EDF / 2018 Reference document

RISK FACTORS AND CONTROL FRAMEWORK Risks to which the Group is exposed

In the event of the collapse of this industrial logistics system, the Group could reduce or even interrupt all or part of the electricity generation at the affected sites, either due to the non-delivery of new assemblies or to the saturation of intermediate storage facilities, which could have a negative impact on the Group's financial position (see section 1.4.1.1.4 "Nuclear fuel cycle and related issues"). In France, EDF has booked provisions for spent nuclear fuel management operations (transport, processing, conditioning for recycling) (see note 29.1.1 to the consolidated financial statements for the financial year ended 31 December 2018) based on the price and volume conditions of the master agreement signed with Orano in December 2008 and broken down in the successive implementation agreements. The implementation agreement for the period from 2016-2023 was signed in February 2016 (see section 1.4.1.1.4 “The nuclear fuel cycle and related issues”). The amount of provisions currently booked to cover the period not covered by the current agreement should be reassessed if the terms under which this agreement is renewed prove more onerous than those currently applicable. Note 29.1.5.2 “Analyses of sensitivity to macro-economic assumptions” of note 29.1 “Nuclear provisions in France” to the consolidated financial statements as of 31 December 2018 shows the connection between “costs based on year-end economic conditions”, which represent estimated amounts as at 31 December 2018, and “provisions made at present value”. As regards spent fuel management, the costs based on year-end economic conditions are estimated at €18,737 million euros and the corresponding provision is €10,698 million. However, the Group cannot guarantee that its contracts, in France and abroad, will completely protect it from sudden or significant price increases. The Group cannot guarantee that when these long-term contracts expire, it will be able to renew them, in particular at an equivalent price. This could have an adverse impact on the Group’s financial position.

Failure to comply with the Group's contractual commitments, or the Group's potential exposure in the event of a major incident in the execution of these projects or the operation of these reactors, could have a major impact on the Group's exposure, legal and financial position or the Group's reputation. Finally, consultation and dialogue with all stakeholders, including institutional, local, national and international, industrial and financial stakeholders, on EPR projects contribute directly to the achievement of corporate responsibility goal no. 5 (see section 3.2.5.1 "EDF's commitment to organise a worldwide dialogue and consultation process around our projects (CSRG no. 5)"). Description 5E: In addition to the control of industrial performance specified in risk factor 4B of category 4, Operational Performance, set out above, the Group is exposed in its nuclear activities to the requirement to control the nuclear fuel cycle. The Group’s operating costs include nuclear fuel purchases. EDF is supplied with uranium, conversion and enrichment services, fuel assembly supplies and spent fuel reprocessing operations for its nuclear fleet in France and the United Kingdom. Prices and volumes are subject to fluctuations due to factors that are inter alia political and economic and that the Group cannot control (in particular, the profitability outlook of mining investments, imbalances between supply and demand or supply shortages associated with, for example, an operating accident in a uranium mine or a combined cycle plant, delays in commissioning new mines or events leading to institutional instability in a uranium-producing country). The storage and transport of new or spent nuclear fuel is an industrial activity that requires specific safety and security measures. These requirements could become more stringent, generating additional difficulties and costs for the Group.

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EDF I Reference Document 2018