Saint Gobain - Registration document 2016

7 RISKS AND CONTROL 1. Risk factors

growth in sales of the products manufactured using the rights proceedings may give rise to significant costs and hamper develop other technologies that do not use the disputed concerned, or force the Group to incur additional expenses to parties suspected of breaching its rights. Any such The Group may be forced to take legal action against third

compensation payments to victims would be organized facility. In the event of a technological accident, specific policy subscribed by the joint venture operating the the Bagneaux-sur-Loing plant, which is insured under a insurer. jointly by the joint venture, the insurance broker and the The Saint-Gobain Group also has to deal with risks relating to expenses to restore industrial sites or clean up the chronic pollution, and could therefore be required to incur the current Group civil liability insurance program, except for installations as defined by Directive 2010/75/EU on industrial environment. 70 Group sites are classified as “IED” and control regulations. emissions, and are subject to integrated pollution prevention Breach of these regulations could result in fines or other civil, question to continue operations. withdrawal of permits and licenses needed for the activities in administrative or criminal penalties, specifically the Lastly, changes in environmental regulations, including their sections 2.3.2 c) and 2.3.6 of chapter 4 and section 3 of interpretation, and consideration of climate change risks (see expenses and/or investments. chapter 7) could cause the Group to incur significant Risks associated with external growth 1.1.7 The Group’s strategy is based, in part, on external growth, in particular by acquiring businesses or assets, taking equity lines and in geographic regions where the Group seeks to interests or establishing joint ventures in the Group’s business integration of the activities of the acquired companies, and depend, in part, on the realization of expected synergies and on relationships with other participants in the joint ventures. expected benefits of these external growth operations at the optimal time and/or under satisfactory conditions. The if not fulfilled within the expected timeframes and at the The Group gives no guarantees as to these objectives, which, results and outlook. expected levels, could affect the Group’s financial position, be able to identify attractive targets or enter into transactions establish or strengthen itself. The Group may, however, not the proper functioning of all technical infrastructure and processes, particularly in its Distribution activities, requires conduct of its commercial, industrial and accounting Daily management of the Group’s activities, specifically the computer applications. The risk of system malfunction or (computer viruses or hacking, service providers’ defaults, shutdown, which may be external or internal in origin error, etc.) cannot be underestimated. blackouts or network shutdowns, natural disasters, human systems Risks associated with information 1.1.8

technology.

supply of raw materials Risks associated with the cost and

1.1.5

market conditions and practices. If the Group’s ability to increases to its customers depends to a large extent on immediately and/or fully pass on increases in raw materials energy (such as natural gas). Its ability to pass on these cost and difficulties in obtaining a supply of raw materials and/or adverse effect on its businesses, financial position or results. and/or energy costs were limited, this could have a material of energy, may be affected by a significant increase in prices The Group’s businesses, some of which are heavy consumers present or future industrial sites. to environmental liabilities as a result of its operation of past, The Group could incur significant expenses and be exposed The industrial and environmental risks arising from the certain hazardous substances. operation of some sites primarily relate to the storage of As at December 31, 2016, three sites were classified under hazards involving dangerous substances, known as Directive 2012/18/EU on the control of major-accident regulations and close supervision by the competent “Seveso III”. These industrial sites are subject to specific Department. authorities and the Group’s Environment, Health and Safety Seveso III Directive: the Balsta (Gypsum) in Sweden, which One of these facilities is classified as “lower-tier” under the “upper-tier”: Bagneaux-sur-Loing (Flat Glass) in France, which stores liquid natural gas. Two other facilities are classified as stores arsenic (AS2O3) and Carrascal del Río (Flat Glass) in (HF). Spain, which stores, among other things, hydrofluoric acid of technological and natural risks and the remediation of In France, under the Law of July 30, 2003 on the prevention policies have been implemented at all of the French sites contaminated sites, specific risk prevention and safety potential impact on the environment, preventive measures listed above. After identifying accident risks and their were implemented at these facilities, covering the design and they are used and maintained. Internal contingency plans construction of storage areas, as well as the manner in which consequences of personal injury and damage to property that have been developed to respond to incidents. The financial may arise by accident from plant operations are covered by Industrial and environmental risks 1.1.6

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SAINT-GOBAIN - REGISTRATION DOCUMENT 2016