Notes 1.3.4.1, 1.3.4.4 and 10 to the consolidated financial statements
As at 31 December 2020, the goodwill, intangible assets with indefinite useful live and tangible assets represent significant amounts of the Group’s equity.
Notes 1.3.4.4 and 10.8 describe the methodologies adopted and applied to determine if indicators exist showing that an asset may be subject to an impairment loss. These notes also describe the methods for performing impairment tests. The tests and the determination of recoverable amounts are carried out annually at the cash-generating unit (CGU) level for those holding intangible assets with indefinite lives or goodwill. The recoverable amount corresponds, for the majority of these CGU, to the value in use determined based on the discounted value of future cash flows.
We considered in particular the valuation of non-regulated assets in France, the United Kingdom and in Italy, to be a key audit matter, due to the sensitivity of valuations to macro-economic, industry and financial assumptions to determine recoverable amounts and the estimates and judgments that they require from management.
In particular, as indicated in note 10.8.2, a market environment in an unfavorable economic and sanitary crisis context with persistent low interest rates, a lowering demand for energy, in connection with energy efficiency policies and development of renewable energies, and lowering long-term fossil commodities and electricity prices in the main markets where EDF operates, may significantly decrease the recoverable amount of certain goodwill, intangible assets, property, plant and equipment and may lead to significant impairment losses.
As part of our work, we analysed the existence of indicators of impairment losses at the CGU level. We have also gained an understanding of the process for formulating estimates and assumptions made by management as part of impairment testing and we have also assessed the appropriateness of the valuation model.
We have verified, for the CGU tested, that the discounted future cash flow projections correspond to those generated by the assets included in these CGU and that they were consistent with (i) the budget data, medium-term plans (MTP) and, beyond, with the Group’s long-term assumptions, (ii) past performances, (iii), market outlook and (iv) the expected operating life of the assets.
We have assessed, by conducting interviews with management, the different underlying assumptions (economic growth, price of raw material and CO2, electricity demands, production capacities and interconnections and changes in energetic mix) on which the medium and long-term price assumptions are based, by substantiating them with external studies carried out by international organisms or experts in energy.
We have verified the determination methods and the consistency of the discount rate assumptions, based on the weighted average cost of capital (WACC) by geographic area and by activity and, in particular, analysed, with the assistance of our internal experts, the consistency of risk-free rates and the risk premiums adopted by management with the underlying market assumptions.
We have assessed the highly probable aspect of the disposals decided by the Group and the items considered to evaluate the realizable value as describe in note 3.2 on the assets and liabilities held for sale.
Finally, we have assessed if notes 1.3.4.4 and 10.8 of the consolidated financial statements provide appropriate disclosure in particular in terms of assumptions adopted to perform impairment tests and sensitivity analyses.
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations of the Group’s information given in the management report of the Board of Directors.
We have no matters to report as to its fair presentation and its consistency with the consolidated financial statements
We attest that the consolidated non-financial statement required by Article L. 225-102-1 of the French Commercial Code is included in the information pertaining to the Group presented in the management report, being specified that, in accordance with the provisions of Article L. 823-10 of the Code, we have not verified the fair presentation and the consistency with the consolidated financial statements of the information contained therein and should be reported on by an independent insurance services provide.
We have also verified, in accordance with the professional standard applicable in France relating to the procedures performed by the Statutory Auditor relating to the annual and consolidated financial statements presented in the European single electronic format, that the presentation of the consolidated financial statements intended to be included in the annual financial report mentioned in Article L. 451-1-2, I of the French Monetary and Financial Code (Code monétaire et financier), prepared under the responsibility of the Chief Executive Officer, complies with the single electronic format defined in the european delegated regulation no. 2019/815 of 17 December 2018. As it relates to consolidated financial statements, our work includes verifying that the tagging of these consolidated financial statements complies with the format defined in the above delegated regulation.
Based on the work we have performed, we conclude that the presentation of the consolidated financial statements intended to be included in the annual financial report complies, in all material respects, with the European single electronic format.
We have no responsibility to verify that the consolidated financial statements that will ultimately be included by your company in the annual financial report filed with the AMF are in agreement with those on which we have performed our work.
We were appointed as Statutory Auditors of Électricité de France SA by the General Meeting of 6 June 2005 for KPMG Audit and the by decision of the Board of Directors of 25 April 2002 for Deloitte & Associés.
As at 31 December 2020, KPMG Audit was in the 16th year of total uninterrupted engagement and Deloitte & Associés was in the 19th year of total uninterrupted engagement, which for both 16 years since securities of the Company were admitted to trading on a regulated market.
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless it is expected to liquidate the Company or to cease operations.
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risks management systems and where applicable, its internal audit, regarding the accounting and financial reporting procedures.
The consolidated financial statements were approved by the Board of Directors.
