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 2022 are presented in note 16. These assumptions are updated annually. The Group considers the actuarial assumptions used at 31 December 2022 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.
Impairment tests on goodwill and long-term assets are sensitive to the macro- economic and segment assumptions used – particularly concerning changes in energy prices – 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.
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.
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.
In view of the specific nature of French public electricity distribution concessions, the Group has opted to present its obligations 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.
The use of estimates and assumptions over recovery horizons is particularly important in the recognition of deferred tax assets.
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 entity. For example EDF has set up “reserved” investment funds (FCPRs) 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 Luminus, the Group has a 49% stake in Luminus Seraing 2.0 SA. The governance and contractual agreements give Luminus exclusive control over this entity, which is fully consolidated in application of IFRS 10.
The main restrictions that may limit the Group’s ability to access or use its assets or settle its liabilities concern the following items:
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).
