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Management’s discussion and analysis
worth of gains on the sale of marketable
securities. These gains were partly offset by
a €104 million loss on the buyback of
2,380,632 convertible debentures issued
in 1994. After taking into account the
reversal of reserves for debenture redemption
premiums, the net loss was €104 million.
4.5. Incomes taxes on income of fullyconsolidated
companies
Income taxes on income of fully-consolidated
companies are presented by combining
the tax due by both the manufacturing
and sales companies and the finance
companies. The reason for this is that the
tax group set up in application of French
group relief rules comprises companies
from all of the Group’s businesses in France,
i.e. the Automobile Division, Finance,
Transportation and Logistics and “Other”
businesses. The tax charge breaks down
as follows:
Income taxes on income of fully-consolidated
companies amounted to €777 million,
representing 29.6% of pre-tax income of
€2,625 million. In 2001, the tax charge
was €835 million representing 31.5% of
pre-tax income of fully-consolidated
companies of €2,647 million. The lower
effective rate of tax in 2002 reflects the
reduction in the French statutory tax rate
and an increase in income taxed at
reduced rates relative to total taxable income.
Income taxes in 2000 amounted to
€713 million, representing 32.2% of pretax
income of fully-consolidated companies
of €2,216 million.
4.6. Net earnings of companies at equity
In 2002, net earnings of companies at
equity came to €22 million, versus
€9 million in 2001 and €19 million in
2000. Companies at equity primarily consist
of entities set up to manage cooperation
agreements between PSA Peugeot Citroën
and other carmakers. These include the joint
venture with Renault for the manufacture
of engines and transmissions, and with Fiat
for the manufacture of light commercial
vehicles and multi-purpose vehicles. The
2002 figure also includes Toyota Peugeot
Citroën Automobiles (TPCA). This project is
still in the start-up phase and the impact on
Group earnings for 2002 was not material.
The joint venture has been set up to
manufacture entry-level Toyota, Peugeot and
Citroën vehicles based on a common platform.
Production is scheduled to begin in 2005.
The Chinese joint venture, DCAC, was also
accounted for by the equity method for the
first time in 2002, based on the Group’s 27%
interest. DCAC contributed €10 million to
Group income for the year. In order to ensure
that accounting data restated in accordance
(in millions of euros) 2002 2001 2000
Manufacturing and sales companies 666 750 601
Finance companies 111 85 112
Total PSA Peugeot Citroën 777 835 713
with Group accounting policies are reliable,
DCAC is accounted for by the equity method
based on accounts closed at September 30.
The company’s contribution to 2002 income
therefore corresponds to its results for the
period October 2001 to September 2002.
Sales for this period totaled €976 million, an
increase of 30% on the previous twelve
month period. Operating margin came to
€119 million, representing 12.2% of sales.
This high margin rate is attributable to last
year’s strong business growth, the success of
the models sold by DCAC in the local market
and the reduction in the joint venture’s
production costs. DCAC incurred interest
expense of €42 million and net exchange
losses of €7 million. After deducting income
tax of €32 million, the company’s net income
for the period came to €38 million.
In the last three months of calendar 2002,
DCAC enjoyed a further rise in sales.
Selling prices remained stable, driving a
further improvement in operating margin.
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PSA PEUGEOT CITROËN - MANAGING BOARD REPORT