PSA - 2019 Universal Registration Document

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

Assumptions B.

Euro zone

United-Kingdom

Discount Rate DECEMBER 2019 December 2018 December 2017 Inflation Rate DECEMBER 2019 December 2018 December 2017

1.20% 1.95% 1.60% 1.80% 1.80% 1.80%

2.20% 2.95% 2.60% 3.10% 3.30% 3.20%

At each period-end,the discountrate is determinedbased on the most representativereturns on prime corporatebonds with a life that approximates the durationof the benefitobligation. Prime corporate bonds are defined as bonds that have been awardedone of the top two ratingsby a recognisedratingagency (for example,bonds rated AA or AAA by Moody’sor Standard& Poor’s). Theassumptions regardingfuturesalaryincreasestakeintoaccount inflation and forecast individual pay rises in each country. The assumption for French plans is inflation plus individual pay rise

accordingto the employee’sage. The assumptionfor the United Kingdomplansis inflationplus0.25%.In Germany,the assumption is for inflationplus 2.30%for hourlyemployeesand 2.55%for salaried employees. Mortality,staff turnoverand retirementage assumptionsare based on thespecific economic conditions of eachhostcountry. Sensitivityof assumptions : a 0.25-pointincreaseor decreasein the discountrateand in the inflationrate in France,theUnitedKingdom and Germanywouldlead to the followingincreasesor decreasesin projected benefit obligations:

Discount rate +0,25%

Inflation rate +0,25%

France

-2.90% -3.85% -5.01%

2.07% 3.50% -0.11%

United Kingdom

Germany

A 1-point increaseor decreasein the expectedreturn on external fundswouldhave led to an increaseor decreasein the investment income recognised in 2019 of €8 million for French plans, €26 millionfor the United Kingdomplans and €26 millionfor the German plans. Informationon externalfunds C. The projectedbenefit obligation is partiallycoveredby dedicatedexternalfunds. The breakdown of external funds is as follows:

In 2012, the Group arrangedan interest rate swap for the United Kingdom within the pension fund, making it possible to vary hedgingassetsin responseto changesin the liabilityat the discount rate.

31/12/2019

31/12/2018

31/12/2017

Equities

Bonds

Equities

Bonds

Equities

Bonds

France

21% 10%

79% 90% 95%

22% 10%

78% 90%

19% 12%

81% 88%

United Kingdom

Germany

5%

0% 100%

0% 100%

The fair value of shares and bondswas at level 1 in 2017, 2018 and 2019. In 2019, the actualreturnon externalfundsmanagedby the Group in France, in Germany and by the pension trusts in the United Kingdomwas +11.2% for the French funds, +9.4% for the United Kingdomfundsand +23.6%for the Germanfunds.In France,equity funds consist of MSCI EMU Euro index tracker funds and internationalindex tracker funds, while bond funds are investedin primeEuropeangovernmentbonds(minimuminvestmentgrade),in European corporate bonds rated A or higher and in European inflation-linkedgovernment bonds. In the UnitedKingdom,all the equitiesare investedin globalequity funds. 64% of the bond portfolioare comprisedof inflation-linked governmentbonds denominatedin poundssterling.The remaining 36% are comprised mainlyof corporate bonds rated A or higher.

In Germany,all the equitiesare investedin globalequityfunds.Bond investmentsare 82% in corporatebondswith an averagerating of A-, 9% in EU governmentbonds (minimuminvestmentgrade) and 9% inshort-termmoneymarketinstruments. In France, the Group is free to decide the amount of its contributionsto the externalfunds. No decisionhad beenmade as to the amountof contributions to be paid in 2020. In the UnitedKingdom,the Group’sannual contribution(excluding Faurecia) amounted to £52 million (€62 million) in 2019. It is estimatedat £46 million(€57 million)for 2020, althoughthis sum maychange inlight of thenegotiations planned for 2020. In Germany,the Group’s annual contribution(excludingFaurecia) amounted to€4 million. It is estimatedat €3 million for 2020.

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT