Saint Gobain : Consolidated Financial Statements for year ended 31 December 2020 with Audit Report - PDF

CONSOLIDATED

FINANCIAL

STATEMENTS

DECEMBER 31, 2020

GROUP CONSOLIDATION REPORTING DEPARTMENT

Compagnie de Saint-Gobain

STATUTORY AUDITORS' REPORT

ON THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended December 31, 2020

The Statutory Auditors

PricewaterhouseCoopers Audit	KPMG Audit
Crystal Park	Tour Eqho
63, rue de Villiers	2, avenue Gambetta
92208 Neuilly-sur-Seine Cedex, France	CS 60055
92066 Paris La Défense Cedex, France

PricewaterhouseCoopers Audit Crystal Park 63, rue de Villiers

92208 Neuilly-sur-Seine Cedex, FranceKPMG Audit Tour Eqho 2, avenue Gambetta CS 60055

92066 Paris La Défense Cedex, France

STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTSFor the year ended December 31, 2020

This is a translation into English of the statutory auditors' report on the consolidated financial statements of the

Company issued in French and it is provided solely for the convenience of English speaking users.

This statutory auditors' report includes information required by European regulation and French law, such as information about the appointment of the statutory auditors or verification of the information concerning the Group presented in the management report and other documents provided to shareholders.

This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.

Compagnie de Saint-Gobain SA Tour Saint-Gobain 12, place de l'Iris

92400 Courbevoie cedex

To the Shareholders,

Opinion

In compliance with the engagement entrusted to us by your Shareholders' Meeting, we have audited the accompanying consolidated financial statements of Compagnie de Saint-Gobain ("the Group") for the year ended December 31, 2020.

In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group as at December 31, 2020 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The audit opinion expressed above is consistent with our report to the Audit and Risk Committee.

Basis for Opinion

Audit Framework

We conducted our audit in accordance with professional standards applicable in France. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Statutory Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report.

Independence

We conducted our audit engagement in compliance with independence requirements of the French Commercial Code (code de commerce) and the French Code of Ethics (code de déontologie) for statutory auditors, for the period from January 1st, 2020 to the date of our report and specifically we did not provide any prohibited non-audit services referred to in Article 5(1) of Regulation (EU) No 537/2014.

Compagnie de Saint-Gobain

STATUTORY AUDITORS' REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended December 31, 2020

Page 2

Justification of Assessments - Key Audit Matters

Due to the global crisis related to the Covid-19 pandemic, the financial statements of this period have been prepared and audited under specific conditions. Indeed, this crisis and the exceptional measures taken in the context of the state of sanitary emergency have had numerous consequences for companies, particularly on their operations and their financing, and have led to greater uncertainties on their future prospects. Those measures, such as travel restrictions and remote working, have also had an impact on the companies' internal organization and the performance of the audits.

It is in this complex and evolving context that, in accordance with the requirements of Articles L.823-9 and R.823-7 of the French Commercial Code (code de commerce) relating to the justification of our assessments, we inform you of the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period, as well as how we addressed those risks.

These matters were addressed in the context of our audit of the consolidated financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on specific items of the consolidated financial statements.

Measurement of goodwill, intangible assets and property, plant & equipment Description of risk

The carrying amounts of goodwill, intangible assets and property, plant & equipment were significant at

December 31, 2020, representing €10,028 million, €2,505 million and €11,072 million, respectively. These assets may be impaired due to internal or external factors, including decisions to change the Group's strategy in certain markets, a

decline in Group performance, changes in competition, unfavorable market conditions particularly in the context of the Covid-19 pandemic and changes in legislation or regulations. These changes are likely to have an impact on the Group's forecast cash flow and, consequently, the assets' recoverable amounts.

The impairment tests performed by Management using the method described in Note 6.5 to the consolidated financial statements led to the recognition of impairment losses of €958 million in the year ended December 31, 2020 (including

impairment on assets held for sale), as indicated in Note 4 to 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 health crisis of Covid-19 on the parameters activity and profitability, 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