FFP_REGISTRATION_DOCUMENT_2017

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ACTIVITY AND PROFIT FOR THE PERIOD Risk factors – Risk management and insurance

Risk factors – Risk management and insurance

4.3

RISK MANAGEMENT Impairment of equity securities in the parent-company financial statements depends on value in use, which is partly based on the holding period. FFP is a long-term investor, and assesses changes in the value of its assets over a long period. For a decline in stock market-listed valuations to cause FFP to breach the second banking covenant presented in Note 28.2 to the 2017 consolidated financial statements, the value of all of FFP’s listed and unlisted assets would have to fall by almost 63%, which seems unlikely to happen. As a result, the risk appears limited, especially since the value of FFP’s assets is spread across a diverse range of investments. RISKS RELATING TO PURCHASES OF SHAREHOLDINGS Identification of risks The main risks relating to a transaction involving an investment in a company, listed or unlisted, concern: O a partial or total loss of value; O a lack of liquidity for FFP as shareholder; O reputational risk for FFP. Risk management FFP manages its portfolio in a prudent manner. In general, FFP does not invest in start-ups or companies in a turnaround situation. The Investments and Shareholdings Committee guides the decisions made by the Board of Directors. In all cases, FFP makes the usual investment checks regarding aspects including the investee’s strategic position, competitive environment, financial position, valuation, governance rules and exit conditions. In addition, and because of our strategy of being a long-term minority shareholder, FFP looks carefully at the history, motivation and shared commitment of the other main shareholders, and thereby checks that the various shareholders share the same business philosophy. FFP supports its investee companies by having at least one person sitting on their Board in most cases. FFP invests in listed companies, in which case the liquidity of its investments is assured, and also in unlisted companies. As regards Risks associated with FFP’s financial investments

FFP has reviewed its risks. Since FFP is a holding company, the main risks concern its assets.

Risks from owning a 9.3% stake in Peugeot SA

IDENTIFICATION OF RISKS After changes in Peugeot SA’s ownership structure in the spring of 2014, the risks for FFP have changed. FFP and its parent company Établissements Peugeot Frères are no longer the largest shareholder in Peugeot SA, but one of three major shareholders alongside Dongfeng Motor Group Company Limited and Bpifrance. As a result, FFP no longer consolidates Peugeot SA’s results, which therefore no longer affect FFP’s results except to the extent of any impairment to the value of the shares. However, FFP’s stake in Peugeot SA is its largest exposure in terms of NAV, and accounted for 33% of FFP’s gross assets at 31 December 2017. A fall in the Peugeot SA share price therefore has a material impact on FFP’s valuation. Similarly, if Peugeot SA reduced or scrapped its dividend for several years, that would limit FFP’s ability to continue its development. RISK MANAGEMENT As with its other shareholdings, FFP plays an active role as a shareholder of Peugeot SA Two FFP directors are members of Peugeot SA’s Supervisory Board. A member of FFP’s Executive Management is also a non-voting member of the Supervisory Board.

Risk of fluctuating share prices

IDENTIFICATION OF RISKS Peugeot SA and some other shareholdings are stockmarket- listed. Their valuation fluctuates as markets move. A material and prolonged decline in stockmarket values could affect FFP in several ways: O it would push down the value of its shares, which could reduce FFP’s ability to make distributions to shareholders; O it would reduce the value of its assets, which could affect its banking covenant ratios.

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FFP

2017 REGISTRATION DOCUMENT