LEGRAND_REGISTRATION_DOCUMENT_2017

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

Summary of critical accounting policies

5.10 – QUANTITATIVE AND QUALITATIVE DISCLOSURES RELATING TO FINANCIAL RISKS

This strategy is centralized at Group level. Deployment is managed by the Financing and Treasury Department, which recommends appropriate measures and implements these after they have been validated by the Corporate Finance Department and the Group’s senior management. A detailed reporting system has been set up to permit permanent tracking of the Group’s positions and effective oversight of the management of financial risks. A detailed description of risks and Legrand’s risk management appears in note 5.1.2 appended to the consolidated financial statements referred to in chapter 8 of this Registration Document. Information on financial risks related to climate change effects and the presentation of measures taken by the company to mitigate those risks by implementing a low-carbon strategy in all its business components are given in Chapter 4 of this Registration Document. Main characteristics of internal control and risk management procedures implemented by the Company on financial information are described in chapter 3 of this Registration Document.

Legrand’s exposure to financial risk mainly concerns the following areas: W interest rate risk; W currency risk; W commodity risk; W credit risk; W counterparty risk; and W liquidity risk. The Group’s cash management strategy is based on overall financial 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 trading in financial instruments, in line with its policy of not carrying out any speculative transactions. Transactions involving financial instruments are conducted with the sole purpose of managing interest-rate, exchange-rate and commodity price risks, and as such are limited in duration and amount.

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5.11 – SUMMARY OF CRITICAL ACCOUNTING POLICIES

The accounting policies described below are those the Company considers critical in preparing its consolidated financial statements: W intangible assets;

These policies include significant estimatesmade bymanagement using information available at the time the estimates are made. A more detailed description of the main accounting policies used by the Company in preparing its consolidated financial statements is included in notes to the consolidated financial statements referred to in chapter 8 of this Registration Document, and in particular in note 1.2.3.

W fair value of financial instruments; W accounting for stock option plans;

W employee benefits; W deferred taxes; and W use of estimates.

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REGISTRATION DOCUMENT 2017 - LEGRAND