SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

Financial and accounting information 2017 Consolidated financial statements

NOTE 5

INTANGIBLE ASSETS AND PROPERTY, PLANT AND EQUIPMENT

Goodwill 5.1. When an entity is acquired by the Group, its identifiable assets and assumed liabilities are recognized at their fair value within a 12-month measurement period and retroactively at the acquisition date. The final acquisition price (“consideration transferred” in IFRS 3R), including, as appropriate, the estimated fair value of any earn-out payments or other deferred consideration (“contingent consideration” in IFRS 3R), is determined in the 12 months following the acquisition. Under IFRS 3R, any adjustments to the acquisition price beyond this 12-month period are recorded in the income statement. All costs directly attributable to the acquisition, i.e., costs that the acquirer incurs to effect a business combination, such as professional fees paid to investment banks, attorneys, auditors, independent appraisers and other consultants, are no longer capitalized as part of the cost of the business combination. They are therefore expensed as incurred and are no longer included in the cost of acquisition. In addition, goodwill is recognized only at the date that control is achieved. Any subsequent increase in ownership interest (without change of control) is recorded as a change in equity without adjusting goodwill. Goodwill is recorded in the consolidated balance sheet as the difference between (i) the acquisition-date fair value plus the amount of any minority interests in the acquisition – measured either at fair value (full goodwill method) or at the proportionate interest in the fair value of the net identifiable assets acquired (partial goodwill method) – and (ii) the net amount of assets and liabilities acquired at their fair value at the acquisition date. The Group generally applies the partial goodwill method and the amount of goodwill calculated under the full goodwill method is not therefore material. Any excess of the cost of an acquisition over the fair value of the Group’s share of the assets and liabilities of the acquired entity is recorded as goodwill. Any negative difference between the cost of the acquisition and the fair value of the net assets and liabilities acquired is recognized in the income statement during the year of acquisition.

Changes in goodwill in 2017 and 2016 are detailed below: (inɸ€ millions) 2017 2016 At Januaryb1 Gross value 12,160 12,180 Accumulated impairment (1,491) (1,497) NET VALUE 10,669 10,683 Changes during the year Impairment (70) (13) Translation adjustments (497) (189) Changes in Group structure 473 188 TOTAL CHANGES (94) (14) At Decemberb31 Gross value 12,023 12,160 Accumulated impairment (1,448) (1,491) NET VALUE 10,575 10,669 In 2017, changes in Group structure related mainly to newly consolidated companies in the Construction Products Sector representing €474 million. Impairment tests performed in 2017 led to the recognition of goodwill impairment, primarily in the Flat Glass business in the United States and the United Kingdom. The 2017 currency translation adjustments primarily reflect the impact of fluctuations in the US dollar, pound sterling, Norwegian krone and Brazilian real. In 2016, changes in Group structure related mainly to newly consolidated companies representing €189 million. Impairment tests performed in 2016 led to the recognition of goodwill impairment, primarily on the Interior Solutions business. Currency translation adjustments primarily reflected the impact of fluctuations in the pound sterling, US dollar, and Brazilian real. The net value of goodwill by sector and by business at December 31, 2017 and 2016 can be analyzed as follows: (inɸ€ millions) 2017 2016 Flat Glass 189 240 High-Performance Materials 1,602 1,679 Construction Products 6,014 5,924 Building Distribution 2,770 2,826 TOTAL 10,575 10,669 Goodwill is essentially allocated to the Construction Products Sector, mainly Gypsum (€3,264 million at December 31, 2017) and Industrial Mortars (€2,075 million at December 31, 2017), and to the Building Distribution Sector, primarily in the United Kingdom, France and Scandinavia.

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