Groupe Renault - 2019 Universal Registration Document

04

CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

IMPAIRMENT TESTS ON FIXED ASSETS (OTHER THAN LEASED ASSETS) NOTE 11

The Group carried out impairment tests on its fixed assets under the approach described in the section on accounting policies (note 2-M). Impairment tests on vehicle-specific assets 11 – A – (including components) Following impairment tests of specific assets dedicated to vehicles (including components), impairment of €239 million was booked during 2019, comprising €206 million for intangible assets and €33 million for property, plant and equipment (impairment in 2018 amounted to €126 million, comprising €63 million for intangible assets and €63 million for property, plant and equipment). This impairment was allocated in priority to capitalized development expenses. It mainly concerns vehicles made for the Chinese market, in view of the lower sales volumes and the downward revision of the prospects for those assets. Impairment for intangibles and property, plant and equipment was recognized in 2013 in respect of electric vehicles. As the market for electric vehicles grew substantially in 2018 and that trend was confirmed in 2019, residual impairment of €5 million on intangible assets and €3 million on property, plant and equipment was reversed in 2019. Residual impairment of €38 million was reversed during 2018 (€21 million for intangible assets and €17 million for property, plant and equipment). Impairment tests of country-specific assets or 11 – B – cash-generating units of the Automotive (excluding AVTOVAZ) segment Argentina, China and other countries: In 2018, the cash-generating unit corresponding to Argentina was subjected to an impairment test following the application of hyperinflationary accounting, and in view of the recession on the local automobile market in the second half-year. An analysis of specific assets dedicated to the Chinese market (in the second half-year of 2019), the Turkish market (in the second half-year of 2018) and the Iranian market was also conducted following the significant decline in automobile sales in China and Turkey and the suspension of Renault’s activities in Iran (see note 6-C). The tests performed in 2018 for the Argentina cash-generating unit led to recognition of impairment on its assets amounting to €188 million at December 31, 2018 ( i.e. the total value of the industrial assets). No impairment was booked at January 1, 2018. The test conducted in 2019 on specific assets dedicated to the Chinese market led to recognition of impairment as described in note 11-A above, and impairment on investments in joint-ventures operating on the Chinese market (see note 13). In 2018, no impairment was recognized on intangibles and property, plant and equipment dedicated to the Iranian and Turkish markets as a result of the impairment tests conducted.

Automotive (excluding AVTOVAZ) segment: The recoverable value used for the purpose of impairment tests for the Automotive (excluding AVTOVAZ) segment is the value in use, determined under the discounted future cash flow method on the basis of the following assumptions:

2019 1.7% 8.5%

2018 1.9% 8.7%

Growth rate to infinity After-tax discount rate

The assumptions used for impairment testing at December 31, 2019 are taken from the six-year strategic plan, Drive the Future 2017-2022, which was announced in October 2017. These assumptions were updated using data from the 2020 budget and Renault’s best estimate of trends in results for 2021 and 2022, which will be affected by adverse market conditions. The revision of the strategic plan, which was still in process at the year-end, will be finalized during 2020. In 2019 as in 2018, no impairment was recognized on assets included in the Automotive (excluding AVTOVAZ) segment as a result of the impairment test. A reasonably possible change in the main assumptions used should not result in a recoverable value that is lower than the book value of the assets tested. Impairment tests on the AVTOVAZ 11 – C – cash-generating unit and the Lada brand Impairment tests of the AVTOVAZ cash-generating unit AVTOVAZ was delisted from the Moscow Stock exchange in May 2019, and consequently reference is no longer made to its market capitalization to assess the recoverable value of its net assets (including goodwill). In application of the approach presented in the note on accounting policies (note 2-M to the consolidated financial statements for 2018), an impairment test was conducted at June 30, 2019 but no impairment was recognized at that date as a result. A further test was conducted at December 31, 2019 due to the decline of the Russian market. The annual impairment test will now be conducted at December 31 every year. For the impairment test of the AVTOVAZ cash-generating unit, an after-tax discount rate of 14% and a growth rate to infinity (including the effect of inflation) of 4% were used to calculate value in use. The test results did not lead to recognition of any impairment at December 31, 2019. A reasonably possible change in the key assumptions used should not result in a recoverable value that is below book values.

374 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2019

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