2007 Interactive Registration Document - Renault

07 CONSOLIDATED
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
C – Consolidation principles
The consolidated financial statements include the financial statements
of all companies controlled exclusively, directly or indirectly, by the Group
(“subsidiaries”). Jointly controlled companies (“joint-ventures”) are proportionately
consolidated. Companies in which the Group exercises signifi cant infl uence
(“associates”) are included in the fi nancial statements on an equity basis.
Significant intercompany transactions and unrealised internal profits are
eliminated.
Non-consolidated companies which fulfi l these criteria are recorded as other
non-current assets.
None of these companies’ individual contributions to consolidated fi gures
exceeds the following:
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revenues: €20 million;
inventories: €20 million.
Their consolidation would have a negligible impact on the consolidated fi nancial
statements, since they are Group-fi nanced entities whose losses, if any, are
recognised via impairment losses, and which:
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acquire almost all their purchases from Group companies, most of these
companies being dealership-type establishments; or
carry out almost all their sales transactions with Group companies, the
principal company concerned being Renault Sport.
D – Presentation of the financial statements
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 corresponds to the operating income before other
operating income and expenses, which cover:
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restructuring costs and costs relating to workforce adjustment;
gains or losses on disposal of businesses or operating entities;
gains or losses on disposal of property, plant and equipment or intangible
assets (except vehicle sales);
unusual items, i.e. income and charges that are unusual in their frequency,
nature or amount
Primary segment reporting
Primary segment information is disclosed for the following divisions:
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the Automobile division, comprising the production, sales, and distribution
subsidiaries for passenger and light commercial vehicles, automobile service
subsidiaries, and the subsidiaries in charge of cash management for these
companies;
the Sales fi nancing division, which the Group considers as an operating
activity, carried out by RCI Banque and its subsidiaries for the distribution
network and fi nal customers.
Each of these two divisions forms a coherent unit with its own specifi c risks
and returns.
Apart from taxes, income and expenses relating to sales fi nancing are recorded
as operating items. The tax effect inherent to the French consolidated taxation
system is included in the tax expense of the Automobile division.
Assets and liabilities are specifi c to each division. Receivables assigned
by the Automobile division to the sales fi nancing companies are treated as
operating assets by the assignee when the risks and benefi ts are substantially
transferred.
Vehicles for which the Automobile division has a repurchase commitment are
included in the division’s assets. When these vehicles are fi nanced by the Sales
fi nancing division, the Sales fi nancing division recognises a receivable on the
Automobile division.
Secondary segment reporting
Secondary segment information is disclosed by geographic area, as defi ned in
the Renault Commitment 2009 growth plan.
Current and non-current assets and liabilities
Sales fi nancing receivables, other securities, derivatives, loans and fi nancial
liabilities of the Sales fi nancing division (other than redeemable shares and
subordinated loans) are considered as current assets and liabilities, as they
are used in the division’s normal business cycle.
For the Automobile division, in addition to items directly related to the business
cycle, all assets and liabilities maturing within one year are classifi ed as
current.
E – Translation of the financial statements
of foreign companies
The Group’s presentation currency is the e uro.
For foreign companies, the functional currency is generally the local currency.
In cases where most transactions are carried out in a different currency, that
currency is adopted as the functional currency.
To determine whether a country is in hyperinfl ation, the Group refers to the
list published by the AICPA (American Institute of Certifi ed Public Accountants)
Task Force. In 2007, this list included none of the countries where Renault has
signifi cant business activity.
Foreign companies’ accounts are established in their functional currency, and
subsequently translated into the Group’s presentation currency as follows:
balance sheet items other than components of shareholders’ equity, which are
stated at historical value, are translated at the closing rate of exchange;
income statement items are translated at the average exchange rate for
the period;
the translation adjustment is included in consolidated shareholders’ equity
and has no impact on net income.
Goodwill and valuation adjustments generated by a business combination with
a foreign company are treated as an asset or liability of the entity acquired,
as appropriate.
When a foreign company is sold, the translation adjustments recorded
in shareholder’s equity in respect of its assets and liabilities are taken to
income.
196 Registration Document Renault 2007
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