Groupe Renault - 2020 Universal Registration Document

110 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 Find out more at group.renault.com 01 INTERNAL CONTROL AND RISK MANAGEMENT GROUPE RENAULT Counterfeiting may be committed by third parties against products, industrial processes, brands, designs and models protected by Renault. From a technological standpoint, given Groupe Renault’s reputation, particularly in the field of hybrid and electric vehicles, the Group could become a prime target for such counterfeiting. Renault’s E-TECH technology is a significant example. As regards trademarks, designs and models, repercussions can be felt in particular in the replacement market. Groupe Renault’s existing reputation is a key factor in increasing the risk of counterfeiting, particularly in Europe and the Middle-East. Any such actions could have an immediate unfavorable impact on the Group’s revenues and earnings, and may harm the reputation and quality image of the technologies and products concerned. Patents, trademarks, designs and models registered by Renault in the Group’s main automotive markets provide it with an effective weapon in the fight against counterfeiting. In addition, with regard to trademarks, the establishment of customs monitoring in various countries allows the reporting of dubious products, both imports and exports. So-called active infringement could be an involuntary act by Renault, given the risk associated with the time period during which patent applications are not made public. Patent applications filed by third parties and known only at the time of publication could force Renault to modify a product under development, increasing the project’s Research and Development costs, or to negotiate rights to use the patented item. In either case, the project’s margin would be affected. This risk is particularly present in the context of connectivity and standard essential patents. Risk management The control of legal risks is in particular based upon an internal control system organized around three guiding principles: management of the Group’s legal function, which is organized P around a central function and employees in the Group’s main countries. These employees report on a hierarchical and/or functional basis; employees of the legal function are proactive in anticipating legal P risks upstream and adapting the corresponding procedures (advisory consultations, information from the central legal function, etc .); regulatory monitoring by Groupe Renault in collaboration with the P different countries concerned. Financial risks 1.5.2.5 Groupe Renault is exposed to the following six main risk components of a financial nature, the assessment, potential impacts and principles of control of which are specified below. Liquidity risk - high risk with impact > probability The Group depends on access to resources in the financial markets. It finances its Automotive and Sales Financing activities through the issuance of long-term debt and commercial paper, bank loans and through the securitization of receivables and deposit-gathering activities. In the event of prolonged market closures or pressure on access to credit, the Group is exposed to liquidity risk. If the Group’s funding requirements increase or if the Group is unable to access new sources of funding, insufficient liquidity would be particularly detrimental to its competitiveness, operating results and financial position. Liquidity risk is the risk of the automotive and sales financing segments experiencing reduced liquidity to repay debts as they fall due or to finance balance sheet growth. The Group’s liquidity could be significantly affected by factors beyond its control, such as general market disruptions, the market’s perception of increased liquidity risk or speculative pressure in the debt market. In 2020, the COVID-19 pandemic has caused general market disruption with a downward impact on the Group’s activity, which adversely affected its working capital requirement. The Automotive and Sales Financing segments are also rated by several agencies. Any downgrading of their ratings could limit and/or increase the cost of access to the capital markets for these Group segments. Under current market conditions, a possible downgrading of Renault SA’s credit rating (Automotive segment) by Moody’s and S&P would result in the downgrading of RCI Banque (Sales Financing segment). The table of Renault SA’s credit ratings is presented below (dated March 11, 2021), together with its bond, bank and similar debt maturity schedule as at December 31, 2020: RENAULT SA RATINGS Agency Rating & Perspective Date Moody's Ba2/NP/Negative Outlook May 28, 2020 S&P BB+/B/Negative Outlook* March 5, 2021 R&I A-/Negative Outlook** March 11, 2021 JCR A-/Negative Outlook October 5, 2020 Rating affirmed on March 5, 2021. * Rating affirmed on March 11, 2021. **