PSA - 2019 Universal Registration Document

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

FINANCING AND FINANCIAL INSTRUMENTS – FINANCE NOTE 13 COMPANIES

ACCOUNTING POLICIES 13.1. Financial assetsand liabilities - definitions A. The assets and liabilities of finance companiesmainly include loansand receivables,marketablesecuritiesanddebts. Recognition andmeasurement of financial B. assets Financial assets as“at amortised cost” (1) Financial instruments that were classified as loans and receivablesin IAS 39,recognised“at amortisedcost” (financing and leasing receivables),continue to fulfil the conditions for being recognised at amortised cost in IFRS 9. Loans and receivables reported in the statement of financial position correspond to Banque PSA Finance’s net financial commitment to its customers. Interest income is allocated by the effective interest method, with the effective interest rate being the rate that exactly discountsestimatedfuture cash receiptsthroughthe expected life ofthe loan. In general,the outstandingprincipalis hedgedfor interestrate risk. Application of hedge accounting brings about the remeasurement at fair value of the hedged portion of outstandings.Gains and losses arising from remeasurementat fair value are recognisedin profit or loss and are offset by the effectiveportionof the loss or gain arisingfromremeasurement at fairvalue ofthe hedging instrument.(seeNote 12.6.B).

To calculateexpectedlossesunderIFRS 9,BanquePSAFinance uses the calculationmethods of the different risk parameters (data used, portfolio segmentation, individual or collective evaluation, choice of model - including probability of default (PD)at maturity,currentexposureof contractsat themomentof default (EAD) at maturity, etc.), as well as the integrationof prospectivedata:definitionof themacroeconomic scenariosand the methodsof recognition in expectedcredit losses. The transactionsdocumented in hedgeaccountingunderIAS 39 continue to be documentedin hedge accountingin the same way under IFRS 9startingat 1 January 2018. Financial assets as“at fair valuethrough (2) profit orloss” In IFRS 9,marketablesecuritiescontinueto be recognisedat fair value throughprofit or loss if they are hedgedfor interestrate risk. Changes in the fair value of the hedge securities are recognisedin profit or loss, togetherwith the offsettingchange fair value of theeconomic hedges. Equityinvestments in nonconsolidatedcompaniesrecognisedat cost under IAS 39 due to the size of their business not being materialare reclassifiedat fair valuethroughprofitor loss under IFRS 9withoutimpactingthe accountsof BanquePSA Finance at 31 December 2019. Recognition andmeasurement of financial C. liabilities SeeNote 12.7.D.

CURRENT FINANCIAL ASSETS 13.2. Loans and receivables - finance companies A. Analysis (1)

31 December 2019 31 December 2018 31 December 2017

(in million euros)

Total net “Retail, Corporate and Equivalent”

10 75 85

115 64

270

Total net “Corporate Dealers”

61

TOTAL

179

331

Retail,CorporateandEquivalentfinancereceivablesrepresentloans provided by the finance companiesto Peugeot, Citroën and DS customers topurchaseor leasevehicles.

Wholesale finance (Corporate Dealers) receivables represent amountsdue to Peugeot,Citroënand DS by their dealer networks and certain European importers which have been transferredto Group finance companies,and working capital loans providedby the financecompanies to the dealernetworks.

236

PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT