Trade receivables are initially recognised at the fair value of the consideration received or receivable, and subsequently carried at amortised cost or at fair value through OCI.
Trade receivables also include the value of unbilled receivables for energy already supplied, which are presented net of advances received from customers who pay in regular monthly instalments.
The Group applies IFRS 9’s simplified approach to measure expected credit losses on trade receivables, using provision matrices established on the basis of credit loss histories.
Cash and cash equivalents comprise immediately available liquidities and very short-term investments that are readily convertible into a known amount of cash, usually maturing within three months or less of the acquisition date, and with negligible risk of fluctuation in value.
Securities held short-term and classified as “Cash equivalents” are recorded at fair value, with changes in fair value included in the heading “Other financial income and expenses”.
The fair value adjustment of financial instruments results from the restatement to fair value of debt and equity securities and certain hedging instruments.
Share issue expenses correspond exclusively to external costs expressly related to the capital increase. They are charged against the issue premium at their net-of-tax value.
Other expenses are classified as expenses of the period.
Treasury shares are shares issued by EDF and held either by that company or by other entities in the consolidated Group. They are valued at acquisition cost and deducted from equity until the date of disposal. Net gains or losses on disposals of treasury shares are directly included in equity and do not affect net income.
The perpetual subordinated bonds issued by the Group (“hybrid” bond issue) incorporate options for redemption at the initiative of EDF. These options may be exercised after a minimum period that depends on the specific terms of each issue, and subsequently at each coupon date or in the event of highly specific circumstances (such as a change in IFRS or tax regime). The annual yield is fixed and reviewable based on contractual clauses that vary according to the specific terms of the issuance. There is no obligation for EDF to make any payment, due to the existence of contractual clauses entitling it to defer payment indefinitely. However, those clauses stipulate that any deferred payments must be made in the event of a dividend distribution. All these features give EDF an unconditional right to avoid paying out cash or another financial asset for the principal or interest. Consequently, in compliance with IAS 32, these bonds are recorded as equity instruments and any payment made is treated in the same way as dividends (see notes 3.3.2, 3.3.3 and 30.4).
The Group recognises provisions when it has a present obligation (legal or constructive) arising from a past event, an outflow of resources will probably be required to settle the obligation, and the obligation amount can be estimated reliably.
If it is anticipated that all or part of the expenses covered by a provision will be reimbursed, the reimbursement is recognised under receivables if and only if the Group is virtually certain of receiving it.
Provisions are determined based on the Group’s expectation of the cost necessary to settle the obligation. Estimates are based on management data from the information system, assumptions adopted by the Group, and if necessary, experience of similar transactions, or in some cases based on independent expert reports or contractor quotes. The various assumptions are reviewed for each closing of the accounts.
The expected costs are estimated based on year-end economic conditions and spread over a forecast disbursement schedule. They are then adjusted to Euros of the year of payment through application of a forecast long-term inflation rate and discounted to present value using a nominal discount rate. The provisions are based on these discounted future cash flows.
The rate of inflation and the discount rate are based on the economic and regulatory parameters of the country where the economic entity is located, considering the long operating cycle of the Group’s assets and the maturities of commitments.
The discount effect generated at each closing to reflect the passage of time is recorded under “Discount effect” in financial expenses.
In extremely rare situations, a provision cannot be booked due to lack of a reliable estimate. In such cases, the obligation is mentioned in the notes as a contingent liability, unless there is little likelihood of an outflow of resources.
Provisions related to nuclear generation mainly cover the following:
Changes in provisions resulting from a change in discount rates, a change in the disbursement schedule or a change in contractor quote are recorded:
Detailed information on the principles for determining provisions related to nuclear generation in France and the United Kingdom is given in note 32.
Other provisions primarily concern:
Provisions for onerous contracts primarily relate to multi-year agreements for the purchase or sale of energy and services:
