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2015 ANNUAL REPORT

Cembre S.p.A.

Head Office: Via Serenissima 9, Brescia, Italy Share Capital: EUR 8,840,000 (fully paid-up). Registration no: 00541390175 (Commercial Register of Brescia)

This document contains translations of the draft statutory annual financial statements and consolidated annual financial statements prepared in the Italian language for the purpose of the Italian law and of CONSOB regulations (CONSOB is the public authority responsible for regulating the Italian securities market)

REPORT ON OPERATIONS FOR THE 2015 FINANCIAL YEAR

Report on Operations for the 2015 Financial Year	1
Attachment 1: Comparative Consolidated Income Statement	18
Attachment 2: Corporate Boards	19
CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2015
Consolidated Financial Statements at December 31, 2015
Consolidated Statement of Financial Position	21
Consolidated Statement of Comprehensive Income	22
Consolidated Statement of Cash Flows	23
Statement of Changes in the Consolidated Shareholders' Equity	24
Notes to the Consolidated Financial Statements	25
Certification pursuant to article 81-ter of Legislative Decree 58/98	61
Auditing Report on the Consolidated Financial Statements	62
Report of the Board of Statutory Auditors on
the Consolidated Financial Statements	64
DRAFT CEMBRE S.P.A.'S FINANCIAL STATEMENTS AT DECEMBER 31, 2015
Draft Cembre S.p.A.'s Financial Statements at December 31, 2015
Statement of Financial Position	66
Statement of Comprehensive Income	67
Statement of Cash Flows	68
Statement of Changes in the Shareholders' Equity	69
Notes to the Financial Statements	70
Attachment 1: Comparative Income Statement	105
Attachment 2: Summary financial data of consolidated subsidiaries	106
Attachment 3: Compensation for auditing services and other services	107
Certification pursuant to article 154-bis of Legislative Decree 58/98	108
Auditing Report on Cembre S.p.A.'s Financial Statements	109

Report of the Board of Statutory Auditors	111

Report on Operations for Financial Year 2015

Operating Review

In 2015 the Cembre Group continued to grow, with sales increasing over the previous year in all geographical areas. Consolidated sales reached €121.4 million, up 7.5% on 2014.

In 2015, Italy represented the Group's major market, accounting for 40% of consolidated sales (as compared with 39.1% in 2014), 10.1% more than in the previous year. Sales in the rest of Europe represented 43% of total Group sales (45.3% in 2014), up 2% on the previous year. Exports to the rest of the World grew significantly (up 17.1% on 2014), thus reaching a 17% share of all sales (15.6% on 2014).

(€'000)	2015	2014	Change	2013	2012	2011	2010	2009	2008
Italy	48,564	44,100	10.1%	39,252	41,096	44,834	41,450	30,783	41,100
Rest of Europe	52,210	51,204	2.0%	47,980	46,837	43,857	40,284	35,694	42,249
Rest of the World	20,603	17,601	17.1%	17,315	15,966	14,337	12,200	9,507	10,939
Total	121,377	112,905	7.5%	104,547	103,899	103,028	93,934	75,984	94,288

Sales by geographical area

In 2015, Group companies had contrasting performances, with the US and UK subsidiaries reporting, contrary to other subsidiaries, a marked decline in sales. Sales in US dollars of the first registered in fact an 11.3% drop, while sales of the UK subsidiary, denominated in pounds, declined by 14.6%. The latter were strongly affected by the investment cuts operated by British Rail that resulted in a strong reduction in orders for one of the main compartments of Cembre Ltd.

The decline of the euro against both the US dollar and the British pound in 2015 had however a mitigating effect of these declines on consolidated sales, denominated in euro.

(€'000)	2015	2014	Change	2013	2012	2011	2010	2009	2008
Parent company	65,725	58,554	12.2%	53,814	54,861	58,834	54,279	40,740	52,422
Cembre Ltd. (UK)	19,710	20,577	-4.2%	19,390	17,535	13,920	11,845	10,626	12,374
Cembre S.a.r.l. (F)	8,677	8,354	3.9%	7,763	7,615	7,606	6,407	6,224	6,477
Cembre España S.L. (E)	8,200	7,016	16.9%	6,139	6,363	7,151	8,309	7,681	11,518
Cembre GmbH (D)	7,775	7,558	2.9%	7,238	8,201	7,815	6,368	5,264	5,358
Cembre AS (NOR)	1,080	960	12.5%	791	985	859	1,014	713	762
Cembre Inc. (USA)	10,210	9,886	3.3%	9,412	8,339	6,843	5,712	4,736	5,377
Total		121,377 112,905	7.5%		104,547 103,899 103,028		93,934	75,984	94,288

Revenues by Group company (net of intragroup sales)

In 2015, Group companies reported the following results, before the consolidation:

					Sales
(€'000)	2015	2014	Change	2013	2012	2011	2010	2009	2008
Parent company	92,616	84,903	9.1%	78,100	79,487	80,777	72,986	56,546	75,461
Cembre Ltd. (UK)	21,130	22,271	-5.1%	20,914	19,193	16,093	13,356	11,807	13,727
Cembre S.a.r.l. (F)	8,680	8,423	3.1%	7,815	7,623	7,634	6,413	6,255	6,511
Cembre España S.L. (E)	8,216	7,019	17.1%	6,145	6,727	7,155	8,309	7,683	11,518
Cembre GmbH (D)	7,889	7,685	2.7%	7,388	8,235	7,981	6,390	5,319	5,369
Cembre AS (NOR)	1,080	960	12.5%	798	1,004	893	1,014	713	767
Cembre Inc. (USA)	10,675	10,052	6.2%	9,456	8,389	6,856	5,744	4,810	5,383

		Net profit
(€'000)	2015	2014	Change	2013	2012	2011	2010	2009	2008
Parent company	14,438	12,202	18.3%	8,676	9,918	10,226	9,870	4,762	9,306
Cembre Ltd. (UK)	2,346	2,603	-9.9%	2,308	1,794	1,266	883	895	632
Cembre S.a.r.l. (F)	277	194	42.8%	171	113	100	63	379	289
Cembre España S.L. (E)	414	305	35.7%	230	(67)	(120)	273	516	770
Cembre GmbH (D)	491	303	62.0%	289	664	621	364	255	302
Cembre AS (NOR)	21	69	-69.6%	11	76	22	157	84	114
Cembre Inc. (USA)	357	561	-36.4%	804	494	320	224	186	337

For a more direct evaluation of the effect of foreign exchange translations, we include below sales figures of companies operating outside the euro area in the respective currency.

	Currency		Sales
(€'000)		2015	2014	Change	2013	2012	2011	2010	2009	2008
Cembre Ltd. (UK)	Gbp	15,337	17,953	-14.6%	17,761	15,563	13,967	11,457	10,509	10,931
Cembre AS (NOR)	Nok	9,669	8,021	20.5%	6,231	7,508	6,962	8,115	6,226	6,311
Cembre Inc. (USA)	Us\$	11,844	13,354	-11.3%	12,559	10,778	9,543	7,615	6,709	7,917

	Currency		Net profit
(€'000)		2015	2014	Change	2013	2012	2011	2010	2009	2008
Cembre Ltd. (UK)	Gbp	1,703	2,098	-18.8%	1,960	1,455	1,098	758	798	503
Cembre AS (NOR)	Nok	186	576	-67.7%	82	567	169	1,257	734	941
Cembre Inc. (USA)	Us\$	396	746	-49.9%	1,067	635	446	297	260	496

To provide a better understanding of the Company's financial performance for 2015, a Reclassified Consolidated Income Statement for the years ended December 31, 2015 and 2014 showing percentage changes is enclosed as Attachment 1.

Gross operating profit for 2015 amounted to €28,537 thousand, representing a 23.5% margin on sales, up 17.2% on 2014 when it amounted to €24,352 thousand, representing a 21.6% margin on sales, thanks in particular to the decline the cost of goods sold as a percentage of total sales from 35.6% to 34.3%. Services and personnel costs as a percentage of sales also declined slightly, despite the increase in the average number of employees on the previous year from 618 to 626.

Consolidated operating profit for 2015 amounted to €22,836 thousand, representing an 18.8% margin on sales, up 17.5% on €19,433 thousand in 2014, when it represented a 17.2% margin on sales.

Consolidated profit before taxes amounted in 2015 to €22,878 thousand, representing an 18.8% margin on sales, up 16.1% on €19.702 thousand in 2014, when it represented a 17.5% margin on sales.

Consolidated net profit for the year amounted to €15,933 thousand, representing a 13.1% margin on sales, up 17.7% on 2014, when it amounted to €13,542 thousand and represented a 12.0% margin on sales.

The net financial position improved from a surplus of €11.7 million at December 31, 2014 to a surplus of €17.8 million at the end of December 2015. Further detail is provided in the notes.

Capital expenditure

In 2015 capital expenditure, net of depreciation and divestments, amounted to €7.1 million, down from €9.2 million in the previous year, among which new machinery acquired by the Parent company for €2.3 million. More detail is provided in the notes under Property, plant and equipment.

Results of the parent company

Results of the parent company for 2015 and 2014 are shown in the table below.

(€'000)	2015	%	2014	%	Change
Sales	92,616	100	84,903	100	9.1%
Gross operating profit	23,257	25.1	19,178	22.6	21.3%
Operating profit	18,497	20.0	15,087	17.8	22.6%
Pre-tax profit	20,164	21.8	17,210	20.3	17.2%
Net profit	14,438	15.6	12,202	14.4	18.3%

Sales revenues grew by 9.1% from €84,903 thousand in 2014 to €92.616 thousand in 2015. Domestic sales grew by 10.1%, while sales in other European countries posted a 1.4% increase and sales in the rest of the World a 21.9% increase.

(€'000)	2015	2014	Change
Italy	48,564	44,100	10.1%
Rest of Europe	28,168	27,777	1.4%
Rest of the World	15,884	13,026	21.9%
Total	92,616	84,903	9.1%

In 2015 the parent company received €1,729 thousand in dividends from its subsidiaries as compared with €1,941 in the previous year.

Definition of alternative performance indicators

In compliance with Consob Communication DEM/6064293 dated July 28, 2007, below we define alternative performance indicators used in the present document to illustrate the financial and operating performance of the Group.

Gross operating profit (EBITDA): defined as the difference between sales revenues and costs for materials, of services received, and the net balance of operating income and charges. It represents the profit before depreciation, amortization and write-downs, financial flows and taxes.

Operating profit (EBIT): defined as the difference between gross operating profit and the value of depreciation, amortization and write-downs. It represents the profit achieved before financial flows and taxes.

Net financial position: represents the algebraic sum of cash and cash equivalents, financial receivables and current and non-current financial debt.

	(€'000)	Dec. 31, 2015	Dec. 31, 2014
	Trade receivables, net	26,372	25,625
	Inventories	39,191	38,291
	Other non-financial assets	1,337	1,384
	Trade payables	(11,653)	(13,219)
	Other non-financial liabilities	(7,636)	(8,141)
A)	Net current assets (working capital)	47,611	43,940
	Property, plant and equipment	67,150	65,846
	Intangible assets	1,336	1,219
	Prepaid taxes	2,550	2,474
	Other non-current assets	20	19
B)	Net non-current assets	71,056	69,558

C)	Non-current assets available for sale	-	-
D)	Employee termination indemnity	2,617	2,554

E)	Provisions for risks and charges	444	269
F)	Deferred taxes	2,235	2,439

G)	Net capital employed (A+B+C-D-E-F)	113,371	108,236
	Sources of funds:
H)	Shareholders' Equity	131,173	119,895
	Cash and short-term financial receivables	(17,802)	(11,659)
	Short-term financial debt	-	-
I)	Net debt/(surplus)	(17,802)	(11,659)
J)	Total sources of funds (H+I)	113,371	108,236

Reclassified Consolidated Statement of Financial Position

Shareholders' Equity

Consolidation adjustments determined the following differences between the Financial Statements of the parent company at December 31, 2015 and the consolidated accounts at the same date:

(€'000)	Shareholders' Equity	Net Profit
Parent company's financial statements	107,711	14,438
Book value of consolidated companies	27,830	3,905
Elimination of intra-group profits included in the value of inventories (*)	(4,384)	(762)
Currency translation differences from elimination of intragroup balances	-	(5)
German subsidiary product warranty provision reversal (*)	21	1
Netting of intragroup dividends (**)	-	(1,642)
Netting of intragroup capital gains	(5)	(2)
Consolidated Financial Statements	131,173	15,933

(*) Net of the related tax effect

(**) Includes currency translation differences amounting to €110 thousand.

Main risks and uncertainties

Risks connected to the economic situation

The economic and financial situation of the Group is influenced by macroeconomic factors such as changes in the Gross Domestic Product, consumer and business confidence, changes in interest rates and the cost of raw materials.

In 2015 the world economy performed under expectations due primarily to the weakness of emerging economies that in turn depressed raw material prices. Positive signals came instead from the American economy that absorbed without particular repercussions the increase in interest rated resolved by the Federal Reserve, recording in the second half of the year a marked recovery. Growth continued in Europe, though showing signs of fragility so as to push the ECB to introduce further expansive measures.

The Italian economy, after a slowdown in the export driven growth, was helped by the recovery of domestic demand, particularly in the manufacturing sector.

Credit to the private sector grew in the fall as interest rates offered fell back into line with the European average, leading to a growth in lending to businesses.

Projections of the Bank of Italy for the Italian economy in 2016 and 2017 point to a GNP growth of 1.5% (Source: Economic Bulletin of the Bank of Italy).

In 2015 the price of copper was volatile, contracting in the first months of the year and then recovering, reaching its maximum price at the beginning of May. From there it declined steadily through the last decade of August then recovering slightly and remaining stable in September and October. In the last months of the year and the first weeks of 2016 the price of copper took a further dive, trading in January under 4,000 €/ton.

The Cembre Group, thanks to its strong financial position, good competitive hedge and wide international presence is confident about the future and feels it is in a position to take advantage of opportunities that may arise and to react to possible changes in the economic scenario that may develop in the next months.

Risks connected with the market

The Group protects its market position by pursuing ongoing innovation, the widening of the product range, the launch of lower cost products and by introducing into production processes the most advanced methods and machinery, while implementing focused marketing policies with the help of its foreign subsidiaries.

Credit risk

Cembre and its subsidiaries focused over time on a careful selection of their customers, managing prudently sales to customers that do not possess an adequate credit standing, continuously monitoring overdues and soliciting payment when terms have expired. The Group has accrued a provision for doubtful accounts and the management doubtful accounts.

Exposure to credit risk relates exclusively to trade receivables.

Liquidity risk

Thanks to its solid financial position, the Group is not currently subject to particular liquidity risk, even in case the cash flow generated by operations should decline drastically.

Interest rate risk

At December 31, 2015 Cembre had no loans outstanding.

Currency risk

Despite its strong international presence, the Group does not have a significant exposure to currency risk, as it operates almost entirely in the euro area, the currency in which its trade transactions are mainly denominated. Exposure to currency risk is basically limited to sales in US dollars and British pounds, but the size of these transactions is not significant in influencing the overall performance of the Group or its financial position.

Integrity and reputation risk

Possible illicit behavior of employees, aimed at obtaining benefits for themselves and for the Group, can imply the risk of a loss of reputation and of sanctions against the Group. To prevent the risk of these occurrences and in line with Legislative Decree 231/2001, the Company adopted an organizational, management and control model that identifies processes that are subject to risk and establishes the conduct that the various persons involved are to keep in carrying out their tasks. The model was illustrated to employees through specific training sessions. The Company constantly integrates and upgrades the model.

Further information on main risks and uncertainties is contained in the notes.

Environmental management

Cembre S.p.A. deemed it fundamental for its development to adopt an environmental management system that covers in an integrated manner every aspect of its activities. Thanks to the setting of behavioral guidelines and of rigorous procedures, the Company obtained in 2008 an Environmental Certification under standard UNI EN ISO 14001:2004 that singles out companies that are more sensitive to environmental protection issues.

Worker safety management

In 2012 Cembre S.p.A. obtained the certification of its worker health and safety management system according to the OHSAS 18001: 2007 standard.

Ratios

To provide a better understanding of results of the Group, we provide below the value of some ratios commonly used in financial statement analysis.

Financial ratios

		Dec. 31, 2015	Dec. 31, 2014
ROE	Return on Equity	0.12	0.11
ROS	Return on Sales	0.19	0.17
ROI	Return on Investment	0.15	0.13

ROE (Return on Equity): is the ratio between net profit and Shareholders' Equity. It is an index of the profitability of capital invested, used to compare the investment in the company with investments of a different nature on a yield basis.

ROS (Return on Sales): is calculated as the ratio between operating profit and net revenues. It indicates profitability as a proportion of revenues, or the ability to generate profit from operations.

ROI (Return on Investment): is the ratio between capital employed (total assets net of investments in non-operating assets, which for the Group do not exist). It indicates the ability of the company to generate profits through operating activities.

Liquidity ratios

		Dec. 31, 2015	Dec. 31, 2014
CR	Current Ratio	4,4	3,6
LR	Liquidity Ratio	2,4	1,8

CR: it is computed by dividing current assets by current liabilities. It indicates the ability of the company to face current liabilities with current assets. A value above 2 signals an optimal situation.

LR: it is computed by dividing the sum of current and deferred liquidity by current liabilities, and is used to assess the firm's ability to pay off current liabilities. A value between 1 and 2 signals an ideal liquidity position.

Debt management ratios

		Dec. 31, 2015	Dec. 31, 2014
CI	Equity to fixed assets ratio	1,92	1,79
LEV	Leverage (Gearing)	1,19	1,22
IN	Debt ratio	15,8%	18,2%

CI: it is computed by dividing Shareholders' Equity by Fixed Assets and it indicates the ability of the company's equity to cover its investment needs. A value above 1 signals an optimal situation.

LEV (Leverage): it is computed by dividing capital employed by the Shareholders' Equity and it represents the degree of debt of the company. The higher the ratio, the higher the riskiness of the company. A value between 1 and 2 represents equilibrium in the sources of funds.

IN: it is computed by dividing the sum of current and non-current liabilities by capital employed and it indicates the percentage share of funds provided by third parties in financing the company. A value below 50% indicates an adequate financial structure.

Research & Development

The total cost of activities carried out by the parent company for in-house research and the development of new products amounts in 2015 to €388 thousand. Of these, the part relating to pure research was expensed in the year, while the part relating to development (€301 thousand) was capitalized among intangible assets. Outsourcing costs for consulting services and design amounted to €94 thousand.

Below we include an overview of activities in the year.

Cable terminals

Requests from customers led to the study of new cable terminals; in addition to the products, tools for their manufacturing were designed and laboratory tests were carried out. A total of 33 requests for new products were followed up.

The development of our range of mechanical cable terminals continued. These are terminals that are not crimped onto the cable through dies, but attached through controlled-breakage screws. Though more expensive and bulkier than similar compression connectors and less performing from an electrical point of view, these are very widespread as each connector can be used with a wider range of cable measures and it is not necessary to utilize dies or compression utensils for their installation, an hexagonal wrench being sufficient. Within this family of products, two new ones, a cable terminal in aluminum for cables between 50 and 240 sq. mm. – for which a die was built – and an aluminum connector also for cables between 50 and 240 sq. mm. – for which validation laboratory testing is being carried out in our labs – were developed.

Railroad equipment

Tools and accessories for cutting, drilling and fastening rails to sleepers were developed. Among these, a battery operated drill for the drilling of rails was developed. The new drill has dimensions and weight similar to a fuel engine one, but is quieter and does not produce harmful emissions and can therefore be used in closed environments, in addition to possessing evident advantages in terms of safety and health of the operator.

Equipment relating to our automatic rail shearing machine was developed and tests aimed at obtaining registration for foreign markets were carried out.

A new family of utensils for the clamping of our electrical contacts to rails that uses the new pumps installed in our battery-operated lunch-box version utensils.

Tools

The development of a new software allowing to visualize information on work cycles contained in the memory of our new battery operated utensils was concluded. The tool also allows to carry out a diagnostic test to verify the functioning of the machine.

A new compact and light hydraulic pump was developed. The pump will come in two versions with different equipment. The better equipped version will include a keypad with display that shows information on usage of the tool and allows to set different operating modes.

Cable marking

A number of new flat and ink-jet printed labels for the marking of cable terminals, cables and electric boxes were developed. These products were developed specifically for our thermal transfer printers.

Three projects relating to the widening and updating of the range of thermal transfer printers are currently underway.

Related parties

Transactions concluded between the parent company and its subsidiaries in 2015 are summarized in the table below:

(€)	Receivables	Payables	Revenues	Purchases
Cembre Ltd.	350,569	-	7,393,354	165,442
Cembre S.a.r.l.	479,422	-	4,379,933	2,161
Cembre España S.L.	577,057	142	4,826,177	8,301
Cembre AS	132,001	-	406,023	-
Cembre Inc.	1,545,922	-	5,805,332	441,803
Cembre GmbH	650,210	4,182	4,562,406	90,057
TOTAL	3,735,181	4,324	27,373,225	707,764

Revenues include, in addition to the sale of products, revenues from the charging to subsidiaries of the respective shares of costs incurred for the maintenance of the information system and royalties for the use of the Cembre trademark, totaling in 2015 to €460 thousand.

No loans or financing were extended between Group companies in 2015.

Cembre S.p.A. also leases property for a cumulative annual rent of €528 thousand from Tha Immobiliare S.p.A., with registered office in Brescia, owned by Anna Maria Onofri, Giovanni Rosani and Sara Rosani, Directors of Cembre S.p.A.

Invoices issued in the year relating to the above contracts were all paid in full.

Cembre Ltd. leases an industrial building from Borno Ltd., a company controlled by Lysne S.p.A., for an annual rent of £41 thousand (equal to €56 thousand). Such amount is in line with market conditions.

	2015	2014	Change
Rent paid by the parent company to Tha Immobiliare	528	528	-
Rent paid by the parent company to Montifer	-	76	(76)
Rent paid by UK subsidiary to Borno Ltd.	56	53	3
TOTAL	584	657	(73)

Lease contracts stipulated with Montifer were terminated in 2014.

Detail of compensation received by directors and statutory auditors is provided in the notes.

Absence of control and coordination

Despite the fact that article 2497-sexies of the Italian Civil Code states that "it is presumed that, unless otherwise proved, the direction and coordination activities of companies is exercised by the company or entity that is required to consolidate the same in its accounts or that, in any case, controls the former company pursuant to article 2359 (of the Italian Civil Code)", Cembre S.p.A. believes to be operating in full autonomy from its parent Lysne S.p.A.. In particular, as a non-exhaustive example, the Company manages autonomously its own treasury and relationships with its customers and suppliers, and does not make use of any service provided by its parent company.

Relationships with parent company Lysne S.p.A. are limited to the normal exercise of shareholders' rights on the part of the parent.

Companies incorporated under the laws of States that are not part of the European Union

Cembre S.p.A. controls two companies incorporated under the laws of States that are not part of the European Union. These are:

Cembre Inc., incorporated in the US, and
Cembre AS, incorporated in Norway.

The company deems the administrative, accounting and reporting systems currently in use to be adequate in supplying regularly its management and the company's independent auditors with the operating and financial information necessary for the preparation of the consolidated financial statements.

The accounts prepared by said foreign subsidiaries and used in the preparation of the consolidated financial statements, are audited and made available to the public, as provided by current regulations.

Cembre S.p.A. is active in ensuring an adequate flow of information from said subsidiaries to its independent auditors and believes the current communication process in place with the independent auditors to be effective.

Cembre S.p.A. already possesses the by-laws, the composition and of powers of company boards and its individual members, and directives ensuring the timely transmission of any information regarding the update of such information have been issued.

Own shares and shares of parent companies

In 2015, the Cembre Group did not acquire or sell any of its own shares, nor did it own, either directly or through any of its subsidiaries, trust companies or intermediaries, any of its own shares or any of its parent company's shares.

Ownership Structure and Corporate Governance

In compliance with norms contained in article 123-bis of Legislative Decree 58, dated February 24, 1998 (Testo Unico Consolidated Finance Act), we refer to the Report on Corporate Governance which, in addition to providing a general description of corporate governance, contains information regarding the ownership structure of the Company, the adoption of the Code of Conduct and the observance of the resulting commitments. Said Report is available in the Investor Relations section of the Group's institutional web site (www.cembre.it).

Subsequent events

Starting with 2016, the Group has entrusted the distribution of its products in the Scandinavian market to a company different from its Norwegian subsidiary Cembre AS. The new distributor has wider operations in the area than Cembre AS and is more suited to favor a better penetration of the Scandinavian market. The procedure for the liquidation of the Norwegian subsidiary was started in March 2016 and no significant effect on the financial or operating performance of the Group is expected to derive from it.

No other event having significant effects on Cembre's financial or operating performance occurred after December 31, 2015.

Outlook

Despite the difficulty of making forecasts of economic activity due the global uncertain situation, the Group expects its turnover to grow slightly with respect to 2015 both in the domestic and international markets. The Group thus expects to close 2016 achieving an increase in turnover and a consolidated profit.

Proposal for the Allocation of the Company's Net Profit

In order to complete the Company's planned investments and to benefit from selffinanced growth, it is advisable that at least a portion of net profit generated be retained. In seeking the approval for our actions by submitting to you the present Financial Statements and Report on Operations, we also invite you, in view of the fact that the legal reserve has already reached 20% of the share capital, to approve our proposed allocation of net profit for 2015, amounting to €14,438,346,49 (rounded off to €14,438,346) as follows:

€0.46 to be distributed to each of the Company's 17,000,000 shares entitled to dividends, for a total of €7,820,000;
the remainder, amounting to €6,618,346.49 to the extraordinary reserve.

With regard to the distribution of dividends we propose the following dates:

May 16, 2016 as the ex-dividend date;
May 17, 2016 as the record date pursuant to article 83-terdecies of TUF (Finance Act);
May 18, 2016 as the payment date

Attachments

The present Report on Operations includes the following attachments:

Attachment 1 Comparative Consolidated Income Statement for the year ended December 31, 2015.

Attachment 2 Corporate Boards.

Brescia, March 11, 2016

THE CHAIRMAN AND MANAGING DIRECTOR OF CEMBRE S.P.A.

Giovanni Rosani

Attachment 1 - Report on Operations for year 2015

Comparative Consolidated Income Statement

	2015	% of sales	2014	% of sales	Change
(€ '000)
Revenues from sales and services provided	121.377	100,0%	112.905	100,0%	7,5%
Other revenues	665		920		-27,7%

TOTAL REVENUES	122.042		113.825		7,2%

Cost of goods and merchandise	(41.454)	-34,2%	(40.787)	-36,1%	1,6%
Change in inventories	(92)	-0,1%	529	0,5%	-117,4%
Cost of services received	(15.245)	-12,6%	(14.615)	-12,9%	4,3%
Lease and rental costs	(1.410)	-1,2%	(1.380)	-1,2%	2,2%
Personnel costs	(34.410)	-28,3%	(32.108)	-28,4%	7,2%
Other operating costs	(1.258)	-1,0%	(1.277)	-1,1%	-1,5%
Increase in assets due to internal construction	852	0,7%	913	0,8%	-6,7%
Write-down of receivables	(417)	-0,3%	(607)	-0,5%	-31,3%
Accruals to provisions for risks and charges	(71)	-0,1%	(141)	-0,1%	-49,6%

GROSS OPERATING PROFIT	28.537	23,5%	24.352	21,6%	17,2%
Property, plant and equipment depreciation	(5.223)	-4,3%	(4.506)	-4,0%	15,9%
Intangible asset amortization	(478)	-0,4%	(413)	-0,4%	15,7%

OPERATING PROFIT	22.836	18,8%	19.433	17,2%	17,5%

Financial income	33	0,0%	21	0,0%	57,1%
Financial expenses	(60)	0,0%	(99)	-0,1%	-39,4%
Foreign exchange gains (losses)	69	0,1%	347	0,3%	-80,1%

PROFIT BEFORE TAXES	22.878	18,8%	19.702	17,5%	16,1%
Income taxes	(6.945)	-5,7%	(6.160)	-5,5%	12,7%
NET PROFIT	15.933	13,1%	13.542	12,0%	17,7%

Attachment 2 – Report on Operations

CORPORATE BOARDS

Board of Directors

Giovanni Rosani	Chairman and Managing Director
Anna Maria Onofri	Vice Chairman
Sara Rosani	Director
Giovanni De Vecchi	Director
Aldo Bottini Bongrani	Director
Fabio Fada	Independent Director
Giancarlo Maccarini	Independent Director
Paolo Giuseppe La Pietra	Independent Director

Board of Statutory Auditors

Fabio Longhi	Chairman
Andrea Boreatti	Permanent Auditor
Rosanna Angela Pilenga	Permanent Auditor

Maria Grazia Lizzini Substitute Auditor Gabriele Baschetti Substitute Auditor

Independent Auditors

PricewaterhouseCoopers S.p.A.

The above list is updated at March 11, 2016.

The Board of Directors and Board of Statutory Auditor's term expires with the approval of the Financial Statements at December 31, 2017.

The Chairman holds by statute (article 18) powers of legal representation of the Company. The Board of Directors conferred to the Chairman and Managing Director Giovanni Rosani all the ordinary management powers not specifically reserved to it by law, including exclusive powers over the organization, management and monitoring of the internal control system.

In case of absence or impediment of the Chairman and Managing Director Giovanni Rosani, Vice Chairman and Managing Director Anna Maria Onofri holds all ordinary management powers not reserved to the Board by law, with the exception of the appointment of professionals. All Managing Directors must keep the Board of Directors informed of all relevant transactions concluded in the context of their mandate. The Board of Directors has approved rules that define which particularly relevant transactions may be concluded exclusively by the same.

Consolidated Statement of Financial Position

ASSETS	Notes		Dec. 31, 2015		Dec. 31, 2014
(euro '000)			of which:		of which:
			related parties		related parties
NON CURRENT ASSETS	1
Tangible assets		65.435		64.050
Investment property	2	1.715		1.796
Intangible assets	3	1.336		1.219
Other investments		10		10
Other non-current assets		10		9
Deferred tax assets	11	2.550		2.474

TOTAL NON-CURRENT ASSETS		71.056		69.558

CURRENT ASSETS
Inventories	4	39.191		38.291
Trade receivables	5	26.372		25.625
Tax receivables	6	770		847
Other receivables	7	567		537
Cash and cash equivalents	27	17.802		11.659

TOTAL CURRENT ASSETS		84.702		76.959

NON-CURRENT ASSETS AVAILABLE FOR SALE		-		-

TOTAL ASSETS		155.758		146.517

LIABILITIES AND SHAREHOLDERS' EQUITY	Notes	Dec. 31, 2015		Dec. 31, 2014
(euro '000)			of which:		of which:
SHAREHOLDERS' EQUITY			related parties		related parties
Capital stock	8	8.840		8.840
Reserves	8	106.400		97.513
Net profit		15.933		13.542

TOTAL SHAREHOLDERS' EQUITY		131.173		119.895
NON-CURRENT LIABILITIES
Non-current financial liabilities		-		-
Employee termination indemnity and other personnel benefits	9	2.617	168	2.554	160
Provisions for risks and charges	10	444	100	269	50
Deferred tax liabilities	11	2.235		2.439

TOTAL NON-CURRENT LIABILITIES		5.296		5.262
CURRENT LIABILITIES
Current financial liabilities		-		-
Trade payables	12	11.653		13.219
Tax payables		679		1.744
Other payables	13	6.957		6.397

TOTAL CURRENT LIABILITIES		19.289		21.360
LIABILITIES ON ASSETS HELD FOR DISPOSAL		-		-

TOTAL LIABILITIES		24.585		26.622

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		155.758		146.517

Statement of Consolidated Comprehensive Income

	Notes	2015		2014
(euro '000)			of which:		of which:
			related parties		related parties
Revenues from sales and services provided	14	121.377		112.905
Other revenues	15	665		920

TOTAL REVENUES		122.042		113.825

Cost of goods and merchandise Change in inventories		(41.454) (92)		(40.787) 529
Cost of services received	16	(15.245)	(655)	(14.615)	(631)
Lease and rental costs	17	(1.410)	(584)	(1.380)	(657)
Personnel costs	18	(34.410)	(300)	(32.108)	(304)
Other operating costs	19	(1.258)		(1.277)
Increase in assets due to internal construction		852		913
Write-down of receivables	5	(417)		(607)
Accruals to provisions for risks and charges	20	(71)		(141)

GROSS OPERATING PROFIT		28.537		24.352

Property, plant and equipment depreciation	1-2	(5.223)		(4.506)
Intangible asset amortization	3	(478)		(413)

OPERATING PROFIT		22.836		19.433
	21
Financial income	21	33		21
Financial expenses	29	(60)		(99)
Foreign exchange gains (losses)		69		347
PROFIT BEFORE TAXES		22.878		19.702

Income taxes	22	(6.945)		(6.160)
NET PROFIT FROM ORDINARY ACTIVITIES		15.933		13.542

NET PROFIT FROM ASSETS HELD FOR DISPOSAL		-		-

NET PROFIT		15.933		13.542

Items that will not be reclassified to profit and loss
Gains (losses) from discounting of Employees' Termination Indemnity		(42)		(126)
Income tax relating to items that will not be reclassified		7		35

Items that may be reclassified subsequently to profit and loss
Conversion differences included in equity		1.293		1.372
Restatement of deferred tax liability as per new tax rate		207		-
COMPREHENSIVE INCOME	23	17.398		14.823

BASIC AND DILUTED EARNINGS PER SHARE	24	0,94		0,80

Consolidated Statement of Cash Flows

	2015	2014
€ '000
A) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD	11.659	7.539
B) CASH FLOW FROM OPERATING ACTIVITIES
Net profit for the period	15.933	13.542
Depreciation, amortization and write-downs	5.701	4.919
(Gains)/Losses on disposal of assets	9	190
Net change in Employee Severance Indemnity	63	116
Net change in provisions for risks and charges	175	190
Operating profit (loss) before change in working capital	21.881	18.957
(Increase) Decrease in trade receivables	(747)	(771)
(Increase) Decrease in inventories	(900)	(1.533)
(Increase) Decrease in other receivables and deferred tax assets	(29)	264
Increase (Decrease) of trade payables	(1.401)	390
Increase (Decrease) of other payables, deferred tax liabilities and tax payables	(709)	972
Change in working capital	(3.786)	(678)
NET CASH FLOW (USED IN)/FROM OPERATING ACTIVITIES	18.095	18.279
C) CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditure on fixed assets:
- intangible	(601)	(477)
- tangible	(6.534)	(8.759)
- financial	-	(5)
Proceeds from disposal of tangible, intangible, financial assets
- intangible	9	-
- tangible	327	142
Increase (Decrease) of trade payables for assets	(165)	50
NET CASH FLOW (USED IN)/FROM INVESTING ACTIVITIES	(6.964)	(9.049)
D) CASH FLOW FROM FINANCING ACTIVITIES
(Increase) Decrease in other non current assets	(1)	1
Increase (Decrease) in bank loans and borrowings	-	(1.647)
Dividends distributed	(6.120)	(4.420)
NET CASH FLOW (USED IN)/FROM FINANCING ACTIVITIES	(6.121)	(6.066)
E) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (B+C+D)	5.010	3.164
F) Foreign exchange differences	961	1.047
G) Discounting of Employee Termination Indemnity	(35)	(91)
H) Restatement of deferred tax liabilities as per new tax rate	207	-
I) CASH AND CASH EQUIVALENTS AT END OF THE PERIOD (A+E+F+G+H)	17.802	11.659
Assets available for sales included above	-	-
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	17.802	11.659

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD	17.802	11.659
Financial assets	-	-
Current financial liabilities	-	-
NET CONSOLIDATED FINANCIAL POSITION	17.802	11.659

INTERESTS PAID IN THE PERIOD	(1)	(6)
BREAKDOWN OF CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
Cash	18	13
Banks	17.784	11.646

Statement of Changes in the Consolidated Shareholders' Equity

(€ '000)	Balance at December 31, 2014	Allocation of previous year net profit	Other changes	Comprehensive income of the period	Balance at December 31, 2015
Capital stock	8.840				8.840
Share premium reserve	12.245				12.245
Legal reserve	1.768				1.768
Suspended-tax revaluation reserve	585				585
Other suspended-tax reserves	68				68
Other reserves	19.586	1.339		(30)	20.895
Conversion differences	(248)			1.323	1.075
Extraordinary reserve	55.286	6.083		207	61.576
Reserve for FTA	3.715				3.715
Reserve for discounting of Employee Termination Indemnity	111			(35)	76
Merger surplus reserve	4.397				4.397
Retained earnings	-				-
Net profit	13.542	(13.542)		15.933	15.933
Total Shareholders' Equity	119.895	(6.120)	-	17.398	131.173

(€ '000)	Balance at December 31, 2013 Restated	Allocation of previous year net profit	Other changes	Comprehensive income of the period	Balance at December 31, 2014
Capital stock	8.840				8.840
Share premium reserve	12.245				12.245
Legal reserve	1.768				1.768
Suspended-tax revaluation reserve	585				585
Other suspended-tax reserves	68				68
Other reserves	17.758	1.827		1	19.586
Conversion differences	(1.619)			1.371	(248)
Extraordinary reserve	51.030	4.256			55.286
Reserve for FTA	3.715				3.715
Reserve for discounting of Employee Termination Indemnity	202			(91)	111
Merger surplus reserve	4.397,00				4.397
Retained earnings	-				-
Net profit	10.503	(10.503)		13.542	13.542
Total Shareholders' Equity	109.492	(4.420)	-	14.823	119.895

Notes to the Consolidated Financial Statements at December 31, 2015

I. CORPORATE INFORMATION

Cembre S.p.A. is a joint-stock company with registered office in Brescia, Via Serenissima 9. The company is listed in the Italian Market of Shares (MTA) managed by Borsa Italiana S.p.A.

Cembre S.p.A. and its subsidiaries (hereinafter referred to jointly as "the Cembre Group" or "the Group") are active primarily in the manufacturing and sale of electrical connectors and related tools.

The publication of the Consolidated Financial Statements of Cembre S.p.A. for the year ended December 31, 2015 was authorized by a resolution of the Board of Directors dated March 11, 2016.

Cembre S.p.A. is controlled by Lysne S.p.A., a holding company based in Brescia, that does not direct or coordinate its subsidiary.

II. FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS

The present Consolidated Financial Statements at December 31, 2015 were prepared under the International Financial Reporting Standards (IFRS) adopted by the European Union and the related implementation regulations issued in application of article 9 of Legislative Decree no. 38/2005.

Principles adopted in the preparation of the Consolidated Financial Statements are those formally approved by the European Union as at December 31, 2015.

The consolidated financial statements were prepared in the expectation of the continuation of the Group's activities.

With the exception of those items for which international accounting principles provide for a different valuation, the consolidated financial statements were prepared in accordance with the historical cost principle.

Unless otherwise indicated, figures reported in the financial statements and the related notes are expressed in thousands of euro.

The table that follows contains a list of international accounting principles and interpretations approved by the IASB that became effective in 2015, which were taken into account, where applicable, in the preparation of the present Consolidated Financial Statements.

	Effective from
IFRIC 21 - Levies	June 17, 2014
Annual Improvements to IFRS: Cycle 2011-2013	January 1, 2015
Amendments to IAS 19 – Employee Benefits	February 1, 2015
Annual Improvements to IFRS: Cycle 2010-2012	February 1, 2015

The above changes did not find an application in the financial statements of the Cembre Group.

Future changes in accounting principles

The following updates of IFRS (already approved by the IASB), interpretations and amendments are in the process of being incorporated into European Union regulations:

New Principles	Effective from
IFRS 9 – Financial Instruments	January 1, 2018
IFRS 14 – Regulatory Deferral Accounts	January 1, 2016
IFRS 15 – Revenue from Contracts with Customers	January 1, 2017
IFRS 16 – Leases	January 1, 2019

Changes in Accounting Principles	Effective from
Amendments to IFRS 11 – Accounting for Acquisitions of Interests in Joint Operations	January 1, 2016
Amendments to IAS 16 and IAS 38 – Acceptable Methods of Depreciation and Amortization	January 1, 2016
Amendments to IAS 16 and IAS 41 – Agriculture: Bearer Plants	January 1, 2016
Amendments to IAS 27 – Equity Method in Separate Financial Statements	January 1, 2016
Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture	January 1, 2016
Annual Improvements to IFRS: Cycle 2012-2014	January 1, 2016
Amendments to IFRS 10 and IAS 28 –– Investment entity amendments: Applying the Consolidation Exception	January 1, 2016
Amendments to IAS 1 – Disclosure Initiative	January 1, 2016

The Cembre Group will evaluate in the next months the possible effects of the adoption of the new principles.

Principles of consolidation

The Consolidated Financial Statements of the Cembre Group include the statutory accounts at December 31 of every year of Cembre S.p.A. and of its subsidiaries. Accounting principles adopted in the preparation of the financial statements of subsidiaries are consistent with those of the parent company.

The financial statements of consolidated subsidiaries are consolidated under the lineby-line method, thus including all items, irrespective of the share held by the Group, of the elimination of intragroup transactions and of unrealized gains on transactions with third parties.

The book value of investments is netted against the related share in the shareholders' equity of consolidated companies, attributing to assets and liabilities the respective current value at the time control was acquired and recording contingent liabilities, where appropriate. Where positive, the residual amount is recorded among non-current assets as goodwill. Negative residual differences are recorded in the income statement.

All subsidiaries are wholly-owned and in no case therefore have minority interests been recorded.

The following companies were consolidated at December 31, 2015:

	% held
Cembre Ltd. (UK)	100%
Cembre S.a.r.l. *(France)	100%
Cembre España SL *(Spain)	100%
Cembre AS (Norway)	100%
Cembre Gmbh*(Germany)	100%
Cembre Inc.**(US)	100%

* 5% share held through Cembre Ltd.

**29% share held through Cembre Ltd.

Translation of financial statements expressed in currencies other than the euro

The functional and reporting currency of the Group is the euro.

Financial statements denominated in functional currencies other than the euro are translated according to the following criteria:

assets and liabilities are translated at the exchange rate applicable at the date of the financial statements;
income statement items are translated at the average exchange rate for the year;
foreign-exchange translation differences are recorded in a specific Shareholders' Equity reserve.

At the time at which a foreign subsidiary is disposed of, accumulated foreign-exchange differences recorded under Shareholders' Equity relating to the same are taken to the Income Statement.

Exchange rates applied in the translation of financial statements of subsidiaries are shown in the table below.

Currency	Exchange rate at Dec. 31, 2015	Average exchange rate for 2015
British pound (£/€)	0.73395	0.72585
US dollar (\$/€)	1.08870	1.10951
Norwegian kroner (NOK/€)	9.60300	8.94963

III. CONSOLIDATION PRINCIPLES AND VALUATION CRITERIA

Form of the financial statements

The financial statements are prepared as follows:

current and non-current assets and liabilities are reported separately in the Consolidated Statement of Financial Position;
the analysis of costs in the Statement of Consolidated Comprehensive Income is carried out based on the nature of the same;
the Consolidated Statement of Cash Flows is prepared by applying the indirect method.

Financial Statements forms are unchanged from previous year.

Finally, with reference to CONSOB Regulation no. 15519 dated July 27, 2006, the Financial Statements include a separate reporting of amounts pertaining to related parties, where significant.

Property, plant and equipment

Property, plant and equipment is recorded at the historical cost and reported net of accumulated depreciation and losses in value. Ordinary maintenance and repair costs are not capitalized, and are charged to the income statement in the year in which they are incurred.

Depreciation commences when the asset is available for use and is calculated on a straight line basis over the estimated residual useful life of the asset, taking into account its residual value. Depreciation rates applied reflect the useful life generally attributed to the various classes of assets and are summarized below:

- Buildings and light installations:	2% – 10%
- Plant and machinery:	5% – 25%
- Industrial and commercial equipment:	6% – 25%
- Other assets:	6% – 33%

Land has an undetermined useful life and is therefore not subject to depreciation.

The book value of property, plant and equipment is subjected to an impairment test whenever events or changes occurred indicate that the book value of the same can no longer be retrieved in line with the depreciation schedule originally set. Whenever there exists such an indication, the assets or cash generating units are written down to reflect their expected realizable value.

The residual value of assets, their useful life and methods applied are reviewed annually and adjusted, where necessary, at the end of each year.

Tangible assets are eliminated from the Balance Sheet at the time of their sale or when there no longer exists the expectation of future economic benefits from their use or disposal. Losses and gains (calculated as the difference between net revenues from the disposal and the book value of the asset) are recorded in the Income Statement in the year in which they are disposed of.

Leased assets

Assets held under a financial lease, through which all risks and benefits relating to ownership are transferred to the Group, are recorded under assets at the lower of their current value and the present value of minimum lease payments due according to the contract, including the bullet payment due at the end of the lease to exercise the purchase option.

The liability corresponding to the lease contract is recorded under financial liabilities.

Leased assets are classified under the respective category among property, plant and equipment, and depreciated over the shorter period between the term of the lease and the expected residual useful life of the asset.

Lease contracts in which the lessor holds all risks and enjoys all benefits deriving from the leased asset are classified as operating leases and recorded as costs in the Income Statement over the term of the contract.

Investment property

Assets that cease to be used in the context of the Group's ordinary operations but possess all the characteristics set forth in IFRS 5 to be included among non-current assets available for sale, are classified among Investment Properties and continue to be amortized as if they were still included among Property, plant and equipment.

Intangible assets

Intangible assets are recorded under assets, as provided by IAS 38 (Intangible assets), whenever it is probable that future economic benefits are generated through use and when the cost of the intangible asset can be determined in a reliable manner.

Intangible assets acquired separately are initially capitalized at cost, while those acquired through mergers are capitalized at their fair value at the time of acquisition.

With the exception of development costs, assets generated internally are not recorded as intangible assets.

After the initial recording, intangible assets are carried in the balance sheet at cost, net of accumulated amortization calculated on a straight-line basis over their expected useful economic life, and of write-downs carried out as a result of durable losses in value. Intangible assets having an indefinite useful life are not amortized and subjected periodically to an impairment test to assess possible loss in value.

The useful life generally attributed to the various classes of assets is the following:

- concessions and licenses:	5 to 10 years
- software licenses	3 to 5 years
- patents	2 years
- development costs:	5 years
- trademarks:	10 to 20 years

Amortization commences when the asset is available for use, that is, when it is in a position and in the necessary condition to operate in the manner intended by management.

The book value of intangible assets is subjected to an impairment test whenever events or changes occurred indicate that the book value of the same can no longer be retrieved in line with the amortization schedule originally set. Whenever there exists such an indication and the book value of the asset exceeds its realizable value, the value of the asset is written-down to its expected realizable value.

Financial assets

Financial assets are initially recorded at cost, inclusive of accessory purchase costs, representing the fair value of the price paid. After the initial recording, financial assets are valued in accordance with their final purpose as described below.

Financial assets valued at fair value, whose change is recorded in the Income Statement

These are financial assets held for trading purposes, acquired for the purpose of obtaining a profit from short-term fluctuations in price. Unless specifically designated as effective hedge, derivatives are classified as financial assets held for trading purposes. Gains and losses on financial assets held for trading purposes are recorded in the income statement.

Financial assets held to maturity

Financial assets other than derivatives that generate fixed financial flows or flows that may be determined and have a set maturity, are classified as Financial assets held to maturity when the Group intends to and is capable of holding them to maturity.

Financial assets that the Group decides to hold for an indefinite period of time do not fall under this category.

The amortized cost is calculated keeping into account discounts and premiums, amortized over the term of the financial asset.

Loans extended and receivables

Loans and receivables are non-derivative financial assets providing for fixed payments or payments that may be determined, not listed on an active market. Such assets are recorded at the amortized cost using the actual discount rate method. Gains and losses are recorded in the Income Statement whenever loans extended and receivables are eliminated from the accounts or they experience losses in value, together with the related amortization.

Financial assets available for sale

Financial assets available for sale include financial assets that do not fall under the above categories. After the initial recording, these are accounted for at fair value, while gains and losses are recorded under a specific Shareholders' Equity reserve until the assets are sold or a loss in value is ascertained. In such case, gains and losses accrued are charged to the income statement.

In the case of securities widely traded on a regulated market, the fair value is determined with reference to the listed price at the closing of trading on the date of the financial statements. In the case of financial assets for which there does not exist an active market, the fair value is determined through valuation techniques based on the price recorded in recent transactions between unrelated parties or on the basis of the current market value of a similar instrument, or on discounted cash flows or option pricing models. Investments in other companies fall in this category.

Loss in value of financial assets

The Group verifies at least yearly the possible loss in value of individual financial assets. These are recorded only at the time when there exists objective evidence, at the occurrence of one or more events, that the asset has experienced a loss of value with respect to its initial recorded value.

Treasury shares

Treasury shares are recorded as a reduction of Shareholders' Equity in a specific reserve.

The purchase, sale, issue or cancellation of treasury shares held does not determine the recording of any gain or loss in the Income Statement.

Inventories

Inventories are valued at the lower of cost and their expected realizable value, represented by their normal sale price, net of completion and selling costs.

The cost of inventories includes the acquisition cost, the transformation cost and other costs incurred to take inventories to their current location and state.

The cost of inventories is determined under the weighted-average method, inclusive of the cost of beginning inventories. Provisions for slow-moving stock are accrued for finished products, materials and other supplies, keeping into account their expected useful life and retrievable value.

Receivables and payables

Receivables are recorded initially at fair value and subsequently carried at the amortized cost, written-down in case of loss in value. Payables are normally valued at the amortized cost, adjusted under exceptional conditions for changes in value.

Cash and cash equivalents

Cash and cash equivalents are recorded at face value.

Loans

Loans are initially recorded at cost, corresponding to the fair value of the amount received, net of accessory costs.

After the initial recording, loans are valued at the amortized cost, using the effective interest method.

Translation of amounts denominated in currencies other than the euro

Transactions denominated in currencies other than the euro are initially accounted for in euro at the exchange rate at the date of the transaction. Currency translation differences arising at the time at which foreign currency receivables are collected and payables are paid out, are recorded in the income statement.

At the date of the financial statements, monetary assets and liabilities denominated in currencies other than the euro – consisting of cash on hand or assets and liabilities to be received or paid out, whose amount is set and may be determined – are translated into euro at the exchange rate at the date of the financial statements, recording in the income statement the currency translation difference.

Non-monetary items denominated in currencies other than the euro are translated into euro at the exchange rate at the time of the transaction, representing the historical exchange rate.

Functional currencies adopted by Group companies correspond to the currencies of the respective county in which subsidiaries are based.

Provisions for risks and charges

Provisions for risks and charges are accrued against known liabilities, whose existence is certain or probable, but whose amount and expiration cannot be determined at the date of the financial statements. Accruals are made when the existence of a current obligation, legal or implicit, deriving from a past event, the fulfillment of which is expected to require the use of resources whose amount can be reliably estimated, is probable.

Provisions accrued are reviewed at each accounting date and adjusted to bring them into line with the best estimate available to date.

Employee benefits

Under IAS 19, and before the reform introduced by the 2007 Budget Law, the Employee Severance Indemnity was classified among defined benefit plans and was therefore subject to actuarial adjustments.

After the reform, the provisions of which were adopted by the Group from the 2007 Half-year Report, employee termination indemnities accrued up to December 31, 2006, continue to be accounted for as defined benefit plans, while those accrued from January 1, 2007 are accounted for in two different ways:

where the individual employee has opted for complementary pension funds, employee termination indemnities accrued after January 1, 2007 and until the time at which the choice is made by the employee, are accounted for as a defined benefit plan. Subsequently they are accounted for as a defined contribution plan;
where the individual employee has opted for accumulation with the treasury fund of the national social security agency (INPS), indemnities accrued after January 1, 2007 are accounted for as a defined contribution plan.

Elimination of financial assets and liabilities

Financial assets are eliminated when the Group ceases to hold rights to receive financial flows deriving from the same or when such rights are transferred to another entity, that is when risks and benefits of the financial instrument cease to have an effect on the financial position and operating performance of the Group.

A financial liability is written-off exclusively when the related obligation is cancelled, fulfilled or expired. Any material change in the contractual terms relating to the liability result in its cancellation and in the recording of a new liability. Any difference between the book value and the amount paid to extinguish the liability is recorded in the Income Statement.

Revenues

Revenues are valued at the current value of the amount received or receivable.

Disposal of assets

The revenue is recognized when the Company has transferred the risks and benefits connected with the ownership of the good, and ceases to exercise the activity associated with ownership and the actual control over the asset sold.

Services rendered

Revenues are recorded based on the stage of completion of the operation at the date of the financial statements. When the result of the service rendered cannot be reliably estimated, revenues are recorded only to the extent of retrievable costs.

The stage of completion is determined by valuing work carried out or by determining the proportion between costs incurred and total estimated costs to completion.

Interest

Interest is recorded in the period in which it accrues, using the effective interest method.

Dividends

Dividends are recorded when the right of shareholders to receive them arises.

Grants

Grants are recorded at fair value when there exists a reasonable certainty that that the same will actually be received and the company meets the conditions for the entitlement to the grant.

Grants linked to cost components (operating grants) are recorded under "other revenues" and amortized over several years so that revenues match the costs they are intended to compensate.

The fair value of grants linked to assets (e.g. grants on the purchase of plant and equipment or grants for capitalized development costs), is suspended under long-term liabilities and released to the income statement under "other revenues" over the useful life of the asset to which it relates, thus in the period over which the depreciation expense relating to the asset is charged to the income statement.

Financial charges

Financial charges are recorded as a cost in the period in which they accrue. In accordance with IAS 23 Revised, financial charges incurred in the acquisition of significant assets (qualifying assets) are capitalized.

Cost of goods purchased and services received

The cost of goods purchased and services received is recorded in the income statement based on the accrual method.

Income taxes (current, prepaid and deferred)

Current taxes are determined based on a realistic estimate of the tax expense for the period in accordance with applicable tax regulations in the respective countries.

The Group records deferred and prepaid taxes arising from temporary differences between the book value of assets and liabilities and the related values reported for tax purposes, in addition to differences in the value of assets and liabilities generated by consolidation adjustments.

Prepaid taxes are recorded only where there exists reasonable certainty of their retrieval through future profits within the term in which tax benefits are enjoyed. Deferred tax assets are recorded also where there exist deductible losses or tax credits, whenever it is deemed probable that sufficient future profits will be generated in the medium-term (3 to 5 years).

Financial derivatives

Derivative financial instruments are valued at market value (fair value). A derivative financial instrument can be acquired for trading or hedging purposes.

Gains and losses on financial instruments acquired for trading purposes are charged to the income statement.

Derivatives acquired for hedging purposes may be accounted for under the hedge accounting method – offsetting the recording of the derivative in the income statement with adjustments to the value of assets and liabilities hedged – only when derivatives meet specific criteria.

Hedge derivatives are classified as "fair value hedges" when they are acquired to hedge against the risk of fluctuations in the market value of an underlying asset or liability or the risk of fluctuations in the financial flows deriving from the same, both in the case of existing assets and liabilities or those deriving from a future transaction.

In the case of fair value hedges, gains and losses on the restatement of the market value of a derivative instrument are taken to the income statement.

With regard to the hedging of financial flows, gains and losses on the hedge instrument are recorded under Shareholders' Equity when they relate to the portion of the hedge considered effective, while the portion not hedged is recorded in the income statement. In 2015 the Group did not stipulate financial derivative contracts.

Earnings per share

Earnings per share are calculated by dividing consolidated net profit by the weighted average number of shares in circulation for the period.

Fully diluted earnings per share (calculated by subtracting from consolidated net profit the cost of converting all stock options into ordinary shares) are obtained by adjusting the number of shares in circulation assuming the exercise of stock options having a diluting effect.

Use of estimates

In accordance with IAS/IFRS, the Group made use of estimates and assumptions based on prior experience and other factors deemed determinant, but not certain. Actual data could therefore differ from estimates and projections made.

Estimated data is reviewed periodically and adjustments made to the same are taken to the Income Statement for the period in which the review takes place in case the review affect only one period, or, subsequent accounting periods in case it affects also the same.

Below we describe review processes and key assumptions used by management in applying accounting principles.

Provision for inventory depreciation

The provision for inventory depreciation is accrued to bring the book value of inventories into line with their expected realizable value.

Management reviews the composition of inventories with particular reference to slow moving stock to determine the amount to be accrued prudentially to reflect the obsolescence of stocks.

Provision for doubtful accounts

The provision for doubtful accounts reflects management estimates regarding losses on trade receivables.

Losses on trade receivables expected by the Group are based on past experience on similar portfolios of receivables, current overdues vs. historical overdues, losses and collections, the close monitoring of credit risk and credit worthiness of customers, in addition to projections on economic and market conditions.

Retrievable value of non-current assets

Non-current assets include property, plant and equipment, intangible assets, investments and other financial assets.

Whenever circumstances so require, the management reviews periodically the book value of non-current assets held and used by the Group, in addition to assets to be disposed of. Such activity is carried out using estimates of expected cash flows from the sale of the asset and of adequate discount rates used in calculating the present value of the same.

Whenever the book value of a non-current asset experiences a loss in value, the Company records a write-down equal to the difference between the book value of the asset and its retrievable value either through use or disposal of the same.

Post-retirement benefits

In the estimation of post-retirement benefits the Group makes use of traditional actuarial techniques based on stochastic simulations of the "Monte Carlo" type. Assumptions made relate to the discount rate and the annual inflation rate. Actuarial advisors of the Group make also use of demographic projections based on current mortality rates, employee disablement and resignation rates observed in Parent Company Cembre S.p.A..

In 2015, based on past turnover experience, the probability of a Cembre S.p.A.'s employee terminating his or her employment for causes other than death is the following:

Male	6.18%
Female	4.46%

Assumptions regarding the discounting and inflation rates were:

Discounting rate	2.03%
Yearly inflation rate	1.50%
Yearly real increase in retributions	1.00%

Expected advances to be paid out are 5% per year and each advance corresponds to 70% of the accrued indemnity.

Retrievability of deferred tax assets

The Group evaluates the possibility to retrieve deferred tax assets on the basis of profits and expected future market conditions in view of current sale contracts and ability of expected future profits to offset tax credits, in addition to the expected variance of the same.

Potential liabilities

In carrying out its activity, management consults with its legal and tax advisors and experts. The Group ascertains a liability arising from litigation whenever it deems probable that a financial outlay will be made in the future and when the amount of resulting losses can be reasonably estimated. In case a financial outlay becomes possible but its amount cannot be determined, such occurrence is reported in the notes.

IV. SEGMENT INFORMATION

IFRS 8 requires segment information to be supplied using the same elements on which management bases internal reporting.

Cembre adopted as its primary reporting focus information by geographical area based on the location in which the operations of the company are based or the production process takes place. As the Cembre Group operates in a single segment denominated "Electric connectors and related tools", items based on this element are not usually utilized for the purposes of internal reporting.

2015	Italy	Rest of Europe	Rest of World	Elimination of intragroup	TOTAL
Revenues
Sales to customers	65,725	45,442	10,210		121,377
Sales to other Group companies	26,891	1,554	464	(28,909)	-
Revenues by sector	92,616	46,996	10,674	(28,909)	121,377

Operating profit by sector	17,729	4,643	464		22,836

Overhead costs not assigned					-

Operating profit					22,836
Financial income (expense)					42
Income taxes					(6,945)

Net profit					15,933

2014	Italy	Rest of Europe	Rest of World	Elimination of intragroup	TOTAL
Revenues
Sales to customers	58,554	44,465	9,886		112,905
Sales to other Group companies	26,349	1,893	166	(28,408)	-
Revenues by sector	84,903	46,358	10,052	(28,408)	112,905

Operating profit by sector	14,012	4,515	906		19,433

Overhead costs not assigned					-
Operating profit					19,433
Financial income (expense)					269
Income taxes					(6,160)

Net profit					13,542

As the distribution of sales by geographical area is different from that of the related Group activities, a breakdown of sales by geographical area of customers is shown below.

	2015	2014
Italy	48,564	44,100
Europe	52,210	51,204
Rest of World	20,603	17,601
	121,377	112,905

The breakdown of assets and liabilities is shown below:

Dec. 31, 2015	Italy	Rest of Europe	Rest of World	TOTAL
Assets and Liabilities
Assets of the sector	114.240	37.924	7.959	160.123
Unassigned assets				(4.365)
Total assets				155.758
Liabilities of the sector	20.404	4.151	51	24.606
Unassigned liabilities				(21)
Total liabilities				24.585
Other information by sector
Capital expenditure:
- Property, plant and equipment	5.631	811	92	6.534
- Intangible assets	599	2	-	601
Total investments				7.135
Depreciation and amortization:
- Property, plant and equipment	(4.310)	(792)	(121)	(5.223)
- Intangible assets	(454)	(24)	-	(478)
Accruals to provision for employee benefits	(821)	(8)	-	(829)

Average no. of employees	436	167	23	626

Dec. 31, 2014	Italy	Rest of Europe	Rest of World	TOTAL
Assets and Liabilities
Assets of the sector	107,486	34,968	7,691	150,145
Unassigned assets				(3,628)
Total assets				146,517
Liabilities of the sector	22,215	4,308	122	26,645
Unassigned liabilities				(23)
Total liabilities				26,622
Other information by sector
Capital expenditure:
- Property, plant and equipment	8,052	551	156	8,759
- Intangible assets	455	22	-	477
Total investments				9,236
Depreciation and amortization:
- Property, plant and equipment	(3,706)	(717)	(83)	(4,506)
- Intangible assets	(386)	(27)	-	(413)
Accruals to provision for employee benefits	(774)	(71)	-	(845)

Average no. of employees	418	178	22	618

V. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENT

	Land and	Plant and	Equipment	Other	Leased	Work in	Total
	buildings	machinery		assets	assets	progress
Historical cost	42,186	51,825	10,478	7,572	37	912	113,010
Revaluation FTA of IFRS	5,921	-	-	-	-	-	5,921
Revaluations for tax purposes	936	53	-	-	-	-	989
Accumulated depreciation	(9,672)	(32,360)	(7,987)	(5,838)	(13)	-	(55,870)
Bal. at Dec. 31, 2014	39,371	19,518	2,491	1,734	24	912	64,050
Increases	600	3,088	978	1,050	-	818	6,534
Currency translation differences	185	101	2	41	-	-	329
Depreciation	(960)	(3,013)	(467)	(696)	(6)	-	(5,142)
Net divestments	(208)	(103)	(3)	(22)	-	-	(336)
Reclassifications	102	241	309	3	-	(655)	-
Bal. at Dec. 31, 2015	39,090	19,832	3,310	2,110	18	1,075	65,435

1. PROPERTY, PLANT AND EQUIPMENT

	Land and buildings	Plant and machinery	Equipment	Other assets	Leased assets	Work in progress	Total
Historical cost	40,366	45,899	9,556	6,805	37	1,570	104,233
Revaluation FTA of IFRS	5,921	-	-	-	-	-	5,921
Revaluations for tax purposes	936	77	-	3	-	-	1,016
Accumulated depreciation	(8,782)	(29,862)	(7,600)	(5,194)	(7)	-	(51,445)
Bal. at Dec. 31, 2013	38,441	16,114	1,956	1,614	30	1,570	59,725
Increases	1,017	5,500	799	781	-	662	8,759
Currency translation differences	195	96	1	33	-	-	325
Depreciation	(890)	(2,498)	(387)	(644)	(6)	-	(4,425)
Net divestments	(126)	(156)	-	(50)	-	(2)	(334)
Reclassifications	734	462	122	-	-	(1,318)	-
Bal. at Dec. 31, 2014	39,371	19,518	2,491	1,734	24	912	64,050

Capital expenditure in 2015 amounted to €6,534 thousand and related primarily to investments made by the parent company. Investments in buildings consisted mainly in the renovation and development of new commercial offices for about €0.4 million. Expenditure on equipment reached €0.4 million, while investment in production machinery amounted to €2.4 million. Expenditure for the manufacturing of dies amounted to €0.7 million. Advances paid for assets to be delivered in 2016 amounted to €0.4 million, while dies and equipment under construction by the parent company also amount to €0.4 million.

Investments made by foreign subsidiaries include €0.3 million spent by Cembre Ltd. on plant and equipment, while the German subsidiary invested €0.1 million in the installation of a new automated warehouse.

Item Land and buildings includes the €5,921 thousand revaluation made upon the firsttime application of international accounting principles (IAS).

	Land and buildings	Plant and Machinery	Other assets	Total
Historical cost	2,430	278	5	2,713
Accumulated amortization	(680)	(235)	(2)	(917)
Balance at Dec. 31, 2014	1,750	43	3	1,796
Depreciation	(72)	(8)	(1)	(81)
Balance at Dec. 31, 2015	1,678	35	2	1,715

2. INVESTMENT PROPERTY

The Group vacated industrial buildings located in Calcinate (Bergamo) and Coslada (Madrid). Awaiting for a recovery of the real estate market that would improve sale conditions, these buildings and the related plant and equipment were reclassified among investment properties. To provide consistency, figures for 2014 were reclassified.

3. INTANGIBLE ASSETS

	Development costs	Patents	Software	Other intangible assets	Work in progress	Total
Historical cost	962	270	4.220	53	30	5.535
Accumulated amortization	(556)	(230)	(3,527)	(3)	-	(4,316)
Balance at Dec. 31, 2014	406	40	693	50	30	1,219
Increases	301	65	225	10	-	601
Currency translation difference	-	-	3	-	-	3
Amortization	(164)	(49)	(254)	(11)	-	(478)
Divestments	-	(3)	(6)	-	-	(9)
Reclassifications	-	-	28	-	(28)	-
Balance at Dec. 31, 2015	543	53	689	49	2	1,336

4. INVENTORIES

	Dec. 31, 2015	Dec. 31, 2014	Change
Raw materials	8,291	8,540	(249)
Work in progress and semi-finished goods	9,804	10,016	(212)
Finished goods	21,096	19,735	1,361
Total	39,191	38,291	900

The value of finished goods inventories is adjusted to its expected realizable value through a provision for slow-moving stock amounting approximately to €2,177 thousand. Changes in the provision in 2015 are shown in the table that follows:

	2015	2014
Balance at January 1	2,042	1,709
Accruals	424	444
Uses	(344)	(166)
Currency translation differences	55	55
Balance at December 31	2,177	2,042

5. TRADE RECEIVABLES

	Dec. 31, 2015	Dec. 31, 2014	Change
Gross trade receivables	27,750	26,810	940
Provision for doubtful accounts	(1,378)	(1,185)	(193)
Total	26,372	25,625	747

Trade receivables by geographical area

	Dec. 31, 2015	Dec. 31, 2014	Change
Italy	15,529	15,202	327
Europe	10,190	9,868	322
North America	1,299	1,415	(116)
Oceania	348	103	245
Middle East	35	59	(24)
Far East	258	87	171
Africa	91	76	15
Total	27,750	26,810	940

Average collection time shortened from 78 days in 2014 to 75 days in 2015.

Changes in the provision for doubtful accounts are shown in the table that follows:

	2015	2014
Balance at January 1	1,185	816
Accruals	417	607
Uses	(227)	(242)
Currency translation differences	3	4
Balance at December 31	1,378	1,185

	Not matured	0-90 days	91-180 days	181-365 days	Over one year	Under litigation	Total
2015	23,136	3,761	132	143	412	166	27,750
2014	22,642	3,098	371	189	361	149	26,810

Breakdown of receivables by maturity at December 31, 2015

6. TAX RECEIVABLES

	Dec. 31, 2015	Dec. 31, 2014	Change
Tax receivables	770	847	(77)

The amount consists prevalently of receivables of the parent on retroactive IRES deductions of IRAP on personnel expenses for years 2007-2011 on which a refund was applied for.

7. OTHER ASSETS

	Dec. 31, 2015	Dec. 31, 2014	Change
Receivables from employees	69	59	10
VAT and other indirect taxes receivable	-	132	(132)
Advances to suppliers	252	239	13
Other	246	107	139
Total	567	537	30

Item Other includes prevalently receivables of the parent company relating to social security.

8. SHAREHOLDERS' EQUITY

The capital stock of the parent company amounts to €8,840 thousand, and is made up

of 17 million ordinary shares of par value €0.52 each, fully underwritten and paid-up.

At December 31, 2015 the Company did not hold treasury shares.

A reconciliation between the Shareholders' Equity and net profit of the parent company and the Consolidated Shareholders' Equity and net profit is provided in the Report on Operations.

Changes in individual components of the Consolidated Shareholders' Equity are shown in the Statement of Changes in the Consolidated Shareholders' Equity included in the Consolidated Financial Statements.

Item Other reserves is made up as follows:

	Dec. 31, 2015	Dec. 31, 2014
Elimination of investments in subsidiaries	22,774	20,368
Elimination of unrealized intra-group profit in stock	(3,623)	(2,891)
German subsidiary product warranty provision reversal	21	21
Dividends from subsidiaries	1,719	2,085
Currency translation differences on intra-group payables and receivables	6	3
Intra Group reconciliation and gains	(2)	-
Total	20,895	19,586

Upon the first-time application of IFRS, the parent company chose to adopt as inventory valuation method the average cost, in line with the rest of the Group. For this reason the consolidated Reserve for the first-time adoption of IFRS differs by €336 thousand from the one recorded under equity by the parent company.

9. EMPLOYEE TERMINATION INDEMNITY AND OTHER RETIREMENT BENEFITS

The item includes the Employee Severance Indemnity accrued for employees of Italian companies. Special retirement benefits, due in accordance with French regulations to persons employed in France at the time of retirement, are also included in the provision.

With the reform of employee termination indemnities, starting with January 1, 2007 Cembre S.p.A. is no longer required to accrue retirement benefits in favor of its employees in a provision, but pays out benefits accrued after such date to the INPS treasury account, unless such benefits have been destined to other pension funds by individual employees.

Employee termination indemnities accrued at December 31, 2015 was discounted on the basis of an evaluation made by a registered actuary, in accordance with current regulations.

	2015	2014
Beginning balance	2,554	2,438
Accruals	829	845
Uses	(232)	(282)
Social security (INPS) treasury account	(635)	(664)
Discounting effect	101	217
Closing balance	2,617	2,554

Total termination indemnities accrued with INPS' treasury account at the end of the year amount to €5,252 thousand.

10. PROVISIONS FOR RISKS AND CHARGES

Changes in the year are shown in the table below.

	Customer indemnities	Directors' variable compensation	Other risks	Total
At December 31, 2014	88	50	131	269
Accruals	12	50	113	175
At December 31, 2015	100	100	244	444

In line with the remuneration policy of the Company, variable compensation linked to the achievement of medium-long term objectives was introduced in favor of the Chairman and Managing Director. Such compensation could be paid out in 2018 in case targets set for years 2014-2017 by the Board of Directors, upon proposal of the Remuneration Committee, are achieved. The amount of the accrual against the possible compensation of directors is recorded among the cost of services.

The provision Other risks includes prevalently accruals for charges on commercial litigation pending that had not been defined at the date of the financial statements.

11. DEFERRED TAX ASSETS AND LIABILITIES

	Dec. 31, 2015	Dec. 31, 2014
Deferred tax assets
Elimination of unrealized intra-group profits in stock	1,697	1,660
Write-down of inventories	241	274
Goodwill amortization	8	13
Provision for French personnel costs	77	78
Provision for doubtful accounts of parent company	228	223
Differences on depreciation of parent company	132	131
Other	167	95
Gross deferred tax assets	2,550	2,474
Deferred tax liabilities
Average cost valuation of inventories by the parent	(297)	(231)
Accelerated depreciation	(242)	(214)
Elimination of Cembre GmbH product warranty provision	(10)	(10)
Reversal of land depreciation	(24)	(27)
Revaluation of land	(1,652)	(1,859)
Discounting of employee termination indemnity	7	(19)

Differences on depreciation of Cembre Inc. (US)	(15)	(56)
Currency translation differences	(2)	(23)
Gross deferred tax liabilities	(2,235)	(2,439)

Net deferred tax liabilities	315	35

12. TRADE PAYABLES

	Dec. 31, 2015	Dec. 31, 2014	Change
Payable to suppliers	11,627	12,898	(1,271)
Advances	26	321	(295)
Total	11,653	13,219	(1,566)

Trade payables by geographical area

	Dec. 31, 2015	Dec. 31, 2014	Change
Italy	10,387	10,873	(486)
Rest of Europe	1,228	1,981	(753)
America	2	37	(35)
Other	10	7	3
Total	11,627	12,898	(1,271)

13. OTHER PAYABLES

	Dec. 31, 2015	Dec. 31, 2014	Change
Payables to employees	1,711	1,618	93
Employee withholding taxes payable	1,167	988	179
Bonuses owed to customers	337	317	20
VAT and similar foreign taxes payable	964	812	152
Commissions payable	231	186	45
Payable to Statutory Auditors and similar foreign boards	19	73	(54)
Payable to Directors	7	6	1
Social security payables	2,535	2,404	131
Payable on sundry taxes	59	39	20
Other	182	50	132
Accrued liabilities	(255)	(96)	(159)
Total	6,957	6,397	560

14. REVENUES FROM SALES AND SERVICES PROVIDED

In 2015, revenues grew by 7.5% on the previous year. A total of 40% of Group sales were represented by Italy (10.1% more than in 2014), while sales in the rest of Europe represented 43% of total sales, (2% more than in the previous year). Sales to the rest of the World represented grew by 17.1%, representing 17% of total sales. Further detail is provided in the Report on Operations.

15. OTHER REVENUES

Other revenues are made up as follows:

	2015	2014	Change
Rent	-	57	(57)
Capital gains	75	45	30
Uses of provisions	22	6	16
Insurance damages	20	14	6
Reimbursements	391	402	(11)
Other	125	395	(270)
Grants	32	1	31
Total	665	920	(255)

Reimbursements relate primarily to transport costs charged to customers.

In 2014, Item Other included €350 thousand of damages awarded to Cembre at the conclusion of a commercial litigation.

16. COST OF SERVICES

	2015	2014	Change
Subcontracted work	3,081	2,688	393
Electricity, heating and water	1,499	1,498	1
Transport of goods sold	1,789	1,721	68
Fuel	448	460	(12)
Travelling expenses	963	852	111
Maintenance and repair	1,835	2,120	(285)
Consulting	1,314	1,368	(54)
Advertising and promotion	583	558	25
Insurance	663	587	76
Boards' compensation	708	680	28
Postage and telephone	309	404	(95)
Commissions	508	356	152
Security and cleaning	500	505	(5)
Bank charges	151	151	-
Other	894	667	227
Total	15,245	14,615	630

17. LEASES AND RENTALS

	2015	2014	Change
Rent and related costs	757	818	(61)
Vehicle leasing	653	562	91
Total	1,410	1,380	30

18. PERSONNEL COSTS

	2015	2014	Change
Wages and salaries	25,938	24,036	1,902
Social security contributions	6,655	6,213	442
Employee termination indemnity	1,116	1,035	81
Retirement benefits	252	279	(27)
Other costs	449	545	(96)
Total	34,410	32,108	2,302

Wages and salaries include €1,044 thousand relating to outsourced personnel, of which €830 thousand pertaining to the parent company and €214 thousand to the German subsidiary.

Average number of employees by category

	2015	2014	Change
Managers	14	15	(1)
Administrative and commercial staff	287	282	5
Workers	299	298	1
Outsourced personnel	26	23	3
Total	626	618	8

Average number of employees by Group company

	Managers	White collars	Blue collars	Outsourced personnel	Total 2015	Total 2014	Change
Cembre S.p.A.	6	184	223	23	436	418	18
Cembre Ltd.	2	36	54	-	92	101	(9)
Cembre Sarl	1	18	5	-	24	24	-
Cembre España SL	1	20	7	2	30	31	(1)
Cembre AS	-	2	-	-	2	2	-
Cembre Inc.	3	15	5	-	23	22	1
Cembre GmbH	1	12	5	1	19	20	(1)
Total	14	287	299	26	626	618	8

19. OTHER OPERATING COSTS

	2015	2014	Change
Sundry taxes	712	685	27
Losses on receivables	6	4	2
Capital losses	85	235	(150)
Donations	23	18	5
Other	432	335	97
Total	1,258	1,277	(19)

Item Other consists primarily sundry expenses of the parent company. In 2014, Capital losses included €126 thousand resulting from the disposal of leasehold improvements following the early termination by Cembre of a number of lease contracts upon the transfer of production departments in other locations owned by the Company.

20. ACCRUALS TO PROVISIONS FOR RISKS AND CHARGES

	2015	2014	Change
Customer indemnities	12	9	3
Customer indemnities	12	9	3
Total	71	141	(70)

The customer indemnities provision amounts to €12 thousand and was accrued against possible charges in the case of termination of agency mandates.

Item Other risks includes accruals for possible charges on commercial litigation not concluded at the date of approval of the financial statements.

21. FINANCIAL INCOME (EXPENSE)

	2015	2014	Change
Interest earned on bank account balances	32	20	12
Other financial income	1	1	-
Total financial income	33	21	12
Loans and bank overdrafts	(1)	(6)	5
Financial charges on discounting of Employee Termination Indemnity	(58)	(91)	33
Other financial charges	(1)	(2)	1
Total financial expense	(60)	(99)	39
Financial income (expense)	(27)	(78)	51

22. INCOME TAXES

Income taxes are made up as follows:

	2015	2014	Change
Current taxes	(6,936)	(6,777)	(159)
Deferred taxes	320	500	(180)
Extraordinary items	(80)	114	(194)
Change in tax rate	(249)	3	(252)
Total	(6,945)	(6,160)	(785)

The table that follows shows a reconciliation between the theoretical tax expense, calculated at the normal tax rate of the parent company (Corporate (IRES) + Regional Tax on Productive Activities (IRAP) = 31.4%), and the actual tax expense recorded in the consolidated accounts.

	2015		2014
	amount	% tax rate	amount	% tax rate
Profit before taxes	22,878		19,702
Theoretical tax expense	7,184	31.40%	6,186	31.40%
Effect of non-deductible costs	913	3.99%	987	5.01%
Effect of tax-exempt income and deductions	(1,245)	-5.44%	(1,082)	-5.49%
Effect of different IRAP taxable income	63	0.28%	495	2.51%
Other deductions	(17)	-0.07%	(86)	-0.44%
Effect of change in tax rate of UK subsidiary	249	1.09%	(3)	-0.02%
Extraordinary items	80	0.35%	(114)	-0.58%
Effect of different foreign tax rates	(282)	-1.23%	(223)	-1.13%
Actual tax expense recorded	6,945	30.36%	6,160	31.27%

Item Change in tax rate consists of the adjustment made to deferred tax assets and liabilities in compliance with the change in the IRES tax rate (lowered to 24%) effective in 2017.

At December 31, 2015, there did not exist temporary differences and loss carryforwards on which no deferred tax assets or liability had been recorded.

	2015	2014
Elimination of unrealized intra-group profits in stock	251	337
Provision for doubtful accounts of the parent company	31	100
Differences on depreciation of US subsidiary	41	(56)
Average cost valuation of inventories of parent company	(92)	53
Accelerated depreciation	(28)	(47)
Write down of inventories	(11)	47
Discounting of employee termination indemnity	14	25
Provision for French personnel costs	(1)	24
Differences on depreciation of parent company	17	14
Amortization of goodwill	(5)	(5)
Other	103	8
Deferred tax assets and liabilities for the period	320	500

Deferred tax assets and liabilities are made up as follows:

23. COMPREHENSIVE INCOME

The Cembre Group chose to adopt IAS 1 Revised providing for the use of a single table to report its comprehensive income. In particular, the economic effects recorded directly under Shareholders' Equity are reported separately and result as an increase or decrease of net profit for the period.

At December 31, 2015, the changes relate only to foreign exchange translation differences arising upon consolidation on the translation into euro of the financial statements of subsidiaries operating outside the euro zone, to the effect of the discounting of Employee Termination Indemnities and to the adjustments made as a result of the introduction from 2017 of a lower IRES tax rate to deferred tax liabilities generated by the revaluation of land carried out on the first-time adoption of IFRS.

24. EARNINGS PER SHARE (BASIC AND DILUTED)

Earnings per share are calculated by dividing net profit by the weighted average number of shares in circulation for the period, excluding treasury shares held at the end of the year (the Group does not hold treasury shares).

	2015	2014
Consolidated net profit (€'000)	15,933	13,542
No. of ordinary shares ('000)	17,000	17,000
Basic and diluted earnings per share	0.94	0.80

25. DIVIDENDS

On May 20, 2015 the company distributed (with ex-dividend date May 18) a dividend on net profit for the year ended December 31, 2014, amounting to €6,120 thousand, equivalent to €0.36 for each share entitled to dividends.

	2015	2014
Resolved and paid in the year Balance due for 2014 dividend: €0.36 (2013: €0.26)	6,120,000	4,420,000
Proposal submitted to the Shareholders' Meeting (not recorded as liability at December 31) Balance due for 2015 dividend: €0.46 (2014: €0.36)	7,820,000	6,120,000

Proposed dividends submitted for approval to the Shareholders' Meeting amount to €0.46 per share, for a total of €7,820 thousand. This amount was not recorded as a liability.

26. COMMITMENTS AND RISKS

	Dec. 31, 2015	Dec. 31, 2014	Change
Guarantees granted	607	547	60

Commitments at December 31, 2015 included guarantees granted to the Brescia Municipality amounting to €352 thousand against the construction of development infrastructure in connection with the construction of new parking spaces and entrance at the Brescia main complex. The residual amount relates to guarantees for supplies granted to electrical and railway companies.

27. NET FINANCIAL POSITION

The net financial position of the Group amounted at the end of 2015 to a surplus of €17,802 thousand, improving on December 31, 2014.

At December 31, 2015, the Group had no outstanding debt involving covenants or negative pledges. Below we include the Net Financial Position of the Group, as provided by Consob in Regulation DEM/6064313 dated July 28, 2006.

		Dec. 31, 2015	Dec. 31, 2014
A	Cash	18	13
B	Bank deposits	17,784	11,646
C	Cash and cash equivalents (A+B)	17,802	11,659
D	Financial receivables	-	-
E	Current bank debt	-	-
F	Current financial debt (E)	-	-
G	Net current financial position (C+D+F)	17,802	11,659
H	Non-current financial debt	-	-
I	Net financial position (G+H)	17,802	11,659

28. RELATED PARTIES

The table that follows shows transactions between the parent company and its subsidiaries at December 31, 2015.

	Payables	Receivables	Revenues	Purchases
Cembre Ltd.	351	-	7,393	166
Cembre S.a.r.l.	479	-	4,380	2
Cembre España S.L.	577	-	4,826	8
Cembre AS	132	-	406	-
Cembre GmbH	650	4	4,563	90
Cembre Inc.	1,546	-	5,805	442
TOTAL	3,735	4	27,373	708

With reference to assets and liabilities relating to subsidiaries shown above, we confirm that transactions with the same and with related parties fall within the scope of normal operating activities. Revenues include, in addition to those from the sale of products, charges made to subsidiaries for costs relating to information system maintenance and royalties for the use of the Cembre trademark, totaling €460 thousand.

Among assets leased to Cembre by third parties are an industrial building adjacent to the Company's registered office measuring a total of 5,960 square meters on three floors, in addition to the Milan, Padua and Bologna sales offices, all of which are owned by company Tha Immobiliare S.p.A., with registered office in Brescia, controlled by Anna Maria Onofri, Giovanni Rosani and Sara Rosani, directors of Cembre S.p.A. Lease payments for 2015 amounted to €528 thousand. Rent is in line with market conditions. It is in the Company's interest to benefit from the continuity of office space reducing the risk of early termination of leases. At the end of 2015, all amounts due to Tha Immobiliare had been settled.

Cembre Ltd. leased an industrial building from Borno Ltd., a company controlled by Lysne S.p.A., for an annual rent of £41 thousand (equal to €53 thousand); this fee is in line with market conditions.

	2015	2014	Change
Rent paid by Cembre SpA to Tha Immobiliare	528	528	-
Rent paid by Cembre SpA to Montifer	-	76	(76)
Rent paid by Cembre Ltd to Borno Ltd.	56	53	3
TOTAL	584	657	(73)

Rent paid to related parties can be summarized as follow:

Lease contracts with Montifer S.r.l. were terminated in 2014.

Cembre S.p.A. does not have direct relationships with its parent company Lysne S.p.A. of any other nature than that of the exercise of shareholders' rights on the part of the parent. Lysne S.p.A. does not carry out any management or coordination activity with respect to Cembre S.p.A.

Boards' compensation

In 2015, compensation for the Board of Directors and the Board of Statutory Auditors, net of social security contributions, amounted to:

	Statutory Auditors	Directors
Emoluments as directors and auditors of the parent company	87	518
Retribution as employees	-	224
Accrual for variable compensation	-	50
Non-monetary benefits	-	14

Non-monetary benefits relate to the use of a company car and insurance policies underwritten on their behalf.

29. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

The Group does not make significant use of derivative instruments to hedge against interest risk and currency exposure.

The short term maturity of a large part of the financial instruments held is such that their carrying value is in line with their fair value of the same.

Risks connected with the market

The Group faces these risks with ongoing innovation, the widening of the product range, high automation and the upgrade of its production process, implementing focused marketing policies also with the help of its foreign subsidiaries.

Interest rate risk

At December 31, 2015 the Group had no loans outstanding.

Currency risk

Despite a strong international presence, the Group does not have a significant exposure to currency risk (on an operating or equity basis), as it operates mainly in the euro area, the currency in which its trade transactions are mainly denominated.

Exposure to currency risk is determined mainly by sales in US dollars, British pounds and Norwegian kroners. The size of these transactions is not significant in influencing the overall performance of the Group.

As described in the consolidation principles section, financial statements of consolidated companies prepared in currencies other than the euro are translated into euro at the exchange rate published on the Internet site of the Ufficio Italiano Cambi. In the table that follows we report the economic effect of possible fluctuations in exchange rates for main financial figures of consolidated companies operating outside the euro area.

	Currency	Exchange rate fluctuation	Effect on Shareholders' Equity	Effect on sales	Effect on pre-tax profit
Cembre Ltd.	£	5% / -5%	591/(591)	767/(767)	107/(107)
Cembre AS	NOK	5% / -5%	211/(211)	483/(483)	12/(12)
Cembre Inc.	US\$	5% / -5%	345/(345)	592/(592)	26/(26)

At December 31, 2015, the effect of foreign-exchange transactions is positive by €69 thousand.

Liquidity risk

The exposure of the Group to liquidity risk is not material as its financial position is balanced. The collection and payment cycle is also in balance, as shown by the ratio of current assets to current liabilities which is considerably above 2.

Credit risk

Exposure to credit risk relates exclusively to trade receivables. As shown in note 4, none of the areas in which the Group operates poses relevant credit risks.

Operating procedures limit the sale of products or services to customers who do not possess an adequate credit profile or provide secured guarantees. Receivables matured over 12 months and those under litigation are widely covered by the provision for bad debt accrued.

30. SUBSEQUENT EVENTS

Starting with 2016, the Group has entrusted the distribution of its products in the Scandinavian market to a company different from its Norwegian subsidiary Cembre AS.

The new distributor has wider operations in the area than Cembre AS and is more suited to favor a better penetration of the Scandinavian market. The procedure for the liquidation of the Norwegian subsidiary was started in March 2016 and no significant effect on the financial or operating performance of the Group is expected to derive from it.

No event having significant effects on the Group's financial position or operating performance occurred after December 31, 2015.

31. CONSOLIDATED COMPANIES

Company	Registered office	Share capital	Share held at Dec. 31, 2015	Share held at Dec. 31, 2014
Cembre Ltd	Sutton Coldfield (Birmingham - UK)	GBP 1,700,000	100%	100%
Cembre Sarl	Morangis (Paris)	EURO 1,071,000	100% (*)	100% (*)
Cembre España SL	Torrejón de Ardoz (Madrid)	EURO 2,902,000	100% (*)	100% (*)
Cembre AS	Stokke (Norway)	NOK 2,400,000	100%	100%
Cembre GmbH	Munich (Germany)	EURO 1,812,000	100% (*)	100% (*)
Cembre Inc.	Edison (New Jersey , US)	US \$ 1,440,000	100%(**)	100%(**)

Companies consolidated line-by-line are:

* 5% share held through Cembre Ltd.

**29% share held through Cembre Ltd.

Brescia, March 11, 2016

THE CHAIRMAN AND MANAGING DIRECTOR OF CEMBRE S.P.A.

Giovanni Rosani

Attestation in respect of the Consolidated financial statements

pursuant to art 154-bis Paragraph 5, of Legislative Decree 58 dated Feb. 24, 1998 "Consolidated Law on financial intermediation regulations" and subsequent integrations and updatings

The undersigned Giovanni Rosani and Claudio Bornati, in their position as Managing Director and Manager responsible for the preparation of financial reports of Cembre S.p.A., respectively, pursuant to Article 154-bis, paragraphs 3 and 4 of Legislative Decree No.58/1998, certify that internal controls over financial reporting in place for the preparation of 2015 consolidated financial statements and during the period covered by the report, were:

adequate to the Company structure, and
effectively applied during the process.

The undersigned officers certify that this 2014 consolidated financial statements:

a) corresponds to the Company's evidence and accounting books and entries, and

b) was prepared in accordance with International Financial Reporting Standards, as endorsed by the European Union through Regulation (EC) 1606/2002 of the European Parliament and Counsel, dated 19 July 2002;

c) provide a fair and correct representation of the financial conditions, results of operations and cash flows of the Company and its consolidated subsidiaries.

The undersigned officers attest, also, that the report on operations includes a reliable operating and financial review of the Company and of the Group as well as a description of the main risks and uncertainties to which they are exposed.

Brescia, March 24, 2016

signed by: signed by: Giovanni Rosani Claudio Bornati

Chairman and Manager responsible for the Managing Director preparation of financial reports

INDEPENDENT AUDITORS' REPORT IN ACCORDANCE WITH ARTICLES 14 AND 16 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010

To the shareholders of Cembre S.p.A.

Report on the consolidated financial statements

We have audited the accompanying consolidated financial statements of the Cembre Group, which comprise the statement of financial position as of December 31, 2015 the statement of comprehensive income, statement of changes in shareholders' equity and statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory notes.

Directors' responsibility for the consolidated financial statements

The directors of Cembre S.p.A. are responsible for the preparation of consolidated financial statements that give a true and fair view in compliance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/2005.

Auditors' responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA Italia) drawn up pursuant to article 11, paragraph 3, of Legislative Decree No. 39 of January 27, 2010. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The audit procedures selected depend on the auditor's professional judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of consolidated financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements give a true and fair view of the financial position of the Cembre Group as of December 31, 2015 and of the result of its operations and cash flows for the year then ended in compliance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/2005.

Report on compliance with other laws and regulations

Opinion on the consistency with the consolidated financial statements of the report on operations and of certain information set out in the report on corporate governance and ownership structure

We have performed the procedures required under auditing standard (SA Italia) No. 720B in order to express an opinion, as required by law, on the consistency of the report on operations and of the information set out in the report on corporate governance and ownership structure referred to in article 123-bis, paragraph 4, of Legislative Decree No. 58/98, which are the responsibility of the directors of Cembre S.p.A., with the consolidated financial statements of the Cembre Group as of December 31, 2015. In our opinion, the report on operations and the information in the report on corporate governance and ownership structure mentioned above are consistent with the consolidated financial statements of the Cembre Group as of December 31, 2015.

Brescia, March 29, 2016

PricewaterhouseCoopers S.p.A.

Signed by

Alessandro Mazzetti (Partner)

This report has been translated into English from the Italian original solely for the convenience of international readers

REPORT OF THE BOARD OF STATUTORY AUDITORS ON THE CONSOLIDATED FINANCIAL STATEMENTS OF THE CEMBRE GROUP AT DECEMBER 31, 2015

To our Shareholders:

the Consolidated Financial Statements for the 2015 financial year delivered to the Board of Statutory Auditors within the term provided – consisting of the Consolidated Statement of Financial Position, Consolidated Statement of Comprehensive Income, Statement of Changes in the Consolidated Shareholders' Equity and of the Notes to the Consolidated Financial Statements – were prepared under International Financial Reporting Standard (IFRS) adopted by the European Union and in compliance with regulations issued to implement article 9 of Legislative Decree 38/2005, in force at December 31, 2015.

International accounting principles, amendments and interpretations issued by IASB applicable from January 1, 2015 and described in the Notes to the consolidated accounts, were employed in the preparation of the Consolidated Financial Statements. The coming into force of amendments to IFRIC 21, IAS 29 and of annual improvements to IFRIS Cycle 2011-2013 and Cycle 2010-2012 did not find an application in the Consolidated Accounts of the Cembre Group.

Items in the Financial Statements were recorded at the historical cost with the exception of those items for which accounting principles provide for a different valuation method.

The Consolidated Financial Statements for the 2015 financial year report a consolidated net profit of €15,933 thousand as compared with a consolidated net profit of €13,542 thousand in the previous year.

Checks carried out by Independent Auditors PricewaterhouseCoopers, appointed for the auditing of the accounts, as stated in the Auditing Report, ascertained that:

paragraph Opinion: "in our opinion the Consolidated Financial Statements give a true and fair view of the financial position of the Cembre Group as of December 31, 2015 and of the result of its operations and cash flows for the year then ended in compliance with IFRS as adopted by the European Union, as well as with regulations issued to implement article 9 of Legislative Decree 38/2005";
paragraph Opinion on the consistency with the consolidated financial statements of the report on operations and of certain information set out in the report on corporate governance and ownership structure: "in our opinion the Report on operations and the information in the report on corporate governance and ownership structure mentioned above are consistent with the Consolidated

Financial Statements of the Cembre Group as of December 31, 2015".

In compliance with article 41, par. 3 of Legislative Decree no. 127, dated April 9, 1991, with the exception of the issues specified below, the Consolidated Financial Statements, were therefore not audited by the Board of Statutory Auditors.

The Notes to the consolidated accounts provide a detail of Balance Sheet and Income Statement items and illustrate accounting principles, consolidation principles and valuation criteria applied in the preparation of the same, in addition to changes in accounting principles.

The consolidation area, unchanged from the previous year, the choice of consolidation principles in application of the line-by-line method, of subsidiaries to be consolidated and of procedures for the consolidation, are consistent with IFRS.

Information provided in the Report on Operations illustrates adequately the operating and financial situation of the parent company, investments made, alternative performance indicators, Shareholders' Equity, main risks and uncertainties, environmental management, worker safety, performance indicators, research, development and technological innovation activities, relationships with subsidiaries, parent companies and related parties – shown also in financial statements – its operating performance in 2015 and the outlook for 2016 of the parent company and the Group as a whole.

The review performed shows the consistency of the Report on Operations with the Consolidated Financial Statements.

Brescia, March 29, 2016

The Board of Statutory Auditors The Chairman Fabio Longhi

Statement of financial position

ASSETS	Notes	Dec. 31, 2015		Dec. 31, 2014
			of which: related		of which: related
			parties		parties
NON CURRENT ASSETS	1
Tangible assets	2	53.983.959		52.926.962
Investment property	3	1.232.614		1.286.155
Intangible assets	4	1.302.697		1.166.122
Investments in subsidiaries	5	10.144.083		10.144.083
Other investments		10.333		10.333
Other non-current assets	6	6.838		5.558
Deferred tax assets	15	728.392		704.753

TOTAL NON-CURRENT ASSETS		67.408.916		66.243.966

CURRENT ASSETS
Inventories	7	28.523.940		26.908.930
Trade receivables	8-35	16.283.580		15.830.675
Trade receivables from subsidiaries	9	3.735.181	3.735.181	3.904.737	3.904.737
Tax receivables	10	669.002		815.967
Other assets	11	425.025		488.260
Cash and cash equivalents	33	11.074.009		7.342.623

TOTAL CURRENT ASSETS		60.710.737		55.291.192

NON-CURRENT ASSETS AVAILABLE FOR SALE		-		-

TOTAL ASSETS		128.119.653		121.535.158

LIABILITIES AND SHAREHOLDERS' EQUITY	Notes	Dec. 31, 2015		Dec. 31, 2014
			of which: related		of which: related
EQUITY			parties		parties
Capital stock	12	8.840.000		8.840.000
Reserves	12	84.433.132		78.179.016
Net profit		14.438.346		12.202.351

TOTAL SHAREHOLDERS' EQUITY		107.711.478		99.221.367
NON-CURRENT LIABILITIES
Non-current financial liabilities		-		-
Employee Severance Indemnity and other personnel benefits	13	2.387.874	167.665	2.333.101	160.155
Provisions for risks and charges	14	443.855	100.000	269.327	50.000
Deferred tax liabilities	15	1.971.605		2.164.903

TOTAL NON-CURRENT LIABILITIES		4.803.334		4.767.331
CURRENT LIABILITIES
Current financial liabilities		-		-
Trade payables	16-35	10.721.910		12.094.491
Trade payables to subsidiaries	17	4.324	4.324	99.706	99.706
Other Payables	18	4.689.635		4.253.331

TOTAL CURRENT LIABILITIES		15.604.841		17.546.460

LIABILITIES ON ASSETS HELD FOR DISPOSAL		-		-
TOTAL LIABILITIES		20.408.175		22.313.791

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		128.119.653		121.535.158

Statement of comprehensive income

	Notes	Year 2015		Year 2014
			of which: related		of which: related
			parties		parties
Revenues from sales and services provided	19	92.615.852	26.890.753	84.902.582	26.348.498
Other revenues	20	754.013	482.473	1.043.041	464.891

TOTAL REVENUES		93.369.865		85.945.623
Cost of goods and merchandise	21	(35.996.664)	(707.765)	(33.755.814)	(549.221)
Change in inventories	7	1.615.010		932.026
Cost of services received	22	(10.552.282)	(655.295)	(10.007.214)	(630.876)
Lease and rental costs	23	(920.254)	(528.376)	(957.087)	(604.052)
Personnel costs	24	(23.774.554)	(299.510)	(22.235.392)	(304.015)
Other operating costs	25	(892.730)		(918.047)
Increase in assets due to internal construction		819.091		882.965
Write-down of receivables	8	(340.343)		(568.533)
Accruals to provisions for risks and charges	26	(70.326)		(140.989)
GROSS OPERATING PROFIT		23.256.813		19.177.538

Tangible asset depreciation	1-2	(4.306.646)		(3.704.120)
Intangible asset amortization	3	(453.494)		(386.171)

OPERATING PROFIT		18.496.673		15.087.247
Financial income	27	1.750.719	1.728.542	1.954.227	1.941.019
Financial expenses	27	(59.072)		(96.818)
Foreign exchange gains (losses)	28-35	(24.387)		265.525

PROFIT BEFORE TAXES		20.163.933		17.210.181
Income taxes	15-29	(5.725.587)		(5.007.830)
NET PROFIT FROM ORDINARY ACTIVITIES		14.438.346		12.202.351

NET PROFIT FROM ASSETS HELD FOR DISPOSAL		-		-

NET PROFIT		14.438.346		12.202.351
Items that will not be reclassified to profit and loss
Gains (losses) from discounting of Employees' Termination Indemnity		(42.413)		(125.687)
Income tax relating to items that will not be reclassified		6.946		34.564

Items that may be reclassified subsequently to profit and loss
Restatement of deferred tax liability as per new tax rate		207.232		-

COMPREHENSIVE INCOME	30	14.610.111		12.111.228

BASIC AND DILUTED EARNINGS PER SHARE		0,85		0,72

Statement of Cash Flows

A) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 7.342.623 2.957.545 B) CASH FLOW FROM OPERATING ACTIVITIES Net profit for the year 14.438.346 12.202.351 Depreciation, amortization and write-downs 4.760.140 4.090.291 (Gains)/Losses on disposal of assets 42.679 76.351 Net change in Employee Severance Indemnity 54.773 45.574 Net change in provisions for risks and charges 174.528 190.512 Operating profit (loss) before change in working capital 19.470.466 16.605.079 (Increase) Decrease in trade receivables (283.349) 958.841 (Increase) Decrease in inventories (1.615.010) (932.027) (Increase) Decrease in other receivables and deferred tax assets 186.561 638.436 Increase (Decrease) of trade payables (1.303.140) 213.837 Increase (Decrease) of other payables and deferred tax liabilities (666.954) 1.299.835 Change in working capital (3.681.892) 2.178.922 NET CASH FLOW (USED IN)/FROM OPERATING ACTIVITIES 15.788.574 18.784.001 C) CASH FLOW FROM INVESTING ACTIVITIES Capital expenditure on fixed assets: - intangible (599.338) (454.815) - tangible (5.631.774) (8.052.358) - financial - (5.109) Proceeds from disposal of tangible, intangible, financial assets - intangible 9.269 - - tangible 278.993 222.137 Increase (Decrease) of trade payables for assets (164.823) 50.169 NET CASH FLOW (USED IN)/FROM INVESTING ACTIVITIES (6.107.673) (8.239.976) D) CASH FLOW FROM FINANCING ACTIVITIES (Increase) Decrease in other non current assets (1.280) (285) Increase (Decrease) in bank loans and borrowings - (1.647.539) Dividends distributed (6.120.000) (4.420.000) NET CASH FLOW (USED IN)/FROM FINANCING ACTIVITIES (6.121.280) (6.067.824) E) INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (B+C+D) 3.559.621 4.476.201


































F) Discounting of employees' termination indemnities (35.467) (91.123)
H) Restatement of deferrd tax liabilities as per new tax rate 207.232 -
G) CASH AND CASH EQUIVALENTS AT END OF YEAR (A+E+F) 11.074.009 7.342.623

CASH AND CASH EQUIVALENTS AT END OF YEAR 11.074.009 7.342.623
Financial receivables from subsidiaries - -
Current financial liabilities - -
NET FINANCIAL POSITION 11.074.009 7.342.623
INTEREST PAID IN THE YEAR (325) (5.374)

BREAKDOWN OF CASH AND CASH EQUIVALENTS AT END OF YEAR Cash 11.608 7.946
Banks 11.062.401 7.334.677
11.074.009 7.342.623

Statement of Changes in the Shareholders' Equity

	Balance at December 31, 2014	Merger's effects	Allocation of previous year net profit	Other movements	Comprehensive income	Balance at December 31, 2015
Capital stock	8.840.000					8.840.000
Share premium reserve	12.244.869					12.244.869
Legal reserve	1.768.000					1.768.000
Suspended-tax revaluation reserve	585.159					585.159
Other suspended-tax reserves	68.412					68.412
Extraordinary reserve	54.952.822		6.082.351		207.232	61.242.405
Reserve for FTA	4.051.204					4.051.204
Reserve for discounting of Employee Termination Indemnity	111.412				(35.467)	75.945
Merger surplus reserve	4.397.138					4.397.138
Retained earnings	-					-
Net profit	12.202.351		(12.202.351)		14.438.346	14.438.346
Total Shareholders' Equity	99.221.367	-	(6.120.000)	-	14.610.111	107.711.478

	Balance at December 31, 2013	Allocation of previous year net profit	Other movements	Comprehensive income	Balance at December 31, 2014
Capital stock	8.840.000				8.840.000
Share premium reserve	12.244.869				12.244.869
Legal reserve	1.768.000				1.768.000
Suspended-tax revaluation reserve	585.159				585.159
Other suspended-tax reserves	68.412				68.412
Extraordinary reserve	50.696.734	4.256.088			54.952.822
Reserve for FTA	4.051.204				4.051.204
Reserve for discounting of Employee Termination Indemnity	202.535			(91.123)	111.412
Merger surplus reserve	4.397.138				4.397.138
Retained earnings	-				-
Net profit	8.676.088	(8.676.088)		12.202.351	12.202.351
Total Shareholders' Equity	91.530.139	- (4.420.000)	-	12.111.228	99.221.367

Notes to the Financial Statements of Cembre S.p.A. at December 31, 2015

I. CORPORATE INFORMATION

Cembre S.p.A. is a joint-stock company with registered office in Brescia, via Serenissima 9. The company is listed in the Italian Market of Shares (MTA) managed by Borsa Italiana S.p.A.

Cembre S.p.A. (hereinafter referred to as the "Company") is active primarily in the manufacturing and sale of electrical connectors and related tools.

The publication of the Financial Statements of Cembre S.p.A. for the year ended December 31, 2015 was authorized by a resolution of the Board of Directors dated March 11, 2016.

Cembre S.p.A. is controlled by Lysne S.p.A., a holding company based in Brescia, that does not direct or coordinate its subsidiary.

II. FORM AND CONTENT OF THE FINANCIAL STATEMENTS

The present Financial Statements at December 31, 2015 were prepared under the International Financial Reporting Standards (IFRS) adopted by the European Union and the related implementation regulations issued in application of article 9 of Legislative Decree no. 38/2005.

Principles adopted in the preparation of the Financial Statements are those formally approved by the European Union as of December 31, 2015.

Items in the Balance Sheet were recorded at the historical cost with the exception of those items for which international accounting principles provide for a different measurement.

Unless otherwise indicated, figures reported in the financial statements and the related notes are expressed in thousands of euro.

The Financial Statements at December 31, 2015 were prepared in the expectation of the continuation of the Company's activities.

The table that follows contains a list of international accounting principles and interpretations approved by the IASB that became effective from 2015, which were taken into account, where applicable, in the preparation of the present Financial Statements.

	Effective from
IFRIC 21 - Levies	June 17, 2014
Annual Improvements to IFRS: Cycle 2011-2013	January 1, 2015
Amendments to IAS 19 – Employee Benefits	February 1, 2015
Annual Improvements to IFRS: Cycle 2010-2012	February 1, 2015

The above changes did not find an application in the financial statements of Cembre S.p.A.

Future changes in accounting principles

The following updates of IFRS (already approved by the IASB), interpretations and amendments are in the process of being incorporated into European Union regulations:

New Principles	Effective from
IFRS 9 – Financial Instruments	January 1, 2018
IFRS 14 – Regulatory Deferral Accounts	January 1, 2016
IFRS 15 – Revenue from Contracts with Customers	January 1, 2017
IFRS 16 – Leases	January 1, 2019

Changes in Accounting Principles	Effective from
Amendments to IFRS 11 – Accounting for Acquisitions of Interests in Joint Operations	January 1, 2016
Amendments to IAS 16 and IAS 38 – Acceptable Methods of Depreciation and Amortization	January 1, 2016
Amendments to IAS 16 and IAS 41 – Agriculture: Bearer Plants	January 1, 2016
Amendments to IAS 27 – Equity Method in Separate Financial Statements	January 1, 2016
Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture	January 1, 2016
Annual Improvements to IFRS: Cycle 2012-2014	January 1, 2016
Amendments to IFRS 10 and IAS 28 –– Investment entity amendments: Applying the Consolidation Exception	January 1, 2016
Amendments to IAS 1 – Disclosure Initiative	January 1, 2016

Cembre will evaluate in the next months the possible effects of the adoption of the new principles and amendments.

III. ACCOUNTING PRINCIPLES AND VALUATION CRITERIA

Form of the Financial Statements

The financial statements are prepared as follows:

− current and non-current assets and liabilities are reported separately in the Statement of Financial Position;
− the analysis of costs in the Statement of Comprehensive Income is carried out based on the nature of the same;
− the Statement of Cash Flows is prepared by applying the indirect method.

Financial Statements forms are not changed from previous year.

With reference to Consob Regulation no. 15519 dated July 27, 2006, the Financial Statements include a separate reporting of amounts pertaining to related parties, where significant.

Property, plant and equipment

Property, plant and equipment is recorded at the historical cost and reported net of accumulated depreciation and losses in value.

Ordinary maintenance and repair costs are not capitalized, and are charged to the income statement in the year in which they are incurred, with the exception of those that result in an extension of the useful life of the asset.

- Buildings and light installations:	3% – 10%
- Plant and machinery:	10% – 15%
- Industrial and commercial equipment:	15% – 25%

Other assets: 12% – 25%

Land has an undetermined useful life and is therefore not subject to depreciation.

The residual value of assets, their useful life and methods applied are reviewed annually and adjusted, where necessary, at the end of each year.

Leased assets

Assets held under a financial lease, through which all risks and benefits relating to ownership are transferred to the Company, are recorded under assets at the lower of their current value and the present value of minimum lease payments due according to the contract, including the bullet payment due at the end of the lease to exercise the repurchase option.

The liability corresponding to the lease contract is recorded under financial liabilities. Leased asset are classified under the respective category among property, plant and equipment, and depreciated over the shorter period between the term of the lease and the expected residual useful life of the asset.

Investment property

Assets that cease to be used in the context of the Company's ordinary operations but possess all the characteristics set forth in IFRS 5 to be included among non-current assets available for sale, are classified among Investment Properties and continue to be amortized as if they were still included among Property, plant and equipment.

Intangible assets

Intangible assets acquired separately are initially capitalized at cost, while those acquired through mergers are capitalized at their fair value at the time of acquisition.

With the exception of development costs, assets generated internally are not recorded as intangible assets.

The useful life generally attributed to the various classes of assets is the following:

- concessions and licenses:	5 to 10 years
- software licenses	3 to 5 years
- patents	2 years
- development costs:	5 years
- trademarks:	10 to 20 years

Amortization commences when the asset is available for use, that is, when it is in a position and in the necessary condition to operate in the manner intended by management.

Investments in subsidiaries

Investments in subsidiaries are recorded at cost, adjusted where necessary for losses in value.

Any positive difference that emerges upon acquisition between the purchase cost and the portion of the Shareholders' Equity acquired is therefore included in the book value of the investment.

Investments in subsidiaries are subjected to an impairment test whenever indicators of a loss in value are detected. Whenever it appears that an investment in a subsidiary has experienced a loss in value, the same is recorded in the Income Statement as a writedown.

Whenever losses of a subsidiary exceed the book value of the investment, the value of the same is written-down to zero and losses exceeding such value are recorded in a specific liability provision. In case the loss is subsequently reversed or reduced, the related amount is written-up in the Income Statement to the original cost of the investment.

Financial assets

Financial assets valued at fair value, whose change is recorded in the Income Statement

These are financial assets held for trading purposes, acquired for the purpose of obtaining a profit from short-term fluctuations in price. Unless specifically designated as effective hedging instruments, derivatives are classified as financial assets held for trading purposes. Gains and losses on financial assets held for trading purposes are recorded in the income statement.

Financial assets held to maturity

Financial assets other than derivatives that generate fixed financial flows or flows that may be determined and have a set maturity are classified as Financial assets held to maturity when the Company intends to and is capable of holding them to maturity.

Financial assets that the Company decides to hold for an indefinite period of time do not fall under this category.

After their initial recording, long-term financial investments held to maturity, such as bonds, are accounted for at the amortized cost, using the effective rate of interest method, representing the rate at which estimated future payments or collections over the expected useful life of the asset are discounted to their present value.

The amortized cost is calculated keeping into account discounts and premiums, amortized over the term of the financial asset.

Loans extended and receivables

Financial assets available for sale

Loss in value of financial assets

The Company verifies at least yearly the possible loss in value of individual financial assets. These are recorded only at the time when there exists objective evidence, at the occurrence of one or more events, that the asset has experienced a loss of value with respect to its initial recorded value.

Treasury shares

Treasury shares are recorded as a reduction of Shareholders' Equity in a specific reserve. The purchase, sale, issue or cancellation of own shares held does not determine the recording of any gain or loss in the Income Statement.

Inventories

Inventories are valued at the lower of cost and their expected realizable value, represented by their normal sale price, net of completion and selling costs.

The cost of inventories includes the acquisition cost, the transformation cost and other costs incurred to take inventories to their current location and state.

Payables and receivables

Cash and cash equivalents

Cash and cash equivalents are recorded at face value.

Loans

Loans are initially recorded at cost, corresponding to the fair value of the amount received, net of accessory costs. After the initial recording, loans are valued at the amortized cost, using the effective interest method.

Foreign currency translation

Non-monetary items denominated in currencies other than the euro are translated into euro at the exchange rate at the time of the transaction, representing the historical exchange rate.

Provisions for risks and charges

Provisions for risks and charges are accrued against known liabilities, of certain or probable existence, whose amount and expiration cannot however be determined at the date of the financial statements. Accruals are made when the existence of a current obligation, legal or implicit, deriving from a past event, the fulfillment of which is expected to require the use of resources whose amount can be reliably estimated, is probable.

Provisions are valued at the fair value of liabilities. When the financial effect and the timing of the cash outflow can be estimated in a reliable manner, provisions include the interest component, recorded in the Income Statement among financial income (expense). Provisions accrued are reviewed at each accounting date and adjusted to bring them into line with the best estimate available to date.

Employee retirement benefits

Under IAS 19, and before the reform introduced by the 2007 Budget Law, the Employee Severance Indemnity was classified among defined benefit plans and was therefore subject to actuarial adjustments.

After the reform, employee termination indemnities accrued up to December 31, 2006, continue to be accounted for as defined benefit plans, while those accrued from January 1, 2007 are accounted for in two different ways:

where the individual employee has opted for complementary pension funds, employee termination indemnities accrued after January 1, 2007 and until the time at which the choice is made by the employee, are accounted for as a defined benefit plan. Subsequently they are accounted for as a defined contribution plan;
where the individual employee has opted for accumulation with the treasury fund of the national social security agency (INPS), indemnities accrued after January 1, 2007 are accounted for as a defined contribution plan.

Elimination of financial assets and liabilities

Financial assets are eliminated when the Company ceases to hold rights to receive financial flows deriving from the same or when such rights are transferred to another entity, that is when risks and benefits of the financial instrument cease to have an effect on the financial position and operating performance of the Company.

A financial liability is written-off when the related obligation is cancelled, fulfilled or expired. Any material change in the contractual terms relating to the liability result in its cancellation and in the recording of a new liability. Any difference between the book value and the amount paid to extinguish the liability is recorded in the Income

Statement.

Revenues

Revenues are valued at the current value of the amount received or receivable.

Disposal of assets

Services rendered

The stage of completion is determined by valuing work carried out or by determining the proportion between costs incurred and total estimated costs to completion.

Interest

Interest is recorded in the period in which it accrues, using the effective interest method.

Dividends

Dividends are recorded when the right of shareholders to receive them arises.

Grants

Grants are recorded when there exists a reasonable certainty that that the same will actually be received and the company meets the conditions for the entitlement to the grant.

Grants linked to cost components (operating grants) are recorded under "other revenues" and amortized over several years so that revenues match the costs they are intended to compensate.

The fair value of grants linked to assets (e.g. grants on the purchase of plant and equipment or grants for capitalized Development costs), is suspended under long-term liabilities and released to the income statement under "other revenues" over the useful life of the asset to which it relates, thus in the period over which the depreciation expense relating to the asset is charged to the income statement.

Financial charges

Financial charges are recorded as a cost in the period in which they accrue.

In accordance with IAS 23 Revised, financial charges incurred in the acquisition of significant assets (qualifying assets) are capitalized.

Cost of goods purchased and services received

The cost of goods purchased and services received is recorded in the income statement based on the accrual method.

Income taxes (current, prepaid and deferred)

Current taxes are determined based on a realistic estimate of the tax expense for the period in accordance with applicable tax regulations. The Company records deferred and prepaid taxes arising from temporary differences between the book value of assets and liabilities and the related amounts reported for tax purposes.

Financial derivatives

Derivative financial instruments are valued at market value (fair value). A derivative financial instrument can be acquired for trading or hedging purposes.

Gains and losses on financial instruments acquired for trading purposes are charged to the income statement.

Hedge derivatives are classified as "fair value hedges" when they are acquired to hedge against the risk of fluctuations in the market value of the underlying asset or liability or fluctuations in the financial flows deriving from the same, both in the case of existing assets and liabilities or those deriving from a future transaction.

In the case of fair value hedges, gains and losses on the restatement of the market value of a derivative instrument are taken to the income statement.

In 2015 the Company did not stipulate financial derivative contracts.

Use of estimates

In the case of certain items and in accordance with IAS/IFRS, the Company made use of estimates and assumptions based on prior experience and other factors deemed determinant, but not certain. Actual data could therefore differ from estimates and projections made.

Provision for inventory depreciation

The provision for inventory depreciation is accrued to bring the book value of inventories into line with their expected realizable value.

Management reviews the composition of inventories with particular reference to slow moving stock to determine the amount to be accrued prudentially to reflect the obsolescence of stocks.

Provision for doubtful accounts

The provision for doubtful accounts reflects management estimates regarding losses on trade receivables.

Losses on trade receivables expected by the Company are based on past experience on similar portfolios of receivables, current overdues vs. historical overdues, losses and collections, the close monitoring of credit risk and credit worthiness of customers, in addition to projections on economic and market conditions.

Retrievable value of non-current assets

Non-current assets include property, plant and equipment, intangible assets, investments and other financial assets. Whenever circumstances so require, the management reviews periodically the book value of non-current assets held and used by the Company, in addition to assets to be disposed of. Such activity is carried out using estimates of expected cash flows from the sale of the asset and of adequate discount rates used in calculating the present value of the same. Whenever the book value of a non-current asset experiences a loss in value, the Company records a write-down equal to the difference between the book value of the asset and its retrievable value either through use or disposal of the same.

Post-retirement benefits

In the estimation of post-retirement benefits the Company makes use of traditional actuarial techniques based on stochastic simulations of the "Montecarlo" type. Assumptions made relate to the discount rate and the annual inflation rate. Actuarial advisors of the Company make also use of demographic projections based on current mortality rates, employee disablement and resignation rates.

In 2015, based on past turnover experience, the probability of an employee terminating his or her employment for causes other than death is the following:

Male	6.18%
Female	4.46%

Assumptions regarding the discounting and inflation rates were:

Discounting rate	2.03%
Yearly inflation rate	1.50%
Yearly real increase in retributions	1.00%

Expected advances to be paid out are 5% per year and each advance corresponds to 70% of the accrued indemnity.

Retrievability of deferred tax assets

The Company evaluates the possibility to retrieve deferred tax assets on the basis of profits and expected future market conditions in view of current sale contracts and ability of expected future profits to offset tax credits, in addition to the expected variance of the same.

Potential liabilities

In carrying out its activity, management consults with its legal and tax advisors and experts. The Company ascertains a liability arising from litigation whenever it deems probable that a financial outlay will be made in the future and when the amount of resulting losses can be reasonably estimated. In case a financial outlay becomes possible but its amount cannot be determined, such occurrence is reported in the notes.

IV. NOTES TO THE FINANCIAL STATEMENTS OF CEMBRE S.P.A.

	Land and buildings	Plant and machinery	Equipment	Other assets	Work in progress	Total
Historical cost	38,880,528	47,058,141	9,283,048	3,914,540	912,037	100,048,294
Accumulated depreciation	(8,063,048)	(29,132,847)	(7,077,147)	(2,848,290)	-	(47,121,332)
Bal. at Dec. 31, 2014	30,817,480	17,925,294	2,205,901	1,066,250	912,037	52,926,962
Increases	588,196	2,777,850	778,028	669,336	818,364	5,631,774
Depreciation	(788,261)	(2,680,325)	(398,884)	(385,635)	-	(4,253,105)
Net divestments	(208,498)	(103,547)	-	(9,627)	-	(321,672)
Reclassifications	102,463	240,221	309,247	3,248	(655,179)	-
Bal. at Dec. 31, 2015	30,511,380	18,159,493	2,894,292	1,343,572	1,075,222	53,983,959

1. PROPERTY, PLANT AND EQUIPMENT

	Land and buildings	Plant and machinery	Equipment	Other assets	Work in progress	Total
Historical cost	37,449,738	42,255,652	8,726,008	3,968,173	1,569,772	93,969,343
Accumulated depreciation	(7,436,986)	(27,652,176)	(7,025,417)	(3,031,094)	-	(45,145,673)
Bal. at Dec. 31, 2013	30,012,752	14,603,476	1,700,591	937,079	1,569,772	48,823,670
Increases	952,870	5,227,161	715,664	494,182	662,481	8,052,358
Depreciation	(756,427)	(2,210,352)	(332,618)	(351,181)	-	(3,650,578)
Net divestments	(125,633)	(156,705)	-	(13,830)	(2,320)	(298,488)
Reclassifications	733,918	461,714	122,264	-	(1,317,896)	-
Bal. at Dec. 31, 2014	30,817,480	17,925,294	2,205,901	1,066,250	912,037	52,926,962

Capital investments made by Cembre S.p.A. in 2015 amounted to €5,632 thousand. Renovation and development costs for new commercial offices included €401 thousand of building improvements and €119 thousand of plant and equipment, while expenditure on new production capacity included €2,301 thousand of machinery and €778 thousand of equipment and dies. Among machinery acquired are 1 transfer press for €437 thousand, two lathes for €632 thousand and a work station for €296 thousand.

Expenditure on equipment and dies under construction amounted to €374 thousand, while advances paid on plant and equipment to be supplied amount to €444 thousand.

Item "Land and buildings" includes the €5,921 thousand revaluation of land carried out upon the first-time application of international accounting principles (IAS).

A list of property, plant and equipment recorded in the Balance Sheet at December 31, 2015 and revalued in the year is provided below:

	Law 576/75	Law 72/83	Law 413/91	Total
Land and buildings	-	248,220	687,441	935,661
Plant and machinery	227	46,742	-	46,969
Total	227	294,961	687,441	982,630

2. INVESTMENT PROPERTIES

	Land and buildings	Plant and Machinery	Other assets	Total
Historical cost	1,713,397	277,759	5,322	1,996,478
Accumulated amortization	(473,213)	(234,526)	(2,584)	(710,323)
Balance at Dec. 31, 2014	1,240,184	43,233	2,738	1,286,155
Depreciation	(44,400)	(8,502)	(639)	(53,541)
Balance at Dec. 31, 2015	1,195,784	34,731	2,099	1,232,614

The Company vacated the industrial buildings located in Calcinate (Bergamo). Awaiting for a recovery of the real estate market that would improve sale conditions, these buildings and the related plant and equipment were reclassified among investment properties. To provide consistency, figures for 2014 were reclassified.

3. INTANGIBLE ASSETS

	Development costs	Patents	Software	Other intangible assets	Work in progress	Total
Historical cost	961,165	270,252	3,953,276	52,170	30,130	5,266,993
Accumulated amortization	(555,936)	(230,197)	(3,312,108)	(2,630)	-	(4,100,871)
Balance at Dec. 31, 2014	405,229	40,055	641,168	49,540	30,130	1,166,122
Increases	301,645	65,480	221,638	10,575	-	599,338
Amortization	(163,491)	(48,958)	(229,883)	(11,162)	-	(453,494)
Net divestments	-	(3,520)	(5,749)	-	-	(9,269)
Reclassifications	-	-	28,230	-	(28,230)	-
Balance at Dec. 31, 2015	543,383	53,057	655,404	48,953	1,900	1,302,697

Among software purchases was a quality system software.

4. INVESTMENTS IN SUBSIDIARIES

	Dec. 31, 2014	Changes	Write-downs	Dec. 31, 2015
Cembre Ltd.	3,437,433	-	-	3,437,433
Cembre Sarl	1,048,197	-	-	1,048,197
Cembre España SL	2,760,194	-	-	2,760,194
Cembre AS	293,070	-	-	293,070
Cembre GmbH	1,716,518	-	-	1,716,518
Cembre Inc.	888,671	-	-	888,671
Total	10,144,083	-	-	10,144,083

	Share Capital	Shareholders' Equity	Net Profit	% held
Cembre Ltd (Sutton Coldfield - Birmingham)	2,316,235	16,117,708	2,346,287	100
Cembre Sarl (Morangis – Paris - France)	1,071,000	3,090,031	278,325	95(a)
Cembre España SL (Torrejon – Madrid - Spain)	2,902,200	7,324,604	413,918	95(a)
Cembre AS (Stokke - Norway)	249,922	439,298	20,738	100
Cembre GmbH (Monaco - Germany)	1,812,000	5,260,622	490,785	95(a)
Cembre Inc. (Edison - New Jersey - USA)	1,322,679	6,339,167	356,831	71(b)

The table below shows financial highlights of subsidiaries, all of which are directly owned.

(a) the remaining 5% held through Cembre Ltd.

(b) the remaining 29% held through Cembre Ltd.

Share Capital, Shareholders' Equity and Net Profit figures above relate to the respective Statutory Financial Statements at December 31, 2015 approved by the boards of the above subsidiaries. Share Capital and Reserves originally not expressed in euro were translated at the year-end exchange rates, while Net Profit figures were translated into euro at the average exchange rate for the year.

5. OTHER INVESTMENTS

	Dec. 31, 2015	Dec. 31, 2014	Change
Inn.tec. S.r.l.	5,165	5,165	-
Conai	59	59	-
A.Q.M. S.r.l	5,109	5,109	-
Total	10,333	10,333	-

Other investments consist in the equity investments in Consorzio Nazionale Imballaggi and that in Inn.tec. S.r.l., technology innovation consortium, both with registered office at the Brescia Province head office. In 2015 Cembre S.p.A. acquired an interest in A.Q.M. S.r.l., a consortium for the supply of technical services to businesses.

6. OTHER NON-CURRENT ASSETS

The item consists exclusively of security deposits.

7. INVENTORIES

	Dec. 31, 2015	Dec. 31, 2014	Change
Raw materials	7,241,335	7,328,255	(86,920)
Work in progress and semi-finished goods	9,662,760	9,797,092	(134,332)
Finished goods	11,619,845	9,783,583	1,836,262
Total	28,523,940	26,908,930	1,615,010

The provision for inventory depreciation amounts to €950 thousand. The provision was charged directly to the value of finished products to bring their value into line with their expected realizable value. Changes in the provision in 2015 were as follows:

	2015	2014
Balance at January 1	950,000	778,961
Accruals	320,762	292,171
Uses	(320,762)	(121,132)
Balance at December 31	950,000	950,000

8. TRADE RECEIVABLES

	Dec. 31, 2015	Dec. 31, 2014	Change
Gross trade receivables	17,356,352	16,761,583	594,769
Provision for doubtful accounts	(1,072,772)	(930,908)	(141,864)
Total	16,283,580	15,830,675	452,905

Trade receivables by geographical area

	Dec. 31, 2015	Dec. 31, 2014	Change
Italy	15,528	15,202	326
Europe	1,044	1,159	(115)
North America	52	76	(24)
Oceania	348	103	245
Middle East	35	59	(24)
Far East	258	87	171
Africa	91	76	15
Total	17,356	16,762	594

The provision for doubtful accounts is reviewed periodically on the basis of the retrievability of the most risky exposures. Whenever bankruptcy procedures are opened, the amount receivable from the related customer is written-off.

Changes in the provision are shown below.

	2015	2014
Balance at January 1	930,908	563,761
Accruals	340,343	568,534
Uses	(198,479)	(201,387)
Balance at December 31	1,072,772	930,908

Trade receivables by maturity at Dec. 31, 2015

	Not matured	0-90 days	91-180 days	181-365 days	Over one year	Under litigation	Total
2015	15,791	939	105	161	293	67	17,356
2014	15,447	511	188	182	383	51	16,762

9. TRADE RECEIVABLES FROM SUBSIDIARIES

Subsidiary	Dec. 31, 2015	Dec. 31, 2014	Change
Cembre Ltd. (UK)	350,569	521,640	(171,071)
Cembre S.a.r.l. (F)	479,422	365,526	113,896
Cembre España S.L. (S)	577,057	409,043	168,014
Cembre AS (N)	132,001	2,068	129,933
Cembre GmbH (D)	650,210	429,331	220,879
Cembre Inc. (US)	1,545,922	2,177,129	(631,207)
Total	3,735,181	3,904,737	(169,556)

10. TAX RECEIVABLES

	Dec. 31, 2015	Dec. 31, 2014	Change
IRES refund on IRAP	695,475	695,475	-
Sundry refunds	120,492	104,730	15,762
Total	815,967	800,205	15,762

Pursuant to article 2, comma 1-quater of Law Decree no. 201/2011, Cembre S.p.A. in 2012 applied for a refund of IRES on retroactive deductions of IRAP on personnel expenses. The residual amount to be refunded is €695 thousand.

11. OTHER ASSETS

	Dec. 31, 2015	Dec. 31, 2014	Change
Advances to suppliers	230,552	236,157	(5,605)
Receivable from employees	26,788	20,494	6,294
Indirect taxes receivable	-	132,274	(132,274)
Other	167,685	99,335	68,350
Total	425,025	488,260	(63,235)

Item "Other" consists mainly of social security (INPS) receivables, while item "Indirect

taxes receivable" includes VAT receivables.

12. SHAREHOLDERS' EQUITY

The capital stock of the parent company amounts to €8,840 thousand, and is made up of

17 million ordinary shares of par value €0.52 each, fully underwritten and paid-up.

The legal reserve amounts to 20% of the share capital.

The table that follows shows the origin, possible uses and availability for distribution of equity reserves.

Nature/description	Amount	Uses	Portion available
Share capital	8,840,000
Equity reserves:
Share premium reserve	12,244,869	A B C	12,244,869
Suspended revaluation reserve	585,159	A B	---
Other suspended-tax reserves	68,412	B	---
Reserves accrued from earnings:
Legal reserve	1,768,000	B	---
Reserve for first-time application IAS/IFRS	4,051,204	B	---
Discounting of Employee Termination Indemnities	75,944	B	---
Merger difference	4,397,137	A B C	4,397,137
Extraordinary reserve	61,242,407	A B C	61,242,407
Total	93,273,132		77,884,413
Portion not available for distribution	511,565
Portion available for distribution	71,083,264

Legend: A= capital increases; B= coverage of losses; C= distribution to Shareholders.

The portion not available for distribution to shareholders is made up by the sum of the unamortized balance of development costs and the residual accelerated depreciation, net of related deferred tax liabilities.

13. EMPLOYEE TERMINATION INDEMNITY AND OTHER PERSONNEL PROVISIONS

Changes in the provision are shown below.

	2015	2014
Balance at January 1	2,333,101	2,287,527
Accruals	821,195	773,893
Uses	(232,169)	(281,945)
Discounting effect	100,749	217,130
Social Security (INPS) pension fund	(635,002)	(663,504)
Balance at December 31	2,387,874	2,333,101

With the reform of employee termination indemnities, starting with January 1, 2007, Cembre S.p.A. is no longer required to accrue retirement benefits in favor of its employees in a provision, but pays out benefits accrued after such date to the INPS treasury account, unless such benefits have been destined to other pension funds by individual employees. The amount accrued with INPS at December 31, 2015 amounts to €5,252 thousand.

Employee termination indemnities accrued at December 31, 2015 were discounted on the basis of an evaluation made by a registered actuary, in accordance with current regulations.

A fluctuation in the discounting rate used could have the following effect on the amount of benefits accrued:

Change in discounting rate	Dec. 31, 2015	Dec. 31, 2014
0.5%	2,287,103	2,231,585
-0.5%	2,498,547	2,443,405

14. PROVISIONS FOR RISKS AND CHARGES

	Customer indemnities	Directors' variable compensation	Other risks	Total
At December 31, 2014	87,542	50,000	131,785	269,327
Accruals	12,049	50,000	112,299	174,348
Uses	-	-	-	-
Other	180	-	-	180
At December 31, 2015	99,771	100,000	244,084	443,855

The provision includes prevalently accruals for charges on commercial litigation pending that had not been defined at the date of the financial statements.

15. DEFERRED TAX ASSETS AND LIABILITIES

Deferred tax assets are recorded prevalently against the provision for inventory depreciation described above, and against the discounting of employee termination indemnities, limited to the portion of the accrual that may not be deducted for tax purposes. Deferred tax liabilities are instead recorded prevalently against the revaluation of land carried out upon the first-time application of IFRS, against the valuation of inventories at the average cost (as for tax purposes these are valued at LIFO), in addition to the discounting of employee termination indemnities. Further detail is provided in the note on Income taxes.

	Dec. 31, 2015	Dec. 31, 2014	Change
Deferred tax assets
Write-down of inventories	240,888	274,138	(33,250)
Amortization of goodwill	7,696	13,020	(5,324)
Provision for bad accounts	228,129	222,781	5,348
Differences on depreciation	131,846	131,408	438
Risk provision	53,027	41,381	11,646
Other	66,806	22,025	44,781
Gross deferred tax assets	728,392	704,753	23,639

Deferred tax liabilities
Average cost valuation of inventories	(297,220)	(231,009)	(66,211)
Accelerated depreciation	(2,504)	(5,965)	3,461
Reversal of land depreciation	(24,017)	(27,030)	3,013
Revaluation of land	(1,651,933)	(1,859,165)	207,232
Discounting of Employee Termination Indemnities	7,459	(19,159)	26,618
Foreign exchange differences	(3,390)	(22,575)	19,185
Gross deferred tax liabilities	(1,971,605)	(2,164,903)	193,298

Net deferred tax liabilities	(1,243,213)	(1,460,150)	216,937

No receivable matures beyond five years.

There do not exist other temporary differences or accruals that can generate deferred taxes not accounted for.

The net change in the provision keeps into account the introduction of the new IRES tax rate – equal to 24% – that will come into effect from 2017, applied to redetermine the value of assets and liabilities expiring after such date. The recalculation resulted in a €238,432 reduction in deferred tax liabilities and a €70,033 decline in deferred tax assets.

16. TRADE PAYABLES TO SUPPLIERS

	Dec. 31, 2015	Dec. 31, 2014	Change
Payable to suppliers	10,695,764	11,773,635	(1,077,871)
Advances	26,146	320,856	(294,710)
Total	10,721,910	12,094,491	(1,372,581)

Trade payables to suppliers are recorded net of trade discounts. Cash discounts are instead recorded at the time of payment. The nominal value of trade payables is adjusted for returns and trade discounts (invoicing adjustments) agreed upon with the counterpart.

Trade payables by geographical area

	Dec. 31, 2015	Dec. 31, 2014	Change
Italy	10,387	10,874	(487)
Europe	297	887	(590)
North America	2	7	(5)
Other	10	6	4
Total	10,696	11,774	(1,078)

17. TRADE PAYABLES TO SUBSIDIARIES

	Dec. 31, 2015	Dec. 31, 2014	Change
Cembre Ltd. (UK)	-	5,706	(5,706)
Cembre GmbH (Germany)	4,182	91,648	(87,466)
Cembre España (Spain)	142	1,452	(1,310)
Cembre Sarl (France)	-	900	(900)
Total	4,324	99,706	(95,382)

18. OTHER PAYABLES

	Dec. 31, 2015	Dec. 31, 2014	Change
Payables to employees	1,417,740	1,392,405	25,335
Employee withholding taxes payable	1,063,294	856,211	207,083
Commissions payable	231,112	170,725	60,387
Payable to Statutory Auditors	18,720	18,720	-
Social security payables	1,980,219	1,849,092	131,127
Payable on other taxes and withholding taxes	14,872	11,398	3,474
VAT payable	182,860	-	182,860
Other	21,514	17,855	3,659
Accrued liabilities	(240,696)	(63,075)	(177,621)
Total	4,689,635	4,253,331	436,304

19. REVENUES FROM SALES AND SERVICES PROVIDED

	2015	2014	Change
Italy	48,564,295	44,099,660	4,464,635
Rest of Europe	28,167,973	27,777,191	390,782
Rest of the world	15,883,584	13,025,731	2,857,853
Total	92,615,852	84,902,582	7,713,270

Revenues by geographical area

Changes are commented upon in the Management Report.

20. OTHER REVENUES

	2015	2014	Change
Extraordinary gains	39,797	33,179	6,618
Rent	-	56,613	(56,613)
Insurance damages	14,388	9,676	4,712
Other reimbursements	88,286	107,553	(19,267)
Reimbursement of intragroup transport costs	22,351	26,057	(3,706)
Intercompany services	460,122	438,834	21,288
Other	97,035	369,789	(272,754)
Grants	32,034	1,340	30,694
Total	754,013	1,043,041	(289,028)

Intercompany services include prevalently advisory services, support and training provided by the parent company's personnel at the subsidiaries upon the implementation of the SAP management software. The item includes also royalties for the use of the Cembre trademark. In 2014, item Other included €350 thousand of damages awarded to the Company at the conclusion of a commercial litigation.

Grants relate almost entirely to subsidies recognized by INPS (Social Security) on the hiring of young employees.

21. COST OF RAW MATERIALS AND GOODS

	2015	2014	Change
Raw materials and goods	32,921,958	30,904,460	2,017,498
Consumables and auxiliary materials	2,746,863	2,604,825	142,038
Transport and customs	327,843	246,529	81,314
Total	35,996,664	33,755,814	2,240,850

	2015	2014	Change
Subcontracted work	3,080,746	2,688,384	392,362
Transport	863,921	881,274	(17,353)
Maintenance and repair	1,253,440	1,276,104	(22,664)
Electricity, heating and water	1,260,849	1,253,449	7,400
Consulting	828,526	925,952	(97,426)
Directors' compensation	620,386	592,182	28,204
Statutory Auditors' compensation	87,296	87,360	(64)
Commissions	407,991	288,492	119,499
Postage and telephone	151,317	204,440	(53,123)
Fuel	224,771	242,512	(17,741)
Travelling expenses	355,142	230,329	124,813
Insurance	219,091	223,765	(4,674)
Bank expenses	66,138	64,287	1,851
Personnel training	61,611	39,598	22,013
Advertising and promotion	70,056	109,067	(39,011)
Security and cleaning	403,605	411,217	(7,612)
Other	597,396	488,802	108,594
Total	10,552,282	10,007,214	545,068

22. COST OF SERVICES

23. LEASES AND RENTALS

	2015	2014	Change
Rent and related costs	544,112	619,366	(75,254)
Vehicle leasing	376,142	337,721	38,421
Total	920,254	957,087	(36,833)

Lease and rental costs are made up by rent paid on buildings leased from others and related parties, as described in the Report on Operations, and by motor vehicle lease costs.

24. PERSONNEL COSTS

The item includes the cost of employees, inclusive of paid holidays and accruals made pursuant to current regulations and collective labor contracts. Employee termination indemnities include the accrual for the year inclusive of the revaluation of the provision, the amount accrued by employees terminating employment in the year, and the share borne by employees of contributions to the COMETA integrative pension fund.

	2015	2014	Change
Wages and salaries	17,082,653	15,896,567	1,186,086
Social security contributions	5,145,726	4,772,502	373,224
Employee termination indemnities	1,109,327	1,035,096	74,231
Retirement benefits	42,981	41,402	1,579
Other costs	393,867	489,825	(95,958)
Total	23,774,554	22,235,392	1,539,162

Average number of employees by category

	2015	2014	Change
Managers	6	6	-
Administrative and commercial staff	184	176	8
Workers	223	215	8
Outsourced personnel	23	21	2
Total	436	418	18

In 2015 Cembre S.p.A. employed an average of 23 persons outsourced from others for a

total cost of €830 thousand. The amount was classified under wages and salaries.

25. OTHER OPERATING COSTS

	2015	2014	Change
Sundry taxes	391,648	357,811	33,837
Donations	23,000	18,500	4,500
Capital losses	82,475	235,161	(152,686)
Fines	1,297	-	1,297
Other	394,310	306,575	87,735
Total	892,730	918,047	(25,317)

In 2014, capital losses included €126 thousand resulting from disposals of improvements on third party property following the early termination by Cembre of a number of lease contracts upon the transfer of production departments in other locations owned by the Company.

26. ACCRUALS TO PROVISIONS FOR RISKS AND CHARGES

	2015	2014	Change
Customer indemnities	12,049	9,204	2,845
Other risks	58,277	131,785	(73,508)
Total	70,326	140,989	(70,663)

The customer indemnities provision amounts to €12,049 thousand and was accrued

against possible charges in the case of the termination of agency mandates.

Item Other risks includes accruals for possible charges on commercial litigation not concluded at the date of approval of the financial statements.

	2015	2014	Change
Dividends from subsidiaries	1,728,542	1,941,019	(212,477)
Interest earned on bank account balances	16,780	12,673	4,107
Other financial income	5,397	535	4,862
Total financial income	1,750,719	1,954,227	(203,508)
Loans and bank overdrafts	-	(5,374)	5,374
Financial charges on discounting of Employee Termination Indemnities	(58,336)	(91,442)	33,106
Other financial charges	(736)	(2)	(734)
Total financial charges	(59,072)	(96,818)	37,746
Financial income (expense)	1,691,647	1,857,409	(165,762)

27. FINANCIAL INCOME (EXPENSE)

In 2015, Cembre S.p.A. received dividends from the following:

French subsidiary Cembre Sarl (€162 thousand);
UK subsidiary Cembre Ltd (£901 thousand, equivalent to €1,230 thousand).
German subsidiary Cembre GmbH (€95 thousand);
Spanish subsidiary Cembre España SL (€193 thousand);
Norwegian subsidiary Cembre AS (NOK 420 thousand, equivalent to €49 thousand).

Cembre Sarl and Cembre GmbH and Cembre España SL also paid respectively €8 thousand, €5 thousand and €10 thousand in dividends to Cembre Ltd.

28. FOREIGN-EXCHANGE GAINS (LOSSES)

	2015	2014	Change
Realized foreign exchange gains	405,064	229,418	175,646
Realized foreign exchange losses	(359,687)	(82,446)	(277,241)
Gains on foreign exchange translation	1,256	119,556	(118,300)
Losses on foreign exchange translation	(71,020)	(1,003)	(70,017)
Total	(24,387)	265,525	(289,912)

29. INCOME TAXES

	2015	2014	Change
Current corporate (IRES) taxes	(4,786,859)	(4,188,889)	(597,970)
Current taxes on productive activity (IRAP)	(849,243)	(1,165,820)	316,577
Deferred and prepaid tax assets	26,359	233,060	(206,701)
Extraordinary items	(80,245)	113,819	(194,064)
Effect of change in the IRES rate	(35,599)	-	(35,599)
	(5,725,587)	(5,007,830)	(717,757)

The accrual to the tax provision is made in accordance with expected taxable income, taking into account adjustments made to income reported in the statutory accounts.

Item Effect of change in the IRES rate shows the impact of the recalculation of deferred tax assets and liabilities as a result of the change in the IRES rate introduced by the 2015 Budget Law, effective 2017. For more information please see note 15 above.

The table that follows shows a reconciliation between the theoretical tax expense, calculated at the nominal tax rate, and the actual tax expense.

	IRES
Profit before taxes	20,163,933
Theoretical tax expense (27.5%)	5,545,082
Effect of permanent differences	(797,847)
Effect of temporary differences	55,813
Sundry deductions	(16,189)
Actual tax expense recorded	4,786,859

	IRAP
Gross taxable income for IRAP purposes	42,740,777
Theoretical tax expense (3.9%)	1,666,890
Effect of permanent differences	13,762
Effect of temporary differences	(12,151)
Deductions for personnel	(819,258)
Actual tax expense recorded	849,243

	2015	2014	Change
Average cost valuation of inventories	(91,960)	52,526	(144,486)
Accelerated depreciation	3,461	3,312	149
Discounting of employee termination indemnity	14,001	25,146	(11,145)
Foreign exchange translation differences	19,185	(22,575)	41,760
Amortization of goodwill	(4,983)	(4,983)	-
Depreciation and write down of subsidiary General Marking inventories	(11,227)	47,035	(58,262)
Write down of inventories	17,009	14,295	2,714
Differences on depreciation	16,259	41,381	(25,122)
Other	64,614	76,923	(12,309)
Total deferred tax assets and liabilities	26,359	233,060	(206,701)

Deferred tax assets and liabilities are made up as follows:

30. COMPREHENSIVE INCOME

As a result of the adoption of amendments to IAS 19, differences arising from the discounting of Employee Termination Indemnities were recorded directly under equity in a specific reserve. These amounts constitute components of Comprehensive Income and are recorded separately from the related tax effect. The net effect for 2015 is negative and amounts to €35 thousand. The adoption of the new IRES tax rate for deferred taxes generated on the revaluation of land upon the first-time application of IFRS, produced a positive effect equal to €207 thousand.

31. DIVIDENDS

	2015	2014
Resolved and paid in the year Balance due for 2014 dividend: €0.36 (2013: €0.26)	6,120,000	4,420,000
Proposal submitted to the Shareholders' Meeting (not recorded as liability at December 31)
Balance due for 2015 dividend: €0.46 (2014: €0.36)	7,820,000	6,120,000

Proposed dividends submitted for approval to the Shareholders' Meeting amount to €0.46 per share, for a total of €7,820 thousand. This amount was not recorded as a liability.

32. COMMITMENTS AND RISKS

At December 31, 2015, guarantees granted by Cembre S.p.A. to third parties amounted to €606,905, as compared with €546,982 at December 31, 2014.

Commitments with third parties include guarantees granted to the Brescia Municipality amounting to €352 thousand against the construction of development infrastructure in connection with the building of new parking spaces and entrance at the Brescia main complex.

The residual part (€255 thousand) relates to guarantees for supplies granted to electrical and railway companies, both Italian and foreign.

33. NET FINANCIAL POSITION

At December 31, 2015, the net financial position of Cembre S.p.A. amounted to a surplus of €11,074 thousand, improving on December 31, 2014. At year end, the Company did not have outstanding loans containing covenants or negative pledges.

The table that follows provides a detail of the net financial position as provided by CONSOB Regulation DEM/6064313 dated July 28, 2006.

		Dec. 31, 2015	Dec. 31, 2014
A	Cash	11,608	7,946
B	Bank deposits	11,062,401	7,334,677
C	Cash and equivalents (A+B)	11,074,009	7,342,623
D	Current bank debt	-	-
E	Current financial debt (D)	-	-
F	Net current financial position (C+E)	11,074,009	7,342,623
G	Non-current financial debt	-	-
H	Net financial position (F+G)	11,074,009	7,342,623

34. RELATED PARTIES

The table that follows shows transactions between Cembre S.p.A. and its subsidiaries in 2015, limited to sales and purchases. Debit and credit balances are shown in the related paragraphs of the present notes.

Subsidiary	Sales	Purchases
Cembre Ltd.	7,393,354	165,442
Cembre S.a.r.l.	4,379,933	2,161
Cembre España S.L.	4,826,177	8,301
Cembre AS	406,023	-
Cembre Inc.	5,805,332	441,803
Cembre GmbH	4,562,406	90,057
TOTAL	27,373,225	707,764

Revenues include, in addition to the sale of products, revenues from the charging to subsidiaries of the respective share of maintenance costs for the information system and royalties for the use of the Cembre trademark, amounting in total to €460 thousand.

Company	Head Office	Share capital		% held			% voting
			directly	indirectly	through	total	rights
Cembre Ltd	Sutton Coldfield (Birmingham-UK)	£ 1,700,000	100%			100%	100%
Cembre Sarl	Morangis (Paris - France)	Euro 1,071,000	95%	5%	Cembre Ltd	100%	100%
Cembre España SL	Torrejon de Ardoz (Madrid - Spain)	Euro 2,902,200	95%	5%	Cembre Ltd	100%	100%
Cembre AS	Stokke (Norway)	Nok 2,400,000	100%			100%	100%
Cembre GmbH	Munich (Germany)	Euro 1,812,000	95%	5%	Cembre Ltd	100%	100%
Cembre Inc.	Edison (NJ- USA)	US\$ 1,440,000	71%	29%	Cembre Ltd	100%	100%

Below we show shares held in subsidiaries at December 31, 2015.

All shares shown in the table above are held in full ownership.

Among assets leased to Cembre by third parties are an industrial building adjacent to the Company's registered office measuring a total of 5,960 square meters on three floors, in addition to the Monza, Padua and Bologna sales offices, all of which are owned by company Tha Immobiliare S.p.A., with registered office in Brescia, controlled by Anna Maria Onofri, Giovanni Rosani and Sara Rosani, directors of Cembre S.p.A. Lease payments for 2015 amounted to €528 thousand. Rent is in line with market conditions. It is in the Company's interest to benefit from the continuity of office space reducing the risk of early termination of leases. At the end of 2015, all amounts due to Tha Immobiliare had been settled.

	2015	2014	Change
Rent paid by Cembre SpA to Tha Immobiliare	528,376	528,278	98
Rent paid by Cembre SpA to Montifer	-	75,774	(75,774)
TOTAL	528,376	604,052	(75,676)

Lease contracts with Montifer S.r.l. were terminated in 2014.

35. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

Due to its minimal exposure, Cembre S.p.A. does not make significant use of derivative instruments to hedge against interest risk and currency exposure.

Risks connected with the market

The Company faces these risks with ongoing innovation, the widening of the product range, high automation and the upgrade of its production process, implementing focused marketing policies also with the help of its foreign subsidiaries.

Interest rate risk

Cembre S.p.A. has negligible exposure to this type of risk and at December 31, 2015 it had no loans outstanding.

Currency risk

Despite a strong international presence, Cembre S.p.A. does not have a significant exposure to currency risk (on an operating or equity basis), as it operates mainly in the euro area, the currency in which its trade transactions are mainly denominated.

	2015		2014
	Original currency € equivalent		Original currency	€ equivalent
Receivables	1,775,122 US\$	1,630,497 €	2,789,706 US\$	2,297,756 €
Payables	760 US\$	698 €	182,975 US\$	150,708 €
Payables	903 GBP	1,231 €	-	-
Current account	479 US\$	440 €	265 US\$	218 €

At December 31, 2015, the following foreign exchange positions were held:

Amounts were translated into euro at the exchange rate applicable at December 31, 2015. The translation generated a positive €12 thousand difference with respect to the value originally booked, difference which was recorded in the income statement. In the table that follows we report the economic effect of possible fluctuations in exchange rates of the said amounts.

	Exchange rate change	Receivables (€'000)	Payables (€'000)
2015	5%	(78)	-
	-5%	86	-
2014	5%	(109)	7
	-5%	121	(15)

As illustrated above, the size of these transactions and the resulting balances are not significant in influencing the overall performance of the Company.

Liquidity risk

The exposure of the Company to liquidity risk is not material as its financial position is balanced. The collection and payment cycle is also in balance, as shown by the ratio of current assets to current liabilities which is considerably above 2.

The breakdown of trade receivables by expiration is shown in the table below:

		0-30 days	31-60 days	61-90 days	91-120 days	over 120 days	TOTAL
	Expired	2,757	619	60	5	136	3,577
2015	Not expired	1,480	4,955	4	641	39	7,119
2014	Expired	3,195	505	157	100	111	4,068
	Not expired	1,222	5,589	876	19	-	7,706

Credit risk

Exposure to credit risk relates exclusively to trade receivables.

As shown in note 7, none of the areas in which Cembre S.p.A. operates poses relevant credit risks. Average collection time of trade receivables is 69 days, as compared with 81 days in 2014.

Operating procedures limit the sale of products or services to customers who do not possess an adequate credit profile or provide guarantees.

Receivables matured over 12 months and those under litigation are widely covered by the provision for doubtful accounts accrued.

36. SUBSEQUENT EVENTS

No event having significant effects on the Company's financial position or operating performance occurred after December 31, 2015.

Attachments

The present document contains the following attachments:

Attachment 1: Comparative Income Statement.

Attachment 2: Summary of last approved financial statements of consolidated subsidiaries.
Attachment 3: Independent Auditors' compensation.

Brescia, March 11, 2016

THE CHAIRMAN AND MANAGING DIRECTOR OF CEMBRE S.P.A. Giovanni Rosani

Attachment 1 – Notes to the Financial Statements of Cembre S.p.A.

Comparative Income Statement

	2015	%	2014	%	change

Revenues from sales and services provided	92.615.852	100,0%	84.902.582	100,0%	9,1%
Other revenues	754.013		1.043.041		-27,7%
Total Revenues	93.369.865		85.945.623		8,6%

Cost of goods and marchandise	(35.996.664)	-38,9%	(33.755.814)	-39,8%	6,6%
Change in inventories	1.615.010	1,7%	932.026	1,1%	73,3%
Cost of services received	(10.552.282)	-11,4%	(10.007.214)	-11,8%	5,4%
Lease and rental costs	(920.254)	-1,0%	(957.087)	-1,1%	-3,8%
Personnel costs	(23.774.554)	-25,7%	(22.235.392)	-26,2%	6,9%
Other operating costs	(892.730)	-1,0%	(918.047)	-1,1%	-2,8%
Increase in assets due to internal construction	819.091	0,9%	882.965	1,0%	-7,2%
Write-down of current assets	(340.343)	-0,4%	(568.533)	-0,7%	-40,1%
Accruals to provisions for risks and charges	(70.326)	-0,1%	(140.989)	-0,2%	-50,1%
Gross Operating Profit	23.256.813	25,1%	19.177.538	22,6%	21,3%

Tangible assets depreciation	(4.306.646)	-4,7%	(3.704.120)	-4,4%	16,3%
Intangible assets amortization	(453.494)	-0,5%	(386.171)	-0,5%	17,4%
Operating Profit	18.496.673	20,0%	15.087.247	17,8%	22,6%

Financial income	1.750.719	1,9%	1.954.227	2,3%	-10,4%
Financial expenses	(59.072)	-0,1%	(96.818)	-0,1%	-39,0%
Foreign exchange gains (losses)	(24.387)	0,0%	265.525	0,3%	-109,2%
Profit Before Taxes	20.163.933	21,8%	17.210.181	20,3%	17,2%

Income taxes	(5.725.587)	-6,2%	(5.007.830)	-5,9%	14,3%
Net Profit	14.438.346	15,6%	12.202.351	14,4%	18,3%

Attachment 2 – Notes to the Financial Statements of Cembre S.p.A.

(amounts in euro)	Non-current assets	Current assets	Total assets	Shareholders' Equity	Total Liabilities	Total Liabilities and Shareholders' Equity

Cembre Ltd	5.626.938	12.945.786	18.572.724	16.117.708	2.455.015	18.572.724

Cembre Sarl	542.007	4.184.342	4.726.350	3.090.031	1.636.318	4.726.350

Cembre España SL	3.276.114	5.141.488	8.417.602	7.324.604	1.092.998	8.417.602

Cembre AS	53.015	608.655	661.670	439.298	222.372	661.670

Cembre GmbH	2.877.228	3.416.345	6.293.573	5.260.622	1.032.951	6.293.573

Cembre Inc.	321.386	7.642.217	7.963.603	6.339.167	1.624.436	7.963.603

Summary financial data of consolidated subsidiaries (ex article 2429 of the Italian Civil Code)

(amounts in euro)	Total revenues	Gross operating profit	Operating profit	Profit before taxes	Income taxes	Net profit (loss)

Cembre Ltd	21.214.758	3.432.720	2.903.381	2.957.187	(610.900)	2.346.287

Cembre Sarl	8.710.621	487.301	411.341	411.269	(132.944)	278.325

Cembre España SL	8.294.515	684.457	570.244	573.925	(160.007)	413.918

Cembre AS	1.100.286	54.981	27.554	25.837	(5.099)	20.738

Cembre GmbH	8.011.573	800.406	730.523	731.412	(240.627)	490.785

Cembre Inc.	10.814.827	585.237	464.491	463.680	(106.849)	356.831

Figures above relate to the respective Financial Statements at December 31, 2015

The translation of amounts expressed in currencies other than the euro was carried out as described in the notes to the Financial Statements at December 31, 2015.

Attachment 3

Notes to the Financial Statements of Cembre S.p.A.

for the year ended December 31, 2015

COMPENSATION FOR AUDITING SERVICES AND SERVICES OTHER THAN AUDITING

pursuant to article 149-duodecies of Listed Companies Code (CONSOB)

Service	Independent auditors	Service received by	Compensation (€'000)
Auditing	PricewaterhouseCoopers	Cembre S.p.A.	68
Auditing	PricewaterhouseCoopers	Subsidiaries (excluding Cembre	77
Auditing	WeiserMazars	Inc.) Cembre Inc.	22
Tax Advisory	PricewaterhouseCoopers	Cembre Ltd.	6
Tax Advisory	WeiserMazars	Cembre Inc.	14
Other services	PricewaterhouseCoopers	Cembre Ltd. Cembre AS	8

Attestation in respect of the statutory financial statements

pursuant to art 154-bis Paragraph 5, of Legislative Decree 58 dated Feb. 24, 1998 "Consolidated Law on financial intermediation regulations" and subsequent integrations and updatings

The undersigned Giovanni Rosani and Claudio Bornati, in their position as Managing Director and Manager responsible for the preparation of financial reports of Cembre S.p.A., respectively, pursuant to Article 154-bis, paragraphs 3 and 4 of Legislative Decree No.58/1998, certify that internal controls over financial reporting in place for the preparation of 2015 statutory financial statements and during the period covered by the report, were:

adequate to the company structure, and
effectively applied during the process.

The undersigned officers certify that this 2015 statutory financial statements:

a) corresponds to the company's evidence and accounting books and entries, and

c) provide a fair and correct representation of the financial conditions, results of operations and cash flows of the Company.

The undersigned officers attest, also, that the report on operations includes a reliable operating and financial review of the Company as well as a description of the main risks and uncertainties to which it is exposed.

Brescia, March 24, 2016

Giovanni Rosani Claudio Bornati

Chairman and Manager responsible for the Managing Director preparation of financial reports

signed by: signed by:

INDEPENDENT AUDITORS' REPORT IN ACCORDANCE WITH ARTICLES 14 AND 16 OF LEGISLATIVE DECREE No. 39 OF JANUARY 27, 2010

To the shareholders of Cembre S.p.A.

Report on the financial statements

We have audited the accompanying financial statements of Cembre S.p.A., which comprise the statement of financial position as of December 31, 2015, the statement of comprehensive income, statement of changes in shareholders' equity and statement of cash flows for the year then ended, a summary of significant accounting policies and other explanatory notes.

Directors' responsibility for the financial statements

The directors of Cembre S.p.A. are responsible for the preparation of financial statements that give a true and fair view in compliance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/2005.

Auditors' responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA Italia) drawn up pursuant to article 11, paragraph 3, of Legislative Decree No. 39 of January 27, 2010. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing audit procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The audit procedures selected depend on the auditor's professional judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements that give a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of Cembre S.p.A. as of December 31, 2015 and of the result of its operations and cash flows for the year then ended in compliance with International Financial Reporting Standards as adopted by the European Union, as well as with the regulations issued to implement article 9 of Legislative Decree No. 38/2005.

Report on compliance with other laws and regulations

Opinion on the consistency with the financial statements of the report on operations and of certain information set out in the report on corporate governance and ownership structure

We have performed the procedures required under auditing standard (SA Italia) No. 720B in order to express an opinion, as required by law, on the consistency of the report on operations and of the information set out in the report on corporate governance and ownership structure referred to in article 123-bis, paragraph 4, of Legislative Decree No. 58/98, which are the responsibility of the directors of Cembre S.p.A., with the financial statements of Cembre S.p.A. as of December 31, 2015. In our opinion, the report on operations and the information in the report on corporate governance and ownership structure mentioned above are consistent with the financial statements of Cembre S.p.A. as of December 31, 2015.

Brescia, March 29, 2016

PricewaterhouseCoopers S.p.A.

Signed by

Alessandro Mazzetti (Partner)

This report has been translated into English from the Italian original solely for the convenience of international readers

REPORT OF THE BOARD OF STATUTORY AUDITORS ON THE FINANCIAL STATEMENTS OF CEMBRE S.p.A. AT DECEMBER 31, 2015 Pursuant to Article 153 of Legislative Decree 58/98 of TUF (Testo Unico della Finanza, Consolidated Finance Act) and of article 2429, comma 3, of the Italian Civil Code.

To our Shareholders:

pursuant to article 2429, comma 2 of the Italian Civil Code and article 153 of legislative decree no. 58, dated February 24, 1998, the Board of Statutory Auditors reports to the Shareholders' Meeting called to approve the 2015 Financial Statements on the monitoring activity carried out and on omissions and censurable facts observed, in addition to expressing a recommendation on the Financial Statements, their approval and other pertinent issues.

The Board of Statutory Auditors currently in office was appointed by the Shareholders' Meeting of April 23, 2015 pursuant to laws, regulations and by-laws relating also to balance in gender representation. The Board of Statutory Auditors's term will end with the Shareholders' Meeting called to approve the Financial Statements at December 31, 2017.

Members of the Board of Statutory Auditors complied with the limit to the number of appointments that may be held by members set by article 144-terdecies of the Code of Conduct of Listed Companies.

The independent auditing firm appointed as per Legislative Decree no 58/98 and Legislative Decree no 39/2010 by the Shareholders' Meeting of April 28, 2009 for financial years 2009-2017 is PricewaterhouseCoopers S.p.a.

In compliance with responsibilities assigned by article 149 of legislative decree no. 58, dated February 24, 1998, the Board of Statutory Auditors reports the following:

In 2015 the Board:

attended Shareholders' and Board of Directors' Meetings, obtaining from Directors adequate information on the operations of the Company and their foreseeable development, in addition to main operations, in terms of dimensions and importance, carried out by the Company and its subsidiaries;
acquired knowledge necessary to verify compliance with the Law, the By-laws, correct management principles and the adequacy of the Company's organizational structure;
attended Control and Risk Committee, Remuneration Committee and Monitoring Board's meetings;
monitored the functioning and effectiveness of internal control systems, in addition to the adequacy of the administrative and accounting system, with particular attention to the ability of the latter to portray the operations of the Company;
carried out the periodical exchange of information with the Company's independent auditors regarding activities carried out pursuant to article 150 of Legislative Decree 58/98, examining work carried out and receiving reports as provided by articles 14 and 19, paragraph 3 of Legislative Decree 39/2010;
monitored the functioning of the control system on subsidiaries and the adequacy of instructions imparted to subsidiaries pursuant to article 114, paragraph 2, of Legislative Decree no. 58/1998;
acknowledged the issue of the Report on Remuneration as per article 123-ter of Legislative Decree 58/98 and article 84-quarter of the Code of Conduct of Listed Companies, without having relevant issues to report;
monitored the implementation of corporate governance rules adopted by the Company in compliance with the Code of Conduct of Listed Companies promoted by Borsa Italiana S.p.A.;
monitored the compliance of the internal procedure on dealings with Related Parties with the Regulation approved by CONSOB with Resolution no. 17221 of March 12, 2010 and subsequent amendments, in addition to the compliance – pursuant to article 4, paragraph 6 – of the same Regulation, keeping into account indications and guidelines provided in Communication no. DEM/10078683 of September 24, 2010;
monitored on the financial reporting process, verifying the compliance on the part of Directors of norms inherent to the preparation, approval and publication of the accounts of Cembre S.p.A. and the consolidated accounts;
verified that the Report of the Board of Directors on Operations for the 2015 financial year complied with applicable legislation and was consistent with resolutions adopted by the Board of Directors and events represented in the accounts of Cembre S.p.A. and the consolidated accounts;
acknowledged the content of the Consolidated Half-year Report, without having exceptions to report, in addition to verifying that the same and the Quarterly Reports were published in compliance with currently applicable regulations;

Based on the information and data acquired during the monitoring activity carried out by the Board of Statutory Auditors as described above, no fact from which to infer the lack of compliance with the law or the Company's By-laws or such as to justify its reporting to the Monitoring Board or worth mentioning in the present Report emerged.

° ° ° °

Below we provide further disclosures required by CONSOB's Communication DEM/1025564 dated April 6, 2001, as subsequently amended:

With regard to the financial year that is the object of the present Report, there do not emerge transactions carried out by the Company or its subsidiaries that may be considered significant or having a relevant economic or financial impact.

We note that starting in 2016, Cembre products are distributed in the Scandinavian market by a company outside the Group that is better structured than Norwegian subsidiary Cembre AS, which has consequently being liquidated by the Group.

All activities carried out by the Company were reported in detail in the Report on Operations.

In each case the Board of Statutory Auditors monitored and verified that all operations carried out were in compliance with the law, the Company's By-laws and correct management principles, were not manifestly imprudent, constituted a potential conflict of interest, were not in contrast with Shareholders' resolutions taken or were such as to compromise the integrity of the company's assets.

The Board of Statutory Auditors did not encounter any atypical or unusual transaction as defined in CONSOB's Communication DEM/6064293 dated July 28, 2006.

We acknowledge that information provided in the Report on Operations regarding events and significant operations that are not repeated frequently or atypical or unusual transactions, including those within Group companies or with related parties, is adequate.

Characteristics of transactions with subsidiaries, parent companies and related parties carried out by the Company and its subsidiaries in 2015, entities involved and the related economic effects, are reported in the Related Parties section in the Report on Operations, to which we refer.

Operations with Related Parties, defined in accordance with international accounting principles and guidelines issued by CONSOB, are regulated by an internal procedure (the "Procedure"), adopted by the Board of Directors of the Company on November 11, 2010 – in compliance with article 2391bis of the Civil Code and the Regulation issued by CONSOB – as last modified on March 14, 2016. The Board of Statutory Auditors examined the Procedure verifying its conformity with regulations issued by CONSOB on related parties dealings.

We acknowledge that Independent Auditors PricewaterhouseCoopers S.p.A. issued on March 29, 2016 an Audit Report pursuant to article 14 of Legislative Decree no. 39 of January 27, 2010, in which it attested that:
the Financial Statements of Cembre S.p.A. at December 31, 2015 represent in a true and correct manner the financial position and operating performance the income and cash flows of the Company;
the Report on Operations and information indicated by article 123-bis of Legislative Decree no. 58/1998 published in the Report on Corporate Governance and Ownership Structure are consistent with the financial statements of the Company.

Said Audit Report does not contain exceptions or raises issues regarding disclosure.

During meetings of the Board of Statutory Auditors with the Independent Auditors no aspect worthy of mention in the present report emerged.

The Independent Auditors issued, according to article 17, comma 9, letter a) of Legislative Decree no. 39/2010, a document attesting its independence from the Company in relation to auditing and tax compliance advisory services provided by the same on the basis of the best knowledge available to them. Taking into account principles stated by law and professionals regulations, they confirmed their position of independence and objectivity towards Cembre S.p.A. They also declared that no changes generating incompatibilities, as those indicated by art. 160 of Legislative Decree 58, February 24, 1998 and by section I-bis of paragraph VI "Independent Audit"- Incompatibility - of CONSOB Regulation no. 11971 of May 14, 1999 and subsequent amendments and integrations, occurred.

In 2015, the Board of Statutory Auditors did not receive any report pursuant to article 2408 of the Italian Civil Code from shareholders or other parties.
In 2015, the Board of Statutory Auditors did not receive any report from shareholders or other parties.
The Board of Statutory Auditors acknowledges that, based on information provided by the Company, no further appointments for audit services were made to Independent Auditors PricewaterhouseCoopers S.p.A.
In 2015, companies belonging to the PricewaterhouseCoopers network and

WeiserMazars provided services other than audit to Cembre and its subsidiaries. The former provided advisory on tax compliance for a fee of €7 thousand, while advisor WeiserMazars provided tax compliance services for a total fee of €11 thousand.

With regard to these appointments, the Board of Statutory Auditors monitored and verified, also as per article 19 of Legislative Decree no.39/2010, the respect of norms regulating the matter, in addition to the compliance with limits set by the law, acknowledging that, based on information provided by the Company, no appointments were made to persons linked to the Independent Auditors by long-term association relationships pursuant to paragraph 2, sub. 8, of CONSOB's Communication DEM/1025564 of April 6, 2001.

In 2015, the Board of Statutory Auditors, in compliance with the law and applicable regulations, issued opinions relating to:

– the proposal to create an Internal Audit department through the revocation of the Manager Responsible for Internal Audit, previously outsourced, and the appointment of a new Manager chosen within the Group, without having to make any remark.

The Board of Statutory Auditors also expressed its opinion in all those cases that required its prior opinion on a Board of Directors' resolution.

In general, with the end of acquiring information instrumental in carrying out its monitoring activities, the Board of Statutory Auditors
met seven times, in compliance with the periodicity required by law, to carry out periodical checks and adopting resolutions required. Activities carried out in said meetings are documented in the related minutes. All meetings except for one were attended by all members;
attended all four of Board of Directors' Meetings at which Directors informed the Board of Statutory Auditors on main operations of economic and financial relevance carried out by the Company and its subsidiaries;
attended the Shareholders' Meeting of April 23, 2015;
met twice as a Board with the Company's independent auditors, PricewaterhouseCoopers S.p.A. without being submitted any relevant aspects or circumstance worthy of mention in the present Report;
attended, through its Chairman, two meetings with the Remuneration Committee;
met also five times with the Internal Control and Risk Committee and with the Monitoring Board – of which on two occasions represented solely by its Chairman – ascertaining the adequacy of the company's structure to its size.
The Board of Statutory Auditors monitored on the compliance with the Law and the By-laws and the respect of correct management practices, ensuring that operations resolved and carried out by Directors were consistent with said rules and principles in addition to being inspired by rational economic principles and not manifestly imprudent or excessively risky, in contrast with resolutions taken by the Board or such as to compromise the integrity of the company's assets;
The Board of Statutory Auditors acquired direct knowledge and monitored, to the extent required by our task, the adequacy of the organizational structure of the Company in relation to its size, also gathering information from persons in charge of the management of the Company, the Person in charge of Internal Audit, the Control and Risk Committee, the Monitoring Board and the Independent Auditors, with the aim of exchanging data and information.

In light of verifications carried out and the absence of critical situations, the organizational structure of the Company appears adequate to its corporate goal, the characteristics and size of the company.

With regard to the adequacy of the internal auditing and risk management system, also at the consolidated level, the Board of Statutory Auditors carried out its task through the exhaustive collection of information, by:
reviewing the report of the Person in charge of Internal Audit on the adequacy and functioning of internal audit and risk management systems of the Company;
attending meetings of the Internal Control and Risk Committee and of the Monitoring Board;
reviewing the report of the Internal Control and Risk Committee on the internal audit system;
reviewing information on measures taken and procedures adopted pursuant to Legislative Decree 231/2001 and subsequent amendments, on the administrative responsibility of organizations with regard to crimes referred to in the above legislation;
maintaining the Environmental management system with periodical internal and external audits;
reviewing information on monitoring activity and the implementation of corrective action devised also by seeking specific independent advice on hygiene, employee safety and the environment in general;
reviewing the results of work carried out by the Independent auditors;
reviewing information provided by the management and respective boards of subsidiaries, pursuant to commas 1 and 2 of article 151 of Legislative Decree 58/98;
attesting the financial statements of the parent company pursuant to article 81 ter of Consob Regulation dated May 14, 1999 and subsequent amendments,

underwritten by the Managing Director and Manager in charge of drafting the Company's accounts;

verifying the correct update of the Administrative and Management Control Model to comply with normative changes in the year.

The Board of Statutory Auditors also interfaced with the Person responsible for Internal Audit to evaluate the audit plan and its outcome, both in its introduction phase, and in that of the review of verifications performed and the related follow-up.

In light of the monitoring activity carried out and of the positive opinions regarding the adequacy, effectiveness and functioning of the internal control and risk management system formulated by the Internal Audit and Risk Committee and by the Board of Directors, the Board of Statutory Auditors deems, within the scope of its responsibilities, such system to be adequate.

The Board also monitored the ability of the managerial accounting system of the Company to represent correctly the performance of the Company through the gathering of information from the Appointed Manager and competent head of departments, the review of corporate documents and the analysis of results of work carried out by the independent auditors. In particular, the Board reports that in 2015 the Appointed Manager verified, with the help of the Internal Audit Department, the adequacy and actual application of administrative and accounting procedures as per article 154-bis, TUF; such activity allowed to attest that the financial statements provide a true and correct representation of the financial situation and economic performance of the Company and its subsidiaries.

In light of the monitoring activity carried out and of the positive opinion on the adequacy of the organizational, administrative and accounting structure of the Company expressed by the Board of Directors at its meeting of November 13, 2015, the Board of Statutory Auditors deems, within the scope of its responsibilities, such system to be adequate and reliable in providing a correct representation of the Company's performance.

The Board monitored the adequacy of instructions imparted to subsidiaries pursuant to article 114, paragraph 2, of Legislative Decree no. 58/1998 and subsequent amendments, and on the correct flow of information between them, and deems the Company to be capable of complying with disclosure requirements set by Law, without exception. With reference to the two subsidiaries incorporated in countries that are not part of the European Union (Cembre Inc., incorporated in the US, and Cembre A.S., incorporated in Norway) whose accounts are audited, we attest that the administrative, accounting and reporting systems used are adequate in providing a regular flow of operating and financial information to the company's management and Independent auditors.
The Board of Statutory Auditors acknowleges that during meetings held with Independent Auditors pursuant to article 150, paragraph 2, of Legislative Decree no. 58/1998 there did not emerge exceptions on any relevant matters.

In compliance with article 150, paragraph 3 of TUF, periodical meetings with the Independent Auditors were carried out to verify the reliability of the management and accounting system of the Company and the internal control system. No aspect requiring further analysis or the existence of censurable facts emerged.

With reference to the functions assumed pursuant to article 19 of Legislative Decree 39/2010, the Board of Statutory Auditors, also in the context of meetings held with the Independent Auditors, took vision of the work plan adopted, received information on accounting principles adopted, the accounting of major operations occurred in the year, the outcome of auditing activities, fundamental issues emerged upon the independent audit relating to financial reporting, from which there did not emerge shortcomings in the internal control system and the financial reporting process.

Cembre participates and complies with the Code of Conduct issued by the Committee for Corporate Governance of listed companies promoted by Borsa Italiana S.p.A.. The corporate governance system adopted is reported in detail in the Report on Corporate Governance and Ownership Structure for financial year 2015, approved by the Board of Directors on March 11, 2016.

In accordance with said Code of Conduct, the Board of Statutory Auditors verified during the year the correct application of criteria and procedures for determining the existence of requisites of independence applied by the Board of Directors in evaluating the independence of Non-executive Independent Directors and the respect of requisites in the composition of the Board of Directors.

The Board of Statutory Auditors verified also the existence of the same requisites of independence as for the Board of Directors for its own members and made its recommendation pursuant to the Code of Conduct that prescribes to declare individual or third party interests in specific operations carried out by the Board of Directors. In 2015, no similar situation occurred for any of the members of the Board of Statutory Auditors.

We refer to the Report on Corporate Governance and Ownership Structure for more information on the Company's corporate governance regarding which the Report on Corporate Governance and Ownership Structure has no exception to make.

With regard to the overall evaluation of monitoring activities carried out, the Board can attest that:
information provided by Directors in the Report on Operations are deemed exhaustive, complete and consistent with resolutions adopted by the Board of Directors and facts represented in the Financial Statements;
the Report on Operations includes, in addition to the Comparative Consolidated Income Statement and a list of Members of Corporate Boards, information on performance indicators, investments made, environmental management, workplace safety, research and development activities, in addition to reporting detail of main risks and uncertainties connected with the overall economic situation, the market for the Company's products, credit markets, liquidity, interest rates, exchange rates, the integrity and reputation of the Company;
in the periodical verifications and checks we performed on the Company, we did not encounter any atypical or unusual transaction either with third parties, related parties or between Group companies;
with regard to transactions between Group companies and those with related parties, the Report on Operations and the Notes to the accounts describe and explain exchanges of goods and services between the Company and its subsidiaries or other related parties, attesting that the same were carried out at market conditions, keeping into account the quality of goods and services exchanged;
the Report on Remuneration as per article 123-ter Legislative Decree 58/98 and article 84-quarter of the Code of Conduct was issued without particular observations to report;
in the field of risk management and financial instruments, the nature and amount of risks were reported;
the Audit Report does not contain reference to lack of disclosure or related observations and proposals;
in compliance with articles 123-bis of the Finance Act (Testo Unico), article 89-bis of CONSOB's Listed Companies Regulation, we acknowledge that, as it appears in the Report on Corporate Governance and Ownership Structure, the Cembre Group participates and complies with the Code of Conduct issued by the Committee for Corporate Governance of listed companies, as integrated and implemented, through its adoption and compliance with Regulations for STAR segment listed companies;
the adoption of said Code was verified by the Board of Statutory Auditors and represented the subject, in its various aspects, of the Report on Corporate Governance made available to you and to which we refer.

The Board of Statutory Auditors attests also, pursuant to article 150 of Legislative Decree no. 58/98 and subsequent amendments, that no data or relevant information, omissions, censurable facts, irregularities or in any case significant events worth reporting to relevant Authorities or monitoring boards, or of mention in the present report have emerged.

Based on the above, in relation to monitoring activities carried out in the year, the Board of Statutory Auditors has no observation to make or proposal to formulate to the Shareholders' Meeting pursuant to article 153, paragraph 2 of Legislative Decree 58/1998.

° ° ° °

The statutory accounts, for which we verified compliance with laws regulating its format and preparation through checks carried out by us, within the limits of our task, as provided by article 149 of Legislative Decree no. 58, February 24, 1998, and subsequent amendments – having ascertained that no waivers pursuant to article 2423 of the Italian Civil Code were exercised – and information provided by the Independent Auditors, report a net income of €14,438,346, as compared with a net income of €12,202,351 in the previous year.

The Board of Statutory Auditors therefore deems the Financial Statements at December 31, 2015 and the proposed allocation of net profit for the year submitted by the Board of Directors to be suitable to receive your approval.

Brescia, March 29, 2016

The Board of Statutory Auditors The Chairman Fabio Longhi

AI assistant

Cembre — Annual Report 2015

4425_10-k_2016-03-30_62cb9612-1892-4bd5-b1ff-6f5eba1ae05b.pdf

C o s t r u z i o n i E l e t t r o m ecc a n i c h e B r e s c i a n e

Cembre S.p.A.

CONTENTS

REPORT ON OPERATIONS FOR THE 2015 FINANCIAL YEAR

Report on Operations for Financial Year 2015

Operating Review

Sales by geographical area

Revenues by Group company (net of intragroup sales)

Capital expenditure

Results of the parent company

Definition of alternative performance indicators

Reclassified Consolidated Statement of Financial Position

Shareholders' Equity

Main risks and uncertainties

Risks connected to the economic situation

Risks connected with the market

Credit risk

Liquidity risk

Interest rate risk

Currency risk

Integrity and reputation risk

Environmental management

Worker safety management

Ratios

Financial ratios

Liquidity ratios

Debt management ratios

Research & Development

Cable terminals

Railroad equipment

Tools

Cable marking

Related parties

Absence of control and coordination

Companies incorporated under the laws of States that are not part of the European Union

Own shares and shares of parent companies

Ownership Structure and Corporate Governance

Subsequent events

Outlook

Proposal for the Allocation of the Company's Net Profit

Attachments

Attachment 1 - Report on Operations for year 2015

Comparative Consolidated Income Statement

Attachment 2 – Report on Operations

CORPORATE BOARDS

Board of Directors

Board of Statutory Auditors

Independent Auditors

Consolidated Statement of Financial Position

Statement of Consolidated Comprehensive Income

Consolidated Statement of Cash Flows

Notes to the Consolidated Financial Statements at December 31, 2015

I. CORPORATE INFORMATION

II. FORM AND CONTENT OF THE CONSOLIDATED FINANCIAL STATEMENTS

Future changes in accounting principles

Principles of consolidation

Translation of financial statements expressed in currencies other than the euro

III. CONSOLIDATION PRINCIPLES AND VALUATION CRITERIA

Form of the financial statements

Property, plant and equipment

Leased assets

Investment property

Intangible assets

Financial assets

Financial assets valued at fair value, whose change is recorded in the Income Statement

Financial assets held to maturity

Loans extended and receivables

Financial assets available for sale

Loss in value of financial assets

Treasury shares

Inventories

Receivables and payables

Cash and cash equivalents

Loans

Translation of amounts denominated in currencies other than the euro

Provisions for risks and charges

Employee benefits

Cembre Annual Report 2015

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