Hellas I.S.A. - Nexans IFRS Report 2015 EN.pdfNEXANS HELLAS I.S.A. S.A. Register No.:...

ANNUAL FINANCIAL REPORT

OF THE PERIOD JANUARY 1st

UNTIL DECEMBER 31st

2015

(pursuant to the provisions of

Article 4 of Law 3556/2007)

Hellas I.S.A.

NEXANS HELLAS I.S.A.

S.A. Register No: 2176/06/Β/86/06 General Commercial Registration No. 000282101000

Registered offices:15, Messoghion Av.GR-11526 Athens

NEXANS HELLAS I.S.A. S.A. Register No.: 2176/06/Β/86/06, General Commercial Registration No. 000282101000 15, Messoghion Av. – GR-115 26 Athens (All amounts are in thousand Euros, unless otherwise stated)

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NEXANS HELLAS S.A.

STATEMENTS OF THE MEMBERS OF THE BOARD OF DIRECTORS

(pursuant to the Article 4 par. 2 of the Law 3556/2007)

The undersigned: Christof Josef Barklage - Chairman of the Board of Directors

Stephane Iliades - Member of the Board of Directors and General Manager

George Chryssomallis - Member of the Board of Directors

hereby declare by virtue of Article 4 par. 2 (c) of Law 3556/2007 that:

The attached annual Financial Statements that have been prepared in line with the

applicable International Accounting Standards give a fair view of assets and liabilities,

equity and operating results of the company for the period 01.01-31.12.2015.

The attached annual Report of the Board of Directors gives a fair view of the evolution,

performance and position of the company including a description of the principal risks and

uncertainties it faces.

Athens, 29th March 2016

Chairman of the Board of Directors: Christof Josef Barklage

Member of the Board of Directors and

General Manager:

Stephane Iliades


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Member of the Board of Directors: George Chryssomallis

NEXANS HELLAS I.S.A.

(S.A. Register No. 2176/06/B/86/06, General Electronic Commercial Registry No.

000282101000)

ANNUAL REPORT OF THE BOARD OF DIRECTORS

(in accordance with the provisions of Codified Law 2190/1920, Article 4 of Law 3556/2007

and the relevant Decisions made by the BoD of the Capital Market Committee for the

period

1st

January 2015 until 31st

December 2015)

Ladies and Gentlemen shareholders,

We have the honour to present you the Annual Financial Report that concerns the 41st accounting period

from 01.01.2015 to 31.12.2015 and includes: the Financial Statements as at 31st December 2015,

namely the Balance Sheet, the Statement of Comprehensive Income, the Statement of Changes in

Equity, the Cash Flow Statement and the Notes to the Financial Statements together with this report and

the statements of the Board of Directors, and to ask for your approval.

This report includes summary information on NEXANS HELLAS S.A., financial information aiming to

provide general update about the financial position, results and changes during 2015, as well as

significant events during the same period which had en affect on the company's financial statements.

This report sets out the main risks and uncertainties facing the company in the fiscal year 2016 and all

the transactions between the company and its related parties.

A) Business activity and financial figures in 2015

Our company’s business activity during 2015 was slightly decreased compared to 2014, with a

considerable change recorded in the demand for aluminium cables rather than copper cables.

Despite the stagnation in domestic construction activity and the reduced demand for cables by foreign

markets, the company has managed to contain its losses considerably compared to 2014.

At current metal prices, sales amounted to EUR 72 million, thus being decreased by 4.3% compared to

last year. If we consider sales at standard metal prices, the decrease in sales volume was marginal by

0.7% compared to the previous year, reflecting the aforementioned increased demand for aluminium

cables. In order to present the actual development of sales in this report, especially during periods

marked by strong volatility in metal prices, the company neutralises the effect of fluctuations in the metal

purchase price on the level of sales by using a fixed price for basic metals, i.e. copper and aluminium.


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Dec-15 % of sales Dec-14 % of sales Change %Domestic 38,475 53.6% 41,027 54.7% 6.2%Foreign 33,293 46.4% 33,968 45.3% 2.0%Total 71,768 100.0% 74,995 100.0% 4.3%

Dec-15 % of sales Dec-14 % of sales Change %Domestic 26,992 52.3% 26,733 51.4% 1.0%Foreign 24,639 47.7% 25,249 48.6% 2.4%Total 51,631 100.0% 51,982 100.0% 0.7%

Turnover at current metal prices (amounts in thousand Euros)

Turnover at standard metal prices (amounts in thousand Euros)

During the year 2015, the company delivered a number of orders, the most important of which were the

following:

Domestic General Market – electric installation cables and optical fibre cables

To PPC (Public Power Corporation) – low and medium voltage power cables

To OTE (Greek Telecom) - copper and fibre-optic cables

Foreign markets: European Union, Middle East and Africa

Sales in the general domestic market, excluding sales to Public Utilities, were slightly diminished due to

the general prolonged recession in Greece and particularly the lack of investments in the private

construction sector.

Sales to HEDNO increased significantly over the previous year as the company was the lowest bidder in

several tenders, while sales to OTE were lower compared to 2014, mainly due to the slowdown of

investments in “New Generation Infrastructure Networks”.

Exports remained stable despite the prolonged political turmoil experienced by the company’s

traditional markets in Africa.

The prices of raw materials and mainly of basic metals – copper and aluminium – during the year

remained at relatively stable levels.

However, the approach taken by the company to cover the risks arising from the fluctuations in market

metal prices, i.e. copper and aluminium, by directly linking the purchase price of these metals with the

selling price to customers, ensured to a large extent both the smooth development of corporate sales

and the stabilisation of profit margins at the target level.

Given the situation as described above, the company managed to contain its losses to a minimum

compared to 2014, after taking specific actions resulting from its participation in the transformation

programme.

Specifically, in 2015, the Management of the company focused its strategic priorities on three pillars, i.e.

improving the competitiveness of its products by applying new methods and procedures to production and

overall operations, maintaining its share in the markets where it operates and the dynamic management

of its activities, by focusing on increasing exports in an effort to counterbalance the expected drop in the

domestic market.

During 2015, the facilities of our plant at Aghia Marina (Fthiotis) performed satisfactorily. The

company’s branches in Attica (Agios Ioannis Rentis) and Thessaloniki (Kalochori), as well as the

distribution centre in Crete (Iraklio) maintained their high level of customer service.


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OPERATIONS

The sales of the company in 2015 at current metal prices amounted to €72 million compared to €75

million in 2014.

Losses before taxes for the financial year 2015 amounted to €940,000 compared to losses of €2.5

million in 2014.

To be noted that Nexans Group uses the index of "operating margin" in order to evaluate the business

performance of each company, this index being equal to net profit before interest and taxes and

expressed as a percentage of sales at standard metal prices. The company’s operating margin

company for 2015 was positive and totalled €292,000, an amount equal to 0.6% of the turnover (at

standard metal prices) versus losses of €1.9 million for 2014.

As mentioned in detail in section "Price Fluctuation Risk", the company buys and sells forward hedging

contracts in the metal market in order to compensate the potential risks from the fluctuation in the prices

of raw materials (copper and aluminium). Based on the rules of the International Financial Reporting

Standards, the company is also obliged to carry out an accounting assessment of all open contracts

traded on the metal exchange.

FINANCIAL FIGURES Dec-15 Dec-14 Change %

Sales at current metal prices 71.768 74.995 4.3%

Sales at standard metal prices 51.631 51.982 0.7%

Net earnings before interest, taxes and depreciation 1,529 -603

Percentages of sales at standard metal prices 3.0% 1.2% 355.3%

Operating margin (net earnings before interest & taxes) 292 -1.914


Net earnings before taxes -940 -2.501

Percentages of sales at current metal prices 1.3% 3.3% 60.7%


FINANCIAL RATIOS

The company's current assets were significantly decreased by €4.2 million, mainly due to the reduction

in trade receivables.

As a result of the above, the company experienced a decrease of inventories and cash in 2015.

Given the increased production volumes at the end of the year, the Company focused its efforts on

coordinating efficiently all the units concerned, towards achieving the minimum time between the order

itself, the completion of the production process and delivery to the customer.

Total short-term liabilities were decreased by €2.9 million, due to the decrease in short-term borrowing.

The main ratios expressing the financial position of the company are as follows:


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RATIOS Dec-15 Dec-14

Liquidity

(Current assets/ Short-term liabilities)1.13 1.15

Capital Structure

(Debt/ Equity)1.55 1.63

Inventory turnover in days

(Inventory/ Sales) x 365 days54 44

Equity return

(Net profits/Equity) 3.5% 9.9%

Receivables turnover in days

(Receivables/ Sales) x 365 days108 96

SOCIAL RESPONSIBILITY – ENVIRONMENT – HEALTH & SAFETY

One of the main duties of all units of Nexans Group is to develop a high sense of responsibility to the

society of which they are part. Professional conduct, integrity and impartiality are those elements that

allow us to gain the trust of our customers, shareholders, employees, associates and society in general.

The Nexans Group has already joined and signed the United Nations Global Compact

(www.unglobalcompact.org), which is a set of rules that companies join voluntarily. It consists of four

sections (Human Rights, Labour Standards, Environment and Anti-corruption) and includes ten

Principles.

Since 2011 the Group has also signed an agreement for sponsoring the “Electricians Without Borders”,

a union which strives to improve living conditions of populations who live in conditions of poverty and

isolation or who are victims of natural disasters by providing them with access to electricity and potable

water. Under this agreement, the Group provides half of the union’s requirements in cables for three

years, representing a significant financial investment.

In many countries, Nexans units make donations of materials, provide training courses, placements in

working places, sponsorships and scholarships as part of their support to educational establishments.

Help is provided to young people in order to improve their education, pursue their goals, decide for

their future and enter the labour market.

In addition, the Group has issued and implements a Code of Ethics and Business Conduct which

imposes the business conduct adopting the highest standards of Corporate Social Responsibility. All

Group companies and, naturally, Nexans Hellas have adhered to the Code.

In 2015, the performance of Nexans Hellas with respect to the various sections of the Code was

satisfactory and was briefly as follows:

Human Rights: The company does not allow any type of discrimination with respect to nationality,

race, sex, religion, age, sexual orientation, marital status, disability, political or philosophical beliefs

and trade unionism.

Labour Standards: The first priority of Nexans Hellas is to ensure a working environment meeting the

highest specifications of Health and Safety. The plant employs a Safety Engineer and an Occupational

Physician, while the “Labour Health and Safety Committee” consisting of employee representatives

performs its duties regularly. The company made significant investments aimed at improving safety and

health in the work place, while all workers have participated in training programmes on health and

safety matters. The company is certified for health and safety management according to OHSAS 18001.

The company condemns all forms of forced or child labour and requires from its suppliers and

subcontractors to behave accordingly.


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The company organises ongoing training courses for its employees in the context of the Continuous

Improvement Programme, while employees are evaluated and promoted on the basis of their merits,

solely and exclusively according to their skills and performance.

The Management of the company strives to maintain good relations with the plant's trade union, to

which about half the company’s personnel is affiliated, and applies the collective agreements and

arbitration decisions, concerning the terms of compensation and employment of the personnel, in an

accurate way.

Environment: Several years ago, the company, being fully aware of its responsibility for

environmental protection and sustainable development, developed and applies consistently an

environmental management system that is monitored by the central services of Nexans Group in

cooperation with external specialised advisors, for which the company has been awarded the EHP

(Environment Highly Protected) label. In the context of this system, Nexans Hellas takes all necessary

measures and makes adequate investments to ensure the quality and safety of its manufactured

products and production processes applied, so as to eliminate any pollution risk against the

environment. The company takes all expedient steps to reduce the consumption of raw materials and

energy, while all material and packaging waste that arises from production processes is delivered to

specialised companies and is forwarded to recycling. For this purpose, the company has entered into an

agreement with the Hellenic Recovery Recycling Corporation (He.R.R.Co) and has also joined the

implementation of EU REACH Regulation which concerns protection from chemical toxic substances and

EU RoHS Directive which refers to the content of heavy metals in the company’s products. In addition,

the company is a founding member of the Board for Sustainable Development falling under the

Hellenic Federation of Enterprises (SEV) and has obtained an Environmental Management Certificate as

per ISO 14001.

Programme of Industrial Excellency: The company participates in the programme for the industrial

prize, Nexans Excellence Way (NEW), which is applied to other factories of the Group. The scope of this

programme is to improve industrial operations, so as to render the company more competitive, more

flexible and more responsive to the customers. The programme Nexans Excellence Way is based on

personnel guidance, enhancement of performance, improvement of production processes and the

introduction of the 5S methodology, so that the factories are cleaner, well settled and more secure, and

mainly to improve safety and productivity in the plant. In 2014, the plant in Lamia broke new ground

and participated in the Nexans Excellence Way II industrial excellence programme, which aims at

optimising further industrial processes on a daily basis in production and equipment maintenance

areas, and maintaining its outstanding performance thanks to which, in 2011, Lamia plant was

bestowed “The plant of the year 2010” award, among 120 plants of the Group. The implementation of

the programme continued smoothly in 2015 too.

On 15 December 2015, the company was awarded an Industrial Excellence award by the “Made in

Greece Awards 2015” organisation. The “Made in Greece” awards are organised by the Hellenic

Marketing Academy and aim to promote and reward entities and organisations which have their

production facilities in Greece and bring added value to the Greek economy through quality products,

innovation and excellence. The largest companies of all production sectors in Greece participate in this

competition and so the award bestowed to our company is a great achievement for us.

Other measures: Nexans Hellas adopts and is committed to rules of ethics and business conduct so

as to promote free competition and avoid any involvement in situations of unfair competition or abuse

of competition. The company takes all steps to avoid money laundering and takes active part in the

fight against corruption in all sectors of economic and social activity. Thus, employees are prohibited

from receiving and offering gifts, gratuities and any type of service related to the company’s financial

dealings.


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The company treats all parties with whom it transacts, such as customers, suppliers, agents and other

associates with respect, integrity, transparency and confidentiality. The company manages responsibly

all personal data entrusted to it, its employees and associates in compliance with applicable laws.

Finally, Nexans Hellas guarantees equal treatment for all its shareholders, as well as fairness and

accuracy of all published financial and business information, and explicitly prohibits the use of inside

information by any party.

RISK MANAGEMENT

The international financial environment and ongoing developments necessitate not only the monitoring

of ordinary business activities but also monitoring of the risks resulting from adverse developments.

Nexans Group applies procedures for identifying and managing such risks in order to minimise them.

Nexans Hellas follows faithfully the Group practice for risk management and continuously trains its

executives in this field. In specific terms:

The Board of Directors stresses that if any of the events or uncertainties described below arises, there

may be substantial adverse effects on the company, its financial position and operating results. In

addition, it is likely that the company may also face other risks and uncertainties than those described

below. Additional risks and uncertainties which for the time being are not known, may have an adverse

effect on the company’s business activities, financial situation, operating results and prospects. Finally,

the order in which risk factors are listed does not indicate any variation in terms of importance or the

likelihood of any of these risks.

Risks associated with macroeconomic conditions

Any adverse developments in the overall economic conditions in Greece and the uncertainty arising

from the Greek financial crisis and political instability have negatively affected the company and may

eventually continue to have an adverse impact on the company’s business activities, economic results

and outlook.

The development of business activity, the economic situation and prospects of Greece depends on the

macroeconomic and political conditions prevailing in Greece. Over the last seven years, the Greek State

faced major fiscal constraints and undertook to take substantial structural measures aimed at restoring

competitiveness and at promoting economic growth in Greece under the adjustment programmes which

were initially agreed with the International Monetary Fund ("IMF"), the European Commission (“EC”) and

the European Central Bank (“ECB”) (jointly referred to as “Institutions”) and, subsequently, in August

2015 with the Institutions and the European Stability Mechanism (“ESM”) (“Economic Adjustment

Programmes”).

The Economic Adjustment Programmes include fiscal adjustment policies and structural reforms aiming

to boost growth, including regulations in the labour market, in various product and services markets in

order to help the Greek economy open up to investments and competition, modernisation and

depoliticisation of the public sector.

The Economic Adjustment Programmes were initially due to expire at the end of 2014. However, due to

the prematurely proclaimed elections in Greece on 8 December 2014, for January 2015, the Council of

the Finance Ministers of the Eurozone (“Eurogroup”) initially agreed, at the request of the Greek

Government, on a two-month “technical extension” of the Economic Adjustment Programmes until the

end of February 2015. On 20 February 2015, the Eurogroup agreed to a further extension to enable

the successful completion of the last pending review, as a prerequisite of any further disbursement

under the Economic Adjustment Programmes, and also in order to provide ample time for the

negotiations and final agreement on a new bailout programme.


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However, the uncertainty as to the overall completion of the Economic Adjustment Programmes and

Greece’s prospects in the Eurozone as well as the prolonged negotiations between the Greek State and

the Institutions for a new financing programme in the first half of 2015 had a direct effect on the

liquidity of the financial system in Greece.

At the end of June 2015 and as a result of a further deterioration of the economic situation in Greece

and the lack of liquidity in the Greek banking system brought about by the expiry of the Economic

Adjustment Programmes and the default of the Greek State in relation to the IMF funding and the

failure to reach an agreement with the EU and the Institutions on a new bailout programme, a bank

holiday was announced in Greece for a period of three weeks and rigorous restrictions were imposed

on free capital flows.

Following further negotiations, on 8 July 2015, the Greek Government submitted to the ESM a 3-year

funding request under a new Economic Adjustment Programme. On 12 July 2015, the Euro Summit

issued a statement according to which the Greek Government should legislate a set of measures as a

prerequisite for the launch of negotiations in order to draft a new Economic Adjustment Programme

under the ESM.

On 15 and 23 July the Greek Parliament approved part of the prerequisites identified by the

aforementioned Summit and, on 14 August and after extensive negotiations, the Eurogroup announced

that the Greek Government had initially reached an agreement with the Institutions on a new Economic

Adjustment Programme of approximately €86 billion under the ESM.

According to the Eurogroup statement, under the ESM Economic Adjustment Programme, Greece

targets a medium-term primary surplus of 3.5% of GDP, namely it targets balances of -0.25% in 2015,

0.5% in 2016, 1.75% in 2017 and 3.5% in 2018 to be achieved notably through fiscal reforms

supported by measures to strengthen tax compliance and fight tax evasion. In addition, Greece is

required to implement a number of structural reforms in the area of social security, labour market and

various product and services markets in order to boost the competitiveness and modernisation of the

economy and to depoliticise the public sector.

As a result of the positive effects of the finalisation of the new ESM Economic Adjustment Programme on

the Greek economy, the capital controls that were initially imposed in June 2015 were relatively eased

in mid July and thereafter on many occasions, such as on 31 July 2015, 17 August and 25 September

2015. However, presently there is no specific expectation as to when such capital controls will be fully

lifted or eased.

Greece has faced and still faces major fiscal challenges and structural deficiencies in its economy which

caused concerns about an eventual Grexit. The likely extent and scope of the effects of Grexit is

uncertain but such an exit or the threat of exit could have a substantial adverse effect on the company's

activities and liquidity.

Moreover, risks arise from the economic environment established from the above facts, the most

important of which concern the liquidity of the financial system and business entities, the collectability of

their receivables, servicing of their existing loan liabilities and/or the fulfilment of terms and the

respective financial ratios, the recoverability of deferred tax assets, valuation of financial instruments,

adequacy of provisions and capability to ensure the smooth operation of business entities.

Any failure to implement the ESM Economic Adjustment Programme and/or overall failure of this

Programme to achieve a considerable improvement of the Greek economy or in case of another credit

event with respect to the Greek sovereign debt or its further restructuring or any Grexit, may have a

negative impact on the company's results and financial position in a manner which at the moment

cannot be accurately predicted.

The company’s sales, results and growth prospects depend to a large extent on the robustness of the

individual operating segments; as a result, if these specific segments show a downturn, the company’s

sales and results could be negatively affected.


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Many customers of the company use the cables produced as part of their products or in projects

undertaken for their customers. The company’s ability to sell its products depends on the overall

economic conditions, including the users’ final expenditure with respect to electricity transmission and

distribution infrastructures, industrial production assets, new constructions, the building sector,

information technology and the maintenance or overhaul of communication networks. During periods

of recession of the above segments, the company is likely to face a drop in its sales and results.

Price fluctuation risk

The volatility of the price of copper, aluminium and other raw materials as well as of fuels and energy

could have a negative impact on the company’s sales and results.

The cost of copper and aluminium, i.e. the most important raw materials used by the company to

manufacture its products, is subject to significant changes caused by the conditions of supply and

demand in metal exchanges, weather conditions, political and economic variables, as well as other

unknown and unforeseeable variables. Further, the fuels and energy required for the operation of the

company’s plant are also subject to significant volatility.

The core raw materials in the cables sector (copper and aluminium) concern products whose prices are

quoted on the London Metal Exchange. Therefore, purchases and sales are affected by international

price fluctuations. To hedge the risk from changes in metal prices, the Management of the Company

purchases the contained metal under the same terms applicable to sales to customers. Sales are divided

into 2 categories:

A) sales based on confirmed customer orders;

B) sales based on provisions for the domestic market amounting to 25% of total sales in 2015.

The risk arising from the volatility of the copper and aluminium price is generated only from those sales

based on forecasts for the domestic market since if the forecasts are not confirmed, the company’s open

position in metal stock can be significant and, if combined with an eventual significant change (drop) in

metal prices, it may result in significant losses.

To reduce the risk arising from the volatility of raw materials cost, the Management monitors constantly

its open position in metal stock and enters into futures and forward contracts (derivatives) whenever

necessary, to hedge this risk and limit the extent of its exposure to price fluctuations.

These contracts have different maturity dates, depending on the date of the expected purchase of such

metals. The valuation of the company’s open positions on 31 December 2015 and 31 December 2014

is as follows (amounts in thousand €):


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31-Dec-15

Metal Buy/Sale Quantity (tons)

Forward buy/

(Forward sale)

price

Current

price

Valuation

profit/ (loss)

Copper Buy 225 970 973 3

970 973 3

Copper Sale 0 0 (11) (11)

Lead Sale (25) (36) (41) (5)

Aluminium Sale 0 0 (9) (9)

(36) (61) (25)

Total 934 912 (22)

31-Dec-14

Metal Buy/Sale Quantity (tons)

Forward buy/

(Forward sale)

price

Current

price

Valuation

profit/ (loss)

Copper Buy 450 2,325 2,335 11

2,325 2,335 11

Copper Buy 125 663 652 (11)

Aluminium Buy 275 539 421 (119)

1,203 1,073 (130)

Total 3,527 3,408 (119)

The above valuation profits/(losses) as well as the realised profits of contracts for the purchase and sale

of metals are posted to the cost of goods sold given that there is also included the purchase cost of raw

materials, in respect of which metal derivatives are concluded..

The volatility of the price of copper, aluminium and other raw materials, as well as of fuels and energy

could have a negative impact on the company’s sales and results. In addition, if the aforementioned

derivatives strategy implemented by the company to hedge the risk and contain its exposure to the

fluctuations of raw material prices proves to be ineffective, the impact on the company’s results could be

unfavourable.

The markets for the company’s products are quite competitive and if the company does not make

successful investments in the development of new products, the improvement of productivity, customer

service and support, the sales of its products could be negatively affected.

The copper, aluminium and fibre-optic cables market is extremely competitive and calls for major

investments in research and technology and some competitors may enjoy comparative advantages.

Many products of the company are manufactured according to common specifications and, therefore,

may be easily replaced by competitive products. Consequently, the company is subject to competition

on many markets based on the price, quality, range of product family, available stocks, timely delivery,

customer service, the environmental effects of the products, as well as the company's capacity to

respond promptly to its customers’ needs.

The company estimates that its competitors will keep on improving the design and performance of their

products and launch new products with competitive prices and features. Therefore, the company must

keep on investing in product development, productivity improvement, and customer service and support


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to remain competitive. Moreover, a possible increase in competitive product imports could have a

negative impact on the company's sales in a market.

Due to its export orientation, the company is exposed to economic, political and other risks in third

countries.

In the year ended 31 December 2015, 46.4% of sales and 40.5% of receivables of the company were

channelled into exports. Certain countries, such as Egypt and Libya, run a greater risk in terms of

eventual social and political destabilisation, international conflicts, government interventions, changes in

regulatory requirements, unfavourable treatment of foreign companies, terrorist attacks, natural

disasters and eventual pandemics for which they lack the necessary resources to deal with emergencies.

The economic developments in the countries where the company exports products, including future

economic changes or crises (such as high inflation, considerable currency devaluation, voting of

exchange control measures or capital controls), could also have adverse effects on the company’s

financial position and results.

The company relies on independent distributors and retailers for the non-exclusive sale of its products,

who may, at their discretion, cease to buy the company’s products.

Distributors and retailers account for a considerable part of the company’s sales (2015: 24%). Such

distributors and retailers are under no contractual obligation to distribute the company’s products on an

exclusive basis or for a specific period of time. Therefore, said distributors and retailers may decide to

purchase competitive products or cease to promote the company's products at any time. Any

simultaneous loss of major distributors or retailers could have significant adverse effects on the

company’s ability to approach end users and may also impact negatively its business results. Moreover,

any eventual liquidity problems of one or more major distributors or retailers could have a negative

effect on the company’s sales and also generate significant credit risk.

The company relies on major customers who are able to amend the terms of

cooperation and/or discontinue the purchase of company products.

In 2015, there were customers of significant size who absorbed a considerable part of the company’s

turnover [companies of Public Power Corporation (PPC) Group: 18.6%, North Africa companies: 13.3%,

Nexans Logistics Ltd 15.1%, Hellenic Telecommunications Organisation (OTE): 3.8%). Any substantial

change in the terms and conditions of cooperation with the most important customers and/or any

discontinuation of collaboration may have an effect, at least on a short-term basis, on the development

of the company’s operations and results.

Any changes to tax and corporate law are likely to have a material adverse effect on the company's

business activity, financial position and results.

Greece has a complex tax system which has gone through radical changes over the last few years and,

consequently, the fact that the Greek State may decide to introduce regulations of a tax or corporate

nature in the future, in order to tackle any negative circumstances which are related to the Greek

sovereign debt crisis and could impact the company cannot be excluded. Such regulations may have a

substantial adverse effect on the company's business activity, financial position and results or its ability

to achieve its strategic goals.

Changes in industrial standards and regulatory requirements may have a

negative impact on the company's operation.

The cables sector worldwide complies with the requirements of international and national regulatory

authorities, as well as with principles of establishing industrial standards. Any changes in the standards

and requirements imposed by these authorities may adversely affect the company. In case the company

is not able to respond swiftly to these new or amended specifications, the effect on its sales may be

unfavourable.


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Moreover, changes in the legislative framework could affect the development and other parameters of

the key markets serviced by the company. The development of the cables industry has been

considerably affected by the laws on energy generation and marketing, including alternative and

renewable energy sources, by public utilities investments and public expenditure for infrastructure.

Although the legislative initiatives had overall a positive effect on the cables sector and the company’s

financial results, there can be no assurance that such positive effect will last. Moreover, the effect that

any new changes in the laws or standards for the sector could have on the company’s future financial

results, cash flows and financial position cannot be predicted.

The company’s majority shareholder exercises significant influence over the

company and the shareholder’s interests may vary from the interests of other

shareholders.

The company’s majority shareholder, Nexans Participations, owns 88.57% of the company’s share

capital and voting rights.

Consequently, the above shareholder has and may eventually continue to have the ability to influence to

a considerable extent the decisions of the company’s General Meeting including, among others, the

decisions on election of BoD members, dividend distribution, share capital increase, mergers,

acquisitions and other relevant corporate acts. While exercising its voting rights, the majority

shareholder may have interests other than those of the other shareholders.

The company has entered into the agreements of 01.01.2001 and 22.05.2015 with

Nexans France regarding the assignment of the use of intellectual property rights,

patents, software and access to research and technology, as well as for the provision of

administrative and commercial services. Any rescission or otherwise termination of these

agreements may have a substantial adverse effect on the company’s results.

The company is part of the companies group of Nexans., with whom it has entered into an agreement

as of 1 January 2001, which had an initial 10-year term and could be subsequently extended for two-

year periods. In the context of the agreement, in exchange for remuneration, Nexans S.A. entitles the

company to use intellectual property rights, patents and software, while also providing the company

with access to research and technology.

The effective term of this agreement has already been extended three times and shall expire on 31

December 2016 unless either contracting party (Nexans. or the company) declares by a written notice

that it does not wish to further extend this agreement. In addition, this agreement provides each

contracting party with rights of termination which, as the case may be, enable its termination either

subject to a deadline for remedy in case of substantial breach of terms by the counterparty or without

any deadline in case proceedings for collective satisfaction of creditors are brought against either

contracting party or, finally, automatically if the company ceases to be a subsidiary of Nexans

In addition, the services agreement dated 22.05.2015 concluded by the company with Nexans. and

Nexans France (further to the agreement dated 1 January 2001 concluded between the company and

Nexans France) provides for the provision of various administrative, commercial and consulting services

which pertain to the operation and activities of the company (including but not limited to the

achievement of optimum market conditions through the volumes of purchases and the global contracts

of Nexans France, services and consulting relating to the company’s industrial organisation, human

resources and other optimum management practices, strategic planning, advertising and generally

communication, financial analysis, preparation of financial statements and legal matters).

The said services agreement has an initial effective term of 4 years (with retroactive effect as of

01.01.2015) and may be further renewed for successive periods of 2 years. Such renewal shall be

automatically put into effect unless either contracting party states that it no longer wishes any further

extension of such term by a 6-month written notice prior to the expiry of the (initial or subsequent) term.


14

The services agreement includes the same termination rights with the above agreement dated

01.01.2001.

Given the extremely competitive environment where the company operates, it must have access to

leading-edge technology and know-how to maintain its competitiveness. Therefore, the above

agreements are extremely important for the company’s operation.

Termination of the agreements in any manner as per the foregoing may have a material adverse effect

on the company’s business, operating results, financial situation and prospects.

In addition, the Management of the company estimates that despite the completion of the share capital

increase, any financing from Greek credit institutions in the future may be made available only if

Nexans Group provides banks with a (non-binding) letter of comfort to support the company.

Finally, an important percentage of the company’s sales (around 18% in 2014 and 24% in 2015) is

channelled outside Greece into companies of Nexans Group.

Therefore, if Nexans Group ceases its contribution to the company in any of the above sectors, this may

have substantial negative repercussions on the company’s results, financial situation and prospects.

Failure of the company to carry out properly orders for major customers and turn-

key projects may have an unfavourable effect on its capacity to be awarded similar

contracts in the future and under extreme circumstances the company may be forced to

pay significant indemnities and fines.

The last few years the company has assumed the implementation of major turn-key projects for specific

customers. These projects are very challenging and are associated with the implementation of major

long-term contracts which stipulate significant financial sanctions in case the company fails to comply

with them.

The company Management aims to seek actively to increase its market share by carrying out

successfully contracts for medium and high voltage cable projects, as well as for land and submarine

fibre-optic cables. In addition, the purchases of terrestrial and submarine power transmission cables

which are financed by the major investments in the interconnections of the power transmission network

as well as the market of renewable energy sources such as solar energy are an attractive long-term

opportunity for the company. The successful implementation of major turn-key projects is also crucial

for the company’s long-term success in this market.

Any eventual unexpected discontinuation of the provision of raw materials and

especially copper and aluminium from main suppliers may affect the results of the

company’s activities and financial performance.

Any eventual sudden discontinuation of provision of necessary raw materials on the part of main

suppliers, due for instance to deficiencies, financial distress, strikes, accidents, fires, typhoons,

earthquakes, floods or terrorist attacks could disrupt production or affect the company’s capacity to

increase or maintain both production and sales. Most suppliers of copper and aluminium rods

employed by the company are foreigners, with the company’s greatest supplier of copper rods being a

company of Nexans Group, i.e. Nexans France, which accounted for 90% (namely an amount over

€24.1 million) of the company’s total purchases of the said raw material during the period 01.01 -

31.12.2015. Further, during the same period 01.01-31.12.2015 the greatest supplier of aluminium

rods accounted for approximately 37% (namely an amount of around €3.9 million) of the company’s

total aluminium purchases.

Any unforeseen problems encountered with suppliers of copper or aluminium rods could entail

significant adverse effects on the company. In addition, the company’s policy consists in employing a

limited number of suppliers for the majority of the other raw materials. The company does not keep

long-term agreements of raw materials supply or any strategic agreements with most of its suppliers


15

and, thus, the company may have limited options for its alternative supply on a short-term basis, if such

suppliers fail to supply materials or accessories for any reason whatsoever. Furthermore, the search,

selection and access to alternative sources of supplies may increase their cost in a short-term horizon.

The premises, machinery of the plant and the stocks of the facilities are insured

with respect to their entire construction cost. Any total destruction or material damages to

them in excess of the insurance indemnity or the insurance coverage is likely to have a

negative effect on the company’s financial results and financial position.

The company’s properties may suffer material damage due to natural disasters (such as fires,

earthquakes and floods) and terrorist attacks and other forms of violence (such as arson) resulting in

damage (including the loss of profits) which may not be covered, in whole or in part, by the insurance

policies taken out by the company. In line with the standard market practice, the company’s properties

are insured for their entire construction cost rather than their book or commercial value. Any total

destruction or material damages to them, the amount of which exceeds the insurance indemnity or the

insurance coverage, is likely to have a negative effect on the company’s financial results and financial

position. In addition, no coverage or limited coverage is available on the insurance market as regards

certain types of risk (such as risk of war and earthquake during technical works). Moreover, the cost of

such insurance may be prohibitive in comparison with the particular risk. Further, the coverage of

certain risks against which the Company is insured, in whole or in part, may no longer be available in

the future. If any risk arises to a company property for which there is no insurance coverage or the loss

exceeds the insurance limit, the company may lose a part of the capital invested in the affected property

and the future benefits expected to obtain from the use of such particular property. Finally, the company

may be forced to restore damages arising from non-insured risks or to pay indemnity to third parties in

case of civil liability that is not covered by insurance policies.

The company cannot ensure that no substantial damages in excess of the insurance indemnity will arise

in the future.

Failure or shutdown of the IT systems could have a negative impact on the

company’s smooth operation.

The company relies on its information systems and on third-party systems to monitor and schedule the

production process, process customer orders, dispatch products, invoice customers, monitor inventories,

support accounting functions, compile the financial statements, pay salaries to its employees and,

generally, to run the company regularly and smoothly. Any disruption to key information systems from

hackers or other sources could have a significant negative effect on the company’s operation.

Also, its information systems may require upgrading on a periodic basis to provide additional

capabilities and features. The launch of new information systems and the upgrade of existing ones often

disrupt the company’s ongoing activities. By way of example, any disruption affecting the capacity of the

Financial Division to compile accurate reports on the company’s financial performance in due time

could have an adverse effect on the Management’s capacity to make sound business decisions. If the

company is not able to implement successfully any potential future improvements to the information

systems, its financial situation, results and cash flows could be negatively affected.

Any increased threats against the security of IT systems and more advanced means of cybercrime,

including advanced electronic viruses, are a potential risk against the security of the company’s IT

systems and networks, and also against data confidentiality, availability and integrity. If the IT systems,

electronic networks or service providers on which these are based fail to function properly or if the

company suffers loss or leakage of business or financial information for any reason whatsoever

including disasters, power failure and breach of security, and if any back-up business continuity systems

do not deal with the core causes in an effective and timely manner, the company Management may


16

face difficulties in managing its operating needs and business matters, which could have an

unfavourable effect on the company’s financial results and/or financial position.

Environmental obligations could eventually have adverse effects on the company’s

operation and results.

The company is subject to European and Greek laws and regulations on the protection of the

environment, which govern its operation and the use, handling, disposal and restoration of

environmental pollution. The environmental liability risk is linked with the company’s production

activities. Under certain conditions, in accordance with environmental laws, the company could be held

jointly and severally liable for the restoration of any pollution from toxic substances and heavy metals in

the company's facilities and in third-party sites with whom the company collaborates regarding waste

disposal. The company could be also held liable for any consequences arising from human exposure to

these substances or other environmental disasters.

The company makes adequate investments to minimise the environmental pollution risk arising from its

production process. The company has adopted the REACH regulation of the European Union with

respect to protection from chemical toxic substances, and the RoHS Directive of the European Union on

the content of heavy metals in its products.

Nevertheless, there can be no assurance that the cost of compliance with environmental laws, EU

regulations, laws and requirements on health and safety will not generate additional future expenses

which could have a substantial adverse effect on the company's financial results, cash flows and

financial position.

Dependence on management executives and specialised personnel

The company management and functions rely on a team of experienced executives and specialised

personnel. Any disruption of the relationship between the Company and its executives and specialised

personnel, which causes them to leave for any reason, or any loss of them, could have an unfavourable

effect on its smooth operation, at least on a short-term scale until the company replaces them.

The loss of any member of the management team or any specialised and experienced employee leads

to the loss of vital knowledge, experience and know-how, deterioration of customer service, thus leading

to increased recruitment and training cost since it renders the company’s successful operation and

implementation of business strategy more difficult.

The company may not be in a position to recruit instantly specialised workforce who will replace the

withdrawing persons and the integration of the eventual substitutes may disrupt the company’s smooth

operation. Moreover, the loss of key executives and employees thoroughly knowledgeable about the

production process could lead to increased competition in case the said employees are recruited by a

competitor and are able to recreate the company's production process.

Also, the company’s future success depends in part on its capacity to attract and retain highly skilled

personnel in great demand in the labour market.

As part of its compliance with borrowing terms, the company may be obliged in

the future to abide by specific financial ratios and other covenants which affect

considerably its operating activity.

In the future, the company may be obliged to observe specific financial ratios and other covenants with

respect to the maximum possible borrowing, and the capacity to distribute dividend and implement

investments. Once these covenants are stipulated, the company's ability to decide freely on its business

strategy and the implementation of initiatives/ transactions which the company would otherwise deem

advantageous may be restrained.


17

In order to draw funds from credit institutions, the company may be forced to provide collateral on its

assets, thus increasing the number of company creditors having acquired collateralised receivables with

special and general privileges, and reducing the likelihood of distributing any amount to shareholders

in case of dissolution or collective satisfaction of creditors against the company.

In the near future the company may seek to obtain bank loans, for the purpose of which it could

provide collateral on its assets in favour of lending banks. The provision of collateral entails the creation

of a special privilege in favour of the banks to satisfy their claims in case of enforcement order or

collective satisfaction of creditors against the company (such as bankruptcy, special liquidation, etc).

Therefore, the bank loans provided to the company may increase the number of its creditors, whose

claims are secured by special or general privileges, thus reducing the likelihood of distributing any

amount to shareholders in case of dissolution or collective satisfaction of creditors against the company.

Eventual non-compliance of the company with covenants and other provisions laid

down in existing or future financing agreements could lead to the cross-default of certain

financing agreements, which could jeopardise the company's capacity to meet its

liabilities.

Various risks, uncertainties, or even events beyond the company's reasonable control could have an

impact on its capacity to comply with the covenants and financial ratios incorporated in the terms of

financing agreements. Moreover, certain financing agreements may include special terms of

prepayment or acceleration of loan repayment at the discretion of lenders when the company does not

abide by the covenants. Moreover, the loan agreements may provide for the prohibition or preliminary

approval regarding the change in the control over the company, or the right to terminate the loan when

major unfavourable changes have taken place.

Any non-compliance with any covenant included in existing or future financing agreements could lead

to default and suspension of financing from its lenders or even to termination of the company's loan

agreements, with lenders seeking prompt refund of all loans granted to the company by liquidating any

collateral provided by the company. The above may limit the company's capacity to meet its liabilities to

suppliers, finance investments and other payments, pay dividends, make freely payments to other

companies of Nexans Group and, naturally, may prohibit the company from financing acquisitions,

mergers and/or transferring or selling assets. Under these circumstances, the company may not have

adequate funds or other resources to meet all its liabilities to third parties at the same time, which could

have a substantial unfavourable effect on its financial position.

The company's capacity to pay dividends will depend on its capacity to generate

profits available for distribution.

All dividends and other distributions are paid by the company at the discretion of its shareholders

general meeting and depend on the availability of profits and reserves for distribution (once all relevant

terms of the Greek corporate law are met), and on the adequacy of cash. The generation of profits and

other reserves for distribution depends on a number of factors including the successful management of

the company's investments, the yield from its operations, the taxes and profits relating to its operations,

regulatory framework, macroeconomic conditions under which the company operates, liquidity needs

as well as tax and other legal factors.

Credit Risk: The company is exposed to the credit risk of customers and commercial partners

and to their financial capacity to pay timely their liabilities.

Trade receivables are broken down as follows:


18

31/12/2015 31/12/2014

Domestic customers 12,413 12,090

Foreign customers 3,762 9,256

Receivables from affiliated parties 4,191 2,600

Cheques receivable (post-dated) 630 1,213

20,996 25,159

Less: provisions for doubtful debts (1,500) (2,078)

Total 19,496 23,081

On 31 December 2015, promptly paid commercial receivables amounted to €18,398 (€21,938 for

2014). As for the receivables remaining open beyond credit limits over 30 days, a statistic provision for

bad debts is set up depending on the age of the receivable. On 31 December 2015, the amount of the

said receivables comes to €2,611 (€3,221 for 2014) and the respective provision to €1,500 (€2,078 for

2014). The total amount of receivables also includes those that are due, but not all of them are

considered as bad. Nexans Hellas, strictly complying with the rules of IFRS, performs reliable provisions

for bad debts, considering the relevant estimations of associate lawyers for specific cases and raising

additional statistical provisions for the rest, depending on their age distribution.

These receivables are broken down per age as follows:

31/12/2015 31/12/2014

30-60 days 258 74

60-90 days 9 14

90 + days 2,190 2,769

Sub-total 2,457 2,857

Cheques in delay 154 364

Total 2,611 3,221

The provisions for doubtful debts for the period ended on 31 December 2015 are broken down as

follows:

1 January 2014 1,915

Additional Provision 163

31 December 2014 2,078

Deletons of period (1,112)

Additional Provisions of period 534

31 December 2015 1,500

The additional provision for the year is included in the Administrative and Sales expenses.

The credit rating of trade receivables which are not overdue or impaired is split into the following

categories:

Receivables without external credit rating:

2015 2014

Group 1 3,264 1,164

Group 2 12,969 16,212

Group 3 2,152 4,562

Total non-devaluated receivables 18,385 21,938


19

Group 1 - New customers/ affiliated parties (less than 6 months)

Group 2 - Existing customers/ affiliated parties without any delays in the past (more than 6

months)

Group 3 - Existing customers/ affiliated parties (more than 6 months) with some delays in the

past. All delays are expected to be recovered, save those for which we have set up provisions for

doubtful debts.

The company’s policy is to enter into contracts with counterparties meeting top credit rating criteria

while in the case of credit risk the company seeks more collateral. Moreover, in an attempt to restrain

losses from eventual default of its customers, the company collaborates with a credit insurance company

of Nexans Group through which it insures a part of its receivables from foreign and domestic

customers. The amount of insurance depends on the credit rating of each customer, as evaluated by the

insurance company.

Nevertheless, any negative financial results of customers and commercial partners or their negative

assessments about their future income may result in them not paying in good time, paying in part or not

paying at all their liabilities in order to seek a renegotiation of the contractual terms, or even withdraw

from the company’s commercial network, all of which could lead to an eventual drop in the company’s

income and impact adversely its financial results.

Interest rate fluctuation risk: The Company received almost exclusively for most of 2015,

short-term funding from the associated Company Nexans Services to meet the current needs of working

capital of the business.

Until mid June 2015, this short-term funding was provided by concluding loan contracts at regular

intervals, depending on the Company's working capital requirements. Such short-term loan contracts

determined every time i) the amount of the loan, ii) the interest rate, which was formed according to, at

the time of conclusion of each loan, prevailing macroeconomic conditions and the cost of raising funds

on the financial markets, and remained stable throughout the duration of each loan and iii) the

duration of the loan, which usually ranged from one week to three months.

Since mid-June 2015, this short-term financing from the related Company Nexans Services, was

provided under a Loan rate calculated as per a combination of indicators and factors, which include the

rate of Greek ten-year government bond and the Euribor index to adjust to the country risk context at

the time. Such Interest Rate is fixed for each withdrawn amount throughout the loan term (7-days)It is

also estimated that the share capital increase and, therefore, the repayment of the entire interest-

bearing loan will have a positive effect and will help minimise the risks arising from the fluctuation of

the above rates.

Foreign exchange risk: The vast majority of transactions, contracts and orders of the company

are executed in Euros. For the minor trade receivables and liabilities made in foreign exchange, the

Management constantly monitors the fluctuations in exchange rates and assesses whether the respective

positions must be adopted so as to hedge the resultant risks. In this context, the Management enters into

futures and forward contracts (derivatives) so as to limit the extent of its exposure to fluctuations of

exchange rates.

Liquidity Risk: Liquidity risk is dealt with by ensuring adequate cash and cash equivalents,

availability of sufficient financing and by the capacity to close open positions. Due to the dynamic nature

of the activities, the cash management department aims at flexible financing through authorised credit

lines. The contractual maturity dates of trade and other payables and loans refer to a period less than one

year. It is also estimated that the share capital increase will have a positive effect and will help minimise

the liquidity risk.


20

Fair value: The amounts presented in the financial statements with respect to cash, trade

receivables, liabilities and loans approach their respective fair values due to their characteristics and their

short-term maturity.

Fair values of derivatives are based on market valuation.

Capital risk management: As regards capital management, the company aims to ensure

problem-free operation in the future so as to provide satisfactory yields to shareholders and benefits to

other contracting parties as well as to ensure the ideal capital allocation at the lowest capital cost. To this

effect, the company monitors consistently the working capital so as to keep external financing at the lowest

possible levels. It is noted that the share capital increase will have a positive effect on dealing with the

capital management risk.

Amounts in thousand Euros

31/12/2015 31/12/2014

Total loans 15,694 18,429

Less: Cash (3,971) (4,810)

Net debt 11,723 13,619

Total equity 20,416 21,258

Total capital 32,139 34,877

Leverage ratio 36% 39%

MACROECONOMIC ENVIRONMENT

The extremely adverse macroeconomic developments in 2015 which culminated in the imposition of

capital controls entailed the generation of extremely high risks concerning the liquidity of the financial

system and business entities, the collectability of their receivables, servicing of existing loan liabilities

and/or the fulfilment of terms and financial ratios, the recoverability of deferred tax assets, the valuation

of financial instruments, the adequacy of provisions and business continuity. In light of the above, the

company has not only managed to deal with the situation but has also achieved considerably improved

results in relation to the previous year.

STRATEGY - OUTLOOK

Given the prevailing economic conditions in Greece, it is estimated that in 2016 the environment in

Greece will remain unstable generating overall difficulties but also opportunities. It is estimated that an

eventual easing of capital controls is not expected to have a considerable effect on the company's results.

More specifically, it is estimated that the drop already registered by the domestic construction activity and

any eventual delay in the implementation of infrastructure projects by public utilities (PPC, HTO) will have

a negative effect on the company’s operations. Nevertheless, Nexans Hellas will make its best efforts to

take advantage of any opportunities that may emerge and to deal with current difficulties. In light of the

above, the Management of the company believes that the transformation programme will contribute to

the achievement of these goals. Specifically, in 2016, the Management of the company will focus its

strategic priorities on three pillars, i.e. improving the competitiveness of its products by applying new

methods and procedures to production and overall operations, maintaining its share in the markets

where it operates and the dynamic management of its activities, by focusing on increasing exports in an

effort to counterbalance the expected drop in the domestic market.

As regards international markets and especially those in Middle East and Africa, efforts are still made to

enter into new partnerships, the development of which will depend, among others, on the preservation of


21

political stability in these areas. As regards sales within Nexans Group, these will depend on the demand

and prices of the markets targeted by the Group units reselling products of Nexans Hellas. The new reality

of capital controls calls for actions that will increase the company’s exports so as to counterbalance the

recession that has already struck the domestic market. Note that the high copper prices maintained in

metal exchanges for a very long period of time has increased the demand for aluminium cables.

Notwithstanding the above adverse macroeconomic environment in Greece, the company has secured

important contracts from Greek public corporations and foreign customers for the current year, and is

expected to take part in more tenders launched by public utilities in 2016.

The modernised plant at Aghia Marina, the organised and functioning commercial, financial and

technical services and also the continuous renewal of its human resources, have constituted important

advantages for the company in order to achieve all the above. The company has utilised and absorbed

the ‘know-how’ provided by Nexans Group services which was already successfully applied in the plant of

Aghia Marina, Fthiotida. This know-how relates to introducing new more efficient production methods,

reducing disposable materials and energy consumption and introduction of organisational methods that

allow more efficient use of human resources. The promotion of new special types of cables such as cables

resistant to particular conditions (fire, high temperature) and also fibre-optic micro-cables is a significant

improvement of the services provided to our customers. Additionally, significant investments of advanced

technology are made to protect the environment and enhance safety and health conditions in the plant’s

workplace.

ORDERS

Orders backlog as at the end of 2015 amounted to €22 million, compared to the amount of €30.5

million in 2014. It is stressed that this backlog amount does not take into account the sales which are

made over the counter.

INVESTMENTS

The value of the company’s investments in fixed assets in 2015 amounted to €1,363 thousand compared

to €1,123 thousand in 2014. As a matter of comparison, in 2015 the depreciation amounted to €1,237

thousand.

Our investments are mainly directed to new products in order to satisfy market and customers

requirements, while some investments were intended for the upgrade and/or replacement of existing

production lines. A significant part of our investments concerns safety, environmental protection, material

recycling and reduction in energy consumption.

It is noted that the company adapting to the current unfavourable market conditions focused its options on

few high-efficiency investments and focuses on innovative products and services.

EXPENSES FOR RESEARCH, DEVELOPMENT, SALES PROMOTION AND OTHER SERVICES

Our company participates constantly in the Group’s Research & Development programmes. Research &

Development are related to the promotion of new products and to the improvement of existing products

in terms of both quality and technical capabilities. R&D concern also new techniques and production

methods to increase productivity and introduce the use of new environment-friendly materials.

In addition, the Group has elaborated major cutting-edge programmes that concern investments in

environmental protection and improvement of health and safety at plants. Nexans Hellas takes part in

these programmes and makes full use of the know-how provided.


22

The contribution for the participation of Nexans Hellas in these global Research & Development

activities, the expenses for product promotion and the rendering of related services for the year 2015

amounted to €1,157 thousand.

There are 4 Nexans Research Centres entrusted with carrying out upstream research activities, in

conjunction with external partners such as universities and external research centres and organisations.

They work for all of Nexans' business units and are therefore fully financed by the Group. These Centers

are based in France (Lyon and Lens), in Nuremberg in Germany and in Jincheon County in South

Korea.

Furthermore, our above contribution to this international programme also covers the marketing and sales

network established in certain countries, which leads to a better co-ordination of Group companies in

these markets and will reinforce our sales.

PERSONNEL

The total workforce on 31 December 2015 was 212 compared to 211 employees at the end of 2014. As

a whole, there were 12 departures and 13 new employees were hired during the financial year.

Particularly note the positive balance in the employment of Nexans Hellas, at a time of sharp rise of

unemployment throughout Greece.

REAL ESTATE

The land and buildings belonging to the company remained unchanged during the year.

SIGNIFICANT EVENTS

Α. Share Capital Increase

At the Annual General Shareholders’ meeting, of May 29, 2015 which following adjournment

continued its proceedings on June 26, 2015, there was decided and approved the increase of the

Company’s share capital up to the amount of twenty-one million eighty thousand four hundred sixty-

eight Euros and seventy-five cents (€21,080,468.75) through the issuance of up to sixteen million eight

hundred sixty-four thousand three hundred seventy-five (16,864,375) new common registered shares

with voting rights of a nominal value of €1.25 each, through payment in cash and with a pre-emptive

right in favour of the existing shareholders in a proportion of eleven (11) new shares for every four (4)

old ones.

The Board of Directors was authorised to set the selling price of the new shares, in accordance with

article 13(6) of Codified Law 2190/1920. Indeed, the Board of Directors, at its meeting of 08/12/2015,

decided the determination of the price at € 1.25 per new share and set the exercise period of the

preemptive rights of the shareholders for the cover of the new shares.

Following the above share capital increase (hereinafter the "Increase"), and if this was covered in full,

the share capital would amount to EUR 28,746,093.75, divided into 22,996,875 common registered

voting shares with a nominal value of 1.25 euro each, while in this case the total proceeds would

amount to 21,080,468.75 euro. Furthermore, the General Shareholders’ meeting decided that if after

the expiry of the exercise period of the preemptive right there would still remain unsubscribed shares,

the Board of Directors would distribute them, in its sole discretion, as provided by law.

The Increase and the relevant amendment of article 5 of the Articles of Association were approved by

No 100109/01.10.2015 decision of the Ministry of Finance, Development and Tourism, registered in

the Commercial Registry on 01/10/2015 (SAA: ΒΖΞΜ465ΦΘΘ-43Ξ).


23

In particular, at the end of paragraph 1 of Article 5 the following text was inserted:

“By decision of the Annual General Meeting of the Shareholders, which following adjournment was

convened on June 26th 2015, the Company's share capital was increased by twenty one million, eighty

thousand, four hundred sixty eight euros and seventy five cents (€ 21,080,468.75) in cash, by issuance

of sixteen million, eight hundred, sixty-four thousand, three hundred seventy-five (16,864,375) new

common, registered, voting shares of nominal value € 1.25 each. Any difference between the nominal

value and the issue price of the new shares will be credited to the account "difference from the issuance

of premium shares".

02/02/2016 was set as the cut-off date of the Increase. Beneficiaries of the preemptive rights were the

Shareholders who were registered in the DSS on 03.02.2016 and those acquired any preemptive rights

during the trading period of such rights on the Athens Exchange Market. The period for exercising the

preemptive right was set from 05/02/2016 up to 19/02/2016.

After the expiry of that period, the Board of Directors with its decisions no. 887/22.02.22.2016 and

888/24.02.2016, after finding that two (2) shareholders namely Nexans Participations and HMG

Globetrotter had exercised their preemptive right, which covered the Increase up to the percentage of

77.06%, through the payment of a total amount of € 16,243,988.75, corresponding to 12,995,191

new common shares with a total nominal capital value of 16,243,988.75 €, decided the allocation of

the 3,869,184 rump shares, which corresponded to a nominal capital value of 4,836,480 €, to the

shareholder Nexans Participations, who had exercised its preemptive right and expressed its interest in

taking over additional shares in order to cover in full the Increase.

The Board of Directors. with its above decisions set for the shareholder Nexans Participations a deadline

for the payment of the above amount of € 4,836,480, until 29.02.2016. Indeed Nexans Participations

paid said amount within that period and namely on 24.02.2016.

Subsequently, with its decision no. 889/24.02.2016, the Board of Directors, in accordance with article

11 of C.L. 2190/1920, certified that the amount of the Increase, i.e. EUR twenty one million eighty

hundred thousand four hundred and sixty eight euro and seventy five cents (€ 21.080.468,75), was

paid in full, and that the Company's share capital was equally increased. Hence, the fully paid share

capital of the Company amounts to twenty eight million seven hundred forty six thousand ninety three

euro and seventy five cents (€ 28.746.093,75) divided into twenty two million nine hundred ninety six

thousand eight hundred and seventy five (22,996,875) common registered voting shares of nominal

value of € 1.25 each.

B. Capital controls

Since May 2010, the company has undertaken important structural reforms to restore the

competitiveness and promote its economic growth through a programme stipulated with the European

Union, the European Central Bank and the International Monetary Fund ("the Institutions"). This led to

primary fiscal surpluses in 2013 and 2014 and a marginal increase in GDP in 2014 and has also

managed to appease the social turmoil that had been created.

Following the parliamentary elections held on 25 January 2015, the new Greek government negotiated

a 4-month extension of the Master Financial Assistance Facility Agreement (MFFA), the purpose of which

was to review the previous (second) bailout agreement. This extension would be used as a bridging

mechanism for talks regarding an eventual agreement between the Institutions and Greece. On 30 June

2015, the extension expired without any agreement reached. In addition, the Greek State did not meet

its financial liabilities to the IMF and on 28 June 2015 capital controls were imposed. A factor that

played an important role in the above restrictions consisted in the outflows of deposits during the


24

previous 6 months and the decision of the ECB to not extend any longer the Emergency Liquidity

Assistance to Greek banks.

On 12 July 2015, the Euro Summit agreed to consider the request of Greece for financial aid from the

European Stability Mechanism (ESM) up to €86 billion provided that the Greek authorities would legislate

a first set of measures by the 22nd

of July (“prior actions”).

After the 23rd

of July 2015 the Greek Parliament approved the actions that had been agreed and

launched talks with the Institutions to agree upon and complete a third bailout programme.

Talks about the third bailout programme were completed during 2015 and led to the recapitalisation of

Greek banks in the context of the Bank Recovery and Resolution Directive (BRRD).

All the above factors have generated even more uncertain economic circumstances in Greece. The

instability of the Greek bank sector and the resultant imposition of capital controls implies the downturn

of Greece again and the anticipated further drop in the disposable income of consumers may affect the

company’s operations. Note also that the measures have gradually eased since the launch of capital

controls while enterprises have also adapted to the new economic and bank reality. Nevertheless,

malfunctions are also registered in the sectors below:

1. A considerable number of raw material suppliers and especially foreign suppliers still require

payments on extremely difficult terms (advance payment, minimum days of credit) since the credit

insurance companies do not provide enough credit coverage even for major solvent Greek entities.

2. Although the payment procedure involving foreign suppliers through collaborating banks has been

considerably improved, it is still a factor causing delays in cases of urgent payments since approvals

by the competent committees are required.

3. Bank account opening in case of collaboration with a new credit institution.

Notwithstanding the difficulties the company faced when capital controls were first imposed, it continues

to operate without any significant effect other than the above. The share capital increase will play an

important role since the company will no longer be dependent to a large extent on continuous high

interest-bearing borrowing.

Amid this uncertain economic environment, the Management assesses continuously the situation and

the eventual future effects in order to take all necessary steps and actions to minimise the impact on the

Group's operations.

SUBSEQUENT EVENTS

The share capital increase was completed and therefore interest-bearing loans were repaid in full. No

other important events took place after the 31st

of December 2015 which could substantially affect the

results of the company for the year ended on such date.

MARKET VALUE

Greek Market Value – Indicators concerning our company’s share on 31 December 2015:

Number of ordinary registered shares

On 31 December 2015 6,132,500

On 31 December 2014 6,132,500

Market value per share Euro


25

On 31 December 2015 0.80


Capitalisation In million Euro



Note that Nexans Hellas does not make any portfolio investments and is n

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