Pursuant to European regulation 1606/2002 of 19 July 2002 on the adoption of international accounting standards, the EDF group’s consolidated financial statements at 31 December 2020 are prepared under the presentation, recognition and measurement rules set out in the international accounting standards published by the IASB and approved by the European Union for application at 31 December 2020. These international standards are IAS (InternationalAccounting Standards), IFRS (International Financial Reporting Standards), and SIC and IFRIC interpretations.
The Group has not opted for early application of standards and interpretations that were not yet mandatory in 2020.
The parent company’s functional currency is the Euro. The Group’s financial statements are presented in millions of euros.
The accounting and valuation methods applied by the Group in the consolidated financial statements at 31 December 2020 are identical to those used in the consolidated financial statements at 31 December 2019, with the exception of the changes presented below in notes 1.2.1, 1.2.2 and 1.2.3. Information is also given on the standards, amendments and interpretations adopted by the European Union that are applicable from 1 January 2021 (note 1.2.4), and released by the IASB but not yet adopted by the European Union (note 1.2.5).
For purposes of clarity, the accounting principles and methods used are now described in individual notes to the financial statements.
These amendments, adopted by European Union on 21 April 2020, applicable to business combinations taking place from 1 January 2020, aim to clarify the distinction between the purchase of a business and the purchase of a group of assets. They allow the use of a concentration test to determine if an entity has acquired a single identifiable asset or group of similar identifiable assets rather than a business(or operation), based on whether substantially all of the fair value of the gross assets acquired is concentrated in a single asset (or a group of similar assets). The Group applies this test to certain acquisitions, with no impact on its financial statements at 31 December 2020.
The current benchmark interest rates (IBOR - Interbank Offered Rates) will be replaced by new alternative benchmarks (Risk Free Rates), some of which will take effect in 2021. This reform is particularly likely to affect certain commercial contracts (e.g. late payment penalties on supplier or customer contracts) and financial instruments (loans and receivables, borrowings, valuation of leases, derivatives). The principal rates concerned by the reform that are used by the Group are Euribor, LiborUSD and Libor GBP.
The IASB has published several amendments to IFRS 9, IAS 39 and IFRS 7 that limit the impacts of the interest rate benchmark reform for issuers. The amendments to IFRS 9, IAS 39 and IFRS 7 for phase 1 of the reform, adopted on 15 January 2020 byEuropean Union and applicable since 1 January 2020, allow continuation of hedge accounting until the transition to the new interest rates is effective, and entail no impact on the Group’s 2020 financial statements.
These amendments concern the treatment by the lessee of relief granted by the lessor on a current lease as a direct result of the Covid-19 pandemic, in the form of “payment holidays” or temporary rent reductions (for payments up to 30 June 2021at the latest). Provided there is no substantial modification of the terms of the lease, the lessee is allowed by these amendments not to re-estimate the lease liability using a revised discount rate, with a corresponding adjustment to the right-of-use asset, and not to defer the value of the relief through amortisation of the right-of-use asset.The lessee can therefore opt to record the impact directly in profit and loss.
Application from 1 June 2020 of these amendments, which were adopted by theEuropean Union on 9 October 2020, has no material impact on the Group’s financial statements.
The amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 for phase 2 of this reform were adopted on 13 January 2021 and are applicable for financial years beginning on or after 1 January 2021 (with retrospective application).
They state that in the event of modification of contractual terms as a direct consequence of the interest rate benchmark reform, and in application of paragraph B5.4.5 of IFRS 9, there is no immediate impact on profit and loss for the year.
A working team has been set up to identify all instruments for each reference interest rate that could be affected by this reform, organise the contractual, organisational and IT aspects of the transition, and introduce appropriate accounting treatments. At the year-end the Group has not identified any events requiring early application, even partial, of the phase 2 amendments.
These amendments modify the treatment of proceeds from selling items produced by an asset before it is ready for its intended use, by prohibiting deduction of those proceeds from the cost of the asset. Such proceeds and the associated costs must instead be recognised in profit and loss.
Subject to adoption by the European Union, these amendments are expected to be applicable from 1 January 2022 and would concern the Group’s projects for construction of energy generation assets (particularly Flamanville 3).
These amendments clarify the nature of the costs to be included in the cost of fulfilling a contract when assessing whether a contract is onerous. They mainly concern incremental costs such as direct labour and materials, and other costs relating directly to the contract, such as allocation of the depreciation charge for a tangible asset that is used in fulfilling the contract.
The Group does not currently anticipate any material impact to result from these amendments, which are expected to be applicable from 1 January 2022.
