PSA_GROUP_REGISTRATION_DOCUMENT_2017
CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2017 Notes to the consolidated financial Statements at December 2017
Leased vehicles C. Leased vehicles totaling an amount of €3,299 million at year-end include vehicles leased under short-term leases to retail customers by the Group’s companies and vehicles sold with a buyback commitment, which are recognised according to the method described in Note 5.1.A.(1)(a).
ASSET IMPAIRMENT 8.3.
Impairment test on the CGU and individual B. assets of the Peugeot Citroën DS and Opel Vauxhall Automotive segments The projections used to determine future cash flows for the purposes of impairment testing of CGUs and individual assets in the Peugeot Citroën DS Automotive segment were updated in December 2017. These projections are taken from the last medium-term plan presented to the Supervisory Board, which covers 2018-2022 (MTP) and take into account the main risks pertaining to this plan. The automotive market forecasts used are the Group’s most recent estimates, which are based on external forecasts. Vehicle CGUs The Vehicle CGU tests are taken from cash flow projections for each vehicle model showing indications of impairment. These flows are projected out over the estimated life cycle of the vehicle model and of the corresponding spare parts. The flows are discounted using an after-tax rate of 9.5%. At 31 December 2017, the tests on the assets dedicated to the Vehicle CGUs in the Peugeot Citroën DS Automotive and Opel Vauxhall Automotive segments did not identify any impairment. Individual assets Specific tests performed on the Latin American plants and the Russian plant were updated on the basis of the 2018-2022 MTP. The discount rates used were 16.5% for the Latin American plants and 13% for the Russian plant. These tests identified an additional annual impairment charge of €17 million related to capital expenditure during the year in Russia. It was recognised under non-recurring operating income. As of 31 December 2017, taking into account impairment recognised previously, total impairment charges for the Latin American and Russian plants totalled €378 million. The research and development individual assets held by the fully consolidated companies of the Peugeot Citroën DS Automotive segment and dedicated to the Chinese activities have been impaired ion the amount of €78 million. Peugeot Citroën DS and Opel Vauxhall Automotive CGUs The profitability assumed for the purposes of determining the terminal value is consistent with the historical performance of the Peugeot Citroën DS Automotive business. The after-tax discount rate applied was 9.5% for 2018-2022 and 10.5% for the terminal value based on a perpetual growth rate of 1%. These rates are unchanged compared with those used for the periods ended 31 December 2016, to test the assets of the Peugeot Citroën DS Automotive CGU. As of 31 December 2017, taking into account impairment recognised previously, net impairment charges of the Peugeot Citroën DS Automotive CGU totalled €604 million.
Accounting policies A. In accordance with IAS 36 “Impairment of Assets ”, the recoverable amount of property, plant and equipment and intangible assets is tested whenever there are indications of impairment and at least once a year for assets with indefinite useful lives, which is primarily goodwill and brands. Indications of impairment are in particular a significant fall in volumes, deteriorating profitability, technological or regulatory developments that adversely impact the business. The recoverable amount of an asset is the higher of its value in use and its fair value less costs to sell. The impairment test usually consists of estimating the asset’s value in use. Value in use is usually measured as the net present value of estimated future cash flows. For the purposes of impairment testing, the recoverable amount is determined for a cash-generating unit (CGU) to which the assets belong, except where the recoverable amount of the individual asset can be determined. CGUs are defined as the smallest identifiable Group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. If a CGU’s recoverable amount is less than its carrying amount, an impairment loss is recognised in profit or loss and, to the extent possible, as an adjustment to the carrying amount of any goodwill allocated to the CGU. The two Peugeot Citroën DS and Opel Vauxhall Automotive segments comprise a number of Vehicle CGUs, each corresponding to a vehicle model. The assets included in a Vehicle CGU consist of tooling and other specific plant and equipment used to manufacture the model, as well as capitalised model development expenditure (see Note 5.3.A.(1)). The assets belonging to the vehicule CGUs and all the other assets are combined and tested together at a higher CGU level, respectively, Peugeot Citroën DS and Opel Vauxhall Automotive CGUs. The Opel Vauxhall goodwill and both brands are allocated to Opel Vauxhall Automotive CGU. In terms of individual assets, where there are indications of impairment the Group does impairment tests on the plants (including property, plant and equipment and intangible assets) in Latin America and Russia. Moreover, the Group may do impairment tests on assets dedicated to specific contracts (in particular cooperation agreements or agreements with joint-ventures) or assets dedicated to a single technology. In the Automotive Equipment segment, each CGU corresponds to a programme and comprises all customer contract-related intangible assets and property, plant and equipment. These CGUs are combined in Business Units (Automotive Seating, Interior Systems and Clean Mobility) to which support assets and goodwill are allocated. The Automotive Equipment segment CGU comprises the assets of the CGUs in the above four Business Units and the Faurecia goodwill recognised in the PSA Group’s consolidated financial statements.
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GROUPE PSA - 2017 REGISTRATION DOCUMENT
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