Groupe Renault - 2020 Universal Registration Document

426 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 Find out more at group.renault.com 04 RENAULT SA ANNUAL FINANCIAL STATEMENTS FINANCIAL STATEMENTS this method is applied to all companies that are fully consolidated P in the Group’s consolited financial statements; the shareholders’ equity of these companies is determined under P the accounting policies applied in the consolidated financial statements; as this is a valuation method, intercompany eliminations are not taken into account; in valuing a subsidiary, its holdings in companies wholly controlled P by the Group are valued in the same way; the change during the year in the overall percentage of P shareholders’ equity corresponding to these interests is not an income or loss item; it is included in shareholders’ equity under “Equity valuation difference”. This amount cannot be distributed or used to offset losses. When it is negative, a provision for general impairment is established as a charge against income. Investments in companies not wholly controlled by Renault SA are valued at acquisition cost, less related expenses, or at their book value if this is lower. The book value takes account of the share of net assets and the profitability prospects. Provisions are established for the difference when the book value of the investments is lower than the gross value. Loans granted to companies and receivables relating to equity interests are recorded at historical cost. Impairment is recognized when there is a risk that these advances will not be recovered. Marketable securities B. Marketable securities are valued at acquisition cost, excluding related expenses and accrued interest for bonds, or at market value if this is lower. Treasury shares held for the purposes of free share and stock option plans are included in marketable securities. These shares are covered by a provision for expenses, corresponding to the difference between the value of the shares (acquisition price or net book value at the date of reallocation) and the exercise price of the options for beneficiaries, when that exercise price is lower than the acquisition cost. Treasury shares not allocated to a specific plan are also included in marketable securities. Impairment is recorded if the stock market price falls below the book value. The fair value of securities is determined mainly by reference to market prices. Receivables C. Receivables are stated at nominal value. Impairment is recognized when their realizable value falls below historical cost, notably based on age and the risk of non-recovery. Translation of foreign currency receivables and D. liabilities Receivables and liabilities denominated in foreign currencies are translated as follows: all receivables and liabilities in foreign currencies are converted at P the year-end exchange rate; exchange differences arising between the date of transactions and P December 31 are recorded in prepayments and deferred income (translation adjustment); a provision for risk equal to the unrealized exchange losses is P established after determining an overall foreign exchange position for each currency (including derivatives). Unrealized losses affecting the Nissan hedge are no longer covered by provisions in the income statement. Under regulation ANC 2015-05, no provisions are recorded in the income statement for unrealized losses on the hedging instrument until the hedged cash flows are realized (date of liquidation or sale of the investment). Redeemable shares E. Redeemable shares are recorded in a separate line of shareholders’ equity at nominal value with no subsequent revaluation. Loans and financial debts F. Loans are stated at their nominal amount. Loan costs, including issuance expenses, and bond redemption premiums, which are recorded in other assets, are amortized on a straight-line basis over the corresponding loan term. Provisions for risks and liabilities G. Provisions for liabilities and charges are defined in accordance with ANC regulation 2014-03. They are established for probable payment obligations existing at the year-end. A contingent liability, in contrast, is an obligation that is neither probable nor definite at the date the financial statements are established, or a probable obligation that cannot be reliably estimated. Provisions are not established for contingent liabilities, but an off-balance sheet commitment is reported, where relevant. Derivatives H. Changes in the value of hedging derivatives are not recognized in the balance sheet unless partial or total recognition of such changes is relevant to ensure symmetrical treatment to the hedged item. This symmetrical treatment would involve revaluation of the hedging instrument in a transition account, with a corresponding entry in a Cash instrument account, in parallel to the translation adjustments booked on the hedged item. Foreign exchange gains and losses on loans set up for the Nissan hedge have no longer been included in profit and loss since the application of ANC regulation 2015-05 from January 1, 2017. They are recorded in specific accounts under other receivables or other liabilities and the accumulated amounts will be transferred to the income statement at the date of liquidation or sale of the investment.