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5

CONSOLIDATED FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 3.2

Financial income/(expense)

30.06.2018

30.06.2017

€ million

Interest expense on net financial debt Interest income on net financial debt

(403)

(357)

46

73

Net cost of debt

(357)

(284)

Structuring and placement fees

(3)

(2)

Net financial impact of pensions and other long-term employee benefits

(15)

(14)

Other net current financial income (expense)

(1)

0

Financial income/(expense) from recurring operations

(376)

(301)

Foreign currency gains/(loss)

7

1

Other non-current financial income/(expense) TOTAL FINANCIAL INCOME/(EXPENSE)

(5)

(1)

(374)

(301)

On 30 June 2018, the net cost of debt included financial expenses of €244 million relating to bonds, €8 million on interest rate and currency hedges, €12 million on factoring and securitisation agreements, €4 million on the syndicated loan and other expenses of €16 million. Weighted average cost of debt The Group’s weighted average cost of debt was 3.5% over FY18 compared to 3.8% over FY17. Weighted average cost of debt is defined as net financing costs plus structuring and placement fees as a proportion of average net financial debt outstanding plus the average amount outstanding on factoring and securitisation programmes. Corporate income tax Note 3.3 Analysis of income tax expense

30.06.2018

30.06.2017

€ million

Current income tax Deferred income tax

(400)

(382)

(37)

(10)

TOTAL

(438)

(392)

Analysis of effective tax rate – Net profit from continuing operations before tax

30.06.2018

30.06.2017

€ million

Operating profit

2,232 (374) 1,858 (640)

2,296 (301) 1,994 (687)

Financial income/(expense)

Taxable profit

Theoretical tax charge at the effective income tax rate in France (1)

Impact of tax rate differences by jurisdiction Tax impact of variations in exchange rates

211

276

29 37 (8)

1

Re-estimation of deferred tax assets linked to tax rate changes

86

Impact of tax losses used/not used

2 0

Impact of reduced/increased tax rates on taxable results

2

Taxes on distributions

(54) (15)

24

Other impacts

(94)

EFFECTIVE TAX CHARGE EFFECTIVE TAX RATE

(438)

(392)

24%

20%

At the standard rate of 34.43% (1)

The US tax reform “Tax Cuts and Jobs Act” enacted on 22 December 2017 has triggered a revaluation of the tax assets and liabilities due to the decrease in the US Federal tax rate from 35% to 21%. The net impact is tax income of €55 million.

In October 2017, the French Constitutional Court declared invalid the French system for taxing dividends, introduced in 2012, which required French companies to pay a tax in an amount equivalent to 3% of dividends paid. The total reimbursement received represents income of €71 million.

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