Saint Gobain - Registration document 2016

7 RISKS AND CONTROL 1. Risk factors

1.1.9

Customer credit risk

infrastructure and applications, data backups and business To minimize the impact of this type of malfunction, the information systems governance and security, relating to Information Systems Department has set strict rules for by the Internal Audit and Control Department. continuity plans, rolled out at the Group level and controlled operations, the protection of its know-how and its financial These malfunctions may adversely affect the Group’s results.

section 1). Nevertheless, changes in the economic situation Note 3 to the Consolidated Financial Statements, chapter 9, could lead to an increase in customer credit risk. analyzed and provisions are booked whenever necessary (see large customer base. Past-due receivables are regularly its wide range of businesses, worldwide presence and very The Group’s exposure to customer credit risk is limited due to

1.2

GROUP STRUCTURAL RISKS

1.2.1

Cost reduction and restructuring risks

1.2.3

Risks associated with goodwill and equipment and intangible assets impairment of property, plant and

than expected, or the cost savings may be less than expected restructuring operations and other initiatives may cost more restructuring costs and/or the Group’s inability to achieve the or take longer than expected to achieve. An increase in higher than originally budgeted. In particular, certain achieved or that the related restructuring costs will not be expected savings could have a material adverse effect on the Group’s results and outlook. there is no guarantee that the forecast reductions will be restructuring initiatives. While further savings are planned, The Group has undertaken a variety of cost-cutting and Netherlands and the United Kingdom) and in North America Western Europe (particularly France, Germany, the new entrants. At December 31, 2016, total commitments (United States and Canada). Most of these plans are closed to pension and other post-employment benefit plans, mainly in The Group makes significant accounting accruals to cover under pension and other post-employment benefit plans were €12.7 billion. The provision for pension plans recognized in the higher inflation, or a fall in the market values of plan assets, measure future commitments, a change in life expectancy or consisting mainly of equities and bonds. obligation, by a reduction in the discount rates used to assumptions used to calculate the projected benefit 2016) may be affected by adverse changes in the actuarial consolidated balance sheet (€3.5 billion at December 31, commitments pension commitments and similar Risks associated with the Group’s 1.2.2

impairment periodically and whenever there is an indication intangible assets with indefinite use lives are tested for Group accounting policies, goodwill and certain other €10.7 billion, respectively, at December 31, 2016. In line with that their carrying amount may not be fully recoverable. Group’s intangible assets, representing €2.1 billion and Brands and goodwill make up a significant proportion of the adverse effect on consolidated net income. recognition of impairment losses on goodwill could have an legal or regulatory changes or many other factors. The performance, unfavorable market conditions, unfavorable become impaired in the event of adverse development of the 2016) represent roughly one-third of total assets and may Property, plant and equipment (€11.7 billion at December 31, business. Property Plant and equipment totaled €11,654 million at impaired as a result of worse-than-expected Group Goodwill and other identified intangible assets may become representing 27% of total assets (26% in 2015), which were December 31, 2016 (€11,587 million at December 31, 2015), December 31, 2015). €43,767 million at December 31, 2016 (€44,856 million at

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SAINT-GOBAIN - REGISTRATION DOCUMENT 2016

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