sain t-gobain annu al report 2008 annual report

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142 Other business income and expense Other business income and expense mainly include movements in provisions for claims and litigation and environmental provisions, gains and losses on disposals of assets, impairment losses, restructuring costs incurred upon the disposal or discontinuation of operations and the costs of workforce reduction measures. Business income Business income includes all income and expenses other than net borrowing costs and other financial income and expense, the Group’s share in net income of associates, and income taxes. Net financial expense Net financial expense includes borrowing and other financing costs, income from cash and cash equivalents, interest cost for pension and other post-employment benefit plans, net of the return on plan assets, and other financial income and expense. Income taxes Current income tax is the estimated amount of tax payable in respect of income for a given period, calculated by reference to the tax rates that have been enacted or substantively enacted at the balance sheet date, plus any adjustments to current taxes recorded in previous financial periods. Deferred taxes are recorded using the balance sheet liability method for temporary differences between the carrying amount of assets and liabilities and their tax basis. Deferred tax assets and liabilities are measured at the tax rates expected to apply to the period when the asset is realized or the liability settled, based on the tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only if it is considered probable that there will be sufficient future taxable income against which the temporary difference can be utilized. They are reviewed at each balance sheet date and written down to the extent that it is no longer probable that there will be sufficient taxable income against which the temporary difference can be utilized. No provision is made in respect of tax on undistributed earnings of subsidiaries that are not intended to be distributed. In accordance with interpretation SIC 21, a deferred tax liability is recognized for brands acquired in a business combination. Deferred taxes are recognized as income or expense in the income statement, except if they relate to items that are recognized directly in equity, in which case the deferred tax is also recognized in equity. Earnings per share Basic earnings per share are calculated by dividing net income by the average number of shares in issue during the period, excluding treasury stock. Diluted earnings per share are calculated by adjusting earnings per share (see Note 24) and the average number of shares in issue for the effects of all dilutive potential common shares, such as stock options and convertible bonds. The calculation is performed using the treasury stock method, which assumes that the proceeds from the exercise of dilutive instruments are assigned on a priority basis to the purchase of common shares in the market. Recurring net income Recurring net income corresponds to income after tax and minority interests but before capital gains or losses, asset impairment losses, material non-recurring provisions and the related tax and minority interests. The method used for calculating recurring net income is explained in Note 23. Return on capital employed 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 from non-amortizable brands and land. Cash flow from operations Cash flow from operations corresponds to net cash generated from operating activities before the impact of changes in working capital requirement, changes in current taxes and movements in provisions for other liabilities and charges and deferred taxes. Cash flow from operations is adjusted for the effect of material non-recurring provision charges. The method used for calculating cash flow from operations is explained in Note 23. Cash flow from operations before tax on capital gains or losses Cash flow from operations before tax on capital gains or losses corresponds to cash flow from operations less the tax effect of asset disposals. The method used for calculating cash flow from operations before tax on capital gains or losses is explained in Note 23. Saint-Gobain – Financial Report 2008
Segment information The Group’s primary reporting format is based on Sectors and Divisions and the secondary reporting format is based on geographic areas, reflecting the Group’s internal structure. NOTE 2 Changes in group structure Changes in the number of consolidated companies 2008 France Outside Total France Fully consolidated companies At January 1 210 1,206 1,416 Newly consolidated companies 35 131 166 Merged companies (34) (199) (233) Deconsolidated companies (3) (12) (15) Change in consolidation method 1 1 At December 31 208 1,127 1,335 Proportionately consolidated companies At January 1 2 11 13 Newly consolidated companies 6 6 Deconsolidated companies 0 Change in consolidation method 3 3 At December 31 2 20 22 Companies accounted for by the equity method At January 1 6 73 79 Merged companies 1 11 12 Merged companies (6) (6) Deconsolidated companies (11) (11) Change in consolidation method (4) (4) At December 31 7 63 70 Total at December 31 217 1,210 1,427 Significant changes in group structure 2008 On March 13, 2008, Saint-Gobain completed the acquisition of the Maxit group from HeidelbergCement for €2,087 million including €559 million in assumed net debt. Maxit was fully consolidated from March 1, 2008, within the Industrial Mortars Division, contributing €1,019 million to consolidated net sales for the year. The provisional allocation of the acquisition price to the identifiable assets and liabilities acquired at December 31, 2008 led to positive fair value adjustments to inventories for €13 million and to property, plant and equipment for €48 million, negative fair value adjustments to non-current financial assets of €11 million, and a €19 million increase before tax in liabilities and contingent liabilities. Goodwill arising on the business combination was provisionally estimated at €1,539 million at December 31, 2008. During the first half of 2008, the Group acquired two building materials distribution companies, Dalhoff Larsen & Horneman A/S (DLH) in Denmark, and Famar Desi in Estonia. UK-based building materials distributor Gibbs & Dandy was also acquired, through a cash offer that closed on July 1, 2008. 2007 The Building Distribution Sector made several acquisitions in 2007, mainly in France, the United Kingdom, Germany, the Netherlands, Spain and the United States. On August 31, 2007, Saint-Gobain acquired the US group Norandex. Sales from its distribution business were consolidated over the last four months of 2007 and totaled €161 million. Izocam and Saint-Gobain Envases SA, which were acquired at the end of 2006 and previously accounted for by the equity method, were accounted for using proportionate consolidation (Izocam) and full consolidation (Saint-Gobain Envases SA) from January 1, 2007. Following the agreement entered into with investment funds Sagard and Cognetas, the Saint-Gobain Desjonquères group, which was classified as held for sale at December 31, 2006, was sold on March 29, 2007. The capital gain on the sale of the entire capital stock of Saint-Gobain Desjonquères was recorded under “Other business income” (see Note 21). The sub-group’s consolidated sales for first-quarter 2007 amounted to €149 million. The Saint-Gobain Group subsequently decided to acquire a 19.9% interest in holding company Cougard Investissements, the parent company of the new Desjonquères group (SGD), for €42 million. This investment comprised €14 million in shares classified as available-for-sale and €28 million in convertible bonds, both of which are included in other non-current assets. Changes in the fair value of the convertible bonds are accounted for through income. On November 1, 2007, the Group’s Reinforcement and Composites Division (excluding the US fiber reinforcements business) was sold to Owens Corning. The related assets and liabilities were classified as held for sale in the consolidated balance sheet at June 30, 2007 and until October 31, 2007, the effective date of the transaction. The Division’s external sales for the first ten months of 2007 amounted to €558 million. 143 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Saint-Gobain – Financial Report 2008
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2008 annual report
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Contents 05 • Strategy and busine
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3 STRATEGY AND BUSINESSES Jean-Loui
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Strategy and Businesses of Saint-Go
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Responding to recession by demonstr
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The High-Performance Materials Divi
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High-Performance Materials Business
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Insulation products are made from m
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Construction Products Businesses an
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Finland, Estonia, Lithuania and Pol
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ecovered glass can be recycled inde
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The “Germ-free Surfaces” progra
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24 2008 results dampened by the fin
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holders of the parent contracted 7.
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28 2008 business review 2008 sales
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30 The Division also continued to e
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32 In the Nordic countries, Dahl de
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Sustainable development 34 Sustaina
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Environment Challenges Action taken
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38 I. Products and services contrib
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40 Sun Saint-Gobain is a major supp
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42 a British trade association that
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44 Mobilizing resources to deploy t
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46 EHS auditors are drawn from a po
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48 Lastly, we make every effort to
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To help them to implement the plan,
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52 Wood dust is primarily an issue
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54 BRØDRENE DAHL’S PROGRAM FOR R
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56 2008-2010 OBJECTIVE Saint-Gobain
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58 warehouses and other similar spa
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product developed in 2006 by Lapeyr
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62 Internships during a student’s
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64 Geographical and job mobility is
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66 SAINT-GOBAIN AND THE BROAD-BASED
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68 Honest, open, high quality socia
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70 Construction Products The Constr
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72 IV. Values supporting responsibl
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74 INTERNATIONAL CORPORATE FOUNDATI
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76 In countries facing certain soci
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78 for example, 91% of the Group’
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ENVIRONMENTAL INDICATORS 2007 2008
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Trading volume since September 2007
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Trading volume since September 2007
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Changes in capital over the last fi
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88 The decision to grant stock opti
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Information Policy and 2009 Financi
Page 94 and 95: 92 Yuko HARAYAMA Professor at Tohok
Page 96 and 97: Other directorships and positions h
Page 98 and 99: 96 Director’s name and current ma
Page 100 and 101: 98 • Committees of the Board. Thr
Page 102 and 103: 100 The Committee’s remit, as def
Page 104 and 105: • The Annual General Meeting of J
Page 106 and 107: 4. Stock options granted to the Cha
Page 108 and 109: 106 Management compensation In Grou
Page 110 and 111: Fees paid by the Group to the Audit
Page 112 and 113: 110 Related party agreements Relate
Page 114 and 115: 112 The audits are based on a 20-st
Page 116 and 117: 114 being applied. The TAS framewor
Page 118 and 119: Statutory Auditors’ report Prepar
Page 120 and 121: Commitment concerning the payment o
Page 122 and 123: 120 Restructuring risks The Group h
Page 124 and 125: 122 • Volumes are not material, o
Page 126 and 127: 124 or any specific illness or phys
Page 128 and 129: The level of coverage is considered
Page 130 and 131: Consolidated balance sheet at 31 De
Page 132 and 133: Consolidated income statement (in
Page 134 and 135: Statement of recognized income and
Page 136 and 137: Notes to the consolidated financial
Page 138 and 139: 136 Non-current assets held for sal
Page 140 and 141: 138 asset’s fair value less costs
Page 142 and 143: 140 Fair value of financial instrum
Page 146 and 147: 2006 In 2005, the Group acquired th
Page 148 and 149: NOTE 4 Other intangible assets Pate
Page 150 and 151: NOTE 6 Investments in associates (i
Page 152 and 153: 150 NOTE 8 Inventories Dec. 31, Dec
Page 154 and 155: Movements relating to stock options
Page 156 and 157: The plan costs are calculated under
Page 158 and 159: The following tables show the funde
Page 160 and 161: Actuarial assumptions used to measu
Page 162 and 163: The effective tax rate paid by the
Page 164 and 165: Provisions for claims and litigatio
Page 166 and 167: isks is hedged wherever possible wi
Page 168 and 169: Bond issues On June 13, 2008, Saint
Page 170 and 171: NOTE 19 Financial instruments Deriv
Page 172 and 173: NOTE 21 Business income by expense
Page 174 and 175: The weighted average number of shar
Page 176 and 177: 174 In addition, as of December 31,
Page 178 and 179: NOTE 28 Related-party transactions
Page 180 and 181: Innovative Construction Building Pa
Page 182 and 183: Information by geographic area Fran
Page 184 and 185: 182 Principal fully consolidated co
Page 186 and 187: II - Justification of our assessmen
Page 188 and 189: Income statement at December, 31 (i
Page 190 and 191: Balance sheet at December, 31 ASSET
Page 192 and 193: Cash flow statement (in € thousan
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Risk management/Financial instrumen
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NOTE 5 Intangible assets Intangible
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Changes in Compagnie de Saint-Gobai
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Grant stock options exercisable for
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9.4 Compagnie de Saint-Gobain Group
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NOTE 12 Debt and payables Total deb
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12.1 Perpetual bonds In 1985, Compa
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NOTE 14 Investment portfolio Countr
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COMPANIES Capital Reserves % Book v
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NOTE 18 Fees paid to the Statutory
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Asbestos-related litigation in Braz
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Statutory Auditors’ report on the
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Main subsidiaries by country and de
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Saint-Gobain Vetrotex Deutschland G
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Saint-Gobain Construction Products
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Saint-Gobain Building Distribution
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Subsidiaries: Saint-Gobain Technica
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CHINA €1 = CNY 10.227 Saint-Gobai
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Table of concordance 1 Person respo
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COMPAGNIE DE SAINT-GOBAIN France He
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Notes 232 Saint-Gobain - Financial
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Saint-Gobain photo library ; p1 ©
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