PSA_GROUP_REGISTRATION_DOCUMENT_2017

GROUPE PSA Risk Factors

RISKS ASSOCIATED WITH 1.5.1.10. THE COOPERATION AGREEMENTS Risk factors

RISKS OF NON-EXECUTION OF 1.5.1.11. THE PACE! STRATEGIC PLAN Risk factors Following the acquisition of Opel Vauxhall on 1 August 2017, Groupe PSA must meet several challenges. Undoubtedly the most ambitious is the recovery of Opel Vauxhall, which nevertheless entails a high risk of failing to carry out the PACE! strategic plan aimed at returning to that business’s fundamentals, and putting its competitiveness and growth on a sustainable footing. The failure of that plan could jeopardise the position of Opel Vauxhall, and hence, of Groupe PSA. Risk management and control processes The PACE! strategic plan presented on 9 November 2017 is based emissions laid down by the European „ Union, which will be met by a complete electrified offer of Opel Vauxhall vehicles in 2024; improved competitiveness, with high synergy gains between PCD „ and OV of €1.1 billion p.a. in 2020 and €1.7 billion p.a. by 2026. These synergy gains will be made possible through efficiency gains and the overall reduction of costs achieved, for example, by controlling general expenses, reducing the number of and pooling production platforms, reducing the manufacturing-plant breakeven while preserving the Germanic “genes” of the Opel brand; a high positioning of the two brands by returning them to growth „ segments such as SUVs, and by improved pricing power while giving preference to quality and services in keeping with customer expectations; lastly, a vigorous drive by Opel Vauxhall to boost its sales growth „ by accelerating the rollout of new models, with a total of 9 launches by 2020, and international development at a pace of 20 new markets by 2022. An Executive Committee common to both PCD and Opel Vauxhall has been set up, meeting monthly to monitor, control and ensure that the performance indicators are duly on track. INFORMATION SYSTEM RISKS 1.5.1.12. Risk factors Risks related to Groupe PSA’s Information Systems, including those embedded in vehicles, stem from targeted attacks or malicious activities, anomalies in the behaviour of participants, failures or disasters. Their consequences would be economic, legal or damaging to the Group’s image. Risk management and control processes A Group Information Systems Security Policy is in force, covering the Automotive and Finance Company Divisions. It is deployed in the operational divisions through governance implemented by the Group Security Department in connection with the IT Department. In order to manage these risks, the Group implements a range of measures that concern both the design features of its Information Systems and their use and maintenance. These measures are focused on the following areas: reinforcing the control of access to sensitive information and „ applications by deploying user-rights reviews governing the use of the Group’s sites by employees and external parties; on four fundamental pillars: the path for reducing CO 2

To speed up its development and bring down engineering and production costs, Groupe PSA has implemented a policy of entering into cooperation agreements with other car manufacturers for both vehicle platforms and subassemblies. In addition, the Group regularly grants manufacturing licences to certain industrial partners. For more information on partnerships, please refer to Section 1.3.1.1.5 above. In the pre-signature negotiation phase for cooperation agreements, there is a risk that the partner concerned could use the information provided to it by the Group. In the negotiation phase, there is a risk that the Group could misjudge contractual risks. Once a cooperation agreement has been signed, the risks faced by the Group are mainly financial, i.e. penalties may be imposed in the event of a breach of take-or-pay clauses for vehicles or subassemblies, or to offset the negative impact on component purchase prices caused by reductions in volumes, or overruns or overestimates in respect of R&D expenditure or investments when the partner is acting as project manager. Whenever a project’s profitability is jeopardised, a provision for onerous contracts and/or an asset impairment loss is recorded in the consolidated financial statements to reflect the future costs that will be incurred. Other risks to which the Group is exposed in relation to its cooperation agreements include the risk of a partner granting licences to a third party without any consideration for the Group or the risk of a partner manufacturing faulty products, which would require Groupe PSA to undertake remedial action and have a negative impact on its products. Regarding the partnership with Dongfeng, the Group believes that strengthened cooperation should generate synergies for the Company. However, these synergies are based on a number of assumptions that may not materialise, including the successful conduct of the next steps in the manufacturing and sales plan defined by the Group and Dongfeng Motor Group Company Limited in the partnership agreement. Risk management and control processes To reduce its risk in negotiating contracts, the Group uses control procedures applied to strategic projects via strict rules in terms of contract management. These procedures lay down the terms of liability, sequencing (mandate and framing, monitoring of negotiations, validation before signature, overseeing contract execution) and approval (Executive Committee, Managing Board). At operational level, the Finance Department and the Programmes and Strategy Department use a process for verifying that the partners involved in cooperation ventures comply with their contractual commitments. Part of this process entails setting up governance bodies for each venture, with a referral procedure for settling any disputes that may arise. The governance bodies allow regular reviews and shared decision-making, notably concerning action plans aimed at rectifying any potential situations of contractual non-compliance and as such mitigating the related risks. In addition, please refer to Note 8.3 to the 2017 consolidated financial statements, Section 5.6 below. Regarding the partnership with Dongfeng, in July 2014 the Group set up an Office of Strategic Partnership which consists of a joint Groupe PSA/Dongfeng team including managers from both companies. This Office of Strategic Partnership, which reports to the Director of the China-Southeast Asia region, is tasked with managing the operations of the partnership and is therefore close to day-to-day activities so as to anticipate risk situations and implement corrective actions.

28

GROUPE PSA - 2017 REGISTRATION DOCUMENT