EDF_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Notes to the financial statements

other benefits include help with the cost of studies, time banking for ■ pre-retirement leave, and pensions for personnel sent on secondment to companies not covered by the IEG system.

The accounting treatment of emission rights depends on the holding intention. There are two economic models, both of which coexist at EDF. Emission rights held under the “Trading” model are included in inventories at acquisition cost. A write-down is recorded when the present value of emission rights is lower than the book value. Emission rights held to comply with regulatory requirements on greenhouse gas emissions (the “Generation” model) are included in inventories at acquisition cost, and the FIFO (first in first out) method is applied. A write-down is recorded when the generation cost of the electricity that includes the cost of the rights is higher than the present value of that electricity. At year-end, a “net presentation” principle is applied as follows: an asset is recognised (in inventories) if the quantities of greenhouse gas ■ emissions are lower than the number of emission rights held in the portfolio. This corresponds to the rights available to cover future greenhouse gas emissions; a liability (provision) is recorded in the opposite situation equivalent to the rights ■ still needed to cover emissions already produced, valued at contractualised acquisition price for forward purchases deliverable before surrender, and at market value for the balance. The net reporting principle assumes that the emission rights held in the portfolio will be the rights used to offset emissions produced. However, there is a limit to the fungibility of rights at EDF, as there are no transfers of rights between the island and mainland activities. This can lead to concurrent recognition of an asset and a liability. EDF accounts for Energy Savings Certificates in compliance with ANC regulation 2012-04 of 4 October 2012, incorporated into Articles 616–1 to 616-25 of ANC regulation 2014-03. EDF holds Energy Savings Certificates in order to meet the requirements of the regulations on energy savings. Consequently, EDF applies the “Energy Savings” model defined by the ANC regulation. Certificates obtained or receivable are recorded in inventories at production or acquisition cost, and are valued under the FIFO (first in first out) method. At the year-end, only the net position is presented in the financial statements: an asset is recognised (in inventories) if the energy savings achieved are greater ■ than the energy savings obligations. This inventory corresponds to the certificates purchased, obtained or receivable that cover future energy savings obligations. It is consumed as and when energy sales are completed that generate energy savings obligations; or a liability (provision) is recognised if the energy savings achieved are lower than ■ the energy savings obligations. The liability corresponds to the cost of action yet to be taken to cover the obligations associated with energy sales completed. It is subsequently extinguished by making energy savings expenditures that enable the Company to obtain certificates, or by purchasing certificates. Energy savings certificates 1.19.2 The system currently in force is described in note 40.2.

1.16.3 These benefits concern employees currently in service, and include:

Other long-term benefit obligations

annuities following incapacity, invalidity, industrial accident or work-related ■ illness; like their counterparts in the general national system, IEG employees are entitled to financial support in the event of industrial accident or work-related illness, and invalidity and incapacity annuities and benefits. The obligation is measured as the probable present value of future benefits payable to current beneficiaries, including any possible reversions; long-service awards; ■ specific benefits for employees who have been in contact with asbestos. ■ EDF uses derivatives in order to minimise the impact of foreign exchange risks and interest rate risks. These short-term and long-term derivatives comprise interest rate and currency derivatives. Hedging derivatives correct the foreign exchange result and interest income or expense of the corresponding asset or liability. If the foreign exchange risk is fully hedged, no provision is recorded. If it is only partly hedged, a provision is recorded for the entire unhedged portion of the unrealised foreign exchange loss. For other instruments, when there is no hedging relationship, a provision is recorded for unrealised losses and unrealised gains are not recognised. Instruments in the portfolio at the year-end are included in off-balance sheet commitments at the nominal value of the contracts. 1.18 Forward financial instruments on commodities are traded for hedging purposes. Gains and losses on these operations are included in sales or in the cost of energy purchases, depending on the nature of the hedged item. Instruments in the portfolio at the year-end are included in off balance sheet commitments at the quantities to be delivered or to be received under the contracts. COMMODITY CONTRACTS DERIVATIVES 1.17

6.

1.19

ENVIRONMENT

1.19.1 The system currently in force is described in note 40.1.

Greenhouse gas emission rights

EDF applies the accounting methods for greenhouse gas emission rights in accordance with France’s Accounting Standards Authority (ANC) regulation 2012-04 of 4 October 2012, incorporated into Articles 615–1 to 615-22 of ANC regulation 2014-03.

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EDF I Reference Document 2017