Groupe Renault - 2020 Universal Registration Document

354 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 Find out more at group.renault.com 04 CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS Accounting policies and scope of consolidation 4.2.6.2 APPROVAL OF THE FINANCIAL STATEMENTS NOTE 1 The Groupe Renault’s consolidated financial statements for 2020 were examined at the Board of Directors’ meeting of February 18, 2021 and will be submitted for approval by the shareholders at the General Shareholders’ Meeting. ACCOUNTING POLICIES NOTE 2 In application of European regulations, the Groupe Renault’s consolidated financial statements for 2020 are prepared under IFRS (International Financial Reporting Standards) as issued by the lASB (International Accounting Standards Board) at December 31, 2020 and adopted by the European Union at the year-end. Changes in accounting policies 2 - A - Changes in accounting policies in 2020 A1 The Groupe Renault applies the accounting standards and amendments that have been published in the Official Journal of the European Union and are mandatory from January 1, 2020. NEW AMENDMENTS THAT BECAME MANDATORY ON JANUARY 1, 2020 Amendments to IFRS 9, IAS 39 and IFRS 7 Interest rate benchmark reform – Phase 1 Amendments to IAS 1 and IAS 8 Definition of Material Amendment to IFRS 3 Definition of a Business Conceptual Framework Amendments to References to the Conceptual Framework in IFRS Standards The standards and amendments that became mandatory on January 1, 2020 have no significant impact on the Group’s financial statements. The amendments to IFRS 9, IAS 39 and IFRS 7 (financial instruments) related to the interest rate benchmark reform Phase 1 were applied early by the Groupe Renault in its financial Statements at December 31, 2019. NEW AMENDMENT EFFECTIVE FROM JUNE 1, 2020 On May 28, 2020 the IASB published an amendment to IFRS 16 entitled “COVID-19-Related rent concessions”, with an effective date of June 1, 2020, which was approved by the European Union on October 12, 2020. This amendment offers an optional exemption for lessees, allowing them to recognize lease payment reductions granted by agreement with lessors in profit and loss. This applies to lease payments initially due up to June 30, 2021. Lessees can choose to apply IFRS 16 unamended, i.e. carry out a detailed analysis of rent concession agreements and treat them as modifications to the lease if necessary. The Groupe Renault has not applied this IFRS 16 amendment in the financial statements at December 31, 2020. The concessions from which the Group has benefited have no significant impact. OTHER STANDARDS APPLIED BY THE GROUP FROM JANUARY 1, 2020 From January 1, 2020 the Group applies phase 3 of IFRS 9 concerning hedge accounting. This has no material impact on the Group’s financial statements, but allows an aggregated position consisting of an exposure and a derivative to be designated as hedged item in the Sales Financing segment. France’s clearing house switched from the Euro overnight index average (EONIA) to the Euro short-term rate (ESTER). Application of these amendments allows the Group to modify the effective rate for this financial instrument prospectively. This has no immediate impact on the income statement. The Groupe Renault has opted for early application, at December 31, 2020, of the amendments to IAS 39, IFRS 9 and IFRS 7 concerning phase 2 of the interest rate benchmark reform. From July 2020, interest on the Sales Financing segment’s margin call account with At December 31, 2020, no other financial instrument negotiated with a non-Group counterparty had been renegotiated as a result of the interest rate benchmark reform. The Automotive segments (through the intermediary of Renault Finance) adhered to the ISDA 2018 Benchmarks Supplement Protocol , and the Sales Financing segment adhered to the ISDA 2020 Fallbacks protocol governing fallback clauses. The Groupe Renault has identified the interest rate benchmarks used in interest rate hedging relationships that are concerned by the reform: Libor Euro, Libor GBP and Libor CHF. The Group considers there is no uncertainty regarding the future of the Euribor index since it was validated as benchmark regulation-compliant by the European Banking Authority. At December 31, 2020, the Sales Financing segment had interest rate swaps designated as fair value hedges amounting to CHF300 million (floating rate indexed on LIBOR CHF) and £100 million (floating rate indexed on Libor GBP). The risk hedging strategies have so far not been modified by the transition to the new benchmark rates Early application of these amendments has no impact on the Group’s financial statements at December 31, 2020. OTHER STANDARDS AND AMENDMENTS NOT YET ADOPTED BY THE EUROPEAN UNION The IASB has also published the following new standards and amendments that have not yet been adopted by the European Union.