PSA - 2019 Universal Registration Document

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

WORKING CAPITAL

NOTE 6

INVENTORIES 6.1.

Inventoriesare statedat the lowerof costandnet realisablevalue, in accordance with IAS 2- Inventories . Cost is determined by the first-in-first-out(FIFO) method. It includesall direct and indirectvariableproductionexpenses,plus fixed expensesbasedon the normalcapacityof each production facility. The net realisable value of inventories intended to be sold correspondsto their selling price, as estimatedbased on market conditionsand any relevantexternalinformationsources,less the estimatedcosts necessaryto completethe sale (such as variable

direct selling expenses, refurbishment costs not billed to customers for used vehiclesandothergoods). The AutomotiveEquipmentsegmentperformsdevelopmentwork and manufacturesor purchasesspecifictoolingto produceparts or modulesfor programmescoveredby specificcustomerorders. When the contract includes a payment guarantee, the developmentexpenditureand the costsof toolingsare recognised in inventories and work-in-progress and the corresponding revenue is recognised when the customer signs off on each technical phase.

31/12/2019

31/12/2018

31/12/2017

Gross Allowance 1,548 (196)

Net

Gross Allowance

Net

Gross Allowance

Net

(in million euros)

Raw materials and supplies Semi-finished products and work-in-progress

1,352 1,280 (154)

1,126 1,272 (153)

1,119

1,083 (30) 1,078 (97)

1,053 1,028 (33)

995 1,017 (30) 954 1,204 (83)

987 1,121

Goods for resale and used vehicles Finished products and replacement parts

981

1,016 (62)

3,153 (270) 2,883 3,873 (238) 3,635 4,289 (227) 4,062 6,862 (593) 6,269 7,197 (487) 6,710 7,782 (493) 7,289

TOTAL

TRADE RECEIVABLES 6.2. Followingthe applicationof IFRS 9,a provisionfor expectedcredit losses is recordedon the trade receivablesof manufacturingand sales companies upon their initial recognition, based on an assessmentof expectedcreditlossesat maturity.The provisionis then reviewed according to the increase in the risk of non-recovery, if applicable.Indicationsof a provisionfor expected credit losses include the existence of unresolved claims or litigation,the age of the receivablesand the obligor’ssignificant financial difficulties.

In accordancewith IFRS 9 and with no change with IAS 39, the Groupderecognises receivablesfor whichthe contractualrightsto receive the cash flows have been transferred along with substantiallyall of the risksand rewardsof ownership.In analysing the transferof risks,dilutionrisk is not includedinasmuchas it has been defined and correctlysegregatednotably from the risk of late payment.Transferredreceivablesare not derecognisedwhen the default risk is retained by the Group. Costs incurred in transferringa receivableare recognised in financial expense. In segmentreporting,this rule also appliesto the PeugeotCitroën DS and Opel VauxhallAutomotivesegments’debtstransferredto the Group’s finance companiesand to the finance companiesin partnership.

31/12/2019

31/12/2018

31/12/2017

(in million euros)

Trade receivables

2,837

2,272 (343) 1,929

2,767 (307) 2,460

Allowances for doubtful accounts

(311)

Total - manufacturing and sales companies

2,526

Elimination of transactions with the finance companies TOTAL TRADE RECEIVABLES IN THE STATEMENTS OF FINANCIAL POSITION

(23)

(25)

(34)

2,503

1,904

2,426

Assignmentsof trade receivables to financial institutionsare disclosed in Note 12.5.E.

195

PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT