PSA - 2019 Universal Registration Document

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

IMPACT OF HYPERINFLATION 2.5. IN ARGENTINA -APPLICATION OF IAS 21 AND IAS 29 Cumulativeinflation over three years in Argentina exceeded the 100%thresholdat 1 July2018,resultingin the retroactiveapplication of IAS 29 at 1 January 2018. This consists in the revaluation of non-monetaryassetsand liabilities(property,plant and equipment, intangible assets, inventoriesand equity) by taking into account inflation since their recognitionin the consolidatedbalance sheet. The offset of this revaluationat 1 January2018 was recognisedin equity. The revaluationsfor the 2018 financial year are presented under “other financial income/expenses”.The various lines of the statementof incomefor the financialyear are revaluedto take into account inflation since the completion of each transaction. The offset is presentedunder “other financial income/expenses”.Cash flowsare also revaluedaccordingto the sameprinciples.The offset is presentedin a specificline of the statementof cashflows“impact of hyperinflation”. In application of IAS 21 - The effects of changes in foreign exchangerates , the statementof income and the cash flows are convertedat the closing rate. The main effects of the applicationof hyperinflationaccounting were in2018: €(114) million in revenue; n

USE OFESTIMATES 2.6. AND ASSUMPTIONS

The preparationof consolidatedfinancialstatementsin accordance with IFRS requires management to make estimates and assumptions in orderto determinethe reportedamountsof certain assets, liabilities, income and expense items, as well as certain amounts disclosed in the explanatory notes to the financial statements relating to contingent assets and liabilities. The estimates and assumptions used are those deemed by managementto be the most pertinentand accuratein view of the Group’s circumstances andpast experience. Giventhe uncertainty inherentin any projections,actualresultsmay differ frominitialestimates. For the preparation of the 2019 consolidated annual financial statements, special attention waspaidto thefollowingitems: The recoverable amount of goodwill, intangible assets and n property, plant and equipment (see Note 8.3), as well as the recoverableamountof investmentsin companiesaccountingfor underthe equitymethod (seeNote 11.5); Recognition of development expenditures as assets (see n Note 5.3); Provisions (particularly restructuring provisions, pensions, n warrantyprovisionsfor new cars as well as claimsand litigation) (seeNote 5.4, Note 7.1 andNote 10); Salesincentives(seeNote 5.1.A.(1).(a)); n Residualvalues of vehiclessold with buybackcommitment(see n Note 8.2.DandNote 9.2); Deferred tax assets (seeNote 14); n For the preparationof the 2017 annualfinancialstatements,special attentionwas also paid to the fair value of the assetsacquiredand liabilitiesassumedin the courseof a businesscombinationrelating to the acquisition of the Opel Vauxhall operations. All significant intragroup transactionsand internal margins are eliminated inconsolidation. TheGroupattributesthe profitor loss of a subsidiarybetweenthe Ownersof the parentandNon controllinginterestsbasedon their respective ownership interests. As a result, if there is no agreementcommittingthe parent to absorbingthe losses of the subsidiary, Non controlling interests may be negative. Changes in scopeof consolidationresulting (2) in exclusive control Business combinations occurring after 1 January 2010 are accountedfor using the acquisitionmethod, in accordancewith IFRS 3 – Business Combinations . The identifiable assets acquired and liabilities and contingent liabilities assumed are measured at acquisition-datefair value, provided that they meet the accounting criteria of IFRS 3 (Revised). The residual goodwill represents anticipated post-acquisitioncash flows due to synergies in addition to the assets and liabilities recognised on initial consolidation. Acquisition-related costsare recognisedas expensesin the period in which the costs are incurred.

€(96) million on adjustedoperating income (loss); n +€79 million innetfinancial income (expense); n €(19) million in net profitor loss. n

SCOPE OF CONSOLIDATION

NOTE 3

ACCOUNTING POLICIES 3.1. Consolidation policies A. Consolidation methods (1) The genericnameGroupePSA refers to the Groupof companies of whichPeugeot S.A. is theparent. The financialstatementsof PeugeotS.A. and companiesin which PeugeotS.A. directlyor indirectlyexercisesexclusivecontrol are fully consolidated. Companiesin whichPeugeotS.A. directlyor indirectlyexercisesa significant influence are included in the consolidated financial statements using the equity method. Under IFRS 11,with respectto its interestsin joint operations,the Grouprecognizes its assetsand its shareof the assetsheld jointly, its liabilities and its share of the liabilities incurred jointly, its revenuesand expensesarisingfrom its transactionswith the joint operationsincludingits share of the revenueand expensesof the joint operationsincurredjointly.Jointarrangements that qualifyas joint venturesbecausethe partieshave rightsto the net assetsof thearrangementare accounted for using theequity method. The securitiesof companiesfulfillingthe consolidationcriteriaand which are not consolidatedfor materialityor feasibility reasons would not have had a significant impact on the consolidated financialstatementsas a whole.Thesesecuritiesare registeredas equity securities in accordance with the general principles described inNote 12.7.

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT