LEGRAND / 2018 Registration document

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INTERNAL CONTROL AND RISK MANAGEMENT RISK FACTORS AND CONTROL MECHANISMS IN PLACE

R 3.6.2.6 SUPPLIER DEFAULT OR POOR PRACTICE The Group’s suppliers and subcontractors are a vital link the value chain and, as such, represent a significant risk factor. W The financial or operational failure of one or more suppliers, without an alternative solution, could pose a major risk to business continuity. W Moreover, the Group’s reputation could also be tarnished through a supplier’s poor practice in terms of respect for the environment, business ethics, compliance with labor laws or with human rights and fundamental freedoms. As regards the risk of failure, the geographic spread of supplies (by origin: France 13%, Italy 13.2%, Rest of Europe 13.3%, North and Central America 26.5%, Rest of the World 33.9%) is not seen as a major factor in terms of the Group’s country or geopolitical risks. An analysis of purchases shows that the risk of dependence on suppliers is limited; indeed, purchases from Legrand’s ten largest suppliers accounted for about 6.2% of the total value of purchases in 2018 (virtually unchanged from 2017). The largest supplier represents 1.3% of total purchases. The Purchasing Department has introduced a systematic policy for supplier certification and approval that covers operational risk and CSR (corporate social responsibility) risk. In addition, to ensure that risks are regularly reassessed, an annual supplier risk analysis is carried out covering risks such as those relating to interdependence, suppliers’ financial strength and CSR- related criteria. Suppliers presenting significant risks for the Group are identified and are the subject of dedicated action plans (more stringent contracts, back-up inventories, alternative suppliers, CSR improvement plan, etc.). To protect against any poor practice among suppliers in view of the Group’s CSR commitments, the Group Purchasing Department has established a responsible purchasing policy that is detailed in section 4.3.2 “Ensuring responsible purchasing” of this registration document.

Anet total of €1,912.8million in trademarks and patentswas recognized in assets at December 31, 2018, compared with €1,892 million at December 31, 2017. The Group’s strategy for tackling counterfeiting is described in section 4.2.1.2 of the chapter concerning the CSR roadmap in this document. R 3.6.2.4 COST AND AVAILABILITY OF RESOURCES, RAWMATERIALS AND COMPONENTS Certain materials and components used in making the Group’s products may sometimes be in short supply. This is the case for certain metals, plastics and electronic components, for example. For the purchases concerned, Legrand could see prices or supply times increase, or may be unable to source supplies at all. In that situation, a specific procedure was adopted in May 2018 to manage the risk of shortages at the Group level. Each country must identify its specific risks and action plans are coordinated with central teams. For example, action plans involve adopting an excess inventory or substitution strategy, or working on estimated supply times and forecasts. R 3.6.2.5 FAILURE IN LAUNCHING A NEWPRODUCT Legrand is a manufacturer that regularly carries out major project launches, which require heavy investment in terms of time and resources. These large-scale projects could end in failure, due to production problems, late arrival in the market or a lack of commercial success. Such failures could result in a loss of sales, asset write-downs and loss of market share. To prevent those risks, the following arrangements are in place: W a “Creation of the Product Offering” process is defined, comprising key stages (validation “milestones”) allowing the Group to detect project anomalies or drift. Each Strategic Business Unit (SBU) carries out a monthly review of its project portfolio as part of this process; W Monthly Marketing Meetings (MMMs) are attended by sales teams, SBUs and Management. Product projects are validated and monitored in these MMMs. Monitoring indicators and project risk analyses are shared in those meetings as regards significant projects.

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REGISTRATION DOCUMENT 2018