PSA_GROUP_REGISTRATION_DOCUMENT_2017
GROUPE PSA Risk Factors
REGULATORY RISKS 1.5.4.3. The nature of the Group’s activities and its international presence make it subject to a set of wide-ranging regulations. In particular, the development of new vehicles and subassemblies also exposes the Group to risks arising from constant changes in European and global regulations, particularly in the areas of safety and the environment. The overall trend is towards increasingly strict regulations. The Group’s activities may be impacted by public authority policy incentives to purchase new vehicles, as well as by unfavourable changes in tax and/or customs regulations in the countries with which the Group trades. These requirements are taken into account as soon as possible in the development of vehicles and subassemblies at the project level and in the marketing of these vehicles. For this purpose, the Group has implemented policies and procedures at the appropriate levels to ensure compliance with these regulations. The Group also participates in permanent dialogue with the national and regional authorities in charge of specific regulations for automotive industry products so as to prevent risks related to regulatory changes. The strengthening of the compliance scheme set out in 2016 and the phased introduction of the global whistleblowing system will also contribute to preventing the occurrence of and limiting regulatory risks. FINANCIAL COVENANTS 1.5.4.4. The purpose of financial covenants is to protect lenders, and their non-compliance generally opens up early repayment or acceleration clauses. Peugeot S.A. and GIE PSA Trésorerie’s €3 billion syndicated revolving credit facility demands a level of the net debt of manufacturing and sales companies of less than €6 billion and a ratio of the net debt of manufacturing and sales companies to Group equity of less than one. As at 31 December 2017, these covenants were complied with. For more details, please refer to Note 12.7.A (1) to the 2017 consolidated financial statements, Section 5.6 below. RISKS RELATED TO PENSION 1.5.4.5. AND OTHER POST-EMPLOYMENT BENEFIT OBLIGATIONS The Group’s employees in certain countries are entitled to supplementary pension benefits under either defined-contribution or defined-benefit plans, as well as lump-sum payments at the time of retirement. The Group’s only obligation under defined contribution plans is to pay fixed contributions into the fund concerned. For its defined benefit plans – which primarily concern France, the United Kingdom and Germany – the Group is required to record a provision corresponding to the long-term pension benefit obligation, which generates employee-benefit related commitments in the consolidated accounts. This directly impacts the Group’s consolidated statement of income. In order to effectively control the Group’s overall pension liabilities, independent actuaries perform valuations every year in each country concerned, and the calculation inputs, including the discount rate applied to future cash flows, inflation rates and demographic assumptions (e.g. the rate of future salary increases, mortality tables and staff turnover, etc.), are regularly reviewed. The Group’s pension funds (allocation of financial assets, underlying strength of the models used, returns, etc.) are monitored by the Finance Department. For more details, please refer to Note 12.7. to the 2017 consolidated financial statements, Section 5.6. below.
RISKS RELATED TO INTELLECTUAL 1.5.4.6. PROPERTY RIGHTS In the course of its business, the Group patents its innovations and grants or receives rights to use patents or other industrial or intellectual property rights, undertaking all of the usual measures to protect them. The Group pays careful attention to protecting its intellectual property rights and legal action is taken against producers of counterfeit spare parts and any other parties that breach the Group’s rights. In 2017, 1,021 new patent applications by Groupe PSA were published in France. For more information on the Group’s patent policy, please refer to Section 4.5.3 below of this Registration Document.
OFF-BALANCE SHEET
1.5.4.7. COMMITMENTS
Please refer to Note 17 to the 2017 consolidated financial statements, Section 5.6 below.
Risk coverage – insurance 1.5.5.
The Group’s Insurance unit has set up worldwide insurance programmes that are placed with companies that have a high insurer financial strength rating, notably for: the property and casualty programme, under three policies providing aggregate cover of €1,500 million, with deductible excess amounts of up to €10 million per claim; the civil liability insurance programme, under three policies providing aggregate cover of €250 million, with a maximum excess of €1,000,000 per claim; the vehicle transportation and storage insurance programme, under two insurance policies of €72 million, with a maximum excess of €300,000 per claim; the fraud programme, under four policies providing cover of €65 million, with a maximum excess of €500,000 per claim. Opel Vauxhall and Opel Bank have been included in the insurance programmes contracted by the Group with effect from 1 August 2017 for the first two, and with effect from 1 November for Opel Bank, for certain programmes on special terms. Some of the lead policies under these programmes are reinsured by SARAL (SA de Réassurance Luxembourgeoise), a wholly owned subsidiary of Peugeot S.A. SARAL is involved exclusively in insuring the Group’s risks, and in particular, risks regarding property and casualty and losses attributable to business interruption (€16 million per claim and per year), automobile liability (€750,000 per claim), risks associated with the transportation of vehicles and their storage on parking lots (€18 million per claim and €36 million per year) and fraud risks (€1.5 million per claim and €3 million per year). Allied to its pro-active approach to risk prevention, which was approved by its partner insurers, the Group’s insurance policy consists of transferring certain high-level risks to the insurance market and retaining low-and average-level risks through deductibles and the captive reinsurance company.
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GROUPE PSA - 2017 REGISTRATION DOCUMENT
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