2007 Interactive Registration Document - Renault

MANAGEMENT PROCEDURES
Import subsidiaries
Central and local systems and procedures have been set up to enable the
Group’s import subsidiaries to control costs and the fi nancial assistance paid
to the network.
Independent auditors perform inspections in some countries to ensure that
dealerships can substantiate the assistance they receive.
In 2006, an annual self-assessment on internal control was set up with a
standard format designed jointly with the Group Audit Department.
In 2007, the Sales and Marketing Department decided to put in place a tool for
the payment and subsequent control of the commercial support provided to the
network. This tool will be gradually rolled out across all sales subsidiaries.
European distribution subsidiaries (Renault Retail Group)
Internal control at the Group’s distribution subsidiaries (Renault Retail Group) is
based on a set of standards and procedures. Annual self-assessments carried
out using the Internal Control Quality tools have been extended to all countries
since end-2006.
These tools were developed in collaboration with the Audit and Risk Management
Department. Use of the self-assessments is checked regularly by auditors from
the Audit Department or by specialized audit fi rms from outside the Group.
2.3.2 FINANCIAL RISK
2.3.2.1 GENERAL FRAMEWORK FOR
CONTROLLING FINANCIAL RISK
Market risk management at Automobile mainly concerns the Central Cash
Management and Financing Department of Renault SA, Renault Finance, and
Société Financière et Foncière (SFF), the main activities of which are described
in paragraph 1.1.3.1 of the Registration Document.
Sales Financing (RCI Banque) manages the market risk on its activities. Securities
trades executed by companies in the RCI Banque group are intended solely to
hedge away the risks related to the fi nancing of the sales and inventories of
the distribution networks for Renault group brands. Most of these transactions
are made by the trading room of RCI Banque, which plays a pivotal role in
refi nancing the RCI Banque group.
Monitoring and control tools exist for each entity and, where necessary, at the
consolidated Renault group level. The results of these controls are reported
on a monthly basis.
✦ Global Reporting Initiative (GRI) Directives
MANAGEMENT REPORT 02
RISK MANAGEMENT
Dealership network
Renault and RCI Banque (RCI) jointly monitor the fi nancial situation of dealerships
in countries where RCI is present. A rating system is used to prevent and limit
the risk of default or outstanding accounts. In other countries, Renault sets up
a credit monitoring system.
Risk committees meet each month in countries where RCI Banque operates.
In other countries, particularly in Central Europe, a Risk Supervision committee
meets at head offi ce every four months to examine monthly operating reports
on the network’s fi nancial situation and on payment receivables.
Default risk is transferred to RCI Banque in geographical regions where it relies
on ad hoc bodies to bear risk from the network and individual customers. If RCI
cannot cover this risk, Renault bears it directly.
In 2007 the Credit Management structure put in place a reporting system with
indicators to monitor the debt of Automobile’s customers. These tools improve
the monitoring and management of payment periods and help to manage
customer risk more effectively.
Parts and Accessories Department
The Group Parts and Accessories Department, which is responsible for the
commercial management of the distribution of spare parts and accessories to
all Renault entities, set up an action program based on the risk maps drawn
up in 2004 and updated in 2007. The action plans are focused on the risk of
a disruption in supply caused by supplier, logistics or IT failure. A special risk
committee monitors these actions regularly.
For each entity, fi nancial risks are monitored at three levels:
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fi rst-level control: self-monitoring by line personnel and formalized monitoring
by each business line manager;
second-level control: carried out by internal auditors under the authority of
the chief executive of the entity;
third-level control: carried out by the control bodies (Renault Internal Audit
or external fi rms commissioned by it). The third-level control organizations
make a critical, independent analysis of the quality of the control system.
The Statutory Auditors also contribute an analysis under the terms of their
assignment.
Furthermore, because SFF and RCI Banque are chartered as credit institutions,
they are required to implement special internal control systems that meet the
requirements of the French banking regulator.
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Registration Document Renault 2007 71