Groupe Renault - 2019 Universal Registration Document

RENAULT: A RESPONSIBLE COMPANY

ANNUAL GENERAL MEETING OF RENAULT ON APRIL 24, 2020

FINANCIAL STATEMENTS

GROUPE RENAULT

CORPORATE GOVERNANCE

RENAULT AND ITS SHAREHOLDERS

ADDITIONAL INFORMATION

CONSOLIDATED FINANCIAL STATEMENTS

Goodwill generated by a business combination with a foreign P company is treated as an asset or liability of the entity acquired, as appropriate. It is therefore expressed in the relevant entity’s functional currency, and translated into euros at the closing rate. When a foreign company is sold, the accumulated translation adjustments on its assets and liabilities are transferred to other operating income and expenses in the income statement. In an exception to the above principles, the financial statements of entities in hyperinflationary economies are translated in accordance with IAS 29 “Financial reporting in hyperinflationary economies”. Non-monetary balance sheet items, income statement items, comprehensive income items and cash flow statement items are adjusted for inflation in their original local currency, then all the financial statements are translated at the closing exchange rate for the period. This hyperinflationary accounting leads to recognition of a gain or loss resulting from exposure to hyperinflation, which is classified as other financial income and expenses and thus included in reserves the following year. To determine whether a country is in hyperinflation, the Group refers to the list published by the International Practices Task Force (IPTF) of the Center for Audit Quality. The financial statements of the Group’s subsidiaries in Argentina are consolidated in accordance with the principles of IAS 29, which are applied from January 1, 2018. It should be noted that the IFRIC is currently examining questions submitted to it about application of IAS 21 “The Effects of Changes in Foreign Exchange Rates” and IAS 29 “Financial Reporting in Hyperinflationary Economies” to the financial statements of entities operating in a hyperinflationary economy. These questions particularly concern the classification of accumulated translation adjustments prior to the hyperinflation period, and classification of the effects of index-based restatement and translation of the financial statements of hyperinflationary economy subsidiaries in reserves or in the translation adjustment included in equity. Allocation of the effects of index-based restatement for hyperinflation and translation of the accounts between reserves and the translation adjustment could be affected by the IFRIC’s forthcoming conclusions. Translation of foreign currency transactions 2 – F – Transactions undertaken in a currency other than the functional currency of the entity concerned are initially translated to and recorded in the functional currency, using the rate applicable at the transaction date. For financial reporting purposes, monetary assets and liabilities in currencies other than the functional currency are translated at the closing rate. All resulting foreign exchange differences are recognized in the income statement, except for foreign exchange gains and losses on financial instruments designated as hedges of a net investment in a foreign entity (note 2-X). The following impacts are therefore recorded in net income: translation adjustments related to financial operations by the P Automotive segments are included in the net financial income; other translation adjustments are included in the operating P margin. Derivatives are measured and recorded as described in note 2-X.

Revenues and margin 2 – G – Revenues comprise all proceeds from sales of the Group’s automotive goods, services related to these sales, and the various sales financing products marketed by the Group’s companies to their customers. Sales of goods and services and margin recognition SALES AND MARGIN RECOGNITION Sales of automotive goods are recognized at the date control is transferred. The transfer of control over automotive goods takes place when the goods are made available to the distribution network in the case of non-Group dealers (at the time they are added to or removed from stock, depending on the contractual arrangements) or upon delivery to the end-user in the case of direct sales. However, there is no transfer of control in the case of goods sold under an operating lease by a Group finance company, or in the case of goods sold with a buyback commitment if it is highly likely that they will be returned. In such transactions, the revenues are recognized progressively over the lease period, and a used vehicle sale is recorded when control of the used vehicle is transferred. The difference between the price paid by the customer and the buyback price is treated as rental income, and spread over the period the automotive item is at the customer’s disposal. The production cost for the new automotive item concerned is recorded in inventories for contracts of less than one year, or included in property, plant and equipment under fixed assets leased to customers when the contracts exceed one year. The forecast resale value takes account of recent known developments on the second-hand automotive market but also future anticipated developments over the period in which the automotive goods will be sold, which may be influenced by factors both external (economic situation, taxation) and internal (changes in the range or the manufacturer’s pricing strategy). As soon as a loss is expected on the resale, a provision (if the automotive item is in inventories) or additional depreciation (if the automotive item is included in property, plant and equipment) is recognized to cover the loss. SALES INCENTIVE PROGRAMS Sales incentive programs based on the volumes or prices of products sold are deducted from sales when the sales operations concerned are recorded. Any provisions are based on estimates of the most probable amount. The Group undertakes certain promotional campaigns offering reduced-interest customer credit or discounts on services. Because these are sales incentives, the cost of these operations is recognized as a reduction in sales by the Automotive segment when the vehicle sale takes place, and is not spread over the duration of the financing or the services concerned. WARRANTY The Group makes a distinction between insurance-type warranties and service-type warranties. Provisions are established for insurance-type warranties, while service-type warranties give rise to revenue that is spread over the duration of the warranty extension.

04

357

GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2019