PSA - 2019 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 Notes to the Consolidated Financial Statements at 31 December 2019

PRELIMINARY NOTE The consolidated financialstatementsfor 2019includingexplanatorynoteswereauthorizedfor issueby theManagingBoardof Peugeot S.A.andendorsedby the Supervisory Board on 25February 2020.

SIGNIFICANT EVENT

NOTE 1

GROUPE PSA AND FCA AGREE TO MERGE On 17 December 2019, Fiat Chrysler Automobiles N.V. (“FCA”) (NYSE:FCAU/MTA:FCA) and PeugeotS.A. (“GroupePSA”)signed a bindingCombinationAgreementprovidingfor a 50/50mergerof theirbusinessesto createthe 4th largestglobalautomotiveOriginal Equipment Manufacturer (OEM) by volume and 3rd largest by revenue (the“Merger”). Themergedentitywill benefitfroman efficientgovernance structure designed topromoteeffectiveperformance, witha Boardcomprised of 11 members,5 out of 9 non-executive directorsof whichneed to be independent. Five Boardmemberswill be nominatedby FCAand its reference shareholder (including JohnElkannasChairman) andfivewill benominated byGroupePSAanditsreference shareholders (including the SeniorNon-Executive Directorand the ViceChairman).At closing the Boardwill includetwo membersrepresentingFCA and Groupe PSAemployees.CarlosTavareswill be the ChiefExecutiveOfficerfor an initial term of five years and will also be a member of theBoard. The newgroup’sDutch-domiciledparentcompanywill be listedon Euronext(Paris),the BorsaItaliana(Milan)and the NewYork Stock Exchange. Under the proposed by-laws of the combined company, no shareholderwould have the power to exercisemore than 30% of the votes cast at Shareholders’Meetings. It is also foreseen that therewill be no carryoverof existingdoublevotingrights but that new double voting rights will accrue after a three-year holding periodaftercompletionof the merger. In the contextof the contemplatedMerger,DongfengGroup(DFG) will sell 30.7 million shares to PSA (in which case they will be canceledprior to closing)and/orto third parties(includingon the ACCOUNTING STANDARDS APPLIED 2.1. The PSA Group’s consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union and in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board on 31 December2019.Thereis no effecton theseconsolidated financial statementsresulting from differencesbetween IFRS as issued by the IASB and IFRSas adopted bythe EuropeanUnion. InternationalFinancialReportingStandardsinclude IFRSs and IASs (InternationalAccountingStandards)and the relatedinterpretations as preparedby theStanding Interpretations Committee (SIC)andthe International FinancialReporting Interpretations Committee (IFRIC). New standardsand amendments The followingnew standardsor IFRIC interpretations,which were effective from 1 January 2019,were: IFRS 16- Leases (see Notes 2.2for the first applicationand 2.3 n for theeffects on theconsolidated financialstatements) IFRIC 23 - Uncertainty over Income Tax Treatments , whose n adoptionhadnomaterialeffecton the consolidated statements. ACCOUNTING POLICIES NOTE 2

market).The accountingfor this financialinstrumentand its impact on the consolidatedfinancial statementsat 31 December2019 of GroupePSAis discussed in Note 12.3. Beforeclosingof the Merger,FCAwill distributeto its shareholders a specialdividendof €5.5 billionwhileGroupePSAwill distributeto its shareholders its 46%stakein Faurecia.At 31 December,Faurecia continues tobe consolidatedwithin continuing operations. In addition,FCAwill continuework on the separationof its holding in Comauwhichwill be separatedpromptlyfollowingclosingfor the benefit of the shareholders of the combined company. Each company intends to distribute a €1.1 billion ordinary dividend in 2020 related to fiscal year 2019, subject to approval by each company’sBoardof Directorsand shareholders.At closing,Groupe PSA shareholderswill receive 1.742 sharesof the new combined companyfor eachshareof GroupePSA,whileFCAshareholderswill have1 share ofthe new combined companyfor eachshareof FCA. Preparation of the Merger is progressing as expected and completionof the proposedcombinationcontinuesto be expected to take place in 12-15 months, subject to customary closing conditions,includingapprovalby both companies’shareholdersat theirrespectiveExtraordinaryGeneralMeetingsand the satisfaction of antitrustandotherregulatoryrequirements. Otherwise, the proposed Merger has no other impact on the consolidatedfinancial statements at 31 December2019 than the mergercosts for servicesreceivedfrom variousfinancialand legal externaladvisorsthat have been expensedas incurredfor a total amount of €25 million in connection with the negotiation and completion of the proposed Merger.

New standardsand amendments not yet effective

The following new IFRS standards, amendments or IFRIC interpretationsmandatory for the periods beginning on or after 1 January 2020 (and not early applied) are expected to have no significantimpactfrom1 January2020: amendments to IFRS 3“Definition ofa business” n amendments to IAS 1and IAS 8“Definition ofMaterial” n interestrate benchmarkreform(Amendmentsto IFRS 9, IAS 39 n andIFRS 7) amendmentto conceptual framework n Regarding IFRS 17Insurancecontracts , subject to its adoptionby the EuropeanUnion,it will becomeeffectivein 2021, in placeof the current IFRS 4 standard. The IASB issued an exposure draft on 26 June 2019 containing a number of amendments to IFRS 17 “InsuranceContracts”.The modificationsare intendedto facilitate the implementationof the standard.In particular,it is proposedto delay the first date of applicationby one year, thus postponedto financial yearsbeginningon orafter1 January 2022.

177

PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT