exans

Annual Report 2005 Nexans Nor way AS

 Pages

Directors´ Report 2005 1

Income statement 1 Jan – 31 Dec 5

Balance sheet at 31 Dec 7

Cash flow statement 8

Statement of changes in equity 8

Notes to the financial statement 10

1. ACCOUNTING PRINCIPLES 10

2. FORWARD FOREIGN EXCHANGE CONTRACTS 12

3. SPECIFICATION OF PAYROLL AND RELATED COSTS 12

4. CASH AND BANK DEPOSITS 12

5. ACCOUNTS RECEIVABLE/BAD DEBTS 12

6. INVENTORIES 12

7. SHARES 12

8. RECEIVABLES DUE IN MORE THAN ONE YEAR 13

9. TANGIBLE FIXED ASSETS 13

10. PENSION COSTS AND NET PENSION OBLIGATIONS 13

11. TAXES
15

12. EQUITY
15

13. REMUNERATION TO THE BOARD OF DIRECTORS,

CHIEF EXECUTIVE OFFICER (CEO) AND THE AUDITOR
OF NEXANS NORWAY AS
15

14. SHARE CAPITAL

16

15. OPERATING REVENUES BY GEOGRAPHICAL

DISTRIBUTION AND BUSINESS AREA 16

16. LONG TERM CONTRACTS AND PROVISION 16

FOR LONG TERM CONTRACTS

17. RELATED PARTIES (NEXANS) 17

18. CONTINGENT EVENTS 17

19. EXPLANATION OF TRANSITION TO SIMPLIFIED IFRS

17

Auditor`s Report
20
Who would have thought the solution
to our challenges 1000 metres
below sea-level was to be found
in the Swiss mountains?
At the slide edge on the Storegga Slide in the Ormen Lange field the seabed is
steeper than the Holmenkollen ski jump. This makes burying pipes and cables
difficult. We were given the assignment by Hydro and sought and found
inspiration for a solution to the problem in a Swiss forestry machine. Our new
dredging machine, the Spider, has sensors on all moving parts, displays digital
3D images of the seabed that are 100% accurate and is capable of moving
rocks of up to 2.7 tonnes in weight.
 The newly constructed wharfage in Rognan was
used for the first time by Nexans in April 2005.
Snapshots from our activities in 2005 The wharfage was built by Saltdal commune, and
Nexans Norway is renting the complete dock site.
A total load of 900 tons of submarine fiber optic
cable was transported from the Rognan factory to
the new wharfage by truck, where the cable was
loaded directly onto a transportation vessel and
shipped for Dubai for installation. Nexans is a
leading manufacturer of fiber optic submarine cables
for the unrepeatered market, and has a world wide
supply record of more than 13 000 km to more than
100 clients including major telecom operators.

In 2005, Nexans Norway installed a cable bundle

consisting of a power cable and a telecom cable
with 48 fibers across the Strait of Gibraltar. The
vessel “Bourbon Skagerrak”, which was upgraded with
a new navigation and positioning system in 2005, was used
for the installation from Tarifa, Spain to Tanger, Morocco.

A submarine high voltage cable produced

in Halden and installed by Nexans Norway
secures the connects Les Saintes with
Guadeloupe and secures the electricity supply
of the small island. The customer was the
French energy company EDF.

In 2005, Nexans decided to invest heavily into

the Rognan factory. One of the investments
specifically increases Nexans’ ability to meet the
ever-increasing need for optimized construction
methods for dynamic deep-sea cables, like
ROV-, seismical and riser cables.

In 2005 Nexans Norway added Millidry floor heating cable

mats to its floor heating portfolio. You can cover this new mat
with parquet and laminate flooring - without any sealing!

Nexans Norway designed, produced and installed a three conductor 69 kV power PEX cable with an
integrated fiber optic element for Alaska Electric Light and Power (AEL&P). The cable was installed at a
depth of 80 m and a drift of approximately 2 knots. The cable connects North Douglas and Young Bay
in Alaska and helps providing cheaper hydro-electric power to local municipalities.
 Nexans installed the pipelines
and umbilical cables that con-
nect the Ormen Lange field
(depth of 1,100 m) with the
land-based production facility in
Nyhamna. A special submarine
dredging unit, the so-called
“Spider”, was developed by
Nexans to conquer challenges
Nexans’ Rognan factory produces posed by the steep slopes of the
cable for telecommunication networks Ormen Lange field.
with copper conductors and/or
optical fiber. Submarine optic fiber
cables and cables and optic ground
wires (OPGW) are also produced
in Rognan. Other examples of the
telecommunication product range
offered by Nexans are structured
cabling systems (Nexans Cabling
Solutions) and coaxial cables with
optical components.

Nexans installed 16,850 m of a triple

conductor submarine power cable
(TKRA 36 kV 3x1x50 mm2 KQ) cable
between Guadeloupe and Les Saintes
in 2005. The vessel “C/S Bourbon
Skagerrak”, which was designed
for laying of large submarine power
cables, was used for the installation.

Nexans Norway missed the world record

only by a few meters when delivering a fjord-
crossing fiber optic cable in Sør-Trøndelag.
The distance over the Sunndalsfjorden covered
with a Nexans Optic Ground Wire (OPGW) is
3,750 m. The cable was produced in Nexans’
Rognan factory and is covering both the cross-
ing of the Sunndalsfjord and the Todalsfjord.
The customer was Statnett, who had very strict
and specific requirements especially for the
cable suspension, which had to be designed to
avoid fractures in the optical fibers caused by
the high level of tension.

Nexans Norway won an order from Gulf Countries Council Interconnection Authority amounting to
over 171 million USD for the manufacture, transportation and installation of an extra high voltage
link dedicated to interconnect power grids between the Kingdom of Saudi Arabia and Bahrain. This
project, worth 343 million USD overall, is one of the largest ever undertaken in the world. Due to its
size, it required the creation of a 50/50 consortium between Nexans and Prysmian Cavi e Sistemi of
Italy. Sales Manager in Nexans Norway, Domenico Gerace, celebrated the contract.

Nexans Norway delivered a 365

km long submarine fiber optic
cable, which was installed between
Kuwait and Iran. Nexans was been
awarded a contract to supply all
the submarine and land fiber optic
cable, as well as cable accessories
to create a new telecommunica-
tions link between Kuwait and
Iran. The contract, which included
branches to Failakah (Kuwait)
and Kharg (Iran) islands and the
Soorosh oil platform, was awarded
by Emirates Telecommunications &
Marine Services FZE (e-marine) who
constructed the link on behalf of the
Kuwait Ministry of Communications
(MOC) and the Telecommunications
Company of Iran (TCI).
The power cable between
Statnett’s transformer station in
Fræna and the processing plant
at Nyhamna will be a PEX-
insulated submarine cable with a
voltage of no less than 420 kV,
by far the most powerful cable of
its type in the world. Nexans also
held the previous record: 170 kV
to the Horns Rev wind farm in
Denmark. And now we are
consolidating our position in the
market for PEX-insulated
submarine cables.

From time to time we are

challenged to surpass ourselves.
The next time will be next year
between Aukra and Fræna.

Directors´ Report 2005
Nexans Norway AS is part of the French Nexans group – one of the world’s
largest cable manufacturers and the company is a wholly owned subsidiary of
Nexans Participations SA in Paris.
Nexans Norway sales Until 29 August 2005,
by business segment
Nexans Distribusjon AS was a
wholly-owned subsidiary of
10% 10% Nexans Norway. As a conse-
19% quence of a corporate decision
to divest non-core business,
61%
all the shares in Nexans
Distribusjon AS were sold to
Ahlsell Norge AS.
High voltage
Energy networks Nexans Norway AS develops,
Telecom
General market manufactures and markets sub-
marine, land and offshore
cables for power and telecom-
Sales for the past 5 years munication transmission.
Million NOK
Nexans Norway AS is
3000 organised in two divisions, the
Energy Division and the
2500
Building and Telecom Cable
2000 Division. The company’s plants
are located in Namsos,
1500
Rognan, Karmøy, Halden and
1000 Langhus. Nexans Norway’s
head office is in Oslo.
500
0 Nexans Norway posted ope-
rating revenues of NOK 2,828
2001
2002
2003
2004
2005
million in 2005 compared to
NOK 2,376 million in 2004,
an increase of 19%.
The company’s order backlog
reached all time high in 2005
with major new contracts
signed in Gulf of Mexico,
Nigeria, Saudi-Arabia,
Bahrain, Qatar, the
Netherlands, Greece,
Thailand, Norway and the
North Sea.
The company foresees conti-
nued growth in the cable
market in the years to come,
especially within high voltage
submarine cables, medium
voltage land cables, offshore
cables and submarine installa-
tion.
In 2005 major investment pro-
grams were undertaken in the
factories in Halden, Rognan
and Namsos to modernise the
facilities and increase produc­-
tion capacity.
In order to meet the increased
demand for the company’s
products and services, the
number of employees was
increased by 139 persons
(18%).
Nexans Norway has chartered
the specialized cable laying
and construction vessel
“Bourbon Skagerrak” for three
years in order to enhance the
company’s role as a turnkey
systems supplier and
installation contractor.
Market
The high voltage segment of
the energy cable market conti-
nued to grow in 2005.
Among the largest projects
undertaken in 2005 were the
submarine links between
Spain and Morocco and bet-
ween Corfu and Greece main-
land. Nexans also supplied
submarine cables to the
Barrow Windmill farm in the
UK.
The market for special cables
to the oil and gas industry
The Directors´ Report
remained on the same level as
in 2004. Supplies were made
to installations in the Gulf of
Mexico and the North Sea.
The market for submarine
installation and services
increased substantially compa-
red to the previous year. In
addition to installation of its
own and other cable manu-
facturers’ cables, Nexans
Norway performed major
trenching and dredging work
in the North Sea and in
Australia.
The demand for medium volta-
ge cables increased through-
out the year both in the
domestic market and in selec-
ted export markets abroad,
while the low voltage market
remained relatively stable.
The market for telecommunica-
tion cables improved some-
what compared to the previ-
ous year, mainly due to
increased domestic demand
and supplies of niche products
to the oil and gas industry.
In the telecom submarine
cable sector, Nexans Norway
supplied cables for the link
between Kuwait and Iran.
Financial Results 2005
Nexans Norway AS has from
2005 decided to implement
the accounting principles of
the Nexans group also in pre-
paration of its Norwegian
financial statements. The finan-

The Directors´ Report

Net income/loss before cial statements are therefore and equipment amounted to currency forward contracts.
tax the past 5 years presented according to NOK 181 million in 2005
Million NOK simplified IFRS. compared to NOK 62 million New contracts
700 the previous year. Large new high voltage con-
650 Operating revenues for tracts in 2005 include parts of
600 Nexans Norway totalled Total expenses in 2005 rela- the new link between Norway
550
NOK 2,828 million in 2005 ted to technical research and and the Netherlands and a
500
compared to NOK 2,376 mil- development in Nexans turn-key delivery for HV cables
400
lion in 2004, an increase of Norway amounted to NOK connecting Saudi-Arabia and
350
19%. The company’s export 74.5 million or 2,6% of Bahrain. Within the oil
300
250
revenues totalled NOK 1,590 turnover. This amount includes industry market, major new
200 million, an increase of 22% substantial development and contracts were signed for deli-
150 compared to the previous year. engineering work undertaken veries of special cables to
100 in co-operation with customers. Qatar and Nigeria.
50 Sales for all product lines
0 increased compared to last Cash from operations Orders on hand at the year’s
2001

2002

2003

2004

2005

year, except building cables amounted to NOK 254 mil­ end totalled NOK 3,315 mil­
which remain stable. lion against NOK 227 million lion. Orders on hand at the
Net income

Operating profit
In 2005, the net income
be­­fore taxes amounted to
Orders on hand NOK 643 million compared
the past 5 years to NOK 321 million in 2004.
Million NOK NOK 313 million of the net
income in 2005 was related
3500
to the divestiture of Nexans
Distribusjon AS.
3000
Although sales volumes turned
2500 out satisfactorily, profit margins
suffered from increased raw
2000 material prices (especially
copper and aluminium) and
strong price pressure in the
1500
Telecom and Oil & Gas
segments.
1000
In 2005, operating profit
500 amounted to NOK 312 mil­
lion compared to NOK 308
million in 2004. Thus, return
0
on sales was reduced from
2001
in 2004. Cash from the sale of
Nexans Distribusjon AS
amounted to NOK 361 mil­
lion. The cash was utilised for
investments of NOK 181 mil­
lion and dividends of NOK
324 million while the loan to
the parent company was
increased by NOK 171 mil­
lion. Net cash flow for the
year 2005 was minus NOK
57 million.
Financial risk
Nexans Norway has imple-
mented guidelines and sys-
tems to handle project risk
and the company’s financial
market exposure, covering
metal, currency and counter-
party risk.
The company’s export sales
are long-term (6-24 months)
end of the previous year were
NOK 1,636 million. Orders
on hand doubled throughout
2005 and the prospects for
the future are therefore very
satisfactory. The company’s
major challenge in the near
future is to successfully manage
the growth in sales, producti-
on capacity and personnel.
Personnel
Total employees in Nexans
Norway AS were 904 at
year-end 2005. This is an
increase of 139 persons com-
pared to the previous year.
The work force in the company
consists today of 91% men
and 9% women. Nexans is
committed to ensuring equal
career opportunities, including
salaries, promotion and recruit­
ing for men and women.

2002

2003

2004

2005

13% to 11%. and predominately in foreign In the company’s management

currencies. The exposure to teams, 4 out of 27 managers
The company’s ordinary foreign currency exchange rate are women (15%). In 2005,
investments in property, plant variations is secured through Nexans recruited 10 women


 The Directors´ Report

and 129 men. Personnel are
recruited from professional
communities where there tradi-
tionally are more men than
women. Working time arrange­
ments are influenced by
position and not by gender.
The working environment in
the company is good.
Absence due to sick leave
was 4.8% in 2005 compared
to 5.7% in 2004.
Health, Safety and
Environment
The company performs conti-
nuous preventive work in the
field of health, safety and
environment (HSE). The purpo-
se of this preventive work is to
achieve a healthy and safe
working environment and to
improve utilisation of resour-
ces, use less materials and
energy, and reduce unsorted
waste. Nexans is a member
No inadvertent emissions to Number of employees at
year end the past 5 years
the environment were repor-
ted in 2005.
1000
Nexans Norway is certified
according to ISO 9001 and 800
ISO 14001.
600
Pursuant to section 4-5 of the 400
Accounting Act, it is duly con-
200
firmed that the annual acco-
unts have been prepared 0
under the going concern

2001

2002

2003

2004

The company experienced 16
injuries as a result of accidents
at work. These injuries resul-
ted in 120 days of absence.
The corresponding figures for
2004 were 12 injuries and
175 days of absence.
2005
of “RENAS”, a national waste assumption.
collection company for Electro
products. Nexans Norway AS made a
net income for the year of
The company’s activities have NOK 549 million.
only a limited direct detrimen-
tal effect on the environment.

Proposed allocations and transfers: 2005

Dividends 350
To (From) other equity 199
Net income/(loss) for the year 549

Remaining distributable equity amounts to NOK 156 million.

Oslo, 4 April 2006

Yvon Raak Anne-Lise Aukner Tom Birkeland

Chairman Chief Executive Officer

Tom Martinsen Leif Børe Spørck Lars Tangen Øyvind Trollerud


In 1997, working together
with Pirelli, we installed the
first power cables between
Europe and Africa. In 2005,
we increased the capacity
multifold to 1400 MW with
a voltage of 400 kV. The
expanded link will help to
meet extra demand in
Europe in high loading
periods. This time, in
addition to power cables,
the project includes two
fibre optic cables for
systems control and
broadband.

Last year we brought Europe and

Africa closer together with new
cables under the Strait of Gibraltar.


Income statement 1 Jan – 31 Dec

NOK million
Nexans Norway AS

Note 2004 2005

Operating revenues 15,16,17 2 376 2 828
Changes in work in progress and finished goods (12) (117)
Raw materials and consumables 17 1 265 1 646
Payroll and related cost 3, 10 460 534
Other operating expenses 5 310 427
Depreciation of fixed assets 9 45 50
Reversal of write-down 9 - (24)
Operating expenses 2 068 2 516
Operating profit 308 312
Interest income from associated companies 17 7 8
Other interest income 6 2
Interest expense to associated companies 17 - (1)
Other interest expense (3) (1)
Gain from sales of shares in subsidiary 7 - 313
Net exchange gain/loss 3 10
Net financial items 13 331
Profit before tax 321 643
Taxes 11 (92) (94)
Net profit for the year 229 549


Proposed dividends 254 350

The following notes are an integrated part of the financial statement.


2,350 metres below the
surfase of the Gulf of Mexico
reign darkness and mystery
together with a cable
from Halden.

Nexans is big on world records. The NaKika umbilical, which links six oil
fields in the Gulf of Mexico, goes down as deep as 2,350 metres, which
is the deepest that cables of this type have been installed anywhere in the
world. This project - completed in 2003 - was pioneering in a number of
ways, and we surmounted major challenges. The cable itself was
produced in Halden and the electrical elements were produced at Rognan.


Balance sheet at 31 Dec
NOK million
Nexans Norway AS

ASSETS Note 2004 2005

Deferred tax asset 11 1 -
Total intangible assets 1 0
Tangible fixed assets 9 397 551
Shares in subsidiaries 7 48 -
Other financial assets 8 27 23
Financial Assets 75 23
Total fixed assets 473 574
Inventories 6 190 249
Receivables from subsidiary 13 -
Accounts receivables 5, 17 316 594
Project sales, still not invoiced 50 129
Other short-term receivables 47 68
Loan to parent company 17 490 661
Receivables 916 1 452
Cash and cash equivalents 4 81 24
Total current assets 1 187 1 725
TOTAL ASSETS 1 660 2 299

EQUITY AND LIABILITIES Note 2004 2005

Paid-in capital:
Share capital 463 463
Retained earnings:
Other equity 304 506
Shareholder´s equity 12, 14 767 969
Provision for long-term contracts 16 101 100
Deferred taxes 11 - 49
Pension obligations 10 139 100
Provisions 240 249
Liabilities to subsidiaries 4 -
Accounts payable 17 118 269
Advance payments from customers 280 582
Income tax payable 55 33
Public duties payable 38 51
Forward foreign exchange contracts 4 20
Other short-term liabilities 154 126
Total current liabilities 653 1 081
TOTAL EQUITY AND LIABILITIES 1 660 2 299

The following notes are an integrated part of the financial statement.

Oslo, 4 April 2006

Yvon Raak Anne-Lise Aukner Tom Birkeland

Chairman Chief Executive Officer

Tom Martinsen Leif Børe Spørck Lars Tangen Øyvind Trollerud 

Cash flow statement
NOK million
Nexans Norway AS

2004 2005
Cash flow from operating activities
Profit before tax 321 644
Depreciation of tangible fixed assets 40 50
Reversal of write-down (24)
Taxes paid (43) (55)
Gain from sale of shares in subsidiary (313)
Net change in inventories, accounts receivable, (86) 24
accounts payable and advance payments from customers
Net change in other balance sheet items (5) (72)
Net cash flow from operating activities 227 254
Cash flow from investing activities
Capital expenditures (62) (181)
Net change in loan to parent company 40 (171)
Sale of shares in subsidiary 361
Net change in other investments (20) 4
Net cash flow from investing activities (42) 13
Cash flow from financing activities
Dividends paid (215) (324)
Net cash flow from financing activities (215) (324)
Net change in cash and cash equivalents (30) (57)
Cash and cash equivalents at 01.01. 111 81
Cash and cash equivalents at 31 December 81 24

Nexans Norway have no unused drawing facilities.

Cash and cash equivalents include cash, bank deposits and all other monetary instruments with original maturities
of three months or less. Short-term loan to parent company is not included.

Statement Of Changes In Equity

NOK million
Nexans Norway AS

Share Capital Retained Earnings Total Equity

Equity as at 31 December 2003 463 72 535
Changes in accounting principles 218 218
Revised equity as at 1 January 2004 463 290 753
Net income 229 229
Dividends paid (215) (215)
Equity as at 31 December 2004 463 304 767
Changes in accounting principles - IAS 39 (3) (3)
Revised equity as at 1 January 2005 463 302 764
Net loss cash flow hedging (21) (21)
Net loss booked directly against equity (21) (21)
Net income 549 549
Total income effects for the year 528 528
Dividends paid (324) (324)
Equity as at 31 December 2005 463 506 969


A 70 degree temperature
span on Sakhalin Island
called for new ideas
from Rognan.
The climate at the site of Exxon’s prestigious oil and gas project on
Sakhalin Island off the east coast of Russia is anything but hospitable.
The ground freezes to a depth of many metres during the winter and
there are heat waves in summer. Nexans is supplying fibre cables to
the project, and this unique climate forced us to think creatively. The
solution that we eventually came up with is capable of withstanding
pressure of 500 kilos over a length of 10 cm and can be used in
extreme conditions of all types.


Notes To The Financial Statement
1 ACCOUNTING PRINCIPLES
The annual report is prepared accord­
ing to simplified IFRS in accordance
with the Norwegian Accounting Act
§ 3-9. Comparative figures for 2004
are restated accordingly, except for
the effects of hedging instruments, which
are implemented from 2005. The ac-
counts are based on historic cost, except
for hedging instruments (derivatives)
which are appraised at real value.
Changes in accounting principles
The following changes in the principles
are made as a consequence of require-
ments in the accounting standards.
• IFRS 2 Share-based Payment: All
transactions involving share-based pay-
ments are to be booked at market
value. Market value at the time of allot-
ment is calculated by using an option
pricing model, and is accrued over the
vesting period.
• IFRS 2 is compulsory for annual
reports starting on or after 1 January
2005. The company has however decid­
ed to implement IFRS 2 for the 2004
accounts. According to the transition
policies costs are booked only on
options alloted after 7 November 2002
and which where not fully vested as at
31 December 2003.
The implementation of IFRS 2 has caus-
ed a reduction of other retained earn­
ings as of 1 January 2004 of NOK
81.576. Increased salaries and wages
have caused a reduction in this year net
income of NOK 403.200 (2004:
144.641).
Revenue recognition
For long-term contracts, revenue is
recognized under the percentage of
completion method. This means that the
accumulated share of the estimated final
profit is recognized based on the per-
centage of completion. The percentage
of completion is based on completed
production. Provisions are made for
guarantee work and other uncertainties.
In the case of contracts that are expect­
ed to show a loss, the estimated loss is
entered in its entirety as a cost.
10
Hedging
Hedgings are made in connection with
long-term projects with a cash flow in
foreign currency. The expected cash
flow is hedged when a binding agree­
ment is signed for the project.
The company criterion to classify a
derivative as a hedging instrument is as
follows:
(1) the hedging is expected to be very
effective because it counteracts changes
in market value or cash flows of an
identified asset. A hedging efficiency
within the scope of 80-125% is expected,
(2) the efficiency of the hedging is relia-
bly measurable,
(3) there is adequate documentation at
the entering of the hedging to show that
the hedging is very efficient,
(4) for cash flow hedging, the future
transaction must be very probable,
(5) the hedging is evaluated on a run-
ning basis and has proven to be very
efficient in the reporting periods the
hedging is meant to cover.
Cash flow hedging
The spot element in the forward foreign
exchange contracts is pointed out as
hedging instrument in relation to changes
in income and expenses related to long-
term projects.
Changes in the market value of a hedg-
ing instrument which satisfies the require-
ments to be very efficient cash flow
hedging are booked directly against
the equity. The ineffective part of the
hedging instrument is booked in the
income statement.
If the hedged cash flow results in book-
ing of an asset or liability, all prior
gains or losses booked directly against
equity are transferred from equity and
included in the first-time measurement of
the asset or liability. For other cash flow
hedges, gains or losses directly booked
agaist equity are transferred to the inco-
me statement in the same period as the
cash flow making up the hedged object
booked in the result.
When a hedging instrument stops to be
very efficient, the booking of the
hedging is terminated prospectively.
In this case, the cumulative gain or loss
on a hedging instrument booked directly
against the equity, will be reversed
when the hedged transaction actually
happens.
If the hedged transaction is no longer
expected to happend any prior cumula-
tive gain or loss on the hedging instru-
ment booked directly against the equity
will be reversed and booked in the
income statement.
Financial instruments
According to IAS 39, Financial instru-
ments:
Recognition and Measurement, financial
instruments are classified in the follow-
ing categories: held-to-maturity and
available-for-sale. Financial instruments
with fixed or determinable cashflows
and a fixed maturity that the company
has the positive intention and ability to
hold to maturity are classified as held-to-
maturity investments. At the balance sheet
date, the company has no investments
classified as held-to-maturity investments.
All other financial instruments that are
available for sale are presented as cur-
rent assets if the management has decid­
ed to sell the instrument within 12
months of the balance sheet date.
All purchases and sales of financial
instruments are recognised on the trans-
action date. The transaction costs are
included in the cost price.
Financial instruments that are classified
as available for sale and at fair value
through profit or loss are carried at fair
value as observed in the market at the
balance sheet date, with no deduction
for costs relating to the sale.
The gain or loss resulting from changes
in the fair value of financial investments
classified as available for sale are
recognised directly in equity until the
investment has been disposed of. The
accumulated gain or loss on the financial
instrument that has previously been
recognised in equity will then be revers-
ed and the gain or loss will be recognis-
ed in the income statement.
Changes in the fair value of financial
instruments classified as financial instru-
ments at fair value through profit or loss
are recognised in the income statement
and included in the net financial inco-
me/expenses.
Investments held to maturity are carried
at amortised cost.
Taxes
Taxes in the income statement are com-
prised of payable tax and change in
deferred tax/deferred tax asset.
Deferred tax/deferred tax asset is calcu-
lated using 28% based on tax increas-
ing and tax reducing differences be-
­tween the carrying values of assets and
liabilities for financial reporting, and
their tax basis, which are considered
temporary in nature.
Deferred tax asset is recorded in the
balance sheet to the extent that it is
more likely than not that the tax asset
will be utilised.
Classification of balance sheet items
Current assets and current liabilities
include balances due within one year
and items connected with the operating
cycle. Other items are classified as
fixed assets/long-term liabilities.
Assets and liabilities in foreign currency
Receivables and debts in foreign curren-
cy are valued at the exchange rate at
year-end. To the extent that revenues
and costs on long-term contracts are
hedged by forward sales or purchases
of foreign currency, the income state-
ment and balance sheet items are con-
verted to the forward rate.
Inventories
Inventories, including work in progress,
are valued at the lower of cost and fair
value less costs to sell after provisions
for obsolete inventories. The fair value
less costs to sell is the estimated selling
price in the ordinary course of business,
less the estimated cost of completion
and estimated costs necessary to make
the sale. Inventories are measured using
the weighted average principle.
Finished goods and work in progress
include variable costs and fixed costs
that can be allocated to goods based
on normal capacity. Obsolete inventori-
es have been fully recognised as impair-
ment losses.
Fixed assets
Fixed assets are valued at cost and re-
duced with cumulative amortisation and
depreciation.When assets are sold, the
cost and acumulative amortisation and
depreciation are reversed in the acco-
unts, and any gain or loss from the sale
is booked in the income statement.
The cost for the asset is the purchase
price, including fees and taxes and
direct purchasing costs related to putting
the asset in a condition ready to be
used. Expenses occuring after the asset
is taken into use, like repairs and
maintenance, are normally booked as
costs in the income statement. If incres-
ed profitability can be shown as a result
of repair and maintenance, the cost of
this will be booked in the balance sheet
as a capital expenditure. Depreciation
is calculated using the linear method
over the following periods:
Buildings 20-30 years
Machinery and equipment 10-30 years
Furniture, fixtures and vehicles 3-10 years
The depreciation period and method is
assessed yearly in order to secure that
the method and the period used is in
accordance with the economic realities
for the asset. Equivalent assessment is
made for the scrap value. Plant under
construction is classified as fixed asset
and is booked including costs related to
the asset. Depreciation is not started
until the asset is ready for use.
Trade receivables
Trade receivables and other receivables
are booked at face value less deduction
for loss in value.
Leasing - operational leasing
For operational leasing agreements, the
leasing payment is an operating cost
that is apportioned systematically over
the leasing period. The company does
not have leasing agreements which can
be considered as financial leasing.
Cash flow analysis
The cash flow analysis is drawn up in
line with the indirect method.
Research and development
All research expenditures are expensed
as incurred. Development costs are
capitalized if the costs fulfil defined
requirements for capitalization.
Capitalization assumes that the intangi-
ble asset, which is being developed,
can be identified and shown that it is
probable that the development work is
successful, and that future economic
advantages linked to the intangible
asset will accrue to the company. At the
end of 2005, no expenses are fulfilling
the requirements for capitalization.
Pension costs and commitments
Net pension costs comprises service
cost, interest cost, expected return on
pension plan asset and the profit or loss
effects of changes in estimates and
changes in pension plans.
Net pension plan assets and pension
obligations are recorded as long-term
receivable or long-term liability in the
Balance Sheet.
Estimate deviations which exceed 10%
of the higher of gross pension obligation
and pension plan asset will, together
with changes in pension plans, be
distributed over the average remaining
working life of our employees.
11
 2 FORWARD FOREIGN EXCHANGE CONTRACTS

NOK million No. of Amount Average Value of Period

Currency contracts exch. rate contracts
at year end
EUR 10 23,4 7,892 184,4 2006-2007
USD 9 33,4 6,506 217,6 2006-2007
Unsettled buy contracts 402,0

DKK 12,9 1 6,4 1,059 6,8 2006

EUR 14,9 9 56,9 7,905 449,4 2006
GBP 15,7 5 3,0 11,640 35,2 2006
MAD 14,6 1 14,9 0,731 10,9 2006
THB 57,4 3 660,0 0,168 110,6 2006-2007
USD 12 191,5 6,621 1267,9 2006-2007
Unsettled sell contracts 1880,8

Value of contracts means: The contracts valued at spot rates per 31 December 2005, including forward fees.

Foreign exchange forwards are for hedging contracts with clients and suppliers. A substantial part of the company´s revenue derives from con-
tracts denominated in foreign currencies. The company utilises foreign exchange forwards to manage exposure to currency risk. The company
is exposed to foreign currency fluctuations in the periods between time of tendering and contract signature. Actual value of the forward
foreign exchange contracts is recorded at NOK 20,2 million.

3 SPECIFICATION OF PAYROLL AND RELATED COSTS

Nexans Norway AS

NOK million 2004 2005

Wages and salaries 362,6 422,1
Social security tax 49,5 57,4
Pension costs 35,3 43,7
Other benefits 12,6 10,0
Payroll costs 460,0 533,2
No of employees (average) 767 838

4 CASH AND BANK DEPOSITS

The company has bank guarantees for NOK 32,1 million as security for total liability for withholding taxes

5 ACCOUNTS RECEIVABLE / BAD DEBTS

The company has a provision for bad debts of NOK 3,2 million.
Realised losses on receivables for the company totalled NOK 0,1 million in 2005.

6 INVENTORIES
Nexans Norway AS

NOK million 2004 2005

Raw materials 83,6 136,6
Work in progress 49,4 52,5
Finished goods 56,7 60,0
Inventories 189,7 249,1
Obsolescence is included with (31,1) (19,7)

7 SHARES

Shares in the subsidiary Nexans August 2005 to Ahlsell Norge AS. The As a consequence of this divestiture,
Distribusjon AS shown in last years acco- gain from the sales is shown separately in Nexans in Norway now consists of one
unts with NOK 48,0 mill. were sold on 29 the income statement. company only.

12
 8 RECEIVABLES DUE IN MORE THAN ONE YEAR
Nexans Norway AS

NOK million 2004 2005

Other short term receivables - -
Other long term receivables 26,5 7,5
Total 26,5 7,5

9 TANGIBLE FIXED ASSETS

Machinery, Plant under
NOK million equipment, etc. Buildings Land construction TOTAL
Acquisition cost at 1 January 912,2 318,8 6,7 34,3 1 272,0
Capital expenditure during year 75,9 0,5 104,7 181,1
Reversal of write-down 23,7 23,7
Disposals during year (9,4) (9,4)
Acquisition cost at 31 December 1 002,4 319,3 6,7 139,0 1 467,4
Accumulated deprec. at 31 Dec. 678,8 237,8 - - 916,6
Net book value at 31 December 323,6 81,5 6,7 139,0 550,8
Depreciation during year 37,4 12,8 - - 50,2
Ordinary rates of depreciation 10-35% 2-5% - -
Annual rental expenses 80,4 12,9 - - 93,3

10 PENSION COSTS AND NET PENSION OBLIGATIONS

The company has pension plans for its obligations in addition to pension obliga- 10% of the higher of gross pension obliga-
employees. Pension obligations linked with tions covered under insurance plans. These tion and pension plan asset will, together
insurance plans are covered through the obligations are supplementary pensions with changes in pension plans, be amorti-
Nexans pension fund and Storebrand. over and above 12G and early retirement zed over the average remaining working
pensions. life of our employees, which is 16,6 years.
The company also has unsecured pension Actuarial gains and losses which exceed

Assumptions applied in calculating pension obligations: 31 Dec. 2004 31 Dec. 2005

Discount rate 5,0 % 4,9 %
Expected return on pension plan assets 5,8 % 5,0 %
Salary adjustments 2,5 % 2,5 %
G-adjustments 3,0 % 3,0 %
Pension adjustments 1,5 % 1,5 %

Pension cost for the year Nexans Norway AS

NOK million 2004 2005

Present value of pensions earned during the year 23,0 27,1
Interest costs on accrued pension obligations 27,4 29,4
Expected return on pension plan assets (19,6) (23,2)
Effects of changes in and deviation from estimates - -
Net pension costs 30,8 33,3

Net pension obligations Nexans Norway AS

NOK million 31 Dec. 2004 31 Dec. 2005

Accrued obligations (554,9) (564,7)
Value of pension assets 377,3 441,8
Net pension obligations (177,6) (122,9)
Unrecognized actuarial loss 38,2 22,9
Net pension plan assets (139,4) (100,0)

74 % of the group’s pension plan assets (valued at marked value) at the year-end, are invested in bond trusts and 16 % in share trusts.

13
 Advanced Norwegian
technology is exported
all over the world
– in the form of heating
cables from Langhus.

As far back as in the 1930s we installed heating cables in Oslo Cathedral,

so it is true to say that we have extensive experience in installing concealed
heating sources in old buildings. In addition to the temple in Beijing we have
installed ice-free gutters and downpipes in the Kremlin, heating for flats in
Mongolia and ice-free truck paths in Pennsylvania. Our Langhus plant is an
international centre of competence in the development and production of
heating cables. We supply cables to no fewer than 32 countries.

14
 11 TAXES

Temporary differences Nexans Norway AS

NOK million 2004 2005

Deferred tax asset:
Short-term items (111,4) (193,6)
Tangible fixed assets (24,5) (81,1)
Pension obligations 139,0 100,0
Basis for deferred tax / deferred tax asset 3,1 (174,7)
Deferred tax / deferred tax asset - 28 % 0,9 (48,9)

Reconciliation of tax expense Nexans Norway AS

NOK million 2004 2005

Income before tax 337,3 643,4
Permanent differences 5,8 (307,0)
Tax base for the year 343,1 336,4
Tax expense for the year - 28 % (96,1) (94,2)

The tax expense comprises of:
Taxes payable (54,9) (35,1)
Change in deferred tax balance (41,2) (59,1)
Total tax expense (96,1) (94,2)

12 EQUITY

Fund for Retained

changes in earnings TOTAL
NOK million value
Balance as of 31 December 2004 according to IFRS 304,4 304,4
Effect of cash flow hedging as of 1 January 2005 (2,6) - (2,6)

Changes during year:
+ Net profit for the year - 549,2 549,2
- Dividends paid in 2005 - (324,0) (324,0)
Effect of cash flow hedging in 2005 (21,2) - (21,2)
Balance as of 31 December 2005 (23,8) 529,6 505,8

13 REMUNERATION TO THE BOARD OF DIRECTORS, CHIEF EXECUTIVE OFFICER (CEO)

AND THE AUDITOR OF NEXANS NORWAY AS

Remuneration to the CEO is included in
the accounts with : to the parent company Nexans SA in
Salaries NOK 1.434.987,-
Bonus related
to previous year NOK 504.400,-
Other remuneration NOK 782.979,-
Pension cost NOK 528.288,-
The CEO participates in the Nexans bonus
program. Maximum bonus payment for the
year is NOK 612.000.
She is allotted 19000 share options related
France at an average exercise price of €
21.40 per share.
If the company terminates the employment
contract with the CEO, she is entitled to
receive a termination fee of 1,5 years total
compensation
The audit fee for 2005 amounts to
NOK 353.000 for the company.
Fee for tax consultancy amounts to
NOK 124.255, fee for other attest services
amounts to NOK 242.142 and fee for
other services amounts to NOK 219.830.
All amounts are exclusive of VAT.

15
 14 SHARE CAPITAL
The company’s share capital is NOK Participations SA in France. available on: http://www.nexans.com or
462,6 million which consists of 462.600 Nexans Norway AS is consolidated by can be obtained by contacting the above
common shares with a nominal Nexans SA in France. Office address: 16, address.
value of NOK 1.000,- each. Nexans rue de Monceau, 75008 Paris.
Norway AS is 100% owned by Nexans The consolidated financial statement is

15 OPERATING REVENUES BY GEOGRAPHICAL DISTRIBUTION AND BUSINESS AREA

Nexans Norway AS

2004 2005
NOK mill. % NOK mill. %
Norway 1 066,7 45 % 1 237,7 44 %
Remaining Scandinavia 496,1 21 % 267,0 10 %
Remaining Europe 286,6 12 % 716,6 25 %
Middle East 54,5 2 % 89,9 3%
Far East 83,5 3 % 49,7 2%
North America 373,7 16 % 268,4 9%
Remaining World 14,8 1 % 198,9 7%
TOTAL 2 375,9 100 % 2 828,2 100 %

2004 2005
NOK mill. % NOK mill. %
Energy networks 450,4 19 % 528,6 19 %
Communication cables 304,1 13 % 355,1 13 %
Installation cables 260,0 11 % 275,4 10 %
High voltage cables 1402,7 59 % 1732,8 61 %
Eliminations (41,3) -2 % (63,7) -2 %
TOTAL 2 375,9 100 % 2 828,2 100 %

16 LONG TERM CONTRACTS AND PROVISION FOR LONG TERM CONTRACTS

Nexans Norway AS

NOK million 2004 2005

Revenue recognition on long-term contracts 931,1 1 256,4
Cost related to revenue recognition above 591,9 882,3
Net operating profit on long-term contracts 339,2 374,1
Remaining production on unprofitable projects - -

Provisions related to contracts:
Reserve for warranties 100,0 96,2
Reserve for fines and penalties 1,1 4,1
TOTAL 101,1 100,4

The provisions are mainly for warranty obligations on completed contracts. The main part is related to the company´s deliveries of
submarine installations. Provisions are made on the basis of empirical data and risk assessment of the total warranty exposure

16
 17 RELATED PARTIES (NEXANS)
Nexans Norway AS

NOK million 2004 2005

Sales to Nexans affiliates 220,9 323,5
Purchase from Nexans affiliates 245,1 381,8
Accounts receivables from Nexans affiliates 34,8 57,6
Accounts payables to Nexans affiliates 23,5 38,7
Loans to Nexans affiliates 490,5 661,1
Interest expense from Nexans affiliates 6,4 7,3

Nexans Norway cooperates with the Nexans group on Research and Development. In that connection the company pays an R&D
charge to a common financing pool and receives financing from that pool for its own R&D work. Nexans Norway AS also pay
charges to Nexans for administrative services and for cooperation in regard to exports.

18 CONTINGENT EVENTS

Nexans Norway received a writ of sum- claiming compensation in an amount of A possible court hearing will probably
mons in 2004 alleging that Nexans was NOK 310 million plus interest. Nexans take place in 2006.
infringing on certain patent rights, and Norway has refuted the claim.

19 Explanation of transition to simplified IFRS

These are the company’s first financial state­
ments prepared in accordance with simpli-
fied IFRS. The accounting policies describ­
ed on page 10 have been applied in pre-
paring the financial statements for 2005,
the comparative information presented in
the financial statements for 2004 and in
the preparation of an opening IFRS balan-
ce sheet at 1 January 2004.
In preparing its opening IFRS balance
sheet, the company has adjusted the finan-
cial statements of 2004, prepared accor-
ding to Norwegian GAAP.
An explanation of how the transition from
Norwegian GAAP to IFRS has affected the
company’s financial position and financial
performance is set out in the following
tables and notes.
Note a) Pension
All cumulative actuarial gain and losses on
defined benefit plans existing on the transi-
tion date to IFRS have been recognised
according to IFRS 1. A total of NOK 66
million of unrecognised losses as of
1 January 2004 have been recognised as
increase in pension liabilities. In addition,
the discount rate is reduced from 6,0 % to
5,5 % and expected return on assets reduc­
ed from 7% to 5,75% - increasing the
pension liability of an additional NOK
107 million.
Note b) Fixed assets
The French Nexans group implemented
already with effect from 1 January 2003
new regulations related to accounting for
fixed assets (component approach and
impairment test). The effect of the change
has been to lengthen the depreciation peri-
od for industrial equipment in line with
their useful economic life. The effect for
Nexans Norway is a write-up of fixed
assets of NOK 42,6 million implemented
in these financial statements as of 1
January 2004. The write-up is mainly rela-
ted to longer life of mechanical compo-
nents (up to 30 years).
Note c) Negative goodwill
Negative goodwill shall be derecognised.
(IFRS 3 – Business combinations).
Negative goodwill as of 1 January 2004
amounts to NOK 94,2 million. The negati-
ve goodwill occurred when the Nexans
group was established in 2000 by separa-
tion from the Alcatel group. (Nexans
Norway was sold for NOK 125 million
with an equity at the time of purchase of
NOK 266,3 million)
Note d) – Inventories
Inventories are now valued at weighted
average cost. (Previously valued according
to the First In, First Out method.) The effect
is an increase of inventory values of NOK
2.2 million.
Note e) share-based payments.
Share-based payments are calculated
according to IFRS and included with a cost
of 0,1 MNOK.
Note f) Construction Contracts
The principles of IAS11 on construction
contracts are very close to those used by
the company under Norwegian GAAP and
represent no material changes in P&L or
equity. With effect from 1 January 2004
balance items related to construction con-
tracts are reclassified as follows:
For each construction contract, the sum of
the costs incurred plus the gain recognised
is compared to the sum of the losses recog-
nised plus progress billings. If the result is
positive, it is included in the amount due
from customers for construction contracts
(asset) and if the result is negative in the
amount due to customers (liability). This
reclassification reduced both assets and
liabilities with NOK 79 million.
Note g) Financial Instruments
Financial instruments that represent hedges
of future revenues and expenses were not
recognised in the accounts under NGAAP.
The company implemented IAS39 – finan-
cial instruments on 1 January 2005.
The loss resulting from changes in the fair
value of financial investments was then
booked as loss directly against equity. As
of 1 January 2005, this amounted to NOK
4 million.
Note h) deferred tax
Changes in income tax expense and defer-
red tax liabilities are due to changes
described in the above notes a)-g).
17
 Transition IFRS Transition Transition IAS39
NGAAP 1 Jan 1 Jan NGAAP 31 Dec IFRS 1 Jan 1 Jan
ASSETS Note 2003 2004 2004 2004 2004 2004 2005 2005
Deferred tax asset h) 3 36 39 - 1 1 1 2
Negative goodwill c) (94) 94 - (80) 80 - -
Total intangible assets (91) 130 39 (80) 81 1 1 2
Tangible fixed assets b) 317 43 360 359 38 397 397
Net pension plan assets a) 59 (59) - 83 (83) -
Shares in subsidiaries 48 48 48 - 48 48
Other financial assets 27 27 27 - 27 27
Financial Assets 134 (59) 75 158 (83) 75 - 75
Total fixed assets 360 114 474 437 36 473 1 474
Inventories f),d) 200 (31) 169 232 (42) 190 - 190
Receivables from subsidiary 11 11 13 - 13 13
Accounts receivables f) 352 (18) 334 397 (81) 316 316
Project sales, not invoiced f) 8 8 50 50 50
Other short-term receivables 33 33 47 - 47 47
Loan to parent company 530 530 490 - 490 490
Receivables 926 (10) 916 947 (31) 916 - 916
Cash and cash equivalents 111 111 81 - 81 81
Total current assets 1 237 (41) 1 196 1 260 (73) 1 187 - 1 187
TOTAL ASSETS 1 597 73 1 670 1 697 (37) 1 660 1 1 661

EQUITY AND LIABILITIES 2003 2004 2004 2004 2004 2004 2 005 2004
Paid-in capital:
Share capital 463 463 463 - 463 463
Retained earnings:
Other equity 72 218 290 72 232 304 (3) 301
Shareholder´s equity 535 218 753 535 232 767 (3) 764
Provision for long-term contracts f) 114 (31) 83 130 (29) 101 101
Deferred taxes h) - - 38 (38) - -
Pension obligations a) 34 114 148 37 102 139 139
Provisions 148 83 231 205 35 240 - 240
Liabilities to subsidiaries 2 2 4 - 4 4
Accounts payable 120 120 118 - 118 118
Advance payments from customers f) 247 64 311 240 40 280 280
Income tax payable 43 43 55 - 55 55
Public duties payable 37 37 38 - 38 38
Forward foreign exchange contracts g) - 4 4 4 8
Provision for dividend 215 (215) - 254 (254) -
Other short-term liabilities f) 250 (77) 173 248 (94) 154 154
Total current liabilities 914 (228) 686 957 (304) 653 4 657
TOTAL EQUITY AND LIABILITIES 1 597 73 1 670 1 697 (37) 1 660 1 1 661

Transition IFRS 15
NGAAP 31 Dec 31 Dec
Note 2004 2004 2004
Operating revenues 2 376 2 376
Changes in work in progress and finished goods (12) (12)
Raw materials and consumables d) 1 269 (4) 1 265
Payroll and related cost a),e) 447 13 460
Other operating expenses 310 310
Depreciation of fixed assets b) 40 5 45
Negative goodwill c) (14) 14 -
Reversal of write-down - -
Operating expenses 2 040 28 2 068
Operating profit 336 (28) 308
Interest income from associated companies 7 7
Other interest income 6 6
Interest expense to associated companies - -
Other interest expense (3) (3)
Gain from sales of shares in subsidiary - -
Net exchange gain/loss 3 3
Net financial items 13 - 13
Profit before tax 349 (28) 321
Taxes h) (95) 3 (92)
Net profit for the year 254 (25) 229
Proposed dividends 254 254

18
 When environmentally
friendly energy is produced
offshore, it has to be brought
safely ashore.

There are a variety of reasons for the upsurge in offshore wind farm projects around
the world. Offshore installation allows noise as well as what many people regard as
a blot on the landscape to be kept out of sight and earshot. Given our extensive
experience in installing submarine cable this is an obvious area for Nexans to move
into, and we are already well under way. The Barrow wind farm is located 7 km off
the island of Walney in the Irish Sea. We are installing what to date is the world’s
longest three-core 132 kV submarine cable.

19
20
 scanpartner Trondheim 0064 Foto: Jørn Adde, Nexans, Getty Images, Photolibrary. Trykkpartner Lade
exans
Global expert in cables and cabling systems

Nexans Norway AS, Innspurten 9, P.O.Box 6450 Etterstad, 0605 Oslo, NORWAY.
Tel: +47 22 88 61 00, fax +47 22 88 61 01.
www.nexans.no