sain t-gobain annu al report 2008 annual report

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isks is hedged wherever possible with Compagnie de Saint-Gobain on receipt of orders sent by the subsidiaries, or with the national delegations’ cash pools. In other cases, hedges are contracted with the subsidiaries’ banks. The Group monitors its exposure to foreign exchange risk using a monthly reporting system which captures the foreign exchange positions taken by the Group’s subsidiaries. At December 31, 2008, 94% of the Group’s foreign exchange position was hedged. The net foreign exchange exposure of subsidiaries whose functional currency is not those presented below was as follows at December 31, 2008: (in millions of euro equivalents) Long Short EUR 8 10 USD 17 21 Other currencies 1 2 Total 26 33 Based on a sensitivity analysis at December 31, 2008, a 10% increase in the exchange rates of the main currencies used by subsidiaries would have the following negative impact on net income: (in € millions) Net gains or losses EUR (0.2) USD (0.5) A 10% fall in exchange rates would have had a positive impact on net income in the same amounts (assuming that all other variables were unchanged). Energy risk The Group limits its exposure to energy price fluctuations by using swaps and options to hedge part of its natural gas purchases in certain European countries and the United States, and its fuel oil purchases in Europe. The swaps and options are contracted in the functional currency of the entities concerned. Hedges of gas and fuel oil purchases are managed by a steering committee comprising members of the Group Finance Department, the Group Purchasing Department (Saint-Gobain Achats - SGA) and the relevant Delegations. These hedges (excluding fixed-price purchases negotiated directly with suppliers by the Purchasing Department) are arranged by the Group Treasury and Financing Department in accordance with instructions received from SGA. The steering committee does not manage hedges of energy purchases or purchases in geographical areas not mentioned above because: the volumes involved are not material, or there are no international price indexes used by local players in the geographical areas concerned, and transactions are therefore based on either administered prices or strictly national indexes. In both of these cases, local purchasing units manage energy risk primarily through fixed-price purchases. The Group may from time to time enter into contracts to hedge purchases of other commodities, in accordance with the principles outlined above for gas and fuel oil. Credit risk To limit the Group’s exposure to credit risk, the Treasury and Financing Department only deals with counterparties with a long-term rating of A- or above from Standard & Poor’s or A3 or above by Moody’s, with a stable outlook in both cases. Concentrations of credit risks are closely monitored to ensure that they remain at reasonable levels. Note 19 provides details of the Group’s interest rate and energy hedges, and the interest rates for the main items of debt. It also provides a breakdown of net debt by currency and interest rate (fixed or variable), as well as the interest rate repricing schedule. 164 Saint-Gobain – Financial Report 2008
NOTE 18 Net debt Long- and short-term debt Long- and short-term debt consists of the following: Dec. 31, Dec. 31, Dec. 31, (in € millions) 2008 2007 2006 Bond issues and Medium Term Notes 7,604 8,048 6,223 Perpetual bonds and participating securities 203 203 203 Acquisition-related bank borrowings 2,034 2,989 Other long-term debt including finance leases 320 358 464 Debt recognized at fair value under the fair value option 157 146 Fair value of interest rate hedges 47 (8) (2) Total long-term debt (excluding current portion) 10,365 8,747 9,877 o/w long-term portion of accrued interest 1 2 Current portion of long-term debt 1,364 971 993 Short-term financing programs (US CP, Euro CP and Billets de Trésorerie) 690 221 Bank overdrafts and other short-term bank borrowings 798 922 1,331 Securitizations 462 591 652 Fair value of derivatives relating to borrowings not qualified as hedges (63) (9) (7) Short-term debt and bank overdrafts 1,887 1,504 2,197 TOTAL GROSS DEBT 13,616 11,222 13,067 Cash and cash equivalents (1,937) (1,294) (1,468) TOTAL NET DEBT INCLUDING ACCRUED INTEREST 11,679 9,928 11,599 The fair value of gross long-term debt (including the current portion) managed by Compagnie de Saint-Gobain amounted to €10 billion at December 31, 2008, for a carrying amount of €11 billion. Long-term debt repayment schedule Gross long-term debt at December 31, 2008 can be analyzed as follows by maturity: (in € millions) Currency Within 1 year 1 to 5 years Beyond 5 years Total Bond issues and Medium Term Notes EUR 999 4,508 2,431 7,938 GBP 0 0 628 628 Other 0 37 0 37 Perpetual bonds and participating securities EUR 0 0 203 203 Acquisition-related bank borrowing EUR 0 2,034 0 2,034 Other long-term debt including finance leases All currencies 117 239 80 436 Debt recognized at fair value under the fair value option EUR 0 157 0 157 Fair value of interest rate hedges EUR 0 47 0 47 Total excluding accrued interest 1,116 7,022 3,342 11,480 At December 31, 2008, future interest payments on gross long-term debt (including the current portion) managed by Compagnie de Saint-Gobain were due as follows: 165 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (in € millions) Within 1 year 1 to 5 years Beyond 5 years Total Future interest payments on gross long-term debt 540 1,187 663 2,390 Total excluding accrued interest 540 1,187 663 2,390 Interest on perpetual bonds and participating securities is calculated through to 2024. 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
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92 Yuko HARAYAMA Professor at Tohok
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Other directorships and positions h
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96 Director’s name and current ma
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98 • Committees of the Board. Thr
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100 The Committee’s remit, as def
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• The Annual General Meeting of J
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4. Stock options granted to the Cha
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106 Management compensation In Grou
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Fees paid by the Group to the Audit
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110 Related party agreements Relate
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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 144 and 145: 142 Other business income and expen
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 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
Page 194 and 195: Risk management/Financial instrumen
Page 196 and 197: NOTE 5 Intangible assets Intangible
Page 198 and 199: Changes in Compagnie de Saint-Gobai
Page 200 and 201: Grant stock options exercisable for
Page 202 and 203: 9.4 Compagnie de Saint-Gobain Group
Page 204 and 205: NOTE 12 Debt and payables Total deb
Page 206 and 207: 12.1 Perpetual bonds In 1985, Compa
Page 208 and 209: NOTE 14 Investment portfolio Countr
Page 210 and 211: COMPANIES Capital Reserves % Book v
Page 212 and 213: NOTE 18 Fees paid to the Statutory
Page 214 and 215: 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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