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Group financing
the recognition in the income statement
of €95 million worth of actuarial
differences related to benefit obligations
towards employees less than 59 years of
age under the French defined benefit plan,
as well as by the €35 million amortization
of deferred items at year-end 2001.
External funds used to finance benefit
payments contracted to €1,668 million as
of December 31, 2002 from €2,108 million
at end-2001. The decline was primarily
attributable to the withdrawal of €228
million from these funds to finance part of
the €384 million lump sum payment made
to an insurance company in exchange for
the transfer to this company of the Group’s
entire obligation towards employees less
than 59 years of age under the defined
benefit plan. It also reflected a €160 million
fall in the value of the external funds.
Reserves carried on the balance sheet in
respect of the portion of benefit obligations
not covered by external funds amounted
to €247 million as of December 31, 2002
and €244 million at end-2001.
The Group has no obligation to pay
additional contributions to external funds,
other than in the United Kingdom, apart
from the obligation to pay benefits when
they fall due. In the United Kingdom,
based on the present value of external
funds, the Group may be required by local
regulations to pay a maximum of €70
million in additional contributions in each
of the next three years.
The charge recorded in accordance with
the standards described above amounted
to €130 million, excluding the effect of the
exceptional amortization of deferred items
related to employees in France under 59
years of age. Charges for 2001 and 2000
stood at €90 million and €85 million
respectively. The estimated charge for
2003 is €164 million.
Return on capital employed
1. DEFINITION AND METHODS
Return on capital employed (ROCE) has
been selected as the standard indicator of
the Group’s overall financial performance.
Capital employed includes the value of all
operating assets and liabilities used by the
Group in its business operations. Return
on capital employed is measured on the
basis of income generated by capital
employed, which corresponds mainly to
operating margin plus or minus the other
income and expense items included in the
ROCE calculation.
Pre-tax ROCE corresponds to the ratio of
income generated by capital employed to
total capital employed at December 31 of
each year. The definition and the
calculation of capital employed, income
generated by capital employed and return
on capital employed are presented in note
44 to the consolidated financial statements.
After-tax ROCE is calculated on the basis
of a standard income tax rate of 33 1/3%,
corresponding to the average tax rate
applied to the Group’s recurring results
of operations.
2. CAPITAL EMPLOYED
Capital employed stood at €15,407
million as of December 31, 2002, slightly
down on the end-2001 figure. The
accounting for DCAC had an impact of
€259 million. Based on a comparable
scope of consolidation, capital employed
contracted by 3.2%, reflecting the
Group’s success in containing capital
expenditure, which is increasingly covered
by depreciation of operating assets. The
decrease also reflects tight control over
inventories, which were virtually
unchanged at December 31, 2002
compared with the previous year-end, and
even slightly lower in the case of new
vehicle inventories. Lastly, capital
employed was favorably impacted by the
increase in supplier credit to a more
normal level. This item dropped sharply
at the end of 2001, due to the scaling
down of production in the fourth quarter
(see Group Financing, 3.1 above).
Capital employed amounted to €15,654
million as of December 31, 2001, up
€2,666 million on the end-2000 figure.
The increase stemmed from Faurecia’s
acquisition of Sommer Allibert’s automobile
business, which had capital employed of
€1,986 million at the date of acquisition.
Based on a comparable scope of
consolidation, capital employed rose by
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PSA PEUGEOT CITROËN - MANAGING BOARD REPORT