2007 Interactive Registration Document - Renault

07 CONSOLIDATED
FINANCIAL STATEMENTS
FINANCIAL STATEMENTS
For the Automobile division, the impact on shareholders’ equity (before taxes)
of a 1% rise in the Euro against the main currencies, applied to fi nancial
instruments exposed to foreign exchange risks, would be €48 million at
December 31, 2007. The impact on shareholders’ equity results mainly from
Currency derivatives
(€ million)
DECEMBER 31, 2007 DECEMBER 31, 2006 DECEMBER 31, 2005
NOMINAL -1 YR 1–5 YRS +5 YRS NOMINAL -1 YR 1–5 YRS +5 YRS NOMINAL -1 YR 1–5 YRS +5 YRS
Currency swaps –
purchases 2,594 1,397 1,166 31 2,438 669 1,715 54 2,488 840 1,597 51
Currency swaps – sales 2,719 1,431 1,267 21 2,357 555 1,748 54 2,640 893 1,696 51
Forward purchases 14,851 14,849 2 - 11,508 11,508 - - 12,991 12,991 - -
Forward sales 14,808 14,806 2 - 11,461 11,461 - - 12,983 12,983 - -
B2 – Interest rate risk
Interest rate risk management
The Renault group’s exposure to interest rate risk mainly concerns the sales
fi nancing business of RCI Banque and its subsidiaries. Customer loans are
generally issued at fi xed interest rates, for durations of between 12 and
72 months.
Interest rate risk is monitored using a methodology common to the entire RCI
group, to allow overall management of interest rate risks at consolidated group
level. Exposure is assessed daily and hedging is systematic, using swaps to
convert fl oating-rate liabilities to fi xed-rate liabilities (cash fl ow hedges). The
objective for each subsidiary is to hedge all risks in order to protect the sales
margin.
The Automobile division’s interest rate risk management policy applies two basic
principles: long-term investments use fi xed-rate fi nancing, and investments
for cash reserves use fl oating-rate fi nancing. In addition, the fi nancing in yen
undertaken as part of the hedge of Nissan equity is fi xed-rate, over terms varying
from one month to seven years.
Finally, Renault Finance carries out interest rate transactions on its own behalf,
within strictly defi ned risk limits. This arbitrage activity has no signifi cant impact
on Renault’s consolidated net income.
The Group made no major changes to its interest rate risk management policy
in 2007.
Analysis of the sensitivity of financial instruments to interest rate risks
The Group is exposed to the following interest rate risks:
n
n
n
variations in the interest fl ows on fl oating-rate fi nancial instruments stated
at amortised cost, and variations in the fair value of fi nancial instruments
stated at fair value (including fi xed-rate instruments swapped to fl oating
rate, and structured products);
variations in the fair value of the fi xed-rate fi nancial instruments stated at
fair value;
variations in the fair value of derivatives (hedging derivatives and other
derivatives).
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the partial hedge of the investment in Nissan. This impact is offset by the
opposite variation in the translation adjustment on the value of the investment
in Nissan (note 19-D). The estimated impact on net income at December 31,
2007 is not signifi cant.
Impacts are estimated by applying this 1% rise in interest rates over a one-year
period to fi nancial instruments reported in the closing balance sheet.
The impact on equity corresponds to the change in fair value of available-forsale
fi xed-rate fi nancial assets and cash fl ow hedges after a 1% rise in interest
rates. All other impacts affect net income.
Calculation of the individual divisions’ sensitivity to interest rates includes
interdivision loans and borrowings.
For the Automobile division, the impact on net income and shareholders’ equity
(before taxes) of a 1% rise in interest rates applied to fi nancial instruments
exposed to interest rate risks would not be significant at December 31,
2007.
For the Sales fi nancing division, the impact on net income and equity (before
taxes) of a 1% rise in interest rates applied to fi nancial instruments exposed
to interest rate risks would be €(5) million and €75 million respectively at
December 31, 2007. The impact on equity results mainly from the change in the
fair value of swaps undertaken to hedge future cash fl ows. The Sales fi nancing
division’s sensitivity to interest rate risks is stable in comparison to 2006.
Fixed rate/floating rate breakdown of financial liabilities and sales financing debts
(excluding derivatives)
DECEMBER 31,
2007
DECEMBER 31,
2006
DECEMBER 31,
2005
AFTER AFTER AFTER
IMPACT OF IMPACT OF IMPACT OF
(€ million)
DERIVATIVES DERIVATIVES DERIVATIVES
Fixed rate 22,215 24,721 22,094
Floating rate 5,234 5,148 8,224
TOTAL FINANCIAL LIABILITIES,
SALES FINANCING DEBTS
(EXCLUDING DERIVATIVES) 27,449 29,869 30,318
228 Registration Document Renault 2007
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