LEGRAND_REGISTRATION_DOCUMENT_2017

CONSOLIDATED FINANCIAL INFORMATION CONCERNING THE GROUP’S ASSETS, LIABILITIES, FINANCIAL POSITION AND RESULTS Consolidated financial statements in accordance with IFRS for the years ended December 31, 2017 and December 31, 2016

standard requires the reporting entity to disclose certain contract information, particularly in the case of contracts that are expected to extend beyond one year, and to describe the assumptions used by the entity to calculate the revenue amounts to be reported. Amendment to IFRS 15 – Revenue from Contracts with Customers In April 2016, the IASB issued amendments to IFRS 15 – Revenue from Contracts with Customers. These amendments clarify in particular the concept of performance obligations that are not considered “distinct within the context of the contract”. Revenue resulting from such performance obligations is to be recognized as a single performance obligation. This standard and these amendments are effective for annual periods beginning on or after January 1, 2018. IFRS 9 – Financial Instruments In July 2014, the IASB published the complete version of IFRS 9 – Financial Instruments, which replaces most of the guidance in IAS 39 – Financial Instruments: Recognition and Measurement. The complete standard covers three main topics: classification and measurement, impairment and hedge accounting. IFRS 9 introduces a single model for determining whether financial assets should be measured at amortized cost or at fair value. This model supersedes the various models set out in IAS 39. The IFRS 9 model is dependent on the entity’s business model objective for managing financial assets and the contractual cash flow characteristics of the financial assets. As under IAS 39, all financial liabilities are eligible for measurement at amortized cost, except for financial liabilities held for trading, which must be measured at fair value through profit or loss. In addition, IFRS 9 introduces a single impairment model that supersedes the various models set out in IAS 39 and also includes a simplified approach for financial assets that fall within the scope of IFRS 15 – Revenue from Contracts with Customers. This model is based in particular on the notion of expected credit losses, which applies regardless of the financial assets’ credit quality. Lastly, whereas most of the IAS 39 hedge accounting rules still apply, IFRS 9 allows more types of hedge relationships to qualify for hedge accounting, in addition to derivatives. In October 2017, the IASB issued an amendment to IFRS 9 clarifying the accounting for the modification of financial liabilities. The amendment provides that modifications of financial liabilities that do not result in derecognition give rise to an adjustment to the amortized cost of the financial liability on the date of modification. The adjustment must be recognized in full in the income statement.

None of the IFRS issued by the International Accounting Standards Board (IASB) that have not been adopted for use in the European Union are applicable to the Group. The preparation of financial statements in accordance with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Group’s accounting policies. The areas involving a specific degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 1.2.3. The consolidated financial statements have been prepared using the historical cost convention, except for some classes of assets and liabilities in accordance with IFRS. The classes concerned are mentioned in Note 5.1.1.2. 1.2.1 New standards, amendments and interpretations that may impact the Group’s financial statements 1.2.1.1 New standards, amendments and interpretations with mandatory application from January 1, 2017 that have an impact on the group’s 2017 financial statements Amendment to IAS 7 – Statement of Cash Flows In January 2016, the IASB issued an amendment to IAS 7 – Statement of Cash Flows. This amendment requires disclosing in the financial statements an analysis of changes in financial liabilities, detailing changes impacting cash flows versus changes not impacting cash flows. This analysis is disclosed in the notes to the financial statements in Note 4.6.3. 1.2.1.2 New standards, amendments and interpretations with mandatory application from January 1, 2017 that have no impact on the Group’s 2017 financial statements Amendment to IAS 12 – Income Taxes In January 2016, the IASB issued an amendment to IAS 12 – Income Taxes. This amendment clarifies the elements to include in estimated future taxable profits to justify the recognition of deferred tax assets resulting from tax losses. 1.2.1.3 New standards, amendments and interpretations adopted by the European Union not applicable to the Group until future periods IFRS 15 – Revenue from Contracts with Customers In May 2014, the IASB issued IFRS 15 – Revenue from Contracts with Customers, which replaces IAS 18 – Revenue and IAS 11 – Construction Contracts. IFRS 15 sets out the requirements for recognizing revenue arising from all contracts with customers (except for contracts that fall within the scope of other standards). In addition, the

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REGISTRATION DOCUMENT 2017 - LEGRAND