Saint Gobain - Registration document 2016

9 FINANCIAL AND ACCOUNTING INFORMATION 1. 2016 Consolidated Financial Statements

(€55.8 million at December 31, 2015). Provisions for pensions and other post-employment benefits (defined benefit obligations [DBO] in respect of length-of-service awards and pensions) accruing to Group management totaled €47.0 million at December 31, 2016 employee benefits Provisions for pensions and other 4.3 Description of defined benefit plans 4.3.1 After retirement, the Group’s former employees are eligible for pension benefits in accordance with the applicable laws and regulations in the respective countries in which the Group operates. There are also additional pension obligations countries. in certain Group companies, both in France and in other The Group’s obligation for the payment of pensions and length-of-service awards is determined at the end of the reporting period by independent actuaries using the unfunded portion. country. These obligations may be financed by pension funds, with a provision recognized in the balance sheet for the projected unit credit method, taking into account changes in salaries until retirement and the economic conditions in each When plan assets exceed the defined benefit obligation, the excess is recognized in other non-current assets under “net are recognized in equity. pension assets”. These assets are capped at the level of future economic benefits they provide. Changes in the asset ceiling assumptions, experience adjustments and the difference between the funds’ actual rates of return and the discount Actuarial gains and losses result from changes in actuarial rates applied. They are recognized against equity as and when they arise. related plan assets are measured by the Group using the discount rate applied to estimate the obligation at the The interest cost of these obligations and the return on the beginning of the period, and are recognized as financial income or expense. agreements. retirement based on years of service and the calculation methods prescribed in the applicable collective bargaining In France, employees receive length-of-service awards on In addition to length-of-service awards, there are three defined benefit plans, all of which are final salary plans. These was set up by Compagnie de Saint-Gobain. defined benefit plan complying with Article L. 137-11 of France’s Social Security Code (Code de la sécurité sociale) plans were closed to new entrants by the companies concerned between 1969 and 1997. Effective March 1, 2012, a The Group’s main defined benefit plans are as follows:

disability benefits for employees. These plans have been closed to new entrants since 1996. In Germany, retirement plans provide pensions and death and benefit supplementary pension plans, above which they are converted into defined contribution plans. In the Netherlands, ceilings have been introduced for defined In the United Kingdom, retirement plans provide pensions as well as death and permanent disability benefits. These been closed to new entrants since 2001. defined benefit plans - which are based on employees’ average salaries over their final years of employment - have plans are final salary plans. Since January 1, 2001, new In the United States and Canada, the Group’s defined benefit employees have been offered a defined contribution plan. benefits other than pensions, mainly concerning healthcare. The Group’s obligation under these plans is determined using In the United States and Spain, retired employees receive the actuarial method and is covered by a provision recorded in the balance sheet. Provisions for other long-term employee benefits cover all other employee benefits. These benefits primarily include long-service awards in France, jubilee awards in Germany, deferred compensation, provisions for social security benefits in the United States, and termination benefits in different countries. The related defined benefit obligation is generally calculated on an actuarial basis using the same rules as for statement. pension obligations. Actuarial gains and losses relating to these benefits are recognized immediately in income defined benefit obligations and plan assets Actuarial assumptions used to measure 4.3.2 Rate assumptions 4.3.2.1 conditions specific to each country or Group company. future salary increases take into account the economic Assumptions related to mortality, employee turnover and observed bond yields at December 31, 2016. Discount rates were set by zone or country, based on were as follows: The rate assumptions used in 2016 for the Group’s main plans

United Kingdom States United

France

Eurozone

(in %)

Discount rate

1.80%

1.80% 2.60% 4.10%

1.40% to

Salary increases

2.50%

2.40% 2.00%*

3.00%

1.40% to 1.55%

Inflation rate

1.50%

2.35% 2.50%

A cap applies to the reference salaries used to calculate benefit entitlements. *

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SAINT-GOBAIN - REGISTRATION DOCUMENT 2016