Saint Gobain - Registration document 2016

9 FINANCIAL AND ACCOUNTING INFORMATION 1. 2016 Consolidated Financial Statements

Receivables securitization programs 8.3.8 The Group has set up two receivables securitization Saint-Gobain Receivables Corporation. programs, one through its French subsidiary GIE Point.P Finances, and the other through its US subsidiary, a maximum amount of €500 million (€600 million previously). At December 31, 2016, it amounted to €500 million The French program was renewed on November 10, 2016 for (€578 million at December 31, 2015). Based on past seasonal as non-current and the balance as current. fluctuations in receivables included in the program and on the contract’s features, €350 million of this amount was classified The US program was renewed on October 21, 2015 for a December 31, 2015). maximum amount of USD 350 million. Its euro-equivalent value at December 31, 2016 was €173 million (€178 million at Collateral 8.3.9 by various non-current assets (real estate and securities). At December 31, 2016, €14 million of Group debt was secured interest rates, exchange rates and commodity prices that may arise in the normal course of business. The Group uses interest rate, foreign exchange and commodity derivatives to hedge its exposure to changes in In accordance with IAS 32 and IAS 39, all such instruments are recognized in the balance sheet and measured at fair under IAS 39. value, irrespective of whether or not they are part of a hedging relationship that qualifies for hedge accounting and qualified as fair value hedges and derivatives that do not qualify for hedge accounting during the period are taken to the Changes in the fair value of both derivatives that are designated income statement (in business income and expense for operational foreign exchange derivatives and commodity However, in the case of derivatives that qualify as cash flow hedges, the effective portion of the gain or loss arising from the ineffective portion is recognized in the income statement. changes in fair value is recognized directly in equity, and only derivatives not qualifying for hedge accounting, and in net financial income and expense for all other derivatives). Financial instruments 8.4.

Fair value hedges a) Fair value hedge accounting is applied by the Group mainly for derivative instruments which swap fixed rates against variable rates (fixed-for-floating interest rate swaps). These derivatives hedge fixed-rate debts exposed to a fair value risk. In accordance with hedge accounting principles, debt included in a designated fair value hedging relationship is remeasured at fair value and to the extent of the risk hedged. As the loss or gain on the underlying hedged item offsets the effective portion of the gain or loss on the fair value hedge, the income statement is only impacted by the ineffective portion of the hedge. them in a hedging reserve in equity. This reserve is reclassified to the income statement when the hedged transaction occurs impact on the income statement of the effective portion of changes in the fair value of these derivatives by recording exposure to changes in the fair value of these derivatives to and the hedged item itself affects income. In the same way as for fair value hedges, cash flow hedging limits the Group’s instruments are qualified as highly probable. The application of cash flow hedge accounting allows the Group to defer the exchange forwards). Transactions hedged by these equipment) and the price of future purchases, mostly gas and fuel oil (commodity swaps) or foreign currencies (foreign for derivative instruments which fix the cost of future investments (financial assets or property, plant and Cash flow hedge accounting is applied by the Group mainly Cash flow hedges b) Derivatives that do not qualify for hedge accounting c) Changes in the fair value of derivatives that do not qualify for hedge accounting are recognized in the income statement. Instruments concerned are primarily foreign exchange swaps and foreign exchange forwards. based on observable market inputs. This represents level 2 in the fair value hierarchy defined in IFRS 7 and IFRS 13. valuation techniques such as the fair value of another recent and similar transaction, or discounted cash flow analysis in an active market, such as derivatives or financial assets and liabilities, is determined by reference to commonly used The fair value of financial assets and financial liabilities corresponds to their quoted price on an active market (if any): this represents level 1 in the fair value hierarchy defined The fair value of short-term financial assets and liabilities is considered as being the same as their carrying amount due to their short maturities. in IFRS 7 and IFRS 13. The fair value of instruments not quoted Fair value of financial instruments d) the ineffective portion of the hedge.

246

SAINT-GOBAIN - REGISTRATION DOCUMENT 2016

WWW.SAINT-GOBAIN.COM