LEGRAND_REGISTRATION_DOCUMENT_2017

MANAGEMENT REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED DECEMBER 31, 2017

Year-on-year comparison: 2017 and 2016

5.4.10 –

Income tax expense

effect of non-recurring gains and expenses resulting from the announced changes in corporate taxation, primarily in France and in the United States, amounting to respectively €85.5 million in 2017 and €61.2 million in 2016. These net favorable effects are adjusted as they do not reflect an underlying performance.

In 2017 Legrand’s pre-tax income amounted to €938.9 million up from €850.1 million in 2016. Consolidated income tax expense amounted to €224.2 million in 2017 compared with €218.6 million in 2016. Consolidated income tax expense amounted to €309.7 million in 2017 and €279.8million in 2016 once adjusted of the net favorable

The net favorable effect of non-recurring gains and expenses of respectively €85.5 million in 2017 and €61.2 million in 2016 is detailed as follows:

12 months ended

December 31, 2017

December 31, 2016

(in € millions)

Tax income linked to mechanical revaluation of deferred tax liabilities on trademarks resulting from the announcement of reductions in corporate income tax rates, primarily in France Tax income resulting from refund of tax on dividends paid since 2013, net of the exceptional corporate income tax paid by companies in France in 2017 Net tax income linked to changes in corporate taxation in the United States, mainly accounting impacts due to mechanical revaluation of deferred tax assets and liabilities

26.4

61.2

18.3

0.0

05

40.8

0.0

TOTAL ADJUSTMENTS

85.5

61.2

Consolidated income tax expense after adjustments (as described above) shows a €29.9 million rise and reflects the rise of pre-tax income as well as the slightly increase of effective income tax rate after adjustment from 32.9% in 2016 to 33.0% in 2017.

5.4.11 –

Net profit attributable to the Group

Net profit attributable to the Group amounts to €711.2 million in 2017 compared to €628.5 million in 2016. 2017 net profit attributable to the Group benefits from a net favorable effect of non-recurring gains and expenses of respectively €85.5 million resulting from the announced changes in corporate taxation, primarily in France and in the United States. As a reminder, in 2016, net profit attributable to the Group had benefited from a €61.2 million non-recurring net tax income of the same type, related primarily to changes in French corporate taxation. Adjusted net profit attributable to Legrand amounted to €625.7 million in 2017 compared to €567.3 million in 2017 representing a €58.4 million increase reflecting primarily: W a solid operational performance, with operating profit up a steep €91.6 million;

W a €12.0 million reduction in net financial expense; partially offset by:

W a foreign exchange result in 2017, which, as it compares with a profit in 2016, represents a net unfavorable change of €14.8 million – the realized (cash) foreign exchange result recorded nevertheless a favorable change of €2.1 million; W a €29.9 million rise in income tax booked in the adjusted net profit attributable to the Group (1) (on this basis, the tax rate on adjusted (1) net profit attributable to the Group for 2017 would be 33.0%, almost stable compared with that of 2016); W a €0.3 million rise in profit attributable to minority interests; and W a €0.2 million decline in the result of equity-accounted entities.

(1) Adjusted net profit attributable to the Group does not take into account the net favorable effect of non-recurring gains and expenses resulting from announced changes in corporate taxation, primarily in France and in the United States. This net favorable effect is adjusted as it does not reflect an underlying performance.

151

REGISTRATION DOCUMENT 2017 - LEGRAND