Groupe Renault - 2019 Universal Registration Document

04

CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

The Group identifies the hedging instrument and the hedged item as soon as the hedge is set up, and documents the hedging relationship, stating the hedging strategy, the risk hedged and the method used to assess the hedge’s effectiveness. The Sales Financing segment documents micro-hedges relationships, which hedge one or more homogeneous items, and macro-hedges relationships, which hedge several items involving similar types of risk. This documentation is subsequently updated such that the effectiveness of the designated hedge can be demonstrated. Hedge accounting uses specific measurement and recognition methods for each category of hedge: fair value hedges: the hedged item is adjusted to fair value up to P the risk hedged and the hedging instrument is recorded at fair value. As changes in these items are recorded in the income statement simultaneously, only the ineffective portion of the hedge has an impact on net income. It is recorded in the same income statement item as changes in the fair value of the hedged item and the hedging instrument;

cash flow hedges: no adjustment is made to the value of the P hedged item; only the hedging instrument is adjusted to fair value. Following this adjustment, the effective portion of the change in fair value attributable to the hedged risk is recorded, net of taxes, in other components of comprehensive income, while the ineffective portion is included in net income. The cumulative amount included in shareholders’ equity is transferred to the income statement when the hedged item has an impact on net income; hedge of a net investment in a foreign operation: the hedging P instrument is adjusted to fair value. Following this adjustment, the effective portion of the change in fair value attributable to the hedged exchange risk is recorded, net of taxes, in other components of comprehensive income, while the ineffective portion is included in net income. The cumulative amount included in shareholders’ equity is transferred to net income at the date of liquidation or sale of the investment. The interest rate component of borrowings in yen used to hedge the investment in Nissan is considered as the ineffective portion, and is therefore recorded directly in financial income and expenses. Derivatives not designated as hedges Changes in the fair value of derivatives not designated as hedges are recognized directly in financial income, except in the case of derivatives entered into exclusively for reasons closely related to business operations. In this case, changes in the fair value of derivatives are included in the operating margin.

CHANGES IN THE SCOPE OF CONSOLIDATION NOTE 3

Automotive (excluding AVTOVAZ)

Sales Financing

AVTOVAZ

Total

Number of companies consolidated at December 31, 2018 Newly consolidated companies (acquisitions, formations, etc.) Deconsolidated companies (disposals, mergers, liquidations, etc.) Number of companies consolidated at December 31, 2019

118

54

40

212

10

1 2

2

13

-

-

2

128

53

42

223

The following companies were included in the scope of consolidation for the first time in 2019. Automotive (excluding) AVTOVAZ segment 3 – A – In March and June 2019, Renault s.a.s. took a 15% stake in new P electricity storage companies Tokay 1 and Tokay 2, which have registered share capital of €3.5 million and €1. 3 million respectively. As the Group has significant influence over Tokay 1 and Tokay 2, they are accounted for by the equity method in the consolidated financial statements. In June 2019, Renault s.a.s., in partnership with the Nissan group, P set up the joint-ventures Alliance Mobility Company France and Alliance Mobility Company Japan, which are dedicated to driverless mobility services. The Group holds 50% of the capital of each of these entities, which amounted to a total €100,000 and ¥10 million respectively at June 30, 2019. Both entities undertook capital increases subscribed in equal shares by Renault and Nissan during the second half-year of 2019, for amounts of €51.6 million and ¥4,901 million respectively. These two joint-ventures are accounted for by the equity method in the consolidated financial statements.

In July 2019, Renault s.a.s. acquired an investment in the Chinese P company JMEV Jiangxi Jiangling Group Electric Vehicle Co. Ltd. and committed to participate, subject to conditions, in a capital increase of up to RMB 1 billion, after which the Group will own 50% of JMEV. Renault holds the majority on the Board of Directors, with 4 of the total 7 directors, and key decisions for control analysis purposes are taken by a simple majority. This takeover reinforces the Group’s presence in the electric vehicle sector on the Chinese market. The terms and amount of the capital increases are still in negotiation with the Chinese partner, and a first capital increase is expected to take place in 2020. Due to the fact that the Group has effective control, after analysis of the substance of this acquisition JMEV and its subsidiaries are fully consolidated in the Group’s consolidated financial statements to reflect the assets acquired and liabilities transferred as required by IFRS 10, with a three-month time lag in accounting data. The accounts of JMEV and its subsidiaries included in the consolidation are for the period July 16 to September 30, 2019. The costs of this takeover are not significant at December 31, 2019 and are recorded in other operating expenses.

364 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2019

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