LEGRAND_REGISTRATION_DOCUMENT_2017

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APPENDIX Appendix 1

R NOTE 10 – OTHER INFORMATION

10.1 INCOME TAXES

10.1.1 Unrecognized deferred tax assets and liabilities

Unrecognized deferred tax benefit (charge)*

Base: income (or expense)

Movements for the period

Jan. 1, 2017 Increase

Decrease Dec. 31, 2017 Jan. 1, 2017

Change Dec. 31, 2017

(in € thousands)

Timing difference between the recognition of income and expenses for financial reporting and tax purposes Taxed income not yet recognized in the income statement Unrealized exchange gains Expenses recognized in the income statement that are deductible in future years Employee profit-sharing

(142)

(15)

(157)

49

5

54

Provisions for pensions and other post-retirement benefit costs

(596)

(122)

11

(707)

173

10

183

Other provisions

(5,463)

(1,474)

(6,937)

1,876

383

2,259

Taxes and other

0

0

TOTAL

(6,201)

(1,611)

11

(7,801)

2,098

398

2,496

* Determined by the liability method, taking into account the contribution sociale de solidarité surtax introduced with effect from January 1, 2000 at the enacted rate of 3.3% for 2017.

10.1.2 Group relief The Company is the parent of the tax group comprising all qualifying French subsidiaries of the Legrand Group. The tax group was set up on January 1, 2003. Under the terms of the group relief agreement, each subsidiary calculates its income tax expense on a stand-alone basis and pays the tax due to the parent company of the group, which is responsible for paying tax for the entire tax group. Income tax in Legrand’s statement of income corresponds to the difference between the tax due by the profitable companies in the tax group and the benefit arising from the use of the tax losses of loss-making companies, plus the tax on distributed earnings. In 2017, Legrand recognized a net income tax benefit of €41,459 thousand (including €26,758 thousand resulting from the refund of the dividend tax paid on the year prior to 2017). For the 2016 financial year, the dividend tax was €5,253 thousand.

does not conduct any trading in financial instruments, in line with its policy of not carrying out any speculative transactions. All transactionsinvolvingderivativefinancialinstrumentsareconducted with the sole purpose of managing interest rate, exchange rate and commodity risks and as such are limited in duration and value. Market risk is the risk of losses resulting from unfavorable changes in interest rates and exchange rates. As of December 31, 2017, no hedges were in place at Company level. 10.2.2 Concentration of credit risks Credit risks correspond to counterparty risks with financial institutions. Financial instruments that may potentially expose the Group to counterparty risk are principally cash equivalents, bank deposits, short-term investments and hedging instruments. These assets are placed with various leading financial institutions and corporates with the aim of limiting exposure to any single counterparty. The related strategies are defined and monitored by the Corporate Finance Department, which tracks the credit default swap ratings and rates of the Group’s counterparties on a regular basis. 10.2.3 Liquidity risk Legrand considers that managing liquidity risk depends primarily on having access to diversified sources of financing across a wide range of maturities. This principle forms the basis of the Group’s financing strategy.

10.2 EXPOSURE TO MARKET RISKS

(INTEREST RATE, CURRENCYAND CREDIT RISKS)

10.2.1 Management of financial risks The Group’s cash management strategy is based on overall 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

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REGISTRATION DOCUMENT 2017 - LEGRAND