Saint Gobain - Registration document 2016

9 FINANCIAL AND ACCOUNTING INFORMATION 1. 2016 Consolidated Financial Statements

NOTE 5

PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS

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

Changes in goodwill in 2016 and 2015 are detailed below:

2016

2015

(in € millions)

At January 1 Gross value

12,180

11,899

Accumulated impairment

(1,497)

(1,437)

NET VALUE

10,683

10,462

Movements during the year Impairment

(13)

(157)

Translation adjustments

(189)

320

Changes in Packaging Sector

0

(1)

Changes in Group structure

188

59

TOTAL MOVEMENTS

(14)

221

At December 31 Gross value

12,160

12,180

Accumulated impairment

(1,491)

(1,497)

NET VALUE

10,669

10,683

on the Interior Solutions business. Currency translation 2016 led to the recognition of goodwill impairment, primarily €1 million (€115 million in 2015). Impairment tests performed in 2015), partially offset by companies deconsolidated for consolidated companies for €189 million (€174 million in In 2016, changes in Group structure related mainly to newly differences arising in 2016 primarily reflect the impact of fluctuations in the pound sterling, US dollar, and Brazilian real. In 2015, changes in goodwill were primarily due to translation Insulation business in Russia. against the Flat Glass business in the United States and the sterling and Brazilian real, and by impairment losses booked adjustments arising on fluctuations in the US dollar, pound December 31, 2016 and 2015 can be analyzed as follows: The net value of goodwill by sector and by business at

2016

2015

(in € millions)

Flat Glass

240

209

High-Performance Materials

1,679

1,597

Construction Products

5,924

5,957

Building Distribution

2,826

2,920

TOTAL

10,669 10,683

December 31, 2016), and to the Building Distribution Sector, December 31, 2016) and Industrial Mortars (€1,979 million at Sector, and chiefly relates to Gypsum (€3,435 million at Goodwill is essentially allocated to the Construction Products primarily in the United Kingdom, France and Scandinavia.

230

SAINT-GOBAIN - REGISTRATION DOCUMENT 2016

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