Universal Registration Document 2020

The practice was then progressively extended until the end of the first half-year, inline with the first emergency period which ended on 10 July 2020. In the period from April to June 2020, the Group thus settled nearly €500 million of invoices before the contractual deadline for very small, small and medium-sized suppliers in France.These measures taken in the first half-year have no impact on the Group’s working capital at 31 December 2020.

Estimated impacts of the Covid-19 pandemic on the income statement for 2020

In accordance with AMF and ANC recommendations, the Group has not applied any different classifications as a result of Covid-19 from those normally used in its income statement. In-depth analyses were conducted in the Group’s local entities and centrally for the half-year closing at 30 June 2020, then the annual closing at 31 December 2020, to prepare reliable estimates of the impacts of the pandemic on the Group’s financial statements. The main estimated impacts of the Covid-19 pandemic on items of the Group’s income statement are presented below.

The pandemic’s impact on sales at 31 December 2020 is an estimated €(2,306) million (or around -3.3% of total sales). This impact mainly concerns the following business segments:

• France - Generation and Supply: the estimated impact of €(1,083) million, reflecting the lower nuclear power output and a decline in demand for electricity which led to sales on the wholesale markets at lower prices;
• France – Regulated activities: the estimated impact of €(278) million is mainly associated with the lower demand for electricity (leading to a decrease in sales of delivery services) and in the first half-year the downturn in network connection activity (work on connections and plant modification was suspended from16 March until 11 May 2020);
• the United Kingdom: the estimated impact of €(451) million results from the lower demand for electricity, principally for customers in the industrial and business segments;
• Italy: the estimated impact of €(90) million reflects the downturn in demand for electricity and gas;
• Dalkia: the estimated impact of €(193) million principally relates to closures of client sites during the lockdown period (this had a significant effect on thermal and electric engineering work), and a lower level of business in services and to a smaller degree energy.

The impact of the Covid-19 pandemic on fuel and energy purchases at 31 December 2020, due to the decline it caused in nuclear power output and demand for electricity and gas, is an estimated decrease of approximately €854 million, principally in the France – Regulated activities and France – Generation and Supply segments and the United Kingdom.

The pandemic also had an estimated downward impact of €344 million on external expenses (net of capitalised production costs) reflecting several types of effect:

• lower purchases as a result of the business downturn in services and engineering work, principally at Dalkia;
• slowdowns or deferrals of on-site work in the Group’s various businesses led to lower non-capitalisable purchases;
• additional expenses incurred in connection with the Covid-19 pandemic (protective equipment, hand sanitiser, etc.);
• lower purchases as a result of the lockdown and various measures introduced by the public authorities, for example restrictions on movement and requiring people to work from home (less travel, training and seminars, etc.).

Personnel expenses increased by some €64 million, principally in connection with the business recovery plan introduced by the Group. This amount includes indemnities received or receivable under furlough schemes in some Group entities inFrance (see note 1.4.1.5), amounting to approximately €18 million, together with the unfavourable effects of the pandemic in terms of employee holiday pay at certain Group entities in France.

Finally, other operating income and expenses were adversely affected to the extent of some €(309) million, including €(204) million following revaluation of impairment of trade receivables in various Group entities (see note 1.4.1.2) and €(45) million due to an increase in decommissioning provisions for permanently shut-down nuclear power plants in France where decommissioning work had to be postponed.

The above estimated impacts were prepared from specific reporting set up by the Management with all Group entities as part of the closing for the consolidated financial statements, applying the following approaches:

• effects associated with downturns in business levels (services, engineering work) or deferrals of work are based on detailed comparative analyses with the corresponding period of 2019, or infra-annual forecasts; impacts on sales due to lower demand for electricity and gas are based on analyses founded on consumption forecast models that take account of other effects (weather effects, portfolio changes, etc.); impacts on nuclear power output are based on analyses of generation by plants in operation (particularly for modulation) and detailed analyses of outages for units that had a scheduled outage in 2020 after the pandemic crisis began, whether for fuel reloading or for regular maintenance, by comparison of activities and time spent on outages in the crisis context in 2020 with a model of outages and the actual work completed in 2019;
• the estimates calculated aim to assess the financial impacts of the Covid-19 pandemic regarding the downturn in business activity, and volumes sold and produced. These estimates do not include impacts of crisis-correlated price effects such as observed market prices over the period, due to the difficulty of attributing them directly and solely to the pandemic. Furthermore, these impacts do not include the effects of action plans implemented by the Group in response to the pandemic;
• additional expenses incurred in connection with the public health crisis (protective equipment, hand sanitiser, etc.), or assessment of the specific measures or risks associated with the crisis, are based on figures recorded in the accounting information system.

The resulting estimated impact of the Covid-19 pandemic on Operating profit before depreciation and amortisation at 31 December 2020 is some €(1,479) million (at 30 June it was some € (1,010) million). This impact mainly concerns the following business segments: France - Generation and Supply (€ (872) million against € (482) million in the first half-year), France - Regulated activities (€(237) million against €(212) million in the first half-year) and the United Kingdom (€ (182) million against €(128) million in the first half-year). The pandemic’s estimated impacts on the Group’s other business segments are less material given the consolidated operating profit before depreciation and amortisation at that date, and mainly concern Dalkia (€(40) million against € (39) million in the first half-year), Framatome (€(47) million against €(37) million in the first half-year), and Italy (Edison) (€(60) million against€(47) million in the first half-year).

Some estimates reflecting the information known to the Group at 31 December 2020, notably concerning the risk of non-recovery of customer receivables, are uncertain by nature. The final situation would differ from the year-end estimates, depending on how the crisis ends, and more broadly the economic consequences in 2021.

Finally, it should be noted that the financial result has been significantly impacted by the decline on the financial markets, through changes in the fair value of financial instruments in the first half-year (see note 12 to the condensed consolidated half-year financial statements). The behaviour of the financial markets in the second half-year, combined with the Group’s allocation approach for portfolio management, led to clearly positive changes in the fair value of financial instruments at 31 December 2020 (see note 8).

The Group has also recognised impairment in 2020 that among other factors reflect indirect effects of the pandemic (see note 10.8).