EDF_REGISTRATION_DOCUMENT_2017

6.

FINANCIAL STATEMENTS Notes to the consolidated financial statements

1.3.2.1

Depreciation period of nuclear power

1.2.3

Standards and amendments published

plants in France In the specific case of the depreciation period of its French nuclear power plants, the EDF group’s industrial strategy is to continue operation beyond 40 years, in optimum conditions as regards safety and efficiency. During 2016, all the technical, economic and governance conditions for extending the depreciation period of 900MW series power plants were fulfilled. The Group therefore extended this period as of 1 January 2016 for all 900MW power plants, with the exception of Fessenheim (see note 3.7.1: Extension to 50 years of the depreciation period of the 900MW PWR series in France). The depreciation period of other Group series in France (1,300MW and 1,450MW), which are more recent, is currently unchanged at 40 years, as the conditions for extension are not yet fulfilled. These depreciation periods take into account the date of recoupling with the network after the most recent 10-year inspection. Nuclear provisions 1.3.2.2 The measurement of provisions for the back-end of the nuclear cycle, decommissioning and last cores is sensitive to assumptions concerning technical processes, costs, inflation rates, long-term discount rates, the depreciation period of plants currently in operation and disbursement schedules. These parameters are therefore re-estimated at each closing date to ensure that the amounts accrued correspond to the best estimate of the costs eventually to be borne by the Group. The Group considers that the assumptions used at 31 December 2017 are appropriate and justified. However, any future change in assumptions could have a significant impact on the Group’s balance sheet and income statement. The main assumptions and sensitivity analyses relating to nuclear provisions are presented in note 29.1.5. The calculation of provisions incorporates a level of risks and unknowns as appropriate to the operations concerned. The valuation of costs carries uncertainty factors such as: changes in the regulations, particularly on safety, security and environmental ■ protection, and financing of nuclear expenses; changes in the regulatory decommissioning process and the time necessary for ■ issuance of administrative authorisation; future methods for storing long-lived radioactive waste and provision of storage ■ facilities by the French agency for radioactive waste management ANDRA (Agence Nationale pour la Gestion des Déchets Radioactifs); changes in certain financial parameters such as discount rates, notably in relation ■ to the regulatory limit, inflation rates, or changes in the contractual terms of spent fuel management. Pensions and other long-term and 1.3.2.3 post-employment benefit obligations 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 2017 are presented in note 31. These assumptions are updated annually. The Group considers the actuarial assumptions used at 31 December 2017 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 31.

by the IASB but not yet adopted by the European Union The following IASB publications related to the accounting principles applied by the Group have not yet been adopted by the European Union: IFRIC 22 “Foreign Currency Transactions and Advance Consideration” ■ (application date: 1 January 2018). Subject to adoption by the European Union, this interpretation will be applied prospectively by the Group from 1 January 2018. This interpretation requires payment or receipt of a non-monetary advance in a foreign currency to be translated at the exchange rate of the transaction date, with no subsequent adjustment. Based on the analyses conducted to date, the Group considers that future application of IFRIC 22 will not have a significant impact on the EDF group’s consolidated financial statements; IFRIC 23 “Uncertainty over Income Tax Treatments” (application date: ■ 1 January 2019). IFRIC 23 clarifies the application of IAS 12 “Income Taxes” regarding recognition and measurement when there is uncertainty over the income tax treatment. Analyses are in process to estimate the potential impact of this interpretation; amendments to IAS 28 “Investments in Associates” entitled “Long-term Interests ■ in Associates and Joint Ventures” (application date: 1 January 2019). Analyses are in process to estimate the potential impact of these amendments; amendments to IFRS 9 entitled “Prepayment Features with Negative ■ Compensation”, published by the IASB on 12 October 2017 (application date: 1 January 2019, early application allowed); IFRS 17 “Insurance Contracts” (application date: 1 January 2021). ■ In addition, the Group has not yet evaluated the potential impact of the following amendments: amendments to IAS 40 “Investment property” entitled “Transfers of Investment ■ Property” (application date: 1 January 2018); amendments to IFRS 2 “Share-based Payment” entitled “Classification and ■ measurement of share-based payment Transactions” (application date: 1 January 2018).

1.3

SUMMARY OF THE PRINCIPAL ACCOUNTING AND VALUATION METHODS

The following accounting methods have been applied consistently through all the periods presented in the consolidated financial statements.

Valuation 1.3.1 The consolidated financial statements are based on historical cost valuation, with the exception of assets acquired and liabilities assumed through business combinations, and of certain financial instruments, which are stated at fair value. 1.3.2 The preparation of the financial statements requires the use of judgements, best estimates and assumptions in determining the value of assets and liabilities, income and expenses recorded for the period, considering positive and negative contingencies existing at year-end. The figures in the Group’s future financial statements could differ significantly from current estimates due to changes in these assumptions or economic conditions. In a context characterised by financial market volatility, the parameters used to prepare estimates are based on macro-economic assumptions appropriate to the very long-term cycle of Group assets. The principal operations for which the Group uses estimates and judgements are the following: Management judgements and estimates

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EDF I Reference Document 2017