LEGRAND / 2018 Registration document

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APPENDIX APPENDIX 1

Defined benefit obligations are calculated using the projected unit credit method. This method takes into account estimated years of service at retirement, final salaries, life expectancy and staff turnover, based on actuarial assumptions. The present value of the defined benefit obligation is calculated by discounting estimated future cash flows, using the interest rates determined by reference to the yield on high-quality bonds. The discount rate is determined on the basis of the external iBoxx € Corporates AA 10+ index, which is commonly used as a benchmark. The provisions recorded in the balance sheet concern the unvested entitlements of active employees. The Company has no obligation with respect to the vested entitlements of former employees, as the benefits were settled at the time of their retirement, either directly or through payments to insurance companies in full discharge of the liability. The main defined benefit plan applicable in France concerns statutory length-of-service awards, under which all retiring employees are eligible for a lump-sum payment calculated according to their length of service. This payment is defined either in the collective bargaining agreement to which their company is a party or in a separate company-level agreement, whichever is more advantageous to the employee. The amount generally varies depending on the employee category (manager/non-manager). AND DISCRETIONARY PROFIT-SHARING Legrand’s statutory profit-sharing agreement is an “ accord dérogatoire ”. Under this type of agreement, the Company applies a more generous profit-sharing formula in exchange for the right to record a tax-deductible “investment provision” covering future investment costs. The latest agreement was signed on June 13, 2018 and applies for the calculation of the special statutory profit- sharing reserve for the three years from 2018 to 2020. The plan covers employees of Legrand and also those of Legrand France, Legrand SNC, Alpes Technologies, Cofrel, Ura, Planet-Wattohm, Intervox Systèmes, Legrand Cable Management, Legrand Energies Solutions, Imesys and Legrand Data Center Solutions. A three-year discretionary profit-sharing agreement was signed on June 13, 2018 covering the years 2018 to 2020. It applies to employees of the same companies as the statutory profit-sharing agreement. 1.12 STATEMENT OF CASH FLOWS In the statement of cash flows, cash and cash equivalents include all cash equivalents and bank overdrafts (classified under debt) with an original maturity of less than three months. 1.11 PROVISIONS FOR STATUTORY

A provision is recorded for shares purchased and allocated on exercise of stock options or for performance shares on the share purchase date, to cover the difference between the price of performance shares and stock options granted to employees and the shares’ carrying amount. This provision is recorded for stock options only if it is probable that the options will be exercised and for performance shares when the Board of Directors decides to purchase the shares underlying the plan concerned. In both cases, the provision is recognized on a straight-line basis over the vesting periods of the performance shares or stock options concerned. MARKETABLE SECURITIES This item includes Legrand shares purchased for allocation to employees as described in note 1.4 above. 1.5 1.6 RECEIVABLES AND PAYABLES Receivables and payables are stated at nominal value. A provision for doubtful accounts is recorded when necessary, to write down receivables to their estimated recoverable amount. FOREIGN CURRENCY RECEIVABLES AND PAYABLES Foreign currency receivables and payables are converted into euros at the exchange rate on the reporting date. DEFERRED CHARGES Deferred charges correspond to debt issuance costs, which are written off to the statement of income over the life of the debt. BOND REDEMPTION PREMIUMS The redemption premium reported in the balance sheet corresponds to the 2011, 2012, 2015, 2017 and 2018 bond issues, described in note 8.2 below. It is amortized over the life of the issues. 1.7 1.8 1.9 1.10 PROVISIONS FOR RETIREMENT BENEFITS AND SUPPLEMENTARY PENSION BENEFITS A defined benefit plan is a pension plan that defines an amount of pension benefit that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and end-of-career salary. The liability recognized in the balance sheet for defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date, less the fair value of plan assets. The past service cost arising from changes to pension benefit plans is expensed (or recognized in income) in full as incurred. Actuarial gains and losses are always recognized directly in the statement of income.

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LEGRAND

REGISTRATION DOCUMENT 2018