SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

Financial and accounting information Statutory Auditors' report on the financial statements

Measurement of financial investments Description of risk

At December 31, 2017, the carrying amount of the Company’s financial investments, chiefly comprising investments in subsidiaries and affiliates and related loans and advances, stood at €26,536 million, or 88% of the Company’s net assets. Investments in subsidiaries and affiliates are initially stated at cost and are impaired based on their value in use, corresponding to the amount the Company would be prepared to pay for the investment if it were to acquire it. A decline in the performance of certain subsidiaries or affiliates or risks relating to the international locations of those companies could lead to impairment losses. We deemed the measurement of the value in use of these investments, which is performed each year by Management using the multi-criteria approach described in Note 1 to the Company’s financial statements, to be a key audit matter in light of the potential materiality of any impairment and the high degree of estimation and judgment required from Management to assess impairment losses. Management’s judgment is based in part on assumptions relating, on the one hand, to the multiples applicable to the valuation of the investments and, on the other, to future changes in the cash flows relating to the investments, as well as to the calculation of the appropriate discount rate applied to future cash flows. As described in Note 8 to the financial statements, no impairment losses were recognized as a result of the impairment tests performed by Management for the year ended December 31, 2017. How our audit addressed this risk We examined the impairment test procedure applied by the Company’s financial Management team, verified the consistency of the method used and tested the effectiveness of the controls implemented by Management to ensure the quality and reliability of the procedure. We carried out an independent analysis of certain key assumptions used by Management to perform the tests, pertaining, as appropriate, to the multiple deemed applicable to the valuation of the investments or to the discount rate and average perpetual growth rate used to project future cash flows, referring both to external market data and analyses of comparable companies. For each investment selected for our tests of detail, we corroborated the calculation parameters applied in Management’s multi-criteria approach with the accounting and budget data available for that investment. Where projected future cash flows were used, we analyzed the consistency of the projections with past performance and our knowledge of the Company’s business, supported by interviews with managers from the various businesses and, in so far as they were available, external data relating to markets or competitors. We paid particularly close attention to the calculation of the normalized amount of the terminal cash flows projected until perpetuity. We verified the disclosures provided in the notes to the financial statements concerning the valuation of financial investments to ensure their appropriateness. Verification of the management report and of the other documents provided 5. to the Shareholders In accordance with professional standards applicable in France, we have also performed the specific verifications required by French law. Information given in the management report with respect to the Company’s financial position and the financial statements We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors, and in the other documents provided to the Shareholders with respect to the financial position and the financial statements. Report on corporate governance We attest that the Board of Directors’ report on corporate governance sets out the information required by articles L.225-37-3 and L.225-37-4 of the French Commercial Code. Concerning the information given in accordance with the requirements of article L.225-37-3 of the French Commercial Code relating to remuneration and benefits received by corporate officers and any other commitments made in their favor, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your Company from companies controlling it or controlled by it. Based on this work, we attest to the accuracy and fair presentation of this information. Concerning the information relating to those items your Company has deemed liable to have an impact in the event of a takeover bid or exchange offer, given in accordance with the requirements of article 225-37-5 of the French Commercial Code, we have verified its consistency with the underlying documents, which were disclosed to us. Based on this work, we have no matters to report with regard to this information.

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