PSA_GROUP_REGISTRATION_DOCUMENT_2017

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

FINANCIAL INSTRUMENTS 12.8. Financial assets and liabilities - definitions A. Financial assets and liabilities within the meaning of IAS 39 include the items listed in the table in Note 12.8.E. The event generating the balance sheet recognition is the transaction (i.e. commitment) date, and not the settlement date. Translation of transactions in foreign B. currencies In compliance with IAS 21, transactions in foreign currencies are translated into the subsidiary’s functional currency at the exchange rate on the transaction date. At each balance sheet date, monetary items are translated at the closing rate and the resulting exchange difference is recognised in profit or loss, as follows: in recurring operating income, for commercial transactions „ carried out by all Group companies and for financing transactions carried out by the Banque PSA Finance Group; in interest income or finance costs for financial transactions „ carried out by the manufacturing and sales companies. Recognition and measurement of financial C. assets IAS 39 provides for different methods of measurement depending on the nature of the financial assets. Financial Assets at fair Value through (1) Profit or Loss These assets are recognised in the balance sheet at fair value. Any change in their fair value is recognised in profit or loss for the period. Loans and Receivables (2) “Loans and receivables” are carried at amortised cost measured using the effective interest method. When their maturities are very

short, their fair value corresponds to their carrying amount, including any impairment.

Available-for-sale financial assets (3) “Available-for-sale financial assets” are securities that may be held on a lasting basis or sold in the short term. They are recognised in the balance sheet at fair value. Gains and losses arising from remeasurement at fair value are recognised directly in comprehensive income. Only impairment losses reflecting a prolonged or significant decline in fair value are recognised in the income statement of the period. An impairment loss is systematically recognised in profit or loss where the value falls by over 50% compared to the acquisition cost or over a minimum of three years. Furthermore, a special line-by-line analysis is carried out where the value falls over 30% compared to the acquisition cost or within a minimum of 1 year. “Investments in non-consolidated companies” are carried on the balance sheet at their acquisition cost, which the Group considers to be representative of fair value, except in cases of impairment. “Other non-current assets” classified as “available-for-sale” correspond to units in Fonds d’Avenir Automobile (FAA). FAA is a fund to support automotive equipment manufacturers set up at the French government’s initiative under France’s Automotive Industry Pact signed on 9 February 2009. The units are measured at fair value. This corresponds to their net asset value at the balance sheet date. Recognition and measurement of financial D. liabilities Borrowings and other financial liabilities are generally stated at amortised cost measured using the effective interest method. When the Group obtains government loans at below-market interest rates, the loans’ amortised cost is calculated through an effective interest rate based on market rates. The subsidy is recognised in accordance with IAS 20 as related either to assets or to income, depending on the purpose for which the funds are used.

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GROUPE PSA - 2017 REGISTRATION DOCUMENT