NOTE 25—PROVISIONS


*(in millions of Euros)*	Notes		Close down and environmental remediation costs			Restructuring costs			Legal claims and other costs			Total
At January 1, 2018				81			5			67			153
Transfer from provision to contract liability		2		—			—			(23	)		(23	)
Allowance				3			1			15			19
Amounts used				(2	)		(2	)		(4	)		(8	)
Unused amounts reversed				—			(1	)		(6	)		(7	)
Unwinding of discounts				(1	)		—			—			(1	)
Effects of changes in foreign exchange rates				2			—			1			3
Transfer				—			—			4			4

At December 31, 2018				83			3			54			140

Current				5			1			40			46
Non-Current				78			2			14			94

Total Provisions				83			3			54			140


*(in millions of Euros)*	Notes	Close down and environmental remediation costs			Restructuring costs			Legal claims and other costs			Total
At January 1, 2017			88			5			56			149
Allowance			3			3			19			25
Amounts used			(2	)		(2	)		(3	)		(7	)
Unused amounts reversed			—			(1	)		(4	)		(5	)
Unwinding of discounts			(1	)		—			—			(1	)
Effects of changes in foreign exchange rates			(7	)		—			(1	)		(8	)

At December 31, 2017			81			5			67			153

Current			4			3			33			40
Non-Current			77			2			34			113

Total Provisions			81			5			67			153

Close down, environmental and remediation costs

The Group records provisions for the estimated present value of the costs of its environmental clean-up obligations and close down and restoration efforts based on the net present value of estimated future costs of the dismantling and demolition of infrastructure and the removal of residual material of disturbed areas, using an average discount rate of 1.04%. A change in the discount rate of 0.5% would change the provision by €2 million.

It is expected that these provisions will be settled over the next 40 years depending on the nature of the disturbance and the technical remediation plans.

Restructuring costs

The Group records provisions for restructuring costs when management has a detailed formal plan, is demonstrably committed to its execution and can reasonably estimate the associated liabilities. The related expenses are presented as Restructuring costs in the Consolidated Income Statement.

Legal claims and other costs


*(in millions of Euros)*	At December 31, 2018		At December 31, 2017
Maintenance and customer related provisions^(A)		6		25
Litigation^(B)		41		36
Disease claims^(C)		4		3
Other		3		3

Total Provisions for legal claims and other costs		54		67

(A)	Contract liabilities related to refund penalties and price concessions previously presented as provisions have been reclassified for €23 million as of January 01, 2018.

(B)

The Group is involved in litigation and other proceedings, such as civil, commercial and tax proceedings, incidental to normal operations. It is not anticipated that the resolution of such litigation and proceedings will have a material effect on the future results, financial position, or cash flows of the Group.

(C)

Since the early 1990s, certain activities of the Group’s businesses have been subject to claims and lawsuits in France relating to occupational diseases resulting from alleged asbestos exposure, such as mesothelioma and asbestosis. It is not uncommon for the investigation and resolution of such claims to go on over many years as the latency period for acquiring such diseases is typically between 25 and 40 years. For any such claim, it is up to the social security authorities in each jurisdiction to determine if a claim qualifies as an occupational illness claim. If so determined, the Group must settle the case or defend its position in court. At December 31, 2018, 6 cases in which gross negligence is alleged (“faute inexcusable”) remain outstanding (7 at December 31, 2017), the average amount per claim being less than €0.1 million. The average settlement amount per claim in 2018 and 2017 was less than €0.1 million. It is not anticipated that the resolution of such litigation and proceedings will have a material effect on the future results from continuing operations, financial position, or cash flows of the Group.

Contingencies

The Group is involved, and may become involved, in various law suits, claims and proceedings relating to customer claims, product liability, and other commercial matters. The Group records provisions for pending litigation matters when it determines that it is probable that an outflow of resources will be required to settle the obligation, and such amounts can be reasonably estimated. In some proceedings, the issues raised are or can be highly complex and subject to significant uncertainties and amounts claimed are and can be substantial. As a result, the probability of loss and an estimation of damages are and can be difficult to ascertain.

The Group is currently subject to an arbitration by a customer claiming that Constellium supplied defective products as a result of which the customer alleges it has suffered significant damages. The Group considers that the claim is without merit on both technical and legal grounds and is vigorously defending the action. For this matter and in respect of others which the Group considers are without merit, while it is possible that an unfavorable outcome may result, after assessing the information available, the Group has concluded that it is not probable that a loss has been incurred.

In exceptional cases, when the Group considers that disclosures relating to provisions and contingencies may prejudice its position, disclosures are limited to the general nature of the dispute.