PSA - 2019 Universal Registration Document

GROUPE PSA Risk factors DPEF.B

analysisof changesin the main consolidatedstatementof income, balancesheetandcashflowstatementitemsis communicated each monthto ExecutiveManagement. The reliabilityof datareportedby the subsidiaries is verifiedby their own managementcontrolteams,the division-levelAccountingand Finance Departments and the GroupConsolidationDepartment. The subsidiaries’ financial statements are reported via the SAP Business Objects Financial Consolidationsystem, which has been set up at all consolidatedsubsidiariesto guaranteedata security and traceability.However,Faureciahas its own consolidationtool and is in thisregard outside the purview of Groupe PSA. Off-balancesheet commitmentsare identifiedwithin each Group company and reported to theConsolidationDepartment. Assetcontrolproceduresare basedon annualinventoriesof goods held by the Group as well as inventoriesof property, plant and equipmentheld at Groupsites,basedon cyclecountswhichensure

that each asset is counted, in general, at least once every three years.The inventoriesare governedby strictproceduresconcerning segregationof tasks and count controlsto ensure that the results are reliable. Investmentand financing strategies and strategies for evaluating counterpartyrisks arising from financial market transactionsare approved by the Finance Department. The Financial CommunicationsDepartment,which reports to the FinanceDepartment,is responsiblefor relationswith investorsand the financialmarkets authorities.It coordinatesthe work done by the various Group entities on preparing the annual Registration Documentand ensures that the timetablefor its preparationand publicationis met, in conjunctionwith the StatutoryAuditors.The ManagementControlDepartment is responsiblefor drawingup and presenting summary data used to analyse results and provide forecasts.

Tasks underlying the preparation of the Report on internal 1.4.6. control

Thisreport wasbasedon the following main procedures: identifyingall existingpracticeswithinthe Groupoperatingunits n and departmentsconcerningrisk analysisprocedures,conductof andregular updates to the procedures and analyses; verifying that Group internal control proceduresand processes n comply with the general principles of the AMF’s Reference Framework forRisk Management and Internal Control Systems;

obtainingassuranceat the levelof theFinanceDepartment– with n input from the accounting, consolidation, financial communications andmanagementcontrolteams– thatprocesses for the preparationand approval of the consolidatedfinancial statementsfulfil the quality criteriadefinedfor each operational category in the application guide included in the above-mentioned ReferenceFramework. Since the 2018 financialyear, and in accordancewith the roadmap, the Opel and Vauxhallentities have been fully integratedinto the Group’srisk managementscope, thus ensuringthe presentationof consolidated information.

RISK FACTORS  DPEF.B 1.5.

Groupe PSAconducts its activities in an environmentof radical changes for the automotive industry, changes with respect to technology,consumptionpatterns and new competitiveforces in the automotive industry. It is therefore exposed to risks that, if materialised,couldhave a significantadverseeffecton its business, financial position, results or outlook and that are specific to the Group’s operations. The various operatingunits of the Group identifyand assess risks and evaluatethe related internal controls on an ongoingbasis, in France and abroad (Faureciahas its own arrangementsfor these activities;for furtherdetailspleasereferto the FaureciaRegistration Document available for consultation on its website www.faurecia.com),and report thereon to the Global Executive Committee and to the Supervisory Board’s Finance and Audit Committee on an annual basis. In addition,the Groupconducteda seriesof interviewswithoutside observers to obtain a realistic and relevant perspectiveas to its abilityto addressthese risks in its environment.

However,otherrisksmayexistor occur,whichare eithernot known to Groupe PSAat the date of this documentor whose realisation has not beendeemedlikelyto havea materialadverseeffecton the Group,its business,financial position, earningsor outlook. For more information on risk management, please refer to Section 1.4,of this Registration Document. This section sets out the main risks identified, grouped into five categories: strategy-related risks; n operationaland industrialrisks; n financial andmarketrisks; n The magnitudeof the risks is assessed in residual value, i.e. after taking into account the impact of risk managementmeasures, accordingto the probabilityof their occurrenceand their negative effectshouldtheymaterialise.Withineachof thesecategories,risks are ranked in decreasingorder of magnitude.Lastly, please note that some of these risks are of a non-financialnature [DPEF.B]* and/or are related to duty of vigilance [DV]* and – given their importance– are also includedin the risk factorsappearingin this section. regulatory, legal andreputational risks; n Risks related to thePSA- FCAMerger. n

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GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT