EDF / 2019 Universal registration document

6. Financial statements Financial statements

30.4

Actuarial assumptions

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. The substantial decrease in the discount rate (100 bp) essentially relates to the decrease in risk-free rates observed over 2019. Until 31 December 2018, the assumed inflation rate used was determined in line with the consensus forecast and expected inflation based on the returns on inflation-linked bonds. From 2019, as declining forecasts made short-term consensus forecast projections less appropriate, the inflation rate used was deduced from inflation swaps. The obligations are based on wage increase assumptions that are differentiated by age group and employee category, with an average annual rise of 2.4% including inflation for a projected full career. The wage law used to calculate obligations was updated in 2019 by applying wage increase rates observed over the period 2015-2018 (adjusted for non-recurring effects), instead of the changes observed over the period 2010-2012 adjusted by a coefficient to reflect the lower expected long-term wage increases. This update had no significant impact on the valuation of the obligations. The mortality table used to calculate obligations is based on the INSEE 2013-2070 generation table (produced by the French statistics office), adjusted for specificities of the IEG (gas and electricity sector) system.

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 1.30% at 31 December 2019 (2.30% ■ at 31 December 2018); the inflation rate is estimated at 1.30% at 31 December 2019 (1.50% ■ at 31 December 2018); the average residual period of employment is 19.5 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 2.55% for 2019 (2.37% for 2018); the expected return on fund assets covering retirement gratuities is 2.21% ■ for 2019 (1.99% for 2018). In France, the discount rate used for employee benefit obligations is determined by applying the yield rate on high-quality corporate bonds of appropriate duration to maturities corresponding to the future disbursements resulting from these

Provisions for other expenses Note 31

Operating increases

Decreases

31/12/2019

31/12/2018

Utilisations

Reversals

Other

(in millions of euros)

Provisions for: Personnel expenses ■

83

69 11

(66)

(2) (1)

-

84

Replacement of assets operated under concessions ■

268 515 866

(6)

272 516 872

Other expenses ■

193 273

(178) (244)

(14) (17)

PROVISIONS FOR OTHER EXPENSES

(6)

442

EDF | Universal registration document 2019

www.edf.fr