SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

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Financial and accounting information 2017 Consolidated financial statements

Performance indicators 3.4. EBITDA 3.4.1.

Cash flow from operations 3.4.4. Cash flow from operations corresponds to net cash generated from operating activities before the impact of changes in working capital requirements, changes in current taxes and changes in provisions for pensions and other employee benefit obligations as well as for other liabilities and charges and deferred taxes. Cash flow from operations is adjusted for the effect of material non-recurring provision charges. Cash flow from operations before tax on disposal gains and losses and non-recurring provisions corresponds to cash flow from operations less the tax effect of asset disposals, asset impairment and non-recurring provisions. Cash flow from operations totaled €3,020 million in 2017 (€2,749 million in 2016) and cash flow from operations excluding income tax on disposal gains and losses and non-recurring provisions amounted to €2,891 million in the year (€2,628 million in 2016). These amounts are calculated as follows: (inɸ€ millions) 2017 2016 GROUP SHARE OF NET INCOME 1,566 1,311 Minority interests in net income 59 41

EBITDA corresponds to operating income plus depreciation and amortization of property, plant and equipment and intangible assets. EBITDA amounted to €4,234 million in 2017 (2016: €3,998 million), calculated as follows: (inɸ€ millions) 2017 2016 Operating income 3,028 2,818

Depreciation/amortization of property, plant and equipment and intangible assets

1,206 4,234

1,180 3,998

EBITDA

Return on capital employed 3.4.2. Return on capital employed (ROCE) corresponds to annualized operating income adjusted for changes in the scope of consolidation, expressed as a percentage of total assets at year-end. Total assets include net property, plant and equipment, working capital, net goodwill and other intangible assets, but exclude deferred tax assets arising on non-amortizable brands and land. Recurring net income 3.4.3. Recurring net income corresponds to income after tax and minority interests but before disposal gains or losses, asset impairment, material non-recurring provisions and the related tax and minority interests. Recurring net income totaled €1,631 million in 2017 (2016: €1,398 million). Based on the weighted average number of shares outstanding at December 31 (553,383,836 shares in 2017 and 554,624,285 shares in 2016), recurring earnings per share amounted to €2.95 in 2017 and €2.52 in 2016. The difference between net income and recurring net income corresponds to the following items: (inɸ€ millions) 2017 2016 GROUP SHARE OF NET INCOME 1,566 1,311 Less: Gains and losses on disposals of assets 46 (2) Impairment of assets and other (226) (201)

Share in net income of equity-accounted companies, net of dividends received

(13)

(20)

Depreciation, amortization and impairment of assets

1,442

1,369

Gains and losses on disposals of assets Changes in provision for anti-trust litigation and other non-recurring provisions Unrealized gains and losses arising from changes in fair value and share-based payments CASH FLOW FROM OPERATIONS Tax on disposal gains and losses, asset impairment and non-recurring charges to provisions CASH FLOW FROM OPERATIONS BEFORE TAX ON CAPITAL GAINS AND LOSSES AND NON-RECURRING PROVISIONS

(46)

2

(4)

4

16

42

3,020

2,749

(129)

(121)

2,891

2,628

Working capital 3.5. Inventories 3.5.1.

Changes in provision for anti-trust litigation and other non-recurring provisions

Inventories are stated at the lower of cost and net realizable value. The cost of inventories includes purchase costs (net of supplier discounts), processing costs and other costs incurred in bringing the inventories to their present location and condition. Cost is generally determined using the weighted-average cost method, and in some cases the First-In-First-Out (FIFO) method. Inventory costs may also include the transfer from equity of any gains/losses on qualifying cash flow hedges of foreign currency purchases of raw materials. Net realizable value is the selling price in the ordinary course of business, less estimated completion and selling costs. No account is taken in the inventory valuation process of the impact of below-normal capacity utilization rates.

4

(4) (1)

Impact of minority interests

(18)

Tax on disposal gains and losses, asset impairment and non-recurring charges to provisions

129

121

GROUP SHARE OF RECURRING NET INCOME

1,631

1,398

232 SAINT-GOBAIN - REGISTRATION DOCUMENT 2017