PSA_GROUP_REGISTRATION_DOCUMENT_2017

CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2017 Notes to the consolidated financial Statements at December 2017

REQUIREMENTS IN WORKING CAPITAL OF MANUFACTURING

NOTE 6

AND SALES COMPANIES

INVENTORIES 6.1.

Inventories are stated at the lower of cost and net realisable value, in accordance with IAS 2 “Inventories” . Cost is determined by the first-in-first-out (FIFO) method and includes all direct and indirect variable production expenses, plus fixed production expenses based on the normal capacity of each production facility. The net realisable value of inventories intended to be sold corresponds to their selling price, as estimated based on market conditions and any relevant external information sources, less the estimated costs necessary to complete the sale (such as variable

direct selling expenses, refurbishment costs not billed to customers for used vehicles and other goods). The Automotive Equipment segment performs development work and manufactures or purchases specific tooling to produce parts or modules for programmes covered by specific customer orders. When the contract includes a payment guarantee, the development costs are recognised in inventories and work-in-progress and the corresponding revenue is recognised when the customer signs off on each technical phase.

31 December 2017

31 December 2016

Gross

Allowance

Net

Gross

Allowance

Net

(in million euros)

Raw materials and supplies

1,272 1,049 1,204 4,289 7,814

(153) (30) (83)

1,119 807 1,019 949

(140)

667 918 801 1,961

Semi-finished products and work-in-progress Goods for resale and used vehicles Finished products and replacement parts

(31)

1,121

911

(110) (146)

(227) 4,062 2,107 (493) 7,321 4,774

TOTAL

(427) 4,347

Of which Opel Vauxhall Automotive segment

2,862

TRADE RECEIVABLES 6.2. A provision for impairment is recorded on the manufacturing and sales companies’ trade receivables if the Group believes that there is a risk that the receivables will not be recovered. Indications of probable impairment include the existence of unresolved claims or litigation, the age of the receivables and the obligor’s significant financial difficulties. In accordance with IAS 39, the Group derecognises receivables for which the contractual rights to receive the cash flows have been transferred along with substantially all of the risks and rewards of ownership. In analysing the transfer of risks, dilution risk is not

included inasmuch as it has been defined and correctly segregated notably from the risk of late payment. Transferred receivables are not derecognised when the default risk is retained by the Group. Costs incurred in transferring a receivable are recognised in financial expense. In segment reporting, this rule also applies to the Peugeot Citroën DS and Opel Vauxhall Automotive segments’ debts transferred to the Group’s finance companies and to the finance companies in partnership.

31 December 2017

31 December 2016

(in million euros)

Trade receivables

2,674 (307) 2,367

1,726 (166) 1,560

Allowances for doubtful accounts

Total - manufacturing and sales companies

Elimination of transactions with the finance companies

(34)

(19)

TOTAL

2,333

1,541

Of which Opel Vauxhall Automotive segment

724

-

Assignments of trade receivables to financial institutions are disclosed in Note 12.6.E.

179

GROUPE PSA - 2017 REGISTRATION DOCUMENT