EDF / 2020 Universal Registration Document

6 FINANCIAL STATEMENTS

Notes to the consolidated financial statements

The key assumptions in the test still concern the useful life of nuclear assets, the long-term price scenario, the discount rate, changes in costs and investments, and the capacity revenue. Each of these assumptions was subjected to sensitivity analyses and the results did not call into question the existence of a positive difference between the book value and recoverable value. Other International – Belgium The updated impairment test at the year-end showed that the recoverable value is higher than the book value. The loss of value indicated at 30 June based on electricity

price scenarios and a projected decline in the customer portfolio was counterbalanced by an improvement in wind power asset value due to expanded capacities. For tests of the nuclear plants operated by the ENGIE Group in which Luminus owns a 10.2% share (419MW), it has historically been assumed that operations will continue until 2025 at the latest depending on the plants. Sensitivity analyses are conducted to incorporate the risk that the hydropower concessions may be shortened, and no associated risk of impairment has been identified.

Finally, impairment of €(189) million was recognised in respect of associates at 31 December 2020, concerning coal-fired plants in China, Framatome’s investments in entities operating in sectors greatly impacted by the Covid-19 pandemic, and certain unlisted assets owned by EDF SA (EDF Invest) included in dedicated assets (see note 15.1.2).

French public electricity distribution concessions Note 11

Accounting principles and methods The accounting treatment of public distribution electricity concessions in France is determined by the concession agreements, with particular reference to their special clauses. It takes into consideration the possibility that the EDF group, particularly Enedis, may one day lose its status as the sole authorised State concession operator. In application of the concession agreements, the concession operator manages the facilities at its own risk for the entire term of the concession, and bears substantially all the risks and benefits (both technical and economic) over the useful life of the network infrastructure. Under IAS 16, the assets are controlled by the operator and the grantors have no decisive characteristics of control over the infrastructures as defined by IFRIC 12. All concession assets are consequently carried in the balance sheet, regardless of their origin (facilities constructed or purchased by the concession operators, and facilities provided by the concession grantors) and the source of financing, while the contractual obligations to the grantor are recognised in the liabilities. Public electricity distribution facilities that are constructed or purchased by the concession operator are carried at production or acquisition cost: purchased facilities are initially recognised at real acquisition cost including ● directly attributable expenses incurred to make the asset ready for use; Since the enactment of the French Law of 8 April 1946, EDF, and subsequently Enedis, has been the concession operator of most of the public distribution networks in France. SEI is the concession operator for distribution network zones that are not interconnected with the network in mainland France, under identical concession regulations to Enedis. Électricité de Strasbourg is the concession operator for public distribution networks in a limited zone depending on a non-nationalised distributor, in application of the Law of 8 April 1946. In accordance with France’s Energy Code and Local Authorities Code, the public distribution of electricity is principally operated under the public service concessions system. The authorities granting the concessions (local authorities or public establishments for cooperation acting as an Energy Distribution Organisation Authority, Autorité organisatrice de la distribution d’énergie – AODE) organise the public electricity distribution service through concession agreements with specifications that define the respective rights and obligations of the parties. Enedis distributes electricity to 95% of the population of mainland France under such concessions, with 421 concession agreements at 31 December 2020. The other 5% are served by Local Distribution Companies (including Électricité de Strasbourg). Concession agreement models Enedis’ concession agreements correspond to different models depending on the date of signature. Regulations governing distribution concessions in France

the production cost of facilities developed in-house includes all labour and ● materials costs, and all other production costs attributable to the construction of the asset, whether incurred directly by the Company or invoiced by third parties. New facilities provided by the concession grantors are carried at the value of the cost the Company would have borne if it had constructed them itself. In the specific case of rising mains transferred for no consideration to the public distribution network in application of Article 176 of French law 2018-1021 of 2 November 2018 on housing, development and digital affairs (the “ELAN” law), these assets are carried at their market value under Article 213 of France’s national chart of accounts. Balance sheet liabilities are recognised in respect of new facilities provided for no consideration by the concession grantors and the rising mains transferred under the ELAN law. Distribution assets (pipes, substations) are depreciated over periods of 30 to 60 years, meters and metering equipment over periods of 20 to 30 years. The Group regularly checks the relevance of the main accounting parameters for concession assets (depreciation periods, replacement values, management levels). 1992 concession agreement model The 1992 concession specifications model (updated in 2007) was negotiated with the FNCCR (National Federation of licensing authorities) and EDF, and approved by the public authorities. This model places Enedis under an obligation to record industrial depreciation and establish provisions for replacement. 2017 concession agreement model On 21 December 2017, the FNCCR, France Urbaine, EDF and Enedis signed a framework agreement for a new concession agreement model. This new model modernises the relationship between Enedis and concession-granting authorities in the long term and reflects the parties’ attachment to the principles of French concessions for electricity distribution: public service, regional solidarity and national optimisation. The FNCCR and France Urbaine represent the concession-granting authorities, particularly towns, syndicated municipalities, boroughs and major cities when they are the authorities with competence to grant public electricity distribution concessions. As of 2018, newly-signed concession agreements apply the concession agreement model validated on 21 December 2017. At the effective date of a new agreement, the existing special concession liabilities recorded in application of the previous concession agreement to represent the concession-granting authority’s rights in the concession assets remain in the accounts. Like earlier concession agreements signed since 2011, the contractual obligation to establish provisions for replacement no longer exists, and the governance of investments is different.

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EDF - UNIVERSAL REGISTRATION DOCUMENT 2020