For France, the main assumptions and sensitivity analyses relating to EDF’s nuclear provisions are presented in note 15.1.1.5.
The calculation of provisions incorporates a level of risks and unknowns as appropriate to the operations concerned. The valuation of costs carries uncertainty factors such as:
- changes in the regulations, particularly on safety, security and environmental protection, and financing of long-term nuclear expenses;
- changes in the regulatory decommissioning process and the time necessary for issuance of administrative authorisation;
- future methods for storing long-lived radioactive waste and provision of storage facilities by the French agency for radioactive waste management ANDRA (Agence nationale pour la gestion des déchets radioactifs);
- changes in the contractual terms for spent fuel management;
- changes in certain financial parameters such as discount rates and/or inflation rates;
- the depreciation period of nuclear facilities (calculation of decommissioning provisions for nuclear plants in operation is based on the depreciation period of the assets concerned, i.e. 50 years for 900MW series and 1300MW series power plants and 40 years for 1450MW series power plants).
1.3.4.3 Pensions and other long-term and post- employment benefit obligations
The value of pensions and other long-term and post-employment benefit obligations is based on actuarial valuations that are sensitive to all the actuarial assumptions used, particularly concerning discount rates, inflation rates and wage increase rates.
The principal actuarial assumptions used to calculate these post-employment and long-term benefits at 31 December 2021 are presented in note 16. These assumptions are updated annually. The Group considers the actuarial assumptions used at 31 December 2021 appropriate and well-founded, but future changes in these assumptions could have a significant effect on the amount of the obligations and the Group’s equity and net income. Sensitivity analyses are therefore presented in note 16.
1.3.4.4 Impairment of goodwill and long-term assets
Impairment tests on goodwill and long-term assets are sensitive to the macro-economic and segment assumptions used – particularly concerning energy price movements – and medium-term financial forecasts. The Group therefore revises the underlying estimates and assumptions based on regularly updated information.
These assumptions, which are specific to Group companies, are presented in note 10.8.
1.3.4.5 Financial instruments
In measuring the fair value of unlisted financial instruments (essentially energy contracts), the Group uses valuation models based on a certain number of assumptions subject to unforeseeable developments.
1.3.4.6 Energy supplied but not yet measured and billed
As explained in note 5.1, the quantities of energy supplied but not yet measured and billed are calculated at the reporting date based on consumption statistic models and selling price estimates. Determination of the unbilled portion of sales revenues at the year-end is sensitive to the assumptions used to prepare these statistics and estimates.
1.3.4.7 Obligations concerning French public distribution concession assets to be replaced
In view of the specific nature of French public electricity distribution concessions, the Group has opted to present its obligation to replace concession assets in the balance sheet at a value based on the amount of contractual commitments as calculated and disclosed to the concession-granting authorities in the annual business reports (see note 11). Measurement of the concession liabilities concerning assets to be replaced is notably subject to unforeseeable developments in terms of costs, the useful life of assets and disbursement dates.
1.3.4.8 Deferred tax assets
The use of estimates and assumptions over recovery horizons is particularly important in the recognition of deferred tax assets.
1.3.4.9 Other judgements and estimates
- When there is no standard or interpretation applicable to a specific transaction, the Group exercises judgment to define and apply accounting methods that supply relevant and reliable information for preparation of its financial statements.
- For the application of IFRS 10 and IFRS 11, the Group uses judgment to assess control or classify the type of partnership arrangement represented by a jointly-controlled. For example:
-
EDF has set up “reserved” investment funds for some of its funds set aside for secure financing of nuclear plant decommissioning expenses and long-term storage expenses for radioactive waste (see note 15.1.2.2). In view of the funds’ characteristics, the prerogatives exercised by their managers and the procedures for defining the management strategies applicable to them, the Group considers that it does not have control, as defined by IFRS 10, over these funds. They are consequently treated as debt securities, in application of IFRS 9.
- Through its subsidiary Edison, the Group held a 30% investment in E2i Energie Speciali, alongside the other shareholder F2i. The governance arrangements and contractual agreements gave Edison exclusive control over this company under IFRS 10. On 16 February 2021, Edison acquired the other 70% of E2i Energie from F2i. As the company was already fully consolidated by the Group, the only impact of this acquisition was on non-controlling interests, and therefore on equity (see note 3.1) and ultimately on EDF net income.
1.3.5 Nature and extent of restrictions on the Group’s ability to access and use assets or settle liabilities
The main restrictions that may limit the Group’s ability to access or use its assets or settle its liabilities concern the following items:
- assets held to fund employee benefits (principally in France and the United Kingdom – see note 16) and expenses related to nuclear liabilities (principally in France – see note 15.1.2 – and the United Kingdom – see note 15.2);
- tangible and intangible assets and the related liabilities associated with concession agreements, whether or not they are subject to regulatory mechanisms (obligations to supply energy or energy-related services, rules governing investments, an obligation to return concession facilities at the end of the contract, amounts payable at the end of the contract, tariff constraints, etc.). These restrictions mainly apply to assets of this type in France (EDF, Enedis, Électricité de Strasbourg and Dalkia), and to a lesser extent Italy (see notes 10.5);
- the sale of Group investments in certain subsidiaries may require authorisations from State bodies, particularly when they exercise a regulated activity or operate nuclear power plants (this is the case for EDF Nuclear Generation in the United Kingdom and Taishan (TNPJVC) in China);
- prudential reserves established and measures taken as regards distribution capacity, so that the insurance subsidiaries will meet their prudential ratio requirements;
- the cash of certain entities that use financing arrangements stipulating that dividend distribution is subject to conditions concerning repayment of bank debt (or qualification for loans) and shareholders, or are subject to regulatory limitations in certain countries.
Certain shareholder agreements concerning companies controlled by the Group include clauses to protect minority shareholders, requiring approval from minority shareholders for certain particularly important decisions.
Finally, certain financing loans granted to Group entities contain early repayment clauses (see note 18.3.4), and certain items of cash and cash equivalents are subject to restrictions (see note 18.2).
