Groupe Renault - 2020 Universal Registration Document

435 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 04 RENAULT SA ANNUAL 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 Unrealized gains on financial 4.4.2.17 instruments These are unrealized foreign exchange gains on hedging instruments on treasury notes in US dollars and borrowings in yen that are no longer part of the Nissan hedge. In 2019, these amount was €10 million. Deferred income 4.4.2.18 Deferred income comprises unrealized foreign exchange gains on borrowings issued in yen or swapped to yen, and a foreign exchange gain on repayment of borrowings issued in yen used for the Nissan hedge, which is recorded in a cash instrument valuation difference account, in the amount of €18 million. Financial instruments 4.4.2.19 Financial instruments and risk management The corresponding commitments, (expressed in terms of notional amount and, where appropriate, in fair value) are shown below: (€ million) 2020 2019 Notional Fair value Notional Fair value Interest rate swaps 95 (1) Currency swaps 276 (12) 57 (2) Forward purchases 638 (33) 680 (10) Forward sales 670 689 All the operations are with Renault Finance. Forward purchases and sales and swap transactions are off-balance sheet. Foreign exchange risk Foreign exchange risk management essentially comprises currency swaps and forward exchange operations to cover Renault’s own foreign-currency financing. Renault SA also undertakes forward exchange operations to hedge loans and borrowings in foreign currencies with its subsidiaries. Interest rate risk Renault SA carries most of the Group’s indebtedness. Its interest rate risk management policy applies two basic principles: long-term investments use fixed-rate financing, and investments for liquidity reserves use floating-rate financing. The financing in yen undertaken as part of the hedge of Nissan equity is fixed-rate. Renault SA uses derivatives to implement the above interest rate and exchange rate risk management policies. These operations are undertaken with Renault Finance, a wholly-owned Groupe Renault subsidiary. Liquidity risk The Group’s Automotive operating segment needs sufficient financial resources to finance its day-to-day business and the investments necessary for future growth. It therefore regularly borrows on the banking and capital markets to refinance its debt, and this exposes it to a liquidity risk in the event of market closure or tensions over credit availability. As part of its centralized cash management policy, Renault SA handles most refinancing for the Automotive operating segment via the capital markets through long-term resources (bond issues, private placements) and short-term financing such as treasury notes, or by bank financing. Renault SA also has confirmed credit agreements with banking establishments (see note 4.4.2.20). The contractual documentation for these financing arrangements and credit agreements contains no clause that might adversely affect credit availability as a result of a change in Renault’s credit rating or financial ratio compliance. Given the available cash reserves, confirmed credit lines unused at year-end, and the prospects for renewal of short-term financing, Renault SA has sufficient financial resources to cover its commitments over a 12-month horizon.