399 Life Is On | Schneider Electric www.se.com Financial Statements 5. Chapter 5 – Consolidated financial statements at December 31, 2021 Recognition and recoverability of deferred tax assets related to tax losses carried forward Notes 1.3, 1.16 and 14 to the consolidated financial statements Risk identified As at December 31, 2021, the deferred tax assets recognized in the group’s balance sheet, with regards to tax losses carried forward, amount to M€ 689 and are mainly related to France for M€ 500. As described in note 1.16 to the consolidated financial statements, the group recognizes future tax benefits, arising from the utilization of tax losses carried forward, to the extent they can reasonably be expected to be achieved, including when such amounts can be indefinitely carried forward. Management assesses at year-end the recoverability by the group of its deferred tax assets on tax losses carried forward. The recognition and appropriate estimation of deferred tax assets relies on the Group’s ability to accurately forecast its future taxable income. We considered the initial recognition and the subsequent recoverability of deferred tax assets on tax losses carried forward to be a key audit matter due to the judgment exercised by management. Our response In considering the group’s capacity to benefit from its deferred tax assets on tax losses carried forward by offsetting them with future taxable income, our audit approach consisted, with the assistance of our tax specialists when necessary, in: • inquiring about the consumption plans of tax losses carried forward for the subsidiaries or tax consolidation groups at stake; • assessing the data and assumptions underlying the consumption plans of tax losses carried forward supporting the recognition and the measurement of related deferred tax assets by the group. Finally, we verified that the notes to the consolidated financial statements contain the appropriate information. Fair valuation of assets acquired and liabilities assumed following the acquisitions of Larsen & Toubro EA and OSIsoft Notes 1.3, 1.5, 1.8 and 2.1 to the consolidated financial statements Risk identified As specified in note 2.1: Acquisition of Larsen and Toubro "Electrical & Automation" On August 31, 2020, the group completed the transaction to combine Schneider Electric India’s Low Voltage and Industrial Automation Products business and Larsen and Toubro (“L&T EA”) Electrical and Automation business, for a consideration paid of EUR 1,571 million. Temasek took 35% stake in the new entity combining L&T EA and the group’s Low Voltage and Industrial Automation activities in India, for a consideration of M€ 530. L&T EA has been fully consolidated by the group since the date of acquisition. The group has determined the fair value of the identifiable assets acquired and liabilities assumed from L&T EA in accordance with IFRS 3R. The acquisition resulted in the recognition of intangible assets and liabilities assumed for a net amount of M€ 286 and final goodwill of M€ 1,117. The purchase price allocation is final as of December 31, 2021. Acquisition of OSISoft On March 19, 2021, the group announced, through its subsidiary AVEVA group Plc, that it had completed the acquisition of OSIsoft for a consideration of M€ 4,500. OSIsoft has been fully consolidated by the group since the date of acquisition. The group has determined the fair value of the identifiable assets acquired and liabilities assumed from OSIsoft in accordance with IFRS 3R for a net amount of M€ 1,460, mainly relating to the recognition of intangible assets. The resulting provisional goodwill at December 31, 2021 amounts to M€ 3,001. The determination of the fair value of the assets acquired and liabilities assumed in these two acquisitions is a key audit matter due to the significant amounts at stake and the level of judgment exercised by management.