Faurecia Automotive GmbH

Faurecia Automotive GmbH

Hannover

Befreiender Konzernabschluss zum Geschäftsjahr vom 01.01.2024 bis zum 31.12.2024

Forvia S.E.

Nanterre/Frankreich

ANNUAL RESULTS 2024

Contents

Key figures

1 Business review

1.1 Notable facts

1.2 Main events

1.3 Automotive production

1.4 Sales

1.5 Operating income

1.6 Net income

1.7 Financial structure

1.8 Outlook

2 Consolidated financial statements

2.1 Consolidated statement of comprehensive income

2.2 Consolidated balance sheet

2.3 Consolidated cash flow statement

2.4 Consolidated statement of changes in equity

2.5 Notes to the consolidated financial statements

2.6 List of consolidated companies as of December 31, 2024

3 Statutory auditors' report on the consolidated financial statements

⁽¹⁾ At constant currencies and scope.
⁽²⁾ Before amortization of acquired intangible assets (§2.1 to the consolidated financial statements).
⁽³⁾ Operating income before adjusted depreciations and amortizations of assets (§2.3 to the consolidated financial statements).
⁽⁴⁾ Note 27.1 to the consolidated financial statements.

1

1.1 Notable facts

1.2 Main events

1.3 Automotive production

1.4 Sales

1.4.1 Sales by region

1.4.2 Sales by customer

1.4.3 Sales by Business Group

1.5 Operating income

1.5.1 By region

1.5.2 By Business Group

1.6 Net income

1.7 Financial structure

1.7.1 Net cash flow

1.7.2 Reconciliation between net cash flow and cash provided by operating and investing activities

1.7.3 Net Debt

1.8 Outlook

1 BUSINESS REVIEW

1.1. Notable facts

ECONOMICAL CONTEXT

The worldwide automotive production stood in 2024 at 89.5 million LVs in 2024, down 1.1% vs. 2023; it was broadly stable in H1 (-0.1%) and down 2.0% in H2. It is worth mentioning that, between 2023 and 2024, the share of Europe excluding Russia out of worldwide automotive production lost one percentage point, at 18%, while the share of China gained 1.5 percentage point at 33%, North America representing 17% of worldwide automotive production.

The geographic mix of FORVIA's sales vs. the geographic mix of worldwide automotive production represented an unfavorable effect estimated at c. 200bps in 2024. In 2024, the pace of electrification slowed down in Europe and North America, with EV production respectively down 7% (Europe excl. Russia) and up only 3% year-on-year, while in China EV production continued to grow in the double-digits (+16% year-on-year).

1.2. Main events

January 2024

February 2024

March 2024

April 2024

May 2024

June 2024

July 2024

September

October

November

December

January

February

1.3. Automotive production

Worldwide automotive production decreased by -1.1% from 2023 to 2024. It decreased in EMEA by -4.1%, decreased in Americas by -1.0%, increased in Asia by 0.1%, and increased in China by 3.7%.

The data related to automotive production and volume evolution is based on S&P Global Mobility (ex-IHS Markit) forecast dated February 2025 (vehicles segment in line with CAAM for China).

Automotive production and volume evolution from 2023 to 2024

1.4. Sales

FORVIA's year-on-year sales evolution is made of three components:

As "Scope effect", FORVIA presents all acquisitions/divestments, whose annual sales amount to more than €250 million. Other acquisitions below this threshold are considered as "bolton acquisitions" and are included in "Growth are constant currencies".

In 2024, there was no effect from "bolton acquisitions".

⁽¹⁾ Scope effect includes disposal of CVI, the 100% consolidation of BHAP and the disposal of HUG Engineering.

⁽¹⁾ Scope effect includes disposal of CVI, the 100% consolidation of BHAP and the disposal of HUG Engineering.

Sales of products (parts, components and R&D sold to manufacturers) reached €25,428.0 million in 2024 compared to €25,950.2 million in 2023. This represents a decreased of 2.0% on a reported basis and a decrease of 0.5% at constant scope & currencies.

Sales of tooling, prototypes and other services reached €1,546.2 million in 2024 compared to €1,297.7 million in 2023. This represents an increase of 19.2% on a reported basis and an increase of 18.7% at constant scope & currencies.

Sales reached €26,974.2 million in 2024 compared to €27,247.9 million in 2023. This represents a decrease of 1.0% on a reported basis and an increase of 0.4% at constant scope & currencies.

1.4.1. Sales by region

⁽¹⁾ Scope effect includes disposal of CVI, the 100% consolidation of BHAP and the disposal of HUG Engineering.

⁽¹⁾ Scope effect includes disposal of CVI, the 100% consolidation of BHAP and the disposal of HUG Engineering.

Sales by region in 2024 were as follows:

Worldwide sales amounted to €26,974.2 million compared to €27,247.9 million in 2023. This represents a decrease of 1.0% on a reported basis and an increase of 0.4% at constant scope and currencies. This is to be compared to a 1.1% downturn in production market in the world (source IHS Markit forecast dated February 2025).

1.4.2. Sales by customer

In 2024, sales to FORVIA four main customers (VW, Stellantis, Ford, Mercedes-Benz) amounted to €12,247.2 million or 45.4% compared to 46.1% in 2023:

1.4.3. Sales by Business Group

⁽¹⁾ Scope effect includes disposal of CVI, the 100% consolidation of BHAP and the disposal of HUG Engineering.

⁽¹⁾ Scope effect includes disposal of CVI, the 100% consolidation of BHAP and the disposal of HUG Engineering.

In 2024:

1.5. Operating income

In 2024 :

1.5.1. By region

The operating income in 2024 compared to 2023 decreased by €39.1 million:

1.5.2. By Business Group

In 2024:

1.6. Net income

The net income group share is a loss of €185.2 million, or 0.7% of sales in 2024. This is to be compared to a gain of €222.2 million or 0.8% of sales in 2023. It represented a decrease of €395.4 million.

In 2024:

Basic earnings per share amounted to €-0.94 (diluted net earnings per share at €-0.94) compared to €1.13 in 2023 (diluted net earnings per share at €1.12).

1.7. Financial structure

1.7.1. Net cash flow

Reconciliation EBITDA net cash flow

The net cash flow was an inflow of €654.9 million or 2.4% of sales compared to a net cash inflow of €649.1 million or 2.4% of sales over the same period in 2023 after IFRS 5. It can be explained as follows :

1.7.2. Reconciliation between net cash flow and cash provided by operating and investing activities

1.7.3. Net Debt

The Group's net financial debt stood at €6,622.6 million at December 31, 2024 compared to €6,987.3 million at December 31, 2023.

The net debt evolution is mainly impacted by the positive net cash flow evolution of €654.9 million, the purchase of treasury shares for €7.8 million, dividends paid for €187.7 million, the net financial investments and other cash elements for a positive amount of €127.5 million and the recording of simple lease liabilities for €222.3 million in accordance with IFRS 16.

The level of available cash as of December 31, 2024 reached 4,500 million euros, compared to 4,274 million the previous year.

The main elements of long-term financial resources are the following (Note 27 provides more details on each of these financings).

A series of bonds issued in euro:

A series of bonds issued in yen:

A series of Schuldscheindarlehen (private placement under German law):

A series of bank loans:

Besides, FORVIA holds two credit facilities:

As at December 31, 2024, these facilities were not used and fully available for their total amount.

1.8. Outlook

FY 2025 GUIDANCE: FOCUS ON PROFITABILITY, CASH GENERATION AND DELEVERAGING

As regards market assumptions for 2025, FORVIA takes into consideration S&P's latest forecast date February 2025:

Worldwide, S&P latest forecast estimates that automotive production should be stable year-on-year at 89.5 million light vehicles.

At FORVIA's mix of sales, this should correspond to an organic growth of -2.0% in FY 2025 vs. FY 2024, with a significant imbalance between H1 and H2 (-4,0% in H1 and broadly stable in H2).

With this production assumption, and assuming also:

FORVIA expects sales between €26.3 billion and €27.5 billion in 2025.

As regards operating margin, FORVIA aims at reaching an operating margin between 5.2% and 6.0% of sales in 2025, supported by initiatives for operational excellence and fixed costs reduction.

In addition, FORVIA aims at generating net cash flow ≥ 2024 level (€655m), mostly through margin expansion and continued actions to reduce capex and inventories.

As regards financial leverage, FORVIA aims at organically reducing its Net debt/Adjusted EBITDA ratio ≤ 1.8x at December 31, 2025, before disposals.

BEYOND THIS ORGANIC DELEVERAGING TARGET, THE GROUP IS COMMITTED TO RESTORE A SOLID BALANCE SHEET WITH THE OBJECTIVE TO REDUCE NET DEBT/ADJUSTED EBITDA RATIO BELOW 1.5x IN 2026, SUPPORTED BY DISPOSALS.

As regards US tariffs, measures already enforced as of today are included in this guidance. Due to current uncertainty related to additional measures (in terms of scope, implementation, duration, as well as potential impact on industry volume), no impact is included in this guidance. The Group remains alert to developments and ready to implement appropriate action plans.

2

2.1 Consolidated statement of comprehensive income

2.2 Consolidated balance sheet

2.3 Consolidated cash flow statement

2.4 Consolidated statement of changes in equity

2.5 Notes to the consolidated financial statements

2.6 List of consolidated companies as of December 31, 2024

2 CONSOLIDATED FINANCIAL STATEMENTS

2.1. Consolidated statement of comprehensive income

Other comprehensive income

2.2. Consolidated balance sheet

Assets

Liabilities

2.3. Consolidated cash flow statement

The net cash flow amounts to €654.9 million as of December 31, 2024 and €649.1 million as of December 31, 2023. (cf. chapter 1, § 1.7.2)

2.4. Consolidated statement of changes in equity

⁽¹⁾ Of which 269,574 treasury stock as of 12/31/2024 and 5,091 treasury stock as of 12/31/2023 - See Note 9.

2.5. Notes to the consolidated financial statements

CONTENTS

NOTE 1 Summary of significant accounting policies

NOTE 2 Change in scope of consolidation and recent events

NOTE 3 Post-balance sheet events

NOTE 4 Information by operating segment

NOTE 5 Analysis of operating expenses

NOTE 6 Other non-recurring operating income and expenses

NOTE 7 Finance costs and Other financial income and expenses

NOTE 8 Income tax

NOTE 9 Earnings per share

NOTE 10 Goodwill

NOTE 11 Intangible assets

NOTE 12 Property, plant and equipment

NOTE 13 Right-of-use assets

NOTE 14 Investments in associates

NOTE 15 Other equity interests

NOTE 16 Other non-current financial assets

NOTE 17 Other non-current assets

NOTE 18 Inventories and work-in-progress

NOTE 19 Trade accounts receivables

NOTE 20 Other operating receivables

NOTE 21 Other receivables

NOTE 22 Cash and cash equivalents

NOTE 23 Shareholders' equity

NOTE 24 Minority interests

NOTE 25 Current provisions and contingent liabilities

NOTE 26 Non-current provisions and provisions for pensions and other postemployment benefits

NOTE 27 Net debt

NOTE 28 Trade payables, accrued taxes and payroll costs

NOTE 29 Accrued taxes and payroll costs

NOTE 30 Sundry payables

NOTE 31 Financial instruments

NOTE 32 Hedging of currency and interest rate risks

NOTE 33 Commitments given and contingent liabilities

NOTE 34 Related party transactions

NOTE 35 Management compensation

NOTE 36 Fees paid to the Statutory Auditors

NOTE 37 Dividends

FORVIA comprises the complementary technology and industrial strengths of FORVIA and HELLA, and is the^7th largest global automotive supplier.

FORVIA S.E is a European company which registered office is located at 23-27, avenue des Champs-Pierreux, 92000 Nanterre (Hauts-de-Seine department) in France. The Company is listed on Euronext Paris.

The consolidated financial statements were approved by FORVIA's Board of Directors on February 27, 2025.

The accounts were prepared on a going concern basis.

NOTE 1 Summary of significant accounting policies

1.1 Accounting principles

The consolidated financial statements of the FORVIA group have been prepared in accordance with International Financial Reporting Standards (IFRS) published by the IASB, as adopted by the European Union and available on the European Commission website. These standards include International Financial Reporting Standards and International Accounting Standards (IAS), as well as the related International Financial Reporting Interpretations Committee (IFRIC) interpretations.

The standards used to prepare the 2024 consolidated financial statements and comparative data for 2023 are those published in the Official Journal of the European Union (OJEU) as of December 31, 2024, whose application was mandatory at that date. Concerning the new standards, amendments and revisions to the existing standards, whose publication is mandatory from January 1, 2024, FORVIA has implemented the amendments to IAS 7 and IFRS 7 on supplier finance arrangements, which have led to the additional information presented in note 28. The other new standards, amendments and revisions to the existing standards (amendment to IFRS 16 on lease liability in a sale and leaseback, IAS 1 on classification of liabilities as current or non-current), have no significant impact on the Group consolidated financial statements.

Moreover, FORVIA has not undertaken any early application of new standards, amendments or interpretations whose application is mandatory after December 31, 2024, irrespective of whether or not they are adopted by the European Union.

The accounting policies considered have been applied consistently to all presented periods. Specifically, the operating margin (before amortization of intangible assets acquired) is the FORVIA group's principal performance indicator. It corresponds to net income of the fully consolidated companies before:

The preparation of financial statements in accordance with IFRS requires the use of estimates and assumptions when measuring certain assets, liabilities, income, expenses accounted for in the financial statements as well as for the evaluation of commitments given and contingent liabilities. These estimates and assumptions are primarily used when calculating the impairment of property, plant and equipment, right of use, intangible assets and goodwill, for measuring pension and other employee benefit obligations as well as for lease liabilities and depreciation of deferred tax assets. They are based on historical experience and other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates and assumptions. These estimations are revised on a regular basis, notably in the current evolutive macro economic context. Moreover, the Group must exercise judgment in determining whether the criteria for recognizing an asset or group of assets as held for sale are met, pursuant to the provisions of IFRS 5 "Non-Current Assets Held for Sale and Discontinued Operations".

These estimates consider also the Group plans in terms of carbon neutrality as approved by the Science Based Target Initiative (SBTi) in July 2022 and more specifically, achieving by 2025 CO₂ neutral scopes 1 & 2 and by 2030 reducing green house gas (GHG) emissions of scope 3 by 45%, among others by solar energy production on its sites (on site PPA), purchases of renewable energy (off site PPA) and the development of its transversal division for cutting edge sustainable and smart materials launched in July 2021, as well as the review of the group industrial portfolio to climatic risks on the basis on the GIEC scenarii.

The results of the sensitivity tests carried out on the carrying amounts of goodwill and provisions for pensions and other employee benefits are provided in Notes 10 and 26.2, respectively. In addition, Note 11 "Intangible Assets" describes the main assumptions used for measuring intangible assets and Note 8 the assumptions for recognition of deferred tax assets.

1.2 Consolidation principles

Companies over which the Group exercises significant influence and which are at least 20%-owned are consolidated when one or more of the following criteria are met: annual sales of over €20 million, total assets of over €20 million, and debt of over €5 million.

Non-consolidated companies are not material, either individually or in the aggregate.

Subsidiaries controlled by the Group are fully consolidated. Control is presumed to exist when the Group holds more than 50% of a company's voting rights and may also arise as a result of shareholders' agreements.

Subsidiaries are fully consolidated as of the date on which control is transferred to the Group. They are no longer consolidated as of the date that control ceases.

Companies over which the Group exercises significant influence but not control, generally through a shareholding representing between 20% and 50% of the voting rights, are accounted for by the equity method. There is no joint operation in the sense of IFRS 11 within the companies consolidated by equity method.

The FORVIA group's financial statements are presented in euros. Except if specifically specified, amounts are in millions of euros; generally, amounts presented are rounded to the closest unit; consequently, the sum of rounded amounts can present non-significant differences to the reported total. Moreover, ratios and variances reported are computed with the detailed amounts and not with the rounded amounts.

The functional currency of foreign subsidiaries is generally their local currency. The assets and liabilities of these companies are translated into euros at the year-end exchange rate and income statement items are translated at the average exchange rate for the year. The resulting foreign exchange gains and losses are recorded in equity.

Balance sheets and net income of Group entities active in hyperinflation economies are restated to take into account the changes in purchasing power of the local currencies using the official indexes at closing date. They are then translated in euros using the exchange rate of the closing date; without restatement of comparative periods in accordance with IAS 21. This is applied in 2023 and 2024 to Group affiliates in Argentina and in Turkiye.

However, some companies located outside the euro or the US-dollar zone and which carry out the majority of their transactions in euros or US dollars may, however, use euros or US dollars as their functional currency.

All material inter-company transactions are eliminated in consolidation, including inter-company gains.

The accounting policies of subsidiaries and companies accounted for by the equity method are not significantly different from those applied by the Group.

1.3 Agent flows

FORVIA operates as an agent for monoliths sales, as well as for some cockpit components, these sales are then recorded at net value in the income statement. These flows managed as agent by FORVIA represented €5,226.1 million in 2024 (€7,384.7 million in 2023); the counterparts in balance sheet are presented in the lines Contract assets (cf. Note 18), Trade accounts receivables (cf. Note 19) in assets and Trade payables (cf. Note 28) in liabilities.

NOTE 2 Change in scope of consolidation and recent events

2.1 Changes in scope in 2024

Within Seating perimeter, in China, the company Faurecia Liuzhou Automotive Seating Co is consolidated by equity method since January 2024, it is held at 50% by the Group and was previously fully consolidated, the company Shenshan Faurecia Automotive Co Ltd, held at 70%, has been created and is fully consolidated since January 2024. In Mexico, the company GMD, consolidated by equity method and held at 50%, is now held at 100% and fully consolidated since August 2024.

For Interiors, in Brazil, the company FMM Pernambuco Componentes Automotivos, fully consolidated, is now held at 100% since January 2024. In February 2024, the company Materi'act Dallas LLC has been created, it is held at 55.4% and fully consolidated.

Within Clean Mobility perimeter, the companies Hug Engineering AG, Hug Engineering GmbH, Hug Engineering Italia Srl, Hug Engineering BV et Hug Engineering Inc have been sold in June 2024.

In China, for Lighting segment, the companies Beijing HELLA BHAP Automotive Lighting Co Ltd Co., Ltd, HELLA BHAP (Sanhe) Automotive Lighting Co Ltd, HELLA BHAP (Tianjin) Automotive Lighting Co Ltd, HELLA BHAP (Changzhou) Automotive Lighting Co Ltd held at 50% by FORVIA HELLA, previously consolidated by equity method, are fully consolidated since January 2024.

For Electronics, the company Behr-HELLA Thermocontrol ("BHTC"), consolidated by equity method and held at 50% by FORVIA HELLA has been sold in April 2024. In China, the company HELLA Nanjing Electronics Co Ltd, held at 100% is fully consolidated since February 2024. Companies dedicated to the ADAS activities have been created in France, Mexico, India, Japan, USA and Thailand during the first semester of 2024. In Portugal, the company Faurecia Aptoïde Automotive, consolidated by equity method and held at 50%, is now held at 100% and fully consolidated since July 1^st 2024.

In Germany, for the Lifecycle Solutions segment, the company HELLA Pagid GmbH, fully acquired on December 31, 2023 and fully consolidated since January 2024 has merged with HELLA GmbH & Co. KGaA.

2.2 Reminder of change in scope of consolidation introduced in 2023

Disposal of SAS

On July 31, 2023, FORVIA has finalized the sale to the Motherson group of its SAS Cockpit Modules division (assembly and logistics services), reported as part of its Interiors Segment, for an entreprise value of €540 million.

On December 31, 2023, the loss on disposal after tax has been booked in "Net income of discontinued operations". On December 31, 2024, according to the sale contract, the process of determining potential price adjustments is ongoing; no significant impact is expected on group financial statements.

In accordance with IFRS 10, the gain or loss on disposal of SAS is calculated based on the difference between:

In accordance with IFRS 5, "net income of discontinued operations" presented in 2023 in the consolidated statement of comprehensive income amounted to -€5.4 million including the operations of the SAS business from January 1, 2023 to July 31, 2023 for total sales of €593.6 million as well as the net loss on disposal related to this activity of -€6.3 million and the directly incrementable expenses related to the sale.

The accounting principles and policies applied to discontinued operations are the same as those applied for annual accounts.

Disposal of CVI business

FORVIA has finalized the sale of designated parts of FORVIA's commercial vehicle exhaust aftertreatment business in Europe and in the United States, on October 2, 2023, for a total transaction value of €199.2 million, to its longstanding partner Cummins. As part of this transaction, Cummins acquired two plants located in Roermond (Netherlands) and Columbus South (Indiana, USA) as well as their related programs. According to the sale contract, the calculation of price adjustments based on CVI accounts on transaction date has been concluded in 2024 without significant impact on group consolidated financial statements.

Disengagement from Russia

Consistently with its early 2023 announcements, FORVIA has concluded its disengagement from Russia, with the sale of its three operating entities (Faurecia Environmental solutions-Russia, Faurecia Automotive Solutions, Faurecia Interior Togliatti) in December 2023, after having obtained the necessary regulatory authorizations from the Russian administration. FORVIA has no operational activities in Russia since end of December 2023.

Other changes in scope

Within Seating perimeter, in China, the company Zhengzhou Faurecia Automotive Parts Co. Ltd has been created and is fully consolidated since April 2023, it is held at 70% by Group, and the company JinHua LEAP Faurecia Automotive Parts Co. Ltd, held at 51%, has been created and is fully consolidated since September 2023. In France, the company SIELEST has been absorbed into the company SIEDOUBS as of January 1, 2023. In Thailand, the company Rayong Faurecia Automotive Parts Co. Ltd held at 70%, has been created and is fully consolidated since November 2023.

For Interiors, in United States, the companies of Detroit Manufacturing Systems' group held at 49% and consolidated by equity method have been sold in June 2023.

Within Clean Mobility perimeter, companies dedicated to the hydrogen activities have been created in France, in Germany, in China, in South Korea and in United states during the first half year 2023. Following the sale of a part of the group's shares to Stellantis, the company Symbio, consolidated by equity method, is held at 33% since July 2023.

In China, for Lighting segment, the company HELLA Faway Automotive Lighting (Tianjin) Co., Ltd has been created in May 2023. It is held at 39.98% and consolidated by equity method.

For Electronics, in China, the company Parrot Automotive Shenzhen, held at 100% and fully consolidated, has been liquidated in June 2023.

In Germany, for the Lifecycle Solutions segment, the company HELLA Pagid GmbH, consolidated by equity method and held at 49%, has been fully acquired on December 31, 2023.

2.3 Recent events

Economical context

The worldwide automotive production stood in 2024 at 89.5 million LVs in 2024, down 1.1% vs. 2023: it was broadly stable in H1 (-0.1%) and down 2.0% in H2. It is worth mentioning that, between 2023 and 2024, the share of Europe excluding Russia out of worldwide automotive production lost one percentage point, at 18%, while the share of China gained 1.5 percentage point at 33%, North America representing 17% of worldwide automotive production in 2024.

The geographic mix of FORVIA's sales vs. the geographic mix of worldwide automotive production represented an unfavorable effect estimated at c. 200bps in 2024. In 2024, the pace of electrification slowed down in Europe and North America, with EV production respectively down 7% (Europe excl. Russia) and up only 3% year-on-year, while in China EV production continued to grow in the double-digits (+16% year-on-year).

NOTE 3 Post-balance sheet events

No significant post-balance sheet events have occurred.

NOTE 4 Information by operating segment

The Group is structured into business units based on the nature of the products and services offered:

These business units are managed by the Group on an independent basis in terms of reviewing their individual performance and allocating resources. The tables below show reconciliation between the indicators used to measure the performance of each segment - notably operating income (before amortization of acquired intangible assets) - and the consolidated financial statements. Borrowings, other operating income and expense, financial income and expenses, and taxes are monitored at the Group level and are not allocated to the various segments. A review of the useful life for the fixed assets has been performed in regard to the climate changes and its regulatory consequences as known at the closing date, more specifically for the Clean Mobility segment, and has not enabled to identify any significant impact for the Group.

The analysis of the effects of the application of IFRIC's decision on the presentation of income and expenses by segments according to IFRS 8.23 is ongoing.

4.1 Accounting principles

Revenue on parts is recognized when the control is transferred to the customer, incidental to ownership of the modules or parts produced. This generally corresponds to when the goods are shipped.

Revenue on tooling is generally recognized at the transfer of control of these tooling to the customer, usually shortly before serial production starts. Development costs are generally recognized as set up costs for the serial parts production and capitalized, they are then not considered as a revenue distinct from product sales, except specific cases depending on the contract with the customer.

Operating margin (before amortization of acquired intangible assets) is the FORVIA group's principal performance indicator.

It corresponds to net income of the fully consolidated companies before:

4.2 Key figures by operating segment

Full-Year 2024

Full-Year 2023

4.3 Sales by operating segment

Sales by operating segment break down as follows:

4.4 Sales by major customer

Sales⁽¹⁾ by major customer break down as follows:

⁽¹⁾ The presentation of sales invoiced may differ from that of sales by end customer when products are transferred to intermediary assembly companies.
⁽²⁾ Renault-Nissan in 2023.

4.5 Key figures by geographic area

Sales are broken down by destination region. Other items are presented by the region where the companies involved operate:

2024

2023

NOTE 5 Analysis of operating expenses

5.1 Analysis of operating expenses by function

5.2 Analysis of operating expenses by nature

5.3 Personnel costs

Details of expenses relating to the Group's free shares plans and pension costs are provided in Notes 23.2 and 26, respectively.

5.4 Research and development costs

Development costs are usually capitalized in intangible assets as they are considered as set up costs for the serial parts production, and then amortized to match the quantities of parts delivered to the customer, over a period not exceeding five years except under exceptional circumstances. For some specific contracts where the developments works are a separate performance obligation under IFRS 15 the corresponding costs comply with the definition of work in progress and are capitalized in inventory. These inventories are then expensed (cost of sales) when the corresponding revenue is recognized.

The development costs recognized in the cost of sales (stock decrease and R&D assets depreciation) amount to €957.0 million as of December 31, 2024, vs €924.4 million as of December 31, 2023.

5.5 Depreciation, amortization and provisions for impairment in value of noncurrent assets

This table does not include allowances and reversals of provision for non-recurring items.

NOTE 6 Other non-recurring operating income and expenses

Other non-recurring operating income and expenses are analyzed as follows:

Other non-recurring operating income

Other non-recurring operating expenses

¹⁾ As of December 31, 2024, this item includes restructuring costs in the amount of €(304.9) million and provisions for impairment in value of assets in the amount of €(56.7) million versus €(171.5) million and €0.7 million (reversal) as of December 31, 2023.

²⁾ Of which €(33.6) million as of December 31, 2024 of costs linked to a supplier in Mexico and other one-off litigation settlements.

Restructuring

Reorganization costs €(361.6) million include redundancy and site relocation payments for 4,913 people.

In February 2024, FORVIA announced the launch of "EU-FORWARD", a five-year (2024-2028) initiative aiming at reinforcing the competitiveness and agility of the Group's operations in Europe, adapting its European manufacturing and R&D set-up to the fast-changing regional environment. During the year 2024, close to 2,900 headcount reduction was announced, representing P&L savings of c. €140 million on an annualized basis. These operations were announced throughout the year on a case-by-case basis and they are implemented locally in the most socially responsible way.

NOTE 7 Finance costs and Other financial income and expenses

7.1 Finance costs

7.2 Other financial income and expenses

⁽¹⁾ This item includes amortization of costs related to long-term debts and commissions for non-use of the credit facility.
⁽²⁾ Of which €134 million as of December 31, 2024 linked to the disposal of BHTC (cf Note 2.1) mainly compensated by impairments of non consolidated financial assets for €(31.7) million and of other financial assets for €(32.6) million and in 2023, €158 million of gain on sale (mainly shares of Symbio and CVI activity).

NOTE 8 Income tax

Deferred taxes are recognized using the liability method for temporary differences arising between the tax bases for assets and liabilities and their carrying amounts on the consolidated financial statements. Temporary differences mainly arise from tax loss carryforwards and consolidation adjustments to subsidiaries' accounts.

Deferred taxes are measured using tax rates (and laws) that have been enacted or substantially enacted at the balance sheet date.

Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available in the short or medium term against which the temporary differences or the loss carry forward can be utilized, based on the Group's strategic plan.

Deferred tax liabilities are accounted for every taxable temporary differences in relation with investment in subsidiaries, joint ventures and associates unless the Group has the capacity to control the timing of the reversal of temporary differences and if it is probable that they will not be reversed in a predictable future.

In compliance with IFRIC 23, accruals for risk on income tax are part of the income tax within the statement of comprehensive income and of income tax payables within the balance sheet (Note 30).

Within the frame of the Finance Law for 2024 published in the Official Journal on December 30, 2023 transposing the European Directive 2022/2023, in order to implement the OECD tax reform ("Pillar 2"), applicable for all accounting periods starting from December 31, 2023, the Group has performed the evaluation of the impacts. In 2024, in most of the cases, the application of the transitory measures was possible, generating nil additional income tax. For the countries where these transitory measures can not be applied, there is no significant impact for the Group.

Corporate income tax can be analyzed as follows:

8.1 Analysis of the tax charge

Corporate income tax can be analyzed as follows:

⁽¹⁾ The impact of local rate differences mainly relates to Chinese and German entities.
⁽²⁾ Mainly due to withholding tax in 2024.

8.2 Analysis of tax assets and liabilities

The Group considers the recovery of the deferred tax net balance as at December 31, 2024, i.e. €717.5 million, as probable.

Changes in deferred taxes recorded on the balance sheet break down as follows:

⁽¹⁾ Mainly related to actuarial gains and losses directly recognized in equity.

8.3 Deferred tax assets and liabilities by nature

The variation of the net deferred tax on intangible assets includes the deferred tax effect of the amortization of intangible assets acquired in business combinations.

8.4 Impairment of tax asset carryforwards

The ageing of impaired tax asset carryforward is detailed as follows:

These impaired deferred income tax assets on loss carry forwards are mainly located in France.

NOTE 9 Earnings per share

Basic earnings per share are calculated by dividing net income attributable to owners of the parent by the weighted average number of shares outstanding during the year, excluding treasury stock. For the purpose of calculating diluted earnings per share, the Group adjusts net income attributable to owners of the parent and the weighted average number of shares outstanding for the effects of all dilutive potential ordinary shares (including stock options, free shares and convertible bonds).

The dilutive impact of the bonds was calculated using the treasury stock method.

In relation to stock options, this method consists of comparing the number of shares that would have been issued if all outstanding stock options had been exercised to the number of shares that could have been acquired at fair value.

The potentially dilutive impact of free shares is taken into account considering the number of shares to be distributed for the plans of which the realization of the performance conditions has already been stated by the Board.

Earnings per share

Earnings per share break down as follows:

NOTE 10 Goodwill

In case of a business combination, the aggregate value of the acquisition is allocated to the identifiable assets acquired and liabilities assumed based on their fair value determined at their acquisition date.

A goodwill is recognized when the aggregate of the consideration transferred and the amount of any non-controlling interest in the acquiree exceed the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. In accordance with IAS 36, goodwill is not amortized but is tested for impairment at least once a year and more often if there is an indication that it may be impaired. For the purpose of impairment testing, goodwill is allocated to Cash-Generating Units (CGUs). A CGU is defined as the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.

The CGU to which goodwill is allocated represents the level within the operating segment at which goodwill is monitored for internal management purposes. The Group has identified the following CGUs:

The carrying amount of assets and liabilities thus grouped is compared to the higher of its market value and value in use, which is equal to the present value of the net future cash flows expected, and their net market value including costs of disposal.

Breakdown of the net amount of goodwill by operating segment:

Cash-generating units and impairment tests

Impairment tests are carried out whenever there is an indication that an asset may be impaired. Impairment testing consists of comparing the carrying amount of an asset, or group of assets, with the higher of its market value and value in use. Value in use is defined as the present value of the net future cash flows expected to be derived from an asset or group of assets.

The assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units, or CGUs).

Impairment tests are performed on each group of intangible assets (development costs) and property, plant and equipment attributable to a customer contract. This is done by comparing the aggregate carrying amount of the Group of assets concerned with the present value of the expected net future cash flows to be derived from the contract.

An impairment loss is recorded when the assets' carrying amount is higher than the present value of the expected net future cash flows. A provision is then recorded for losses to completion on loss-making contracts in compliance with IAS 37.

In case of a triggering event, impairment testing is also carried out on general and corporate assets grouped primarily by type of product and geographic area.

The cash inflows generated by the assets allocated to these CGUs are largely interdependent due to the high overlap among various manufacturing flows, optimization of capacity utilization, and centralization of research and development activities.

Manufacturing assets whose closure is planned are tested independently for impairment.

Within the frame of the impairment tests of goodwill and group of CGUs, the cash flow forecasts used to calculate value in use were based on the Group's 2025-2029 forecasts which were drafted in the second semester of 2024. The volume assumptions used in the strategic plan are based on worldwide automotive market assumptions of 88.4 million of cars in 2025, 92.6 million in 2026 and 96.2 million in 2029, based themselves on external information sources. The impacts of group commitment on carbon neutrality as well as the consequences of governmental policies linked to the global warming are as well part of the assumptions used for these forecasts.

The main assumption affecting value in use is the level of operating income used to calculate future cash flows and particularly the terminal value. The operating margin assumption for 2029 remains above 8% of sales for the Group as a whole.

Projected cash flows for the last year (2029) have been projected to infinity by applying a growth rate determined based on analysts' trend forecasts for the automotive market. The growth rate applied for the 2024 test was 1.4% (1.4% applied at the end of 2023), except for Electronics for which 2% has been considered given the specific development of this segment (2% applied at the end of 2023) and for Clean Mobility for which a growth rate nil has been considered (1.4% applied at the end of 2023).

FORVIA called on an independent expert to update the weighted average cost of capital used to discount future cash flows. The market parameters used in the expert's calculation are based on a sample of companies operating in the automotive supplier sector. Taking into account these parameters and a market risk premium of 6.5% on average, the weighted cost of capital used to discount future cash flows was set at 10.2% (on the basis of a range of values provided by the independent expert) in 2024 (10.6% in 2023). This rate was applied for the impairment tests carried out on all of the groups of CGUs, as they all bear the same specific risks relating to the automotive supplier sector and the CGUs multinational operation does not justify using geographically different discount rates.

The tests performed as of December 31, 2024 did not show any indication of impairment in goodwill.

The table below shows the sensitivity of the impairment test results to changes in the assumptions used as of December 31, 2024 to determine the value in use of the CGUs groups to which the Group's goodwill is allocated:

NOTE 11 Intangible assets

11.1 Research and development expenditure

The FORVIA group incurs certain development costs in connection with producing and delivering modules for specific customer orders which are considered as set up costs for the serial parts production and capitalized. In accordance with IAS 38, these development costs are recorded as an intangible asset where the Company concerned can demonstrate:

These capitalized costs are amortized to match the quantities of parts delivered to the customer, over a period not exceeding five years except under exceptional circumstances.

Research costs, and development costs that do not meet the above criteria, are expensed as incurred.

11.2 Other intangible assets

Other intangible assets include development and purchase costs relating to software used within the Group - which are amortized on a straight-line basis over a period of between one and three years - as well as patents and licenses.

It also includes the intangible assets acquired in business combinations (customer relationship, trademarks, technologies...); these assets are amortized on the corresponding contracts duration, i.e. between 5 and 20 years for trademarks, between 6 and 16 years for customer relationship and between 6 and 12 years for technologies.

Intangible assets break down as follows:

The book value of development costs allocated to a customer contract as well as the associated specific tooling is compared to the present value of the expected net future cash flows to be derived from the contract based on the best possible estimate of future sales. The volumes taken into account in FORVIA's business plans are the best estimates by the Group's Marketing department based on automakers' forecasts when available.

NOTE 12 Property, plant and equipment

Property, plant and equipment are stated at acquisition cost, or production cost in the case of assets produced by the Group for its own use, less accumulated depreciation.

Maintenance and repair costs are expensed as incurred, except when they increase productivity or prolong the useful life of an asset, in which case they are capitalized.

In accordance with the amended version of IAS 23, borrowing costs on qualifying assets arising subsequent to January 1, 2009 are included in the cost of the assets concerned. The amount is not significant for the period.

Property, plant and equipment are depreciated by the straight-line method over the estimated useful lives of the assets, as follows:

⁽¹⁾ For leased buildings, leasehold improvements are depreciated over the same duration than the corresponding Right-of-Use asset.

Investment grants are recorded as a deduction from the assets that they were used to finance.

Property, plant and equipment are often dedicated to client programs.

NOTE 13 Right-of-use assets

Lease contracts are accounted for in the balance sheet, through an asset (representing the right to use the leased asset along the contract duration) and a liability (representing the lease future payments obligation), considering the main following principles:

Variable lease contracts: contracts corresponding to the qualification of lease contracts, for which all payments are variable payments, leading to no recognition of right-of-use assets and financial debt, have been signed for the lease of solar panel producing electricity (on site PPA) in plants of the Group. As at December 31, 2024, 49 contracts were effectively signed, mainly for a duration of 20 years, out of which 30 were already in operation.

NOTE 14 Investments in associates

Investment in associates for continued operations:

As of December 31, 2024

⁽¹⁾ As the Group share of some company's net equity is negative, it is recorded under liabilities as a provision for contingencies and charges.

There is no joint operation in the sense of IFRS 11 within the companies consolidated by equity method.

Change in investments in associates

NOTE 15 Other equity interests

Equity interests correspond to the Group's interests in the capital of non-consolidated companies. They are subject to impairment testing based on the most appropriate financial analysis criteria. An impairment loss is recognized when appropriate. The criteria generally applied are the Group's equity in the underlying net assets and the earnings outlook of the company concerned.

NOTE 16 Other non-current financial assets

Loans and other financial assets are initially stated at fair value and then at amortized cost, calculated using the effective interest method.

Provisions are booked on a case-by-case basis where there is a risk of non-recovery.

NOTE 17 Other non-current assets

This item includes:

NOTE 18 Inventories and work-in-progress

Inventories of raw materials and supplies are stated at cost, determined by the FIFO method (First-In, First-Out).

Finished and semi-finished products, as well as work-in-progress, are stated at production cost, determined by the FIFO method. Production cost includes the cost of materials and supplies as well as direct and indirect production costs, excluding overhead not linked to production and borrowing costs.

Work-in-progress includes the costs of specific tooling produced or purchased specifically for the purpose of manufacturing parts or modules for customer orders and which are sold to the customer, i.e. for which the control is transferred to the customer, usually shortly before serial production starts, and specific development work which is sold to customers and corresponding to the definition of work in progress when the contract enables to consider that these developments are a specific performance obligation under IFRS 15. These costs are expensed (cost of sales) over the period in which the corresponding revenue is recognized, i.e. at transfer of control of these development works to the customer.

Inventories of products for which the Group is considered as agent are presented as contract assets and not in inventories.

Provisions are booked for inventories for which the probable realizable value is lower than cost and for slow moving items.

Inventories and work in progress as well as contract assets expressed in days of sales (including agent flows) are representing 40 days as of December 31, 2024:

Nota : the computation of the Days of Inventory outstanding ratio necessitates the reintegration of the gross amount of agent flows (see note 1.3) which are neither included in the consolidated sales, nor in cost of goods sold in compliance with IFRS15, but are included in the working capital in inventory, trade payables and trade receivables.

NOTE 19 Trade accounts receivables

Under trade receivables sale programs, the Group can sell a portion of the receivables of a number of its French, German, North America and other subsidiaries to a group of financial institutions, transferring substantially all of the risks and rewards relating to the receivables sold to the financial institutions concerned.

The following table shows the amount of receivables sold with maturities beyond December 31, 2024, for which substantially all the risks and rewards have been transferred, and which have therefore been derecognized, as well as the financing under these programs:

Individually impaired trade receivables are as follows:

Given the high quality of Group counterparties, late payments do not represent a material risk. They generally arise from administrative issues.

Late payments as of December 31, 2024 were €231.3 million, breaking down as follows:

Trade accounts receivables expressed in number of days of sales (including agent flows) are representing 55 days of sales as of December 31, 2024.

Nota : the computation of the days of sales outstanding ratio necessitates the reintegration of the gross amount of agent flows (see note 1.3) which are neither included in the consolidated sales, nor in cost of goods sold in compliance with IFRS15, but are included in the working capital in inventory, trade payables and trade receivables.

NOTE 20 Other operating receivables

NOTE 21 Other receivables

In 2024, the receivables in France Crédit d'impôt Recherche (CIR) have been sold for an amount of €43.2 million vs €43.7 million in 2023.

NOTE 22 Cash and cash equivalents

Cash and cash equivalents include current account balances in the amount of €3,357.9 million (compared to €3,130.6 million in 2023) and short-term investments in the amount of €1,142.4 million (compared to €1,143.3 million in 2023), for a total of €4,500.4 million as of December 31, 2024 (€4,273.9 million as of December 31, 2023).

These components include cash at bank, current account balances, marketable securities such as money market and shortterm money market funds, deposit and very short-term risk-free securities that are readily sold or converted into cash. Cash equivalents are investments held for the purpose of meeting short term cash commitments and are subject to an insignificant risk of change in value.

They are measured at fair value and variances are booked through P&L.

NOTE 23 Shareholders' equity

23.1 Capital

As of December 31, 2024, FORVIA capital stock totaled €1,379,625,380 divided into 197,089,340 fully paid-up shares with a par value of €7 each.

The Group's capital is not subject to any external restrictions. Double voting rights are granted to all shares for which a nominative registration can be confirmed, for at least two years in the name of the same shareholder.

23.2 Share-based payment

Free share grant

In 2010, FORVIA implemented a share grant plan for executives of Group companies. These shares are subject to service and performance conditions.

In 2021, FORVIA has implemented a unique long term share grant plan (Executive Super Performance Initiative-ESPI) for the members of the Group Executive Committee. The acquisition period is five years without conservation condition, and the maximum amount is limited to 300% of the yearly fixed wages. These shares are subject to a service and a performance condition, the Total Shareholder Return - TSR, compared to a peer group.

Free shares are measured at fair value by reference to the market price of FORVIA's shares at the grant date, less an amount corresponding to the expected dividends due on the shares but not paid during the vesting period and an amount reflecting the cost of the shares being subject to a lock-up period. For the ESPI plan, the fair value of the shares includes also an assumption for the achievement of the external performance condition which is frozen at grant date. The fair value is recognized in payroll costs on a straight-line basis over the vesting period, with a corresponding adjustment to equity.

Details of the share grant plans as of December 31, 2024 are set out in the table below:

⁽¹⁾ Net of free shares granted cancelled.

The shares corresponding to the plan attributed by the Board of October 22, 2020 (485,517), have been distributed in October 2024. The performance conditions for the plan attributed by the Board of October 25, 2021 have been partially met, the corresponding shares (500,624) will be distributed in October 2025.

Other plans

Furthermore, a long-term variable remuneration (long-term incentive, LTI) has been implemented for HELLA Management Board before HELLA acquisition by FORVIA. This long term incentive is paid in cash. The LTI base amount is determined for the first fiscal year in the calculation period, as a fixed percentage of the annual fixed salary depending on the RoIC; the long term variable remuneration is based on a calculation period of a number of fiscal years and payment is made once the calculation period has come to an end.

For LTI up to the one granted for fiscal year 2022, the performance criteria are based on the Return on Invested Capital (RoIC), the income before tax as well as the performance of the HELLA share (total shareholder return) and the calculation period comprises a total period of five fiscal years. For example, the LTI allocated for the fiscal year 2020/2021 will be paid out at the end of the fiscal year 2024 in 2025. As these LTI are share-based, their value is recognized according to IFRS 2.

For LTI granted for the fiscal year 2023 onwards, the performance of the HELLA share is not part of the performance criteria and the calculation period comprises a total of four fiscal years.

There are currently five plans on going with the following valuation:

The amount recognized for the period for all these plans is an expense of €13.9 million, compared to €16.4 million in the year 2023.

23.3 Treasury stock

As of December 31, 2024, FORVIA held 269,574 treasury stock shares.

The cost of the shares held in treasury stock as of December 31, 2024 totaled €4.1 million, representing an average cost of €15.30 per share.

NOTE 24 Minority interests

This item corresponds to minority shareholders' interests in the equity of consolidated subsidiaries.

Changes in minority interests were as follows:

The minority interests, taken individually, are not considered as significant in comparison to the total net equity.

NOTE 25 Current provisions and contingent liabilities

25.1 Current provisions

A provision is recorded when Group Executive Management has decided to streamline the organization structure and announced the program to the employees affected by it or their representatives, when relevant.

Changes in these provisions during 2024 were as follows:

⁽¹⁾ Surplus provisions.

25.2 Contingent liabilities

Litigation

With letter dated August 2021, the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - "BaFin") asked HELLA GmbH & Co. KGaA ("Company") for information and the submission of documents regarding a potentially delayed capital market information under the Market Abuse Regulation (EU) No. 596/2014 ("MAR"); the request was issued in connection with the public takeover process in 2021 regarding the shares in the Company. The Company is of the opinion that it acted in accordance with all legal requirements and responded to this letter and another letter from BaFin on suspected administrative offenses accordingly.

In May 2024, the Company was informed that the public prosecutor's office in Frankfurt am Main ("Prosecutor's Office") had taken over the administrative fine proceedings as the possible administrative offense was related to a prosecution of a criminal offense. However, this possible criminal offense shall not be directed against responsible persons or employees of the Company. The Prosecutor's Office, however, has informed HELLA in its initial response that the capital market notifications had been published too late and were incomplete. Based on the previous legal letters exchanged with the BaFin and an exchange of letters with the Prosecutor's Office, the Company is still of the opinion that there is or was no violation of the MAR that is subject to a fine. According to the current assessment, the material-legal position of the Company in this matter has not changed. The outcome of the proceeding remains open. The Company will continue to cooperate with authorities to confirm its position in this matter and further explain the facts supporting its position.

There are no other claims or litigation in progress or pending that are likely to have a material impact on the Group's consolidated financial position.

NOTE 26 Non-current provisions and provisions for pensions and other post-employment benefits

26.1 Non-current provisions

Changes in non-current provisions

26.2 Provisions for pensions and other post-employment benefits

Group employees may receive, in addition to their pensions in conformity with the applicable regulations in the countries where the Group companies employing them are located, additional benefits or post-retirement benefit obligations. The Group offers these benefits through either defined benefits or defined contribution plans. The valuation and accounting methodologies followed by the Group are the following:

The valuation takes into account the probability of employees staying with the Group up to retirement age and expected future salary levels as well as other economic assumptions (such as the inflation rate, the discount rate) for each concerned zone or country. It takes also into account the 2021 IFRS IC decision on attributing benefit to periods of services. These assumptions are described in Note 26.2.

Benefit obligations are partially funded by contributions to external funds. In cases where the funds are permanently allocated to the benefit plan concerned, their value is deducted from the related liability. An excess of plan assets is only recognized in the balance sheet when it represents future benefits effectively available for the Group.

Periodic pension and other employee benefit costs are recognized as operating expenses over the benefit vesting period.

Actuarial gains and losses on defined benefits plan are recognized in other comprehensive income.

In case of a change in regime, past service costs are fully recognized as operating expenses, the benefits being fully acquired or not.

The expected rate of return of defined benefits plan assets is equal to the discount rate used to value the obligation at the opening of the period. This return is recorded in "Other financial income and expense".

The other long-term benefits (during employment period) mainly cover seniority bonuses as well as long-service awards. The obligation is valued using similar methodology, assumptions and frequency as the ones used for post-employment benefits.

Benefit obligations

⁽¹⁾ External funds mainly cover pension plan benefit obligations for €271.9 million in 2024.
⁽²⁾ Pension plan surpluses are included in Other non-current assets.

Pension benefit obligations

A - Description of the plans

In France, all managerial employees with a salary in tranche C are granted a defined benefit pension scheme, for which the rights acquired as of December 31, 2019 have been frozen, in order to comply with the PACTE Law from May 22, 2019. Executive Committee members who have an employment contract with FORVIA S.E. or any of its subsidiaries also benefit from a defined benefit pension scheme for French members and defined contribution pension scheme for foreign members, the rights acquired as of December 31, 2019 in the defined benefit pension scheme for French members have also been frozen, in order to comply with the PACTE Law from May 22, 2019. The rights are reestimated based on the evolution of the salary and respective expenses of the employees part of the pension scheme.

In the United States, the two remaining plans, already closed to new participants, were combined as of January 1, 2020. The combined pension plan covers 752 participants.

In Germany, the main defined benefit pension plan still open covers 5,193 participants. The benefit granted is based on the number of years of service, starting after 14 years. The main defined benefit pension plan closed to new participants covers 7,906 participants.

In Japan, the main defined benefit plan covers 671 participants. Benefits are based on years of service and paid at the end of the contract or upon reaching the age of 60.

B - Assumptions used

The Group's obligations under these plans are determined on an actuarial basis, using the following assumptions:

The main actuarial assumptions used in the past two years to measure the pension liability are as follows:

Nota: The discount rate for the euro zone was determined on the basis of yields on prime corporate bonds for a maturity corresponding to the duration of the obligations. Prime corporate bonds are defined as bonds awarded one of the top two ratings by a recognized rating agency (for example, bonds rated AA or AAA by Moody's or Standard & Poor's).

In the United States, the pension benefit obligations are not sensitive to the inflation rate.

The average duration of the various plans is as follows:

C - Information on external funds

External funds are invested as follows:

The fair value of shares and bonds falls in the level 1 category (price quoted in active markets) in 2024.

D - Provisions for pension liabilities recognized on the balance sheet

⁽¹⁾ The provision for €404.1 million as of December, 31, 2024 relates mainly to Germany (€343.1 million).

E - Changes in pension liabilities

These costs are recognized:

The actuarial gains and losses generated have been recorded in "Other comprehensive income" according to IAS 19R. It can be analyzed as follows:

F - Retirement pension liabilities: sensitivity to changes in the discount rate and in the inflation rate in the main scope

The impact of a 25 basis point increase in the discount rate and in the inflation rate for the projected benefit obligation is as follows:

26.3 Long-service awards

The Group evaluates its liability for the payment of long-service awards, given to employees based on certain seniority requirements. The Group calculates its liability for the payment of long-service awards using the same method and assumptions as for its pension liability. Provisions for long-service awards have been set aside as follows:

^(*) The provision of €34.2 million as of December 31, 2024 relates mainly to Germay (€ 17.5 million).

26.4 Healthcare costs

In addition to pension plans, some Group companies, mainly in the United States, cover the healthcare costs of their employees.

The related liability can be analyzed as follows:

The increase of 25 basis points in the discount rate and 1 percentage point in the healthcare cost trend rates would lead to the following variations on the Group's projected benefits obligations:

Expenses recognized in connection with this liability break down as follows:

⁽¹⁾ Interest cost is recorded under "Other financial income and expenses".

Financial liabilities

The Group's financial liabilities fall within the IFRS 9 categories of (i) financial liabilities at fair value through profit or loss, and (ii) other financial liabilities measured at amortized cost.

They are recorded on the following balance sheet items: "Current financial liabilities" and "Non-current financial liabilities" (Note 27), "Accrued taxes and payroll costs" (Note 29) and "Sundry payables" (Note 30).

Financial assets and liabilities are broken down into current and non-current components for maturities at the balance sheet date: under or over a year.

NOTE 27 Net debt

The Group's financial liabilities are generally measured at amortized cost using the effective interest method.

27.1 Analysis of net debt

The change in net financial debt during the year is as follows: