LEGRAND / 2018 Registration document

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CONSOLIDATED FINANCIAL INFORMATION CONCERNING THE GROUP’S ASSETS, LIABILITIES, FINANCIAL POSITION AND RESULTS

CONSOLIDATED FINANCIAL STATEMENTS IN ACCORDANCE WITH IFRS FOR THE YEARS ENDED DECEMBER 31, 2018 AND DECEMBER 31, 2017

The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Group’s accounting policies. The areas involving a specific degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 1.2.3. The consolidated financial statements have been prepared using the historical cost convention, except for some classes of assets and liabilities in accordance with IFRS. The classes concerned are mentioned in Note 5.1.1.2. 1.2.1 New standards, amendments and interpretations that may impact the Group’s financial statements 1.2.1.1 New standards, amendments and interpretations with mandatory application from January 1, 2018 that have an impact on the Group’s 2018 financial statements IFRS 15 – Revenue from Contracts with Customers In May 2014, the IASB issued IFRS 15 – Revenue from Contracts with Customers, which replaces IAS 18 – Revenue and IAS 11 – Construction Contracts. IFRS 15 sets out the requirements for recognizing revenue arising from all contracts with customers (except for contracts that fall within the scope of other standards). In addition, the standard requires the reporting entity to disclose certain contract information, particularly in the case of contracts that are expected to extend beyond one year, and to describe the assumptions used by the entity to calculate the revenue amounts to be reported. Amendments to IFRS 15 – Revenue from Contracts with Customers In April 2016, the IASB issued amendments to IFRS 15 – Revenue from Contracts with Customers. These amendments clarify in particular the concept of performance obligations that are not considered “distinct within the context of the contract”. Revenue resulting from such performance obligations is to be recognized as a single performance obligation. The application of IFRS 15 and its amendments had no material impact on the Group’s financial statements as of January 1, 2018 (refer to Note 2.2 regarding this lack of material impact). IFRS 9 – Financial Instruments In July 2014, the IASB published the complete version of IFRS 9 – Financial Instruments, which replaces most of the guidance in IAS 39 – Financial Instruments: Recognition and Measurement. The complete standard covers three main topics: classification and measurement, impairment and hedge accounting. IFRS 9 introduces a single model for determining whether financial assets should be measured at amortized cost or at fair value. This model supersedes the various models set out in IAS 39.

IFRS 9 introduces a single impairment model that also includes a simplified approach for financial assets that fall within the scope of IFRS 15 – Revenue from Contracts with Customers. This model is based in particular on the notion of expected credit losses, which applies regardless of the financial assets’ credit quality. In October 2017, the IASB issued an amendment to IFRS 9 clarifying the accounting for the modification of financial liabilities. The amendment provides that modifications of financial liabilities that do not result in derecognition give rise to an adjustment to the amortized cost of the financial liability on the date of modification. The adjustment must be recognized in full in the income statement. The application of IFRS 9 had no material impact on the Group’s financial statements as of January 1, 2018. It should be noted that the obligation introduced by IFRS 9 to measure other investments (investments in non-consolidated entities) at fair value generated impacts in 2018. These purely balance sheet impacts are described in Note 5.1.1. 1.2.1.2 New standards, amendments and interpretations with mandatory application from January 1, 2018 that have no impact on the Group’s 2018 financial statements Amendment to IFRS 2 – Share-based Payment In June 2016, the IASB issued an amendment to IFRS 2 – Share- based Payment. This amendment specifies in particular that, for cash-settled share- based payment plans, non-market performance conditions and service conditions must impact the number of granted shares expected to vest but not their fair value. In addition, the amendment outlines that, for equity-settled share- based payment plans, the IFRS 2 charge recognized in equity does not have to be reduced by any withholding tax to be paid by the entity to tax authorities on behalf of beneficiaries. 1.2.1.3 New standards, amendments and interpretations adopted by the European Union not applicable to the Group until future periods IFRS 16 – Leases In January 2016, the IASB issued IFRS 16 – Leases, which supersedes IAS 17. IFRS 16 provides a single lessee accounting model for the majority of leases with a term of more than 12 months. This model requires the lessee to recognize a right-of-use asset and a financial liability in the balance sheet when a lease contract conveys the right to control the use of an identified asset. In addition, the standard requires the lessee to recognize the lease expense partly as a depreciation charge within operating expenses and partly as an interest expense within financial expenses. This standard is effective for annual periods beginning on or after January 1, 2019. A new Group-wide process for monitoring and accounting for leases has been implemented since 2018.

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REGISTRATION DOCUMENT 2018