Michelin Luxembourg SCS : Michelin Luxembourg SCS Société en Commandite Simple Audited accounts as of and for the year ended December 31, 2014

1. General Information

Michelin Luxembourg SCS ("the Partnership") is a limited liability Partnership ("société en commandite simple") incorporated under the laws of the Grand-Duchy of Luxembourg on October 31, 2003.

The Partnership is established for an unlimited period.

The Partnership's financial year starts on January 1^st and ends on December 31^st of each year.

The principal activity of the Partnership is the provision of loans to affiliated undertakings within the Michelin group of companies. These loans have been financed by the issue of guaranteed bonds on the Luxembourg Stock Exchange. On April 2,  2009, the Partnership set up a Euro Medium Term Note Programme registered with the Luxembourg Stock Exchange. The Partnership launched a Bond issue on June 20, 2012 at the Luxembourg Stock Exchange and issued on April 12, 2012 a US Commercial Paper Programme. The US Commercial Papers are being issued for an average term of one month at an average interest rate of 0,31 fixed. The US Commercial Papers Programme is also guaranteed by COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie". On April 24^th, 2014 the Partnership repaid the remaining amount of EUR 401'503'000 of the 8.625% guaranteed bonds 2014.

The principal activities of Michelin Group companies include the manufacture and distribution of vehicle tyres and the publication of travel guides and maps.

The registered office of the Partnership is established at 69, boulevard de la Pétrusse,
L-2320, Luxembourg. The Partnership is registered with the Registre de Commerce of Luxembourg under the section B Number 96 546.

98% of the share capital of the Partnership is held by COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" ("CFM") and the remaining 2% is held by Nitor S.A. (together the "Partners"). These companies are both subsidiaries of Compagnie Générale des Etablissements Michelin. The registered office of CFM and Nitor S.A. is at Route Louis-Braille 10 CH-1763 Granges-Paccot, Switzerland.

The Partnership is included in the consolidated accounts of CFM, which is the undertaking which draws up the consolidated accounts of the smallest and the largest body of undertakings of which the Partnership forms a part as a subsidiary undertaking. The consolidated accounts are available at CFM's registered office.

2              Summary of significant accounting policies

2.1.                          Basis of preparation

The accounts of the Partnership have been prepared in accordance with Luxembourg legal and regulatory requirements under the historical cost convention.

Accounting policies and valuation rules are, besides the ones laid down by the Law of 19 December 2002, as amended, determined and applied by the Management.

2.2.                          Financial fixed and current assets

Financial fixed assets consist of loans to affiliated undertakings bearing accrued interest are valued at their nominal value.

If the Management determines that a durable impairment has occurred in the value of a financial fixed asset, a value adjustment is made in order to reflect that loss.
These value adjustments are not continued if the reasons for which they were made have ceased to apply.

Current assets consist of amounts owed to affiliated undertakings becoming due and payable after less than one year and are recorded at their nominal value.
A value adjustment is made when their recovery is partly or completely in doubt.
These value adjustments are not continued if the reasons for which they were made have ceased to apply.

2.3.                          Foreign currencies translation

The Partnership maintains its financial records in euros ("EUR"). Assets and liabilities denominated in other currencies are translated into EUR at the rate effective at the balance sheet date. Income and expense transactions are recorded at the rate effective at the date of the transactions. Realized exchange gains and losses, and unrealized exchange losses, are recorded in the profit and loss account.

Currently the Partnership has an asset of USD 372'022,20, equivalent to EUR 306'670,55 on CFM.

2.4.                          Prepayments

Prepayments represent costs associated with the issuance of the guaranteed bonds which are amortized to the profit and loss account over the contractual term of the bonds, and the interest paid in advance on the US Commercial Papers.

2.5.                          Debts

Debts are recorded at their reimbursement value.

Loans and amounts owed to affiliated undertakings bear interests which are accrued on a pro rata temporis basis.

2.6.                          Non-convertible loans

Non-convertible loans are represented by guaranteed bonds such are valued at their nominal value and bear interests which are accrued on a pro rata temporis basis.

2.7.                          US Commercial Papers

US Commercial Papers ("USCP") are recorded at their reimbursement value. Where the amount repayable is greater than the amount received, the difference is shown as an asset and is written off over the period of the debt.

The movements for 2014 were as follows:               

USD
EUR

Openings balance
67'500'000
49'124'880

Amount issued
811'000'000
604'099'815

Amount reimbursed
878'500'000
653'224'695

Balance at December 31, 2014
0'00
0'00

The movements for 2013 were as follows:               

The maximum outstanding amount at any time is USD 700'000'000. The Partnership has no commitment to perform monthly issuance of USCP, issuances are performed only upon
Partnership request.

3. Financial assets

Amounts owed by affiliated undertakings represent interest bearing loans made to finance the development of the Michelin group's operations. Movements for the year are as follows:

4. Debtors

5. Prepayments

6. Subscribed Capital

The Partnership's subscribed capital is set at EUR 1'000'000 divided into two classes of Partnership units, comprising 98'000 unlimited Partnership units (parts commanditées) and 2'000 limited Partnership units (parts commanditaires) with a par value of EUR 10 per unit, each one of them fully paid up.

Each class of Partnership units entitles the same rights and privileges.

The authorized capital amounts to EUR 1'000'000.

The unlimited Partnership units are owned by CFM and the limited Partnership units by Nitor S.A.

No movement in the subscribed capital during the current period occurred.

7. Legal reserve

The Partnership is required to allocate to a legal reserve a minimum of 5% of the annual net income, until this reserve equals 10% of the subscribed share capital. This reserve may not be distributed.

8. Result for the financial year

The Annual General Meeting held on April 3^rd, 2014 approved the loss for the financial year 2013, being EUR 6'065'817,49  and the covering of the loss by the Partners on a pro rata basis. The Partnership's result for the period ended December 31^st, 2014 is a loss of EUR 262'904,91.

According to art. 19 of Articles of Association of the Partnership, the net result of the Partnership as reported in the annual accounts, be it a profit or a loss, will be automatically recorded in the profit and loss of the Partners on a pro rata basis of their participation, in the Partnership. The net profit will be distributed among the Partners, unless the Annual General Meeting of the Partners decides that the profit be either carried forward or transferred to a reserve. In case the net result is a loss, this will be immediately covered by the Partners on a pro rata basis of their participation and meanwhile recorded as "other reserves".

9. Non-subordinated debts

The loans to COMPAGNIE FINANCIERE DU GROUPE MICHELIN, "Senard et Cie" are being financed as at December 31^st, 2014 by guaranteed bond issuances amounting to EUR 400,000,000 (December 31^st, 2013: EUR 803,562,000)  and by USCP amounting to EUR 0 (December 31^st, 2013: EUR 49,124,880).

Non-convertible guaranteed bonds/amounts owed to credit institutions.

The total interest payable on the above guaranteed bonds amounts to EUR 21'733'076      for the period January 1^st, 2014    up to December 31^st, 2014.

The accrued interest payable as at December 31^st, 2014 amounts to EUR 5'876'712.

On April 24, 2014, the 8,625% bond, issued on April 24^th, 2009 was completely repaid.

On June 20^th, 2012, the Partnership issued the 2.75% bonds of EUR 400'000'000 due June 20^th, 2019.

On April 12^th, 2012, the Partnership started issuing US Commercial Paper. As per December 31^st, 2014 there were no outstanding US Commercial Papers. The total interest paid for the year 2014 amounted to USD 153,104 equivalent to EUR 114,176.

The 2019 bond is listed on the Luxembourg Stock Exchange and guaranteed by CFM.

Amounts owed to affiliated undertakings

1. Staff

The Partnership does not have any employee, same in 2013.

1. Related parties transactions

During the financial year, the transactions entered with related parties, described in the previous notes, have been carried out at arm's length.

1. Auditor's fees

The total fees accrued by the Partnership and paid to the audit firm are presented as follows:

1. Subsequent events

From January 1^st, until March 26^th,2015 no significant events were noted.