LEGRAND_REGISTRATION_DOCUMENT_2017

08 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

or when, in the absence of such an intention, management considers that the trademarks may be threatened by a major competitor in the long term. Amortization of trademarks is recognized in the income statement under administrative and selling expenses.

Trademarks with finite useful lives are amortized over their estimated useful lives ranging: W from 10 years when management plans to gradually replace them by other major trademarks owned by the Group; W to 20 years when management plans to replace them by other major trademarks owned by the Group only over the long term

Trademarks can be analyzed as follows:

December 31, 2017

December 31, 2016

(in € millions)

Gross value at the beginning of the period

1,917.8

1,852.9

W Acquisitions

184.3

52.2

W Adjustments

0.0

0.0

W Disposals

0.0

0.0

W Translation adjustments

(59.7)

12.7

Gross value at the end of the period

2,042.4

1,917.8

Accumulated amortization and impairment at the beginning of the period

(220.0)

(186.9)

W Amortization expense

(33.4)

(27.8)

W Reversals

0.0

0.0

W Translation adjustments

21.3

(5.3)

Accumulated amortization and impairment at the end of the period

(232.1)

(220.0)

NET VALUE AT THE END OF THE PERIOD

1,810.3

1,697.8

To date, no impairment has been recognized for these trademarks.

Each trademark with an indefinite useful life is tested for impairment separately, in the fourth quarter of each year and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Impairment tests are performed using the relief from royalty method. This method consists of measuring the royalties that the company would have to pay to license the trademark from a third party. The theoretical value of these royalties is then measured by estimating future revenue generated by the trademark over its useful life, as if the trademark were owned by a third party.

The following impairment testing parameters were used in the period ended December 31, 2017:

Value in use

Carrying amount of trademarks with indefinite useful lives

Discount rate (before tax)

Growth rate to perpetuity

Recoverable amount

(in € millions)

Value in use

1,408.0

9.5 to 10.3%

2.9 to 3.1%

Based on the results of these tests, a 50-basis point change in these rates would not lead to any impairment losses being recognized on trademarks with an indefinite useful life.

No impairment was recognized in the period ended December 31, 2017. Sensitivity tests were performed on the discount rates and long-term growth rates used for impairment testing purposes.

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REGISTRATION DOCUMENT 2017 - LEGRAND