LEGRAND_REGISTRATION_DOCUMENT_2017

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INTERNAL CONTROL AND RISK MANAGEMENT

Insurance policies and risk coverage

R 3.6.4.8 VALUE OF INTANGIBLES (GOODWILL AND BRANDS) As at December 31, 2017, the Group’s intangible assets mainly included brands with an indefinite useful life (€1,048 million) and goodwill distributed by geographic region (€3,930 million). These assets may pose an impairment risk due to internal or external factors, which could have a material impact on Legrand’s financial situation and results. An annual review of the value of these intangible assets is carried out and verified by the Statutory Auditors. W For goodwill: the calculation assumptions used in impairment tests take into account both known and anticipated trends in sales and results per cash generating unit (CGU) at the calculation date. Rates used can vary from one year to another,

depending on market conditions (risk premium, interest rates, etc.). W For brands: impairment tests are carried out on the Group’s three brands with an indefinite useful life (Legrand, Bticino, Cablofil) to compare their value in use against their carrying amount. As in previous years, Legrand recorded no impairment loss for goodwill or brands in 2017. The criteria for goodwill impairment tests are described in note 3.2 to the consolidated financial statements in chapter 8 of this Registration Document, which also contains a sensitivity analysis of the main criteria. Furthermore, the Statutory Auditors in their report on the consolidated financial statements at year end December 31, 2017 deal with this subject by means of specific audits: the Key Audit Matters (KAM).

3.7 – INSURANCE POLICIES AND RISK COVERAGE

Legrand intends to continue its practice of maintaining global insurance programs where practicable, increasing coverage where necessary and reducing insurance costs through risk protection and prevention and through self-insurance (adapted deductibles). Legrand believes that the coverage offered by these insurance programs is adequate in scope, amounts insured and limits of cover. [The Group regularly reviews its insurance coverage with the help of its brokers.] The Group’s insurance and risk management policy and related prevention programs are periodically presented to the Risk Committee by the Legal Department (and to the Audit Committee as part of its annual review of the Group’s main risks).

Legrand has taken out global insurance policies to cover its assets and income from identifiable and insurable risks. Working closely with brokers, it seeks the insurance market’s most appropriate solutions that offer the best value for money in terms of coverage. The major risks incurred by the Group across all its operating activities are covered by a risk and insurance management policy centralized at headquarters. These insurance programs are contracted from reputed and financially sound international insurance companies without recourse to a captive reinsurance structure. These policies provide global coverage for the Group and take into account the specific risks and activities related to the Group’s operations, including property damage and the resulting operating losses, and product liability.

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REGISTRATION DOCUMENT 2017 - LEGRAND