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Financial information on assets,the financial statements and results of the CompanyNotes to the consolidated financial statementsImpairment of other assetsOperating segmentUnited KingdomItalyOther internationalCash-GeneratingUnit or assetEDF Energy –ESCSEdison CGUCENGImpairment indicatorsDecline in sparkspreads(West Burton B plant)and sale of SuttonBridge plantEconomic situationin GreeceDecline inlong-term electricity pricescenariosWACCafter taxGrowth ratebeyond mediumterm planImpairment 2012(in millions of Euros)7.2% - (234)15% - (44)6.6% - (396)Other impairment of assets (26)TOTAL (700)In 2011, impairment totalled €(640) million and mainly concerned Edison (€(320) million, principally relating to the sale of Edipower to Delmi) and DalkiaInternational (€(151) million, principally on renewable energy activities in Italy).United KingdomEDF Energy’s goodwill amounts to €8,339 million at 31 December 2012.Impairment testing is based on two different Cash Generating Units (CGUs):• Nuclear activities, including power plants in operation and plans todevelop new EPRs;• Energy Sourcing and Customer Supply (ESCS), including developmentof the West Burton plant.The recoverable value of the nuclear activities is estimated based ondiscounted future net cash flows from the generation units over theirestimated useful life, taking into consideration the probable extension ofthe useful lives of the AGRs (Advanced Gas Reactors) and Sizewell B. Theapproval of the 7-year extensions for the Hinkley Point B and Hunterston Breactors in December 2012 confirms the validity of the assumptions adoptedby the Group. The assumptions regarding electricity price movements inthe United Kingdom take account of the need to develop new generationfacilities to meet demand from 2020, especially due to retirement of existingcoal-fired plants, and a recovery in nuclear power over the same horizon. Thegreenhouse gas emission rights prices used for the impairment tests weredetermined on a basis that reflects application of energy market reforms.The recoverable value of the Nuclear CGU is sensitive to assumptionsregarding long-term movements in electricity prices and WACC, mainlyas a result of the operating lifetimes of nuclear plants, but using a WACCone half-point higher would not lead to impairment on this CGU. Also, ifthe number of EPRs constructed was reduced from 4 to 2 the recoverablevalue of the CGU would remain higher than its book value.The recoverable value of ESCS is based on the value in use, determinedby reference to the entity’s 3-year medium-term plan. Terminal value isdetermined using an after-tax growth rate to infinity of 1.9%.When it acquired British Energy in 2009, EDF Energy made a commitment tothe European Commission to dispose of its investment in the Sutton Bridgegas plant. A sale agreement subject to conditions was signed in December2012. The Sutton Bridge plant is recorded as discontinued operationsat 31 December 2012 at its sale price less selling expenses, leading torecognition of impairment amounting to €74 million.The West Burton plant is a 1,305 MW combined cycle gas plant scheduledto begin commercial operation in the first half of 2013. In view of thesubstantial decline in sparkspreads in 2012, the plant was subjected to animpairment test. Its recoverable value is estimated based on discountedcash flows over its expected useful life. Impairment testing on these basesled to recognition of impairment of €160 million in 2012.Italy – EdisonAfter the takeover of Edison, finalised on 24 May 2012, and determinationof the initial balance sheet for the purposes of the operation, the EDFgroup’s consolidated financial statements no longer record any goodwillassociated with the Edison subgroup (see note 3.1). However, sincethat date, an intangible asset with indefinite useful life of €945 millionrepresenting the Edison brand has been recognised in the consolidatedfinancial statements.In application of the Group’s accounting policies as presented in note1.3.15, the Edison brand was subjected to an impairment test that didnot lead to recognition of any impairment. This test was based on cashflows from the medium-term plan, using an after-tax discount rate of7.5% to 7.8%.Impairment of €44 million was recorded in respect of other Edison assetsin 2012 (including €20 million for fossil-fired generation assets in Greece).44 l EDF l Financial report 2012
Financial information on assets,the financial statements and results of the CompanyNotes to the consolidated financial statementsOther internationalEDF LuminusEDF Luminus’ goodwill amounted to €383 million at 31 December 2012. Forthe purposes of impairment testing EDF Luminus is considered as a singlecash-generating unit. The recoverable value is based on its value in use,determined using cash flows over 20 years and a terminal value.Under the plan to withdraw from civil nuclear energy, confirmed by theBelgian government in July 2012, Belgian nuclear power plants are to closeby 2025. For the purposes of determining cash flows, it was thus consideredthat the nuclear plants in which EDF Luminus holds investments will close by2025, and that the electricity generated by those plants will be replaced bypower from a combined cycle gas plant. The impairment test also assumesthat electricity sale prices will decrease due to greater competition.Impairment testing on these bases did not lead to recognition of anyimpairment in 2012.CENGThe recoverable value of CENG’s assets is estimated based on future cashflows over the estimated useful life of generation facilities. In the UnitedStates, the decline in gas prices as shale gas operations expanded caused asignificant downturn in long-term electricity prices, which is an indication ofimpairment. The impairment test was based on the economic assumptionsthat basic energy generation in the United States will be based on gas,obsolete power plants will be shut down and greenhouse gas regulationwill remain at a modest level. On these bases, the impairment test led torecognition of impairment of €396 million in respect of CENG’s assets.Other activitiesDalkia InternationalDalkia International’s goodwill amounted to €800 million at 31 December2012. The recoverable value of assets is estimated based on values in usetaken from the 5-year medium-term plan and a terminal value.The impairment test did not lead to recognition of any impairment in 2012.EDF Énergies NouvellesAt 1 March 2012 EDF ENR Photowatt and PV Alliance joined EDF ÉnergiesNouvelles’ scope of consolidation. It was decided to write off thesecompanies’ assets in full in the opening balance sheet due to the negativecash flows reflected in the medium-term plans.Also, due to the macroeconomic situation in Greece, development activitiesin the country were halted until conditions improve. Goodwill for Greecehas therefore been fully impaired.j Note 14 Other income and expensesOther income and expenses in 2012 include:• income of €160 million concerning ERDF, resulting from reversal of a provision for renewal following a change in estimate for the useful life of high/lowvoltage transformers (extended from 30 years to 40 years);• the effects of the Group’s takeover of Edison, amounting to €(58) million. Details of the impacts of this operation are presented in note 3.1;• a net expense of €(70) million associated with revision of the estimated costs for decommissioning permanently shut-down nuclear power plants in France(UNGG power plants, Creys-Malville, Brennilis and Chooz A), and the revision of certain costs associated with interim storage of spent fuel – see note 29.1.Other income and expenses in 2011 included:• income of €414 million corresponding to reversals from provisions for renewal of ERDF’s concession assets, following a change in estimate for the usefullife of low-voltage twisted overhead pipes (extended from 40 to 50 years);• income of €327 million corresponding to the gain on sale of EnBW.j Note 15 Financial result15.1 Cost of gross financial indebtednessDetails of the components of the cost of gross financial indebtedness are as follows:(in millions of Euros) 2012 2011Interest expenses on financing operations (2,538) (2,284)Change in the fair value of derivatives and hedges of liabilities 39(5)Transfer to income of changes in the fair value of cash flow hedges (39)(3)Net foreign exchange gain on indebtedness 9521COST OF GROSS FINANCIAL INDEBTEDNESS (2,443)(2,271)The rise in interest expenses in 2012 reflects the higher average gross financial indebtedness over the year.EDF l Financial report 2012 l 45
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LE GROUPE EDF EST CERTIFIÉ ISO 140
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