EDF / 2019 Universal registration document

5. The Group’s financial performance and outlook Operating and financial review in 2019

The financial result for 2019 corresponds to a financial expense of €361 million, with an improvement of €4,437 million from 2018. This change is explained by: an increase in the cost of gross financial indebtedness. Excluding the effect of ■ application of IFRS 16 (-€74 million), the cost of gross financial indebtedness is stable; a favourable change of €303 million in the discount effect, principally due to a ■ smaller year-on-year decrease in the discount rate used for nuclear provisions in France. At 31 December 2019 the discount rate for nuclear provisions was 3.7% incorporating an assumed inflation rate of 1.4% (respectively 3.9% and 1.5% at 31 December 2018). a €4,228 million increase in other financial income and expenses, primarily due ■ to the favourable change in the dedicated asset portfolio (€3,534 million) reflecting stronger performances on the equity and bond markets in 2019 than in 2018. Income taxes 5.1.4.5 Income taxes amounted to -€1,581 million in 2019, corresponding to an effective tax rate of 24.71% (compared to an income of +€178 million in 2018 corresponding to an effective tax rate of -27.13%  (1) ). The €1,759 million increase in the Group’s tax charge between 2019 and 2018 essentially reflects the higher net income before taxes, which rose by €5,743 million (notably resulting from the increase in EBITDA and changes in unrealised gains and losses on EDF SA’s portfolio of financial assets), which generated an additional tax charge of €1,977 million in application of the French income tax rate of 34.43%. After eliminating non-recurring items (mainly changes in unrealised gains and losses on EDF SA’s portfolio of financial assets, impairment and disposals), the effective tax rate for 2019 is 19.1%, compared to 22.6%  (1) for 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 €818 million in 2019, compared to €569 million in 2018. Cash flow and net indebtedness 5.1.5 Cash flow 5.1.5.1

This +€249 million change is mainly explained by the increase in CENG’s net income. The share in net income of associates in 2019 includes impairment totalling -€73 million. Details of this impairment are given in note 26 to the 2019 consolidated financial statements, “Investments in associates and joint ventures”. Net income of discontinued operations 5.1.4.7 The specific line “Net income of discontinued operations” comprises items from the income statement of Edison’s E&P operations for 2018 and 2019, and impairment on these assets recognised in those two periods (see note 19 to the 2019 consolidated financial statements). Net income attributable to 5.1.4.8 non-controlling interests Net income attributable to non-controlling interests amounted to €27 million in 2019, up by €13 million compared to 2018. EDF net income 5.1.4.9 EDF net income totalled €5,155 million in 2019, an increase of +€3,978 million in comparison to 2018, notably due to improvement of the financial result. Net income excluding 5.1.4.10 non-recurring items The Group’s net income excluding non-recurring items  (2) stood at €3,871 million in 2019, up by 57.9% compared to 2018.

2019  (1)

2018  (2)

Variation

Variation (%)

(in millions of euros)

Net cash flow from operating activities Net cash flow used in investing activities Net cash flow from financing activities

14,022

13,364

658

+4.9 -8.8 -37.0

(15,650)

(17,165)

1,515

2,223

3,530 (271) 3,692 (271)

(1,307)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

595

866

n.a.

Cash and cash equivalents – opening balance Net increase (decrease) in cash and cash equivalents

3,290

(402)

-10.9

595

866

n.a.

Effect of currency fluctuations

(5) 17 37

(95)

90

-94.7 +30.8

Financial income on cash and cash equivalents

13

4

Effect of reclassifications

(49)

86

n.a.

CASH AND CASH EQUIVALENTS – CLOSING BALANCE

3,934

3,290

644

+19.6

not applicable. n.a.: The financial statements at 31 December 2019 apply IFRS 16 from 1 January 2019 (see note 2.1 to the 2019 consolidated financial statements). (1) The published figures for 2018 have been restated due to the impact of presenting the E&P operations as discontinued operations. (2)

(1) The published figures for 2018 have been restated due to the impact of presenting the E&P operations as discontinued operations. (2) EDF 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 debt and equity instruments, net of tax. Amount 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: -€986 million of impairment and other non-recurring items in 2019, compared to -€385 million in 2018; +€490 million of net changes in the fair value of energy and commodity derivatives, excluding trading activities, net of tax in 2019, compared to -€145 million in 2018; +€1,780 million of net changes in the fair value of debt and equity instruments in 2019, compared to -€745 million in 2018.

261

EDF | Universal registration document 2019