SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

Financial and accounting information 2017 Consolidated financial statements

Defined contribution plans 4.3.4. Contributions to defined contribution plans are expensed as incurred. Contributions to defined contribution plans for 2017 represented an estimated €644 million (2016: €628 million), including €434 million for government-sponsored basic pension schemes (2016: €418 million), €131 million for government-sponsored supplementary pension schemes, mainly in France (2016: €131 million), and €79 million for corporate-sponsored supplementary pension plans (2016: €79 million). The Group Savings Plan (Plan Epargne Groupe) is an employee stock purchase plan open to all Group employees in France and most other countries where the Group is present. Eligible employees must have completed a minimum of three months’ service within the Group. Eligible employees are able to invest in Saint-Gobain shares at a preferential subscription price. These shares are held either directly or through the employee saving plan’s mutual funds, depending on local legislation, and are subject to a mandatory five- or ten-year lock-up, except following the occurrence of certain events. The Board of Directors delegates authorization for setting the subscription price to the Chief Executive Officer of Compagnie de Saint-Gobain. It corresponds to the average of the opening prices for the Saint-Gobain share on Euronext Paris over the 20 trading days preceding the date of the decision, subject to a 20% discount, in accordance with applicable laws, the Shareholders’ Meeting resolutions and the deliberations of the Board of Directors. The compensation cost recorded in accordance with IFRS 2 is measured by reference to the fair value of a discount offered on restricted stock (i.e., stock subject to a lock-up). The cost of the lock-up for the employee is defined as the cost of a two-step strategy that involves first selling the restricted stock forward five or ten years and then purchasing the same number of shares on the spot market and financing the purchase with debt. The borrowing cost is estimated at the rate that would be charged by a bank to an individual with an average risk profile for a general-purpose, five- or ten-year consumer loan repayable at maturity. The cost of the plans is recognized in full at the end of the subscription period. In 2017, 4,593,807 new shares with a par value of €4 were issued to employees under the PEG at an average subscription price of €36.72 (2016: 4,653,810 shares at an average price of €29.42), representing a share capital increase of €168 million (€136 million in 2016), net of transaction fees. No amount was expensed in respect of the plans in 2017 or 2016 owing to the lock-in cost. Share-based payments 4.4. Group Savings Plan 4.4.1.

Actuarial gains and losses 4.3.3.4. Actuarial gains and losses on provisions result from the following items: (inɸ€ millions) 2017 2016 Pension obligations 109 1,474 Fair value of plan assets (573) (1,106) Asset ceiling (1) (2) TOTAL MOVEMENTS (465) 366 Plan assets 4.3.3.5. Plan assets have been progressively built up by contributions, primarily in the United Kingdom and the United States. Contributions paid by the Group into these plans in 2017 totaled €306 million (2016: €732 million), including €182 million (2016: €578 million) paid in the United States in September 2017. Actual market returns generated an increase of €820 million in plan assets, compared with an increase of €1,384 million in 2016. This actual return is €573 million higher than the estimated return of €247 million calculated using the discount rate. A 0.5-point increase or decrease in the actual return on plan assets would have an impact of approximately €46 million on equity. Plan assets mainly comprise: (in %) Dec.b31, 2017 Dec.b31, 2016 Equities 29% 27% Bonds 48% 55% Other 23% 18% TOTAL 100% 100% The cost of the Group’s pension and other post-employment benefit plans (excluding other employee benefits) is as follows: (inɸ€ millions) 2017 2016 Service cost 210 189 Interest cost 324 382 Return on plan assets (247) (278) Past service cost, plan curtailments and settlements (108) (14) Employee contributions and plan administration costs (1) (1) PENSIONS, LENGTH-OF-SERVICE AWARDS AND OTHER POST-EMPLOYMENT BENEFITS 178 278 Contributions to pension plans for 2018 are estimated at around €110 million. Employee benefit expense 4.3.3.6.

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