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.
For investments in companies consolidated by the EDF group, value in use is principally determined by reference to the entity’s equity value consolidated in the Group’s financial statements. It also takes other factors into consideration where relevant, such as information gathered during impairment tests conducted by the Group.
EDF holds investment securities comprising financial assets intended to finance operations at the end of the nuclear cycle, for which provisions have been accrued. These assets are managed separately from other financial assets and investments in view of their specific objective, and consist of bonds, equities, collective investment funds and “reserved” funds.
Other investments also include treasury shares that cover obligations relating to debt instruments providing access to the Company’s capital, acquired under a liquidity contract with an investment services company or through an external growth operation or capital reduction.
Shares are recorded at acquisition cost. Transfer duties, professional fees, commissions, legal expenses and purchasing costs are all charged to expenses, applying the option used for other investments.
Investment securities (shares and bonds) are recorded at acquisition cost. If the carrying amount of a security is lower than the acquisition cost, the unrealised capital loss is fully covered by a provision without being netted against potential gains on other securities. The carrying amount of listed securities is assessed individually, taking the stock market price into account. For unlisted securities, the carrying amount is also assessed individually, mainly by reference to the growth prospects of the companies concerned and their share prices.
EDF grants short-term loans in foreign currencies to its subsidiaries for the purposes of the Group’s activities.
In order to reduce exposure to foreign exchange risks, EDF mainly finances these loans by short-term commercial paper issues in foreign currencies and in Euros, together with the use of currency hedging derivatives. Capitalised receivables are stated at nominal value. Impairment is recognised when the market value falls below the book value.
The initial cost of inventories includes all direct material costs (including the effect of hedging), labour costs and a share of indirect production costs.
Inventory consumption is generally valued under the weighted average unit cost method. Consumption of greenhouse gas emission rights and Energy Savings Certificates is valued under the FIFO (first in first out) method.
Inventories are carried at the lower of historical cost or net realisable value.
Inventory accounts include:
The stated value of nuclear fuel and materials and work-in-progress is determined based on direct processing costs including materials, labour and subcontracted services (e.g. fluoration, enrichment, fabrication, etc.).
In application of the concept of “loaded fuel” as defined in the ministerial order of 21 March 2007, the cost of inventories for fuel loaded in the reactors but not yet irradiated includes expenses for spent fuel management and long-term radioactive waste management. The corresponding amounts are taken into account in the relevant provisions.
Nuclear fuel consumption is determined by component (natural uranium, fluoration, enrichment, fuel assembly fabrication) as a proportion of the expected output when the fuel is loaded in the reactor. These quantities are valued at weighted average cost of inventories, applied to each component. Inventories are periodically corrected in view of forecast spent quantities based on neutronic measurements and physical inventories.
Other operating inventories include:
Impairment of spare parts depends mainly on the turnover of these parts.
