1.3.10 Goodwill and other intangible assets

1.3.10.1 Goodwill

1.3.10.1.1 Determination of goodwill

In application of IFRS 3, “Business combinations”, goodwill is the difference between:

• the sum of the following items:
  • the acquisition-date fair value of the price paid to acquire control,
  • the value of non-controlling interests in the entity acquired, and
  • for acquisitions achieved in stages, the acquisition-date fair value of the Group’s share in the acquired entity before it acquired control; and
• the net value of the assets acquired and liabilities assumed, measured at fair value at the acquisition date.
  
  

When this difference is negative it is immediately included in net income.

The fair values of assets and liabilities and the resulting goodwill are finalised within twelve months of the acquisition.

1.3.10.1.2 Measurement and presentation of goodwill

Goodwill on acquisition of subsidiaries is disclosed separately in the balance sheet. Impairment on this goodwill is reported under the heading “Impairment” in the income statement. After initial recognition, goodwill is carried at cost less any impairment recognised.

Goodwill on acquisition of associates and joint ventures is included in the investment’s net book value. Impairment on this goodwill is included under the heading “Share in income of associates and joint ventures”.

Goodwill is not amortised, but impairment tests are carried out as soon as there is an indication of possible loss of value, and at least annually, as described in note 1.3.14.

1.3.10.2 Other intangible assets

1.3.10.2.1 Research and development expenses

Research expenses are recognised as expenses in the financial period incurred.

Development costs that qualify for capitalisation under IAS 38 are included in intangible assets and amortised on a straight-line basis over their foreseeable useful life.

1.3.10.2.2 Other self-produced or purchased intangible assets

Other intangible assets mainly comprise:

• software, which is amortised on a straight-line basis over its useful life;
• purchased brands with an indefinite useful life, or amortised on a straight-line basis over their useful life;
• operating or usage rights for power plants, which are amortised on a straight-line basis over the useful life of the underlying asset;
• rights or licenses relating to hydrocarbon concessions, which are amortised under the Unit Of Production (UOP) method, and exploration expenses amortised over the year (see note 1.3.10.2.3);
• intangible assets related to environmental regulations (greenhouse gas emission rights and renewable energy certificates acquired for a consideration – see note 1.3.26);
• the positive value of energy purchase/sale contracts stated at fair value as part of a business combination governed by IFRS 3: this value is amortised as the contractual deliveries take place;
• assets related to concession contracts governed by IFRIC 12, under the “intangible model” (see note 1.3.12.2.4);
• technology related to activities as designer and supplier of nuclear steam supply systems and manufacturer of control rod clusters and nuclear fuel (Framatome) including codes and methods, EPR technology, patents and manufacturing processes, all amortised over their useful life;
• purchased customer contracts and relations, amortised over their useful life.
  
  

1.3.10.2.3 Hydrocarbon prospecting, exploration and generation

The Group applies IFRS 6, “Exploration for and Evaluation of Mineral Resources”.

Prospection and exploration costs and costs incurred in connection with geological surveys, exploration tests, geological and geophysical mapping and exploratory drilling are recognised as intangible assets and fully amortised in the year they are incurred.

Development costs related to commercially viable mineral wells and investments in facilities to extract and store hydrocarbons are recognised as “Property, plant and equipment used in generation and other tangible assets owned by the Group” or “Property, plant and equipment operated under concessions for other activities” as appropriate.

They are amortised under the Unit Of Production (UOP) method.

This concerns discontinued E&P operations (see note 2.3).

1.3.11 Concession assets, generation assets and other property, plant and equipment

The Group’s property, plant and equipment is reported under three balance sheet headings, as appropriate to the business and contractual circumstances of their use:

• property, plant and equipment operated under French public electricity distribution concessions;
• property, plant and equipment operated under concessions for other activities;
• property, plant and equipment used in generation and other tangible assets owned by the Group.
  
  

1.3.11.1 Initial measurement

Property, plant and equipment is recorded at acquisition or production cost:

• the cost of facilities developed in-house includes all labour and materials costs, and all other production costs that can be included in the construction of the asset;
• borrowing costs attributable to the financing of an asset incurred during the construction period are included in the value of the asset provided it is a qualifying asset as defined by IAS 23 “Borrowing costs”;
• the cost of property, plant and equipment also includes the initial estimate of decommissioning costs. These assets are associated with the provisions recorded to cover decommissioning obligations. At the date of commissioning, property, plant and equipment is measured and recorded in the same way as the corresponding provision (see note 1.3.20);
• decommissioning costs for nuclear generation installations also include last core costs
  (see note 1.3.20).
  
  

When some of the decommissioning costs for a plant are to be borne by a partner, the expected reimbursement is recognised as accrued income in the assets. The difference between the provision and the accrued income is recorded in Property, plant and equipment, and subsequent payments by the partner are deducted from the accrued income.

The Group capitalises safety expenses incurred as a result of legal and regulatory obligations sanctioning non-compliance by an administrative ban from operation.

Strategic safety spare parts for generation facilities are treated as property, plant and equipment, and depreciated over the residual useful life of the installations.

The costs of operations that are necessary for generation assets to remain in service, and are undertaken at the time of scheduled shutdowns, particularly during major inspections, are capitalised and amortised over a period corresponding to the time elapsing between two inspections.

When a part of an asset has a different useful life from the overall asset’s useful life, it is identified as an asset component and depreciated over a specific period.