LEGRAND / 2018 Registration document

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APPENDIX APPENDIX 3

Valuation of shares in subsidiaries and affiliates

Risk identified Shares in subsidiaries and affiliates are stated at acquisition cost and impaired where necessary based on their fair value determined by reference to Legrand’s equity in the investee’s revalued net assets, as adjusted to reflect its earnings performance and growth outlook (Note 1.3 “Etats financier Legrand SA”). As of December 31, 2018 they comprise Legrand France SA shares recorded in the balance sheet in the amount of €3,774 million (Note 2.2 “Etats financiers Legrand SA”), that is 81% of total assets. The residual balance, primarily consists of amounts receivable from this subsidiary.

The correct valuation of this heading is key to the assessment of Legrand’s asset and financial position. We therefore considered the valuation of shares in subsidiaries and affiliates to be a key audit matter.

Our response We verified, based on information communicated to us, that the valuation method and figures underlying the estimated value determined by management are appropriately substantiated. Our work mainly consisted in verifying that the fair value estimated by management was based on enterprise values founded on identical assumptions to those used by the group for impairment testing on the activity scope of the Legrand France SA subsidiary and its directly and indirectly-held subsidiaries. Our valuation experts carried out an independent analysis of certain key assumptions used by management to perform the test, pertaining in particular to the discount rate, the royalty rate and the perpetual growth rate of future cash flows, referring both to external market data and analyses of comparable companies. We analyzed the consistency of the projected future cash flows with historical data and our knowledge of the Group’s business, supported by interviews with the Group’s management control department. We also tested the mathematical accuracy of the Group’s calculation, on a sample basis. Finally, we verified the consistency of the fair value adopted with the group’s stock market capitalization. We assessed the appropriateness of the disclosures on shares in subsidiaries and affiliates provided in the notes to the financial statements. R IV. SPECIFIC VERIFICATIONS We have also performed, in accordance with professional standards applicable in France, the specific verifications required by French law. We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors and in the other documents provided to shareholders with respect to the financial position and the financial statements. We attest the fair presentation and the consistency with the financial statements of the information relating to payment deadlines mentioned in article D.441-4 of the French Commercial Code. Information relating to corporate governance We attest that the section of the management report devoted to corporate governance sets out the information required by articles L. 225-37-3 and L. 225-37-4 the French Commercial Code. Concerning the information given in accordance with the requirements of article L. 225-37-3 of the French Commercial Code relating to compensation and benefits received by the directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your Company from controlling and controlled companies. Based on this work, we attest the accuracy and fair presentation of this information. With respect to the information relating to items that your company considered likely to have an impact in the event of a public purchase or exchange offer, provided pursuant to article L. 225-37-5 of the French Commercial Code, we have verified their compliance with the source documents communicated to us. Based on our work, we have no observations to make on this information. Information given in the management report and in the other documents provided to shareholders with respect to the financial position and the financial statements

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LEGRAND

REGISTRATION DOCUMENT 2018