutourworkinaccordancewiththeprofessionalstandardsapplicableFrance.Theserequirethatweperform whethertheagreementsareappropriateandshouldbeapproved. of shareholderstodetermine responsibility R.225-31oftheFrenchCommercialCode,itis out commentingontheirrelevanceorsubstance.Undertheprovisionsofarticle tous,with- andconditionsofagreementscommitmentsthathavebeendisclosed provided,aboutthemainfeaturesandterms the information Our responsibilitydoesnotincludeidentifyinganyundisclosedagreementsorcommitments.We toshareho arerequiredtoreport ments thatwerepreviouslyauthorizedbyyourBoardofDirectors. L.225-40oftheFrenchCommercialCode( In accordancewitharticle 22,2008 I. Agreementsandcommitmentsauthorizedin2007untilFebruary In ourcapacityasStatutor To theShareholders, ON REGULATED, RELATED-PARTY AGREEMENTSANDCOMMITMENTS,YEARENDEDDECEMBER31,2007 STATUTORY AUDITORS’SPECIALREPORT* Frédéric Vincent benefit. willnotbeentitledtothe contractualseverancepaymentifhereceivesthetermination conditionsasthosereferredtoinparagraph 1above. ofoffice asChiefOperatingOfficer)willbesubjecttothesameGroupperformance term ofhis benefitpayabletohimintheeventoftermination severance paymenttowhichheisentitled(inthesameamountas thetermination ofofficeasChiefOperatingOfficer, ofhisemployment contractorhisterm negligence ormisconductduringtheperformance the contractual conditions. financial andsharepriceperformance Vincent in accordancewiththeconditionssetbyBoardofDirectorsandpublishedCompanywillbesubjecttoNexans Group ofofficeasChiefOperating Officer. ofhisterm resenting hisbonus)priortothetermination benefit willbe paidtoFrédéric Thistermination rep- plusthepercentage of said salary (definedashismostrecentfixedmonthlysalary to twenty-fourtimeshismostrecentgrossmonthlysalary y Auditors of Nexans we hereby present our report on regulated, related-party agreementsandcommitm onregulated,related-party y AuditorsofNexansweherebypresentourreport t oftheissuanceNexans5.75%bondsmaturingin2017,BoardDirectorsapprovedaglobal Code decommerce),wehavebeeninfor . med ofagreementsandcommit- ng Officer, andthe lders, basedon ents. pproved r 197 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:53 Page 198

LEGAL INFORMATION

II. Prior agreements and commitments remaining in force in 2007 In accordance with the provisions of the French Commercial Code, we were advised that the following agreements and commitments authorized in prior years remained in force in 2007.

Agreements entered into with BNP Paribas; Georges Chodron de Courcel serving as a Nexans Board Member and Chief Operating Officer of BNP Paribas.

Global underwriting agreement for OCEANE bonds issued in 2004 Nature and purpose On July 5, 2004, the Nexans Board of Directors approved a global underwriting agreement with a bank syndicate (of which BNP Paribas is a member) in connection with the issuance of bonds convertible into new shares and/or exchangeable for existing shares (OCEANE bonds). Terms and conditions Pursuant to the agreement executed on July 6, 2004, Nexans undertook to issue OCEANE bonds, and the bank syndicate undertook to place the bonds or subscribe the bonds itself on the basis of certain representations and warranties given by Nexans and in consideration for payment by Nexans. The guarantors are BNP Paribas, Goldman Sachs International, and Lazard-IXIS. The fee paid in respect of 2004 and shared among the guarantors was 2,227,000 euros. No fee was paid in respect of 2007.

Amendment to the medium-term syndicated loan agreement Nature and purpose On September 26, 2005, the Nexans Board of Directors approved an amendment to the medium-term syndicated loan agreement for 450 mil- lion euros executed on December 28, 2004. This amendment extended the term of the loan to five years from the date it was signed, with the option of a further extension to seven years, and decreased the spreads and commitment fees payable under the agreement. Terms and conditions The amendment was executed on October 17, 2005. The fee paid in respect of 2005 and shared among the lenders in proportion to their con- tributions was 215,000 euros. No fees were paid under this agreement in respect of 2007, except an annual administrative agent fee paid to BNP Paribas in the amount of 12,500 euros before tax.

Global underwriting agreement for OCEANE bonds issued in 2006 Nature and purpose On June 26, 2006, the Nexans Board of Directors approved a global underwriting agreement with two financial institutions, including BNP Paribas, for the issuance of OCEANE bonds in 2006. Terms and conditions Pursuant to the agreement executed on June 29, 2006, Nexans undertook to issue OCEANE bonds representing a maximum nominal value of 280 million euros, and the bank syndicate undertook to place the bonds or subscribe the bonds itself on the basis of certain representations and warranties given by Nexans and in consideration for payment by Nexans. The guarantors are BNP Paribas and Société Générale Corporate & Investment Banking. The fee paid for 2006 and shared among the guarantors was 4,200,000 euros. No fee was paid in respect of 2007.

Second amendment to the medium-term syndicated loan agreement Nature and purpose On May 15, 2006, the Nexans Board of Directors approved an amendment to the medium-term syndicated loan agreement for 450 million euros signed on December 28, 2004. The amendment, required following the Group’s transition to IFRS, changed the method and basis used to calcu- late the covenants and commitment fees, and clarified Nexans’ reporting obligations to the lenders. Terms and conditions The amendment was executed on June 30, 2006.

Third amendment to the medium-term syndicated loan agreement Nature and purpose On September 27, 2006, the Nexans Board of Directors approved an amendment to the medium-term syndicated loan agreement for 450 million euros signed on December 28, 2004. The amendment increased the amount available under the credit facility by 130 million euros to a total of 580 million euros. Terms and conditions The amendment was executed on October 30, 2006. The fee paid in respect of 2006 and shared among the lenders in proportion to their con- tributions was 405,000 euros. No fee was paid in respect of 2007. 198 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:53 Page 199

Agreement with Frédéric Vincent, Chief Operating Officer of Nexans since May 15, 2006

Amendment to Frédéric Vincent’s employment contract Nature and purpose On May 15, 2006, the Nexans Board of Directors approved an amendment to the employment contract between Nexans and Frédéric Vincent. The amendment was executed on the same day. Terms and conditions Frédéric Vincent’s employment contract is suspended during his term of office as Chief Operating Officer of Nexans, but will come back into force by operation of law if his position as Chief Operating Officer is terminated for any reason whatsoever. In addition, if he is dismissed for reasons other than gross negligence or misconduct, he will be entitled to the severance payment provided for in the collective bargaining agreement plus an additional amount equal to twenty-four times his most recent monthly salary (including bonus) prior to the termination of his term of office as Chief Operating Officer.

Neuilly-sur-Seine and Paris La Défense, February 29, 2008.

The Statutory Auditors

PricewaterhouseCoopers Audit Salustro Reydel Member of KPMG International

Dominique Ménard Benoît Lebrun Partner Partner 199 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page200 200 LEGAL the ChiefOperatingOfficerfor2006. and CEO and ofthecompensationChairman In2007,theBoardsetvariableportion the BoardofDirectors’ManagementReport. The rulesestablishedbytheBoardofDirectorsforsettingcompensation andbenefitspaidtoNexans’corporateofficersare describedin leader inSouthAmerica,forwhichaframeworkagreementwassignedonNovember15, 2007. cable businessofMadeco,theindustry oftheprogressmadeontheseprojects.Themostsignificantin2007wasplannedacquisition ofthe was keptconstantlyinformed rules,theBoardwasalsoconsultedthroughout2007onvariousplannedacquisitionsandsignificantdivestitures, and Pursuant toitsinternal andthesite’sdetailed presentationonNexans’strategyinGermany operations. Members visitedtheNexansDeutschlandplantinHanovertoenhance theirunderstandingofthebusiness.Duringthisvisit,they weregivena corebusinessesandprovideamoreprecisepictureoftheGroup’s operations.Inthesecondhalfof2007, internal with Nexans’ orAreamanagerstofamiliarizethe Directors Presentations aremadeonaregularbasistotheBoardofDirectorsbyfunctionaldepartment an employeeshareplaninvolvingincreaseintheCompany’s forGroupemployees). sharecapitalreserved onthismatter.during aspecialmeetingheldinJanuary TheBoardalsocametoadecisiononvariousfinancialtransactions(a All theseissueswereaddressedbytheBoardduring2007.Inparticular, theBoardreviewedandapproved2007-2009strategic plan on mattersaffectingthestrategyandrunningofCompany. parent Companyandconsolidatedfinancialstatementsmanagementplanningdocumentation,reviewsthebudget.Ittakes de ofthebusinesstrends,financialanddebtpositionsCompanyGroup.Itapproves the The BoardofDirectorsiskeptinformed documentationrelatingtoallmajoritemsonthea Several daysbeforeeachmeeting,theDirectorsareprovidedwithsupporting andCEOnotifiesthemembersofBoardatleastoneweekbeforeeachmeeting. The Chairman The BoardofDirectorsmeteighttimesin2007andmorethantwo-thirdsitsmemberswerepresentateachmeetings. ORGANIZATION OFTHEWORKBOARDDIRECTORS 1.1 PREPARATION ANDORGANIZATION OFTHEWORK 1 theparentCompanyandallGroupcompaniesincludedinscopeofconsolidation. concerns This report to Nexanscorporateofficers. alsodiscussestherulesestablishedbyBoardofDirectorsforsettingcompensation and benefitspaid the BoardofDirectors.Thereport controlproceduresimplementedbytheCompanyandanyrestrictionsplacedonpowersof CEO by organized, aswelltheinternal onthemannerinwhichworkofBoardisprepared Officer ofNexans,aholdingcompanyandparenttheGroup,reports L.225-37oftheFrenchCommercialCode In accordancewitharticle (Year endedDecember31,2007) on theBoardofDirectors’operationsandCompany’s controlprocedures internal CHAIRMAN’S REPORT HOLDINGCOMPANY ANDPARENT OFTHEGROUP A OF THEBOARDDIRECTORSNEXANS, INFORMATION (Code decommerce) , GérardHauser, andChiefExecutive Chairman bondissueand genda. cisions Board and 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page201 • • • • • • The responsibilitiesoftheAccountsandAuditCommitteeinclude: Lyon-Caen ofofficeJean-LouisVinciguerra. and theendofterm JérômeGallotchairstheCommittee. Jean-Louis GerondeauandJérômeGallotwereappointedduringtheBoardMeetingheldonMay10,2007,followingresignation The AccountsandAuditCommitteecomprisesthreemembers:GeorgesChodrondeCourcel,Jean-LouisGerondeau,Jérôme Gallot. Composition androleoftheAccountsAuditCommittee The AccountsandAuditCommittee COMMITTEESCREATED BYTHEBOARDOFDIRECTORS 1.4 and thatitissatisfiedwiththeBoard’s organizationandoperations.TheBoardMembersdidnotrequestanychanges. andCEOGroupMana sent totheDirectors.TheresultsofappraisalshowedthatBoardhasconfidenceinChairman The appraisalwascarriedoutagainin2007onthebasisofanimprovedversionquestionnaire(e.g.includingmultiplechoice questions) operations. thattheDirectorsweresatisfiedwithBoard’s confirmed appraisal procedureusingindividualmeetings.SpencerStuart organization and outaformal basis ofadetailedquestionnairesenttoeachDirector. washiredtocarry SpencerStuart In2006,thespecializedconsulting firm dealtwithand discussedatitsmeetings.Thisappraisalprocedurewasconductedeach yearonthe that materialissuesareproperlyreported, An annualproceduretoappraisetheBoardofDirectorswithregarditsorganizationandoperationswasimplementedin2003 check APPRAISALOFTHE BOARD OFDIRECTORS 1.3 lock-outperiodsonanysuchtransactions. relation toNexans’securities,andcomplywithmandatory The Director’s therightsandobligationsofBoardMembers,includingobligationtodisclosetransaction setsforth Charter independence. rulesalsodefinetherolesofvariousCommitteescreatedbyBoardandcriteriafor amounts involved.Theinternal acquisitions, divestitures,orproposedfinancingprojectswillrequirethepriorapprovalofBoardDirectors,basedon their natureorthe whichcapital expenditureorsignificantrestructuringplans, suchasmergers, rulesdetermine theinternal In accordancewiththeBoutonreport, theareasofauthorityBoardDirectors,howitoperatesandethicalprinciplestobe followed. rulessetforth The internal rulesandtheDirector’sThe internal aregiventoeachnewmemberoftheBoardupontakingoffice. Charter principlessetoutintheBoutonandViénot-BoutonNexans complieswithandappliesthecorporategovernance reports. rulesfortheBoardofDirectorsandaDirector’s adoptedtheinternal In 2003,Nexansformally Charter. CORPORATE GOVERNANCE:INTERNALRULESFORTHEBOARDOFDIRECTORS 1.2 • • participating intheAuditors’selectionprocessandgivingitsopiniontoBoardofDirectorsontheirappointmentorrenew participating Audit,givingitsopinionandreviewingthemainconclusionsofauditsconducted; examining theworkofInternal monitoring sensitiveissues; that suchproceduresaresufficienttoensurethereliabilityofinfor proceduresforidentifyingoff-balancesheetcommitmentsandrisks, checking ensuring thattheCommitteeismadeawareofinternal examining theGroup’s scopeofconsolidation; principles andmethodsusedarebothrelevantconsistent; examining thedraftaccountstobesubmittedBoard,checkingmethodsusedpreparethemandensuringthatacco management personneloftheCompany outanyspecificreviewsitdeemsnecessary, andCEO,and,asappropriate,contacting key theChairman carrying afterhaving informed defining therulesforusingAuditornetworksassignmentsother thanauditing,inaccordancewithapplicableregulation N DIRECTOR’SCHARTER AND , and reporting backtotheBoard. , andreporting mation resultingfromthem; al; s; s carriedoutin gement, Director of Yves unting

201 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page202 202 at the Board Meeting held on January 16,2008. at theBoardMeetingheldonJanuary In addition,theCommitteemetatendofyeartoreviewproposedcompensationChiefOperatingOfficerthatwas presented and CEOChiefOperatingOfficerfor2006.Italsoapprovedtheideaofexpandingnumberbeneficiariesstock option plan. The AppointmentsandCompensationCommitteemetthreetimesduring2007.Itsetthevariablepor • LEGAL which monitorsandcontrolsthe procedures. Company. andateachentity, Theyarethenimplementedineachcountry aresenttothefunctionaldepartme andperiodicreports havebeenestablishedcentrallyatthelevel All NexansGroupprocedures,whetherornottheyrelatetofinancial information, potential risks. controlproceduresinlinewiththemanagement ofits are gearedtotherisksidentifiedwithitsactivities.Nexanshas designeditsinternal controlprocedures takeintoaccountthespecificaspectsof itsbusinessand control.Itsinternal Nexans takesapragmaticapproachtointernal actions complywithapplicablelawsandregulationsareconsistent withthevalues,policies,andobjectivesdefinedby Group. controlconsistsofimplementingasetrulesthroughouttheGroupwithviewtoobtainingreasonableassurance thatalltrans- Nexans’ internal DEFINITIONS,SCOPE,OBJECTIVES,ANDRESTRICTIONSOF INTERNALCONTROL 2.1 INTERNALCONTROLPROCEDURES 2 Company’s andCEO. bylawshaveplacedanyrestrictionsonthepowersofChairman rules–suchasmergers,acquisitions,orfinancingproposalsneithertheBoardofDirectors, northe Directors asdefinedintheinternal Other thantheapplicablelegalrestrictionsandthoserelatingtotransactionsordecisionsthatrequirepriorapprovalof theBoardof oftheBoardDirectorsandChiefExecutive Officer.The BoardofDirectorshasdecidednottoseparatethepositionsChairman RESTRICTIONSPLACEDONTHEPOWERSOFCHAIRMANANDCEO 1.5 • • • The responsibilitiesoftheAppointmentsandCompensationCommitteeinclude: Rosenberg, whochairstheCommittee. The AppointmentsandCompensationCommitteecomprisesthreemembers:GianpaoloCaccini,FrançoisPolgedeCombret,Ervin Composition androleoftheAppointmentsCompensationCommittee The AppointmentsandCompensationCommittee company. 2012 auditplan.ItalsoreviewedtheGroup’s insurance programandreceivedanupdateontheproposedcreationofacaptivein as wellasthe2007- auditplanandthemonitoringofinitiativesundertaken, progress. Itwasbriefedonthestatusof2006-2007internal to thechangerelatingrecognitionofnon-ferrousmetalinventories(“coreexposure”),andexaminedprovisionsforl Financial Officer, Auditors.ItreviewedNexans’consolidatedfinancialstatements,paying specialattention AuditDirectorandStatutory Internal oftheChiefOperatingOffic During 2007,theAccountsandAuditCommitteemetonthreeoccasionsinpresenceparticular Auditors, includingwithoutthepresenceofGroupManagement. andthe Statutory In thecourseofitswork,AccountsandAuditCommitteemayrequesttomeetwithanymemberFinanceDepartment Directors, andgivingtheBoarditsopiniononplanproposalsdrawnupbyManagement. helping definetheGroup’s policyrelatingtostockoptionplans(frequency, totalamount)thatitproposes totheBoardof individualsconcerned, appraisals,theGroup’s executives’performance strategyandmarketpractices; medium-term annual performance, proposing to the Board criteria for determining the fixed and variable portions of corporate officers’ compensation in line with theGroup’ ofcorporateofficers’compensationinlinewith thefixedandvariableportions proposing totheBoardcriteriafordetermining proposing totheBoardnewDirectorsandofficersbeco-optedorproposedatAnnualShareholders’Meeting; examining andmakingsuggestionsregardingtheassessmentofDirectors’independence,priortoafinaldecisionbyBoard Directors; MLMNE TNEXANS IMPLEMENTED AT INFORMATION tion ofthecompensation Chairman of theparent nt incharge, itigation in er, Chief surance s 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page203 The America,Asia-Pacific,andRestofWorldThe ChiefOperatingOfficerisresponsibleforoverseeingoperationsintheEurope,North Areas. develop amarketingstrategyfortherelevantsegments. and BuildingMarketManagerstodevelopamarketingstrategy, nee MarketManagerwiththeinformation andprovidestheIndustry her Area,exceptforsalesofdomesticproductsmadelocally, aswellinter-Area sales.TheAreaSalesManagerworkswithth Executive Vicein2007.TheAreaSalesManagerisresponsibleforsales within hisor President,wasalsoappointedforeachAreastarting Each AreaisledbyaRegionalManagerassistedfinancialcontrolteam.AnSalesManager, directlytothe Area whoreports in forceeachcountry. bothoperationsandtheimplementationofGroup’sfor managing,coordinating,andsupervising strategyinaccordancewiththe regulations The countriesaregroupedinto procedure. financial reporting monthly continuestobemonitoredbymarketandproductunderafull Countries areresponsibleforoperatingincome.Theirperformance In 2007,theNexansGroupwasorganizedasfollows: inplace:organizationoftheGroup involvedandstructures Parties 2.3.1 and usesappropriateproceduressystems. The organizationestablishedbyNexansmakesitpossibletodefineresponsibilitiesclearlyandensurethathasadequatemeans andskills GENERALORGANIZATION ANDDESCRIPTIONOFTHEINTERNALCONTROL 2.3 Nexans beganinSpring2007preparingtheprogressivecomplianceofNexans’procedureswithAMF’s recommendationsby2008. authority), controlbytheAMF(theFrenchfinancialmarkets 2007oftheReferenceFrameworkforinternal Following thepublicationinJanuary controlprocedures. Nexans currentlyusesitsownbodyofinternal INTERNALCONTROL PROCEDURESUSEDBYNEXANS 2.2 Group-level functionaldepartments - • - The IndustrialManagementDepartment - The DevelopmentandEconomicIntelligenceDepartment, - The Technical ManagementDepartment - The InformationSystems Department The StrategicOperationsDepartment developing theGroup’s growthstrategy, external andcontributetocreatingimplementingtheGroup’s strategicplans. product lines.ThisreplacestheMarketingDepartment. inordertobettercoordi and buildingmarketswascreatedatthebeginningof2007withinStrategicOperationsDepartment, The Industry, Infrastructure,andBuildingMarketsDepartment, the help of a specialized external service provider. service the helpofaspecializedexternal establishestheprocedurestobeimplementedandensuresthatthey are applied Committee, theIndustrialManagementDepartment poses anindustrialandenvironmentalriskpreventionpolicytoGroup Management.OncethepolicyhasbeenvalidatedbyExe managing andmonitoringcapitalexpendituresindustrialprojects, andassessinganynewmanufacturingtoolsprocesses. involvedinmanagingNexans’industrialequipme isalsovery Nexans’ manufacturingplants.TheIndustrialManagementDepartment of whichareresponsiblefortheperformance IndustrialManagementDepartments, expenditure budgets,andtheAreacountry-level Competence CentersandtheResearchCenter. Systems Department to assist the Executive Committee when deciding on budgetary priorities and Group Information Systemstrateg prioritiesandGroup Information toassisttheExecutiveCommitteewhendecidingonbudgetary Systems Department Information withinthe systemsasafactorinNexans’competitiveness,Group-levelSteeringCommitteehasbeenformed tance ofinformation PROCEDURES IMPLEMENTED four geographicAreas are also involved in internal control. are alsoinvolvedininternal is responsibleforthestrategicdevelopmentofentireGroup.Itincludes: develops theGroup’s ITsystemspolicyandoverseesitsimplementation.Duetotheimpor- – Europe, North America,Asia-Pacific,andtheRestofWorld– Europe,North –whichareresponsible manages alltheGroup’s throughits inparticular researchanddevelopmentefforts, assists theAreasinindustrialmattersandoverseesstrategy, thecapital whose missionistomonitortheGroup’s in competition,participate a specificorganizationforeachoftheindustry, infrastructure, e Infrastructure nate Nexans’ ded to y. cutive It pro- with nt, 203 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page204 204 A for theentitiesthatcompriseGroup,andmonitorachievementofsuchobjectives. The roleoftheExecutiveCommitteeistodefineandmanageGroupstrategy, objectives resourcestoimplementit,set allocatethenecessary TheSeniorCorporateVice PresidentofHumanResourcesand Communications. - TheChiefFinancialOfficer, - TheSeniorCorporateVice PresidentofStrategicOperations, - ThefourAreaExecutiveVice Presidents, - TheChiefOperatingOfficer, - The LEGAL Audit Department. –approvedbytheAccountsandAuditCommitteewhichsetsoutresponsibilities ofthe Internal The Grouphassetupanauditcharter monitoringtheseprocesses, andmakingrecommendationstostrengthen them. ofrisks,control,andcorporategovernance, processes interms helpstheGrouptoattainitsobjectives bysystematicallyandmethodicallyassessingthesuitability ofmanagement AuditDepartment The Internal CEO. ItsworkisapprovedandmonitoredbytheAccountsAudit Committee. and directlyto the Chairman reports AuditDepartment functionallytheInternal totheFinanceDepartment, Although organizationallyitreports by IFACI inJuly2006andSeptember2007afterfollow-upaudits. by theInstitutFrançaisdel’AuditetduContrôleInternes to becer auditdepartments 1,2002,andinJuly2005wasoneofthefirstinternal wascreatedonJanuary AuditDepartment The Internal B) THEINTERNALAUDITDEPARTMENT are alsopresentedtotheCommittee. year, auditplanissubmittedtotheAccountsandAuditCommitteeforapproval,mainconclusionsfrom previous year theinternal is involvedinmonitoringtheimplementationofinter rules,theAccountsand Audit Committee As aresultoftheabove-mentionedpowersconferreduponitbyBoardDirectorsandinternal A) THEACCOUNTSANDAUDITCOMMITTEE control dedicatedtointernal involvedandstructures Parties 2.3.2 asdescribedbelow.reports, Lastly, the Market Manager,Managers. andCEO),AreaSalesManagers,theIndustry Country Chairman andcertain from in thisCouncilincludemembersofNexans’ExecutiveCommittee(apart President ofEurope.Otherpeoplewhomaytakepart andisledjointlybytheChiefOperating Officer,at leastquarterly SeniorCorporateViceand ExecutiveVice PresidentofStrategicOperations, Management Council Executive Committee • - The Purchasing Department The PurchasingDepartment - • The Group’s (seeSection2.3.3) FinanceDepartment press, andnewmedia–incollaborationwiththerelevantfunctionaldepartments. handlesalltheGroup'scommunications–commercial,institutional,in Human ResourcesDirectors.TheCommunicationsDepartment networkof It handlesrelationswithemployeerepresentativesattheEuropeanlevel,andisalsoinchargeofcoordinatinginternational trainingprogramsandcompensationpoliciesfortopm transfers,international development, successionplans)andinternational career managers(recruitment, human resourcespolicies,includingestablishingjointmanagingthecareersoftopinternational The Group’s HumanResourcesandCommunicationsDepartment of goods and services inordertooptimizecost,quality,of goodsandservices timeframes,andtechnology. Board ofDirectors INFORMATION has beencreatedinordertomorecloselyinvolvetheGroup'sentitiesitsoverallmanagement.ThisCouncilmeets comprises theChair provides assistance in monitoring internal control,primarilythroughtheworkofCommitteesandCommittee provides assistanceinmonitoringinternal is responsiblefordefiningandoverseeingtheimplementationofGroup’s proceduresforthepurchase man andCEOeightothermembers: nal controlprocesses,exercisingsuchcontrol,andmonitoringtheprocedures inplace.Each (the French Audit and Internal ControlInstitute)(IFACI).(the FrenchAuditandInternal wasrenewed Thiscertification is inchargeofdefiningandcoordinatingtheGroup’ anagers. ternal, tified the s 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page205 • The roleofRiskManagementisto: ing realestatesaletransactions,andriskmanagementingeneral. • The roleoftheRiskManagementDepar totheChiefOperatingOfficer. reports totheCorporateCounsel,whointurn reports The RiskManagementDepartment C) THERISKMANAGEMENTDEPARTMENT ures takentoreducetheGroup'sworkingcapitalrequirements. subsidiariesorbusinesses,capitalexpendituresandmonitoring meas- in regardtomonitoringriskandmanagingnon-ferrousmetalscertain subsidiariesinFranceandabroad.Specificauditswerealsoconducted, particularly During 2007,complianceauditswereconductedincertain Audit Committee,andtheExecutiveCommittee. issubmittedtotheBoardofDirectors, theAccountsand AuditDepartment ontheworkcarriedoutby theInternal In addition,abiannualreport andtheentityauditedrelevantfunctionalmanagers of theExecutiveCommittee,HeadRiskManagementDepartment, andCEO,theChiefOperatingOfficer, issenttotheChairman toring procedure.Eachreport theChiefFinancialOfficer, theappropriate member(s) thatcontainsrecommendationswhicharesubjectto issuesareport AuditDepartment After eachauditisconducted,theInternal The ExecutiveandAccountsAuditCommitteesreviewupdatethisauditplanannually • • • • • • • • • of issues,including: A five-yearauditplanwasdrawnuponthebasisofriskmap(seeSection2.5.2foradescriptionprocess),covering abroadspectrum and areeffectivefortheGroup’s potentialrisks. T • • • • • • coveringfinancialandadministrativeaswelloperationalmatters, areto: AuditDepartment, The ongoingresponsibilitiesoftheInternal • o achieve these goals, the Internal Audit Department conductsauditstoverifythatthemeasureshavebeenimplementedare appropriate AuditDepartment o achievethesegoals,theInternal (c) theacceptanceofcer (b) preventionandothermeasures, (a) insurancecoverage, propose astrategyformanagingoperating,commercial,industrial, andfinancialrisksbyseekingtheoptimumbalancebetween: environmental impact(i.e.sustainable developmentindicators). and developmentofNexans’activitiesasregards theireconomic,social, establish indicatorsfortherisks associatedwiththelong-term directives; basis,todevelopriskmanagementorensurethatitcomplies withtheGroup’s orpermanent ness thatrequirededicatedresources,onatemporary validating theappointmentofriskmanagersatlevelanother corporatefunction,ageographicAreaorcer propose andmonitortheintroductionofmeasuresotherthaninsurance forriskpreventionandmanagementpurposes,includingproposing or Human resources,etc. systems, Information Legal, insurance,safetyandenvironmentalissues, projects, Management ofmajorturnkey Sales process, Inventories process, Purchasing process, Non-ferrous metalhedgingrisk, Cash managementandexchangeraterisks, identify andpromotebestpractices. propose correctiveactionsandmethodsofimplementation; concerned; conduct operationalauditsincooperationwiththedepartments financialaudits; conduct internal controlprocedures; controlmechanismsareinplaceandfunctioning,ensurecompliancewithinternal ensure thatinternal identify, analyze,andmeasure risks; tain risks; tment wasexpandedanddetailedin2007.Itischargeofmonitoringinsurancecoverage, . tain countries or specificbusi- a formal moni- aformal . coordinat-

205 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page206 206 This structureensurescoordinated,consistentprocessingoffinancialinformation. ManagerandfunctionallytotheCorporateFinance Department. toboththeCountry report ineachcountry In addition,theFinancedepartments totheChiefFinancialOfficer, report totheChiefOperatingOfficer.All thesedepartments reports whointurn LEGAL on recommendations made in the context of internal audits.ItisusedtopreparetheGroup’son recommendationsmadeinthe contextofinternal auditplan. annualinternal year,The riskmapisupdatedevery oncontrollingandmonitoringissuesidentified assensitive,wel focusing inparticular Nexans Group’s financialposition. withrespecttocontrols,andevaluate their impactonthe areas ofriskincludingallrisksidentifiedbyManagementaswell astheirconcerns Theaimofthisprocessistoidentify risksand AuditDepartment. yearbytheInternal ontheGroupevery A riskmappingprocessisperformed Therisk mappingprocess 2.5.1 SYSTEMS DESIGNEDTOIDENTIFYANDANALYZE THEMAINRISKSANDENSURE 2.5 theirduties. inatimelymannertoallowthemperform information thatgivesoperationsandfunctionalmanagementaccesstorelevant andreliable accounting, industrial,environmental,andotherinformation) systemcovering alltheactivitiesofoperatingentities(includingcommercial,financial and The Grouphassetupamonthlyreporting INTERNALINFORMATION SHARING 2.4 • • • • • • The CorporateFinanceDepartment tothepreparationandprocessingofpublishedfinancial accounting Organizationpertaining 2.3.3 AuditDepartment. alsoworkscloselywiththeInternal The RiskManagementDepartment impact onNexans’profitability. toreducethemostcriticalrisksthat couldhavean The “riskmap”makesitpossibletoallocateresourcesbetterandplanorganizeefforts andeachbusinessgroup. up andusedefficientlyineachcountry andbusinessgrouplevels,oncethemethodhasbeenvalidated,itisresponsiblefor ensuring thatthetoolisset “risk map”toolatthecountry isinchargeofproposinganimplementationmethodology forthe toimproveriskcontrol,theRiskManagementDepartment oftheeffort As part together withtheRiskManagementDepartment. the workinggroups;purpose(analyzingaspecificrisk)andcompositionofthesegroupsaredefinedbyrelevant departments coveringthemainriskscompiles the assessments carriedoutby Thisannualreport the mainrisks,andwhichisassessedinanannualriskreport. andbasedonthelevelofriskcontrol thatexistsfor AuditDepartment yearatthecorporatelevelbyInternal the “riskmap”establishedevery theAreaExecutiveViceTheseprioritiesaredefinedbasedon a reviewof Operations Department, Presidentsand/ortheFinanceDepartment. with theStrategic yearbytheHeadofRiskManagementDepartment ofRiskManagementareestablishedevery The prioritymeasuresinterms the directivesdefinedatGrouplevel. operations managementattheArealevel,andGroup’s legalentities,inordertodefineandimplementfinanciallyviablesolutions inlinewith atthecorporate level, In viewofthebroadscopetheseresponsibilities,closecooperationisrequiredwithfunctionaldepartments The Financial Operations Department (which includes the Mergers and Acquisitions Department andtheFinancialCommunicationsDe (whichincludestheMergers andAcquisitionsDepartment The FinancialOperationsDepartment The Tax Department, AuditDepartment, The Internal The TreasuryandNon-FerrousMetalsDepartment, The ConsolidationDepartment, The ManagementControlDepartment, HTRISKMANAGEMENTPROCEDURESAREINPLACE THAT information INFORMATION includes sixfunctionaldepartments: l asfollowingup par tment). 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page207 • • • • TheGrouphassetupanumberofCommitteestoanalyzeandmonitorthemainrisks: 2.5.3 registration document.Thepurposeoftheseworkshopsistoproposesolutionsremedyrisksorlimittheirimpact. identified fortheGroupbyusingriskmappingprocess.Theserisksarepresentedin“Riskfactors”sectionofNexans annualreport Workshops werelaunchedin2007,bringingtogetheroperationalstaffandmembersoffunctionalmanagementtoworkonthemainr 2Monitoringmajorrisks 2.5.2. other countries. Thisriskmappingexercisewillberolledoutoverthecomingyea AuditDepartment. oftheInternal consultants andthesupport withtheassistanceo bytheRiskManagementDepartment In 2007,ariskmappingexercisewasalsocarriedoutontestcountry the occurrenceofrisk. Risks wereevaluatedaccordingtothefrequencywithwhichtheyarelikelyoccurandgravityofconsequencesthatmay resultfrom Managers. Managers andCountry withExecutiveCommitteemembers,theManagersofCorporate Functions,Product Line Risks wereidentifiedin2007throughinterviews Executive Vice PresidentfortheAreainvolved. RegionalManagementController,General Counsel,HeadoftheRiskManagementDepartment, andoperatingmanagersappointedbyth prised oftheExecutiveVice PresidentfortheAreainvolved,ChiefFinancialOfficer, HeadoftheTreasuryandNon-FerrousMetals Department, nical). Thisreviewisper (commercial,legal, financial,andtech- In addition,allbidsinexcessof25millioneurosaresubjecttoareviewtheapplicablecontractterms Management, HumanResources,andCommunicationsDepartments. This CommitteeismadeupofrepresentativesfromtheStrategic Operations, IndustrialManagementandTechnical, Purchasing,Legal, Risk An of StrategicOperationsandtheExecutiveVice PresidentsoftheAreasconcerned. ExecutiveVice HeadoftheMergersandAcquisitionsDepartment, P General Counsel,HeadoftheFinancialOperationsDepartment, and AcquisitionsCommittee arereviewedbyNexan Any potentialbusinessorcompanyacquisitionssales,possiblestrategicalliancespartnerships, The DisclosureCommittee (without theChiefOperatingOfficer). European bidsforamountsbetween5and25millioneuros(whichcomprisethevastmajorityofbids)arealsoreviewedbythis c - identifying and defining issues that merit investigation by the internal auditteaminordertoassessorimprovethereliability oftheprocedures identifying anddefiningissuesthatmeritinvestigationbytheinternal - and - compilingsignificantinformation; totheparent tobesentthesubsidiariesidentifyrisksandevaluatingmethodsimplementedsubmitinformation designing asurvey - - identifyingandassessinganymaterialnon-financialinformation; Its responsibilitiesincludethefollowing: reports. due representationinthefinancialstatementsandtheirdisclosurevariousexternal The Committee’s objectiveistoidentifyallrisksofanynaturewhichthesubsidiariesareexposed,assesstheirmateriality, andensuretheir AuditDirector, GeneralCounsel,CorporateandSecuritiestheInternal Department, theRiskManager, andthreeAreaCo This CommitteecomprisestheChiefOperatingOfficer in place and the information submittedtotheparentCompany.in placeandtheinformation Company; Environmental Committee formed bythe formed . ThisCommitteeischairedbytheChiefOperatingOfficer oversees programsaimedatcontinuouslyimprovingtheenvironmental per Group Tender ReviewCommittee , ChiefFinancialOfficer, HeadoftheManagementControl,Cons . ThisCommitteeischairedbytheChiefOperatingOfficerandcom- , anditsothermembersaretheChiefFinancialOfficer, formance of Nexans’productionsites. formance rs toinclude s’ f external ommittee olidation ntrollers. resident Merger isks e 207 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page208 208 thisprincipleisreflectedin theconsolidatedfinancialstatementsbyrecognitionof outstandingcommitments - thisprincipleisappliedbyeachlegalentityforwhichposition limitsareset.Thesereviewedregularlybasedon thedevelopment - theprincipleissystematic hedgingofrisksrelatingtometalpricesandstructureas soonastheriskarises; - The basicrulesareasfollows: the GroupFinancingDepartment. to 2004byateamreporting fluctuations, Nexanshasimplementedaspecificprocedureformanaging non-ferrousmetals,ledsinceJanuary LEGAL In viewoftheimpor • 2.6.3 Specific procedures with. controlproceduresareworkingproperlyandthattheya controlstoensurethatinternal performs AuditDepartment The Internal Department. regularlytotheCorporateFin whichreports metal pricesthataremonitoredbytheTreasuryandNon-FerrousMetalsDepartment, This isthecase,forexample,withmanagementofrisksassociatedexchangerates,interestandfluctuation ofnon-ferrous identified thatarespecifictoNexans’businessandcouldhaveanimpactonitsassetsorearnings. In additiontothefinancialandaccountingrulesimplementedbyGroup,theseproceduresalsodealwithsensitiveissuesor riskfactors arecurrentlyapplicablewithintheNexans Group. Department, andmoregenerallytheareaswithinresponsibility oftheFinance Over seventyproceduresrelatingtofinancialandaccountinginformation, controlproceduresimplementedbytheCompany Mainfinancialandaccountinginternal 2.6.2 andtheLegalDepartment. Non-Ferrous MetalsDepartment, providedbytheunits,Trea basedoninformation Off-balance sheetcommitmentsarereviewedbytheConsolidationDepartment relating totheyear-end accountsclosing. Managersandwherekeydecisionsare year-end procedureinvolvesBalanceSheetCommitteemeetingswhichareattendedbyCountry basis,withaspecificprocedureapplicableattheyear-end.A consolidatedaccountsclosingprocedureiscarriedoutonaquarterly Thisspecific are analyzedbyGroupManagementatAreameetings. review. Thefiguresarecomparedwiththebudgetandpreviousyear’s results.TheconsolidatedresultsbyAreaand product line of the business brokendownbyproduct line,theresultsofwhichareanalyzedbyManagementaspart Each month,theunitsprepareareport monthly report. to Nexans’executivemanagementteamforfinalapproval.TheGroup’s budgetissubmittedtotheBoardofDirectors.Itthen included ina year. ofevery an annualbudgetbyproductlineinthelastquarter TheisdiscussedlocalandAreaManagement issubmitted Based ontheGroup’s Plan(coveringthreeyears),whichsetsoutthemainstrategicandfinancialpolicies,each unit establishes Medium-term analyzed byfunctionfortheunitasawholeandtheirproductlines. produced, NexanshasanaccountingmanualwhichisusedbyallGroupunitsanddefineseachlineintheoperatingincomestatem according tostandardaccountingprinciplesdefinedinnumerousprocedures.Inparticular, toensuretheconsistencyofinf The breakdownbybusinesssegmentandproductlineisbasedonthelegalentities’financialstatements.Thesestatementsarep isorganizedusingtheHyperionSystem. reporting statements, whicharedrawnupinaccordancewithIFRSpursuanttoECregulation1606/2002.AlloftheGroup’s financialandac and thenrestatedinaccordancewiththeaccountingprinciplesmethodsappliedbyNexanstoprepareconsolidatedfinanc isobtainedfromtheaccountingsystemsoflegalentities,whoseaccountsarekeptaccordingtolocal principles All information asfollows: isgeneratedinconsolidatedform Financial andaccountinginformation Preparationoffinancialandaccountinginformation 2.6.1 The Group’s controlprocedure systemandasetofinternal controloperationsarebasedonafinancial andaccountingreporting CONTROLOPERATIONS 2.6 of eachunit’s Audit’s ofInternal business. Monitoringadherencetothelimitsispart responsibilities; Rules specifictothemanagementofrisksrelatednon-ferrousmetals INFORMATION tance ofnon-ferrousmetals(copper, aluminum)toNexans’variousbusinessesandtherisksassociatedwith s. re complied ormation sury and sury counting repared made price ance ent ial 161_215_Rapport_Activite_GB_v21.qxd 28/04/08 12:53 Page 209

Non-ferrous metal price risks are identified by the Group’s operating subsidiaries. They are hedged through the physical purchase and sale of metal inventory or transactions on commodities exchanges such as the London Metal Exchange (LME) or the New York Commodities Exchange (COMEX). Commodities exchange transactions are managed by the Financing Department apart from those carried out on the Shanghai Metal Exchange (SHFE), which are organized by the Group’s Chinese subsidiaries.

Trading on these markets is executed through first-rate brokers whose financial soundness is reviewed regularly to minimize counterparty risks.

• Centralized Cash Management Nexans has implemented a centralized system for its principal subsidiaries to manage cash flow, which is organized around the following: - international cash pooling; - centralized banking commitments; - centralized management of exchange rate risk.

2.6.4 Information on other internal control procedures There are approximately sixty such internal control procedures within the Group covering areas such as: • ethics: the Group has established a code of ethics entitled “Nexans Business Ethics and Conduct” which specifies certain principles and rules of conduct; • human resources: a procedure relating to personal safety in at-risk geographic areas has been implemented; • communications; • purchasing; • information systems; • quality; • intellectual property; • insurance; • legal issues; • industrial and environmental issues: a charter has been drawn up relating to the management of industrial risks covering the protection of property, accident prevention, personal safety, security and environmental protection. The purposes of this charter are to: - identify and quantify the risks to which Nexans is exposed; - define priorities and recommend prevention and control measures to reduce the frequency and magnitude of such risks; - organize Nexans’ insurance program accordingly; - organize crisis management plans.

The implementation of the above is managed by the Industrial Management Department in liaison with the Finance Department, the Risk Management Department, and the Legal Department for insurance matters, with extensive interaction between the corporate departments and designated managers at various levels of the organization.

Nexans’ policies and procedures regarding the environment are described in the Board of Directors’ Management Report.

2.7 MONITORING OPERATIONS

The Board of Directors monitors the internal control procedures primarily through its Accounts and Audit Committee (see Section 2.3.2) whose role is to ensure that the procedures used are both relevant and suitable in light of the Group’s objectives.

The Internal Audit Department is also involved in monitoring these procedures; it carries out assignments, drafts reports, and monitors the implementation of the recommendations issued.

January 30, 2008

Gérard Hauser Chairman and CEO 209 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page210 210 LEGAL should bereadinconjunctionwith,andconstruedaccordanceFrench lawandprofessionalauditingstandardsapplicable issuedinFrenchandisprovidedsolelyfortheconvenience ofEnglishspeakingreaders.Thisreport Auditors’report *This isafreetranslationintoEnglishoftheStatutory 29,2008 Neuilly-sur-Seine andParisLaDéfense,February of theFrenchCommercialCode. oftheBoard’s setoutintheChairman L.225-37 processing offinancialandaccountinginformation preparedinaccordancewitharticle report, controlproceduresrelatingtothe givenoninternal on theinformation On thebasisofourwork,wehavenomatterstoreport report. tion thatwemayhaveidentifiedinthecourseofourworkareproperlydescribedChairman's informa- control relatingtothepreparationandprocessingoffinancialaccounting ifanymaterialweaknessesintheinternal determining • andoftheexistingdocumentat giveninthereport theinformation tosupport obtaininganunderstandingoftheworkperformed • presentedintheChairman’stion onwhichtheinformation andexistingdocumentationarebased; report informa- controlproceduresrelatingtothepreparationandprocessingoffinancialaccounting obtaininganunderstandingoftheinternal • Theseproceduresmainlyconsistedof: processing offinancialandaccountinginformation. setoutintheChairman’s thepreparationand oftheinformation controlproceduresrelatingto dures toassessthefairness ontheinternal report We proce- ourproceduresinaccordancewithprofessionalstandardsapplicableFrance.These standards requirethatweperform performed mation. set outintheChairman’s controlproceduresrelatingtothepreparationandprocessingoffinancial ontheinternal report controlproceduresinplacewithintheCompany.pared andorganizedtheinternal on theinformation toyou Itisourresponsibility toreport It istheChairman’s ofDirectorsarepre- notablyoftheconditionsinwhichdutiesBoard responsibilitytogiveanaccount,inhisreport, L.225-37oftheFrenchCommercialCode,foryearendedDecember31,2007. sions ofarticle ofyourCompanyinaccordancewiththeprovi- preparedbytheChairman toyouonthereport Code (decommerce),weherebyreport In ourcapacityastheStatutor To theShareholders, PROCESSING OFFINANCIALANDACCOUNTINGINFORMATION CHAIRMAN OFTHEBOARDDIRECTORSNEXANSS.A.ONINTERNALCONTROLPROCEDURESRELATING TOTHEPREPARATION AND PREPARED INACCORDANCE WITHARTICLE L.225-235OFTHEFRENCHCOMMERCIALCODE( STATUTORY AUDITORS’REPORT* INFORMATION PricewaterhouseCoopers Audit y Auditors of Nexans S.A., and in accordance with the provisions of article L.225-235 of the French Commercial L.225-235oftheFrench y AuditorsofNexansS.A.,andinaccordancewiththeprovisionsarticle Dominique Ménard Partner The Statutory Auditors The Statutory Member ofKPMGInternational Salustro Reydel, Benoît Lebrun Partner CODE DECOMMERCE)ONTHEREPORT BYTHE inFrance. accountinginfor- preparation and ion; 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page211 ing tothechangeinmethodusedaccountforshareacquisitioncosts. relat- observation relatingto2007,presentedinthisregistrationdocument,containsone onfinancialinformation Auditors’report The Statutory No. D.07.251filedwiththeAMF, inventories. thechangerelatingtorecognitionofnon-ferrousmetal concerning containsoneobservation relatingto2006,presentedonpages124and125ofregistrationdocument onfinancialinformation Auditors’report The Statutory ment andhavereadthedocumentasawhole. relatingtothefinancialpositionandstatementscontainedinth thattheyhavereviewedallinformation confirm Auditors,PricewaterhouseCoopersAuditandSalustroReydelattheendoftheir assignment, inwhichthey I obtainedaletterfromtheStatutory with adescriptionoftheprincipalrisksandcontingenciesthattheyface. intheconsolidationtakenasa ance ofthebusiness,profitorlossandfinancialpositionCompanyundertakings presentedinthisdocumentincludesafairreviewofthedevelopment consolidation takenasawhole,andtheManagementReport inthe standards andgiveatruefairviewoftheassets,liabilities,financialpositionprofitorlossCompany undertakings declarethat,tothebestofmyknowledge,financialstatementshavebeenpreparedinaccordancewithapplicable accounting I further to thebestofmyknowledge,inaccordancewithfactsandcontainsnoomissionlikelyaffectitsimport. containedinthisregistration documentis, I herebydeclarethat,havingtakenallreasonablecaretoensurethatsuchisthecase,information Paris, March5,2008 PERSON REPRESENTATIVE FORTHEREFERENCEDOCUMENT Chairman andCEO Chairman is registrationdocu- whole,together Gérard Hauser and perform-

211 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page212 212 6.5. Elementsonwhichallissuerrepresentationsregardingitscompetitivepositionarebased 6.4. Dependences 6.3. Exceptionalevents 6.2. Principalmarkets 6.1. Principalbusinesses 6. OVERVIEW OFBUSINESSES 5.2. Investments anddevelopmentofthecompany 5.1. History 5. INFORMATION ONTHEISSUER 4. RISKFACTORS 10.4. Restrictions ontheuseofcapitalthathaveormayasignificant 3. SELECTEDFINANCIALINFORMA 2. AUDITORS 1. INDIVIDUALSRESPONSIBLE LEGAL 10.3. Loanter 10.2. Sourceandamountofcashflows 10.1. Issuer’s equity 10. CASHANDEQUITY 9. REVIEWOFFINANCIALPOSITIONANDEARNINGS 8.2. Environmentalissuesthatcouldinfluencetheuseoftangiblefixedassets 8.1. Significantexistingorplannedtangiblefixedassets 8. PROPERTY, PLANT, ANDEQUIPMENT 7.2. Listofsignificantsubsidiaries descriptionoftheGroup 7.1. Summary 7. ORGANIZATION CHART CONCORDANCE TABLE 15.2. 15.1. Amountofcompensationpaidandin-kindbenefits 15. COMPENSATION ANDBENEFITS 14.2. Conflictsofinterestamongmanagementbodies 14.1. Managementbodies 14. MANAGEMENTANDSUPERVISORY BODIESANDGENERALMANAGEMENT 13. FORECASTSORESTIMATES OFPROFITS 12. INFORMATION ONTRENDS 11. RESEARCHANDDEVELOPMENT, PATENTS ANDLICENSES 10.5. Sourcesoffinancingexpected ie o pedx1o uoenrglto °809/2004 Lines forAppendix1ofEuropeanregulationN° influence ontheissuersoperations retirement pensionsorotherbenefits Total amountofprovisionsfundedorallocated orpaymentofpensions, INFORMATION ms andfinancialstructure TION 28 and29,5051,5455 22 to26,4145,102and103 18, 51and52,9798,184 19 and20,39to41,99101 19 to26,3848,58and59 33 and34,55,68to70 123 to126,132135 52 to57,136144 Corresponding pages in theAnnualReport 118 and119,184 5 to9,60and61 51 and52,183 156 and157 1 to35,187 22 to26,38 132 to135 9, 61to63 9, 61to63 10 and11 53 and54 22 to26 194 211 136 136 NA NA 82 9 161_215_Rapport_Activite_GB_v21.qxd 28/04/0812:53Page213 25. INFORMATION ONSHAREHOLDINGS 24. DOCUMENTSAVAILABLE TOTHEPUBLIC The information included in these two registration documents other than cited above, as appropriate, was replaced by the information includedinthisregistrationdocument. includedinthesetworegistrationdocumentsotherthancitedabove,asappropriate,wasreplacedbytheinformation The information document No.D.06-0232filedwiththeAutoritédesMarchésFinanciers(Financial MarketAuthorities)onApril7,2006. forthefiscalyearendedDecember31,2005, presentedonpages56to106ofregistration Auditors'reports - theGroup'sconsolidatedfinancialstatementsandStatutory document No.D.07-251filedwiththeAutoritédesMarchésFinanciers(Financial MarketAuthorities)onMarch30,2007; forthefiscalyearendedDecember31,2006, presentedonpages70to125ofregistration Auditors'reports - theGroup'sconsolidatedfinancialstatementsandStatutory 28ofEuropeanregulationNo.809/2004April29,2004,thefollowingitemsareincludedbyreferencein thisregistrationdocument: *Pursuant toArticle 23. INFORMATION OBTAINED FROMTHIRDPARTIES, EXPERT STATEMENTS 22. MAJORCONTRACTS 21.2. Char 21.1. Sharecapital 21. SUPPLEMENTARY INFORMATION 20.9. Significantchangeinthefinancialormarketposition 20.8. Legalandarbitrationproceedings 20.7. Dividenddistributionpolicy 20.6. Interimandotherfinancialdata 20.5. Dateofthelatestfinancialdata 20.4. Verification ofhistoricannualdata 20.3. Financialstatements 20.2. Pro-for 20.1. Historicalfinancialdata* 20. FINANCIAL INFORMATION CONCERNINGTHEASSETS, 19. TRANSACTIONSWITHRELATED PARTIES 18.4. Agreement knowntotheissuerthatifimplementedcould 18.3. Issuercontrol 18.2. Existenceofdisser 18.1. Shareholdersholdingmorethan5%ofthecompany’s capitalorvotingrights 18. LEADINGSHAREHOLDERS 17.3. Agreementprovidingforemployeesstockownershipintheissuer 17.2. Sharesandstockoptionsheldbymembersofmanagementbodies 17.1. Headcount 17. EMPLOYEES applicableintheissuer’s16.4. Corporategovernance oforigin country ontheauditandcompensationcommittees 16.3. Information 16.2. Ser 16.1. Expirationofcurrentterms 16. METHODOFOPERATION OFMANAGEMENTBODIES Photos: ChristianChamourat,LasseRossing, Nexans,DR. : Design AND DECLARA FINANCIAL POSITIONANDRESUL in thefuturetriggerachangeCompagny’s control vice contractsformembersofmanagementbodies ter and articles ofassociation ter andarticles ma financialdata TIONS OFINTEREST ting votingrights TS OFTHEISSUER Published by Nexans – Communications Department Published byNexans–Communications Department 47 and48,9798,156157 66, 123to126,188192 153 and154,195to199 13, 66,189and190 5 to9,200and201 159 and160,181 186, 188and189 13, 16,58and59 1, 31,70and71 9, 201and202 185 and186 190 to192 78 to180 May 2008 52 to56 78,161 31, 67 183 213 190 189 187 183 NA NA NA 9 8 213 001_036_Rapport_Activite_GB_v12.qxd 28/04/08 12:14 Page couv4

16, rue de Monceau 75008 Paris Cedex – France SA with share capital of 25,678,355 euros Tel.: +33 (0)1 56 69 84 00 Fax: +33 (0)1 56 69 84 84 www.nexans.com [email protected]