EDF / 2018 Reference document

6.

FINANCIAL STATEMENTS Operating assets and liabilities, equity

At 31 December 2018, EDF Energy’s EEGSG and BEGG pension schemes (see note 1.3.22.2.2) were overfunded to the extent of €937 million compared to €910 million at 31 December 2017. The surplus funding, which has increased due to the good performance by fund assets, is recognised in balance sheet assets as “non-current financial assets”.

On 26 October 2018 in the litigation between Lloyds Banking Group Pensions Trustees Limited and Lloyds Bank plc, the High Court of Justice ruled that the minimum guaranteed pension relating to rights vested between May 1990 and April 1997 must be equalised for men and women. Application of this decision to EDF Energy’s pension schemes (BEGG and EEGSG) resulted in a €15 million increase in provisions for employee benefits in 2018, with a corresponding entry in other income and expenses.

31.3.2

Post-employment benefit and other long-term employee benefit expenses

2018 (258)

2017 (267)

(in millions of euros) Current service cost

Past service cost

(15)

- -

Actuarial gains and losses – other long-term benefits Net expenses recorded as operating expenses

-

(273) (232)

(267) (244)

Interest expense (discount effect)

Return on fund assets

248

249

Net interest expense included in financial result

16

5

(257)

(262) (194)

EMPLOYEE BENEFIT EXPENSES RECORDED IN THE INCOME STATEMENT

Actuarial gains and losses – post-employment benefits

518

Actuarial gains and losses on fund assets

(463)

558 364 (17) 347

Actuarial gains and losses Translation adjustments

55 (6) 49

GAINS AND LOSSES ON EMPLOYEE BENEFITS RECORDED DIRECTLY IN EQUITY

31.3.3

Breakdown of obligations by type of beneficiary

31/12/2018

31/12/2017

(in millions of euros) Current employees

4,948 3,300 8,248

5,412 3,544 8,956

Retirees

OBLIGATIONS

Fund assets 31.3.4 Pension obligations in the United Kingdom are partly covered by external funds with a present value of €9,039 million at 31 December 2018 (€9,684 million at 31 December 2017). The investment strategy applied in these funds is a liability driven investment strategy. The allocation between growth and back-to-back is regularly reviewed by

the trustees, at least after every actuarial valuation, to ensure that the funds’ overall investment strategy remains coherent in order to achieve the target coverage level required.

These assets break down as follows:

31/12/2018

31/12/2017

(in millions of euros) BEGG pension fund EEGSG pension fund EEPS pension fund

6,963 1,267

7,597 1,283

809

804

9,039

9,684

FUND ASSETS

Comprising (%) Listed equity instruments (shares) Listed debt instruments (bonds)

9% 27% 61% 50% 8% 7% 3% 1% 19% 15%

Real estate properties

Cash and cash equivalents

Other

At 31 December 2018, the equities held as part of fund assets are distributed as follows: approximately 40% of the total are shares in North American companies; ■ approximately 37% of the total are shares in European companies; ■ approximately 23% of the total are shares in companies in the Asia-Pacific zone ■ and emerging countries.

At 31 December 2018, the bonds held as part of fund assets are distributed as follows: approximatevly 64% of the total are AAA and AA-rated bonds; ■ approximately 36% of the total are bonds with A, BBB and other ratings. ■ Around 61% of all these bonds are sovereign bonds, mainly issued by the United Kingdom. The balance mainly consists of bonds issued by financial and non-financial firms.

The portion of sovereign bonds issued by the United Kingdom was 2 percentage points lower than at 31 December 2017.

394

EDF I Reference Document 2018