Groupe Renault - 2019 Universal Registration Document

04

CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

New partnership agreements were signed in 2018 with Oyak in Turkey, including perfectly symmetrical put and call options for non-controlling investments, entitling Renault, subject to certain conditions, to purchase Oyak’s shares in Oyak Renault (call) and to sell its shares in Mais (put), and entitling Oyak to sell its shares in Oyak Renault (put) and purchase Renault’s shares in Mais (call). The exercise price for the put option, if exercised, will be determined by three independent experts who would be appointed at the exercise date.

Analysis of the contracts did not identify any circumstances beyond the control of Renault SA that could lead to Oyak’s put option exercised without Renault SA being able to object. Consequently, no liability is recognized at December 31, 2019 in connection with these options. There are no significant restrictions on the Group’s capacity to access or use its assets and settle its liabilities, other than restrictions that result from the regulatory framework in which the subsidiaries operate. The local supervisory authorities may require banking subsidiaries to keep a certain level of capital and liquidities, limit their exposure to other group parties, and comply with other ratios. Principal defined-benefit plans of the Group In France, the Group’s retirement indemnities result from agreements negotiated with each French entity and employee representatives. They are based on employees’ salaries and length of service; payment is conditional on being in the Company’s employment at the time of retirement. Retirement benefit obligations for France are entirely covered by provisions, and account for most of the Group’s liabilities for retirement indemnities. The Group’s most significant supplementary pension plan is in the United Kingdom, where two defined-benefit pension plans are managed as part of a dedicated pension fund comprising two compartments: one concerns Automotive subsidiaries (excluding AVTOVAZ) and the other RCI Financial Services Ltd., together covering approximately 1,780 people. This plan has been closed to new members since 2004, and no further rights can be earned under it after December 31, 2019. All employees benefit from a defined-contribution pension plan from January 1, 2020. This pension fund (a trust) is a legal entity in its own right. It is administered by a Board of Trustees with equal representation for the participating companies and their current and former employees. The fund is governed by local regulations, which set the minimum funding requirements that can lead to additional contributions being made by the Group. The asset investment policy is defined for each section of the fund by a supervisory body which examines the performance of investments quarterly. The risks associated with these plans are the usual risks (lower future returns on fund assets, a decline in the equities markets, longer life expectancy for beneficiaries, a rise in inflation, etc.). The fund compartment dedicated to the Automotive (excluding AVTOVAZ) segment is underfunded and the Group has made a commitment to cover the shortfall by 2027 through payments amounting to £5 million maximum per year. Underfunding at December 31, 2019 is valued at £44 million for the fund compartment dedicated to the Automotive (excluding AVTOVAZ) segment, and £11 million for the fund compartment dedicated to RCI Financial Services Ltd.

PROVISIONS FOR PENSIONS AND OTHER LONG-TERM EMPLOYEE BENEFIT OBLIGATIONS NOTE 19 Pension and benefit plans 19 – A –

Pensions and other long-term employee benefit obligations essentially concern active employees. These benefits are covered either by defined-contribution plans or defined-benefit plans. Defined-contribution plans The Group makes earnings-related payments, in accordance with local custom, to the national organizations responsible for paying pensions and similar financial benefits. There is no actuarial liability concerning these pension arrangements. The total expense for defined-contribution plans was €603 million in 2019 (€588 million in 2018). Defined-benefit plans The accounting treatment of defined-benefit plans is described in note 2-S, and involves establishment of provisions. These plans concern: indemnities payable upon retirement or departure, in application P of legislation or agreements in certain countries such as France and Turkey; supplementary pensions providing employees with contractual P income; the countries applying this type of plan are in Europe ( e.g. the United Kingdom, France, Germany, the Netherlands, and Switzerland); other long-term benefits, chiefly long-service awards and flexible P holiday entitlements. Defined-benefit supplementary pension plans are generally covered by contracts with pension funds or insurance companies. In such cases, the obligations and assets are valued separately. The difference between the obligation and the fair value of the assets held to fund it may indicate underfunding or overfunding. In the event of underfunding, a provision is booked. In the event of overfunding, an asset is recognized subject to certain conditions.

388 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2019

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