EDF / 2020 Universal Registration Document

6 FINANCIAL STATEMENTS

Notes to the consolidated financial statements

11.2

Special French public electricity distribution concession liabilities

Accounting principles and methods Concession liabilities represent the contractual obligations specific to the concession rules for public electricity distribution concessions in France, and comprise the following: the concession-granting authority’s rights in existing assets (its right to ● recover all the concession assets), consisting of the value in kind of the facilities (the net book value of assets operated under concessions), less any as yet unamortised financing provided by the operator; the concession-granting authority’s rights in assets to be replaced (the ● operator’s obligations relating to assets due for replacement): amortisation of financing by the grantor: this is a liability owed by the ❯ concession operator to the grantor and is recognised progressively as the asset is used, provision for replacement: this provision exclusively concerns assets due ❯ for replacement before the end of concessions using the 1992 concession agreement model, except for the rising mains transferred in application of the ELAN law. It is accrued over the asset’s useful life, based on the difference between the asset’s replacement value for identical capacity

and functions, and the original value. The replacement value is adjusted at each year-end based on indexes from official publications, and the impact of the adjustment is spread over the residual useful life of the assets concerned. When assets are replaced, amortisation recognised on the portion of assets considered to be financed by the grantor, and the provision for replacement established for the relevant asset, are cancelled and transferred to rights in existing assets. Any excess provision is taken to income. During the concession, the grantor’s rights in assets to be replaced are thus transferred upon the asset’s replacement to become the grantor’s rights in existing assets, with no outflow of cash to the benefit of the grantor. The Group considers that the obligations related to assets to be replaced are to be valued on the basis of the special clauses contained in the concession agreements. Under this approach, these obligations are stated at the value of the contractual obligations as calculated and reported annually in the reports to the grantors. This contractual value also reflects the possibility that the EDF group may one day lose its status as the concession operator.

The changes in special concession liabilities for existing assets and assets to be replaced are as follows:

31/12/2020

31/12/2019

(in millions of euros)

Value in kind of assets*

52,907 (28,730) 24,177

51,085 (27,387) 23,698

Unamortised financing by the operator Rights in existing assets – net value Amortisation of financing by the grantor

15,000

14,389

Provisions for replacement

9,243

9,378

Rights in assets to be replaced

24,243 48,420

23,767

SPECIAL FRENCH PUBLIC ELECTRICITY DISTRIBUTION CONCESSION LIABILITIES 47,465 Including contributions received to finance concession assets, amounting to €108 million (€131 million in 2019). In 2020 they include €399 million resulting from * incorporation of the rising mains in application of the ELAN law.

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EDF - UNIVERSAL REGISTRATION DOCUMENT 2020