Content | 2 |
1. INTEGRATED REPORT | 5 |
MESSAGE FROM THE CHIEF EXECUTIVE OFFICER | 6 |
LEGRAND: THE GLOBAL SPECIALIST IN ELECTRICAL AND DIGITAL BUILDING INFRASTRUCTURE | 8 |
BUSINESS MODEL PROFITABLE, SUSTAINABLE, VALUE-CREATING GROWTH | 12 |
STRATEGY AND GROWTH DRIVERS | 14 |
CSR STRATEGY FOR LONG-TERM GROWTH | 16 |
RISK MANAGEMENT FOR PERFORMANCE | 20 |
GOVERNANCE CENTRAL TO ALL ISSUES | 22 |
INTEGRATED PERFORMANCE | 24 |
2. GROUP OVERVIEW | 29 |
2.1 – LEGRAND AND ITS BUSINESS | 30 |
2.1.1 – Overview | 30 |
2.1.2 – History | 36 |
2.2 – A PROFITABLE GROWTH STRATEGY BASED ON DEVELOPING LEADING POSITIONS | 37 |
2.2.1 – Legrand, a market leader with a unique position | 37 |
2.2.2 – A development driven by two growth drivers | 39 |
2.2.3 – A business model creating long-term value | 41 |
2.3 – AN ORGANIZATION SERVING BOTH THE GROUP’S STRATEGY AND ITS CUSTOMERS | 44 |
2.3.1 – Front Office | 44 |
2.3.2 – Back Office | 47 |
2.4 – OTHER INFORMATION | 49 |
2.4.1 – Suppliers and raw materials | 49 |
2.4.2 – Property, plant and equipment | 50 |
2.4.3 – Information by geographic region | 52 |
2.4.4 – Competitors | 52 |
3. INTERNAL CONTROL AND RISK MANAGEMENT | 53 |
3.1 – ENVIRONMENT AND ORGANIZATION OF INTERNAL CONTROL AND RISK MANAGEMENT | 54 |
3.1.1 – Reference framework | 54 |
3.1.2 – Scope of application | 54 |
3.1.3 – Internal control and risk management environment | 54 |
3.1.4 – Resources allocated to internal control and risk management | 55 |
3.2 – INTERNAL CONTROL SYSTEM | 56 |
3.2.1 – Defi nition and purposes of internal control | 56 |
3.2.2 – Procedures, controls and assessments | 56 |
3.3 – RISK MANAGEMENT SYSTEM | 57 |
3.3.1 – Definition and purposes of risk management | 57 |
3.3.2 – Risk management procedure | 57 |
3.4 – INTERNAL AUDIT SYSTEM | 58 |
3.4.1 – Definition and objectives of internal audit | 58 |
3.4.2 – Audit planning, implementation and follow-up action | 58 |
3.5 – PROCEDURES FOR PREPARING AND PROCESSING ACCOUNTING AND FINANCIAL INFORMATION | 58 |
3.6 – RISK FACTORS AND CONTROL MECHANISMS IN PLACE | 60 |
3.6.1 – Strategic risks | 63 |
3.6.2 – Operational risks | 65 |
3.6.3 – Reputational and compliance risks | 69 |
3.6.4 – Financial risks | 70 |
3.7 – INSURANCE POLICIES AND RISK COVERAGE | 74 |
3.7.1 – Civil liability | 74 |
3.7.2 – Property damage and business interruption insurance | 74 |
3.7.3 – Other cross-functional risks insured | 74 |
4. CORPORATE SOCIAL RESPONSIBILITY AND DECLARATION OF EXTRA-FINANCIAL PERFORMANCE | 75 |
4.1 – THE GROUP’S CSR STRATEGY | 76 |
4.1.1 – Integration with the business model | 76 |
4.1.2 – Analysis of priority risks and issues in terms of social responsibility | 77 |
4.1.3 – CSR roadmaps | 80 |
4.1.4 – CSR standards applied | 82 |
4.1.5 – CSR governance and performance management | 83 |
4.1.6 – Recognized CSR performance | 84 |
4.1.7 – 2014-2018 roadmap and overall performance | 85 |
4.2 – OFFERING USERS SUSTAINABLE SOLUTIONS | 87 |
4.2.1 – Issue no. 1: Providing sustainable solutions | 87 |
4.2.2 – Issue no. 2: Playing a driving role in the electrical sector | 94 |
4.3 – ACTING ETHICALLY TOWARDS SOCIETY | 99 |
4.3.1 – Issue no. 3: Acting ethically | 99 |
4.3.2 – Issue no. 4: Ensuring responsible purchasing | 104 |
4.3.3 – Issue no. 5: Enabling access to electricity for all | 108 |
4.4 – BEING COMMITTED TO OUR EMPLOYEES | 112 |
4.4.1 – Issue 6: Respecting human rights | 112 |
4.4.2 – Issue no. 7: Guaranteeing health and safety at work | 114 |
4.4.3 – Issue no. 8: Developing skills and promoting diversity | 118 |
4.5 – LIMITING OUR ENVIRONMENTAL IMPACT | 125 |
4.5.1 – Issue no. 9: Reducing the Group’s environmental footprint | 126 |
4.5.2 – Issue no. 10: Innovating for a circular economy | 131 |
4.6 – DUTY OF CARE | 136 |
4.6.1 – Governance | 136 |
4.6.2 – Overview of the duty of care plan | 137 |
4.6.3 – Duty of care plan concerning suppliers’ activities | 138 |
4.6.4 – Whistleblowing system | 138 |
4.6.5 – Duty of care plan concerning the Group’s activities | 138 |
4.6.6 – Report on the duty of care plan: monitoring of measures and effectiveness | 140 |
4.6.7 – Future development of the duty of care plan | 141 |
4.7 – OVERVIEW OF INDICATORS AND ADDITIONAL INFORMATION | 142 |
4.7.1 – Reporting procedures | 142 |
4.7.2 – Overview of social indicators | 143 |
4.7.3 – Overview of environmental indicators | 149 |
4.7.4 – GRI cross-reference table | 151 |
4.7.5 – Global Compact cross-reference table | 151 |
4.7.6 – Materiality for the Group of the core issues of ISO 26000 | 152 |
4.8 – STATUTORY AUDITORS’ REPORT | 153 |
5. MANAGEMENT REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2018 | 157 |
5.1 – PRELIMINARY DISCLAIMER | 158 |
5.2 – 2018 HIGHLIGHTS | 158 |
5.3 – OPERATING INCOME | 160 |
5.3.1 – Introduction | 160 |
5.3.2 – Main factors affecting Group results | 161 |
5.4 – YEAR-ON-YEAR COMPARISON: 2018 AND 2017 | 164 |
5.4.1 – Net sales | 165 |
5.4.2 – Cost of sales | 167 |
5.4.3 – Administrative and selling expenses | 167 |
5.4.4 – Research and development costs | 167 |
5.4.5 – Other operating income and expenses | 168 |
5.4.6 – Operating profit | 168 |
5.4.7 – Adjusted operating profit | 168 |
5.4.8 – Net financial expenses | 169 |
5.4.9 – Exchange gains and losses | 169 |
5.4.10 – Income tax expense | 169 |
5.4.11 – Net profit attributable to the Group | 170 |
5.5 – CASH FLOWS AND BORROWING | 170 |
5.5.1 – Cash flows | 170 |
5.5.2 – Debt | 171 |
5.6 – CAPITAL EXPENDITURE | 171 |
5.7 – OFF BALANCE SHEET COMMITMENTS | 172 |
5.8 – CONTRACTUAL OBLIGATIONS | 172 |
5.9 – VARIATIONS IN EXCHANGE RATES | 172 |
5.10 – QUANTITATIVE AND QUALITATIVE DISCLOSURES RELATING TO FINANCIAL RISKS | 173 |
5.11 – SUMMARY OF CRITICAL ACCOUNTING POLICIES | 174 |
5.12 – NEW IFRS PRONOUNCEMENTS | 174 |
5.13 – TRENDS AND PROSPECTS | 175 |
5.14 – TABLE OF CONSOLIDATED FINANCIAL RESULTS OVER THE LAST FIVE YEARS | 175 |
5.15 – SELECTED FINANCIAL INFORMATION | 176 |
6. CORPORATE GOVERNANCE | 179 |
6.1 – ADMINISTRATION AND MANAGEMENT OF THE COMPANY | 180 |
6.1.1 – Board of Directors | 181 |
6.1.2 – Lead Director | 195 |
6.1.3 – Board of Directors’ specialized committes | 197 |
6.1.4 – General Management of the Company | 205 |
6.2 – COMPENSATION AND BENEFITS OF COMPANY OFFICERS | 208 |
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 year | 208 |
6.2.2 – Compensation and benefits of company officers in respect of the 2018 financial year | 216 |
6.2.3 – Company officers’ shareholdings in the Company | 233 |
6.2.4 – Other benefits granted to company officers | 233 |
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 shareholders | 233 |
7. SHARE OWNERSHIP | 243 |
7.1 – SHARE CAPITAL OWNERSHIP STRUCTURE | 244 |
7.1.1 – Shareholder structure at December 31, 2018 and changes to the shareholder structure in 2018 | 244 |
7.1.2 – Shareholder structure at December 31, 2017 and changes to the shareholder structure in 2017 | 245 |
7.1.3 – Shareholder structure at December 31, 2016 and changes to the shareholder structure in 2016 | 245 |
7.1.4 – Shareholders’ agreement and specific agreements | 245 |
7.2 – STOCK OPTION PLANS | 246 |
7.3 – PERFORMANCE SHARES | 248 |
7.4 – REGULATED AGREEMENTS AND COMMITMENTS | 249 |
7.4.1 – Description and designation | 249 |
7.4.2 – Statutory Auditors’ special report on regulated agreements and commitments | 249 |
8. CONSOLIDATED FINANCIAL INFORMATION CONCERNING THE GROUP’S ASSETS, LIABILITIES, FINANCIAL POSITION AND RESULTS | 251 |
8.1 – CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS FOR THE YEARS ENDED DECEMBER 31, 2018 AND DECEMBER 31, 2017 | 252 |
8.1.1 – Consolidated key figures | 252 |
8.1.2 – Consolidated statement of income | 253 |
8.1.3 – Consolidated statement of comprehensive income | 254 |
8.1.4 – Consolidated balance sheet | 254 |
8.1.5 – Consolidated statement of cash flows | 256 |
8.1.6 – Consolidated statement of changes in equity | 257 |
8.1.7 – Notes to the consolidated financial statements | 258 |
8.2 – STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS FOR THE YEAR ENDED DECEMBER 31, 2018 | 302 |
8.3 – STATUTORY AUDITORS’ FEES | 306 |
8.4 – DIVIDEND DISTRIBUTION POLICY | 307 |
8.5 – LEGAL AND ARBITRATION PROCEEDINGS | 308 |
8.6 – MATERIAL CHANGES IN THE COMPANY’S FINANCIAL OR TRADING POSITION | 308 |
8.7 – MATERIAL AGREEMENTS | 308 |
8.8 – CAPITAL EXPENDITURE | 309 |
8.8.1 – Capital expenditure and capitalized development costs | 309 |
8.8.2 – Investments in equity interests: the Group’s primary acquisitions | 309 |
8.8.3 – The Group’s primary acquisitions in 2019 and principal investments in process | 310 |
9. ADDITIONAL INFORMATION | 311 |
9.1 – INFORMATION ABOUT THE COMPANY | 312 |
9.1.1 – Company name | 312 |
9.1.2 – Place of registration and registration number | 312 |
9.1.3 – Date and duration of incorporation | 312 |
9.1.4 – Registered office | 312 |
9.1.5 – Legal form and applicable law | 312 |
9.1.6 – Website | 312 |
9.1.7 – Simplified organizational chart | 313 |
9.1.8 – Subsidiaries | 313 |
9.2 – SHARE CAPITAL | 315 |
9.2.1 – Subscribed share capital and share capital authorized but not issued | 315 |
9.2.2 – Acquisition by the Company of its own shares | 317 |
9.2.3 – Other securities giving access to equity | 318 |
9.2.4 – Changes in share capital | 318 |
9.2.5 – Pledges, guarantees and security interests | 320 |
9.2.6 – Number of voting rights | 320 |
9.3 – MEMORANDUM AND ARTICLES OF ASSOCIATION | 320 |
9.3.1 – Corporate purpose | 320 |
9.3.2 – Administration and management | 320 |
9.3.3 – Rights, privileges and restrictions attached to shares | 320 |
9.3.4 – Amendment of the rights attached to shares | 321 |
9.3.5 – Shareholders’ General Meetings | 321 |
9.3.6 – Provisions to delay, defer or prevent a change of control | 322 |
9.3.7 – Crossing of statutory ownership thresholds | 322 |
9.3.8 – Changes to the share capital | 322 |
9.4 – IDENTITY OF PERSONS RESPONSIBLE FOR THE REGISTRATION DOCUMENT AND AUDITING THE FINANCIAL STATEMENTS | 323 |
9.4.1 – Person responsible for the registration document | 323 |
9.4.2 – Statutory Auditors | 324 |
9.4.3 – Financial disclosure policy | 325 |
T. CROSS-REFERENCE TABLES | 327 |
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, 2004 | 328 |
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. APPENDIX | 337 |
APPENDIX 1 | 338 |
Financial statements December 31, 2018 | 338 |
Balance sheet | 339 |
Notes to the financial statements | 341 |
APPENDIX 2 | 357 |
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 3 | 379 |
Statutory auditors’ report on the financial statements for the year ended December 31, 2018 | 379 |
APPENDIX 4 | 383 |
Presentation of the agenda for the Annual Shareholders’ Meeting of May 29, 2019 | 383 |
Board of Directors’ Report | 383 |
Resolutions for the Combined Ordinary and Extraordinary General Meeting of Shareholders on May 29, 2019 | 405 |