2007 Interactive Registration Document - Renault

07 CONSOLIDATED
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
The unrecognised actuarial gains and losses resulting from revisions of the
underlying assumptions are included in equity, as allowed under the option
contained in the amendment to IAS 19 (see note 2-A).
The net expense for the year, corresponding to the sum of the current period
service costs, the discount cost less the expected return on fund assets and
a portion of deferred past service costs, is charged in full to the operating
margin.
Restructuring measures/Termination benefits
The estimated cost of restructuring and the cost of workforce adjustment
measures is recognised as soon as a detailed plan has been defi ned and is
either announced or in progress.
S – Financial assets
The Group recognises a financial asset when it becomes a party to the
contractual provisions of the instrument.
Financial assets comprise investments in non-controlled companies in which
Renault does not exercise signifi cant infl uence, securities, loans, and derivative
assets related to fi nancial transactions (note 2-V).
These instruments are presented as non-current assets, apart from those
maturing within 12 months of the closing date, which are classifi ed as current
assets or cash equivalents as appropriate.
Securities: investments in non-controlled companies in which Renault
does not have significant influence
Dividends from such companies are recorded in the year of distribution.
These investments are considered to be “available for sale”, and are accordingly
stated at their fair value at the fi nancial reporting date, with any changes in
fair value included directly in consolidated reserves. The amounts recorded in
consolidated reserves are transferred to the income statement upon disposal
of the investment.
Impairment is calculated and recognised in the income statement when there is
objective evidence that these investments are impaired. One indicator providing
objective evidence of impairment is a signifi cant or prolonged fall in the fair
value of investments below their acquisition cost.
The fair values of such investments are determined by reference to the market
price when possible.
Securities that do not represent a share in another entity’s capital
These securities are short-term investments undertaken as part of the Group’s
cash surplus management policy, and are initially stated at fair value.
The valuation methods and subsequent accounting treatment vary according
to whether such securities are considered “available for sale” or designated
from the outset as “assets stated at fair value through profi t or loss”. The
relevant category is determined on a case-by-case basis and depends on the
underlying management strategy. Securities intended for sale in the short term
are classifi ed as “assets stated at fair value through profi t or loss”; all other
securities are classifi ed as “available for sale”.
Securities intended for sale in the short term are stated at fair value at the
reporting date, with changes in fair value taken to income.
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Available-for-sale securities are stated at fair value at the reporting date, and
changes in this fair value are recorded directly in equity. The amounts included
in equity are taken to income upon derecognition of the asset. Impairment
losses are recorded in the income statement when there is objective evidence
of signifi cant long-term depreciation in value.
Fair values of securities are mainly determined by reference to the market
price.
Loans
Loans include interbank loans for investment of cash surpluses and loans to
non-controlled companies in which Renault holds investments.
Loans are initially recognised at fair value, plus directly attributable transaction
costs.
At each closing date, loans are valued at amortised cost. Impairment is recognised
in the income statement when there is objective evidence of depreciation in
value caused by an event that occurred after the initial recognition of the
asset.
T – Cash and cash equivalents
Cash includes cash on hand and bank deposits, with the exception of bank
overdrafts, which are included in fi nancial liabilities.
Cash equivalents are investments held for the purpose of meeting short-term
cash commitments. For an investment to qualify as a cash equivalent, it must be
readily convertible for a known amount of cash and be subject to an insignifi cant
risk of change in value.
U – Financial liabilities and sales financing debts
The Group recognises a fi nancial liability (for the Automobile division) or a
sales fi nancing debt when it becomes a party to the contractual provisions of
the instrument.
Financial liabilities and sales fi nancing debts comprise redeemable shares,
bonds, other interest-bearing borrowings and derivative liabilities related to
fi nancial transactions (note 2-V).
Redeemable shares
In accordance with IAS 39, the Group considers that the variable interest
on redeemable shares is an embedded derivative which cannot be valued
separately. Consequently, the Group has stated all its redeemable shares at
fair value. For these shares, fair value is equal to market value. Changes in fair
value are recorded in fi nancial income and expenses.
Bonds and other interest-bearing borrowings
Bonds and other interest-bearing borrowings are initially recorded at fair value,
less any directly attributable transaction costs.
At each reporting date, apart from specifi c hedge accounting methods (note 2-V),
these fi nancial liabilities are restated at amortised cost using the effective
interest rate method. The fi nancial expense calculated in this way includes
issuance expenses and issuance or redemption premiums, together with the
impact of debt renegotiations when the old and new terms are not substantially
different.
200 Registration Document Renault 2007
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