Faurecia Autositze GmbH

Faurecia

Nanterre

Konzernabschluss zum Geschäftsjahr vom 01.01.2022 bis zum 31.12.2022

Annual Results 2022

- 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

List of consolidated companies as of December 31, 2022

3. Statutory auditors' report on the consolidated financial statements

Statutory auditors' report on the consolidated financial statements

Key figures ^*

^* All results presented after application of IFR5 for 2021.
⁽¹⁾ At constant currencies and scope.
⁽²⁾ Before amortization of acquired intangible assets (§ 2.1 to the consolidated financial statements).
⁽³⁾ Operating income before depreciations and amortization of assets (§ 2.3 to the consolidated financial statements).
⁽⁴⁾ Note 26.1 to the consolidated financial statements..

1. Business review

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

1.7.2. Net cash flow

1.7.3. Net Debt

1.8. Outlook

1.1. Notable facts

ECONOMICAL CONTEXT LINKED TO COVID-19, SHORTAGE OF ELECTRONICS COMPONENTS AND MILITARY CONFLICT IN UKRAINE

In 2022, worldwide automotive production grew by 6.7% vs. 2021, from 77.2 million LVs in 2021 to 82.4 million LVs in 2022. It remains significantly below the 89 million LVs recorded in 2019, before the Covid crisis. The first-half of the year was down 1.1% year-on-year, mostly impacted by Q1 (down 3.5% vs. Q1 2021) that recorded the outbreak of the war in Ukraine in February, while the second half was up 14.8%, mostly reflecting the very low base of comparison of Q3 2021.

It was penalized by Stop and Gos from OEMs consequent to supply chain disruptions due to the war in Ukraine, by the continued shortage of semiconductors and the Covid developments in China:

As regards to the Group's very limited activity in Russia (sales represented 0.4% of total consolidated sales in 2022 vs. 1.4% in 2021), due to the war in Ukraine, OEMs' decisions regarding their operations in Russia and the uncertain and complex environment, Faurecia has decided to disengage from Russia and has depreciated related assets in 2022. The detailed accounting impacts are described in note 6. The group is not present in Ukraine.

1.2. Main events

January 2022

• Faurecia has announced a partnership with BMW group to integrate the Faurecia Aptoide Automotive App Store in future vehicles. The App Store enable an innovative and seamlessly connected app offering in the new models of the world's leading premium car and motorcycle manufacturer.

• On January 31, 2022, Faurecia announced the closing of the HELLA transaction, in line with the indicative timetable. Faurecia now owns a controlling stake exceeding 80% of the shares of HELLA and will consolidate HELLA in its financial accounts as from February 1, 2022. As a result of the transaction, the Hueck and Roepke Family pool received 13,571,385 newly issued shares of Faurecia, thus becoming Faurecia's main shareholder with c. 9% of its share capital. The Family pool agreed to be subject to a first lock-up of its Faurecia shares during 18 months as from the closing date and a subsequent lock-up of 12 additional months for the portion of its Faurecia shares exceeding 5% of the Faurecia share capital.

March 2022

• Faurecia, selected to partner on the hydrogen fuel cell research project, "Bavarian fleet", with MAN.

Faurecia announced that the Company will equip a Bavarian fleet (Bayern flotte) of heavy-duty trucks provided by MAN with complete hydrogen storage systems, as part of a state-supported fuel cell research project.

For this project, backed with about €7 million funding from Bavarian Ministry of Economic Affairs, Regional Development and Energy, Faurecia, part of group FORVIA, will develop and seek certification for a new size of tank perfectly adapted to meet the requirements of heavy-duty vehicles and other applications with intensive use cases.

April 2022

The California Energy Commission (CEC) has selected Symbio, Michelin, Faurecia along with GTI and other industry partners, to develop and demonstrate a hydrogen-fueled, regional-haul Class 8 truck, as major contributors to a state-supported hydrogen mobility project.

The "Symbio H2 Central Valley Express" project, will develop and demonstrate a hydrogen fuel cell truck that matches the performance of a 15-liter diesel truck providing a zero-emission solution for demanding regional-haul trucking operations. This hydrogen truck project strives to support California's goal to achieve economy wide carbon neutrality by 2045.

Faurecia has announced a worldwide long-term partnership with Mercedes-Benz group AG to integrate its apps platform, developed in partnership with Aptoide, into the MBUX multimedia system of one of the global suppliers of premium and luxury cars and vans.

From 2023, the Company will provide a customized app portfolio refreshed multiple times per year to enhance user experience. The Faurecia Aptoide apps platform provides maximum security, privacy and control of content.

May 2022

Faurecia, and Veolia have signed a Cooperation and Research Agreement to jointly develop innovative compounds for automotive interior modules, aiming to achieve an average of 30% of recycled content by 2025. Through this partnership, the two companies will accelerate the deployment of breakthrough sustainable interiors solutions implemented in instrument panels, door panels and center consoles in Europe. Veolia will start the production of these secondary raw materials at its existing recycling sites in France starting from 2023.

In 2011, Faurecia was the first automotive supplier to introduce a complete range of bio-composite cockpit solutions with NAFILean®. More than a decade later and in around 13 million vehicles, these products' CO ₂ footprint is 28% lower than that of conventional all-plastic counterparts.

Faurecia has signed power purchase agreements (PPA) with ENGIE and EDP to equip over 150 sites in 22 countries with solar panels.

This partnership is a major milestone in Faurecia's roadmap to become CO ₂ neutral for its industrial operations (scopes 1 and 2) by 2025.

June 2022

Faurecia in collaboration with the company Air Flow has been awarded a contract to supply high-capacity hydrogen storage containers for refilling stations in the Zero Emission Valley (ZEV), a project involving HYmpulsion.

The ZEV project aims to deploy, before the end of 2024, 1,200 fuel cell vehicles and 20 hydrogen stations, including several equipped with electrolyzers to produce hydrogen from renewable electricity without emitting CO ₂.

• FORVIA, has announced that its joint CO ₂ neutrality roadmap was validated by the Science Based Target initiative (SBTi) on June 6, 2022. Together, Faurecia and HELLA will reach net zero emissions by 2045 - an objective corresponding to the most ambitious standard of SBTi. Only twenty companies worldwide have had their net zero commitments approved so far.

July 2022

• HELLA has agreed the sale of its 33.33% stake in HBPO to its co-shareholder, Plastic Omnium for €290 million.

• Faurecia has signed a €315 million loan with the European Investment Bank (EIB). The €315 million transaction is a bullet loan with a maturity of seven years.

This loan allows Faurecia to enhance its liquidity profile by extending its debt maturity at an attractive financing cost.

September 2022

• Faurecia has been integrated into the Euronext CAC 40 ESG® index that comprises the 40 companies within the CAC® Large 60 index that demonstrate the best Environmental, Social and Governance (ESG) practices.

• FORVIA exhibited at this year's IAA Transportation in Hanover, for the first time with its two brands Faurecia and HELLA. Located in Hall 12 Booth B27 & 31, FORVIA will showcase the combined expertise of both companies in the fields of lighting and electronics as well as clean and sustainable mobility.

• Faurecia, has announced a $210 million loan with Latin America banks. This transaction is part of the program to finance HELLA acquisition. The $210 million transaction is structured into two tranches in USD and MXN, with a 2028 maturity. Margin above reference rates is close to 3.35% on average which represents an attractive financing cost in the current environment.

October 2022

• The zero emissions mobility activities of Faurecia, are selected as being of common European interest. Faurecia and Symbio are among the 10 projects supported by the French government in IPCEI (Important Project of Common European Interest). €2.1 billion are provided to support those 10 projects to accelerate the hydrogen industry in France.

• Faurecia, has been awarded by HYVIA, a joint venture between Renault Group and Plug. Faurecia will supply next generation hydrogen storage systems for the mass production of its Renault Master H2-TECH, made in France. The hydrogen storage systems will be produced in Faurecia's plant located in Allenjoie, France, which has a capacity of over 100k tanks per year.

• Faurecia, signed a power purchase agreement (PPA) of Europe's largest investors in renewable energy, Octopus Energy Generation and Mirova, a management company dedicated to sustainable investment and an affiliate of Natixis Investment Managers. The installed capacity of the project reaches 85.8 megawatts (MW). The wind turbines are located in Alingsas, Sweden. This agreement will support FORVIA's plan to reach net-zero CO ₂ emissions by 2045.

November 2022

• FORVIA announced the creation of MATERI'ACT, a new brand to massively develop and manufacture cutting-edge sustainable materials. FORVIA is the first in the automotive industry whose "net zero emissions" objective is validated by the Science Based Target initiatives, and thus reinforces its technological advantage in the field to offer mobility experiences that matter to people.

• Faurecia and HELLA, operating together as FORVIA hosted their first joint Capital Markets Day, during which the Group presented Power25, its new medium-term plan to drive profitable growth, enhance cash generation and accelerate Group deleveraging.

The ambitions of FORVIA's Power25 plan are focused on three key strategic priorities:

They are translated into the following 2025 financial objectives (based on an assumption of worldwide automotive production of 88 million units in 2025 and after the estimated effect of the €1bn disposal program by end-2023):

• FORVIA, has received the prestigious CES 2023 Innovation Award in the category "Vehicle Tech & Advanced Mobility" as "Honoree" for its digital, chip-based "Solid State Lighting | High Definition" (SSL | HD) headlamp system.

• Faurecia has successfully priced €700 million in aggregate principal amount of SL Notes at 7.25%. The SL Notes are to be issued under Faurecia's Sustainability-Linked Financing Framework established in October 2021.

December 2022

• FORVIA showcased its newest solutions in electrification and energy management, automated and safe driving, and personalized experiences in the digital and sustainable cockpit. Through these technologies, FORVIA illustrated its commitment to becoming carbon-neutral across all operations and products by 2045.

• Faurecia, Michelin and Stellantis announced exclusive negotiations for Stellantis to acquire a substantial stake in Symbio, a leader in zero-emission hydrogen mobility, to become a significant player along with existing shareholders Faurecia and Michelin.

January 2023

• Faurecia has successfully priced the New Notes, sustainability-linked 7.25% senior notes due 2026 (the "New Notes") following a private placement arranged by BNP Paribas. Faurecia priced the New Notes at 101.75% of par, or a yield of 6.65%.

The proceeds of the issuance of the New Notes is used to fully reimburse the Bridge-to-Bond and the Bridge-to-Equity in connection with the HELLA acquisition and for general corporate purposes.

February 2023

• Faurecia has issued on February 1st, 2023 €250 million of New Notes, sustainability-linked 7.25% senior notes due 2026. The proceeds of the issuance of the New Notes will be used to fully reimburse the Bridge-to-Bond and the Bridge-to-Equity in connection with the HELLA acquisition (see note 26.3) and for general corporate purposes.

• Faurecia has entered in February 2023 into exclusive negotiations with Cummins for the potential sale of a part of its Commercial Vehicle exhaust after treatment business. The potential transaction would be subject to customary conditions precedents, including regulatory approvals and completion of applicable employee representative consultations.

• Faurecia has announced mid February 2023 to have signed with the Motherson Group an agreement by which Motherson commits to acquire Faurecia SAS Cockpit Modules division (assembly and logistics services), reported as part of its Interiors Segment, for an enterprise value of €540 million. The transaction will be subject to customary conditions precedents, including regulatory approvals.

All press releases related to these events are available on the site www.faurecia.com

1.3. Automotive production

Worldwide automotive production increased by 6.7% from 2021 to 2022. It decreased in Europe (including Russia) by 0.5%, increased in Americas by 9.4% (o/w an increase of 9.7% in North America and 8.3% in South America) , increased in the rest of the world by 9.2%, and increased in Asia by 8.2% (of which an increase of 6.4% in China).

The data related to automotive production and volume evolution is based on IHS Markit Automotive reported dated February 2023 (vehicles segment in line with CAAM for China).

Automotive production and volume evolution from 2021 to 2022

1.4. Sales

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

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

In 2022, there was no effect from "bolt-on acquisitions".

^* Scope effect includes HELLA sales from July to December 2022.

^* Scope effect includes HELLA sales from February to December 2022.

Sales of products (parts, components and R&D sold to manufacturers) reached €24,106.5 million in 2022 compared to €14,572.7 million in 2021. This represents an increase of 65.4% on a reported basis and by 17.8% at constant scope & currencies.

Sales of tooling, prototypes and other services reached €1,351.7 million in 2022 compared to €1,045.1 million in 2021. This represents an increase of 29.3% on a reported basis and an increase of 6.1% at constant scope & currencies.

Sales reached €25,458.2 million in 2022 compared to €15,617.8 million in 2021. This represents an increase of 63.0% on a reported basis and 17.0% at constant scope & currencies.

1.4.1. Sales by region

^* Scope effect includes HELLA sales from July to December 2022.

^* Scope effect includes HELLA sales from February to December 2022.

Sales by region in 2022 were as follows:

1.4.2. Sales by customer

In 2022, sales ^* to FORVIA four main customers (VW, Stellantis, Renault-Nissan-Mitsubishi, Ford) amounted to €12,280.9 million or 48.2% compared to 60.2% in 2021:

^* The presentation of sales invoiced may differ from that of sales by end customer when products are transferred to intermediary assembly companies.

1.4.3. Sales by Business Group

^* Scope effect includes HELLA sales from July to December 2022.

^* Scope effect includes HELLA sales from February to December 2022.

In 2022:

1.5. Operating income

In 2022:

1.5.1. By region

The operating income in 2022 compared to 2021 increased by €253.2 million :

1.5.2. By Business Group

In 2022:

1.6. Net income

The net income group share is a loss of €381.8 million, or -1.5% of sales in 2022. This is to be compared to a loss of €78.8 million or -0.5% of sales in 2021. It represented a decrease of €303.0 million.

In 2022:

Basic earnings per share amounted to €-2.20 (diluted net earnings per share at €-2.20) compared to €-0.57 in 2021 (diluted net earnings per share at €-0.57).

1.7. Financial structure

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

1.7.2. Net cash flow

The net cash flow was an inflow of €470.8 million compared to a net cash inflow of €304.6 million over the same period in 2021. It can be explained as follows:

1.7.3. Net Debt

The Group's net financial debt stood at €7,939.1 million at Decembers 31, 2022 compared to €3,466.7 million at December 31, 2021.

The net debt evolution is mainly impacted by the HELLA acquisition effective on the 31st of January 2022 as well as the positive net cash flow evolution of €470.8 million, the purchase of treasury shares for €1.1 million, dividends paid for €54.9 million, the net financial investments and other cash elements outflow of €4,537.5 million (mainly impacted by the HELLA acquisition) and the negative impact of €349.7 million related to IFRS 16.

The main elements of long-term financial resources are:

1.8. Outlook

FORVIA 2023 GUIDANCE

Based on the following assumptions:

FORVIA's full-year 2023 guidance is as follows:

This guidance assumes no major lockdown impacting production or retail sales in any major automotive region during the year.

FY 2025 TARGETS CONFIRMED (after estimated impact of the disposal program of €1 bn by year-end 2023)

FORVIA's full-year 2025 targets, as presented at the recent Capital Markets Day held on November 3, 2022, are fully confirmed (based on an assumption of worldwide automotive production of 88 million vehicles in 2025, more conservative than S&P's latest forecast of 90 million, and on 2025 currency rates of USD/€ @ 1.05 and CNY/€ @ 7.00):

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

List of consolidated companies as of December 31, 2022

In the financial statements reported thereafter, please note that:

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 €470.8 million as of December 31, 2022 and €304.6 million as of December 31, 2021.

2.4. Consolidated statement of changes in equity

⁽¹⁾ Of which 84,171 treasury stock as of 12/31/2022 and 84,171 treasury stock as of 12/31 /2021 - See Note 9.
⁽²⁾ Of which €524.5 million on January 31, 2022 and €692.3 million on June 24, 2022.
^* See Note 10.A.
^** See Note 1.A.

2.5. Notes to the consolidated financial statements

Contents

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

Faurecia 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 Faurecia's Board of Directors on February 17, 2023.

The accounts were prepared on a going concern basis.

Note 1 Summary of significant accounting policies

1.A Accounting principles

The consolidated financial statements of the Faurecia 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 2022 consolidated financial statements and comparative data for 2021 are those published in the Official Journal of the European Union (OJEU) as of December 31, 2022, whose application was mandatory at that date. The new standards, amendments and revisions to the existing standards, whose publication is mandatory from January 1, 2022, have no significant impact on the Group consolidated financial statements, more specifically the IAS 37 amendment on cost of fulfilling a contract and the IFRS IC decision on SaaS softwares.

Moreover, Faurecia has not undertaken any early application of new standards, amendments or interpretations whose application is mandatory after December 31, 2022, irrespective of whether or not they are adopted by the European Union.

The principal accounting policies considered have been applied consistently to all presented periods. Specifically, the operating margin (before amortization of intangible assets acquired) is the Faurecia 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 recent macro economic context of the military conflict Ukraine (see Note 2.5). 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 CO ₂ neutral scopes 1 & 2 and by 2030 reducing green house gas (GHG) emissions 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 25.2, respectively. In addition, note 11 "Intangible Assets" describes the main assumptions used for measuring intangible assets.

1.B 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 Faurecia 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 to Group affiliates in Argentina in 2021 and 2022 and in Turkey in 2022.

However certain 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.

Note 2 Change in scope of consolidation and recent events

2.1 Major perimeter change with HELLA acquisition

On August 14, 2021, Faurecia has announced the signature of agreements concerning the acquisition of block of control for 60% of the shares from the controlling family pool and a public tender cash offer on the remaining 40% shares of HELLA, group listed on the Frankfort Stock Exchange, for a price of €60 per HELLA share, corresponding to a total value of €6.7 billion for the total number of shares. 19.5% of HELLA shares were tendered in the takeover offer by HELLA shareholders, which has been launched on September 27, 2021 by Faurecia and closed on November 11, 2021.

Following approval from the appropriate regulatory bodies, Faurecia has completed on January 31, 2022 the acquisition of 79.5% of HELLA, comprising the 60% acquired from the family pool, of which 8.95% were paid through newly issued Faurecia shares and 19.5% as a result of the public tender offer mentioned above. Faurecia also acquired additional shares on the market, representing 2.09% of HELLA shares as of March 18, 2022. As of December 31, 2022, Faurecia holds 81.6% of HELLA shares.

Faurecia has an exclusive control on HELLA, which is fully consolidated (including all its significant affiliates) since February 1, 2022. The new group combining Faurecia and HELLA is now named FORVIA.

The combination of Faurecia and HELLA creates the 7th largest global automotive supplier, focused on four growth areas, fully aligned with industry megatrends:

2.2 Other changes in scope in 2022

Within the Seating perimeter, in China the companies Xian Faurecia Automotive Parts Co., Ltd and Changzhou Faurecia Automotive Parts Co., Ltd have been created and are fully consolidated since February 2022; they are held at 70% by the Group. The company Faurecia (Tianjin) Automotive Systems Co., Ltd has been created and is fully consolidated since February 2022; it is held at 100%. The company Faurecia (Changshu) Automotive System Co., Ltd in China, fully consolidated, is being held at 60% vs initially at 55% since October 2022.

For the Electronics perimeter, in Mexico, the company Hitachi Automotive Systems San Juan Del Rio, S.A. de C.V held at 20% and consolidated in equity method had been sold in June 2022. In China, the company Changchun FAWSN Faurecia Cockpit of Future System Co., Ltd in China, has been acquired in July 2022 at 50% and is fully consolidated and the company Faurecia Clarion (Wuhan) has been created and is fully consolidated since September 2022, it is held at 100%.

Within the Lighting perimeter, the company HBPO Beteiligungsgesellschaft mbH in Germany, consolidated in equity method with a share of 27% since February 2022 following HELLA acquisition (see 2.1) has been sold in December 2022.

2.3 Disposal of Acoustic Soft Trim

On October 31, 2021, Faurecia sold to the group Adler its business Acoustic Soft Trim, which manufactures and sells acoustic products and soft trims, with eight plants and one R&D center, all based in Europe, within the Interiors segment. An expert has been nominated to determine any potential price adjustments based on Acoustic Soft Trim accounts on transaction date; no significant impact is expected on Group financial statements.

2.4 Reminder of change in scope of consolidation introduced in 2021

Within the Clean Mobility perimeter, in China the company Kaishi Faurecia Aftertreatment Control Technologies Co., Ltd has been acquired at 35% in March 2021 and is consolidated by equity method and the company Faurecia CLD Safety Technology (Shenyang) Co., Ltd has been acquired in May 2021 at 65% and is fully consolidated. The company Hongtai Faurecia Composite (Wuhan) Co. Ltd, consolidated by equity method and held at 50%, has been sold in June 2021. In Indonesia, the company PT Faurecia Clean Mobility Indonesia held at 100%, has been created in September 2021 and is fully consolidated. In October 2021, Faurecia has acquired the remaining shares of Faurecia Metalloprodukcia Holding, already held at 70% and fully consolidated. The company's name is now Faurecia Exhaust Russia Holding.

For Clarion Electronics perimeter, in Sweden, the company Faurecia Créo, held at 78.5% is now held at 100% and is fully consolidated. In Malaysia, the company Crystal Precision Sdn, Bhd previously held at 86.25% and fully consolidated, was held at 30% in June 2021 and consolidated by equity method during the first half year 2021, has been progressively sold between July and December 2021.

Within Seating perimeter, the company Faurecia (Shanghai) Automotive Component Co. Ltd, has been created in February 2021 and is fully consolidated.

The company Faurecia Ré has been acquired at 100% in Luxembourg in May 2021; it is fully consolidated and will be used to manage the insurance policies of the Group.

2.5 Recent events

ECONOMICAL CONTEXT LINKED TO COVID-19, SHORTAGE OF ELECTRONICS COMPONENTS AND MILITARY CONFLICT IN UKRAINE

In 2022, worldwide automotive production grew by 6.7% vs. 2021, from 77.2 million LVs in 2021 to 82.4 million LVs in 2022. It remains significantly below the 89.0 million LVs recorded in 2019, before the Covid crisis. The first-half of the year was down 1.1% year-on-year, mostly impacted by Q1 (down 3.5% vs. Q1 2021) that recorded the outbreak of the war in Ukraine in February, while the second half was up 14.8%, mostly reflecting the very low base of comparison of Q3 2021.

It was penalized by Stop and Gos from OEMs consequent to supply chain disruptions due to the war in Ukraine, by the continued shortage of semiconductors and the Covid developments in China :

As regards to the Group's very limited activity in Russia (sales represented 0.4% of total consolidated sales in 2022 vs. 1.4% in 2021), due to the war in Ukraine, OEMs' decisions regarding their operations in Russia and the uncertain and complex environment, Faurecia has decided to disengage from Russia and has depreciated related assets in 2022. The detailed accounting impacts are described in note 6. The group is not present in Ukraine.

Note 3 Post-balance sheet events

Faurecia has issued on February 1st, 2023 €250 million of New Notes, sustainability-linked 7.25% senior notes due 2026. The proceeds of the issuance of the New Notes was used to fully reimburse the Bridge-to-Bond and the Bridge-to-Equity in connection with the HELLA acquisition (see note 26.3) and for general corporate purposes.

Faurecia has entered in February 2023 into exclusive negotiations with Cummins for the potential sale of a part of its Commercial Vehicle exhaust aftertreatment business. The potential transaction would be subject to customary conditions precedents, including regulatory approvals and completion of applicable employee representative consultations.

Faurecia has announced mid February 2023 to have signed with the Motherson Group an agreement by which Motherson commits to acquire Faurecia SAS Cockpit Modules division (assembly and logistics services), reported as part of its Interiors Segment, for an enterprise value of €540 million. The transaction will be subject to customary conditions precedents, including regulatory approvals.

Note 4 Information by operating segment

The Group is structured into business units based on the nature of the products and services offered. Following the integration of HELLA activities, acquired on January 31, 2022 (see note 2.1) and the consequent group organization, the group business units are presented as follows.

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.

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.

Faurecia 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.

Operating margin (before amortization of acquired intangible assets) is the Faurecia 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 2022

Full-Year 2021

4.3 Sales by operating segment

Sales by operating segment break down as follows:

4.4 Sales by major customer

Sales ^* by major customer break down as follows:

^* The presentation of sales invoiced may differ from that of sales by end customer when products are transferred to intermediary assembly companies.

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:

2022

2021

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 22.2 and 25, 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 € 881.9 million as of December 31, 2022, vs €701.0 million as of December 31, 2021.

5.5 Depreciation, amortization and provisions for impairment in value of non-current 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, 2022, this item includes restructuring costs in the amount of €207.7 million and provisions for impairment in value of assets in the amount of €144.1 million versus €137.6 million and €58.7 million as of December 31, 2021.
⁽²⁾ Of which €43.0 million of costs linked to the acquisition and integration of HELLA as of December 31, 2022 and €25.6 million as of December 31, 2021.
⁽³⁾ The costs linked to reduction of activities in Russia amounted to €130.3 million as of December 31, 2022 of which €103.9 million of reorganization expenses and €26.4 million of others.

RESTRUCTURING

Reorganization costs (€351.8 million) include redundancy and site relocation payments for 3,306 people.

Note 7 Finance costs and Other financial income and expenses

7.1 Finance costs

7.2 Other financial income and expenses

^* This item includes amortization of costs related to long-term debts and commissions for non-use of the credit facility.
⁽¹⁾ Of which €34.3 million of financial costs linked to the acquisition of HELLA vs. €11.4 million in 2021.

Note 8 Corporate 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 forecasts.

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 28).

Corporate income tax can be analyzed as follows:

8.1 Analysis of the tax charge

The effective corporate income tax charge can be reconciled with the theoretical tax charge as follows:

^* The impact of local rate differences mainly relates to Chinese and German entities.
^** Mainly due to withholding tax.

8.2 Analysis of tax assets and liabilities

The Group considers the recovery of the deferred tax net balance as at December 31, 2022, i.e. €300.1 million, as probable.

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

^* Mainly related to actuarial gains and losses directly recognized in equity.

8.3 Deferred tax assets and liabilities by nature

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).

⁽¹⁾ Changes in the number of shares outstanding as of December 31, 2022, are analyzed as follows:

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 10A Business Combination - HELLA

Following approval from the appropriate regulatory bodies, Faurecia, through its subsidiary Forvia Germany GmbH, has acquired 79.5% of the HELLA shares on January 31, 2022 and through additional acquisitions on the market, holds 81.6% of HELLA shares as of December 31, 2022 (see Note 2.1) for a total amount of €5.4 billion and has the exclusive control over HELLA. Minority interests represent 18.4% of HELLA shares. The €5.4 billion are composed of €4 billion of consideration transferred to the family pool (€3.5 billion of cash and €0.5 billion of Faurecia shares), €1.3 billion of cash paid for the tender offer on the 19.5% and €0.1 billion of cash paid for the acquisition of additional shares on the market and from the family.

HELLA is a major automotive supplier, which develops and manufactures lighting technology and electronics components and systems for the automotive industry. The Group's production and manufacturing sites are located across the globe; its most significant markets are in Europe, the USA and Asia, particularly China. The Company is listed on the Frankfort stock exchange and is based in Lippstadt, Germany. HELLA has achieved in its fiscal year 2021 €6,380 million sales and was employing 36,500 employees.

The one-year period during which the amounts of assets acquired and liabilities assumed and the related goodwill may be amended has ended on January 31, 2023. Out of the initial purchase price for a 100% basis of €6,714.1 million; €3,700.0 million have been allocated to the net assets acquired, specifically to technology for €658 million, trademark for €233 million and customer relationships for €379 million, and €3,014.0 million to the goodwill, mainly representing the expected synergies of HELLA integration and the new market opportunities.

HELLA accounts have been included in the consolidated financial statements since February 1, 2022. HELLA total contribution to Faurecia's consolidated revenue and operating income (before amortization of acquired intangible assets) was respectively €6,512.1 million and €345.9 million for the year 2022. Would HELLA have been consolidated from January 1, 2022, its contribution based on a pro rata temporis of the 11 last consolidated months would amount to €7,104.1 million to the consolidated revenue and €377.4 million to the operating income (before amortization of acquired intangible assets).

The table below shows a breakdown of the fair value of HELLA assets acquired and liabilities assumed:

The costs linked to the acquisition and integration of HELLA are booked in "Other non-recurring operating expenses" for €43.0 million in 2022 v.s. €25.6 million in 2021 (see note 6) and in "Other financial income and expenses" for €34.3 million in 2022 v.s. €11.4 million in 2021 (see note 7).

The fair value of minority interests of HELLA as at acquisition date was €1,271.2 milllion.

Note 10B 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 and at least once a year. 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 2023-2025 forecasts which were drafted in the second semester of 2022. The volume assumptions used in the strategic plan are based on worldwide automotive market assumptions of 81 million of cars in 2023, 85 million in 2024 and 88 million in 2025, 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. In order to take into account the development plan for the activities integrated following HELLA acquisition in 2022, the cash flow forecasts used for Electronics, Lighting and Lifecycle solutions are based on forecasts extended until 2027.

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 2025 remains above 7% of sales for the Group as a whole.

Projected cash flows for the last year 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 2022 test was 1.4% (1.4% applied at the end of 2021), except for Electronics for which 2% has been considered given the specific development of this segment.

Faurecia 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 7.3% on average, the weighted cost of capital used to discount future cash flows was set at 10.5% (on the basis of a range of values provided by the independent expert) in 2022 (9.3% in 2021). 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; as a reminder in 2021 a discount rate of 8.3% had been considered except for Clarion Electronics, to take into account a slightly different country exposure, which is no more the case in 2022, the Electronics segment combining this activity with HELLA Electronics.

The tests performed as of December 31, 2022 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, 2022 to determine the value in use of the CGUs groups to which the Group's goodwill is allocated:

Note 11 Intangible assets

A. Research and development expenditure

The Faurecia 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.

B. 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, and the intangible assets acquired in business combinations (customer relationship...); these assets are amortized on the corresponding contracts duration.

Intangible assets break down as follows:

^* see note 10A.

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 Faurecia's Business Plans are the best estimates by the Group's Marketing department based on automakers' forecasts when available.

Note 12A 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:

^* 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 12B 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:

Note 13 Investments in associates

Investment in associates are :

As of December 31, 2022

^* 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 14 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 15 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 16 Other non-current assets

This item includes:

Note 17 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.

Note 18 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, 2022, 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, 2022 were €239.5 million, breaking down as follows:

Note 19 Other operating receivables

Note 20 Other receivables

In 2022, the receivables Crédit d'Impôt Recherche (CIR) have been sold for an amount of €41.9 million vs €57.2 million in 2021.

Note 21 Cash and cash equivalents

Cash and cash equivalents include current account balances in the amount of €3,747.5 million (compared to €2,196.4 million in 2021) and short-term investments in the amount of €453.5 million (compared to €2,709.3 million after depreciation of €0.7 million in 2021), for a total of €4,201.1 million as of December 31, 2022 vs €4,905.7 million as of December 31,2021.

These components include cash at bank, current account balances, marketable securities such as money market and short-term 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 22 Shareholders' equity

22.1 Capital

As of December 31, 2022, Faurecia capital stock totaled €1,379,625,380 divided into 197,089,340 fully paid-up shares with a par value of €7 each.

Within the frame of the Faurecia share issue paying part of the 60% shares Hella acquisition (cf note 2.1), Faurecia has issued 13,571,385 new shares on January 31, 2022.

As a consequence of the capital increase with preferential subscription rights and which subscription period was open from June 9, 2022 to June 17, 2022 included, 45,482,154 new Faurecia shares have been subscribed with a par value of €15.50, of which 43,521,870 ordinary new shares on a non-reductible basis and 1,960,284 ordinary new shares on a reductible basis.

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.

22.2 Share-based payment

FREE SHARE GRANT

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

In 2021, Faurecia 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 5 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 Faurecia'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, 2022 are set out in the table below:

^* Net of free shares granted cancelled.

The performance conditions for the plan attributed by the Board of October 9, 2019 have been partially met, the corresponding shares (81,117), will be distributed in October 2023. For each of the plans presented above, the number of potential free shares has been adjusted following the capital increase in cash performed in June 2022 in compliance with the rules and after approval of the Board, by applying a 1.0788 factor to the initial values.

OTHER PLANS

A long-term variable remuneration (long-term incentive, LTI) has been implemented for HELLA Management Board before HELLA acquisition by Faurecia. This long-term incentive is paid in cash. 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). 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 RolC; the long-term variable remuneration is based on a calculation period of five fiscal years and payment is made once the calculation period comprising a total of five fiscal years has come to an end. For example, the LTI allocated for the fiscal year 2020/2021 will be paid out at the end of the fiscal year 2024. As these LTI are share-based, their value is recognized according to IFRS 2.

With the exception of one member of the HELLA Management Board, for whom the LTI regulations described above were also applied in the fiscal year 2019/20, LTI allocated for fiscal year 2019/20 do not include the performance of the HELLA share as a performance criteria and their calculation period comprises only a total of four fiscal years.

There are currently 4 plans on going and one additional plan that has vested but not yet been paid out as of December 31, 2022, with the following valuation:

The amount recognized for the period for all these plans is an expense of €16.4 million, compared to €3.9 million in the year of 2021.

22.3 Treasury stock

As of December 31, 2022, Faurecia held 84,171 treasury stock shares.

The cost of the shares held in treasury stock as of December 31, 2022 totaled €3.5 million, representing an average cost of €41.99 per share.

Note 23 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 mainly correspond to the minority interests of HELLA, representing €1,264.5 million as of December 31, 2022.

Note 24 Current provisions and contingent liabilities

24.1 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 2022 were as follows:

^* Surplus provisions.

24.2 Contingent liabilities

LITIGATION

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 25 Non-current provisions and provisions for pensions and other post-employment benefits

25.1 Non-current provisions

CHANGES IN NON-CURRENT PROVISIONS

^* (Cf. Note 25.2.)

25.2 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 now also into account the 2021 IFRS IC decision on attributing benefit to periods of services. These assumptions are described in Note 25.2.

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 €284.5 million in 2022.
⁽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 according to seniority at this date, in order to comply with the PACTE law from May 22, 2019. Executive Committee members who have an employment contract with Faurecia 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 according to seniority at this date, 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 828 participants.

In Germany, the main defined benefit pension plan still open covers 5,164 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 7,958 participants.

In Japan, the main defined benefit plan covers 881 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 2022.

D - Provisions for pension liabilities recognized on the balance sheet

⁽¹⁾ (cf. Note 25.2)
^* The provision for €376.7 million as of December, 31, 2022 relates mainly to Germany (€311.0 million).

E - Changes in pension liabilities

Retirement commitments have evolved as detailed below:

^* Cf. Note 25.2.

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:

25.3 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:

25.4 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:

^* 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 26), "Accrued taxes and payroll costs" (Note 27) and "Sundry payables" (Note 28).

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 26 Net debt

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

26.1 Analysis of net debt

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

26.2 Maturities of long-term debt