Valeo: Impact of the Transition to IFRS on Opening Equity

PARIS, February 10 -- Following a meeting of its Board of Directors, Valeo presents its IFRS opening stockholders' equity at 1 January 2004 - the date of the transition to the new standards. This has been validated by the Statutory Auditors and the Audit Committee.

In accordance with the IFRS first-time adoption guidelines, the adjustments resulting from IFRS application at 1 January 2004 have been recorded in stockholders' equity.

The table below summarises the impact of IFRS on the opening stockholders equity at 1 January 2004.

    
    Stockholders' equity including 
    minority interests (in millions of euros)         1 January 2004
    Under French GAAP                                   2,112 (I)
    Pensions and other employee benefits                 -245
    Development expenses                                  148
    Specific tooling                                      -53
    Other adjustments (III)                              -112
    Total impact of IFRS restatements                    -262
    Under IFRS                                          1,850 (II)

(I) of which 132 million euros in minority interests

(II) of which 97 million euros in minority interests

(III) individual impact less than 50 million euros

In total, the application of the new standards has a negative impact of 262 million euros in the stockholders' equity including minority interests (of which 227 million euros excluding minority interests).

The most significant impact comes from:

1. Pensions and other employee benefits: full recognition (in accordance with IFRS first-time adoption guidelines) of actuarial gains and losses unrecognised at 31 December 2003 under French GAAP, changes in the method of calculation of certain obligations and the redefinition of some actuarial assumptions in accordance with IAS 19;

2. Capitalisation of some development costs in accordance with IAS 38,

3. Redefinition of the accounting treatment for tooling.

These effects are detailed in the section of the 2004 Management Report dedicated to the transition to IFRS standards.

The consolidated 2004 financial statements (income statement, balance sheet, cash flow statement and a statement of changes in stockholders' equity) restated under IFRS will be published on 19 April 2005, at the same time as the first quarter 2005 results. For each of the main items of the financial statements Valeo will provide a French GAAP/IFRS reconciliation accompanied by explanatory notes. The impact (on the Group's stockholders' equity and net debt) of IAS 32 and 39 relating to financial instruments and applicable from 1 January 2005 will also be presented.

The interim figures at 31 March and 30 September 2005 as well as financial statements at 30 June 2005 will also be published using IFRS, with comparative information restated according to the same principles as those used in 2005 (except for IAS 32 and 39).

Valeo is an independent industrial group fully focused on the design, production and sale of components, integrated systems and modules for cars and trucks. Valeo ranks among the world's top automotive suppliers. The Group has 129 plants, 65 R&D centres, 9 distribution platforms and employs 67,300 people in 26 countries worldwide.

Kate Philipps, Group Communications Director, Kate.philipps@valeo.com, Tel.:+33-1-40-55-20-65. Remy Dumoulin, Financial Relations Director, Remy.dumoulin@valeo.com, Tel.: +33-1-40-55-29-30