Groupe Renault - 2020 Universal Registration Document

81 GROUPE RENAULT I UNIVERSAL REGISTRATION DOCUMENT 2020 01 EARNINGS REPORT – 2020 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 RESEARCH AND DEVELOPMENT EXPENSES RECORDED IN THE INCOME STATEMENT Analysis of research and development costs: (€ million) 2020 2019 Change R&D expenses -2,749 -3,697 948 Capitalized development expenses +1,390 +1,985 -595 R&D capitalization rate 50.6% 53.7% -3.1 pts Amortization -1,210 -946 -264 Gross R&D expenses recorded in the income statement* -2,569 -2,658 +89 of which AVTOVAZ - 1 - 6 + 5 Research and development expenses are reported net of research tax credits for the vehicle development activity. * Gross R&D expenses: R&D expenses before expenses billed to third parties and others. The capitalization rate increased from 53.7% in 2019 to 50.6% in 2020, in connection with the projects progresses. The decrease in research and development expenses over 2020 is explained by the end of an initial cycle of upgrades to the product range, the lower level of business, and actions to reduce fixed costs, which focused particularly on subcontracting and purchases of prototypes. This decrease was accentuated by the COVID-19 pandemic, although it did not significantly affect the level of capitalized development expenses under the rules set out in IAS 38. The lower level of capitalized development expenses is notably attributable to deferral of certain technical milestones from which development expenses are capitalized. Amortization was substantially higher in 2020 than 2019, due to the higher level of capitalized development expenses in 2018 and particularly in 2019. NET CAPEX AND R&D EXPENSES IN % OF REVENUES (€ million) 2020 2019 Tangible investments net of disposals (excluding capitalized leased vehicles and batteries) and intangible (excluding capitalized development costs) 2,631 3,006 CAPEX invoiced to third parties and others -83 -213 Net industrial and commercial investments excl. R&D (1) 2,548 2,793 % of Group revenues 5.9% 5.0% R&D expenses 2,749 3,697 R&D expenses billed to third parties and others -366 -521 Net R&D expenses (2) 2,383 3,176 % of Group revenues 5.5% 5.7% Net CAPEX and R&D expenses (1) + (2) 4,931 5,969 % of Group revenues 11.3% 10.7% Net Capital expenditures and R&D expenses, down -€1,038 million, amounted to 11.3% of Group revenues in 2020, compared with 10.7% in 2019.