EDF / 2019 Universal registration document

6. Financial statements Financial statements

Depreciation, amortisation and impairment of intangible Note 17 and tangible fixed assets

Cumulative amount at 31/12/2019

Cumulative amount at 31/12/2018

Increases

Decreases

(in millions of euros)

Software

950 124

257

32

1,175

Other

10

4

130

Intangible assets Land and buildings Nuclear power plants

1,074 7,338

267 284

36 46

1,305 7,576

40,379

2,549

1,394

41,534

Machinery and plant other than networks

8,641

537

181

8,997

EDF-owned networks

502

30

-

532

Other

1,061

135

63

1,133

Property, plant and equipment owned by EDF

57,921

3,535

1,684

59,772

Land and buildings

6,479 1,066 1,200

146

7

6,618 1,084 1,264

Machinery and plant other than networks

31 79

13 15

Concession networks

Other

10

-

-

10

Property, plant and equipment operated under concessions

8,755

256

35

8,976

Tangible assets in progress

177

25

108

94

TOTAL DEPRECIATION, AMORTISATION AND IMPAIRMENT

67,927

4,083

1,863

70,147

17.1

Impairment tests on assets

The impairment test takes into consideration the latest forecasts concerning Flamanville 3 (see note 2.1.1) which adjusted the schedule, setting the fuel loading date in late 2022, and revised the estimated cost of construction to €12.4 billion in 2015 euros, an increase of €1.5 billion from the previous estimate. The test takes into consideration the fact that most of these additional costs will be recorded as operating expenses. The test results indicated a significant positive difference between the recoverable value and the book value of the generation fleet in France. The margin resulting from the test is higher than at 31 December 2018, as the higher costs and deferred commissioning of Flamanville 3 were outweighed by favourable effects, essentially concerning the lower discount rate and the positive effect of cash outflows in 2019. The key assumptions used in the test include the useful life of nuclear assets, the long-term price scenario, the discount rate, developments in costs and investments, and the assumed capacity revenue. Each of these assumptions has been subjected to a sensitivity analysis, which does not call into question the existence of a positive difference between the recoverable value and book value. The test conducted at 31 December 2019 also takes into consideration the sensitivity associated with early closure proposals for certain nuclear units, as set out in the proposed multi-year energy programme. This did not affect the conclusions of the test.

Due to the integrated management and interdependence of the different generation facilities that make up the French fleet (nuclear, thermal and hydropower plants), independently of their maximum technical capacities, EDF considers the entire fleet as a single CGU. Even when there is no indication of any loss of value, an impairment test is performed due to the highly significant value of this CGU in the financial statements and its substantial exposure to market prices since discontinuation of the “yellow” and “green” regulated tariffs on 1 January 2016. The recoverable value of the generation fleet is estimated by discounting future cash flows under EDF’s usual methodology, described in note 1.6, over the assets’ useful life, using an after-tax WACC of 5.1% at 31 December 2019. For nuclear assets currently in operation (except for Fessenheim), EDF’s benchmark model assumes that the useful life is extended to 50 years, in line with its industrial strategy. The nuclear capacity remains subject to a ceiling of 63.2GW in the test, consistent with France’s Energy Transition Law. The capacity revenue assumptions used in the test are higher than the previous year, in line with the system fundamentals analysis in the benchmark scenario. The average auction price achieved in 2019 was €19.5/KW.

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EDF | Universal registration document 2019