Saint Gobain - Registration document 2016

9 FINANCIAL AND ACCOUNTING INFORMATION

3. Compagnie de Saint-Gobain annual financial statements (parent company)

The financial statements cover the twelve-month period from January 1 to December 31, 2016. The following notes form an integral part of the annual financial statements. These financial statements were approved by the Board of Directors on February 23, 2017.

NOTE 1

ACCOUNTING PRINCIPLES AND METHODS

Receivables

Accounts, French law, and accounting principles generally accepted in France. been drawn up in accordance with the French Chart of The financial statements of Compagnie de Saint-Gobain have The financial statements include the accounts of Compagnie de Saint-Gobain’s German branch.

aside for impairment when inventory value is less than book value. Receivables are stated at nominal value. A provision is set

Marketable securities

Intangible assets

acquisition cost. funds (OPCVM and FCP) and are stated at acquisition cost or at market value at year end, if the latter is lower than the Marketable securities mainly include units in money market other than those classified as investment securities. This item also includes treasury shares held by the company These securities are valued in accordance with the first in/first out (FIFO) method. Foreign currency transactions the euro exchange rate prevailing on the transaction date. Receivables, payables and bank balances in foreign Income and expenses in foreign currencies are recorded at currencies are converted at the year-end exchange rate, along with the related hedging instruments, and differences losses.” Provisions are booked for any exceptional unrealized translation losses that are not hedged. arising on translation are recorded under “Translation gains or Risk management/Financial instruments the timely renewal of its financings at an optimal cost. Long-term debt therefore systematically represents a high Liquidity risk is managed with the main objective of ensuring the markets when the debt is renewed is spread over several years. proportion of overall debt. Similarly, the long-term debt maturity schedule is set so that the financing raised through Currency, interest rate, and commodity (energy and raw materials) price risks resulting from the Group’s international activities are hedged by Compagnie de Saint-Gobain, mainly of fluctuations in the Saint-Gobain share price that could affect the cost of performance unit plans. on behalf of subsidiaries. In addition, on its own behalf and for its subsidiaries, Compagnie de Saint-Gobain hedges the risk Currency risks are hedged mainly by fixed-term forward purchase and sale contracts and currency options. Currency sale contracts are recorded in the balance sheet at the hedging rate. receivables and payables hedged by forward purchase and The portion of the unrealized gain or loss on currency options qualifying for hedge accounting that represents the extrinsic Only unrealized losses on currency options that do not qualify (time) value is taken to income, and the portion that represents the intrinsic value is recorded in the balance sheet.

over periods of three, five or ten years. over 25 years. Other intangible assets, consisting of computer software, are measured at acquisition cost and amortized Purchased goodwill that is not legally protected is amortized

Property, plant and equipment

price plus incidental expenses), except for assets acquired prior to December 31, 1976, which have been revalued. Property, plant and equipment are stated at cost (purchase commonly used useful lives are as follows: They are depreciated over their estimated useful lives using the straight-line or declining-balance method. The most

Buildings ‹

40 to 50 years

Straight-line

12 years

Straight-line

Improvements and additions ‹

5 to 12 years

Straight-line

Fixtures and fittings ‹

10 years

Straight-line

Office furniture ‹

5 years

Straight-line

Office equipment ‹

4 years

Straight-line

Vehicles ‹

Computer equipment ‹

3 years

Straight-line or declining balance

Investments in subsidiaries and affiliates, other investment securities On initial recognition, investments in subsidiaries and affiliates are stated at cost excluding any incidental expenses. They are to determine the net present value of future cash flows, excluding interest expense but after tax, based on business assets and the proportion of consolidated net assets. Specific impairment tests may be performed on a case-by-case basis criteria, including the Company’s equity in the underlying net then periodically measured at fair value, in particular when an inventory is done. Fair value is estimated based on various capital gains and losses are not offset. a provision is set aside for impairment. No unrealized capital gain is recorded if fair value exceeds cost, and unrealized When the fair value of the investments falls below their cost, plans (or long-term budget projections).

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SAINT-GOBAIN - REGISTRATION DOCUMENT 2016

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