PSA - 2019 Universal Registration Document

CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2019 Statutory auditors’ report on the consolidated financial statements

RECOVERABILITY OF THE FRENCHTAXGROUP’S DEFERRED TAX ASSETS

Riskidentified

Ourresponse

As stated in Note 14 to the consolidatedfinancial statements, the Group’sdeferredtax assetson loss carryforwardsamountto M€ 999as at 31 December 2019, includingM€ 821of deferredtax assets on losses within the French tax groupof Peugeot S.A. The tax assetson loss carryforwardsof the tax group in France that may be offset against net deferredtax liabilities(up to a maximum of 50%) are recognized on the balance sheet. In addition,deferred tax assets are recognizedif they have a reasonablechance of being realized given the taxable income projections.Deferredtaxesare testedfor impairmenton the basis of tax projections that are consistentwiththe assumptionsof the Group’sMedium-Term Planandestablishedovertheperiodduring which the Group estimates their recoverability to be probable. Given the significantamountof these assets and the degreeof Management’s judgment inherent in the estimates and assumptions used, we considered the recoverability of the deferred tax assets recognized in respect of the tax loss carryforwards of the taxgroupin Franceas akey audit matter. As statedin Note 11.2to the consolidated financialstatements,as at 31 December 2019, the equity-accounted investmentsrelating to theGroup’sautomotive activitiesarerecognizedon thebalance sheetfor the amountof M€ 195.Theseinvestmentsmainlyinclude the Group’s share in joint ventureswith the Dong Feng Motor Company Group for the activities located in China. The results of the equity-accountedcompanies include the depreciationof assetsresultingfrom impairmenttestsperformed accordingto the sameprinciplesas thoseappliedto testthe fixed assetsof the PSAGroup’sautomotiveactivities.Whenthereis an indicationof impairment,the assetsdedicatedto specificvehicle models are tested, and the total assets (including those not allocatedto a specificvehiclemodel)arealsotestedat thelevelof each joint venture, as stated in Note 8.3.Bto the consolidated financial statements.Furthermore,the PSA Group performsan additionalimpairmenttest at its level whenthere is an indication of impairment. Given the significanceof these equity-accounted investments in theGroup’saccounts,the volatilityof theChinesemarket,andthe degree of judgementthat Managementis required to exercise concerning the assumptions underlying thevaluationof the assets of these companies, we considered the valuation of the equity-accounted investments relatingto theautomotiveactivities as a key auditmatter. Riskidentified

Within the frameworkof our audit of the consolidatedfinancial statements,our work consisted in: for deferred tax assets on loss carryforwards whose > recoverabilityis justified by the existence of deferred tax liabilities, assessing whether the principle of recognition of deferredtax assets for 50% of net deferredtax liabilitieshas beencorrectly applied; for deferred tax assets on loss carryforwards whose > recoverability is justified by taxable income projections, assessing the consistency of the tax projections with the assumptionsof the Group’sMedium-Term Planapprovedby the governance bodies; assessingthe appropriatenessof the disclosuresin Note 14to > the consolidated financial statements.

VALUATION OF EQUITY-ACCOUNTED INVESTMENTS RELATING TO THE AUTOMOTIVE ACTIVITIES

Ourresponse

Within the framework ofur audit of the consolidated financial statements,our work consisted in: analyzingthe existenceof impairmentindicatorswithin these > equity-accounted companies,such as a significantdecreasein volumesanda deterioration in profitability; assessing the consistency and relevance of the main > assumptionsused for the impairmenttests performedon the assetsof the jointventureswiththeDongFengMotorCompany Group,notablyby referenceto theMedium-Term Planapproved by thegovernancebodiesof these joint ventures; assessingthe appropriatenessof the informationdisclosedin > Note 10to the consolidated financial statements.

Specific verifications

We have also performed,in accordancewith professionalstandardsapplicablein France,the specificverificationsrequiredby laws and regulations of Group’s information given in the ManagingBoard’smanagement report. We haveno mattersto reportas to itsfairpresentation and its consistencywiththe consolidated financial statements. We attest that the consolidatednon-financialstatement required by article L. 225-102-1of the French CommercialCode ( Code de commerce ) is included in the Group’s information given in the management report, it being specified that, in accordance with article L. 823-10 of thisCode,we haveverifiedneitherthe fair presentationnor the consistencywiththe consolidated financialstatementsof the information contained therein. This information should be reported on by an independenthird party.

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PSA - GROUPE PSA - 2019 UNIVERSAL REGISTRATION DOCUMENT