SAINT_GOBAIN_REGISTRATION_DOCUMENT_2017

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Financial and accounting information Compagnie de Saint-Gobain 2017 annual financial statements (parent company)

The financial statements cover the twelve-month period from January 1 to December 31, 2017. The following notes form an integral part of the annual financial statements. These financial statements were approved by the Board of Directors on February 22, 2018.

NOTE 1

ACCOUNTING PRINCIPLES AND METHODS

The financial statements of Compagnie de Saint-Gobain have been drawn up in accordance with the French Chart of Accounts, French law, and accounting principles generally accepted in France. The financial statements include the accounts of Compagnie de Saint-Gobain's German branch. Intangible assets Purchased goodwill that is not legally protected is amortized over 25 years. Other intangible assets, consisting of computer software, are measured at acquisition cost and amortized Property, plant and equipment are stated at cost (purchase price plus incidental expenses), except for assets acquired prior to December 31, 1976, which have been revalued. They are depreciated over their estimated useful lives using the straight-line or declining-balance method. The most commonly used useful lives are as follows: buildings 40 to 50 years Straight-line „ improvements „ and additions 12 years Straight-line fixtures and fittings 5 to 12 years Straight-line „ office furniture 10 years Straight-line „ office equipment 5 years Straight-line „ vehicles 4 years Straight-line „ 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 then periodically measured at fair value, in particular when an inventory is done. Fair value is estimated based on various criteria: Company’s equity in the underlying net assets, proportion of consolidated net assets, net present value of future cash flows, excluding interest expense but after tax, based on business plans (or long-term budget projections), or multiple of a normative performance basis. When the fair value of the investments falls below their cost, a provision is set aside for impairment. No unrealized capital gain is recorded if fair value exceeds cost, and unrealized capital gains and losses are not offset. over periods of three, five or ten years. Property, plant and equipment

Treasury shares held by the Company at year-end for allocation upon exercise of stock options are recorded in the balance sheet under “Other investment securities”. They are carried at the lower of cost, market price or the option exercise price when it is probable that the options will be exercised. Treasury shares held for cancellation are carried at cost and are not revalued or provided for. Receivables Receivables are stated at nominal value. A provision is set aside for impairment when inventory value is less than book value. Marketable securities Marketable securities mainly include units in money market funds (OPCVM and FCP) and are stated at acquisition cost or at market value at year end, if the latter is lower than the acquisition cost. This item also includes treasury shares held by the company other than those classified as investment securities. These securities are valued in accordance with the first in / first out (FIFO) method. Foreign currency transactions Income and expenses in foreign currencies are recorded at the euro exchange rate prevailing on the transaction date. Receivables, payables and bank balances in foreign currencies are converted at the year-end exchange rate, along with the related hedging instruments, and differences arising on translation are recorded under “Translation gains or losses.” Provisions are booked for any exceptional unrealized translation losses that are not hedged. Risk management / Financial instruments Liquidity risk is managed with the main objective of ensuring the timely renewal of its financings at an optimal cost. Long-term debt therefore systematically represents a high proportion of overall debt. Similarly, the long-term debt maturity schedule is set so that the financing raised through the markets when the debt is renewed is spread over several years. 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 on behalf of subsidiaries. In addition, on its own behalf and for its subsidiaries, Compagnie de Saint-Gobain hedges the risk of fluctuations in the Saint-Gobain share price that could affect the cost of performance unit plans.

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