Saint-Gobain // Universal Registration Document 2021

Financial and accounting information 2021 Consolidated Financial Statements

In Germany, retirement plans provide pensions and death and disability benefits for employees. These plans have been closed to new entrants since 1996. Since January 1997, new employees have been offered pension plans based on contributions financed jointly by employer and employee. On January 1, 2019, the main pension plan in the Netherlands covering 80% of employees was converted into a defined contribution plan with a residual defined benefit plan for a transitional period of up to 12 years. In the United Kingdom, retirement plans provide pensions as well as death and permanent disability benefits. These defined benefit plans – which are based on employees’ average salaries over their final years of employment – have been closed to new entrants since 2001. The legal structure of the plans is being altered, which will include the closure of the Building Distribution Section to future accrual from January 1, 2022. In the United States and Canada, the Group’s defined benefit plans are final-salary plans. Since January 1, 2001, new employees have been offered a defined contribution plan. In the United States and Spain, retired employees receive benefits other than pensions, mainly concerning healthcare. The Group’s obligation under these plans is

determined using 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 pension obligations. Actuarial gains and losses relating to these benefits are recognized immediately in the income statement. Actuarial assumptions used to measure 6.3.2 defined benefit obligations and plan assets 6.3.2.1 Interest rate assumptions Assumptions related to mortality, employee turnover and future salary increases take into account the economic conditions specific to each country and Group company. The discount rates are established by region or country based on observed bond rates at December 31, 2021. For the Eurozone, two discount rates were calculated based on the term of the plans using a yield curve model developed by consulting firm Mercer: one rate for plans with a term of 14 years or less and one for plans with a term of over 14 years.

The rates used in 2021 for the Group’s main plans were the following:

United Kingdom United States

France

Eurozone

Short-term plans

Long-term plans

Short-term plans

Long-term plans

(in %)

Discount rate Salary increases

1.06%

1.42%

1.06%

1.42%

1.95%

2.70% 3.00% 2.20%

1,90% to 5.50%

2.10% to 2.30% 1.60% to 2.00%

2.00%* 2.70%

Inflation rate

1.70%

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

The rates used in 2020 for the Group’s main plans were the following:

United Kingdom United States

France

Eurozone

8

Short-term plans

Long-term plans

Short-term plans

Long-term plans

(in %)

Discount rate Salary increases

0.70%

1.11%

0.70%

1.11%

1.20%

2.30% 3.00% 2.20%

3.10% 1.50%

1.20% to 2.30% 0.90% to 1.60%

2.00%*

Inflation rate

2.15%

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

As the above three regions account for substantially all of the Group’s pension obligation, the revised actuarial assumptions, notably the discount and inflation rates, contributed to a decrease in the obligation, and therefore in the provision, by an amount of €597 million.

The actual return on plan assets for almost all plans was higher than expected, at €222 million, leading to a decrease in the provision of the same amount.

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