Groupe Renault - 2020 Universal Registration Document

357 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 Significant intercompany transactions and unrealized internal profits are eliminated. Investments in non-significant companies that are controlled exclusively by the Group but not consolidated, even though they fulfil the above criteria, are recorded as other non-current assets. Their consolidation would have a negligible impact on the consolidated financial statements, since they are Group-financed entities whose losses, if any, are recognized via impairment losses, and which: acquire almost all their purchases from Group companies; or P carry out almost all their sales transactions with Group companies. P Put options on non-controlling interests are carried in the consolidated financial position at fair value, and classified in other financial liabilities in the Automotive segments and in other non-current liabilities in the Sales Financing segment, with a corresponding adjustment to equity. Presentation of the consolidated financial 2 - D - statements Valuation basis The consolidated financial statements are established under the historical cost convention, except for certain categories of assets and liabilities, in compliance with IFRS rules. The categories concerned are detailed in the following notes. Operating income and operating margin Operating income includes all revenues and costs directly related to the Group’s activities, whether recurrent or resulting from non-recurring decisions or operations, such as restructuring costs. The operating margin, which corresponds to the operating income of an individual segment as defined in IFRS 8 "Operating Segments", corresponds to the operating income before other operating income and expenses that are by nature unusual or significant and could affect comparability of the margin. Other operating income and expenses mainly include: restructuring and workforce adjustment costs, and significant P costs relating to discontinued activities. Restructuring costs are defined as follows in the definition given in IAS 37 “Provisions, Contingent liabilities and Contingent assets”: “A restructuring is a program that is planned and controlled by management, and materially changes either: a) the scope of a business undertaken by the entity; or b) the manner in which that business is conducted”; gains or losses on partial or total disposal of businesses or P operating entities, gains or losses on total or partial disposals of investments in associates and joint ventures, other gains and losses relating to changes in the scope of consolidation such as acquisitions of control, as defined by IFRS 10, over entities previously accounted for under the equity method, and direct acquisition costs for entities that are fully consolidated or consolidated on a line-by-line percentage of interest basis; gains or losses on disposal of property, plant and equipment or P intangible assets (except leased assets sales); impairment on property, plant and equipment or intangible assets P and goodwill (excluding goodwill of associates or joint ventures); unusual items, i.e. income and charges that are unusual in their P frequency, nature or amount, relating to significant litigation or impairment of operating receivables. Equity method consolidation of associates and joint ventures The share in net income of associates and joint ventures reported in the Group’s consolidated income statement comprises the share in these entities’ profits or losses, impairment and recoveries of impairment relating to these entities (note 2-M). The impairment booked is limited to the net book value of the investment, unless an additional commitment has been made. The gain or loss resulting from the sale or loss of significant influence or joint control over associates and joint ventures accounted for by the equity method, and the gain or loss on acquisition of control, as defined by IFRS 10, over companies that were already consolidated but not controlled, is reported in other operating income and expenses in the Group’s consolidated income statement. This includes transfers of accumulated translation adjustments during the period the entity was accounted for by the equity method. The Group recognizes a deferred tax liability on dividend distributions for all differences between the book and tax values of its investments in associates and joint ventures (note 2-I). This tax is included in current and deferred taxes in the Group’s income statement. Goodwill relating to associates and joint ventures is included in the value of the relevant entities as stated in the assets in the consolidated statement of financial position. In the event of impairment, an impairment loss is booked and included in the consolidated income statement via the share in net income (loss) of associates and joint ventures (note 2-J). Acquisition expenses related to investments in associates and joint ventures are included in the initial acquisition cost for these investments. Cross-investments between a consolidated entity and an associate are neutralized in measuring the investment in the associate as stated in the assets of the statement of financial position. Nissan’s 15% stake in Renault is therefore neutralized in valuing the investment in Nissan shown in the assets of the consolidated statement of financial position (note 12). Dividends received from unlisted associates and joint ventures are included in the Automotive segments’ operational free cash flow, while dividends received from listed associates and joint ventures, i.e. Nissan, are excluded from the operational free cash flow of the Automotive (excluding AVTOVAZ) segment. Reporting by operating segment The information by operating segment is based on internal reporting to the Group Executive Committee, identified as the “Chief Operating Decision-Maker”. This information is prepared under the IFRSs applicable to the consolidated financial statements. All Group financial data are assigned to the operating segments. The “Intersegment transactions” and “Intra-Automotive” columns are reserved for transactions between the segments, which are carried out on near-market terms. Dividends paid by the Sales Financing segment to the Automotive (excluding AVTOVAZ) segment are