2007 Interactive Registration Document - Renault

7.2.6.1 ACCOUNTING POLICIES AND SCOPE
OF CONSOLIDATION
1 – APPROVAL OF THE FINANCIAL STATEMENTS
The Renault group’s consolidated fi nancial statements for 2007 were fi nalised
at the Board of Directors’ meeting of February 12, 2008 and will be submitted
for approval by the shareholders at the General Shareholders’ Meeting to be
held on April 29, 2008.
2 – ACCOUNTING POLICIES
In application of regulation 1606/2002 passed on July 19, 2002 by the
European Parliament and the Council of Europe, Renault’s consolidated fi nancial
statements for 2007 are prepared under IFRS (International Financial Reporting
Standards) as issued by the lASB (International Accounting Standards Board) at
December 31, 2007 and adopted by the European Union at the year-end.
A – Changes in accounting policies
The following standards and interpretations which became mandatory from
January 1, 2007 and were published in the Offi cial Journal of the European
Union at December 31, 2007, have been applied for the fi rst time in 2007:
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IFRS 7, “Financial Instruments: Disclosures”.
In application of this standard, the Group includes the required disclosures in
the notes to the fi nancial statements. The classifi cation and valuation of the
Group’s fi nancial instruments are unaffected by application of IFRS 7;
Amendment to IAS 1 concerning capital disclosures.
For application of the amendment to IAS 1, the Group describes its capital
management policy (note 19-B);
IFRIC 7, “Applying the Restatement Approach under IAS 29 Financial
Reporting in Hyperinfl ationary Economies”;
IFRIC 8, “Scope of IFRS 2 – Share-based payment”;
IFRIC 9, “Reassessment of Embedded Derivatives”.
Application of these interpretations has no impact on the fi nancial statements
at December 31, 2007.
The Group undertakes no early application of any standard or interpretation,
including the following, which were already released at December 31, 2007:
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IFRIC 11 “intra-group and Treasury Share Transactions”, mandatory for
fi nancial years beginning on or after March 1, 2007;
IFRS 8 “Operating segments”, which replaces IAS 14 “Segment Reporting”,
mandatory for fi nancial years beginning on or after January 1, 2009.
The Group does not currently expect adoption of these new standards and
interpretations to have any signifi cant impact on the fi nancial statements.
✦ Global Reporting Initiative (GRI) Directives
FINANCIAL STATEMENTS 07
CONSOLIDATED FINANCIAL STATEMENTS
The Group has also introduced several new accounting policies in 2007, with
the effects described below.
The Renault Group opted in 2007 to recognise actuarial gains and losses in
equity as allowed by the amendment to IAS 19. This change of policy has a
negative impact on equity of €196 million at December 31, 2007 (€127 million
at December 31, 2006 and €166 million at December 31, 2005).
The Group has also reviewed its accounting treatment of certain components
of revenues in order to provide a more fair refl ection of its transactions:
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sales of raw materials, parts and engines to subcontractors are now
considered as a consignment of inventories at subcontractors’ premises,
and are no longer included in sales. The inventories concerned remain in
Group assets until the vehicle is sold to the fi nal customer. This change
in presentation results in a €638 million reduction in revenues for 2007
(€498 million for 2006 and €449 million for 2005). There is no impact on
operating margin;
sales of spare parts to dealers to be reinvoiced to the Group through warranty
costs are no longer included in sales, but deducted from the cost of sales.
This change in presentation results in a €529 million reduction in revenues
for 2007 (€658 million for 2006 and €608 million for 2005). There is no
impact on operating margin;
the cost of promotional campaigns offering reduced-interest loans to endusers,
previously included in selling, general and administrative expenses,
is now charged to sales revenues. This change in presentation results in
a €30 million reduction in revenues for 2007 (€40 million for 2006 and
€35 million for 2005). There is no impact on operating margin.
In order to clarify certain indicators in the statements of cash fl ows, net
allocations to short-term provisions in those statements are now included with
net allocations to long-term provisions in other unrealised income and expenses.
This change in presentation has a negative impact of €401 million on cash fl ow
for 2007 (€623 million for 2006 and €229 million for 2005). Cash fl ows from
operating activities were unaffected given that this reclassifi cation is refl ected
in the change in working capital.
B – Estimates and judgments
In preparing its fi nancial statements, Renault has to make estimates and
assumptions that affect the book value of certain assets and liabilities,
income and expense items, and the information disclosed in certain notes.
Renault regularly revises its estimates and assessments to take account of
past experience and other factors deemed relevant in view of the economic
circumstances. If changes in these assumptions or circumstances are not
as anticipated, the fi gures reported in Renault’s future fi nancial statements
could differ from current estimates. The recoverable value of fi xed assets and
sales fi nancing receivables, deferred taxes and provisions, particularly vehicle
warranty provisions (note 2-G) and provisions for pension and other long-term
employee benefi t obligations (note 20-C), are the principal items that depend
on estimates and assumptions
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Registration Document Renault 2007 195