In parallel to the above summary proceedings, cases concerning the substance of the matter were brought before the Paris Commercial Court by several ARENH applicants, claiming compensation from EDF for the prejudice caused by its allegedly illegal refusal to apply the force majeure clause. These cases are ongoing.
Gross investments in intangible assets and property, plant and equipment in 2020 amounted to €16,007 million (see note 4) compared to €16,797 million in 2019, a decrease of €790 million. These amounts include capitalised production costs totalling €7,888 million in 2020 (charged to other external expenses, which are reported net of those items in the income statement) and €7,932 million in 2019.
The Covid-19 pandemic had a moderate overall impact at Group level on gross investments in intangible assets and property, plant and equipment compared to 2019, although the nature and scale of its effects varied in different Group entities.
With the introduction of national lockdowns and practices to prevent the virus spreading, which differed across countries and regions, some work projects were suspended and deferred, while others continued but at a much slower pace or over a longer period. Resumption of work has varied in speed and intensity in the second half of the year, depending on the activities concerned and the countries where the Group operates. Some work, much of it engineering work, could be done remotely.
The new public health measures themselves have sometimes generated additional costs, principally resulting from additional protective activities, tension on external resources in some fields of work, and longer completion time for certain operations(due to adoption of practices to stop the virus spreading, limits on the number of workers on site, etc.). Additional costs directly attributable to continuation of site work and completion of assets have been capitalised, in accordance with IAS 16. No significant effect resulting from low production activity (“sous-activité”) that might have been capitalised was identified at 31 December 2020. The costs of demobilising and remobilising personnel for the deferred and suspended worksites are recorded as
For the France - Generation and Supply segment, gross investments decreased by €588 million between 2019 and 2020 (see note 4). Most of this decrease was unrelated to Covid-19 effects, which were as follows:
Enedis (France – Regulated activities segment) stopped work during France’s lockdown on connections, grid modification, and the network generally, and suspended Linky meter installations. Resumption of work at a brisk pace since11 May 2020 reduced the backlog, particularly for installation of Linky meters. As a result of these effects, gross investments by the France – Regulated activities segment (which also includes Électricité de Strasbourg and the island activities) were €423 million lower in 2020 than 2019, an amount similar to the decrease observed in the first half of 2020 and mainly attributable to the effects of the pandemic.
In the United Kingdom, work on the Hinkley Point C project slowed down inApril 2020 due to the lower number of people working on site at a stage of significant development. Gross investments by EDF Energy increased by €133 million between 2019 and 2020.
EDF Renewables saw a slight rise of €42 million in gross investments compared to 2019, mainly driven by projects in North America.
The value of property, plant and equipment reported by the Group also includes interest expenses on financing of assets incurred during the construction period in the case of qualifying assets as defined by IAS 23 “Borrowing costs”. When development of an asset is suspended for a long period, capitalisation of interest must also be suspended. This was the case for the Flamanville EPR project, where capitalisation of the associated interest was suspended between 16 March and 30 June 2020, resulting in a €120 million increase in financial expenses at 31 December 2020.
In view of the significant downward revision during the first half-year of estimates of nuclear power output in France for 2020, and the results of the capacity auction held on 25 June 2020, EDF considered in its half-year financial statements that it was likely to be required to make imbalance settlement payments for the delivery year 2020, and recorded a provision of €137 million for this purpose at 30 June 2020 (see note 5.1 for details of the operation of France’s capacity mechanism). In view of the final output achieved in 2020, and particularly the availability of EDF generation plants during the peak periods of the second half of the year, this provision was cancelled in the second half-year since EDF had fulfilled its obligations relating to the French capacity mechanism.
The Group has updated its provisions for onerous contracts (mainly gas purchase contracts and some customer contracts), principally to reflect changes in market price scenarios (see notes 5.2 and 17.2). No new significant onerous contracts were identified.
Ongoing work on the decommissioning was halted from 16 March 2020. On thes sites, only the regulatory activities (monitoring the environment, site safety an security) continued. Work first resumed on 11 May 2020.
The temporary deferral of certain types of on-site decommissioning work led to a €45 million increase to provisions for decommissioning concerning nuclear plant currently being dismantled at 31 December 2020.
As a result of the Covid-19 pandemic, certain Group entities in France have had to suspend or slow down their activities, and made use of the furlough scheme set up by the government. At 31 December 2020 the indemnities received amount to€18 million and have been recognised as a deduction from personnel expenses.
During the pandemic some States extended deadlines for payment of taxes. EDFEnergy, among other Group entities, has made use of these measures and deferred its monthly VAT payments. The amount concerned was £117 million at 30 June 2020and around £104 million at 31 December 2020.
In addition to the information in the previous paragraphs, the Covid-19 pandemic did not involve any other specific use of judgements, estimates or assumptions for determination of the value of assets and liabilities, income and expenses of the period (compared to those described in note 1.3).
