6.1 – Administration and management of the Company 6.2 – Compensation and benefits of company officers
2.1 – Legrand and its business
2.2 – A profitable growth strategy based on developing leading positions 2.3 – An organization serving both the Group’s strategy and its customers
243 244 246 248 249
7.1 – Share capital ownership structure
2.4 – Other information
7.2 – Stock option plans 7.3 – Performance shares
7.4 – Regulated agreements and commitments
INTERNAL CONTROL AND RISK MANAGEMENT
CONSOLIDATED FINANCIAL INFORMATION CONCERNING THE GROUP’S ASSETS, LIABILITIES, FINANCIAL POSITION AND RESULTS 8.1 – Consolidated financial statements in accordance with IFRS for the years ended December 31, 2018 and December 31, 2017
3.1 – Environment and organization of internal control and risk management
54 56 57 58
3.2 – Internal control system 3.3 – Risk management system 3.4 – Internal audit system
3.5 – Procedures for preparing and processing accounting and financial information 58 3.6 – Risk factors and control mechanisms in place 60 3.7 – Insurance policies and risk coverage 74
8.2 – Statutory Auditors’ report on the consolidated financial
statements in accordance with IFRS for the year ended December 31, 2018
CORPORATE SOCIAL RESPONSIBILITY AND DECLARATION OF EXTRA-FINANCIAL PERFORMANCE 4.2 – Offering users sustainable solutions 4.3 – Acting ethically towards society 4.4 – Being committed to our employees 4.5 – Limiting our environmental impact 4.1 – The Group’s CSR strategy
302 306 307 308 308 308 309 311 312 315 320
8.3 – Statutory Auditors’ fees 8.4 – Dividend distribution policy 8.5 – Legal and arbitration proceedings 8.6 – Material changes in the Company’s financial or trading position
75 76 87 99
8.7 – Material agreements 8.8 – Capital expenditure
112 125 136 142 153
4.6 – Duty of care
4.7 – Overview of indicators and additional information
9.1 – Information about the company
4.8 – Statutory auditors’ report
9.2 – Share capital
9.3 – Memorandum and articles of association 9.4 – Identity of persons responsible for the registration document and auditing the financial statements
MANAGEMENT REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2018
Cross-reference table – Annual Financial Report (article 222-3 of the AMF’s General Regulation) Cross-reference table – European Commission regulation (EC) 809/2004 of April 29, 2004 Cross-reference table – management report (including corporate governance report) Cross-reference table – filing of annual financial statements (article L. 232-23 of the French Commercial Code)
5.4 – Year-on-year comparison: 2018 and 2017
5.5 – Cash flows and borrowing
5.6 – Capital expenditure
5.7 – Off balance sheet commitments 5.8 – Contractual obligations 5.9 – Variations in exchange rates 5.10 – Quantitative and qualitative disclosures relating to financial risks 5.11 – Summary of critical accounting policies
5.12 – New IFRS pronouncements 5.13 – Trends and prospects
5.14 – Table of consolidated financial results over the last five years
5.15 – Selected financial information
INCLUDING THE INTEGRATED REPORT
This is a non binding free translation into English of the Registration Document filed with the Autorité des Marchés Financiers (French Financial Markets Authority) on April 10, 2019, pursuant to article 212-13 of its General Regulations. The French version of the Registration Document can be used in support of a financial transaction if it is supplemented by an informationmemorandum duly approved by the French Financial Markets Authority. This Document was prepared by the issuer. The signatories assume responsability for this document.
REGISTRATION DOCUMENT 2018
The terms “ Group ” and “ Legrand ” refer to the Company (as defined in section 9.1 of this Registration Document), its consolidated subsidiaries and its minority shareholdings. References to “ Legrand France ” relate specifically to the Company’s subsidiary Legrand France, which was previously named Legrand SA but was renamed by the General Meeting of Shareholders dated February 14, 2006, and not to its other subsidiaries. The Company’s consolidated financial statements presented in this Registration Document for the financial year ending December 31, 2018 have been prepared in accordance with International Financial Reporting Standards (“IFRS”), as adopted by the European Union. The Company prepares and presents its consolidated financial statements in accordance with IFRS as required by French law. IFRS may differ in certain significant respects from French GAAP. The separate financial statements are presented in accordance with French GAAP. This Registration Document contains information about Legrand’s markets and its competitive position therein, including market size and market share. As far as Legrand is aware, no exhaustive report exists with regard to the industry or the market for electrical and digital building infrastructures. Consequently, Legrand obtains data on its markets from its subsidiaries which compile information on their relevant markets on an annual basis. This information is derived from formal and informal contacts with professionals of the electricity sector (notably professional associations) and from building statistics and macroeconomic data. Legrand assesses its position in its markets based on the market data referred to above and on its actual sales in the relevant market. Legrand believes that the information about market share contained in this Registration Document provides fair and adequate estimates of the size of its markets and fairly reflects its competitive position within these markets. However, internal surveys, estimates, market research and publicly available information, while believed by Legrand to be reliable, have not been independently verified and Legrand cannot guarantee that a third party using different methods to assemble, analyze or compute market data would obtain the same results. Furthermore, Legrand’s competitors may define its markets differently. Because data relating to market shares and market sizes are Company estimates, they are not data extracted from the consolidated financial statements, and Legrand cautions readers not to place undue reliance on such information.
This Registration Document contains forward-looking statements. These forward-looking statements include all matters that are not historical facts. They are mentioned in various sections of this Registration Document and contain data relating to Legrand’s intentions, estimates and targets, concerning in particular its market, strategy, growth, results, financial position and cash position. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward- looking statements are not guarantees of the Group’s future performance. Legrand’s actual financial position, results and cash flows as well as the development of the industrial sector in which it operates may differ significantly from the forward-looking information mentioned in this Registration Document, and even where these elements are consistent with the forward-looking information mentioned in this Registration Document, they may not be representative of the results or developments in later periods. Factors that could cause such differences include, among other things, the risk factors described in chapter 3 of this Registration Document. Accordingly, all forward-looking statements should be understood bearing in mind their inherent uncertainty. The forward-looking statements referred to in this Registration Document are only made as of the date of this Registration Document. The Group will update this information as necessary in its financial communications. Legrand operates in a competitive environment subject to rapid change. Legrand may therefore not be able to anticipate all of the risks, uncertainties and other factors that could affect its activities, their potential impact on its activities or the extent to which the occurrence of a risk or combination of risks could lead to significantly different results from those set out in any forward-looking statements, noting that such forward- looking statements do not constitute a guarantee of actual results.
2018 : STRONG GROWTH IN MAIN INDICATORS AND TARGETS FULLY MET Excluding the exchange-rate effect, Group sales were up +13% in 2018, the highest rise since 2006. This healthy performance was on the one hand driven by organic growth in sales of +4.9%, coming from successful new product launches and commercial initiatives, and on the other hand from the effect of the increased scope of consolidation at +7.8%, reflecting a very active external growth strategy. Adjusted operating profit increased by +9.7% to more than €1.2 billion and adjusted operating margin before acquisitions reached 20.2% of sales. 2018 also marked the final year for the 2014-2018 CSR roadmap, whose achievement rate reached 122%. The Group more than exceeded its ambitions in some areas, for example as regards reducing energy intensity and improving health and safety at work. As a result, Legrand fully met its targets in 2018. We achieved a very strong overall performance, reflecting our ability to create value for all our stakeholders over the long term through a clear strategy, a robust business model and our highly committed teams.
A VALUE-CREATING BUSINESS MODEL Legrand will continue to develop, driven in particular by the technological and social changes that are having a lasting and profound impact on buildings, such as digitalization, longer life expectancy, urbanization, efforts to control energy consumption, fiber optics and voice control. Building on this, Legrand will maintain its value-creating strategy, driven by: • organic and external growth, and innovation to accelerate its development, • optimized performance, particularly through industrial initiatives, • digital transformation of its offering, in order to increase the value in use of its products, and of its organization, • a new CSR roadmap to define and monitor its extra- financial performance targets in connection with the UN’s Sustainable Development Goals, around three focal areas: Business Ecosystem, People and Environment. This clear strategy is underpinned by the Group’s robust market positions and the fundamentals that have made its success: demanding governance, acknowledged financial discipline, the accountability and commitment of its teams, simplicity in dealings with others, rapid decision-making and strong values. More than ever, the strategy also consists of having customer-centric thoughts, processes and decisions!
INTEGRATED STRATEGY AND PERFORMANCE
I believe that we must consider the Group’s overall performance in terms of the expectations of all stakeholders: its customers andworkforce obviously, but also its suppliers, shareholders, public authorities and the communities in which the Group operates, while also making sure to respect natural resources and the environment. This is why, for more than 10 years now, we have adopted sustainability targets through multi-year roadmaps. This is also why we made a materiality survey, which allows us to understand what matters to each of our stakeholders. Likewise, performance can only be sustainable if major risks are correctly identified and mitigated, which we strive to do every day through our risk management approach. Finally, this integrated report charts the Group’s ability to make the most of opportunities for value creation in a sustainable, responsible and profitable manner. It is based on the framework defined by the International Integrated Reporting Council (IIRC), and it complements our other publications.
Legrand is a global player in electrical and digital infrastructure for residential, tertiary and industrial buildings. Its accessible market is worth more than €100 billion. Social and technological megatrends, and those relating to customer habits, offer the Group long-term growth prospects. Indeed, buildings lie at the heart of these developments.
Present across all parts of the economic chain
The depth of Legrand’s offering, geared towards low-voltage applications in tertiary, residential and industrial buildings, makes the Group a global benchmark for all the players in its economic chain: • distributors, to which Legrand sells its products, • electrical contractors, who install Legrand’s solutions in buildings, • product specifiers (architects and engineering firms), which recommend the Group’s solutions, • end-users (individuals, companies and building managers).
THE FRONT OFFICE is organized by country and consists of sales (in a broad sense) and operational marketing, aimed at meeting the specific needs of each market.
THE BACK OFFICE brings together industrial activities (innovation, R&D, production, purchasing and supply chain) with strategy-related activities and general administration, centralized at the Group level.