Legrand

Annual Report • Feb 9, 2023

08

Consolidated financial information concerning the Group's assets, liabilities, financial position and results

8.1 - Consolidated financial statements in accordance with IFRS for the years ended December 31, 2022 and December 31, 2021	244 2
8.1.1 - Consolidated statement of income	244 2
8.1.2 - Consolidated statement of comprehensive income	245 3
8.1.3 - Consolidated balance sheet	246 4
8.1.4 - Consolidated statement of cash flows	248 6
8.1.5 - Consolidated statement of changes in equity	249 7
8.1.6 - Notes to the consolidated financial statements	250 8

le 31 décembre 2021 -

8.3 - Honoraires des Commissaires aux comptes -

8.4 - Politique de distribution de dividendes -

8.5 - Procédures judiciaires et d'arbitrage -

8.7 - Contrats importants 296

8.8 - Investissements -

et commerciale -

capitalisés -

principales acquisitions réalisées par le Groupe -

par le Groupe en 2022 -

8.2 - Rapport des Commissaires aux comptes sur les comptes consolidés en normes IFRS pour l'exercice clos

8.6 - Changement significatif de la situation financière

8.8.1 - Investissements industriels et frais de développement

8.8.3 - Principales acquisitions réalisées ou en cours de réalisation

8.8.2 - Investissements en titres de participation :

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8.1 - Consolidated financial statements in accordance with IFRS for the years ended December 31, 2022 and December 31, 2021

8.1.1 - Consolidated statement of income

		12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Net sales (Notes 2.1 and 2.2)	8,339.4	6,994.2
Operating expenses (Note 2.3)
Cost of sales	(4,192.7)	(3,439.2)
Administrative and selling expenses	(2,054.6)	(1,765.0)
Research and development costs	(357.4)	(329.1)
Other operating income (expenses)	(288.2)	(116.8)
Operating profit	1,446.5	1,344.1
Financial expenses	(108.6)	(92.4)
Financial income	45.8	6.8
Exchange gains (losses)	(0.4)	(1.5)
Financial profit (loss)	(63.2)	(87.1)
Profit before tax	1,383.3	1,257.0
Income tax expense (Note 2.4)	(383.8)	(351.9)
Share of profits (losses) of equity-accounted entities	0.0	0.0
Profit for the period	999.5	905.1
Of which:
– Net profit attributable to the Group	999.5	904.5
– Minority interests	0.0	0.6
Basic earnings per share (euros) (Note 4.1.3)	3.749	3.389
Diluted earnings per share (euros) (Note 4.1.3)	3.726	3.366

The accompanying Notes are an integral part of these consolidated financial statements.

8.1.2 - Consolidated statement of comprehensive income

	12 months ended
(in € millions) December 31, 2022 Profit for the period 999.5		December 31, 2021
		905.1
Items that may be reclassified subsequently to profit or loss
Translation reserves	291.5	340.7
Other (Note 5.1.1.1)	56.3	5.0
Income tax relating to components of other comprehensive income	4.9	7.9
Items that will not be reclassified to profit or loss
Actuarial gains and losses (Note 4.5.1.1)	26.5	32.4
Deferred taxes on actuarial gains and losses	(6.2)	(7.1)
Other (Note 5.1.1.1)	0.0	0.0
Comprehensive income for the period	1,372.5	1,284.0
Of which:
– Comprehensive income attributable to the Group	1,372.4	1,283.2
– Minority interests	0.1	0.8

The accompanying Notes are an integral part of these consolidated financial statements.

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8.1.3 - Consolidated balance sheet

ASSETS

(in € millions)	December 31, 2022	December 31, 2021
Non-current assets
Intangible assets (Note 3.1)	2,534.7	2,485.3
Goodwill (Note 3.2)	5,567.4	5,241.2
Property, plant and equipment (Note 3.3)	746.0	719.2
Right-of-use assets (Note 3.4)	266.2	268.4
Investments in equity-accounted entities	0.0	0.0
Other investments	1.9	2.4
Other non-current assets	62.1	62.6
Deferred tax assets (Note 4.7)	133.6	116.3
TOTAL NON-CURRENT ASSETS	9,311.9	8,895.4
Current assets
Inventories (Note 3.5)	1,357.4	1,252.7
Trade receivables (Note 3.6)	958.1	728.5
Income tax receivables	120.5	115.1
Other current assets (Note 3.7)	255.4	240.4
Other current financial assets	65.1	6.4
Cash and cash equivalents (Note 3.8)	2,346.8	2,788.3
TOTAL CURRENT ASSETS	5,103.3	5,131.4
TOTAL ASSETS	14,415.2	14,026.8

The accompanying Notes are an integral part of these consolidated financial statements.

EQUITY AND LIABILITIES

(in € millions)	December 31, 2022	December 31, 2021
Equity
Share capital (Note 4.1)	1,067.3	1,069.8
Retained earnings (Notes 4.2 and 4.3.1)	5,900.3	5,268.5
Translation reserves (Note 4.3.2)	(330.4)	(621.8)
Equity attributable to equity holders of Legrand	6,637.2	5,716.5
Minority interests	5.6	3.8
TOTAL EQUITY	6,642.8	5,720.3
Non-current liabilities
Long-term provisions (Notes 4.4 and 4.5.2)	217.4	196.6
Provisions for post-employment benefits (Note 4.5.1)	130.1	170.7
Long-term borrowings (Note 4.6.1)	4,014.4	4,485.9
Deferred tax liabilities (Note 4.7)	914.6	866.5
TOTAL NON-CURRENT LIABILITIES	5,276.5	5,719.7
Current liabilities
Trade payables	852.5	810.5
Income tax payables	48.6	39.6
Short-term provisions (Note 4.4)	146.4	135.8
Other current liabilities (Note 4.8)	795.1	774.3
Short-term borrowings (Note 4.6.2)	651.3	826.6
Other current financial liabilities	2.0	0.0
TOTAL CURRENT LIABILITIES	2,495.9	2,586.8
TOTAL EQUITY AND LIABILITIES	14,415.2	14,026.8

The accompanying Notes are an integral part of these consolidated financial statements.

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8.1.4 - Consolidated statement of cash flows

		12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Profit for the period	999.5	905.1
Adjustments for non-cash movements in assets and liabilities:
– Depreciation and impairment of tangible assets (Note 2.3)	162.4	111.6
– Amortization and impairment of intangible assets (Note 2.3)	114.7	98.7
– Amortization and impairment of capitalized development costs (Note 2.3)	31.9	28.3
– Amortization and impairment of right-of-use assets (Note 3.4)	75.2	67.8
– Amortization of financial expenses	3.6	3.7
– Impairment of goodwill (Note 3.2)	28.2	0.0
– Changes in long-term deferred taxes	12.6	44.5
– Changes in other non-current assets and liabilities (Notes 4.4 and 4.5)	68.3	46.0
– Unrealized exchange (gains)/losses	(7.1)	11.5
– Share of (profits) losses of equity-accounted entities	0.0	0.0
– Other adjustments	(4.1)	0.2
– Net (gains)/losses on sales of assets	(0.6)	0.7
Changes in working capital requirement:
– Inventories (Note 3.5)	(47.6)	(351.3)
– Trade receivables (Note 3.6)	(157.8)	3.0
– Trade payables	(13.7)	140.1
– Other operating assets and liabilities (Notes 3.7 and 4.8)	(29.3)	2.8
Net cash from operating activities	1,236.2	1,112.7
– Net proceeds from sales of fixed and financial assets	5.0	10.2
– Capital expenditure (Notes 3.1 and 3.3)	(177.6)	(139.9)
– Capitalized development costs	(28.1)	(30.6)
– Changes in non-current financial assets and liabilities	(27.2)	(10.4)
– Acquisitions of subsidiaries, net of cash acquired (Note 1.3.2)	(235.6)	(296.2)
Net cash from investing activities	(463.5)	(466.9)
– Proceeds from issues of share capital and premium (Note 4.1.1)	0.0	0.0
– Net sales / (buybacks) of treasury shares and transactions under the liquidity contract (Note 4.1.2)	(44.6)	(91.7)
– Dividends paid to equity holders of Legrand (Note 4.1.3)	(439.3)	(377.9)
– Dividends paid by Legrand subsidiaries	0.0	0.0
– Proceeds from long-term financing (Note 4.6)	100.0	794.9
– Repayment of long-term financing* (Note 4.6)	(106.9)	(74.2)
– Debt issuance costs	0.0	(3.0)
– Increase / (reduction) in short-term financing (Note 4.6)	(740.3)	(886.6)
– Acquisitions of ownership interests with no gain of control (Note 1.3.2)	(3.3)	(48.6)
Net cash from financing activities	(1,234.4)	(687.1)
Translation net change in cash and cash equivalents	20.2	37.9
Increase / (decrease) in cash and cash equivalents	(441.5)	(3.4)
Cash and cash equivalents at the beginning of the period	2,788.3	2,791.7
Cash and cash equivalents at the end of the period (Note 3.8)	2,346.8	2,788.3
Items included in cash flows:
– Interest paid during the period**	79.1	76.9
– Income taxes paid during the period	360.7	300.9

* Of which €75.0 million corresponding to lease financial liabilities repayment for the 12 months ended December 31, 2022 (€67.5 million for the 12 months ended December 31, 2021).

** Interest paid is included in the net cash from operating activities; of which €7.1 million interests on lease financial liabilities for the 12 months ended December 31, 2022 (€6.9 million for the 12 months ended December 31, 2021).

The accompanying Notes are an integral part of these consolidated financial statements.

8.1.5 - Consolidated statement of changes in equity

		Equity attributable to the Group
(in € millions)	Share capital	Retained earnings	Translation reserves	Actuarial gains and losses*	Total	Minority interests	Total equity
As of December 31, 2020	1,069.8	4,881.2	(962.3)	(92.9)	4,895.8	10.2	4,906.0
Profit for the period		904.5			904.5	0.6	905.1
Other comprehensive income		12.9	340.5	25.3	378.7	0.2	378.9
Total comprehensive income		917.4	340.5	25.3	1,283.2	0.8	1,284.0
Dividends paid		(377.9)			(377.9)	0.0	(377.9)
Issues of share capital and premium	0.0	0.0			0.0		0.0
Cancellation of shares held in treasury	0.0	0.0			0.0		0.0
Net sales / (buybacks) of treasury shares and transactions under the liquidity contract		(91.7)			(91.7)		(91.7)
Change in scope of consolidation**		(22.8)			(22.8)	(7.2)	(30.0)
Current taxes on share buybacks		(0.6)			(0.6)		(0.6)
Share-based payments		30.5			30.5		30.5
As of December 31, 2021	1,069.8	5,336.1	(621.8)	(67.6)	5,716.5	3.8	5,720.3
Profit for the period		999.5			999.5	0.0	999.5
Other comprehensive income		61.2	291.4	20.3	372.9	0.1	373.0
Total comprehensive income		1,060.7	291.4	20.3	1,372.4	0.1	1,372.5
Dividends paid		(439.3)			(439.3)	0.0	(439.3)
Issues of share capital and premium (Note 4.1.1)	0.0	0.0			0.0		0.0
Cancellation of shares held in treasury (Note 4.1.1)	(2.5)	(47.3)			(49.8)		(49.8)
Net sales / (buybacks) of treasury shares and transactions under the liquidity contract (Note 4.1.2)		5.2			5.2		5.2
Change in scope of consolidation**		(1.9)			(1.9)	1.7	(0.2)
Current taxes on share buybacks		0.3			0.3		0.3
Share-based payments (Note 4.2)		33.8			33.8		33.8
As of December 31, 2022	1,067.3	5,947.6	(330.4)	(47.3)	6,637.2	5.6	6,642.8

* Net of deferred taxes.

** Corresponds mainly to acquisitions of additional shares in companies already consolidated and to puts on minority interests.

The accompanying Notes are an integral part of these consolidated financial statements.

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8.1.6 - Notes to the consolidated financial statements

Key figures		251 9
	NOTE 1 - Basis of preparation of the consolidated financial statements	252 10
NOTE 1.1	General information	252 10
NOTE 1.2	Accounting policies	252 12
NOTE 1.3	Significant transactions and events for the period	254 12
NOTE 1.4	Scope of consolidation	255 13
NOTE 2 - Results for the year		257 15
NOTE 2.1	Segment information	257 15
NOTE 2.2	Net sales	260 18
NOTE 2.3	Operating expenses	261 19
NOTE 2.4	Income tax expense	261 19
	NOTE 3 - Details on non-current and current assets	262 20
NOTE 3.1	Intangible assets	262 20
NOTE 3.2	Goodwill	264 22
NOTE 3.3	Property, plant and equipment	266 24
NOTE 3.4	Right-of-use assets and lease contracts	268 26
NOTE 3.5	Inventories	270 28
NOTE 3.6	Trade receivables	271 29
NOTE 3.7	Other current assets	271 29
NOTE 3.8	Cash and cash equivalents	272 30
	NOTE 4 - Details on non-current and current liabilities	272 30
NOTE 4.1	Share capital and earnings per share	272 30
NOTE 4.2	Stock option plans and performance share plans	273 31
NOTE 4.3	Retained earnings and translation reserves	279 37
NOTE 4.4	Provisions	280 38
NOTE 4.5	Provision for post-employment benefits and other long-term employee benefits	281 39
NOTE 4.6	Long-term and short-term borrowings	285 43
NOTE 4.7	Deferred taxes	288 46
NOTE 4.8	Other current liabilities	289 47
NOTE 5 - Other information		289 47
NOTE 5.1	Financial instruments and management of risks	289 47
NOTE 5.2	Climate issues	293 51
NOTE 5.3	Related-party information	295 53
NOTE 5.4	Off-balance sheet commitments	295 53
NOTE 5.5	Claims and contingent liabilities	296 54
NOTE 5.6	Statutory Auditors' fees	296 54
NOTE 5.7	Subsequent events	296 54
NOTE 5.8	Key figures reconciliation	296 54

KEY FIGURES

Key figures

(in € millions)	2022	2021
Net sales	8,339.4	6,994.2
Adjusted operating profit	1,701.5	1,434.0
As % of net sales	20.4%	20.5%
	20.7% before ⁽¹⁾ acquisitions
Operating profit	1,446.5	1,344.1
As % of net sales	17.3%	19.2%
Adjusted net profit attributable to the Group	1,146.6	904.5
As % of net sales	13.7%	12.9%
Net profit attributable to the Group	999.5	904.5
As % of net sales	12.0%	12.9%
Normalized free cash flow	1,210.4	1,074.1
As % of net sales	14.5%	15.4%
Free cash flow	1,035.5	952.4
As % of net sales	12.4%	13.6%
Net financial debt at December 31	2,318.9	2,524.2

(1) At 2021 scope of consolidation.

Adjusted operating profit is defined as operating profit adjusted for: i) amortization and depreciation of revaluation of assets at the time of acquisitions and for other P&L impacts relating to acquisitions, ii) assets impairment in Russia and, iii) where applicable, for impairment of goodwill.

Adjusted net profit attributable to the Group for 2022 is excluding the effect of expenses in the amount of €147.1 million corresponding to assets impairment in Russia.

Free cash flow is defined as the sum of net cash from operating activities and net proceeds from sales of fixed and financial assets, less capital expenditure and capitalized development costs.

Normalized free cash flow is defined as the sum of net cash from operating activities - based on a working capital requirement representing 10% of the last 12 months' sales and whose change at constant scope of consolidation and exchange rates is adjusted for the period considered - and net proceeds of sales from fixed and financial assets, less capital expenditure and capitalized development costs.

Net financial debt is defined as the sum of short-term borrowings and long-term borrowings, less cash and cash equivalents and marketable securities.

The reconciliation of key figures with the financial statements is available in Note 5.8.

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NOTE 1 - Basis of preparation of the consolidated financial statements

NOTE 1.1 General information

Legrand ("the Company") along with its subsidiaries (together
"Legrand" or "the Group") is the global specialist in electrical
and digital building infrastructures.

The Group has manufacturing and/or distribution subsidiaries and offices in close to 90 countries and sells its products in more than 170 countries.

The Company is a French société anonyme (K65D) incorporated and domiciled in France. Its registered office is located at 128, avenue du Maréchal de Lattre de Tassigny – 87000 Limoges (France).

The 2021 Universal Registration Document was filed with the AMF (French Financial Markets Authority) on April 6, 2022, under no. D.22-0245.

The consolidated financial statements cover the period from January 1, 2022 to December 31, 2022, they were approved by the Board of Directors on February 8, 2023.

All amounts are presented in millions of euros with a figure after the decimal point, unless otherwise specified. Some totals may include rounding differences.

NOTE 1.2 Accounting policies

As a company incorporated in France, Legrand is governed by French company laws, including the provisions of the Code de commerce (French Commercial Code).

The consolidated financial statements cover the 12 months ended December 31, 2022. They have been prepared in accordance with the International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee publications adopted by the European Union and applicable or authorized for early adoption from January 1, 2022.

IFRS issued by the International Accounting Standards Board (IASB) that have not been adopted for use in the European Union are not 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 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.

NOTE 1.2.1 New standards, amendments and interpretations that may impact the Group's financial statements

NOTE 1.2.1.1 New standards, amendments and interpretations with mandatory application from January 1, 2022 that have an impact on the Group's 2022 financial statements

Not applicable.

NOTE 1.2.1.2 New standards, amendments and interpretations with mandatory application from January 1, 2022 that have no impact on the Group's 2022 financial statements

Not applicable.

NOTE 1.2.1.3 New standards, amendments and interpretations adopted by the European Union and not applicable to the Group until future periods

Amendment to IAS 12 – Income Taxes	transactions such as decommissioning obligations and
In May 2021, the IASB issued the IAS 12 amendment –	leases.
Income taxes. This amendment reduces the scope of application of the	This amendment should be effective for annual periods beginning on or after January 1, 2023 at the latest.
exemption from initial recognition of deferred tax on	The amendment is not expected to have a material impact on the Group.

NOTE 1.2.1.4 New standards, amendments and interpretations not yet adopted by the European Union and not applicable to the Group until future periods

Amendments to IAS 1 – Classification of Liabilities as Current or Non-current	Not yet been adopted by the European Union, the amendment should be effective for annual periods beginning on or after January 1, 2023 at the latest. The Group reviewed this amendment, to determine its possible impacts on the consolidated financial statements and related disclosures. The amendment is not expected to have a material impact on the Group.
In January 2020, the IASB issued the IAS 1 amendment – Classification of Liabilities as Current or Non-current.
This amendment clarifies the requirements for classifying liabilities as current or non-current.
NOTE 1.2.1.5 Standards newly applicable to the Group

IAS 29 – Financial Reporting in Hyperinflationary Economies

On March 16, 2022, the International Practices Task Force (IPTF) of the Center for Audit Quality (CAQ), the benchmark for monitoring "highly inflationary" countries, included Turkey in the list of hyperinflationary economies.

IAS 29 provides for an entity's financial statements to be restated when its functional currency is that of a hyperinflationary economy.

NOTE 1.2.2 Basis of consolidation

Subsidiaries are consolidated if they are controlled by the Group.

The Group has exclusive control over an entity when it has power over the entity, i.e., it has substantive rights to govern the entity's key operations, is exposed to variable returns from its involvement with the entity and has the ability to affect those returns.

Such subsidiaries are fully consolidated from the date when effective control is transferred to the Group. They are deconsolidated from the date on which control ceases.

Any entity over which the Group has either:

◼ significant influence (a situation that occurs when the Group holds more than 20% of the voting rights without providing it with substantive rights to govern the entity's key operations); or

NOTE 1.2.3 Use of judgments and estimates

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that are reflected in the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates.

Pursuant to the requirements of the standard, the Group has identified and measured the restatements needed to adequately present the impacts of the hyperinflationary Turkish currency in the consolidated financial statements.

The application of IAS 29 did not have a material impact on the 2022 consolidated accounts.

◼ joint control (a situation where the Group's participation gives it substantive rights to govern the entity's key operations jointly with a partner but does not provide exclusive control to the Group);

is consolidated using the equity method.

Such subsidiaries are initially recognized at acquisition cost and consolidated from the date when effective control is transferred to the Group. They are deconsolidated from the date on which control ceases.

Items included in the financial statements of each Group entity are measured using the currency of the primary economic environment in which the entity operates (the "functional currency"). The consolidated financial statements are presented in euros, which is the Company's functional and presentation currency.

Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of future events, and are believed to be reasonable under the circumstances.

NOTE 1.2.3.1 Impairment of goodwill and intangible assets

Trademarks with indefinite useful lives and goodwill are tested for impairment at least once a year and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Intangible assets with finite useful lives are amortized over their estimated useful lives and are tested for impairment when there is any indication that their recoverable amount may be less than their carrying amount.

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Future events could cause the Group to conclude that evidence exists that certain intangible assets acquired in a business combination are impaired. Any resulting impairment loss could have a material adverse effect on the Group's consolidated financial statements and in particular on the Group's operating profit.

NOTE 1.2.3.2 Accounting for income taxes

As part of the process of preparing the consolidated financial statements, the Group is required to estimate income taxes in each of the jurisdictions in which it operates. This involves estimating the actual current tax exposure and assessing temporary differences resulting from differing treatment of items such as deferred revenue or prepaid expenses for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are reported in the consolidated balance sheet.

The Group must then assess the probability that deferred tax assets will be recovered from future taxable profit.

NOTE 1.2.3.3 Other assets and liabilities based on estimates

Other assets and liabilities based on estimates include provisions for pensions and other post-employment benefits, impairment of trade receivables, inventories and financial Discounted cash flow estimates (used for impairment tests on goodwill and trademarks with indefinite useful lives) are based on management's estimates of key assumptions, especially discount rates, medium-term growth and profitability rates.

Deferred tax assets are recognized only when it is probable that sufficient taxable profit will be available, based on management-approved taxable profit forecasts.

The Group has not recognized all of its deferred tax assets because it is not probable that some of them will be recovered before they expire. The amounts involved mainly concern operating losses carried forward and foreign income tax credits. The assessment is based on management's estimates of future taxable profit by jurisdiction in which the Group operates and the period over which the deferred tax assets are recoverable.

assets, share-based payments, provisions for contingencies and charges, right-of-use assets, capitalized development costs, and any annual volume rebates offered to customers.

NOTE 1.3 Significant transactions and events for the period

Valuation of assets in Russia

Legrand's activities in Russia accounted for approximately 1.5% of full-year sales in 2022. As of December 31, 2022, the Group's balance sheet exposure to Russia, including currency translation reserves, amounted to approximately €200 million.

Of this amount, €147.9 million in asset impairment has been recognized in the 2022 consolidated financial statements, mainly in other operating income and expenses, with no impact on adjusted operating profit.

The impact on the Group's operating profit breaks down as follows:

• ◼ depreciation, amortization and impairment related to the remeasurement of assets accounted in administrative and selling expenses: €2.0 million,
• ◼ depreciation, amortization and impairment related to the remeasurement of assets accounted in other operating income and expenses: €117.7 million and,
• ◼ goodwill impairment: €28.2 million.

Impact on net profit is €147.4 million and on net profit attributable to the Group is €147.1 million.

The balance-sheet impact at the closing rate is €134.8 million and breaks down as follows: €54.5 million on inventories, €34.7 million on property, plant and equipment, €26.2 million on goodwill and the remainder on current assets, with an additional impact recorded in translation reserves. The translation reserves (unrealized loss of €44.6 million as of December 31, 2022) will be reclassified in the income statement at the time of the actual disposal, without any cash impact.

In view of recent developments, including rising operational complexity and uncertainty, Legrand has announced in January 2023 its intention to disengage from its Russian operations and is currently reviewing options for transferring their control in a timely and orderly manner. Legrand believes this disengagement is the best option to ensure its ongoing compliance with all legislation and regulations as well as the long-term continuity of local operations for its employees and customers.

Consolidated financial statements in accordance with IFRS for the years ended December 31, 2022 and December 31, 2021

NOTE 1.4 Scope of consolidation

NOTE 1.4.1 List of main consolidated companies

The consolidated financial statements comprise the financial statements of Legrand and its 229 subsidiaries.

The main operating subsidiaries as of December 31, 2022, all of which being 100% owned and fully consolidated, are as follows:

Europe

Legrand Group Belgium	Belgium	Diegem
Ensto Building Systems	Finland	Porvoo
Legrand France	France	Limoges
Legrand SNC	France	Limoges
Legrand ZRT	Hungary	Szentes
Bticino SpA	Italy	Varese
Legrand Nederland B.V.	Netherlands	Boxtel
Legrand Polska	Poland	Zabkowice
Legrand LLC	Russia	Moscow
Legrand Group España	Spain	Madrid
Inform Elektronik	Turkey	Pelitli
Legrand Elektrik	Turkey	Gebze
Legrand Electric	United Kingdom	Birmingham
Netatmo	France	Boulogne-Billancourt

North and Central America

United States	Westlake Village
Mexico	Querétaro
United States	Union City
United States	Chicago
United States	Kenosha
United States	Eden Prairie
United States	New London
United States	Syracuse
United States	Denver
United States	Somerset
United States	Reno
United States	Canonsburg
United States	Santa Clara
United States	West Hartford

Rest of the world

Legrand Group Pty Ltd	Australia	Sydney
GL Eletro-Eletronicos Ltda	Brazil	São Paulo
HDL Da Amazonia Industria Eletronica Ltda	Brazil	Manaus
Electro Andina Ltda	Chile	Santiago
DongGuan Rocom Electric	China	Dongguan
TCL International Electrical	China	Huizhou
TCL Wuxi	China	Wuxi
Legrand Colombia	Colombia	Bogota
Novateur Electrical and Digital Systems	India	Mumbai

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NOTE 1.4.2 Changes in the scope of consolidation

The contributions to the Group's consolidated financial statements of companies acquired since the end of 2020 were as follows:

2021	March 31	June 30	September 30	December 31
Full consolidation method
Champion One	Balance sheet only	6 months' profit	9 months' profit	12 months' profit
Compose	Balance sheet only	6 months' profit	9 months' profit	12 months' profit
Ecotap			Balance sheet only	6 months' profit
Ensto Building Systems				2 months' profit
Geiger				Balance sheet only
2022	March 31	June 30	September 30	December 31
Full consolidation method
Champion One	3 months' profit	6 months' profit	9 months' profit	12 months' profit
Compose	3 months' profit	6 months' profit	9 months' profit	12 months' profit
Ecotap	3 months' profit	6 months' profit	9 months' profit	12 months' profit
Ensto Building Systems	3 months' profit	6 months' profit	9 months' profit	12 months' profit
Geiger	Balance sheet only	6 months' profit	9 months' profit	12 months' profit
Emos	Balance sheet only	Balance sheet only	Balance sheet only	9 months' profit
Usystems		Balance sheet only	Balance sheet only	7 months' profit
A. & H. Meyer			Balance sheet only	Balance sheet only
Power Control			Balance sheet only	Balance sheet only
Voltadis			Balance sheet only	Balance sheet only
Encelium				Balance sheet only

The main acquisitions announced in 2022 were as follows:

• ◼ Emos, the leader in Central and Eastern Europe in electrical installation components. Based in the Czech Republic, Emos has annual sales of around €85 million;
• ◼ Usystems, a specialist in datacenter solutions. Usystems' portfolio of cooling solutions and racks helps its clients reduce their datacenter energy bills and therefore their carbon footprint. Founded in 2003 and based in Bedford in the United Kingdom, the company has some 70 employees and recorded annual sales of around €11 million, including 50% stemming in the United States;
• ◼ A. & H. Meyer, Germany's leading player in "power in furniture" connectivity solutions for commercial buildings. Based in Dörentrup (Germany), A. & H. Meyer has nearly 200 employees and annual sales of over €20 million;
• ◼ Power Control, a British specialist in UPS systems (equipment, services and maintenance). Based in Sheffield (United Kingdom), the company has annual sales of around €15 million and a workforce of over 70;
• ◼ Voltadis, a French player in datacenter services. From design to commissioning, including equipment supply and installation, Voltadis offers comprehensive support in defining tailored electrical power supply systems for datacenters' grey rooms. Based in Cournon d'Auvergne, France, the company has some 20 employees and annual sales of around €13 million;
• ◼ Encelium, a US player in lighting systems for commercial buildings, with a particular focus on energy-efficient, connected products. Based in Boston (Massachusetts) in the US, Encelium has annual sales of over \$20 million.

Acquisitions of subsidiaries (net of cash acquired) came to a total of €235.6 million in 2022.

As of December 31, 2022, these acquisitions led to the recognition of €16.7 million in intangible assets excluding goodwill, €55.1 million in other acquired assets net of liabilities, and €163.8 million in provisional goodwill.

NOTE 2 - Results for the year

NOTE 2.1 Segment information

In accordance with IFRS 8, operating segments are determined based on the reporting made available to the chief operating decision maker of the Group and to the Group's management.

Given that Legrand activities are carried out locally, the Group is organized for management purposes by countries or groups of countries which have been allocated for internal reporting purposes into three operating segments:

• ◼ Europe, including France, Italy and Rest of Europe (mainly including Benelux, Germany, Iberia (including Portugal and Spain), Poland, Russia, Turkey, and the United Kingdom);
• ◼ North and Central America, including Canada, Mexico, the United States, and Central American countries; and

◼ Rest of the world, mainly including Australia, China, India and South America (including particularly Brazil, Chile and Colombia).

These three operating segments are under the responsibility of three segment managers who are directly accountable to the chief operating decision maker of the Group.

The economic models of subsidiaries within these segments are quite similar. Indeed, their sales are made up of electrical and digital building infrastructure products in particular to electrical installers, sold mainly through third-party distributors.

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12 months ended December 31, 2022

(in € millions)	Europe	North and Central America	Rest of the world	Total
Net sales to third parties	3,506.4 ⁽¹⁾	3,428.4 ⁽²⁾	1,404.6	8,339.4
Cost of sales	(1,668.7)	(1,743.9)	(780.1)	(4,192.7)
Administrative and selling expenses, R&D costs	(1,034.2)	(1,044.8)	(333.0)	(2,412.0)
Other operating income (expenses)	(222.1)	(49.5)	(16.6)	(288.2)
Operating profit	581.4	590.2	274.9	1,446.5
– of which i/ acquisition-related amortization, expenses and income and ii/ assets impairment in Russia
accounted for in administrative and selling expenses, R&D costs	(24.8) ⁽³⁾	(78.4)	(5.9)	(109.1)
accounted for in other operating income (expenses)	(117.7) ⁽⁴⁾	0.0	0.0	(117.7)
– of which goodwill impairment	5 (28.2) ⁽ ⁾	0.0	0.0	(28.2)
Adjusted operating profit	752.1	668.6	280.8	1,701.5
– of which depreciation and impairment expense	(110.8)	(26.8)	(24.4)	(162.0)
– of which amortization and impairment expense	(8.7)	(2.3)	(1.3)	(12.3)
– of which amortization and impairment of development costs	(30.9)	0.0	(1.0)	(31.9)
– of which amortization and impairment of right-of-use assets	(28.9)	(24.9)	(21.4)	(75.2)
– of which restructuring costs	(25.5)	(18.1)	(6.1)	(49.7)
Capital expenditure	(113.6)	(31.1)	(32.9)	(177.6)
Capitalized development costs	(26.6)	0.0	(1.5)	(28.1)
Net tangible assets	453.6	159.1	133.3	746.0
Total current assets	3,166.4	1,106.7	830.2	5,103.3
Total current liabilities	1,550.5	512.3	433.1	2,495.9

(1) Of which France: €1,297.5 million.

(2) Of which United States: €3,174.6 million.

(3) Of which Russia: €(2.0) million.

(4) Of which Russia: €(117.7) million.

(5) Of which Russia: €(28.2) million.

12 months ended December 31, 2021

		North and Central	Rest of
(in € millions)	Europe	America	the world	Total
Net sales to third parties	2,993.3 ⁽¹⁾	2,747.8 ⁽²⁾	1,253.1	6,994.2
Cost of sales	(1,357.3)	(1,358.7)	(723.2)	(3,439.2)
Administrative and selling expenses, R&D costs	(907.3)	(886.1)	(300.7)	(2,094.1)
Other operating income (expenses)	(59.0)	(38.8)	(19.0)	(116.8)
Operating profit	669.7	464.2	210.2	1,344.1
– of which i/ acquisition-related amortization, expenses and income and ii/ assets impairment in Russia
accounted for in administrative and selling expenses, R&D costs	(15.4)	(71.8)	(5.5)	(92.7)
accounted for in other operating income (expenses)	0.0	2.8		2.8
– of which goodwill impairment				0.0
Adjusted operating profit	685.1	533.2	215.7	1,434.0
– of which depreciation and impairment expense	(63.9)	(25.6)	(21.7)	(111.2)
– of which amortization and impairment expense	(8.5)	(2.2)	(1.1)	(11.8)
– of which amortization and impairment of development costs	(27.4)	0.0	(0.9)	(28.3)
– of which amortization and impairment of right-of-use assets	(26.3)	(22.4)	(19.1)	(67.8)
– of which restructuring costs	(24.7)	(11.6)	1.5	(34.8)
Capital expenditure	(87.9)	(21.4)	(30.6)	(139.9)
Capitalized development costs	(29.3)	0.0	(1.3)	(30.6)
Net tangible assets	442.3	146.8	130.1	719.2
Total current assets	3,395.2	869.4	866.8	5,131.4
Total current liabilities	1,638.3	475.7	472.8	2,586.8

(1) Of which France: €1,200.1 million.

(2) Of which United States: €2,551.0 million.

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NOTE 2.2 Net sales

The Group derived the large majority of its revenue from product sales to generalist and specialist distributors. The two largest distributors accounted for more than 16% of consolidated net sales in 2022. The Group estimates that no other distributor accounted for more than 5% of consolidated net sales.

Contracts with distributors are signed for a one-year period. As a general rule, there is only one performance obligation in these contracts, which is to sell and deliver products to the customer (the performance obligation related to delivery is not material within the context of customer contracts).

Within the context of these contracts, the Group owns the main risks and benefits resulting from the product sales, and therefore acts as the principal (and not as an agent).

Net sales are generally recognized at one point in time, corresponding to the date on which the control of the asset (products or, more rarely, services) is transferred to the customer, usually the date of shipment in the case of product sales. In the specific case of service sales where the

Changes in net sales by destination are as follows:

customer consumes the service benefits over the period in which they are provided, net sales are recognized over time, i.e. spread over the period in which the services are provided to the customer.

Contracts with customers generally include variable payments in their favor, primarily deferred discounts and rebates, and occasionally commercial returns. These variable payments to customers are estimated at their most likely amount and accounted for when net sales are recognized. By default, variable payments to customers are accounted for as a deduction from net sales. Only payments made to customers in exchange for the transfer of products or services by these customers are accounted for as selling expenses, for the portion of these payments corresponding to the transferred products' or services' fair value.

In 2022, the Group's consolidated net sales came to €8,339.4 million, up (+19.2%) in total compared with 2021 due to an organic growth (+9.7%), an increase in scope of consolidation (+3.0%) and the favorable impact of exchange rates (+5.5%).

	12 months ended December 31
Net sales (in € millions, except %)	2022	2021	Total change	Change in scope of consolidation	Organic growth(1)	Exchange rate effect
Europe	3,343.7	2,859.7	16.9%	7.1%	9.8%	(0.6%)
North and Central America	3,378.4	2,700.7	25.1%	0.2%	11.1%	12.3%
Rest of the world	1,617.3	1,433.8	12.8%	0.1%	6.6%	5.7%
Consolidated total	8,339.4	6,994.2	19.2%	3.0%	9.7%	5.5%

(1) At constant scope of consolidation and exchange rates.

The Group sells its products in mature countries as well as many new economies (Eastern Europe and Turkey in the Europe operating segment, Central America and Mexico in the North and Central America operating segment, Asia excluding South Korea, South America, Africa and the Middle East in the Rest of the world operating segment).

Net sales by destination in these two geographical areas are as follows:

		12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Mature countries	6,202.7	5,169.2
New economies	2,136.7	1,825.0
TOTAL	8,339.4	6,994.2

NOTE 2.3 Operating expenses

Operating expenses include the following main categories of costs:

	12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Raw materials and component costs	(3,021.0)	(2,418.1)
Personnel costs	(1,854.6)	(1,695.0)
Other external costs	(1,344.9)	(1,113.8)
Amortization of right-of-use assets	(75.2)	(67.8)
Depreciation of tangible assets	(162.4)	(111.6)
Amortization of intangible assets	(146.6)	(127.0)
Restructuring costs	(49.7)	(34.8)
Goodwill impairment	(28.2)	0.0
Other	(210.3)	(82.0)
OPERATING EXPENSES	(6,892.9)	(5,650.1)

"Other" primarily includes impairment losses and reversals on inventories (Note 3.5), trade receivables (Note 3.6), and provisions for contingencies (Note 4.4), out of which €(117.7) million in relation with the impairment of assets in Russia.

The Group had an average of 37,931 employees in 2022 (versus 38,207 in 2021), of which 30,387 back-office employees and 7,544 front-office employees (versus 30,965 and 7,242, respectively, in 2021).

NOTE 2.4 Income tax expense

Income tax expense consists of the following:

	12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Current taxes	(378.2)	(298.6)
Deferred taxes	(5.6)	(53.3)
TOTAL INCOME TAX EXPENSE	(383.8)	(351.9)

The reconciliation of total income tax expense for the period to income tax calculated at the standard tax rate in France is as follows, based on profit before tax of €1,383.3 million in 2022 (versus €1,257.0 million in 2021):

	12 months ended
(Tax rate)	December 31, 2022	December 31, 2021
Standard French income tax rate	25.83%	28.41%
Increases (reductions):
– Effect of foreign income tax rates	(1.82%)	(4.37%)
– Non-taxable items	2.70%	(0.48%)
– Income taxable at specific rates	(0.20%)	(0.28%)
– Other	0.96%	4.31%
	27.47%	27.59%
Impact on deferred taxes of:
– Changes in tax rates	0.02%	0.10%
– Recognition or non-recognition of deferred tax assets	0.25%	0.31%
EFFECTIVE TAX RATE	27.74%	28.00%

Assets impairment in Russia €(147.9) million is mainly comprised of non-taxable items. Adjusted for these items, the effective tax rate would be 25.1% in 2022.

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NOTE 3 - Details on non-current and current assets

NOTE 3.1 Intangible assets

(in € millions)	December 31, 2022	December 31, 2021
Trademarks	1,882.2	1,849.6
Patents	127.4	125.5
Customer relationships	349.8	358.3
Other intangible assets	175.3	151.9
NET VALUE AT THE END OF THE PERIOD	2,534.7	2,485.3

NOTE 3.1.1 Trademarks with indefinite and finite useful lives

The Legrand and Bticino brands represent close to 98% of the total value of trademarks with indefinite useful lives. These trademarks with indefinite useful lives are used internationally, and therefore contribute to all of the Group's cash-generating units.

They should contribute indefinitely to future consolidated cash flows because management plans to continue using them indefinitely. The Group performs periodical reviews of these trademarks' useful lives.

Trademarks with finite useful lives are amortized over their estimated useful lives ranging:

• ◼ from 10 years when management plans to gradually replace them by other major trademarks owned by the Group;
• ◼ to 20 years when management plans to replace them by other major trademarks owned by the Group only over the long term 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 can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Gross value at the beginning of the period	2,264.2	2,185.4
– Acquisitions	58.3	21.8
– Disposals	(0.7)	0.0
– Translation adjustments	40.2	57.0
Gross value at the end of the period	2,362.0	2,264.2
Accumulated amortization and impairment at the beginning of the period	(414.6)	(350.5)
– Amortization expense	(50.4)	(39.9)
– Reversals	0.5	0.0
– Translation adjustments	(15.3)	(24.2)
Accumulated amortization and impairment at the end of the period	(479.8)	(414.6)
NET VALUE AT THE END OF THE PERIOD	1,882.2	1,849.6

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

For the purposes of impairment tests, the net book values of trademarks with an indefinite useful life are included in the impairment tests of goodwill at the level of CGU groups (Note 3.2). These tests are carried out in the fourth quarter of each year and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Consolidated financial statements in accordance with IFRS for the years ended December 31, 2022 and December 31, 2021

NOTE 3.1.2 Patents

Patents can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Gross value at the beginning of the period	780.2	758.7
– Acquisitions	16.7	5.1
– Disposals	0.0	0.0
– Translation adjustments	12.7	16.4
Gross value at the end of the period	809.6	780.2
Accumulated amortization and impairment at the beginning of the period	(654.7)	(629.4)
– Amortization expense	(20.2)	(16.7)
– Reversals	0.0	0.0
– Translation adjustments	(7.3)	(8.6)
Accumulated amortization and impairment at the end of the period	(682.2)	(654.7)
NET VALUE AT THE END OF THE PERIOD	127.4	125.5

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

NOTE 3.1.3 Customer relationships

Customer relationships acquired in business combinations are recognized when they correspond to contractual relationships with key customers. Such customer relationships are measured using the excess earnings method, and are amortized over a period ranging from 3 to 20 years.

Customer relationships can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Gross value at the beginning of the period	531.6	458.5
– Acquisitions	0.0	32.2
– Adjustments	0.0	0.0
– Disposals	0.0	0.0
– Translation adjustments	28.7	40.9
Gross value at the end of the period	560.3	531.6
Accumulated amortization and impairment at the beginning of the period	(173.3)	(131.3)
– Amortization expense	(31.2)	(29.8)
– Reversals	0.0	0.0
– Translation adjustments	(6.0)	(12.3)
Accumulated amortization and impairment at the end of the period	(210.5)	(173.3)
NET VALUE AT THE END OF THE PERIOD	349.8	358.3

To date, no significant impairment has been recognized for these customer relationships.

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NOTE 3.1.4 Other intangible assets

Other intangible assets are recognized at cost less accumulated amortization and impairment. They include in particular:

◼ costs incurred for development projects (relating to the design and testing of new or improved products). They are amortized from the date of sale of the product on a straight-line basis over the period in which the asset's future economic benefits are consumed, not exceeding 10 years. Costs incurred for projects that do not meet the IAS 38 definition of an intangible asset are recorded in research and development costs for the year in which they are incurred;

◼ software, which is generally purchased from an external supplier and amortized over 3 years. The Group reviewed the impacts of the interpretation on IAS 38 "Configuration or Customization Costs in a Cloud Computing Arrangement", impacts which were not material as of December 31, 2022.

Other intangible assets can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Capitalized development costs	487.1	459.3
Software	174.0	159.8
Other	55.8	32.0
Gross value at the end of the period	716.9	651.1
Accumulated amortization and impairment at the end of the period	(541.6)	(499.2)
NET VALUE AT THE END OF THE PERIOD	175.3	151.9

To date, no material impairment has been recognized for these items.

NOTE 3.2 Goodwill

To determine the goodwill for each business combination, the Group applies the partial goodwill method whereby goodwill is calculated as the difference between the consideration paid to acquire the business combination and the portion of the acquisition date fair value of the identifiable net assets acquired and liabilities assumed that is attributable to the Group.

Under this method no goodwill is allocated to minority interests. Changes in the percentage of interest held in a controlled entity are recorded directly in equity without recognizing any additional goodwill.

Goodwill is tested for impairment annually, in the fourth quarter of each year, and whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.

Each CGU (cash-generating unit) corresponds to individual countries or to groups of countries, when they either have similar market characteristics or are managed as a single unit. Within the Legrand Group, the level at which the goodwill carrying amount is measured corresponds to groups of CGUs, namely the three operating segments (Note 2.1), these three operating segments corresponding to the level of performance monitoring and allocation of resources by the Management Committee.

Value in use is estimated based on discounted cash flows for the next five years and a terminal value calculated from the final year of the projection period. The cash flow data used for the calculation is taken from the most recent medium-term business plans approved by Group management. Business plan projections are based on the latest available external forecasts of trends in the Group's markets. Cash flows beyond the projection period of five years are estimated by applying a growth rate to perpetuity.

The discount rates applied derive from the capital asset pricing model. They are calculated for each individual country, based on financial market and/or valuation services firm data (average data over the last three years). The cost of debt used in the calculations is the same for all individual countries (being equal to the Group's cost of debt).

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, 2022 and December 31, 2021

Goodwill can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Europe	1,975.5	1,833.8
North and Central America	2,933.8	2,750.6
Rest of the world	658.1	656.8
NET VALUE AT THE END OF THE PERIOD	5,567.4	5,241.2

The North and Central America group corresponds to a single cash-generating unit (CGU), while the Europe and Rest of the World groups each include several CGUs.

Changes in goodwill can be analyzed as follows:

December 31, 2022	December 31, 2021
5,277.9	4,840.4
163.8	271.5
(12.2)	(86.1)
200.7	252.1
5,630.2	5,277.9
(36.7)	(36.7)
(28.2)	0.0
2.1	0.0
(62.8)	(36.7)
5,567.4	5,241.2

* Adjustments correspond to the difference between provisional and final goodwill, as well as to the impact of IAS 29.

Purchase price allocations, which are performed within one year of each business combination, are as follows (excluding inventory step-up):

	12 months ended
(in € millions)	December 31, 2022	December 31, 2021
– Trademarks	58.2	21.8
– Deferred taxes on trademarks	(12.6)	(1.0)
– Patents	16.7	5.1
– Deferred taxes on patents	(3.3)	(1.4)
– Other intangible assets	0.0	32.2
– Deferred taxes on other intangible assets	0.0	0.0

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The following impairment testing parameters were used in the period ended December 31, 2022:

(in € millions)			Value in use
	Recoverable amount	Carrying amount of goodwill	Discount rate (before tax)	Growth rate to perpetuity
Europe		1,975.5	10.3 to 35.2%	2.0 to 15.0%
North and Central America	Value in use	2,933.8	11.3%	2.0%
Rest of the world		658.1	11.4 to 18.8%	2.0 to 5.0%
NET VALUE AT THE END OF THE PERIOD		5,567.4

An impairment loss of €28.2 million in relation with Russia is recognized in the period ended December 31, 2022.

Sensitivity tests performed on the discount rates, long-term growth rates and operating margin rates showed that a 100-basis point unfavorable change in each of these three parameters taken at the level of each group of CGUs would not lead to any material impairment of goodwill of any of the other CGUs.

The following impairment testing parameters were used in the period ended December 31, 2021:

			Value in use
(in € millions)	Recoverable amount	Carrying amount of goodwill	Discount rate (before tax)	Growth rate to perpetuity
Europe		1,833.8	7.7 to 22.9%	2.0 to 5.0%
North and Central America	Value in use	2,750.6	8.7%	3.1%
Rest of the world		656.8	9.4 to 14.6%	2.0 to 5.0%
NET VALUE AT THE END OF THE PERIOD		5,241.2

No goodwill impairment losses were identified in the period ended December 31, 2021.

NOTE 3.3 Property, plant and equipment

Depreciation is calculated on a straight-line basis over the estimated useful lives of the respective assets; the most commonly adopted useful lives are the following:

Lightweight buildings	25 years
Standard buildings	40 years
Machinery and equipment	8 to 10 years
Tooling	5 years
Building fixtures	15 years

Changes in property, plant and equipment in 2022 are analyzed as follows:

(in € millions)	December 31, 2022
	Land	Buildings	Machinery and equipment	Assets under construction and other	Total
Gross value
At the beginning of the period	49.4	630.9	1,918.0	368.8	2,967.1
– Acquisitions	0.0	4.7	33.2	123.8	161.7
– Disposals	(0.2)	(20.3)	(73.6)	(16.3)	(110.4)
– Transfers and changes in scope of consolidation	0.7	62.7	52.9	(83.0)	33.3
– Translation adjustments	0.8	5.9	7.7	7.4	21.8
At the end of the period	50.7	683.9	1,938.2	400.7	3,073.5
Depreciation and impairment
At the beginning of the period	(0.2)	(435.2)	(1,607.8)	(204.7)	(2,247.9)
– Depreciation expense	(0.2)	(46.8)	(97.2)	(18.2)	(162.4)
– Reversals	0.1	18.3	72.5	15.3	106.2
– Transfers and changes in scope of consolidation	0.1	(7.2)	(3.4)	(1.5)	(12.0)
– Translation adjustments	0.0	(1.7)	(5.2)	(4.5)	(11.4)
At the end of the period	(0.2)	(472.6)	(1,641.1)	(213.6)	(2,327.5)
Net value
At the beginning of the period	49.2	195.7	310.2	164.1	719.2
– Acquisitions/Depreciation	(0.2)	(42.1)	(64.0)	105.6	(0.7)
– Disposals/Reversals	(0.1)	(2.0)	(1.1)	(1.0)	(4.2)
– Transfers and changes in scope of consolidation	0.8	55.5	49.5	(84.5)	21.3
– Translation adjustments	0.8	4.2	2.5	2.9	10.4
At the end of the period	50.5	211.3	297.1	187.1	746.0

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Changes in property, plant and equipment in 2021 were analyzed as follows:

(in € millions)	December 31, 2021
	Land	Buildings	Machinery and equipment	Assets under construction and other	Total
Gross value
At the beginning of the period	47.0	618.8	1,819.6	343.2	2,828.6
– Acquisitions	0.1	2.3	32.6	96.7	131.7
– Disposals	(0.7)	(18.8)	(51.9)	(15.7)	(87.1)
– Transfers and changes in scope of consolidation	0.8	16.9	87.3	(67.0)	38.0
– Translation adjustments	2.2	11.7	30.4	11.6	55.9
At the end of the period	49.4	630.9	1,918.0	368.8	2,967.1
Depreciation and impairment
At the beginning of the period	(0.2)	(424.7)	(1,532.7)	(190.1)	(2,147.7)
– Depreciation expense	0.0	(17.3)	(77.5)	(16.8)	(111.6)
– Reversals	0.4	15.5	50.7	11.1	77.7
– Transfers and changes in scope of consolidation	(0.4)	(2.4)	(25.2)	(0.4)	(28.4)
– Translation adjustments	0.0	(6.3)	(23.1)	(8.5)	(37.9)
At the end of the period	(0.2)	(435.2)	(1,607.8)	(204.7)	(2,247.9)
Net value
At the beginning of the period	46.8	194.1	286.9	153.1	680.9
– Acquisitions/Depreciation	0.1	(15.0)	(44.9)	79.9	20.1
– Disposals/Reversals	(0.3)	(3.3)	(1.2)	(4.6)	(9.4)
– Transfers and changes in scope of consolidation	0.4	14.5	62.1	(67.4)	9.6
– Translation adjustments	2.2	5.4	7.3	3.1	18.0
At the end of the period	49.2	195.7	310.2	164.1	719.2

NOTE 3.4 Right-of-use assets and lease contracts

Right-of-use assets are initially measured at an amount equal mainly to the sum of:

• ◼ initial values of the lease financial liability;
• ◼ prepayments (including the first lease payment in case of lease payments made at the beginning of lease periods); and
• ◼ restoration costs.

Right-of-use assets value is subsequently remeasured whenever the lease financial liability value is remeasured.

Right-of-use assets are depreciated using the straight-line method over the estimated lease contract duration. This latter is determined by taking into account the existence of lease renewal options and early termination options whose exercise is subject solely to the Group's decision.

More specifically, regardless of the nature of these options, whenever there is significant capital expenditure on leased buildings, the depreciation period applied to the tangible assets resulting from these expenditures is used to determine the estimated lease contract duration of these buildings.

Lease financial liabilities are initially measured at the present value of future lease payments (excluding variable lease payments and service payments whenever it is possible to identify these payments within total lease payments, while including, when applicable, the purchase option value if the exercise of this option is deemed probable), using as the discount rate the borrowing rate available for a Group entity for both the currency and the maturity corresponding to the estimated duration of the lease contract.

Lease financial liabilities are remeasured when there is a change in future lease payments arising from a change in an index or rate, or a change in the lease term (following the subsequent exercise of an extension or an early termination option).

Lease financial liabilities are analyzed in Note 4.6.1.

The Group has elected not to recognize right-of-use assets and lease financial liabilities for short-term leases (not exceeding a one-year period) and/or leases of low-value assets.

Changes in right-of-use assets in 2022 are analyzed as follows:

	December 31, 2022
(in € millions)	Buildings	Machinery and equipment	Other	Total
Gross value
At the beginning of the period	504.5	5.5	60.0	570.0
– Increases	56.4	0.6	7.1	64.1
– Decreases	(5.5)	(0.1)	(0.7)	(6.3)
– Transfers and changes in scope of consolidation	9.7	0.1	1.2	11.0
– Translation adjustments	10.6	0.1	1.3	12.0
At the end of the period	575.7	6.2	68.9	650.8
Depreciation and impairment
At the beginning of the period	(265.7)	(3.3)	(32.6)	(301.6)
– Depreciation expense	(67.4)	(0.8)	(7.0)	(75.2)
– Reversals	1.4	0.0	0.2	1.6
– Transfers and changes in scope of consolidation	(2.7)	0.0	(0.4)	(3.1)
– Translation adjustments	(5.6)	0.0	(0.7)	(6.3)
At the end of the period	(340.0)	(4.1)	(40.5)	(384.6)
Net value
At the beginning of the period	238.8	2.2	27.4	268.4
– Increases/Depreciation	(11.0)	(0.2)	0.1	(11.1)
– Decreases/Reversals	(4.1)	(0.1)	(0.5)	(4.7)
– Transfers and changes in scope of consolidation	7.0	0.1	0.8	7.9
– Translation adjustments	5.0	0.1	0.6	5.7
At the end of the period	235.7	2.1	28.4	266.2

"Buildings" right-of-use assets mainly concern lease contracts for production sites, commercial offices and warehouses. Most of these lease contracts offer both extension and early termination options, while very few of them include purchase options or restoration costs. Therefore, the corresponding right-of-use assets do not include any material amount for purchase options or restoration costs.

"Machinery and equipment" right-of-use assets comprises mainly industrial machinery.

"Other" right-of-use assets mainly concern vehicles, forklifts and some IT equipment. Although most of these lease contracts include purchase options, these options are generally not exercised.

Renewal options not included in lease financial liabilities' value as of December 31, 2022 represent a discounted value of roughly €86 million.

A significant portion of this value corresponds to renewal options related to building lease contracts in the United States, the exercise of which is subject solely to the Group's decision. The exercise of these renewal options, which represent an additional lease period ranging from 5 to 10 years according to lease contracts, is not currently deemed certain by management and would not occur for several years.

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Changes in right-of-use assets in 2021 were analyzed as follows:

(in € millions)		December 31, 2021
	Buildings	Machinery and equipment	Other	Total
Gross value
At the beginning of the period	460.7	6.7	64.5	531.9
– Increases	53.7	0.5	6.2	60.4
– Decreases	(42.2)	(1.9)	(13.2)	(57.3)
– Changes in scope of consolidation	12.8	0.0	0.3	13.1
– Translation adjustments	19.5	0.2	2.2	21.9
At the end of the period	504.5	5.5	60.0	570.0
Depreciation and impairment
At the beginning of the period	(222.1)	(3.9)	(37.6)	(263.6)
– Depreciation expense	(61.0)	(0.6)	(6.2)	(67.8)
– Reversals	29.7	1.3	12.3	43.3
– Changes in scope of consolidation	(1.2)	0.0	(0.1)	(1.3)
– Translation adjustments	(11.1)	(0.1)	(1.0)	(12.2)
At the end of the period	(265.7)	(3.3)	(32.6)	(301.6)
Net value
At the beginning of the period	238.6	2.8	26.9	268.3
– Increases/Depreciation	(7.3)	(0.1)	0.0	(7.4)
– Decreases/Reversals	(12.5)	(0.6)	(0.9)	(14.0)
– Changes in scope of consolidation	11.6	0.0	0.2	11.8
– Translation adjustments	8.4	0.1	1.2	9.7
At the end of the period	238.8	2.2	27.4	268.4

NOTE 3.5 Inventories

Inventories are measured at the lower of cost (of acquisition or production) and net realizable value, with cost determined principally on a first-in, first-out (FIFO) basis. Net realizable value is the estimated selling price in the ordinary course of business, less applicable variable selling expenses.

Impairment provisions are recognized when inventories are considered wholly or partially obsolete, and for finished goods inventories when their net realizable value is lower than their net book value.

Inventories can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Purchased raw materials and components	619.2	529.3
Sub-assemblies, work in progress	137.4	145.7
Finished products	842.7	727.4
Gross value at the end of the period	1,599.3	1,402.4
Impairment	(241.9) (1)	(149.7)
NET VALUE AT THE END OF THE PERIOD	1,357.4	1,252.7

(1) of which impairment of inventories in Russia (Note 1.3): €(54.5) million.

NOTE 3.6 Trade receivables

Trade receivables are initially recognized at fair value and are subsequently measured at amortized cost.

In accordance with IFRS 9, expected credit losses on trade receivables are estimated based on a provision table, by applying provision rates depending on the receivables aging.

Furthermore, a provision can be recognized in the income statement when there is objective evidence of impairment such as:

• ◼ when a debtor has defaulted; or
• ◼ when a debtor's credit rating has been downgraded or its business environment has deteriorated.

Trade receivables can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Trade receivables	1,058.7	826.6
Impairment	(100.6)	(98.1)
NET VALUE AT THE END OF THE PERIOD	958.1	728.5

The Group uses factoring contracts to reduce the risk of late payments.

During 2022, a total of €314.7 million in receivables were transferred under the terms of the factoring contracts. The resulting costs were recognized in financial profit (loss) for an amount of less than €1 million.

As of December 31, 2022, these factoring contracts allowed the Group to derecognize trade receivables for an amount of €73.4 million (€79.6 million as of December 31, 2021), as they transfer all credit and late payment risks to the factoring companies. The only risk that is not transferred is limited to dilution risk, which is historically very low.

Past-due trade receivables can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Less than 3 months past due receivables	214.2	151.7
From 3 to 12 months past due receivables	44.5	40.4
More than 12 months past due receivables	40.3	35.3
TOTAL	299.0	227.4

Provisions for impairment of past-due trade receivables amounted to €77.5 million as of December 31, 2022 (€76.4 million as of December 31, 2021). These provisions break down as follows:

(in € millions)	December 31, 2022	December 31, 2021
Provisions for less than 3 months past due receivables	9.2	13.6
Provisions for 3 to 12 months past due receivables	28.0	27.5
Provisions for more than 12 months past due receivables	40.3	35.3
TOTAL	77.5	76.4

NOTE 3.7 Other current assets

Other current assets can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Employee advances	2.1	2.6
Prepayments	80.6	80.8
Taxes other than income tax	124.8	121.4
Other receivables	47.9	35.6
NET VALUE AT THE END OF THE PERIOD	255.4	240.4

These assets are valued at amortized cost.

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NOTE 3.8 Cash and cash equivalents

Cash and cash equivalents consist of cash, short-term deposits and other liquid financial assets (possibility to realize the assets in less than 3 months at any time), readily convertible to known amounts of cash and are not subject to any material risk of change in value. Some of these other financial assets may have an initial maturity of one year or more, while being very easily convertible.

Cash and cash equivalents that are unavailable in the short term for the Group correspond to the bank accounts of

NOTE 4 - Details on non-current and current liabilities

NOTE 4.1 Share capital and earnings per share

Share capital as of December 31, 2022 amounted to €1,067,270,984 represented by 266,817,746 ordinary shares with a par value of €4 each, for 266,817,746 theoretical voting rights and 266,668,231 exercisable voting rights (after subtracting shares held in treasury by the Group as of this date).

As of December 31, 2022, the Group held 149.515 shares in treasury, versus 678,176 shares as of December 31, 2021, i.e. 528,661 fewer shares corresponding to:

◼ the net acquisition of 450,000 shares outside of the liquidity contract;

certain subsidiaries facing complex, short-term fund repatriation conditions due mainly to regulatory reasons.

Cash and cash equivalents totaled €2,346.8 million as of December 31, 2022 (versus €2,788.3 million as of December 31, 2021). Of this amount, €13.4 million was not available to the Group in the short term as of December 31, 2022 (versus €7.3 million as of December 31, 2021).

• ◼ the transfer of 426,945 shares to employees under performance share plans;
• ◼ the cancellation of 630,000 shares.
• ◼ the net purchase of 78,284 shares under the liquidity contract (Note 4.1.2.2).

As of December 31, 2022, among the 149,515 shares held in treasury by the Group, 38,285 shares have been allocated according to the allocation objectives described in Note 4.1.2.1, and 111,230 shares are held under the liquidity contract.

NOTE 4.1.1 Changes in share capital

Changes in share capital in 2022 were as follows:

	Number of shares	Par value	Share capital (euros)	Premiums (euros)
As of December 31, 2021	267,447,746	4	1,069,790,984	539,064,770
Cancellation of shares	(630,000)	4	(2,520,000)	(47,307,842)
As of December 31, 2022	266,817,746	4	1,067,270,984	491,756,928

NOTE 4.1.2 Share buybacks and transactions under the liquidity contract

As of December 31, 2022, the Group held 149,515 shares in treasury (678,176 as of December 31, 2021, of which 645,230 under the share buyback program and 32,946 under the liquidity contract) which can be analyzed as follows:

NOTE 4.1.2.1 Share buybacks

NOTE 4.1.2.2 Liquidity contract
During 2022, the Group acquired 450,000 shares, at a cost of €38.1 million.	As of December 31, 2022, the Group held 38,285 shares, acquired at a total cost of €3.2 million. These shares are being held for allocation, upon exercise of performance share plans.

The Group appointed a financial institution to maintain a liquid market for its shares on the Euronext™ Paris market under a liquidity contract. This contract is compliant with the AMF decision on July 2, 2018 relating to the establishment of liquidity contracts on equity securities under accepted market practice.

As of December 31, 2022, the Group held 111,230 shares under this contract, purchased at a total cost of €8.6 million.

During 2022, transactions under the liquidity contract led to a cash outflow of €6.5 million corresponding to the net purchase of 78,284 shares.

NOTE 4.1.3 Earnings per share

Basic earnings per share are calculated by dividing net profit attributable to the Group by the weighted average number of ordinary shares outstanding (excluding shares held in treasury) during the period.

Diluted earnings per share are calculated according to the treasury stock method, by dividing profit attributable to the Group by the weighted average number of ordinary shares outstanding (excluding shares held in treasury) during the period, plus the number of dilutive potential ordinary shares. The weighted average number of ordinary shares outstanding used in these calculations is adjusted for the share buybacks and sales carried out during the period.

Basic and diluted earnings per share, calculated on the basis of the average number of ordinary shares outstanding during the period, are as follows:

	12 months ended
	December 31, 2022	December 31, 2021
Net profit attributable to the Group (in € millions) A	999.5	904.5
Average number of shares (excluding shares held in treasury) B	266,608,415	266,896,342
Average dilution from:
– Performance shares	1,676,317	1,788,044
Average number of shares after dilution (excluding shares held in treasury) C	268,284,732	268,684,386
Number of stock options and performance share grants outstanding at the period end	1,877,203	1,837,364
Sales (buybacks) of shares and transactions under the liquidity contract (net during the period)	(528,284)	(1,135,219)
Shares transferred during the period under performance share plans	426,945	582,450
Basic earnings per share (in euros) A/B	3.749	3.389
Diluted earnings per share (in euros) A/C	3.726	3.366
Dividend per share (in euros)	1.650	1.420

Net profit attributable to the Group was impacted in 2022 by an accounting effect of a charge of €147.1 million, from assets impairment in Russia.

The corresponding basic earnings per share and diluted earnings per share are as follows:

		12 months ended
		December 31, 2022	December 31, 2021
Adjusted net profit attributable to the Group (in € millions)	D	1,146.6	904.5
Adjusted basic earnings per share (euros)	D/B	4.301	3.389
Adjusted diluted earnings per share (euros)	D/C	4.274	3.366

As mentioned above, during 2022, the Group:

• ◼ transferred 426,945 shares under performance share plans, out of the 411,715 shares bought back in the year and 15,230 shares bought back from previous years for this purpose; and
• ◼ purchased a net 78,284 shares under the liquidity contract.

These movements were taken into account on an accruals basis in the computation of the average number of ordinary shares outstanding during the period, in accordance with IAS 33. If the shares had been issued and bought back on January 1, 2022, earnings per share and diluted earnings per share would have amounted to €3.748 and €3.728 respectively for the 12 months ended December 31, 2022.

During 2021, the Group:

• ◼ transferred 582,450 shares under performance share plans, out of the 554,770 shares bought back in the year and the 27,680 shares bought back in previous years for this purpose; and
• ◼ sold a net 64,781 shares under the liquidity contract.

These movements were taken into account on an accruals basis in calculating the average number of ordinary shares outstanding during the period, in accordance with IAS 33. If the shares had been issued and bought back on January 1, 2021, basic earnings per share and diluted earnings per share would have amounted to €3.391 and €3.364 respectively for the 12 months ended December 31, 2021.

NOTE 4.2 Stock option plans and performance share plans

The cost of stock options or performance shares is measured at the fair value of the award on the grant date, using the Black & Scholes option pricing model or the binomial model, and is recognized in the income statement under personnel costs on a straight-line basis over the vesting period with a corresponding adjustment to equity. Changes in the fair value of stock options after the grant date are not taken into account.

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The expense recognized by crediting equity is adjusted at each period-end during the vesting period to take into account changes in the number of shares that are expected to be delivered to employees when the performance shares vest or the stock options are exercised, except for the number of shares related to stock market performance criteria.

NOTE 4.2.1 Performance share plans

The following performance share plans were approved by the Company's Board of Directors:

	2018 Plans	2019 Plans	2020 Plans	2021 Plans	2022 Plans
Date approved by shareholders	May 30, 2018	May 30, 2018	May 30, 2018	May 26, 2021	May 26, 2021
Grant date	May 30, 2018	May 29, 2019	May 26, 2020	May 26, 2021	May 25, 2022
Total number of performance share rights initially granted	524,123 (1)	617,818	461,861	491,477	514,981
o/w to Executive Officer	19,546 (1)	22,954	11,544	20,544	22,534
– Benoît Coquart	19,546	22,954	11,544	20,544	22,534
Total IFRS 2 expense (in € millions)	28.5 (2)	31.0 (2)	22.8 (2)	35.2 (2)	31.9 (2)
End of vesting period	June 16, 2021 (3)	June 16, 2022 (3)	June 16, 2023 (3)	June 14, 2024 (3)	June 11, 2025 (7)
	June 16, 2022 (4)	June 16, 2023 (4)	June 14, 2024 (4)	June 12, 2025 (4)	June 10, 2026 (8)
	May 31, 2023 (3)	May 31, 2024 (3)	May 28, 2025 (3)	May 27, 2026 (3)	May 26, 2027 (7)
End of lock-up period	June 16, 2022 (4)	June 16, 2023 (4)	June 14, 2024 (4)	June 12, 2025 (4)	June 11, 2026 (8)
Number of performance shares adjusted for the performance criteria fulfillment	(37,046) (5)	(1,906) (6)	5,332 (6)
Number of performance share rights cancelled or forfeited	(96,365)	(66,332)	(23,584)	(21,606)	(6,698)
Number of performance shares acquired as of December 31, 2022	(390,712)	(93,274)	(866)
PERFORMANCE SHARE RIGHTS OUTSTANDING AS OF DECEMBER 31, 2022	0	456,306	442,743	469,871	508,283

(1) Given the dividend distribution features approved at the General Meetings of Shareholders on May 29, 2019, the number of remaining performance shares was adjusted to take into account the impact of these transactions on the interests of performance share beneficiaries in accordance with article L.228-99 of the French Commercial Code.

(2) Total charge estimated at the grant date assuming 100% achievement for each performance criteria. This charge is spread over the vesting periods.

(3) Date applicable to the Executive Officer and members of the Executive Committee.

(4) Date applicable to beneficiaries other than the Executive Officer and members of the Executive Committee.

(5) Percentage of performance criteria achievement: see Note 4.2.1.2.

(6) Adjustments estimated at the date when the consolidated financial statements were prepared.

(7) Date applicable to the Executive Officer and to 5 members of the Executive Committee.

(8) Date applicable to beneficiaries other than the Executive Officer and to 3 members of the Executive Committee.

If all the performance shares from the 2019 to 2022 plans were to vest according to the target allocation (i.e. 1,877,203 shares) and if those shares were transferred following capital increases, the Company's capital would be diluted by 0.7% as of December 31, 2022.

NOTE 4.2.1.1 2019, 2020, 2021 and 2022 performance share plans

The final number of shares granted to beneficiaries is determined on the condition that the beneficiary is present within the Group at the time the vesting period expires and according to several performance criteria.

For the Executive Officer and members of the Executive Committee, the term of the vesting period is three years, with an additional two-year holding period; for other beneficiaries, the vesting period is four years, with no holding period.

Performance criteria applicable to the Executive Officer and members of the Executive Committee

The performance criteria applicable to the Executive Officer and members of the Executive Committee are defined as follows:

Type of performance criteria	Description of performance criteria and target-setting method	Weight of performance criteria
Target for organic sales growth	Target: 3-year arithmetic mean of the upper and lower bounds of the annual target ranges concerned. Comparison between the target and the average achievement over three years.	1/4
Target for adjusted operating margin before acquisitions(1)	Target: 3-year arithmetic mean of the upper and lower bounds of the annual target ranges concerned. Comparison between the target and the average achievement over three years.	1/4
Annual rates of achievement of the Group's CSR roadmap	Target: arithmetic mean over 3 years of the annual CSR roadmap achievement rates.	1/4
Legrand's share price performance relative to the performance of the CAC 40 index	Performance gap between Legrand's share price and the CAC 40 index over a 3-year period.	1/4

(1) The adjusted operating margin before acquisitions corresponds to the adjusted operating profit (see key figures).

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Performance criteria applicable to beneficiaries other than the Executive Officer and members of the Executive Committee

The performance criteria applicable to beneficiaries other than the Executive Officer and members of the Executive Committee are defined as follows:

Type of performance criteria	Description of performance criteria and target-setting method	Weight of performance criteria
Target for organic sales growth	The target to be reached for this criterion, set annually corresponds to the lower and upper ranges of the relevant annual target. The annual rate of achievement is measured in relation to the annual target. The final pay-out rate for this criterion corresponds to the arithmetic average over a three-year period of the annual rates of achievement.	1/3
Target for adjusted operating margin before acquisitions(1)	The target to be reached for this criterion, set annually corresponds to the lower and upper ranges of the relevant annual target. The annual rate of achievement is measured in relation to the annual target. The final pay-out rate for this criterion corresponds to the arithmetic average over a three-year period of the annual rates of achievement.	1/3
Annual rates of achievement of the Group's CSR roadmap	The annual rate of achievement corresponds to the rate of achievement of the CSR annual roadmap. The final pay-out rate for this criterion corresponds to the arithmetic average over a three-year period of the annual rates of attainment.	1/3

(1) The adjusted operating margin before acquisitions corresponds to the adjusted operating profit (see key figures).

The final pay-out rate for each criterion corresponds to the arithmetic average over a three-year period of the annual achievement rates.

NOTE 4.2.1.2 Monitoring of performance criteria performance share plans

The monitoring of the performance criteria under the 2018 plan applicable to the Executive Officer and members of the Executive Committee can be detailed as follows:

	2018		2019		2020		3-year average
Criteria	Target(1)	Actual	Target(1)	Actual	Target(1)	Actual	Target(1)		Actual Performance
Organic sales growth	2.5%	4.9%	2.0%	2.6%	1.0%	(8.7%)	1.8%	(0.4%)	82.0%
Adjusted operating margin before acquisitions(2)	20.3%	20.2%	20.3%	20.4%	20.0%	19.1%	20.2%	19.9%	91.9%
Annual rates of achievement of the Group's CSR roadmap	100.0%	122.0%	100.0%	113.0%	100.0%	128.0%	100.0%	121.0%	104.2%
Legrand's share price performance relative to the performance of the CAC 40 index							+8.8%	+17.2%	+150.0%
Performance									107.0%

(1) 100% achievement target for the criterion.

(2) The adjusted operating margin before acquisitions corresponds to the adjusted operating income (see key figures).

The monitoring of the performance criteria under the 2018 plan applicable to beneficiaries other than the Executive Officer and members of the Executive Committee can be detailed as follows:

	2018				2019
Criteria	Target (1)		Actual Performance	Target(1)		Actual Performance	Target(1)		Actual Performance	Performance by criterion
Organic sales growth	2.5%	4.9%	128.0%	2.0%	2.6%	103.0%	1.0%	(8.7%)	0.0%	77.0%
Adjusted operating margin before acquisitions(2)	20.3%	20.2%	98.0%	20.3%	20.4%	102.5%	20.0%	19.1%	50.0%	83.5%
Annual rates of achievement of the Group's CSR roadmap	100.0%	122.0%	104.4%	100.0%	113.0%	102.6%	100.0%	128.0%	106.8%	104.6%
Performance by year			110.1%			102.7%			52.3%	88.4%

(1) 100% achievement target for the criterion.

(2) The adjusted operating margin before acquisitions corresponds to the adjusted operating income (see key figures).

The monitoring of the performance criteria under the 2019 plan applicable to the Executive Officer and members of the Executive Committee can be detailed as follows:

	2019		2020		2021		3-year average
Criteria	Target(1)	Actual	Target(1)	Actual	Target(1)	Actual	Target(1)		Actual Performance
Organic sales growth	2.0%	2.6%	1.0%	(8.7%)	3.5%	13.6%	2.2%	2.5%	101.5%
Adjusted operating margin before acquisitions(2)	20.3%	20.4%	20.0%	19.1%	19.7%	20.8%	20.0%	20.1%	102.3%
Annual rates of achievement of the Group's CSR roadmap	100.0%	113.0%	100.0%	128.0%	100.0%	131.0%	100.0%	124.0%	104.8%
Legrand's share price performance relative to the performance of the CAC 40 index							+8.8%	+32.6%	+150.0%
Performance									114.7%

(1) 100% achievement target for the criterion.

(2) The adjusted operating margin before acquisitions corresponds to the adjusted operating income (see key figures).

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The monitoring of the performance criteria under the 2019 plan applicable to beneficiaries other than the Executive Officer and members of the Executive Committee can be detailed as follows:

	2019				2020
Criteria	Target (1)		Actual Performance	Target(1)		Actual Performance	Target(1)		Actual Performance	Performance by criterion
Organic sales growth	2.0%	2.6%	103.0%	1.0%	(8.7%)	0.0%	3.5%	13.6%	150.0%	84.3%
Adjusted operating margin before acquisitions(2)	20.3%	20.4%	102.5%	20.0%	19.1%	50.0%	19.7%	20.8%	150.0%	100.8%
Annual rates of achievement of the Group's CSR roadmap	100.0%	113.0%	102.6%	100.0%	128.0%	106.8%	100.0%	131.0%	108.6%	106.0%
Performance by year			102.7%			52.3%			136.2%	97.1%

(1) 100% achievement target for the criterion.

(2) The adjusted operating margin before acquisitions corresponds to the adjusted operating income (see key figures).

The monitoring of the performance criteria under the 2020 plan applicable to the Executive Officer and members of the Executive Committee can be detailed as follows:

	2020		2021		2022		3-year average
Criteria	Target(1)	Actual	Target(1)	Actual	Target(1)	Actual	Target(1)		Actual Performance
Organic sales growth	1.0%	(8.7%)	3.5%	13.6%	5.0%	9.7%	3.2%	4.9%	107.8%
Adjusted operating margin before acquisitions(2)	20.0%	19.1%	19.7%	20.8%	20.3%	20.7%	20.1%	20.2%	104.6%
Annual rates of achievement of the Group's CSR roadmap	100.0%	128.0%	100.0%	131.0%	100.0%	123.0%	100.0%	127.3%	106.4%
Legrand's share price performance relative to the performance of the CAC 40 index							+7.5%	+0.6%	+34.5%
Performance									88.3%

(1) 100% achievement target for the criterion.

(2) The adjusted operating margin before acquisitions corresponds to the adjusted operating income (see key figures).

The monitoring of the performance criteria under the 2020 plan applicable to beneficiaries other than the Executive Officer and members of the Executive Committee can be detailed as follows:

2020		2021			2022
Criteria	(1) Target		Actual Performance	Target(1)		Actual Performance	Target(1)		Actual Performance	Performance by criterion
Organic sales growth	1.0%	(8.7%)	0.0%	3.5%	13.6%	150.0%	5.0%	9.7%	150.0%	100.0%
Adjusted operating margin before acquisitions(2)	20.0%	19.1%	50.0%	19.7%	20.8%	150.0%	20.3%	20.7%	110.0%	103.3%
Annual rates of achievement of the Group's CSR roadmap	100.0%	128.0%	106.8%	100.0%	131.0%	108.6%	100.0%	123.0%	104.6%	106.7%
Performance by year			52.3%			136.2%			121.5%	103.3%

(1) 100% achievement target for the criterion.

(2) The adjusted operating margin before acquisitions corresponds to the adjusted operating income (see key figures).

NOTE 4.2.2 Share-based payments (IFRS 2 expense)

In accordance with IFRS 2, an expense of €33.8 million was recorded in 2022 (€30.5 million in 2021) for all of these plans combined.

NOTE 4.3 Retained earnings and translation reserves

NOTE 4.3.1 Retained earnings

The Group's consolidated retained earnings as of December 31, 2022 amounted to €5,900.3 million.

As of the same date, the Company had retained earnings including profit for the period of €1,077.1 million available for distribution.

NOTE 4.3.2 Translation reserves

Assets and liabilities of Group entities whose functional currency is different from the presentation currency are translated using the exchange rate at the balance sheet date. Statements of income are translated using the average exchange rate for the period. Gains or losses arising from the translation of the financial statements of foreign subsidiaries are recognized directly in equity under "Translation reserves", until the potential Group's loss of control over the entity.

Translation reserves record the impact of fluctuations in the following currencies:

(in € millions)	December 31, 2022	December 31, 2021
US dollar	240.3	(13.7)
Other currencies	(570.7)	(608.1)
TOTAL	(330.4)	(621.8)

The Group operates in close to 90 countries. It is mainly exposed to a dozen currencies other than the euro and the US dollar, including the Australian dollar, Brazilian real, British pound, Chilean peso, Chinese yuan, Indian rupee, Mexican peso, Russian ruble and Turkish lira.

Under IFRS 9, non-derivative financial instruments may be designated as hedges only when they are used to hedge foreign currency risk and provided that they qualify for hedge accounting. Accordingly, in the case of hedges of a net investment in a foreign operation, the portion of the gain or loss on the hedging instrument that is deemed to be an effective hedge is recognized in equity.

The counterpart of the Yankee debt increase amounting to €19.3 million in 2022, was recorded as a decrease in conversion reserves. As of December 31, 2022, a total balance of €83.0 million was recorded as a decrease in conversion reserves, under the Yankee loan.

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Finally, in accordance with IAS 21, translation gains and losses on receivables or payables considered as part of a net investment in a foreign Group entity are recognized in translation reserves. Gains recognized in translation reserves in 2022 amounted to €0.3 million, resulting in a net positive balance of €11.6 million as of December 31, 2022.

NOTE 4.4 Provisions

Changes in provisions in 2022 are as follows:

	December 31, 2022
(in € millions)	Product warranties	Claims and litigation	Tax and employee risks	Restructuring	Other	Total
At the beginning of the period	52.4	126.1	43.6	38.0	72.3	332.4
Changes in scope of consolidation	0.0	0.0	0.0	0.0	0.0	0.0
Increases	26.3	63.9	7.4	24.7	16.3	138.6
Utilizations	(7.8)	(13.3)	(6.4)	(23.6)	(13.1)	(64.2)
Reversals of surplus provisions	(17.8)	(26.8)	0.0	(1.0)	(1.8)	(47.4)
Reclassifications	0.0	(0.6)	(0.2)	0.3	(0.3)	(0.8)
Translation adjustments	0.4	2.0	(0.1)	1.0	1.9	5.2
AT THE END OF THE PERIOD	53.5	151.3	44.3	39.4	75.3	363.8
Of which non-current portion	13.1	126.1	14.4	4.2	59.6	217.4

Changes in provisions in 2021 were as follows:

	December 31, 2021
(in € millions)	Product warranties	Claims and litigation	Tax and employee risks	Restructuring	Other	Total
At the beginning of the period	52.0	127.4	40.8	36.6	71.3	328.1
Changes in scope of consolidation	(0.1)	0.2	(1.5)	0.0	1.9	0.5
Increases	15.3	25.9	8.3	20.9	25.4	95.8
Utilizations	(7.9)	(16.5)	(5.3)	(19.3)	(23.4)	(72.4)
Reversals of surplus provisions	(8.0)	(12.7)	0.0	(1.3)	(5.3)	(27.3)
Reclassifications	0.0	0.0	(0.3)	0.0	0.0	(0.3)
Translation adjustments	1.1	1.8	1.6	1.1	2.4	8.0
AT THE END OF THE PERIOD	52.4	126.1	43.6	38.0	72.3	332.4
Of which non-current portion	31.8	85.3	13.2	3.7	62.6	196.6

NOTE 4.5 Provision for post-employment benefits and other long-term employee benefits

NOTE 4.5.1 Pension and other post-employment benefit obligations

Group companies operate various pension plans. These plans are funded through payments to insurance companies or trustee-administered funds, determined by periodic actuarial calculations. The Group has both defined contribution and defined benefit plans.

A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Contributions are recognized as an expense for the period of payment. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in current and prior periods.

A defined benefit plan is a pension plan that defines an amount of pension benefit that employees will receive on retirement, usually dependent on one or more factors such as age, years of service and end-of-career salary. The liability recognized in the balance sheet for defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date, less the fair value of plan assets. The past service cost arising from changes to pension benefit plans is expensed in full as incurred.

In accordance with IAS 19, the Group recognizes all actuarial gains and losses outside profit or loss, in the consolidated statement of comprehensive income.

Defined benefit obligations are calculated using the projected unit credit method. This method takes into account estimated years of service at retirement, final salaries, life expectancy and staff turnover, based on actuarial assumptions. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of investment grade corporate bonds that are denominated in the currency in which the benefits will be paid and have terms to maturity approximating the period to payment of the related pension liability.

Some Group companies provide post-employment healthcare benefits to their retirees. Entitlement to these benefits is usually conditional on the employee remaining with one of these Group companies up to retirement age and completion of a minimum service period. These benefits are treated as post-employment benefits under the defined benefit scheme.

Pension and other post-employment defined benefit obligations can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
France (Note 4.5.1.2)	84.2	103.6
Italy (Note 4.5.1.3)	27.2	33.9
United Kingdom (Note 4.5.1.4)	81.5	123.4
United States (Note 4.5.1.5)	63.4	75.7
Other countries	54.9	53.7
TOTAL PENSION AND OTHER POST-EMPLOYMENT DEFINED BENEFIT OBLIGATIONS	311.2	390.3

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NOTE 4.5.1.1 Analysis of pension and other post-employment defined benefit obligations

The total (current and non-current) obligation under the Group's pension and other post-employment defined benefit plans, consisting primarily of plans in France, Italy, the United States and United Kingdom, is as follows:

(in € millions)	December 31, 2022	December 31, 2021
Defined benefit obligation
Projected benefit obligation at the beginning of the period	390.3	386.8
Service cost	9.5	10.0
Interest cost	7.7	5.6
Benefits paid or unused	(23.2)	(19.6)
Employee contributions	0.4	0.4
Actuarial losses/(gains)	(72.6)	(24.8)
Curtailments, settlements, special termination benefits	(0.5)	(0.8)
Translation adjustments	(0.3)	15.1
Other	(0.1)	17.6
PROJECTED BENEFIT OBLIGATION AT THE END OF THE PERIOD	311.2	390.3
Fair value of plan assets
Fair value of plan assets at the beginning of the period	231.2	207.8
Expected return on plan assets	5.0	3.8
Employer contributions	7.1	8.5
Employee contributions	1.9	0.4
Benefits paid	(12.2)	(11.6)
Actuarial (losses)/gains	(46.1)	7.6
Translation adjustments	1.7	14.7
Other	0.0	0.0
FAIR VALUE OF PLAN ASSETS AT THE END OF PERIOD	188.6	231.2
PROVISION RECOGNIZED IN THE BALANCE SHEET	135.4	175.7
Current liability	5.3	5.0
Non-current liability	130.1	170.7
Non-current asset	12.8	16.6

Actuarial gains recognized in equity in 2022 amounted to €26.5 million.

These €26.5 million actuarial gains resulted from:

• ◼ €54.5 million in gains from changes in financial assumptions;
• ◼ €6.5 million in gains from changes in demographic assumptions; and
• ◼ €34.5 million in experience losses.

The discount rates used are determined by reference to the yield on high-quality bonds based on the following benchmark indices:

• ◼ Euro zone: iBoxx € Corporates AA 10+;
• ◼ United Kingdom: iBoxx £ Corporates AA 15+;
• ◼ United States: Citigroup Pension Liability Index.

Sensitivity tests were performed on:

• ◼ the discount rate. According to the results of these tests, a 50-basis point reduction in the rate would lead to the recognition of additional actuarial losses of around €28 million and would increase the provision as of December 31, 2022 by the same amount; and
• ◼ the rate of future salary increases. According to the results of these tests, a 50-basis point increase in the rate would lead to the recognition of additional actuarial losses of around €9.7 million and would increase the provision as of December 31, 2022 by the same amount.

Consolidated financial statements in accordance with IFRS for the years ended December 31, 2022 and December 31, 2021

Discounted future payments for the Group's pension and other post-employment benefit plans are as follows:

(in € millions)
2023	17.9
2024	18.4
2025	15.7
2026	17.2
2027 and beyond	242.0
TOTAL	311.2

The impact of service costs and interest costs on profit before tax for the period is as follows:

		12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Service cost	(9.5)	(10.0)
Net interest cost*	(2.7)	(1.8)
TOTAL	(12.2)	(11.8)

* The expected return on assets and interest costs are presented as a net amount in financial expenses.

The weighted average allocation of pension plan assets is as follows as of December 31, 2022:

(as a percentage)	United Kingdom	United States
Equity instruments	50.6	59.6
Debt instruments	42.1	31.8
Insurance funds	7.3	8.6
TOTAL	100.0	100.0

These assets are marked to market.

NOTE 4.5.1.2 Provisions for retirement benefits and supplementary pension benefits in France

The provisions recorded in the consolidated balance sheet concern the unvested entitlements of active employees. The Group has no obligation with respect to the vested entitlements of former employees, as the benefits were settled at the time of their retirement, either directly or through payments to insurance companies in full discharge of the liability.

The main defined benefit plan applicable in France concerns statutory length-of-service awards, under which all retiring employees are eligible for a lump-sum payment calculated according to their length of service.

This payment is defined either in the collective bargaining agreement to which their company is a party or in a separate company-level agreement, whichever is more advantageous to the employee. The amount generally varies depending on the employee category (manager/non-manager).

In France, provisions recorded in the consolidated balance sheet amounted to €84.2 million as of December 31, 2022 (€103.6 million as of December 31, 2021) corresponding to the difference between the projected benefit obligation of €84.2 million as of December 31, 2022 (€103.6 million as of December 31, 2021), and the fair value of the related plan assets of €0.0 million as of December 31, 2022 (€0.0 million as of December 31, 2021).

The projected benefit obligation is calculated based on staff turnover and mortality assumptions, estimated rates of salary increases and an estimated discount rate. In France, the calculation in 2022 was based on a salary increase rate of 3.5% and a discount rate of 3.7% (respectively 2.8% and 1.2% in 2021).

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NOTE 4.5.1.3 Provisions for termination benefits in Italy

In Italy, a termination benefit is awarded to employees regardless of the reason for their departure.

Since January 2007, such benefits have been paid either into an independently managed pension fund or to the Italian social security service (INPS). As from that date, the Italian termination benefit plans have been qualified as defined contribution plans under IFRS. Termination benefit obligations arising prior to January 2007 continue to be accounted for under IFRS as defined benefit plans, based on revised actuarial estimates that exclude the effect of future salary increases.

The resulting provisions for termination benefits, which correspond to the obligation as of December 31, 2006 plus the ensuing actuarial revisions, amounted to €27.2 million as of December 31, 2022 (€33.9 million as of December 31, 2021).

The calculation in 2022 was based on a discount rate of 3.6% (0.4% in 2021).

NOTE 4.5.1.4 Provisions for retirement benefits and other post-employment benefits in the United Kingdom

The UK plan is a trustee-administered plan governed by article 153 of the 2004 Finance Act, and is managed in a legal entity outside of the Group.

Benefits are paid directly out of funds consisting of contributions paid by the company and by plan participants.

The plan has been closed to new entrants since May 2004.

Active plan participants account for 1.5% of the projected benefit obligation, participants who are no longer accumulating benefit entitlements for 35.9% and retired participants for 62.6%.

The provisions recorded in the consolidated balance sheet amounted to €0.3 million as of December 31, 2022 (€13.3 million as of December 31, 2021) corresponding to the difference between the projected benefit obligation of €81.5 million as of December 31, 2022 (€123.4 million as of December 31, 2021) and the fair value of the related plan assets of €81.2 million as of December 31, 2022 (€110.1 million as of December 31, 2021).

The projected benefit obligation is calculated based on staff turnover and mortality assumptions, estimated rates of salary increases and an estimated discount rate. The calculation in 2022 was based on a salary increase rate of 4.3% and a discount rate and an expected return on plan assets of 4.5% (respectively 4.7% and 1.7% in 2021).

NOTE 4.5.1.5 Provisions for retirement benefits and other post-employment benefits in the United States

In the United States, the Group provides pension benefits for employees and health care and life insurance for certain retired employees.

The Legrand North America Retirement Plan is covered by a plan document in force since January 2002 that was last amended in January 2008. The minimum funding requirement is determined based on Section 430 of the Internal Revenue Code.

To meet its obligations under the plan, the Group has set up a trust with Prudential Financial, Inc. The trust assets include several different investment funds. The current trustee is Legrand North America. The Wiremold Company is the Plan Administrator and the Custodian is Prudential Financial, Inc.

The plan has been closed to new entrants since August 2006 for salaried employees and since April 2009 for hourly employees. Since January 1, 2018, active plan participants can no longer cumulate new rights.

Active plan participants account for 9.7% of the projected benefit obligation, other participants who are no longer accumulating benefit entitlements for 20.0% and retired participants for 70.3%.

The funding policy consists of ensuring that the legal minimum funding requirement is met at all times.

The provisions recorded in the consolidated balance sheet amounted to €0.0 million as of December 31, 2022 (€0.0 million as of December 31, 2021) reflecting the fact that the fair value of the plan assets is higher than the value of the projected benefit obligation.

The calculation in 2022 was based on a discount rate and an expected return on plan assets of 4.9% (2.5% in 2021).

NOTE 4.5.2 Other long-term employee benefits

The Group implemented cash-settled long-term employee benefit plans for employees deemed to be key for the Group, subject to the grantees' continued presence within the Group after a vesting period of three years.

In addition to the grantee still being present within the Group, these plans can, in certain cases, depend on the Group's achievement of future economic performance conditions.

NOTE 4.6 Long-term and short-term borrowings

The Group actively manages its debt through diversified sources of financing available to support its medium-term business growth while guaranteeing a robust financial position over the long term.

Negotiable commercial paper

Legrand France has a short-term marketable securities program (NEU CP) whose package was increased from €700.0 million to €1,200.0 million on March 25, 2020.

A medium-term marketable securities program (NEU MTN) was opened on March 18, 2021 with a package of €1,200.0 million.

Bonds

In April 2012, the Group carried out a €400.0 million 3.375% ten-year bond issue. The bonds were redeemed at maturity on April 19, 2022.

In December 2015, the Group carried out a €300.0 million 1.875% twelve-year bond issue. The bonds will be redeemable at maturity on December 16, 2027.

In July 2017, the Group carried out a bond issue for a total of €1.0 billion, in two tranches of €500.0 million each, with maturities of seven and fifteen years. The respective maturity dates of these two tranches are July 6, 2024 and July 6, 2032 and their annual coupons are respectively 0.750% and 1.875%.

In October 2017, the Group carried out a €400.0 million 0.5% six-year bond issue. The bonds will be redeemable at maturity on October 9, 2023.

In March 2018, the Group carried out a €400.0 million 1.0% eight-year bond issue. The bonds will be redeemable at maturity on March 6, 2026.

In June 2019, the Group carried out a €400.0 million 0.625% nine-year bond issue. The bonds will be redeemable at maturity on June 24, 2028.

Due to their gradual replacement by equity-settled long-term employee benefit plans detailed in Note 4.2.1, these plans no longer represent material amounts in the Group's financial statements.

In May 2020, the Group carried out a €600.0 million 0.75% ten-year bond issue. The bonds will be redeemable at maturity on May 20, 2030.

In October 2021, the Group carried out its first sustainabilitylinked bond issue indexed to its carbon neutrality metrics. The 0.375% ten-year bonds were issued for a total amount of €600.0 million and will be redeemable at maturity on October 6, 2031.

The issue is indexed to the Group's carbon trajectory by applying a potential additional coupon of 0.50% over the only last year in which the bond reaches maturity, in the event that the related objectives are not achieved.

Yankee bonds

On February 14, 1995, Legrand France issued \$400.0 million worth of 8.5% debentures due February 15, 2025, through a public placement in the United States. Interest on Yankee bonds is payable semi-annually on February 15 and August 15 of each year, beginning August 15, 1995.

A number of Yankee bondholders offered to sell their securities to the Group. Acting on this offer, the Group decided to acquire Yankee bonds:

• ◼ in 2013, with an aggregate face value of \$6.5 million,
• ◼ in 2020, with an aggregate face value of \$18.6 million,
• ◼ in 2021, with an aggregate face value of \$27.5 million, ◼ in 2022, with an aggregate face value of \$34.6 million.

The acquired debentures were subsequently cancelled.

2011 Credit Facility

In October 2011, the Group signed a Credit Facility with six banks to set up a €900.0 million revolving multicurrency credit line for a five-year period with two successive one-year period renewal options. As per this contract, the margin applied to market rates is determined on the basis of the Group's credit rating.

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In July 2014, the Group signed an agreement that amends and extends this Credit Facility with all banks party to this contract. This agreement extends the maximum maturity of the €900.0 million revolving credit line by three years, i.e., up to July 2021, including two successive one-year period extension options, and at improved financing terms compared with October 2011.

In December 2019, the Group signed a new agreement that amends and extends this Credit Facility with all banks party to this contract.

NOTE 4.6.1 Long-term borrowings

Long-term borrowings are initially recognized at fair value, taking into account any transaction costs directly attributable Following this agreement, the maturity of the €900.0 million revolving credit line is extended up to December 2026. The margin applied to market rates is still determined on the basis of the Group's credit rating, but it is increased or decreased each year according to the Group yearly achievement rate on its CSR roadmap.

The 2011 Credit Facility does not contain any covenants.

As of December 31, 2022, the Credit Facility had not been drawn down.

to the issue, and are subsequently measured at amortized cost, using the effective interest method.

Long-term borrowings can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Negotiable commercial paper	165.0	220.0
Bonds	3,300.0	3,700.0
Yankee bonds	291.6	304.1
Lease financial liabilities	207.5	217.0
Other borrowings	66.1	64.1
Long-term borrowings excluding debt issuance costs	4,030.2	4,505.2
Debt issuance costs	(15.8)	(19.3)
TOTAL	4,014.4	4,485.9

No guarantees have been given with respect to these borrowings.

Long-term borrowings (excluding debt issuance costs) break down by currency as follows, after hedging (see Note 5.1.2.2):

(in € millions)	December 31, 2022	December 31, 2021
Euro	3,588.8	4,026.2
US dollar	375.6	416.7
Other currencies	65.8	62.3
LONG-TERM BORROWINGS EXCLUDING DEBT ISSUANCE COSTS	4,030.2	4,505.2

Long-term borrowings (excluding debt issuance costs) as of December 31, 2022 can be analyzed by maturity as follows:

(in € millions)	Negotiable commercial paper	Bonds	Yankee bonds	Lease financial liabilities	Other borrowings
Due in one to two years	115.0	500.0	0.0	55.3	38.0
Due in two to three years	50.0	0.0	291.6	39.6	9.5
Due in three to four years	0.0	400.0	0.0	30.2	7.3
Due in four to five years	0.0	300.0	0.0	22.7	11.3
Due beyond five years	0.0	2,100.0	0.0	59.7	0.0
LONG-TERM BORROWINGS EXCLUDING DEBT ISSUANCE COSTS	165.0	3,300.0	291.6	207.5	66.1

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, 2022 and December 31, 2021

Long-term borrowings (excluding debt issuance costs) as of December 31, 2021 can be analyzed by maturity as follows:

(in € millions)	Negotiable commercial paper	Bonds	Yankee bonds	Lease financial liabilities	Other borrowings
Due in one to two years	155.0	400.0	0.0	51.2	10.7
Due in two to three years	65.0	500.0	0.0	39.0	37.4
Due in three to four years	0.0	0.0	304.1	30.0	9.0
Due in four to five years	0.0	400.0	0.0	23.3	7.0
Due beyond five years	0.0	2,400.0	0.0	73.5	0.0
LONG-TERM BORROWINGS EXCLUDING DEBT ISSUANCE COSTS	220.0	3,700.0	304.1	217.0	64.1

Average interest rates on borrowings are as follows:

		12 months ended
	December 31, 2022	December 31, 2021
Negotiable commercial paper	(0.06%)	(0.20%)
Bonds	0.96%	1.15%
Yankee bonds	8.50%	8.50%
Lease financial liabilities	2.50%	2.49%
Other borrowings	3.84%	3.04%

NOTE 4.6.2 Short-term borrowings

Short-term borrowings can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Negotiable commercial paper	155.0	320.0
Bonds	400.0	400.0
Lease financial liabilities	68.8	62.2
Other borrowings	27.5	44.4
TOTAL	651.3	826.6

NOTE 4.6.3 Changes in long-term and short-term borrowings

Changes in long-term and short-term borrowings can be analyzed as follows:

			Variations not impacting cash flows
(in € millions)	December 31, 2022	Cash flows	Acquisitions	Reclassifications	Translation adjustments	Other	December 31, 2021
Long-term borrowings	4,014.4	78.2	7.5	(642.3)	24.8	60.3	4,485.9
Short-term borrowings	651.3	(825.4)	6.5	642.3	1.8	(0.5)	826.6
Gross financial debt	4,665.7	(747.2)	14.0	0.0	26.6	59.8	5,312.5

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NOTE 4.7 Deferred taxes

In accordance with IAS 12, deferred taxes are recognized for temporary differences between the tax bases of assets and liabilities and their carrying amount in the consolidated balance sheet.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the asset is realized or the liability is settled.

Deferred tax assets and deferred tax liabilities are offset when the entity has a legally enforceable right of offset and they relate to income taxes levied by the same taxation authority.

Deferred tax assets are recognized to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized. The recognized deferred tax assets are expected to be utilized no later than five years from the period-end.

Deferred taxes recorded in the balance sheet result from temporary differences between the carrying amount of assets and liabilities and their tax base and can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Deferred taxes recorded by French companies	(294.5)	(297.9)
Deferred taxes recorded by foreign companies	(486.5)	(452.3)
TOTAL	(781.0)	(750.2)
Origin of deferred taxes:
– Impairment losses on inventories and receivables	66.8	55.0
– Margin on inventories	28.7	26.4
– Recognized operating losses carried forward	1.3	3.5
– Leases	6.6	6.6
– Fixed assets	(300.9)	(263.3)
– Trademarks	(438.6)	(430.7)
– Patents	(16.5)	(15.5)
– Other provisions	(107.6)	(110.9)
– Pensions and other post-employment benefits	32.0	38.7
– Fair value adjustments to derivative instruments	(0.4)	(0.5)
– Other	(52.4)	(59.5)
TOTAL	(781.0)	(750.2)
– Of which deferred tax assets	133.6	116.3
– Of which deferred tax liabilities	(914.6)	(866.5)

The timing of expected reversal of deferred taxes can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Deferred tax assets (liabilities) reversing in the short term	103.5	90.8
Deferred tax assets (liabilities) reversing in the long term	(884.5)	(841.0)
TOTAL	(781.0)	(750.2)

Tax losses carried forward break down as follows:

(in € millions)	December 31, 2022	December 31, 2021
Recognized operating losses carried forward	9.0	14.4
Recognized deferred tax assets	1.3	3.5
Unrecognized operating losses carried forward	148.6	125.6
Unrecognized deferred tax assets	33.2	27.0
Total net operating losses carried forward	157.6	140.0

NOTE 4.8 Other current liabilities

Other current liabilities can be analyzed as follows:

(in € millions)	December 31, 2022	December 31, 2021
Taxes other than income tax	97.1	89.9
Accrued employee benefits expense	339.1	345.4
Statutory and discretionary profit-sharing reserve	35.2	38.0
Payables related to fixed asset purchases	29.2	29.5
Accrued expenses	187.0	164.1
Accrued interest	26.5	36.5
Deferred revenue	42.9	33.7
Other current liabilities	38.1	37.2
TOTAL	795.1	774.3

NOTE 5 - Other information

NOTE 5.1 Financial instruments and management of risks

NOTE 5.1.1 Financial instruments

NOTE 5.1.1.1 Impact of financial instruments

	12 months ended
		December 31, 2022	December 31, 2021
		Impact on equity
(in € millions)	Impact on financial profit (loss)	Fair value	Translation adjustment	Impact on financial profit (loss)	Impact on equity
Other investments		0.0			0.0
Trade receivables	(0.7)			(1.2)
Cash and cash equivalents	16.6		20.2	5.8	37.9
Trade payables	0.0			0.0
Borrowings	(76.2)		(19.3)	(71.1)	(24.5)
Derivatives	4.2	56.3	0.0	15.9	(0.5)
TOTAL	(56.1)	56.3	0.9	(50.6)	12.9

In accordance with IFRS 9, other investments are valued at fair value through equity. Therefore, changes in the fair value of other investments only impact the consolidated balance sheet and the consolidated statement of comprehensive income.

In 2021, the Group subscribed to a rate hedging instrument for future financing. As of December 31, 2022, this instrument with a fair value of €63.3 million (€5.0 million at December 31, 2021), was recognized as other financial assets through equity as counterpart for the variation of €58.3 million (cash flow hedge recognition).

Yankee bonds denominated in US dollars are treated as net investment hedges (see Note 4.3.2).

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NOTE 5.1.1.2 Breakdown of balance sheet items by type of financial instrument
-------------------------------------------------------------------------------	--

			December 31, 2022				December 31, 2021
			Levels of valuation
(in € millions)	Carrying amount	Amortized cost	Fair value	Level 1 (1)	Level 2(2)	Level 3(3)	Carrying amount
ASSETS
Non-current assets
Other investments	1.9		1.9			1.9	2.4
Other non-current assets	62.1	49.3	12.8		62.1		62.6
TOTAL NON-CURRENT ASSETS	64.0	49.3	14.7	0.0	62.1	1.9	65.0
Current assets
Trade receivables	958.1	958.1			958.1		728.5
Other current financial assets	65.1		65.1		65.1		6.4
Cash and cash equivalents	2,346.8		2,346.8		2,346.8		2,788.3
TOTAL CURRENT ASSETS	3,370.0	958.1	2,411.9	0.0	3,370.0	0.0	3,523.2
EQUITY AND LIABILITIES
Non-current liabilities
Long-term borrowings	4,014.4	423.9	3,145.2	3,145.2	423.9	(1.1)	4,485.9
TOTAL NON-CURRENT LIABILITIES	4,014.4	423.9	3,145.2	3,145.2	423.9	(1.1)	4,485.9
Current liabilities
Short-term borrowings	651.3	251.3	393.1	393.1	251.3		826.6
Trade payables	852.5	852.5			852.5		810.5
Other current financial liabilities	2.0		2.0		2.0		0.0
TOTAL CURRENT LIABILITIES	1,505.8	1,103.8	395.1	393.1	1,105.8	0.0	1,637.1

(1) Level 1: quoted prices on an active market.

(2) Level 2: calculations made from directly observable market data.

(3) Level 3: calculations made from non-observable market data.

In accordance with IFRS 13, fair value measurement takes counterparty default risk into account.

In light of the Group's credit rating, the measurement of other current financial liabilities is subject to insignificant credit risk.

NOTE 5.1.2 Management of financial risks

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 any trading in financial instruments, in line with its policy of not carrying out any speculative transactions. All transactions involving derivative financial instruments are conducted with the sole purpose of managing interest rate, exchange rate and commodity risks and as such are limited in duration and value.

This strategy is centralized at Group level. Its implementation is deployed by the Financing and Treasury Department which recommends appropriate measures and implements them after they have been validated by the Corporate Finance Department and Group management. A detailed reporting system has been set up to enable permanent close tracking of the Group's positions and effective oversight of the management of the financial risks described in this note.

NOTE 5.1.2.1 Interest rate risk

As part of an interest rate risk management policy aimed mainly at managing the risk of a rate increase, the Group has structured its debt into a combination of fixed and variable rate financing. The Group may be required to subscribe to use hedging instruments for its future funding.

Net debt (excluding debt issuance costs) breaks down as follows between fixed and variable interest rates before the effect of hedging instruments:

	December 31, 2022					December 31, 2021
(in € millions)	Due within 1 year	Due in 1 to 2 years	Due in 2 to 3 years	Due in 3 to 4 years	Due in 4 to 5 years	Due beyond 5 years	Total	Total
Financial assets*
Fixed rate	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Variable rate	2,346.8	0.0	0.0	0.0	0.0	0.0	2,346.8	2,788.3
Financial liabilities**
Fixed rate	(475.2)	(592.2)	(340.7)	(437.5)	(334.0)	(2,159.7)	(4,339.3)	(4,974.8)
Variable rate	(176.1)	(116.1)	(50.0)	0.0	0.0	0.0	(342.2)	(357.0)
Net exposure
Fixed rate	(475.2)	(592.2)	(340.7)	(437.5)	(334.0)	(2,159.7)	(4,339.3)	(4,974.8)
Variable rate	2,170.7	(116.1)	(50.0)	0.0	0.0	0.0	2,004.6	2,431.3

* Financial assets: cash and marketable securities.

** Financial liabilities: borrowings (excluding debt issuance costs).

The following table shows the sensitivity of net debt costs to changes in interest rates, before hedging instruments:

	December 31, 2022		December 31, 2021
(in € millions)	Impact on profit before tax	Impact on equity before tax	Impact on profit before tax	Impact on equity before tax
Impact of a 100-bps increase in interest rates	18.9	40.4	18.3	42.3
Impact of a 100-bps decrease in interest rates	(18.9)	(40.4)	(18.3)	(42.3)

The impact on profit before tax of a 100-basis point increase in interest rates would result in a gain of €18.9 million due to a net positive variable-rate exposure. Conversely, the impact on profit before tax of a 100-basis point decrease in interest rates would result in a loss of €18.9 million.

NOTE 5.1.2.2 Foreign currency risk

The Group operates in international markets and is therefore exposed to risks through its use of several different currencies.

When relevant, "natural" hedges are preferred. If required, when the acquisition of an asset is financed using a currency other than the functional currency of the country concerned, the Group may enter into forward contracts to hedge its foreign currency risk.

As of December 31, 2022, the Group has set up forward contracts in US dollars, Canadian dollars, Australian dollars Singaporean dollars, Hungarian forint, British pounds Mexican pesos, Chinese yuan and Polish zloty which are accounted for in the balance sheet at their fair value.

The following table shows the breakdown of net debt (excluding debt issuance costs) by reporting currency:

	December 31, 2022					December 31, 2021
(in € millions)	Financial assets*	Financial liabilities**	Net exposure before hedging	Hedging	Net exposure after hedging	Net exposure after hedging
Euro	1,793.0	(4,181.5)	(2,388.5)	(231.7)	(2,620.2)	(2,717.2)
US dollar	275.2	(403.2)	(128.0)	20.6	(107.4)	(168.4)
Other currencies	278.6	(96.8)	181.8	211.1	392.9	342.1
TOTAL	2,346.8	(4,681.5)	(2,334.7)	0.0	(2,334.7)	(2,543.5)

* Financial assets: cash and marketable securities.

** Financial liabilities: borrowings (excluding debt issuance costs).

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The following table shows the sensitivity of gross debt to changes in the exchange rate of the euro against other currencies, before hedging instruments:

	December 31, 2022		December 31, 2021
	Impact on profit before tax	Impact on equity before tax	Impact on profit before tax	Impact on equity before tax
(in € millions)	10% increase		10% increase
US dollar	0.0	39.9	0.3	42.3
Other currencies	0.2	9.4	0.0	10.8

	December 31, 2022		December 31, 2021
	Impact on profit before tax	Impact on equity before tax	Impact on profit before tax	Impact on equity before tax
(in € millions)	10% decrease		10% decrease
US dollar	0.0	(36.3)	(0.3)	(38.5)
Other currencies	(0.2)	(8.5)	0.0	(9.8)

Operating assets and liabilities break down as follows by reporting currency:

		December 31, 2021
(in € millions)	Current operating assets excluding taxes	Current operating liabilities excluding taxes	Net exposure	Net exposure
Euro	754.4	832.0	(77.6)	(101.9)
US dollar	930.6	482.9	447.7	286.7
Other currencies	885.9	479.1	406.8	316.2
TOTAL	2,570.9	1,794.0	776.9	501.0

The table below presents the breakdown of net sales and operating expenses by reporting currency as of December 31, 2022:

(in € millions)	Net sales		Operating expenses
Euro	2,818.8	33.8%	2,376.4	34.5%
US dollar	3,318.4	39.8%	2,730.1	39.6%
Other currencies	2,202.2	26.4%	1,786.4	25.9%
Total	8,339.4	100.0%	6,892.9	100.0%

When relevant, natural hedges are also set up by matching costs and revenues in each of the Group's operating currencies. Residual amounts are hedged by options to limit the Group's exposure to fluctuations in the main currencies concerned. These hedges are for periods of less than 18 months.

The Group estimates that, all other things being equal, a 10% increase in the exchange rate of the euro against all other currencies would have resulted in 2022 in a decrease in net sales of approximately €502 million (€415 million in 2021) and a decrease in operating profit of approximately €91 million (€74 million in 2021), while a 10% decrease would have resulted in 2022 in an increase in net sales of approximately €552 million (€457 million in 2021) and an increase in operating profit of approximately €100 million (€81 million in 2021).

NOTE 5.1.2.3 Commodity risk

The Group is exposed to commodity risk arising from changes in the price of raw materials, mainly plastics and metals (steel, copper, brass, aluminum). Raw materials consumption (except components) amounted to around €874 million in 2022.

A 10% increase in the price of the above-mentioned consumption would theoretically feed through to around a €87 million increase in annual purchasing costs. The Group believes that it could, circumstances permitting, raise the prices of its products to offset the adverse impact of any such increases over the long term.

Additionally, the Group can set up specific derivative financial instruments (options) for limited amounts and periods to hedge part of the risk of an unfavorable change in copper and certain other raw material prices. The Group did not set up any such hedging contracts in 2022.

reviewed individual credit limits for each customer, constantly monitoring collection of its outstanding receivables and systematically chasing up past due receivables. In addition, the situation is reviewed regularly with the Corporate Finance Department. When the Group is in a position to do so, it can

resort to either credit insurance or factoring.

NOTE 5.1.2.4 Credit risk

As explained in Note 2.2, a substantial portion of Group revenue is generated with two major distributors. Other revenue is essentially derived from distributors of electrical products but sales are diversified due to the large number of customers and their geographic dispersion. The Group actively manages its credit risk by establishing regularly

NOTE 5.1.2.5 Counterparty risk

Financial instruments that may potentially expose the Group to counterparty risk are principally cash equivalents, shortterm investments and hedging instruments. These assets are placed with well-rated financial institutions or corporates with the aim of fragmenting the exposure to these counterparties.

NOTE 5.1.2.6 Liquidity risk

The Group considers that managing liquidity risk depends primarily on having access to diversified sources of financing as to their origin and maturity. This approach represents the basis of the Group's financing policy.

Those strategies are decided and monitored by the Corporate Finance Department, which ensures a regular follow up of ratings and credit default swap rates of these main counterparties.

The total amount of net financial debt (€2,318.9 million as of December 31, 2022) is fully financed by financing facilities expiring at the earliest in 2023 and at the latest in 2032. The average maturity of gross debt is 4.8 years.

Legrand is rated "A-" with a stable outlook by Standard & Poor's.

Rating agency	Long-term debt	Outlook
S&P	A-	Stable

NOTE 5.2 Climate issues

NOTE 5.2.1 Climate commitments

For many years, the Group has set up ambitions to reduce its environmental impact. In 2021, Legrand committed to achieving carbon neutrality by 2050 and had its targets for reducing greenhouse gas emissions by 2030 (versus 2019) validated by the Science Based Targets initiative (SBTi):

• ◼ 50% reduction in Scopes 1&2 emissions;
• ◼ 15% reduction in Scope 3 emissions.

To achieve these long-term ambitions, the Group is developing multi-year CSR roadmaps with concrete reduction targets, aligned with the long-term trajectory (2030 SBTi trajectory). The roadmaps will spread the target-related costs over time.

The 2022-2024 CSR roadmap, launched in March 2022, includes a climate pillar with concrete commitments to reduce greenhouse gas emissions:

• ◼ 10% reduction per year in Scopes 1&2 greenhouse gas emissions over the duration of the roadmap;
• ◼ commitment by the 250 suppliers with the greatest carbon impact on the Group (Scope 3) to reduce their CO2 emissions by an average of 30% by 2030 during the roadmap.

In October 2022, Legrand accelerated its commitment to reducing its energy consumption, by announcing that its initial target of an 8% reduction by the end of 2023 (versus 2021) was being doubled to 15% by the end of 2023 (versus 2021).

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The Group's financing reflects Legrand's extra-financial and climate commitments with:

◼ a pioneering multi-currency syndicated loan; since 2019, the loan's cost has been partly linked to the CSR roadmaps' yearly achievement rate;

NOTE 5.2.2 Climate change challenges faced by the Group

Physical risks

To assess its exposure to physical climate-related risks more effectively, Legrand carried out a scenario analysis for its top 100 sites. The analysis focused on:

• ◼ exposure to extreme events (major coastal, river and surface water flooding);
• ◼ the impact of climate change on the ability to work at the sites (e.g., in high temperatures).

Two climate change scenarios, one limited (IPCC RCP2.6) and one extreme (IPCC RCP8.5) were considered. Overall, Legrand's strategic real-estate assets and activities appear to show little exposure to physical climate-related risks. Its business is not sensitive to weather conditions and fewer than 10 sites could be exposed to partial coastal or river flooding as part of a 100-year flooding event.

Mitigation action is and will be considered to address all relevant points identified.

NOTE 5.2.3 Accounting and financial implications

The Group's current exposure to the consequences of climate change is limited. Accordingly, the impact of climate change on its financial statements is currently not material.

To meet its climate commitments, the Legrand Group is deploying additional resources, with no material impact on its financial model at this stage.

The short- and medium-term effects have been integrated into the Group's strategic plans, on the basis of which

Opportunities

SBTi.

In response to the climate emergency and the emergence of new needs, the Group offers a wide range of solutions (both connected and standard) for controlling energy consumption in all types of buildings.

◼ the successful launch of a first Sustainability-Linked 10-year bond in 2021. The issue is indexed on the Group's carbon neutrality trajectory and its 2030 targets for reducing greenhouse gas emissions that were validated by

Sales from energy efficiency programs reached approximately 22% of net sales in 2022.

Regulatory challenges

The regulatory landscape is evolving to integrate climate change.

The regulations to which the Group is subject do not currently entail any risk for its business or financial situation.

Climate change regulations are driving demand for Group products.

impairment tests on indefinite-life intangible assets are carried out (Note 3.2). The long-term effects of these changes are not quantifiable to date.

The Group's studies and other work have not led to any other impacts on assets and are not likely to call into question the fair value measurement methods or the associated sensitivity tests.

NOTE 5.3 Related-party information

The only individuals qualifying as related parties within the meaning of IAS 24 are the corporate officers who serve on the Executive Committee and the Chairman of the Board of Directors.

Compensation and benefits provided to the members of the Executive Committee and to the Chairman of the Board of Directors for their services are detailed in the following table:

	12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Compensation (amounts paid during the period)	11.3	8.2
out of which fixed compensation	5.5	5.2
out of which variable compensation	5.6	2.9
out of which other short-term benefits (1)	0.2	0.1
Long-term compensation (charge for the period) (2)	5.1	4.9
Termination benefits (charge for the period)	0.0	0.0
Pension and other post-employment benefits (charge for the period)(3)	(0.2)	0.3

(1) Other short-term benefits include benefits in kind.

(2) As per the equity-settled benefit plans described in Note 4.2.1, with a 100% pay-out rate assumption.

(3) Change in the obligation's present value (in accordance with IAS 19).

NOTE 5.4 Off-balance sheet commitments

NOTE 5.4.1 Specific transactions

Specific commitments and their expiry dates are discussed in the following notes:

◼ Note 3.4: Right-of-use assets;

◼ Note 4.5.1: Pension and other post-employment benefit obligations.

NOTE 5.4.2 Routine transactions

NOTE 5.4.2.1 Financial guarantees

(in € millions)	December 31, 2022	December 31, 2021
Guarantees given to banks	124.4	115.6
Guarantees given to other organizations	64.1	45.1
TOTAL	188.5	160.7

Most of these guarantees are given by the Company to banks for Group subsidiaries located outside of France.

NOTE 5.4.2.2 Lease contracts outside the scope of IFRS 16

As of December 31, 2022, the Group holds short-term or low value lease contracts which are outside the scope of IFRS 16.

These lease contracts relate mostly to low value assets. The resulting future minimum rental commitments are not material as of December 31, 2022.

NOTE 5.4.2.3 Commitments to purchase property, plant and equipment

Commitments to purchase property, plant and equipment amounted to €20.9 million as of December 31, 2022.

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NOTE 5.5 Claims and contingent liabilities

The Group is involved in a number of claims and legal proceedings arising in the normal course of business. In the opinion of management, all such matters have been adequately provided for, being specified that no provision is recorded for claims and legal proceedings for which the Group considers that the provision recognition criteria under IFRS are not met.

On July 4, 2022, Legrand received a statement of objections (notification de griefs) from the French Competition Authority (Autorité de la concurrence), concerning the derogation mechanism with its distributors on the French market.

Legrand is committed to strictly complying with all applicable legislation and intends to fully exercise its rights in the upcoming proceedings.

As part of the investigation of the derogation mechanism on the French market, one of Legrand's French entities has been indicted and ordered to provide security in the amount of €80.5 million.

Neither this indictment nor the ordering of this security mean that Legrand will ultimately be found guilty of any wrongdoing.

Legrand rejects that these proceedings have any merit and intends to vigorously demonstrate that its trade policy is in full compliance with the applicable law.

NOTE 5.6 Statutory Auditors' fees

The total amount of Statutory Auditors' fees invoiced to the Group in 2022 can be detailed as follows:

(in euros excluding taxes)	PricewaterhouseCoopers Audit SAS			Deloitte & Associés
Statutory audit and related services	709,478	96%	663,328	89%
Non-audit services	30,000	4%	79,000	11%
TOTAL	739,478	100%	742,328	100%

NOTE 5.7 Subsequent events

In February 2023, the Group announced the acquisition of Clamper, Brazilian leader in surge protection devices, used in particular for photovoltaic infrastructures.

Based in Belo Horizonte, Clamper has over 600 employees and annual sales of nearly €40 million.

NOTE 5.8 Key figures reconciliation

Reconciliation of adjusted operating profit with profit for the period:

	12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Profit for the period	999.5	905.1
Share of profits (losses) of equity-accounted entities	0.0	0.0
Income tax expense	383.8	351.9
Exchange (gains) / losses	0.4	1.5
Financial income	(45.8)	(6.8)
Financial expense	108.6	92.4
Operating profit	1,446.5	1,344.1
i/ Amortization & depreciation of revaluation of assets at the time of acquisitions and other P&L impacts relating to acquisitions, ii/ assets impairment in Russia	226.8	89.9
Impairment of goodwill	28.2	0.0
Adjusted operating profit	1,701.5	1,434.0

Reconciliation of cash flow from operations, free cash flow and normalized free cash flow with profit for the period:

	12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Profit for the period	999.5	905.1
Adjustments for non-cash movements in assets and liabilities:
Depreciation, amortization and impairment	416.0	310.1
Changes in other non-current assets and liabilities and long-term deferred taxes	80.9	90.5
Unrealized exchange (gains)/losses	(7.1)	11.5
(Gains)/losses on sales of assets, net	(0.6)	0.7
Other adjustments	(4.1)	0.2
Cash flow from operations	1,484.6	1,318.1
Decrease (Increase) in working capital requirement	(248.4)	(205.4)
Net cash provided from operating activities	1,236.2	1,112.7
Capital expenditure (including capitalized development costs)	(205.7)	(170.5)
Net proceeds from sales of fixed and financial assets	5.0	10.2
Free cash flow	1,035.5	952.4
Increase (Decrease) in working capital requirement	248.4	205.4
(Increase) Decrease in normalized working capital requirement	(73.5)	(83.7)
Normalized free cash flow	1,210.4	1,074.1

Reconciliation of EBITDA with profit for the period:

	12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Profit for the period	999.5	905.1
Share of profits (losses) of equity-accounted entities	0.0	0.0
Income tax expense	383.8	351.9
Exchange (gains) / losses	0.4	1.5
Financial income	(45.8)	(6.8)
Financial expense	108.6	92.4
Operating profit	1,446.5	1,344.1
Depreciation and impairment of tangible assets	237.6	179.4
Amortization and impairment of intangible assets (including capitalized development costs)	146.6	127.0
Impairment of goodwill	28.2	0.0
EBITDA	1,858.9	1,650.5

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Calculation of net financial debt:

	12 months ended
(in € millions)	December 31, 2022	December 31, 2021
Short-term borrowings	651.3	826.6
Long-term borrowings	4,014.4	4,485.9
Cash and cash equivalents	(2,346.8)	(2,788.3)
Net financial debt	2,318.9	2,524.2

Calculation of working capital requirement:

(in € millions)	December 31, 2022	December 31, 2021
Trade receivables	958.1	728.5
Inventories	1,357.4	1,252.7
Other current assets	255.4	240.4
Income tax receivables	120.5	115.1
Deferred tax assets / (liabilities) reversing in the short term	103.5	90.8
Trade payables	(852.5)	(810.5)
Other current liabilities	(795.1)	(774.3)
Income tax payables	(48.6)	(39.6)
Short-term provisions	(146.4)	(135.8)
Working capital required	952.3	667.3

Company Headquarters

128, avenue de Lattre de Tassigny 87045 Limoges Cedex, France +33 (0) 5 55 06 87 87 www.legrandgroup.com @legrand

Legrand essentials