Universal Registration Document 2020

The financial result for 2020 is a financial expense of € 2,582 million, € 2,218 million more than in 2019. This change is explained by:

• a decrease of €  1,842 million in other financial income and expenses, driven mainly by the change in the fair value of the dedicated asset portfolio: this reflects a lower performance by the equity and credit fund markets after the exceptional performance in 2019, despite the good performance by these assets during the Covid-19 pandemic (+€1,218 million change in fair value in 2020 compared to +€ 2,545 million in 2019, a decrease of € 1,327 million);
• an increase of €572 million in the discount effect, due to the larger decrease in discount rates due principally to the impact of lower market rates on the discount rate used for nuclear provisions in France. As of 31 December 2020, the method for calculating discount rates changed (see note 15.1.1.5 to the 2020 consolidated financial statements). The discount rate at 31 December 2020 was 3.3%, assuming inflation of 1.2% (respectively 3.7% and 1.4% at 31 December 2019), such that the reduction in the real rate was 0.2% in 2020 compared to 0.1% in 2019);
• a € 196 million decline in the cost of gross financial indebtedness, due to debt repayments and bond issues at more favourable rates, as well as favourable foreign exchange effects net of hedging

5.1.4.5 Income taxes

Income taxes amounted to -€ 945 million in 2020, corresponding to an effective tax rate of 73.10% (compared to -€ 1,532 million in 2019 corresponding to an effective tax rate of 23.96%).

The € 587 million decrease in the Group’s tax charge between 2019 and 2020 essentially reflects the € 5,100 million decrease in net income before taxes, which led to a € 1,633 million decrease in the tax charge that was partly offset by:

• the unfavourable effect of the increase in the UK tax rate from 17% to 19%;
• the absence in 2020 of any favourable effect due to asset disposals (after the Alpiq and NnG sales in 2019);
• the unfavourable decision by France’s Council of State in December 2020 challenging the tax-deductibility of certain long-term liabilities of EDF SA, which has an impact of -€ 177 million, and unrecognised deferred tax assets with an impact of -€ 361 million due to the conservative approach applied by the Group to deferred assets over a horizon beyond 10 years.

After eliminating non-recurring items (mainly the consequences of tax litigation, changes in unrealised gains and losses on the financial asset portfolio, impairment and the impacts of changes in the UK tax rate), the effective tax rate in 2020 was 19.0% (18.0% in 2019).

5.1.4.6 Share in net income of associates and joint ventures

The Group’s share in net income of associates and joint ventures was a positive
€ 425 million in 2020 compared to € 818 million in 2019, a decrease of € 393 million resulting from the income of CENG, which amounted to € 63 million at
31 December 2020, € 225 million less than in 2019.

The share in net income of associates and joint ventures in 2020 includes impairment totalling € 189 million. Details of this impairment are given in note 12 to the 2020 consolidated financial statements, “Investments in associates and joint ventures”.

5.1.4.7 Net income of discontinued operations

The net income of discontinued operations comprises items from the income statement of Edison’s E&P operations (excluding Algeria and Norway), and impairment on the relevant assets (see note 3.2 to the 2020 consolidated financial statements).

5.1.4.8 Net income attributable to non-controlling interests

Net income attributable to non-controlling interests amounted to -€ 35 million in 2020, € 62 million lower than in 2019.

5.1.4.9 EDF net income

EDF net income totalled €650 million for 2020, € 4,505 million lower than in 2019, due notably to losses included in EBIT (-€ 2,882 million) and financial result
(-€ 2,218 million).

* The published figures for 2019 have been restated for the impact of the change in the scope of the E&P disposal (see note 1.4.2 to the 2020 consolidated financial statements).

5.1.4.10 Net income excluding non-recurring items

The Group’s net income excluding non-recurring items ⁽¹⁾ stood at € 1,969 million in 2020, down by € 1,902 million compared to 2019 (see note 19.1, Net income excluding non-recurring items, to the 2020 consolidated financial statements.