PSA - 2019 Universal Registration Document

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

Staff costs(excluding restructuring costs) Groupstaff costsof the consolidated companies included inthe operating income are as follows:

2019

2018

2017

(in million euros)

Automotive division

(6,531) (3,470)

(6,795) (3,304)

(5,638) (3,177)

Automotive Equipment Division

Finance companies Other businesses

(7)

(6)

(7)

(134)

(137)

(98)

TOTAL

(10,142)

(10,242)

(8,920)

In 2019, the Competitivenessand EmploymentTax Credit (CICE)doesn’tapply anymore.The CICE amountedto €83 millionin 2018 and €103 million in2017,andhadbeen deducted from personnel expenses. Details ofpension costs are disclosed inNote 7. Depreciation expense Depreciation expense includedin operatingincome breaksdownas follows:

2019

2018

2017

(in million euros)

Capitalised development expenditure

(1,182) (180) (746) (1,280) (3,388)

(1,065)

(939) (98) (616)

Other intangible assets

(123) (669) (958)

Specific tooling

Other property, plant and equipment

(1,057) (2,710)

TOTAL

(2,815)

RESEARCH AND DEVELOPMENT EXPENSES 5.3. Accounting policies A. Research and development expenses include the cost of scientific and technical activities, industrial property, and the education and training necessary for the development, production or implementation and marketing of new or substantiallyimprovedmaterials,methods,products,processes, systems or services. Under IAS 38 – Intangible Assets , developmentexpenditureis recognisedas an intangibleasset if the entity candemonstrate inparticular: its intentionto completethe intangibleasset as well as the n availabilityof adequatetechnical,financialandotherresources for thispurpose; that it is probable that the future economic benefits n attributableto the developmentexpenditurewill flow to the entity; that the cost of the assetcanbe measured reliably. n Capitaliseddevelopmentcosts include related borrowingcosts (seeNote 12.2.A). Expenses for the year include research costs, non-capitalised study and developmentcosts under the above criteria,and the depreciationof capitalizeddevelopmentcosts. Automotive segment (1) Development expenditure on vehicles and mechanical sub-assemblies(engines and gearboxes)incurredbetween the project launch (corresponding to the styling decision for vehicles)and the start-upof pre-seriesproductionis recognized in intangibleassets.It is amortisedfrom the start-of-production date over the asset’s useful life, representingup to seven years for vehicles and ten years for mechanicalsub-assembliesand

modules.The capitalisedamountmainlycomprisespayrollcosts of personnel directly assigned to the project, the cost of prototypes and the cost of external services related to the project.No overheadsor indirectcosts related to researchand development activities are included, such as rent, building depreciationandinformationsystem utilisation costs. The capitalisedamount also includes the portion of qualifying development expenditure incurred by the Group under cooperation agreements that is not billedto the partner. Generally,developmentcostsbilledto the Groupby its partners under cooperationagreementsare also capitalised,when they are meetingcapitalisationcriteria. All developmentexpenditure incurred to developmechanicalsub-assembliescompliantwith new emissionsstandardsis monitoredon a project-by-project basisandcapitalised. Automotive Equipment Division (2) Developmentwork is undertakenfor all programmesscovered by specificcustomerorders.Wheredevelopmentcosts are paid in proportionto parts deliveredto the customer,with their full recovery being subject to an unguaranteedminimum level of orders placed by the customer,the costs incurred during the period between the customer’sacceptanceof the commercial offer and the start-of-productiondate of the parts or modules are recognised in intangible assets. The intangible asset is amortised based on the quantity of parts delivered to the customer, provided that accumulated amortisation at each year-enddoesnot representless thanthe amountthatwouldbe recognisedif the asset were amortisedon a straight-line basis overfive years.If the contractincludesa paymentguarantee,the development expenditure is recognized in inventories and work-in-progress.

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT