2005 REFERENCE DOCUMENT Content Profile. 1 Key Figures . 2 Corporate Governance and Management . 4 1 REPORT OF THE SUPERVISORY BOARD . 5 7 STATISTICS . 123 2 GROWTH STRATEGY . 9 8 CONSOLIDATED FINANCIAL STATEMENTS. 133 Two marques to drive growth . 10 Consolidated Financial Statements. 134 A long-term vision of the future . 10 Notes to the Consolidated Financial Statements . 141 Customer-focused R&D . 11 Consolidated Companies as at December 31, 2005. 212 A commitment to people . 11 Subsidiaries and Affiliates as of December 31, 2005 . 224 Working for sustainable development. 11 Manufacturing efficiency. 12 9 ANNUAL STOCKHOLDER’S MEETING . 227 A focus on profitability . 12 Presentation of the Resolutions . 228 Outlook for 2006. 12 Financial Authorizations in effect . 230 Resolutions . 232 3 CORPORATE GOVERNANCE . 13 The Supervisory Board . 14 10 INVESTOR INFORMATION. 235 The Managing Board and Executive Management . 17 Stockholder Relations . 236 Internal and External Controls. 19 Information about the Company’s Capital. 240 Management and Administration – Stockholder Information . 243 Main functions and directorships held during 2005 . 23 Management and Administration – 11 REPORT OF THE CHAIRMAN OF THE SUPERVISORY Compensation of Corporate Officers and Executives in 2005 . 32 BOARD ON THE PREPARATION AND ORGANIZATION OF SUPERVISORY BOARD MEETINGS AND ON INTERNAL 4 BUSINESS REVIEW. 35 CONTROL . 245 The Automobile Division. 36 Banque PSA Finance . 43 12 STATUTORY AUDITORS’ REPORT . 253 Gefco . 45 Statutory Auditors’ Report on the Consolidated Financial Faurecia . 47 Statements . 254 Other Businesses . 49 Statutory Auditors’ Report prepared in accordance with article L. 225-235 of the French Commercial Code 5 CORPORATE POLICIES . 51 (Code de commerce), on the report prepared by the Chairman of the Board of Directors of Peugeot S.A. Employee Relations Commitment . 52 on the Internal Control procedures relating to the preparation Employee Relations Indicators . 65 and processing of financial and accounting information . 256 Environmental Stewardship . 82 Environmental Indicators – 13 LEGAL AND FINANCIAL INFORMATIONS . 257 Automobile fuel consumption and emissions . 89 Information about Peugeot S.A. 258 Environmental Indicators – Organization at December 31, 2005. 260 Production plant consumption and emissions . 91 Persons responsible for the Reference Document Corporate Social Responsibility . 97 and the Audit of the Accounts. 262 6 MANAGEMENT'S DISCUSSION AND ANALYSIS . 103 The Vice-Presidents Committee. 264 Results . 104 Cross-Reference Table . 266 Group Financing . 111 Return on Capital Employed . 118 Management of Financial and Operational Risks . 119 PSA PEUGEOT CITROËN GROUP 2005 REFERENCE DOCUMENT PSA Peugeot Citroën is a world-class automobile manufacturer, supported by two broadline marques and the expertise of more than 200,000 employees around the globe. It is the second largest carmaker in Europe, with 14.3% of the market in 2005. During the year, the Group sold 3.39 million vehicles in more than 140 countries worldwide, generating net sales of €56.3 billion. PSA Peugeot Citroën also encompasses the Banque PSA Finance group of automotive finance companies, Gefco, a transportation and logistics company, and Faurecia, an automotive equipment manufacturer. This Reference Document was filed with the Autorité des Marchés Financiers (French Financial Markets Authority) on April 24, 2006, in accordance with the provisions of Article 212-13 of the general regulation of the AMF. It may be used in support of any financial transaction if it is supplemented by a prospectus approved by the Autorité des Marchés Financiers. PSA Peugeot Citroën – 2005 reference document 1 KEY FIGURES KEY FIGURES Worldwide sales Sales and revenue (in units) (in millions of euros) 56,105 56,267 3,375,300 3,390,000 10,866 11,196 45,239 45,071 2004 2005 2004 2005 Automobile Division Other businesses Return on capital employed Balance sheet structure (after tax) (in millions of euros) 12.9% 14,406 13,703 7.1% 1,347 381 2004 2005 2004 2005 Stockholder’s equity (including minority interests) Net financial position of the manufacturing and sales companies 2 PSA Peugeot Citroën – 2005 reference document KEY FIGURES Operating margin Net income (in millions of euros) (in millions of euros) 1,646 2,481 1,940 978 1,029 1,024 1,503 916 2004 2005 2004 2005 Automobile Division Other businesses Working capital provided by operations Capital employed and capital expenditure (in millions of euros) (manufacturing and sales companies) (in millions of euros) 4,171 3,689 14,123 12,403 2,793 2,862 5,912 6,271 6,491 7,852 2004 2005 2004 2005 Automobile Division Working capital provided by operations Other businesses Capital expenditure Earnings per share/Dividend Workforce at december 31 (in euros) 6.97 207,600 208,500 68,200 69,000 4.47 139,400 139,500 1.35 1.35 2004 2005 2004 2005 Earnings per share Automobile Division Dividend Other businesses PSA Peugeot Citroën – 2005 reference document 3 CORPORATE GOVERNANCE AND MANAGEMENT CORPORATE GOVERNANCE AND MANAGEMENT Supervisory Board Executive Committee Senior Management Thierry Peugeot Jean-Martin Folz Xavier Fels Chairman Chairman of the Managing Board External Relations Jean Boillot Yann Delabrière Jean-Louis Grégoire Jean-Philippe Peugeot Finance, Control and Performance Executive Staff Vice-Chairmen Gilles Michel Jean-Claude Hanus Pierre Banzet Platforms, Engineering and Purchasing Legal Affairs Jean-Louis Dumas Jean-Marc Nicolle Liliane Lacourt Marc Friedel Strategy and Group Product Planning Corporate Communications Jean-Louis Masurel François Michelin Robert Peugeot Jean-Paul Parayre Innovation and Quality Statutory Auditors Marie-Hélène Roncoroni Frédéric Saint-Geours PricewaterhouseCoopers Audit Ernest-Antoine Seillière Peugeot Marque Joseph F. Toot Jr. Mazars & Guérard Claude Satinet Roland Peugeot Citroën Marque Bertrand Peugeot Auxiliary Auditors Advisors to the Supervisory Board Roland Vardanega Yves Nicolas Manufacturing and Components Patrick de Cambourg Managing Board Jean-Luc Vergne Jean-Martin Folz Employee Relations and Human Resources Chairman of the Managing Board Frédéric Saint-Geours Peugeot Marque As of March 1, 2006 Claude Satinet Citroën Marque 4 PSA Peugeot Citroën – 2005 reference document 01 REPORT OF THE SUPERVISORY BOARD PSA Peugeot Citroën – 2005 reference document 5 01 REPORT OF THE SUPERVISORY BOARD 2005 was a difficult year, when the Group’s results were affected by three factors: more aggressive competition in Europe, higher raw material prices and the cost of compliance with new European Union environmental standards. The two last factors, however, were entirely offset by another significant reduction in production costs. In addition, a fine imposed by the European Commission had to be paid. A total of 3,390,000 vehicles were sold by the Group, representing an increase of 0.4% from 2004. Although sales and revenue edged up slightly to €56.3 billion, operating margin declined 22% to €1,940 million, or 3.4% of sales, compared with 4.4% the year before. Operating margin of the non-automobile divisions – mainly Faurecia, Banque PSA Finance and Gefco – came to €1,024 million, or 53% of the total. Profit attributable to equity holders of the parent contracted by 37% to €1,029 million, representing €4.38 per share. The net financial position of the manufacturing and sales companies, after capital expenditure, ended the year at €381 million due to the adverse impact of adjustments to production and the build-up in inventory. Capital expenditure remained high, at nearly €2.8 billion. Together with Toyota, the Group inaugurated the Kolin factory in the Czech Republic, which is producing the new Peugeot 107 and Citroën C1. The sustained renewal of the two marques’ line-ups was also supported by the launch of the Peugeot 1007 and 407 Coupé and the Citroën C6. For the first time, unit sales outside Western Europe passed the one million mark, rising to 1,029,500 vehicles, or 30.4% of the 2005 total. The situation continued to improve in the Mercosur zone and China where, alongside Citroën, Peugeot made a successful comeback with introduction of the 307 Sedan. In all, unit sales in China expanded by more than 57% in 2005. Despite the decline in earnings in 2005 and the challenging economic environment in early 2006, we agree with the Managing Board’s recommendation to maintain the 2005 dividend unchanged at €1.35 per share. In 2005, Peugeot S.A. bought back company shares in a total amount of €198 million and in November canceled 3.49% of issued capital, under the terms authorized at last year’s Annual Meeting. Today, the company’s issued capital comprises 234,618,266 shares. The Managing Board reported to us regularly during the year about the Group’s performance, and we continued to fulfill our role in accordance with the law and bylaws. The matters examined by the three Committees of the Board are described in the corporate governance section. The November Supervisory Board meeting was held in Sochaux and was preceded by a visit to the local production plant and the Belchamp testing facility. The Board also met with members of the Executive Committee and the Senior Management team, and attended a presentation by Faurecia. The resolutions submitted by the Managing Board to the Stockholders’ Meeting have all been approved or proposed by the Supervisory Board. 6 PSA Peugeot Citroën – 2005 reference document REPORT OF THE SUPERVISORY BOARD 01 The terms of office of François Michelin, Ernest-Antoine Seillière and Joseph Toot all expire at this Annual Meeting. Mr Michelin did not wish to seek another term, but we recommend that Mr Seillière and Mr Toot be re-elected. The Board wishes to thank Mr Michelin for his outstanding contribution all these years. So that we can continue to benefit from his vast knowledge of both the automobile industry and our Group, we will ask him at our next meeting to serve as Advisor to the Board. We also recommend that you elect Jean-Louis Silvant to the Supervisory Board.