LEGRAND / 2018 Registration document

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

APPENDIX APPENDIX 1

10.1.2 Group relief The Company is the parent of the tax group comprising all qualifying French subsidiaries of the Legrand Group. The tax group was set up on January 1, 2003. Under the terms of the group relief agreement, each subsidiary calculates its income tax expense on a stand-alone basis and pays the tax due to the parent company of the group, which is responsible for paying tax for the entire tax group. Income tax in Legrand’s statement of income corresponds to the difference between the tax due by the profitable companies in the tax group and the benefit arising from the use of the tax losses of loss-making companies, plus the tax on distributed earnings. In 2018, Legrand recognized a net income tax benefit of €16,630 thousand. 10.2 EXPOSURE TO MARKET RISKS (INTEREST RATE, CURRENCYAND CREDIT RISKS) 10.2.1 Management of financial risks The Group’s cash management strategy is based on overall risk management principles and involves taking specific measures to manage the risks associated with interest rates, exchange rates, commodity prices and the investment of available cash. The Group does not conduct any trading in financial instruments, in line with

its policy of not carrying out any speculative transactions. All transactions involving derivative financial instruments are conducted with the sole purpose of managing interest rate, exchange rate and commodity risks and as such are limited in duration and value. Market risk is the risk of losses resulting from unfavorable changes in interest rates and exchange rates. As of December 31, 2018, no hedges were in place at Company level. 10.2.2 Concentration of credit risks Credit risks correspond to counterparty risks with financial institutions. Financial instruments that may potentially expose the Group to counterparty risk are principally cash equivalents, bank deposits, short-term investments and hedging instruments. These assets are placed with various leading financial institutions and corporates with the aim of limiting exposure to any single counterparty. The related strategies are defined and monitored by the Corporate Finance Department, which tracks the credit default swap ratings and rates of the Group’s counterparties on a regular basis. 10.2.3 Liquidity risk Legrand considers that managing liquidity risk depends primarily on having access to diversified sources of financing across a wide range of maturities. This principle forms the basis of the Group’s financing strategy.

10.3 CONTINGENCIES AND COMMITMENTS Financial commitments given by the Company as of December 31, 2018 and 2017 were as follows:

December 31, 2018

December 31, 2017

(in € thousands)

Guarantees given to banks

0

0

Guarantees given to other organizations

63

63

TOTAL COMMITMENTS GIVEN

63

63

10.4 EMPLOYEES

December 31, 2018 December 31, 2017

Average number of employees Management

31

27

Administrative staff

4

5

Apprentices

2

1

TOTAL

37

33

A

355

LEGRAND

REGISTRATION DOCUMENT 2018