LEGRAND / 2018 Registration document

Content2
1. INTEGRATED REPORT5
MESSAGE FROM THE CHIEF EXECUTIVE OFFICER6
LEGRAND: THE GLOBAL SPECIALIST IN ELECTRICAL AND DIGITAL BUILDING INFRASTRUCTURE8
BUSINESS MODEL PROFITABLE, SUSTAINABLE, VALUE-CREATING GROWTH12
STRATEGY AND GROWTH DRIVERS14
CSR STRATEGY FOR LONG-TERM GROWTH16
RISK MANAGEMENT FOR PERFORMANCE20
GOVERNANCE CENTRAL TO ALL ISSUES22
INTEGRATED PERFORMANCE24
2. GROUP OVERVIEW29
2.1 – LEGRAND AND ITS BUSINESS30
2.1.1 – Overview30
2.1.2 – History36
2.2 – A PROFITABLE GROWTH STRATEGY BASED ON DEVELOPING LEADING POSITIONS37
2.2.1 – Legrand, a market leader with a unique position37
2.2.2 – A development driven by two growth drivers39
2.2.3 – A business model creating long-term value41
2.3 – AN ORGANIZATION SERVING BOTH THE GROUP’S STRATEGY AND ITS CUSTOMERS44
2.3.1 – Front Office44
2.3.2 – Back Office47
2.4 – OTHER INFORMATION49
2.4.1 – Suppliers and raw materials49
2.4.2 – Property, plant and equipment50
2.4.3 – Information by geographic region52
2.4.4 – Competitors52
3. INTERNAL CONTROL AND RISK MANAGEMENT53
3.1 – ENVIRONMENT AND ORGANIZATION OF INTERNAL CONTROL AND RISK MANAGEMENT54
3.1.1 – Reference framework54
3.1.2 – Scope of application54
3.1.3 – Internal control and risk management environment54
3.1.4 – Resources allocated to internal control and risk management55
3.2 – INTERNAL CONTROL SYSTEM56
3.2.1 – Defi nition and purposes of internal control56
3.2.2 – Procedures, controls and assessments56
3.3 – RISK MANAGEMENT SYSTEM57
3.3.1 – Definition and purposes of risk management57
3.3.2 – Risk management procedure57
3.4 – INTERNAL AUDIT SYSTEM58
3.4.1 – Definition and objectives of internal audit58
3.4.2 – Audit planning, implementation and follow-up action58
3.5 – PROCEDURES FOR PREPARING AND PROCESSING ACCOUNTING AND FINANCIAL INFORMATION58
3.6 – RISK FACTORS AND CONTROL MECHANISMS IN PLACE60
3.6.1 – Strategic risks63
3.6.2 – Operational risks65
3.6.3 – Reputational and compliance risks69
3.6.4 – Financial risks70
3.7 – INSURANCE POLICIES AND RISK COVERAGE74
3.7.1 – Civil liability74
3.7.2 – Property damage and business interruption insurance74
3.7.3 – Other cross-functional risks insured74
4. CORPORATE SOCIAL RESPONSIBILITY AND DECLARATION OF EXTRA-FINANCIAL PERFORMANCE75
4.1 – THE GROUP’S CSR STRATEGY76
4.1.1 – Integration with the business model76
4.1.2 – Analysis of priority risks and issues in terms of social responsibility77
4.1.3 – CSR roadmaps80
4.1.4 – CSR standards applied82
4.1.5 – CSR governance and performance management83
4.1.6 – Recognized CSR performance84
4.1.7 – 2014-2018 roadmap and overall performance85
4.2 – OFFERING USERS SUSTAINABLE SOLUTIONS87
4.2.1 – Issue no. 1: Providing sustainable solutions87
4.2.2 – Issue no. 2: Playing a driving role in the electrical sector94
4.3 – ACTING ETHICALLY TOWARDS SOCIETY99
4.3.1 – Issue no. 3: Acting ethically99
4.3.2 – Issue no. 4: Ensuring responsible purchasing104
4.3.3 – Issue no. 5: Enabling access to electricity for all108
4.4 – BEING COMMITTED TO OUR EMPLOYEES112
4.4.1 – Issue 6: Respecting human rights112
4.4.2 – Issue no. 7: Guaranteeing health and safety at work114
4.4.3 – Issue no. 8: Developing skills and promoting diversity118
4.5 – LIMITING OUR ENVIRONMENTAL IMPACT125
4.5.1 – Issue no. 9: Reducing the Group’s environmental footprint126
4.5.2 – Issue no. 10: Innovating for a circular economy131
4.6 – DUTY OF CARE136
4.6.1 – Governance136
4.6.2 – Overview of the duty of care plan137
4.6.3 – Duty of care plan concerning suppliers’ activities138
4.6.4 – Whistleblowing system138
4.6.5 – Duty of care plan concerning the Group’s activities138
4.6.6 – Report on the duty of care plan: monitoring of measures and effectiveness140
4.6.7 – Future development of the duty of care plan141
4.7 – OVERVIEW OF INDICATORS AND ADDITIONAL INFORMATION142
4.7.1 – Reporting procedures142
4.7.2 – Overview of social indicators143
4.7.3 – Overview of environmental indicators149
4.7.4 – GRI cross-reference table151
4.7.5 – Global Compact cross-reference table151
4.7.6 – Materiality for the Group of the core issues of ISO 26000152
4.8 – STATUTORY AUDITORS’ REPORT153
5. MANAGEMENT REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2018157
5.1 – PRELIMINARY DISCLAIMER158
5.2 – 2018 HIGHLIGHTS158
5.3 – OPERATING INCOME160
5.3.1 – Introduction160
5.3.2 – Main factors affecting Group results161
5.4 – YEAR-ON-YEAR COMPARISON: 2018 AND 2017164
5.4.1 – Net sales165
5.4.2 – Cost of sales167
5.4.3 – Administrative and selling expenses167
5.4.4 – Research and development costs167
5.4.5 – Other operating income and expenses168
5.4.6 – Operating profit168
5.4.7 – Adjusted operating profit168
5.4.8 – Net financial expenses169
5.4.9 – Exchange gains and losses169
5.4.10 – Income tax expense169
5.4.11 – Net profit attributable to the Group170
5.5 – CASH FLOWS AND BORROWING170
5.5.1 – Cash flows170
5.5.2 – Debt171
5.6 – CAPITAL EXPENDITURE171
5.7 – OFF BALANCE SHEET COMMITMENTS172
5.8 – CONTRACTUAL OBLIGATIONS172
5.9 – VARIATIONS IN EXCHANGE RATES172
5.10 – QUANTITATIVE AND QUALITATIVE DISCLOSURES RELATING TO FINANCIAL RISKS173
5.11 – SUMMARY OF CRITICAL ACCOUNTING POLICIES174
5.12 – NEW IFRS PRONOUNCEMENTS174
5.13 – TRENDS AND PROSPECTS175
5.14 – TABLE OF CONSOLIDATED FINANCIAL RESULTS OVER THE LAST FIVE YEARS175
5.15 – SELECTED FINANCIAL INFORMATION176
6. CORPORATE GOVERNANCE179
6.1 – ADMINISTRATION AND MANAGEMENT OF THE COMPANY180
6.1.1 – Board of Directors181
6.1.2 – Lead Director195
6.1.3 – Board of Directors’ specialized committes197
6.1.4 – General Management of the Company205
6.2 – COMPENSATION AND BENEFITS OF COMPANY OFFICERS208
6.2.1 – Principles and criteria for the determination, breakdown and award of fixed, variable and exceptional elements of total compensation and any benefits due to company officers in respect of their office in respect of the 2019 financial year208
6.2.2 – Compensation and benefits of company officers in respect of the 2018 financial year216
6.2.3 – Company officers’ shareholdings in the Company233
6.2.4 – Other benefits granted to company officers233
6.2.5 – Compensation policy due in respect of the 2019 financial year and compensation components paid or awarded in respect of the 2018 financial year to company officers, submitted for the approval of shareholders233
7. SHARE OWNERSHIP243
7.1 – SHARE CAPITAL OWNERSHIP STRUCTURE244
7.1.1 – Shareholder structure at December 31, 2018 and changes to the shareholder structure in 2018244
7.1.2 – Shareholder structure at December 31, 2017 and changes to the shareholder structure in 2017245
7.1.3 – Shareholder structure at December 31, 2016 and changes to the shareholder structure in 2016245
7.1.4 – Shareholders’ agreement and specific agreements245
7.2 – STOCK OPTION PLANS246
7.3 – PERFORMANCE SHARES248
7.4 – REGULATED AGREEMENTS AND COMMITMENTS249
7.4.1 – Description and designation249
7.4.2 – Statutory Auditors’ special report on regulated agreements and commitments249
8. CONSOLIDATED FINANCIAL INFORMATION CONCERNING THE GROUP’S ASSETS, LIABILITIES, FINANCIAL POSITION AND RESULTS251
8.1 – CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS FOR THE YEARS ENDED DECEMBER 31, 2018 AND DECEMBER 31, 2017252
8.1.1 – Consolidated key figures252
8.1.2 – Consolidated statement of income253
8.1.3 – Consolidated statement of comprehensive income254
8.1.4 – Consolidated balance sheet254
8.1.5 – Consolidated statement of cash flows256
8.1.6 – Consolidated statement of changes in equity257
8.1.7 – Notes to the consolidated financial statements258
8.2 – STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS FOR THE YEAR ENDED DECEMBER 31, 2018302
8.3 – STATUTORY AUDITORS’ FEES306
8.4 – DIVIDEND DISTRIBUTION POLICY307
8.5 – LEGAL AND ARBITRATION PROCEEDINGS308
8.6 – MATERIAL CHANGES IN THE COMPANY’S FINANCIAL OR TRADING POSITION308
8.7 – MATERIAL AGREEMENTS308
8.8 – CAPITAL EXPENDITURE309
8.8.1 – Capital expenditure and capitalized development costs309
8.8.2 – Investments in equity interests: the Group’s primary acquisitions309
8.8.3 – The Group’s primary acquisitions in 2019 and principal investments in process310
9. ADDITIONAL INFORMATION311
9.1 – INFORMATION ABOUT THE COMPANY312
9.1.1 – Company name312
9.1.2 – Place of registration and registration number312
9.1.3 – Date and duration of incorporation312
9.1.4 – Registered office312
9.1.5 – Legal form and applicable law312
9.1.6 – Website312
9.1.7 – Simplified organizational chart313
9.1.8 – Subsidiaries313
9.2 – SHARE CAPITAL315
9.2.1 – Subscribed share capital and share capital authorized but not issued315
9.2.2 – Acquisition by the Company of its own shares317
9.2.3 – Other securities giving access to equity318
9.2.4 – Changes in share capital318
9.2.5 – Pledges, guarantees and security interests320
9.2.6 – Number of voting rights320
9.3 – MEMORANDUM AND ARTICLES OF ASSOCIATION320
9.3.1 – Corporate purpose320
9.3.2 – Administration and management320
9.3.3 – Rights, privileges and restrictions attached to shares320
9.3.4 – Amendment of the rights attached to shares321
9.3.5 – Shareholders’ General Meetings321
9.3.6 – Provisions to delay, defer or prevent a change of control322
9.3.7 – Crossing of statutory ownership thresholds322
9.3.8 – Changes to the share capital322
9.4 – IDENTITY OF PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND AUDITING THE FINANCIAL STATEMENTS323
9.4.1 – Person responsible for the registration document323
9.4.2 – Statutory Auditors324
9.4.3 – Financial disclosure policy325
T. CROSS-REFERENCE TABLES327
CROSS-REFERENCE TABLE – ANNUAL FINANCIAL REPORT (ARTICLE 222-3 OF THE AMF’S GENERAL REGULATION)328
CROSS-REFERENCE TABLE – EUROPEAN COMMISSION REGULATION (EC) 809/2004 OF APRIL 29, 2004328
CROSS-REFERENCE TABLE – MANAGEMENT REPORT (INCLUDING CORPORATE GOVERNANCE REPORT)333
CROSS-REFERENCE TABLE – FILING OF ANNUAL FINANCIAL STATEMENTS (ARTICLE L. 232-23 OF THE FRENCH COMMERCIAL CODE)336
A. APPENDIX337
APPENDIX 1338
Financial statements December 31, 2018338
Balance sheet339
Notes to the financial statements341
APPENDIX 2357
Management report of the Board of Directors on March 20, 2019 to the Annual General Meeting scheduled on May 29, 2019 of Legrand SA (the “Company”)357
APPENDIX 3379
Statutory auditors’ report on the financial statements for the year ended December 31, 2018379
APPENDIX 4383
Presentation of the agenda for the Annual Shareholders’ Meeting of May 29, 2019383
Board of Directors’ Report383
Resolutions for the Combined Ordinary and Extraordinary General Meeting of Shareholders on May 29, 2019405

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