EDF / 2018 Reference document

6.

FINANCIAL STATEMENTS Income Statement

In 2017, dividends and interest income on debt securities, and net gains (losses) on sales, were presented under “Gains/(losses) on available-for-sale financial assets” and amounted to €410 million. Other financial income and expenses in 2018 include €(995) million of changes in fair value on financial instruments. In a context of market decline, particularly at the end of 2018, this unfavourable difference is explained by a €(1,026) million change in the fair value of debt and equity securities (of which €(989) million concern

dedicated assets) and a €31 million change in the fair value of derivatives. In 2017, other changes in the fair value of financial instruments amounted to €(102) million including €(42) million relating to dedicated assets, and principally concerned derivatives held for trading. Conversely, “Gains/(losses) on available-for-sale financial assets” in 2017 included net gains of €985 million on disposals (entirely attributable to dedicated assets).

INCOME TAXES NOTE 16

16.1

BREAKDOWN OF TAX EXPENSE

Details are as follows:

2018 (358)

2017

(in millions of euros) Current tax expense

42

Deferred taxes

507 149

(189) (147)

TOTAL

In 2018, €(168) million of the current tax expense relates to French companies, and €(190) million relates to other subsidiaries (€314 million and €(272) million respectively in 2017).

16.2

RECONCILIATION OF THE THEORETICAL AND EFFECTIVE TAX EXPENSE

(TAX PROOF)

2018

2017

(in millions of euros)

Income of consolidated companies before tax Income tax rate applicable to the parent company

473

3,401

34.43% 34.43%

Theoretical tax expense Differences in tax rate (1) Permanent differences (2)

(163)

(1,171)

(90)

51

30

476 478

Taxes without basis (3)

239 132

Unrecognised deferred tax assets

20 (1)

Other

1

ACTUAL TAX EXPENSE EFFECTIVE TAX RATE

149

(147)

-31.54% 4.32%

2017: ■ (1) the positive impacts of income tax cuts in Belgium (from 33.99% to 25% ■ in 2020) and the United States (from 40% to 27%), amounting to €38 million and €46 million respectively, (2) the favourable impact of sales of investments (principally the CTE/RTE ■ operation) and assets subject to a reduced tax rate, amounting to €389 million, (3) the favourable impact of the appeal concerning the 3% contribution on ■ dividend distributions, amounting to €255 million (and non-taxable) and the impact of deduction of payments made to bearers of perpetual subordinated loans, amounting to €195 million.

The income tax receivable of +€149 million in 2018, corresponding to an effective tax rate of -31.54% (compared to a charge of €(147) million in 2017, corresponding to an effective tax rate of 4.32%) essentially results from non-recurring items (disposals or impairment). After elimination of these non-recurring items, the effective current tax rate for 2018 is 25.70%, compared to 18% in 2017. The main factors explaining the difference between the theoretical tax rate and this effective rate are: 2018: ■ (2) the favourable impact of sales of investments and assets subject to a ■ reduced tax rate, amounting to €199 million (principally Dunkerque LNG - see note 3.3), (3) the impact of deduction of payments made to bearers of perpetual ■ subordinated bonds, amounting to €203 million;

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EDF I Reference Document 2018