Groupe Renault - 2020 Universal Registration Document

402 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 Find out more at group.renault.com 04 CONSOLIDATED FINANCIAL STATEMENTS FINANCIAL STATEMENTS The alternation of different maturities and issue formats is part of the Sales Financing segment’s diversification strategy for financing sources. This policy has been followed for several years and enables the segment to reach the maximum number of investors. There was only a modest degree of market financing during 2020, and the Company was not seriously affected by the rise in the cost of financing. This situation arose because bond redemptions were lower in 2020 than in previous years (refinancing of the TLTRO II was launched early in 2016), and due to a slowdown in automotive sales that reduced the volume of new credit. Savings deposits collected from private customers increased by €2.8 billion from 2019 to €20.5 billion or 43% of net assets at December 31, 2020. On the secured refinancing segment, the revolving periods for private securitizations of automotive loans in the United Kingdom and leasing in Germany were extended for a further year. The French subsidiary undertook its first securitization of vehicle leases with a purchase option amounting to €991.5 million: €950 million of senior instruments (of which €200 million were self-subscribed) and €41.5 million of subordinated instruments. RCI issued a 7-year fixed-rate bond of €750 million in January. With these resources, as well as available securities in Europe for €16.6 billion, comprising €4.5 billion of undrawn confirmed credit lines with banks, €4.5 billion of collateral eligible for the European Central Bank’s monetary policy operations, €7.4 billion of highly liquid assets (HQLA), and €0.3 billion of financial assets, RCI Banque is able to maintain its customer financing for more than 12 months without access to external liquidities. The RCI Banque group’s issues and programs are credit-rated by several agencies. Details of the ratings are provided in the "Liquidity Risks" chapter of the "Risk Factors" section in the Universal registration document. In the current context, in the case of Moody’s and Standard & Poor’s, any ratings downgrade for Automotive liabilities would entail a ratings downgrade for RCI Banque liabilities. Foreign exchange risk B2 The Group made no major changes to its foreign exchange risk management policy in 2020. The Group’s exposure to foreign exchange risk principally concerns the Automotive segments. FOREIGN EXCHANGE RISKS – AUTOMOTIVE SEGMENTS In the Automotive segments, fluctuations in exchange rates can affect the following six financial aggregates: operating income (loss), working capital, financial income (expenses), share in in net income (loss) of associates and joint ventures, shareholders’ equity and net cash position. Renault SA’s Financing and Treasury department manages the foreign exchange risk for the Automotive (excluding AVTOVAZ) segment. The Finance department of AVTOVAZ manages the foreign exchange risk in a very similar way to the Automotive (excluding AVTOVAZ) segment. It identifies, measures and manages the foreign exchange risk by analyzing the net position in each currency. At December 31, 2020 the great majority of cash surpluses and bank debt of AVTOVAZ is denominated in Russian roubles, and no foreign exchange hedging was conducted in 2020. Operating income and working capital It is the Automotive segment’s policy not to hedge future operating cash flows in foreign currencies, although exceptions may be made. Foreign exchange hedges on operating and working capital items require formal authorization from the Finance department or Senior Management, and the results of these hedges are then reported to the Senior Management. In such cases foreign, and when it is possible, exchange operations are mainly undertaken by the subsidiary Renault Finance for currencies that are negotiable on the international markets. The principal exposure to foreign exchange risks lies in the operating income (loss). At December 31, 2020 based on the 2020 structure of operating results and cash flows, a 1% rise in the euro against all other currencies would have an unfavorable impact of €24 million on the Automotive segment’s annual operating income (loss) after any hedging. The principal exposure in 2020 concerned the pound sterling, with sensitivity of approximately €9 million in the event of a 1% rise in the euro against the pound sterling. The 10 largest exposures in absolute value and their sensitivities are presented below in millions of euros: Currency Annual net operating flows (€ million) Impact of a 1% rise in the euro Pound sterling GBP 954 (9) Russian rouble RUB 858 (8) Polish zloty PLN 675 (7) Swiss franc CHF 378 (4) Argentinian peso ARS 340 (3) Indian rupee INR (244) 2 Japanese yen JPY (330) 3 Korean won KRW (336) 3 US dollar USD (394) 4 Romanian leu RON (688) 7