Universal Registration Document 2021

5.1.4.6 Financial ratios

*Equity including non-controlling interests.

5.1.5 Management and control of market risks

See section 2.2.2. “Management of financial and market risks” of the 2021 Universal Registered Document.

5.1.5.1 Management and control of financial risks

This section sets forth the policies and principles for management of the Group’s financial risks defined in the strategic financial management framework (liquidity, interest rate, foreign exchange rate and equity risks), and the Group counterparty risk management policy set up by the EDF group. These principles apply only to EDF and operationally controlled subsidiaries or subsidiaries that do not benefit by law from specific guarantees of independent management such as Enedis. In compliance with IFRS 7, the following paragraphs describe the nature of risks resulting from financial instruments, based on analyses of sensitivities and credit (counterparty) risks.

An independent unit in the Group’s Risk Division, the Financial Risks Control Department (Département Contrôle des Risques Financiers et Investissements – CRFI), is in charge of financial risk control at Group level, mainly by ensuring correct application of the principles of the strategic financial management framework (July 2015). It also has the task of carrying out a second-level check of the risk of counterparty default (methodology and organisation) for EDF entities and operationally controlled Group subsidiaries (excluding Enedis), and a first-level check of financing activities by EDF SA’s trading room. The CRFI Department also carries out a second -level check of management activities concerning the dedicated  asset portfolio.

The CRFI Department issues daily and weekly monitoring reports of risk indicators relevant to activities in EDF SA’s trading room.

Regular internal audits are carried out to ensure controls are actually applied and are effective

5.1.5.1.1 Liquidity position and management of liquidity risk

5.1.5.1.1.1 Liquidity position

At 31 December 2021, the Group’s liquidities, consisting of liquid assets, cash and cash equivalents, totalled €22,656 million and available credit lines amounted to €13,039 million.

At 31 December 2021, the Group’s loans and other financial liabilities maturing within one year totalled €15,072 million and included €3,632 million relating to bonds, including accrued interest not yet due. This amount also comprises the negative cash position (including €2,691 million for margin calls on derivatives) and the liability relating to lease obligations (see note 18.3 to the 2021 consolidated financial statements). The associated requirements may when necessary be funded by the Group’s liquidities and available credit lines mentioned below, and other short-term resources mentioned below.

No Group company was in default on any borrowing at 31 December 2021.

5.1.5.1.1.2 Management of liquidity risk

The EDF group was able to meet its financing needs by conservative liquidity management and has obtained financing on satisfactory terms. On 26 May 2021, €1.25 billion of social hybrid notes were issued at the initial rate of 2.625%. On 23 November 2021, EDF issued a senior Green Bond for a total amount of €1.75 billion, with 12-year maturity and a fixed coupon of 1.000%, complemented on 30 November 2021 by a further issue of €100 million of senior Green Bonds, fungible with initial issue of 23 November 2021. 

A range of specific levers are used to manage the Group’s liquidity risk:

• the Group’s cash pooling system, which centralises cash management for controlled subsidiaries. The subsidiaries’ cash balances are made available to EDF SA in return for interest, so as to optimise the Group’s cash management and provide subsidiaries with a system that guarantees them market-equivalent financial terms;
• centralisation of financing for controlled subsidiaries at the level of the Group’s cash management Changes in subsidiaries’ working capital are financed by this department through stand-by credit lines provided for subsidiaries, which may also be granted revolving credit from the Group;
• active management and diversification of financing sources used by the Group: the Group has access to short-term resources on various markets through programmes for French commercial paper (billets de trésorerie) and US commercial paper. For EDF, the ceilings for these programmes are €6 billion for French NEU CP commercial paper and $10 billion for US commercial paper;
• transfer of bond liabilities to banking counterparties under cash repurchase agreements.

At 31 December 2021, the amount of the Group’s commercial paper outstanding was €4,462 million for French commercial paper, and US$730 million for US commercial paper. EDF has access to the world’s main bond markets: the Euromarkets through its EMTN programme, which currently has a ceiling of €50 billion, particularly for euro and sterling issues; and the domestic markets used for stand-alone issues in US dollars (144A bonds), yen (Samurai bonds) and Swiss francs.

The average maturity of the Group’s gross debt was 13.7 years at 31 December 2021, compared to 14.5 years at 31 December 2020.

At 31 December 2021, EDF SA had a total amount of €12,297 million in available credit facilities (syndicated credit and bilateral lines) :

• a syndicated credit line of €4 billion that expires in December 2025. No drawings had been made on this syndicated credit line at 31 December 2021;
• a syndicated social credit facility of €1.5 billion, signed in December 2021, with initial maturity of three years (December 2024) and two 1-year extensions possible. No drawings had been made on this facility at 31 December 2021. The cost will be indexed on four Group ESG KPIs, with a particular focus on its social responsibility;
• bilateral lines representing an available amount of €6,397 million, with expiry dates extending to December 2026. The level of this available financing is reviewed very regularly to ensure the Group has sufficient backup credit facilities;
• credit lines with the European Investment Bank representing an available amount of €400 million. Five of these six credit lines were fully drawn at 31 December 2021, for amounts of €500 million, €225 million, €500 million, €250 million and €400 million.

EDF concluded on 15 March 2022⁽¹⁾ some bilateral term loans for a total amount of 10.25 billion euros⁽²⁾. These facilities have a maturity of 3 years and do not include any breakup cost in case of early repayment. These loans were concluded with a group of 9 banks. This transaction does increase the financial flexibility of the Group for the coming years.

Edison has notably a credit line with the European Investment Bank (available amount €300 million at 31 December 2021).

(1)  See EDF's press release on 16 March 2022 "EDF signs for 25 billion euros of banking facilities".

(2) Part of which is in dollars.