Notes 1.2.2, 1.7.2, 1.15.1, 18, 28 and 38 to the financial statements
As at December 31, 2021, the provisions recorded to cover obligations relating to nuclear power plants for which EDF is the operator in France total €46,442 million, including €26,052 million with respect to the back-end of the nuclear cycle (management of spent fuel and radioactive waste) and €20,390 million with respect to the decommissioning of nuclear power plants and last cores.
The valuation of these provisions depends on the regulatory context is described in Notes 1.15.1 and 28 to the financial statements. It requires defining technical and financial assumptions and using complex calculation models.
They are updated and the assumptions taken into consideration in the models are reviewed at least once a year. As of 31 December 2021, the methodologies used to determine the discount rate changed in 2020, remain unchanged in 2021. These assumptions reflect management’s best estimate at the reporting date of the impacts of the applicable regulation, the implementation of decommissioning and storage processes or changes in the main financial parameters. More specifically, they reflect the impacts of the extension of the amortization period for the 1,300MWe nuclear fleet and of studies on preparing the dismantling plan of Fessenheim nuclear plants over the other nuclear plants in operation and, the updated scenario regarding interim spent fuel storage.
Furthermore, the Company is required to allocate so-called “dedicated” assets to secure financing of certain categories of nuclear provisions in France. The realizable value of these assets should allow the Company’s commitments relating to the decommissioning of nuclear power plants and long-term storage of radioactive waste in France to be covered (Note 38). The realizable value of these dedicated assets, for an amount of €37,454 million (or a net carrying amount of €31,554 million) as of December 31, 2021, was determined based on the fair value of diversified equity and bonds investments, and the equity value of a non-listed assets portfolio managed by the division EDF Invest. These dedicated assets are classified as growth assets, fixed-income assets and yield assets and ought to be compliant with the cart of responsible investor implemented in 2021.
We considered the valuation of provisions related to nuclear generation and dedicated assets to be a key audit matter due to:
it being specified that the valuation of provisions covers and includes uncertainties related to the fact that certain scenarios and technical solutions have never been implemented.
We have analyzed the measures for recognizing provisions related to nuclear generation in France and gained an understanding of the industrial scenarios for decommissioning nuclear power plants and the technical solutions adopted in terms of management of spent fuel and radioactive waste. We have assessed the compliance of the methods for determining the provisions with regard to applicable accounting, legal and regulatory measures.
We have verified the calculation models used by the Company and assessed the assumptions adopted in terms of cost, forecast cash outflows and financial parameters (discount and inflation rates).
Our work also consisted in verifying the type of costs used to determine provisions and assessing the reconciliation of forecast costs and forecast cash outflows with industrial scenarios as well as the available studies and quotes, based on the current year change in assumptions.
We have also assessed the appropriateness of:
Concerning the inflation and discount rates and their calculation methods adopted by management described in note 28.5, we have verified their compliance with applicable accounting standards and regulatory measures, since 2020. We have reconciled the data used for this purpose with available market data or internal expertise-based documentation.
Concerning the securing of financing for certain of these provisions through dedicated assets, we have reconciled the realizable value of the dedicated assets in the portfolio at the reporting date with the available certificate of depository statements, and available external data and valuations. We have also assessed the accounting treatment and their valuation, in particular the compliance with the accounting standard of the impairment model described in the accounting principles and methods of the Note 1.7.2.
Finally, we have verified the appropriateness of the disclosures given in the Notes for the provisions related to nuclear generation in France and the dedicated assets, notably regarding the sensitivity of the valuation of provisions to changes in macro-economic assumptions (Note 28.5.3).
We have also performed, in accordance with professional standards applicable in France, the specific verifications required by laws and regulations.
Information given in the management report and in the other documents with respect to the financial position and the financial statements provided to the Shareholders
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors, and in the other documents with respect to the financial position and the financial statements provided to Shareholders.
We attest the fair presentation and the consistency with the financial statements of the information relating to payment deadlines mentioned in Article D.441-6 of the French Commercial Code (Code de commerce).
Information relating to corporate governance
We attest that the section of the management report devoted to corporate governance sets out the information required by Articles L.225-37-4, L.22-10-10 and L.22-10-9 of the French Commercial Code.
Concerning the information given in accordance with the requirements of Article L.22-10-9 of the French Commercial Code (Code de commerce) relating to remunerations and benefits received by or awarded to the directors and any other commitments made in their favour, we have verified its consistency with the financial statements, or with the underlying information used to prepare these financial statements and, where applicable, with the information obtained by your company from controlling and controlled companies included in the scope of consolidation. Based on these procedures, we attest the accuracy and fair presentation of this information.
With respect to the information relating to items that your company considered likely to have an impact in the event of a public takeover bid or exchange offer, provided pursuant to Article L.22-10-11 of the French Commercial Code, we have agreed this information to the source documents communicated to us. Based on these procedures, we have no observations to make on this information.
