EDF / 2018 Reference document

FINANCIAL STATEMENTS Notes to the consolidated financial statements

In general, application of IFRS 9 causes greater volatility in the Group’s income back-end of the nuclear cycle, which give rise to a recurring cost of unwinding the statement. Meanwhile, dedicated assets are held to cover provisions for the discount, which is included in the financial result.

The table below summarises changes in the classification of financial assets held by the Group at 31 December 2017 between IAS 39 and IFRS 9, and the impacts on the Group’s financial statements.

IFRS 9 classification

Fair value through OCI with no recycling

Fair value through OCI with recycling

Net fair value reserve (after tax) at 01/01/18 (2)

Fair value through P&L

Balances at 31/12/2017 restated (1)

Gross fair value reserve at 01/01/2018

Categorie IAS 39 (in millions of euros)

Amortised cost

Available-for-sale financial assets

40,924 20,848 18,963

- - - -

20,828

444 19,652

2,190 2,114

1,423 1,347

EDF’s dedicated assets

4,992

- -

15,856

EDF’s liquid assets

15,815

3,148

73

73

Other assets

1,113

21

444

648 292

3

3

Loans and receivables Trade receivables (3)

14,622 16,843

14,330 15,187

-

- -

- -

-

1,656 - See notes 36.2.2 and 36.3 respectively to the 2017 consolidated financial statements for details of available-for-sale financial assets and loans and receivables. (1) The amount of trade receivables has been restated for the impacts of IFRS 15 (see note 2.1.3.2). Corresponding to the cumulative changes in fair value, after tax, on unrealised gains and losses on shares in investment funds (€1,172 million), equity instruments (2) (€87 million) and debt securities, notably bonds (€164 million). Trade receivables of Edison (Italy) are managed under the “collect and sell” model and are therefore classified in the “Fair value through OCI with recycling” (3) category. -

6.

Impairment 2.2.2.2 Retrospective application of the IFRS 9 impairment model to all the financial assets concerned leads to recognition of an impact of €(34) million (net of tax) in opening reserves. Hedge accounting 2.2.2.3 Retrospective application of the IFRS 9 hedge accounting rules had no impact on opening reserves since all hedging relationships were continued at 1 January 2018.

Debt modification 2.2.2.4 The accounting treatment under IFRS 9 of debt modifications that do not result in derecognition was clarified by the IASB in July 2017. This standard requires the change in amortised cost of the debt at the modification date to be recorded in profit and loss, in contrast to the current practice of spreading the adjustment over the residual term of the modified debt. The impact of retrospective application at 1 January 2018 of this clarification of IFRS 9 on the Group’s opening reserves amounts to €28 million (net of tax).

2.2.2.5

Summary of impacts in terms of changes in Group equity (after tax) at 1 January 2018

Revaluation differences on financial instruments (OCI with recycling)

Other consolidated reserves and net income (1)

Impacts in millions of euros (net of tax)

Equity as published at 31/12/2017

(306)

40,103

Fair value adjustments to financial instruments that no longer transit via OCI with recycling (2) ■

(1,261)

1,261

Associates’ and joint ventures’ share of these fair value adjustments ■

(159)

159 (34)

Impairment (see note 2.2.2.2) ■

6

Debt modification (see note 2.2.2.4) ■

-

28

1,414

(1,414) (1,720)

Equity after restatements at 01/01/2018

41,517

Fair value changes recorded in OCI with no recycling are presented in the column “Other consolidated reserves and net income”. (1) At 31 December 2017, the cumulative changes in fair value, after tax, on unrealised gains and losses on shares in investment funds (€1,172 million), equity (2) instruments subject to the OCI with no recycling option (€87 million) and debt securities, notably bonds (€2 million) (see note 2.2.2.1).

non-recognition of the gains or losses on sale realised in 2017 in the amount of ■ €(931) million, including €(985) million related to dedicated assets (see note 15.3); recognition in income of changes in the fair value of these instruments ■ during 2017, representing the volatility over the period of €1,146 million including €1,158 million related to dedicated assets.

2.2.2.6

Information regarding the impacts on 2017 net income of application of IFRS 9 to financial assets

The impact of application of IFRS 9 instead of IAS 39 on the Group’s net income at 31 December 2017 is provided for information and comparability purposes. The main impacts concern financial assets carried at fair value through OCI with no recycling or through profit and loss. On those instruments, all other things being equal, the impact on the financial result would have been €215 million (€176 million on the net income), consisting of:

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EDF I Reference Document 2018