EDF / 2018 Reference document

FINANCIAL STATEMENTS Balance sheet

30.3

FUND ASSETS

Fund assets amount to €10,913 million at 31 December 2018 (€11,366 million specific benefits earned under the special pension system (€10,402 million) and at 31 December 2017) and are principally allocated to coverage of the past retirement gratuities (€496 million).

Investments under the contracts concerned break down as follows:

31/12/2018

31/12/2017

(in millions of euros)

TOTAL FUND ASSETS

10,913 10,402

11,366 10,845

Assets funding special pension benefits

(%)

Equities

27% 30% 73% 70%

Bonds and monetary instruments

Assets funding retirement gratuities

496

506

(%)

Equities

27% 32% 73% 68%

Bonds and monetary instruments Assets funding other benefits

15

15

6.

ACTUARIAL ASSUMPTIONS 30.4 The main actuarial assumptions used for provisions for post-employment benefits and long-term employee benefits under the IEG system are summarised below: the discount rate is 2.30% at 31 December 2018 (1.90% at 31 December 2017); ■ the inflation rate is estimated at 1.50% at 31 December 2018 (1.50% at ■ 31 December 2017); the average residual period of employment is 19.75 years; ■ the staff turnover rate is considered non-significant; ■ the “tarif agent” (special energy price for EDF employees) includes changes in ■ taxes based on that tariff; the expected return on fund assets covering past specific benefits under the ■ special pension system is 2.37% for 2018 (2.37% for 2017); the expected return on fund assets covering retirement gratuities is 1.99% for 2018 ■ (1.99% for 2017). The discount rate used for employee benefit obligations is determined by applying the yield rate on high-quality corporate bonds based on their duration to maturities corresponding to the future disbursements resulting from these obligations. For longer durations, the calculation also takes into consideration data from a wider selection of corporate bonds adjusted for comparability with the high-quality bonds, given the smaller panel of bonds with these durations since 2017.

Changes at 31 December 2018 in the economic and market parameters used have led EDF to set the discount rate at 2.30% at 31 December 2018 (1.90% at 31 December 2017). The inflation rate used to calculate provisions for employee benefits is derived from an internally-determined inflation curve by maturity. The inflation rate determined in this way at 31 December 2018 is an average 1.50% (identical to the rate applied at 31 December 2017). The obligations are based on wage increase assumptions that are differentiated by age group and employee category, with an average annual rise of 2.6% including inflation for a projected full career. The mortality table used to calculate obligations is adjusted for specificities of the IEG (gas and electricity sector) system; in 2018 it was updated by using the INSEE 2013-2070 generation table (produced by the French statistics office), instead of the INSEE 2007-2060 generation table.

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EDF I Reference Document 2018