PSA - 2019 Universal Registration Document

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

Impactof fair valuehedges (b)

2019

2018

2017

(in million euros)

Change in ineffective portion recognised in profit or loss

(65) (65)

112 112

(23) (23)

NET IMPACT ON INCOME

The “Net gain (loss) on hedgesof borrowings”presentedin Note 12.2.Aalso includesgains and losses on economichedgesthat do not qualifyfor hedgeaccountingunderIFRS 9.

FINANCIAL INSTRUMENTS 12.7.

Financial assetsand liabilities - definitions A. Financialassetsand liabilitieswithinthemeaningof IFRS 9include the items listed in thetable inNote 12.7.E. The event generating the statement of financial position recognitionis the transaction(i.e. commitment)date, and not the settlement date. Translation oftransactions in foreign B. currencies In compliancewith IAS 21, transactionsin foreign currenciesare translated into the subsidiary’s functional currency at the exchange rate on the transaction date. At each statement of financial position date, monetary items are translated at the closing rate and the resulting exchange rate difference is recognised inprofitor loss,as follows: in operatingincome,for commercialtransactionscarriedout by n all Groupcompaniesand for financingtransactionscarriedout by the BanquePSAFinance Group; in interest income or finance costs for financial transactions n carried outby the manufacturing and sales companies. Recognition andmeasurement of financial C. assets TheGroupusestwoaccountingcategoriesthatare providedfor in IFRS 9. The classificationof a financial asset depends on the characteristicsof its contractualcash flows and the management methods defined by the Company. Financial assets as“at amortised cost” (1) The financial assets are classifiedas “at amortisedcost” if their contractualcash flows only representpaymentsof principaland interest,and if they are held for the purposeof collectingthese contractualcash flows. They are recognisedat amortised cost calculated using the effective interest method. When their maturities are very short, their fair value correspondsto their carryingamount, includingany impairment.In practice,they are receivables that constitute theworking capital requirement. The assetsclassifiedas loans and receivablesaccordingto IAS 39 continueto be classifiedas “at amortisedcost”,and fromnowon, moneymarketsecuritiesclassifiedas cashequivalents,or financial investmentsintendedto be held until maturity,are also classified as “at amortised cost”.

Measurement of trade receivables Followingapplicationof IFRS 9,provisionsfor impairmentare now made for trade receivables on initial recognition,based on an assessmentof expectedcredit lossesat maturity.The impairment is then reviewedaccordingto the greaterrisk of non-recovery, if applicable. Indications of impairment include the existence of unresolvedclaimsor litigation,the age of the receivablesand the borrower’s significant financial difficulties. IFRS 9 is unchanged compared with IAS 39 in terms of the derecognition of receivables. Financial assets as“at fair valuethrough profit (2) or loss” Assetsthatdo not fit the definitionandmanagementobjectivesof the first categoryare classifiedas “at fair value throughprofit or loss”.Theyare recognisedin the statementof financialpositionat fair value. Any changein their fair value is recognisedin profit or lossfor the period. “Equity investments” that were classified as “assets available-for-sale” accordingto IAS39are nowclassifiedas “at fair value through profit or loss”, without material impact for the Group.Theirinitialfair valuecorresponds to their acquisition cost. “Othernon-currentassets”correspondto units in Fonds d’Avenir Automobile (FAA). FAA is a fund to support automotive equipment manufacturersset up at the French government’s initiative under France’s Automotive Industry Pact signed on 9 February 2009. The FAA units were classified as “assets available-for-sale”accordingto IAS 39 and are now classifiedas “at fair value through profit or loss”, which brought about a reclassification in reservesof amountsclassifiedin “otheramounts of comprehensive income(loss)”at the date of the transition.The units are measured at fair value. This correspondsto their net assetvalue at thestatement of financial position date. Recognition andmeasurement of financial D. liabilities IFRS 9 has not introduced changes to the evaluation and recognition ofinancial liabilities. Borrowingsand other financial liabilities are generally stated at amortised cost measured using the effective interest me hod. When the Group obtains government loans at below-market interest rates, the loans’ amortisedcost is calculatedthroughan effective interest rate based on market rates. The subsidy is recognised in accordancewithIAS 20as relatedeitherto assetsor to income, dependingon the purpose for which the funds are used.

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT