EDF / 2019 Universal registration document

6. Financial statements

Notes to the consolidated financial statements

An alternative breakdown of hedging derivatives is shown below:

31/12/2019

Notes

31/12/2018

(in millions of euros)

41.3

Fair value of derivatives hedging liabilities

3,387

1,972

Fair value of derivatives hedging net foreign investments Fair value of other hedging derivatives (commodities)

261 281

106

(643) 1,435

FAIR VALUE OF HEDGING DERIVATIVES

3,929

to hedge future cash flows related to expected sales and purchases of electricity, ■ gas, and coal, using futures, forwards and swaps. The EDF group also hedges the currency risk associated with fuel and commodity purchases. The ineffective portion of cash flow hedges in 2019 represents a gain of €3 million which was included in the financial result (gain of €5 million in 2018).

44.1

Fair value hedges

The EDF group hedges the exposure to changes in the fair value of fixed-rate debts. The derivatives used for this hedging are fixed/floating interest rate swaps and cross currency swaps, with changes in fair value recorded in the income statement. Fair value hedges also include currency hedging instruments on certain firm purchase commitments. In 2019, the ineffective portion of fair value hedges represents a loss of €(17) million (loss of €(3) million in 2018), included in the financial result.

44.3

Hedges of net investments in foreign

entities

44.2

Cash flow hedges

Hedging of net foreign investments is used for protection against exposure to the exchange rate risk related to net investments in the Group’s foreign entities. This risk is hedged at Group level either by contracting debts for investments in the same currency, or through the markets, in which case the Group uses currency swaps and forward exchange contracts.

The EDF group uses cash flow hedging principally for the following purposes: to hedge its floating-rate debt, using interest-rate swaps (floating/fixed rate); ■ to hedge the exchange rate risk related to debts contracted in foreign currencies, ■ using cross currency swaps;

44.4

Impact of hedging derivatives on equity

Changes during the period in the fair value of hedging instruments included in equity (EDF share) are detailed below:

2019

2018

Gross changes in fair value transferred to income – Recycling  (2)

Gross changes in fair value transferred to income – Ineffectiveness

Gross changes in fair value transferred to income -Recycling  (2)

Gross changes in fair value transferred to income -Ineffectiveness

Gross changes in fair value recorded in equity  (1)

Gross changes in fair value recorded in equity  (1)

(in millions of euros)

Interest rate hedging Exchange rate hedging Net foreign investment hedging Commodity hedging

(39)

(106) (156)

3

(73) 890

-

1

(200)

(17)

443

(5)

(416) 1,482

(448)

-

(85)

-

-

719

3

(1,043)

(788)

(9)

HEDGING DERIVATIVES  (3)

827

9

(11)

(311)

(345)

(13)

+/( ): increase/(decrease) in equity (EDF share). (1) +/( ): increase/(decrease) in net income (EDF share). (2) Excluding associates and joint ventures. (3)

372

EDF | Universal registration document 2019

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