Items of property, plant and equipment are depreciated on a straight-line basis over their useful life, defined as the period during which the Company expects to draw future economic benefits from their use.
The expected useful lives for the main facilities are as follows:
EDF is the operator for two types of concessions:
The accounting treatment of concessions is based on the 1975 accounting guide for concession operator firms, as there are no specific instructions in the national chart of accounts.
EDF is the concession operator for the island public distribution networks located in Corsica and France’s overseas departments, under concession agreements based on standard concession specifications approved by the public authorities. Concession agreements signed since 2018 follow the concession model negotiated in 2017 with the National Federation of Licensing Authorities (Fédération nationale des collectivités concédantes et régies – FNCCR) and France Urbaine, while other concessions follow the concession model signed with the FNCCR in 1992 (and updated in 2007).
Concession assets are reported in the balance sheet assets as property, plant and equipment operated under concessions, regardless of their initial financing, at acquisition cost or their estimated value at the transfer date when supplied by the grantor. An offsetting liability is recognised for any assets supplied for nil consideration by concession grantors.
Hydropower concessions follow standard rules approved by decree.
For concessions granted before 1999, hydropower concession assets consist solely of hydropower generation equipment (dams, pipes, turbines, etc.), while for more recent concessions, they also include hydropower generation equipment and switching facilities (alternators, etc.).
Assets used in these concessions are recorded under “Property, plant and equipment operated under concessions” at acquisition cost.
Depreciation is calculated over their useful life, which is generally identical to the term of the concession, although electromechanical equipment is depreciated over a period of 50 years.
Additional depreciation is also booked in the balance sheet liabilities for assets operated under concessions (see note 1.14.2).
Most concessions that expired before 2012 were initially for 75 years and were renewed for terms of 30 to 50 years. However, the French government has not yet renewed 18 concessions that have expired. Since their expiry these concessions have thus been in the “rolling extension” situation defined by the law. If, at the expiry date of a concession, no new concession has been established, “the concession is extended on the existing terms until such time as a new concession is granted”, so as to ensure continuity of operations in the meantime (Article L. 521-16 par. 3 of the French Energy Code).
At each reporting date, EDF assesses whether there is an indication that an asset could have significantly lost value. If so, an impairment test is carried out as follows:
These calculations may be influenced by several variables:
Investments are carried at acquisition cost.
Gains and losses on sales of investments are valued using the FIFO (first in first out) method.
Transfer duties, fees and commissions and legal fees related to acquisitions of investments are included in the cost of acquisition of the asset.
Expenses of this type relating to other shares are included in expenses. Tax-regulated amortisation of acquisition costs is recorded in an excess depreciation account.
When the book value of investments is higher than their value in use, impairment is recorded equivalent to the difference.
