PSA - 2019 Universal Registration Document

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

Covenants None of the borrowingsof the manufacturingand sales companies excludingFaureciais subjectto specificaccelerationclausesbased on minimum credit ratings. In some cases, the borrowings of manufacturingand sales companiesare subjectto clauseswhereby the borrower gives the lenders certain guarantees that are commonly required within the automotive industry. They include: Negativepledgeclauseswherebythe borrowerundertakesnot to n grant any collateral to any third parties. These clauses nevertheless carry certain exceptions; “materialadversechanges”clauses,whichapplyin the eventof a n majornegative change in economic conditions; ”pari passu”clauses,whichensurethat lendersenjoy at least the n same treatment as othercreditors; ”cross-default”clauses, whereby if one loan goes into default n otherloansbecomerepayable immediately; clauses whereby the borrower undertakes to provide regular n information to the lenders; clauses whereby the borrower undertakes to comply with n applicablelegislation; change ofcontrol clauses. n

In addition, the European Investment Bank (EIB) loans are dependent on the Groupcarryingout theprojects being financed. All of these clauseswere complied with in 2019. ShouldPeugeotS.A. lose its “InvestmentGrade”rating,the drawing of the €3 billionsyndicatedcredit facility establishedin April 2014 andamendedin May 2018will be subject to compliance with: a level of net debt of manufacturingand sales companiesof less n than of €6 billion; a ratio of the net debt of manufacturingand sales companiesto n consolidatedequity ofless than 1. The €1,200 million syndicated line of credit arranged on 15 December 2014 by Faurecia and amended in June 2018, comprisingonly one €1,200 milliontranche expiring in June 2024, contains only one covenantsetting limits ondebt.

Net Debt(1)/EBITDA(2)

maximum

2.79 (3)

Consolidated net debt. (1) EBITDA Faurecia’s Earnings Before Interest, Tax, Depreciation and Amortisation for the last 12 months. (2) In 2019, the ratio was adjusted to take into account the application of IFRS 16 (Leases). It was 2,50 in 2018. (3)

The compliancewith this ratio is a conditionto the availabilityof this credit facility.As of 31 December2019, Faureciacompliedwith this ratio. Interest rate risks (2) Trade receivablesand payablesare due within one year and their value isnotaffected bythe level of interestrates.

The methodologyused consistsof comprehensiveand systematic hedging of interest rate risk as soon as it is identifiedby using, whereappropriate,appropriatefinancialinstrumentsto ensurethat the interest rate structurematches assets and liabilities.All these transactionsare qualifiedas hedgesunderaccountingstandards.In 2019, theGrouphedged theSchuldschein borrow. Faureciaindependentlymanageshedgingof interestrate risks on a centralised basis. Such management is implemented through Faurecia’sFinance and TreasuryDepartment,which reports to its executivemanagement.Hedgingdecisionsare made by a Market RiskCommitteethatmeetson a monthlybasis.A significantpart of the gross borrowings(syndicatedcredit facilityfor the drawnpart, short-term loans and commercial paper as applicable) are at variablerates.The aimof the FaureciaGroup’sinterestratehedging policy is to reduce the impact of changes in short-termrates on earnings.The hedgesarrangedcomprisemainlyeuro-denominated interestrate swaps. Some of Faurecia’sderivativeinstrumentshave qualifiedfor hedge accounting under IFRS 9 since 2008. The other derivative instrumentspurchasedby Faureciarepresenteconomichedgesof interest rate risks on borrowingsbut do not meet the criteria in IFRS 9for the application of hedgeaccounting. Faureciais the only entity that holds cash flow hedgesof interest rate risks.

Cashreservesand short-termfinancingneedsof manufacturingand sales companies- excludingAutomotiveEquipmentcompanies- are mainly centralisedat the level of GIE PSA Trésorerie, which investsnet cashreserveson the financialmarkets.Theseshort-term instrumentsare indexed to variableratesor at fixedrates. The mid/long-termgross borrowingsof manufacturingand sales companies- excludingAutomotiveEquipmentcompanies- consist mainly of fixed-rate long-term loans. The proportion of the manufacturing and sales companies’ borrowings - excluding AutomotiveEquipmentcompanies- at variablerates of interestis now lessthan1%, based on theprincipalborrowed. The PSA Group’sinterestrate risk managementpolicy is designed to neutralize the impact of interest rate fluctuationson adjusted operatingincome.It is part of GroupePSAoverallriskmanagement policy. The ManagementBoard defines the governancerules. The TreasuryandForeignExchangeCommittee,chairedmonthlyby the CFO, takes the decisions.PSA International(PSAI)implementsand follows upthehedging.

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT