Groupe Renault - 2019 Universal Registration Document

04

CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS

INTEREST RATE DERIVATIVES

December 31, 2019

December 31, 2018

Nominal

<1 yr 1 to 5 yrs

>5 yrs Nominal

<1 yr 1 to 5 yrs

>5 yrs

(€ million)

Interest rate swaps

23,313

7,500

13,813

2,000

23,867

8,361

13,506

2,000

Other interest rate hedging instruments

-

-

-

-

79

79

-

-

Equity risks B4 MANAGEMENT OF EQUITY RISKS

Commodity risks B5 MANAGEMENT OF COMMODITY RISKS

The exposure of the Automotive (excluding AVTOVAZ) segment and the Sales Financing segment to equity risks essentially concerns the Daimler shares acquired in connection with the cooperation agreements, and marketable securities indexed to share prices. These two segments do not use equity derivatives to hedge these risks. The Automotive (excluding AVTOVAZ) segment and the Sales Financing segment made no major changes to their equity risk management policy in 2019. ANALYSIS OF FINANCIAL INSTRUMENTS’ SENSITIVITY TO EQUITY RISKS The sensitivity to equity risks resulting from application of a 10% decrease in share prices to the financial assets concerned at the year-end would have an unfavourable impact of €82 million on shareholders’ equity. The impact on net income is not significant at December 31, 2019.

Commodity purchase prices can change suddenly and significantly, and cannot necessarily be passed through on vehicle sale prices. This may lead Renault’s Purchases department to hedge part of its commodity risks using financial instruments. These hedges are subject to volume, duration and price limits. In 2019 Renault undertook hedging operations on base metals and precious metals, within the limits validated by the Chairman and CEO of Renault SA for a temporary period. The operations in progress at December 31, 2019 are classified for accounting purposes as cash flow hedges, and accordingly changes in their fair value are included in other components of comprehensive income to the extent of the effective portion of the hedges. ANALYSIS OF FINANCIAL INSTRUMENTS’ SENSITIVITY TO COMMODITY RISKS Financial instruments’ accounting sensitivity to commodity risks results from derivatives used to hedge the Group’s economic exposure to these risks. A 10% increase in commodity prices for derivatives classified as hedging derivatives would have a positive impact of €9 million on other components of comprehensive income at December 31, 2019.

COMMODITY DERIVATIVES

December 31, 2019

December 31, 2018

Nominal

<1 yr 1 to 5 yrs

>5 yrs Nominal

<1 yr 1 to 5 yrs

>5 yrs

(€ million)

Swaps

115

115

- -

- -

70 31

64 29

6 2

- -

Zero-premium collars (option)

36

36

a Group rating for bank counterparties founded on each P counterparty’s external rating and equity level; several different acceptance score systems for “Customers”, P depending on the subsidiaries and types of financing involved. RCI Banque is constantly adjusting its acceptance policy to reflect the conditions of the economic environment. The Group has detailed management procedures, notably covering collection of outstanding payments, with local versions in all the countries where they apply.

Counterparty and credit risks B6 CREDIT RISK ON AUTOMOTIVE RECEIVABLES

The Automotive segment’s exposure to credit risk is limited because of the assignment of many receivables leading to their deconsolidation, and systematic hedging of risks on export receivables. Non-assigned sales receivables and receivables covered by guarantee are regularly monitored. CREDIT RISK ON RECEIVABLES AND COMMITMENTS GIVEN BY THE SALES FINANCING SEGMENT Credit risk relating to customers is assessed by a scoring system and monitored by type of activity (customers and dealers). Various internal rating systems are currently in use in the Sales Financing segment: a Group rating for “Dealers”, used in each phase of relations with P the borrower (initial acceptance, risk monitoring, provisioning);

406 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2019

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