Groupe Renault - 2020 Universal Registration Document

355 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 04 CONSOLIDATED FINANCIAL STATEMENTS GROUPE RENAULT GROUPE RENAULT: A COMPANY THAT ACTS RESPONSIBLY CORPORATE GOVERNANCE FINANCIAL STATEMENTS RENAULT AND ITS SHAREHOLDERS ANNUAL GENERAL MEETING OF RENAULT ON APRIL 23, 2021 ADDITIONAL INFORMATION New IFRS standards and amendments not yet adopted by the European Union Application date set by the IASB Amendment to IAS 1 Classification of Liabilities as Current or Non-current January 1, 2023 Amendments to IAS 16 Proceeds before Intended Use January 1, 2022 Amendments to IFRS 3 Updating a Reference to the Conceptual Framework January 1, 2022 Amendments to IAS 37 Onerous Contracts – Cost of Fulfilling a Contract January 1, 2022 Annual improvements (2018-2020 cycle) Annual improvements process January 1, 2022 IFRS 17 and amendments/Amendments to IFRS 4 Insurance contracts January 1, 2023 The Group is currently analyzing the potential impacts, but does not at this stage anticipate that application of these amendments will have any significant impact on the consolidated financial statements. IFRIC agenda decision concerning classification of the A2 effects of index-based restatement and translation of the financial statements of subsidiaries in hyperinflationary economies In view of the IFRIC’s agenda decision of March 2020 concerning classification of the effects of index-based restatement and translation of the financial statements of subsidiaries in hyperinflationary economies, the Group has concluded that the combined effect of index-based restatement and translation qualifies as an exchange difference under IAS 21 “The Effects of Changes in Foreign Exchange Rates", as restatement based on price indexes is correlated with movements in the exchange rate between the Argentinian peso and the euro, and mitigates the effect of the peso’s devaluation. Consequently, the effects of restatement and translation of the equity of subsidiaries located in Argentina are now reported in the translation adjustment in other components of comprehensive income, whereas the effects of index-based restatement were included in reserves in the 2018 and 2019 financial statements. The change led to reclassification of €349 million to the translation adjustment reserve at January 1, 2020. Application of the IFRIC agenda decision concerning A3 recognition of the impacts of reverse factoring programs in the statement of financial position and cash flow statement In December 2020 the IFRIC published an agenda decision concerning reverse factoring programs, concluding that the existing standards are sufficient for appropriate treatment of such programs in the financial position and cash flow statement. This decision notably clarifies that supplier payables covered by reverse factoring programs should be classified in the statement of financial position as trade payables or financial liabilities, or presented in a separate line. The treatment applied by the Group to these programs is consistent with this decision (see note 2-P). The IFRIC’s decision also clarifies that the presentation in the cash flow statement depends on the analysis of the transaction, particularly because a repayment considered to concern a non-operating finance arrangement must be classified as a cash flow from financing activities. To date, the Group has presented repayments of liabilities covered by reverse factoring programs as cash flows from operating activities, even when the transaction was considered a financing operation. The amounts concerned in 2020 have been reclassified in accordance with the IFRIC decision (see section 4.2.6.1 – A4). The amounts concerned in previous years have not been reclassified since they are not significant. Estimates and judgments 2 - B - Specific context of 2020 In the context of the COVID-19 pandemic that appeared in the first quarter of 2020 and continued throughout the year, the global automotive market suffered a downturn of 14.4% compared to 2019. To protect its employees, and in compliance with the measures introduced by national governments, the Groupe Renault suspended its commercial and production activities in most countries during March. During the lockdown periods, practically all employees not working in production and sales worked from home, and furlough measures were put in place. Production and sales resumed mainly from May 2020, respecting the end-of-lockdown measures imposed by the governments of the countries where the Groupe Renault has operations. A second lockdown and curfews were imposed in several countries, including France, during the second half of the year, and these also had negative effects on the Group’s business activity. Total sales volumes for 2020 were thus 21.3% lower than in 2019, at 2,951,971 vehicles. To maintain a sufficient level of liquidity for operations, the Groupe Renault arranged a €5 billion credit line guaranteed by the French government, on which it made three drawings totalling €4 billion (note 23). At December 31, 2020, the undrawn amount of €1 billion is no longer available. The Group also issued a new bond in November 2020 with a nominal value of €1 billion (note 23-C). At the date of publication of these consolidated financial statements, the Group has sufficient cash and sources of financing to ensure continuity of operations for the next twelve months (note 25-B) and demonstrated its capacity to issue debt in the second half of the year (note 23-C). Expenses and income recognized that are identified as resulting wholly or partly from the COVID-19 pandemic are not considered as “Other operating income and expenses”, except for expenses which due to their nature are always included in that category, such as impairment of tangible and intangible assets. Payroll costs net of state aid received by Renault, additional logistics costs, the costs of introducing new health protocols, and depreciation on assets unused or only partially-used during the period because of the lockdown rules are allocated to the relevant functions (cost of goods and services sold, research and development expenses, and selling, general and administrative expenses). The amounts concerned are not reported because it is impossible to reliably identify the amounts solely attributable to the COVID-19 pandemic.