PSA - 2019 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 Supervisory Board’s report: comments by the Supervisory Board on the Managing Board’s report and on the financial statements of the perio

SUPERVISORY BOARD’S REPORT: 5.7. COMMENTS BY THE SUPERVISORY BOARD ON THE MANAGING BOARD’S REPORT AND ON THE FINANCIAL STATEMENTS OF THE PERIOD The Group sold 3.5 millionvehicles worldwideand maintainedits registrationsin Europeachievinga marketshare of 16.8% in a slightly increasing market (+1.3%),whilst respecting strict discipline to meetits CO 2 emissionstargets. Groupe PSAachievedsolid resultsin 2019, boastingan adjustedoperatingmarginof 8.5% for the Groupat €6.3 billion,and 8.5% for theAutomotivedivision,up 0.9 percentage pointson 2018at €5 billion.Profit(loss)for theperiodattributableto ownersof theparent hit a newhigh at €3.2 billion.The PACE! plan target(6% adjustedoperatingmarginin 2026)was met with a 6.5%adjustedoperating margin for Opel Vauxhall from 2019. The Group’s free cash flow stood at €2.7 billionincludingthe acquisitionof Clarion, and at €3.2 billion for the Automotive division. 2019was a consolidationyearfor Peugeot . The brandoverhauled its segment Bproductsto helpgrowthin 2020.The newelectricrange, led by the Peugeote-208ande-2008and the plug-inhybridversionsof the Peugeot3008Hybridand508Hybrid(sedanandSW),is now availableand boastsCO 2 emissionsthat are amongthe lowest on the market.Of the 12 best-sellingbrands in Europe, Citroëngrew the most and its marketshareincreasedin themaincountriesled, in particular,by theC5 AircrossSUV. Salesof theDS rangeof vehicleswere up sharply, aboveall in the secondhalfwhensaleswereup 56%,drivenby the successof thenewrange,particularly in FrancewiththeDS7 Crossbackand theDS3 Crossback, and thedevelopmentof the exclusiveDS networkwhich now has356 points of sale. Thanks to the systematic implementationof the “Core Model Strategy”, Opel/Vauxhall has made progress towards achieving its ambitiousCO 2 emissionstargets . The Grandland Xand Crossland XSUVspostedimpressivesalesgrowth(up 29%and 28% respectively), as did the LCVmodels(up 20%). To deal withthe difficulties the company faces in China,a recovery plan was decidedby the two partnersDongfeng andPSA. Groupe PSAcontinuesto roll out measureson CSR issuesrelatingto CO 2 emissionsfromvehicles,energy/industrial carbonfootprintand environmentalperformanceof the supply chain, in recognitionof the EuropeanCommission’sdecision to cut CO 2 emissionsby 37.5% between2020 and2030, primarily through specificgovernance led by a monthly CO 2 Committee. Groupe PSAhas already introduced 10 newplug-in hybrid or fully electricmodels, in keepingwith its target of making all its vehicles electricstartingin 2025and half of themelectricby the end of 2021,with 13 additionalmodels.Since2019,all newmodelslaunchedby the Groupare availablein a plug-inhybridor fully electricversion.Ordersof low-emissionvehiclesare promisingand in line with the Group’s objective tomeetthe requirements of the 2020 European standardson CO 2 emissionsas soon asthey take effect. Groupe PSA’s CSR performance is alreadywell knowninternationally.The Grouphas been hailedas an industryleaderin the Dow Jones SustainabilityIndex for the third year running and by the rating agency Vigeo. It is also present in SRI indexes such as STOXX and FTSE4Good,andwas featuredonceagainthis yearon theA-Listof the CarbonDisclosureProject,in whichit has beeninvolvedsince2016. Groupe PSA’sCO 2 emissionreductiontargetshavebeenscientificallycertifiedby SBTi1as complyingwith the reductionsrequiredto meet the targetsset by the Paris ClimateAgreement, i.e. to limit globalwarningto 2°C abovepre-industrialevels.Last December,Groupe PSA was at the top of WBA2’s “Climate and Energy Benchmark”,which ranks car manufacturerson their propensityto actively promote low-emission vehicles andto invest innew technologies. Basedon criteriaassessingthe Group’scompetitiveness,geographicaldiversification,profitabilityand liquidity,Moody’sInvestorsService raised PeugeotS.A.’s creditrating to Baa3/Stable on 28 March2019, andFitch andS&P kepttheir rating atBBB-/Stable. With regardto changesin the membershipof the SupervisoryBoard,on the recommendation of the shareholder,DongfengMotorGroup Company Ltd,the PeugeotS.A. SupervisoryBoard decidedto co-opt You Zheng as a memberof the SupervisoryBoard to replaceAn Tiecheng,who steppeddown,and appointedYou Zhengas a memberof the StrategicCommitteeand the Financeand AuditCommittee andas Chair of theAsia BusinessDevelopment Committee. 2019 was also an historic year for the SupervisoryBoard and the ManagingBoard with the construction,negotiationand signing of a binding agreement betweenPeugeot S.A.and FiatChrysler Automobiles N.V. witha viewto entering into a 50/50 merger. This new entity will be the fourth largest car manufacturerin the world by volume and the third largest by revenueand will be a key industryplayer,with the management,the know-how,the resourcesand the size to enableit to seize all the opportunitiesofferedby the new ageof sustainablemobility. The newentitywill recordannualsales of 8.7 millionvehicles,a consolidatedrevenueof almost€170 billion,an adjustedoperatingincome of over €11 billion,and an operatingmarginof 6.6%, based on 2018 aggregatedresults. This healthyconsolidatedstatementof financial positionoffers the new entity financialflexibilityand plenty of room for manoeuvre,both in terms of implementingstrategicplans and long-term investment in newtechnologies in the fieldsof electrification, sustainable mobility, autonomouscarsandconnectivity.

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT