PSA - 2019 Universal Registration Document

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

CURRENT AND NON-CURRENT PROVISIONS NOTE 10

Accounting Policies In accordancewith IAS 37 – Provisions,ContingentLiabilities and ContingentAssets , a provisionis recognisedwhen, at the statementof financial position date, the Group has a present obligation towards a third party, and it is probable that an outflow of resources embodying economic benefits will be requiredto settlethe obligation,andno inflowof resourcesof an equivalentamountis expected.Provisionsfor restructuringcosts are recognisedonly whenthe restructuringhas been announced and the Group has drawn up or has started to implementa detailed formal plan. In applicationof IFRIC– 21 Levieschargedby publicauthorities , taxesleviedby publicauthoritiesare recognisedas of the dateof their tax generating event.

Provisionsare discountedonlywhenthe effectis material.In this case,the discount rate is based ona risk-free rate. Warranties Under IFRS 15, as previously, when warranties provided to customersare designedto cover defectsin the vehiclessold, a provisionis recordedto coverthe estimatedcost of vehicleand spare part warrantiesat the time of sale to independentdealer networks orend-customers.

Change in scope of conso- lidation and other

Recognised in equity during the period

Releases (unused provisions)

31 December

Releases (utilisations)

31 December 2019

2018 Additions

(in million euros)

Pensions (Note 7.1)

1,183

212

(144)

(87)

53

(50)

1,167

Other employee benefit obligations and others TOTAL NON-CURRENT PROVISIONS

209

34

(31)

(8)

-

(26) (76)

178

1,392 1,563

246 705

(175) (743)

(95) (130)

53

1,345

Warranties

-

24

1,419

Commercial and tax claims and litigations

773

148

(224) (663)

(176) (53)

- -

421

942

Restructuring plans (1)

1,373 1,076

29

1,762

Long-term and operating contract losses

504 852

324

(392)

(22) (118)

- - -

(141)

273 545

Others

118

(81)

(226)

TOTAL CURRENT PROVISIONS

5,065 2,371

(2,103)

(499)

107

4,941

The main additions for restructuring plans in 2019 are discussed in Note 5.4 (1)

The provision forwarranties mainly concerns sales of new vehicles,where the contractual obligations generally covertwo years. It correspondsto the expectedcost of warrantyclaimsrelatedto vehiclesand replacementparts. The amountexpectedto be recovered fromsuppliers isrecognisedas an asset,under“Miscellaneous othereceivables” (Note 6.3.A). Provisions for tax claims concern a numberof claims onoperating taxes primarily outside France notably inBrazil.

EQUITY METHOD INVESTMENTS

NOTE 11

The share in earnings of equity method investmentsrepresentsthe Group’s share of the earnings of those companies,plus any impairment of equity methodinvestments. Gains on disposals of equity method investments are recordedin operating income.

Equity method investments include: joint venturesin the automotiveactivitieswith DongFengMotor n Group(seeNote 11.4.A)andChangan,located inChina; finance companies in partnershipwith: n Santander Consumer Finance covering the financing of the n Peugeot, Citroën and DS brands’ operationsin the following countries: France, the United-Kingdom, Malta, Spain, Switzerland,Italy, the Netherlands,Belgium,Germany,Austria, Brazil andPoland (seeNote 11.4.B);

BNP Paribas coveringthe financingof the Opel and Vauxhall n brands’operationsin the followingcountries:Germany,France, the Netherlands,the United-Kingdom, SwedenandSwitzerland (seeNote 11.4.C); as well as the joint companywith DongfengMotor Group in n China; the companiesover which the Group has significantinfluence, n mainlyGEFCO.

211

PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT