Rob Guyler - Chief Financial Officer

Our approach to finance and ethics

“We will make strong and trusted financial and ethical performance central to how we do business, providing an essential service in a responsible way.”

- Rob Guyler, Chief Financial Officer

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Better Energy Ambitions Report

Our report covers progress on our Better Energy Ambitions which are our plan for a sustainable business.

Our goals to achieve strong financial performance. We provide an essential service to society and need to do this in a responsible way

This is why we have an ambition to achieve strong financial and ethical performance. We have deliberately made this central to how we do business. It means we can be a better kind of energy company – one that thinks long-term and does business fairly, openly and ethically.

We’ve strengthened our ambition by adding a clear commitment to strong ethical performance – how we manage our business and our supply chain. This ambition also has a focus on transparency and honesty across our financial activities. It’s all about a responsible long-term approach to our whole business.

Strong financial performance

Our goal: We will ensure a transparent and honest approach to our financial performance

Our key targets

  • We will challenge costs across our operations and achieve a long term return on capital which is at least in line with our cost of capital
  • We will invest our profits to benefit our customers, our people and our business, while striving to have a positive free cash flow
  • We will continue to demonstrate a responsible and honest approach to our tax management

Our performance in 2015

  • Our underlying operating profit, or earnings before interest and tax (EBIT) in 2015 was £664m. This was 15% lower than in 2014, as a result of the ongoing cost of our investment programme.
  • Additionally there was a one-off charge of £796 million related to gas and coal generation and storage equipment falling in value – a reflection of the year’s challenging market conditions.
  • We were awarded the UK’s largest annual electricity supply contract by the Crown Commercial Service following a competitive tender process. The renewal of the multi-billion pound four-year agreement will see EDF Energy continue to supply electricity to thousands of public buildings and sites across central and local Government, including schools, the NHS, the Highways Agency and major cultural assets such as the National Gallery.

Our programmes

We invest £600 million a year in our nuclear plants and this investment is paying off. In 2015, they generated 60.6TWh, the highest level for 10 years and 50% higher than in 2008, the year EDF Energy acquired the stations.

The year ahead

In the face of challenging market conditions, our belief that the Government will maintain and strengthen its Carbon Price Floor and Capacity Market policies gave us the confidence to extend the operational life of four of our nuclear power stations. The Carbon Price Floor encourages generation from low-carbon sources like nuclear, while the Capacity Market ensures the UK has the power it needs.

Ethical performance

Our goal: We will ensure sustainable, ethical practice across our supply chain and our business, and refuse to tolerate any fraud, corruption or abuse of human rights

How we conduct our business, and the impact and influence we have through our wider supply chain, is just as important as our financial performance. We publish our performance against the 10 principles of the United Nations Global Compact (UNGC) to help us focus and improve our performance.

Our target

  • ​We will maintain a United National Global Compact (UNGC ) compliant supply chain and show continuous improvement aligned to the principles of the Department for the Environment and Rural Affairs (Defra) Sustainable Procurement Framework.

Our performance in 2015

  • We spent £2.2 billion with more than 4,000 suppliers, broadly consistent with 2014. We calculate this supported over 89,000 indirect jobs within our supply chain.
  • We continued to promote and assure UNGC compliance among our suppliers but fell slightly short of our 100% target.

 

We continued our journey of continuous improvement against the Chartered Institute of Procurement and Supply (CIPS) Sustainable Procurement Review by:

  • adopting the CIPS Sustainability Index (SI) for supplier assessment
  • inviting our Top 200 suppliers (84% of corporate spend) to undertake a CIPS SI assessment (42 have completed and published scores so far)
  • establishing a Health, Safety and Environmental (HSE) and Wellbeing forum where we can collaborate with our strategic supply chain partners across six work streams
  • supporting our company-wide accreditation against the National Equality Standard
  • collaborating with our supply partner EY to hold a joint women’s network event
  • continuing the rollout of sustainability training to our supply chain practitioners.

Our programmes

We decided not to seek silver accreditation in the CIPS Sustainable Procurement Review, allowing us to focus on establishing the foundations required for sustained success in the future

Early in 2016, with the support of our Trade Unions, we gained the Voluntary Living Wage accreditation. This means we will continue paying our employees a Living Wage and will work with our supply chain partners to make sure everybody who works within our supply chain is also paid a Living Wage.

We published our first Communication on Progress of our compliance against the ten principles of the UNGC. We have committed to achieve advanced level compliance by 2017. 

The year ahead

We will continue to engage our top suppliers on sustainability. Our target is for 100% of our prioritised suppliers to have completed the CIPS SI assessment by the end of 2016, with improvement plans agreed for any suppliers falling short of the average.

We will revise our UNGC compliance target to 95% of suppliers, to allow for process timescales and churn within our vendor master database.

Upon request, we will provide our suppliers with an interim statement of our compliance with the Modern Slavery Act 2015, ahead of publishing a full statement on our website in 2017.

Compliance with tax policy

Compliance with tax policy

Our performance in 2015

EDF Group will continue to demonstrate a responsible and honest approach to its tax management. It has adopted a tax policy which is aligned with its stated ambitions and values. Specifically the Group’s tax policy includes:

  • acting with integrity
  • only undertaking tax planning to ensure legitimate business activities are implemented efficiently, and not to undertake artificial schemes or arrangements
  • maintaining an open, honest and positive working relationship with HMRC
  • where differences of view arise with regard to the interpretation and application of tax law, committing  to addressing the matter in real-time and resolving the matter with HMRC in a constructive manner.

 

EDF Energy is a UK company and all EDF Group profits and losses are appropriately taxed or relieved in the UK, regardless of where individual entities were originally incorporated. In addition, the Group seeks to pay the right amount of tax at the right time according to both the letter and spirit of UK tax laws. The Group chooses to discuss significant transactions with HMRC in advance of their completion, where it feels the tax treatment is uncertain.

Based on our 2015 profits, we expect to pay around £120 million in corporation tax.

 Our programmes

We reinvested all of our operating profit and more back into the business, spending more than £1.3 billion on our nuclear, coal and renewable plants and on our new nuclear project, Hinkley Point C.

The year ahead

We will review our processes and resources to find further efficiencies and eliminate tax risk.

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) £m

Awards and achievements

We have a long track record in sustainability and responsible business which has been recognised and endorsed by many different organisations.

 

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Our Customer Commitments

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