LEGRAND / 2018 Registration document

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MANAGEMENT REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2018

YEAR-ON-YEAR COMPARISON: 2018 AND 2017

5.4 – YEAR-ON-YEAR COMPARISON: 2018 AND 2017

12 months ended

December 31, 2018

December 31, 2017

(in € millions)

Net sales

5,997.2

5,520.8

Operating expenses Cost of sales

(2,869.7)

(2,627.0)

Administrative and selling expenses

(1,606.8)

(1,511.6)

Research and development costs

(276.5)

(252.1)

Other operating income (expenses)

(105.2)

(104.5)

Operating profit

1,139.0

1,025.6

Financial expenses

(79.1)

(92.1)

Financial income

12.0

13.7

Exchange gains (losses)

2.2

(8.3)

Financial profit (loss)

(64.9)

(86.7)

Profit before tax

1,074.1

938.9

Income tax expense

(301.3)

(224.2)

Share of profits (losses) of equity-accounted entities

(0.4)

(1.5)

Profit for the period

772.4

713.2

Of which: W net profit attributable to the Group

771.7

711.2

W minority interests

(0.7)

(2.0)

The table below shows the calculation of adjusted operating income (defined as operating income adjusted for amortization and depreciation of revaluation of assets at the time of acquisitions and for other P&L impacts relating to acquisitions, and, where applicable, for impairment of goodwill), and maintainable adjusted operating income (i.e., excluding restructuring charges) for the periods under review:

12 months ended

December 31, 2018

December 31, 2017

(in € millions)

Profit for the period

772.4

713.2

Share of profits (losses) of equity-accounted entities

0.4

1.5

Income tax expense

301.3

224.2

Exchange (gains) losses

(2.2)

8.3

Financial income

(12.0)

(13.7)

Financial expenses

79.1

92.1

Operating profit

1,139.0

1,025.6

Acquisition-related amortization, depreciation, expenses and income

73.1

79.3

Goodwill impairment

0.0

0.0

Adjusted operating profit

1,212.1

1,104.9

25.7

20.5

Adjusted restructuring costs (1)

Maintainable adjusted operating profit

1,237.8

1,125.4

(1) Adjusted restructuring costs are defined as restructuring costs adjusted for revaluation of assets at the time of acquisitions.

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LEGRAND

REGISTRATION DOCUMENT 2018