Saint-Gobain // Universal Registration Document 2021

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Financial and accounting information Statutory Auditors’ report on the consolidated financial statements

Determining the assets’ recoverable amounts is a key audit matter given the potentially significant nature of any impairment and the high degree of estimation and judgment required by Management in assessing impairment losses. Management exercises judgment when making assumptions regarding future changes in sales (in both volume and value terms), profitability, investments and the other cash flows required to operate the assets, and when determining an appropriate discount rate to apply to future cash flows. How our audit addressed this risk We familiarized ourselves with the procedures implemented within the Group for impairment testing purposes particularly with regard to take into account the impacts of the Group’s commitments to carbon neutrality, and tested the effectiveness of the controls implemented by the Group to ensure the quality and reliability of the aforementioned procedures and their consistency with data from the budget and the medium-term business plan prepared by Management. We also assessed the consistency and relevance of Management’s approach to determine the cash-generating units for asset impairment testing. We adapted our audit approach to the risk of impairment, which varies depending on the cash-generating unit. Our valuation specialists performed an independent analysis of certain key assumptions used by Management for impairment testing purposes, in particular the discount rate, by referring to both external market data and comparable company analyses. For a selection of cash-generating units, we analyzed the consistency of future cash flow projections with regard to past performance and our knowledge of the business, confirmed by interviews with the Heads of the relevant Segments and Businesses and qualitative and quantitative parameters relating to the depth and potential duration of the health crisis triggered by Covid-19. We carefully examined the calculation of the normalized amount of the terminal cash flows projected to perpetuity. We performed our own sensitivity analyses of certain key variables of the measurement model, particularly with regard to take into account the impacts of the Group’s commitments to carbon neutrality, to assess the materiality of their potential impact on the recoverable amounts of the most high-risk assets. We verified that the disclosures provided in the notes to the consolidated financial statements on the measurement of goodwill, intangible assets and property, plant & equipment, the underlying assumptions and sensitivity analyses were appropriate and in particular that, given the context related to Covid-19, the sensitivity ranges communicated have remained extended. Measurement of provisions for liabilities and litigation related to asbestos Description of risk The Group is exposed to various legal risks, including asbestos-related litigation in the United States. As indicated in Note 9 to the consolidated financial statements, provisions amounting to €1,349 million were recognized at December 31, 2021 for contingent liabilities and litigation. Significant contingent liabilities, whose amount or timing cannot be estimated with sufficient reliability, are disclosed in the notes to the consolidated financial statements. With regard to asbestos-related risks in the United States, determining and measuring the provisions recognized for contingent liabilities and litigation and assessing the appropriateness of the related disclosures in the notes to the consolidated financial statements are a key audit matter given the amounts involved and the high degree of estimation and judgment required by Management in determining those provisions. Judgment is required, in particular, to assess the status and resolution of the ongoing legal proceedings (in particular the voluntary petition for relief under Chapter 11 in the United States): duration, cost, estimation of the number of current and future cases covered, definition of the damages by the judicial authority, etc. How our audit addressed this risk To obtain an understanding of contingent liabilities and litigation regarding asbestos in the United States and the related judgments made, we held discussions with Management and lawyers chosen by Management, at the Group and country level as well as at the main subsidiaries concerned. We also contacted certain law firms and external experts chosen by Management to assist them with the monitoring of these risks. We: examined the minutes of the Board of Directors’ meetings and the Group’s risk mapping prepared by Management and ■ presented to the Audit and Risk Committee; familiarized ourselves with the procedures implemented by Management when measuring the provisions for ■ asbestos-related risks in the United States and determining the disclosures thereon in the notes to the consolidated financial statements; assessed the permanence of methods and performed a critical review of internal analyses relating to the probability ■ and possible impact of these contingent liabilities and new items of litigation by examining the available information relating to the proceedings (correspondence, judgments, notifications, etc.). We also reviewed the responses to the confirmation letters of the law firms chosen by Management, particularly in terms of their experience at resolving comparable situations in the past. We also used our professional judgment to assess the positions adopted by Management, to see where they fell within risk assessment ranges and the consistency of those positions over time; verified the arithmetical accuracy of the calculations of changes in provisions and the consistency of the main items of ■ change in relation to the underlying data, in particular the payments made during the year in respect of these risks. We assessed if the appropriateness of the disclosures provided in the notes to the consolidated financial statements regarding these items of litigation and contingent liabilities identified.

SAINT-GOBAIN UNIVERSAL REGISTRATION DOCUMENT 2021 336

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