EDF / 2018 Reference document

5.

THE GROUP’S PERFORMANCE IN 2018 AND FINANCIAL OUTLOOK Operating and financial review

a €2,108 million decrease in other financial income and expenses, principally due ■ to impacts associated with dedicated assets, particularly due to the performance by growth assets (equities and equity funds): +12.7% in 2017 followed by -7.0% in 2018 in reflection of unfavourable market developments, with overall effects of: net changes in the fair value of debt and equity instruments, after hedging, ■ of -€989 million in 2018 after application of IFRS 9, net gains on sales of EDF’s dedicated assets amounting to -€12 million ■ in 2018 (compared to +€985 million in 2017 before application of IFRS 9). Income taxes 5.1.4.5 Income taxes amounted to +€149 million in 2018, corresponding to an effective tax rate of -31.5% (compared to -€147 million in 2017, corresponding to an effective tax rate of +4.3%). This change essentially reflects the lower pre-tax income of consolidated companies, and non-recurring items. After eliminating these non-recurring items, the effective tax rate for current taxes in 2018 was +25.7%, compared to +18.1% in 2017. The increase in the Group’s effective current tax rate between 2017 and 2018 mainly results from the favourable impact in 2017 of disposals subject to reduced-rate taxation, which had no equivalent in 2018. Share in net income of associates 5.1.4.6 and joint ventures The Group’s share in net income of associates and joint ventures was a positive €569 million in 2018, compared to €35 million in 2017.

This +€534 million change is mainly explained by the increase in CTE’s net income and the impairment of €491 million booked in 2017 on the assets of CENG, for which there was no equivalent in 2018. The share in net income of associates in 2018 includes impairment totalling €39 million. Details of this impairment are given in note 23 to the 2018 consolidated financial statements, “Investments in associates and joint ventures”. Net income attributable 5.1.4.7 to non-controlling interests Net income attributable to non-controlling interests amounted to €14 million in 2018, €102 million less than in 2017. This downturn is mainly explained by the sale of EDF Polska’s assets in 2017, and by Centrica’s lower income from nuclear generation in the United Kingdom, due to the lower level of both nuclear generation and realised net prices for nuclear power. EDF net income 5.1.4.8 EDF net income totalled €1,177 million for 2018, down by €1,996 million (-62.9%) from 2017, notably as a result of the gain on the sale of CTE in 2017, which had no equivalent in 2018, and a deterioration of the situation on the financial markets which had a significant impact on the financial result. Net income excluding 5.1.4.9 non-recurring items The Group’s net income excluding non-recurring items (1) stood at €2,452 million for 2018, down by 13.1% from 2017 due to significant gains on financial assets in 2017 that had no equivalent in 2018.

Group net income excluding non-recurring items, net changes in fair value on Energy and Commodity derivatives, excluding trading activities, and net changes in the fair value of (1) debt and equity instruments, net of tax. The amounts of non-recurring items, net changes in fair value on Energy and Commodity derivatives, excluding trading activities, and net changes in the fair value of debt and equity instruments, net of tax, are: -€385 million for miscellaneous risks and impairment in 2018 compared to +€617 million in 2017; -€145 million of net changes in fair value on Energy and Commodity derivatives, excluding trading activities, net of tax in 2017, compared to -€264 million in 2017; -€745 million of net changes in the fair value of debt and equity instruments in 2018 (IFRS 9).

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EDF I Reference Document 2018