EDF / 2018 Reference document

2.

RISK FACTORS AND CONTROL FRAMEWORK Control of Group risks and activities

Procedures for preparing and controlling 2.2.2.3.2 the consolidated financial statements The consolidated financial statements are prepared by the Group Accounting and Taxation Department on the basis of the data entered locally by each entity (entities of the parent company and subsidiaries) in accordance with the Group standards and closing instructions, according to a single plan of charts. The scope of consolidation is closed after noting all companies of significance that are controlled, jointly-controlled or under significant influence. The non-significant nature of entities for which EDF holds an interest and which might fall within the scope of consolidation is examined regularly and submitted annually for the assessment of the Statutory Auditors. The half-year consolidated financial statements are presented to the Audit Committee and then approved by the Board of Directors. The annual consolidated financial statements are reviewed by the Audit Committee, then closed at 31 December of the fiscal year by the Board of Directors and lastly approved by the Shareholders' Meeting. Each annual and semi-annual results in the drawing up of instructions specifying the key deliverables expected from each stakeholder to the publication of the financial statements, the management report and the Reference Document for the annual closings. Meetings with EDF departments and the subsidiaries facilitate the preparation of these financial statements and make it possible to anticipate changes with regard to certain treatments thereby increasing the reliability of the accounting and financial information published. An analysis of the conditions of preparation (compliance with deadlines, quality of information, etc.) after the event allows for regular improvement of the consolidated financial statements preparation and analysis process. Monthly reporting of information on the balance sheet accounts and the income statement can anticipate the processing of complex operations and contribute to making the results more reliable. Forecasts and management acts are implemented using a single reference framework and tools shared between accounting and management. This system contributes to the coherence of Group management and facilitates dialogue at all levels of the organisation and helps promote exchange of information between actors and the quality of the information produced. Procedures for preparing and controlling 2.2.2.3.3 the corporate financial statements The financial statements are prepared annually and semi-annually by the Parent company Financial Statements Department of the Accounting Consolidation Division. The annual financial statements are closed on 31 December of the fiscal year, approved by the Board of Directors of EDF and then approved by the Shareholders' Meeting. The condensed half-year financial statements are closed on 30 June of the fiscal year by the Board of Directors. EDF's transactional accounting (excluding the Nuclear Fuel Division, the Island Energy Systems Department, the Decommissioning and Waste Projects Department, and the Executive Management Department for payroll accounting) is handled by the Shared Accounting and Consulting Services Centre (CSP2C) of the Tertiary Services Department, which also maintains the transactional accounting of certain French subsidiaries. The processing of transactional accounting is organised by process. “Governance pacts” set the respective responsibilities of the Operational and Functional Departments, of the shared “Accounting” services centre or, where applicable, the accounting operators in the operational business lines and the Accounting Consolidation Division.

Meetings are organised on a quarterly basis with the EDF departments to prepare the financial statements and anticipate changes with regard to certain treatments to increase the reliability of the accounting and financial information published. Financial communication 2.2.2.3.4 The financial communication policy defines the rules to be complied with to ensure the reliability and consistency of the financial information disseminated by the Group. The financial communication controlled by the Investors and Markets Department aims to fulfil the two fundamental objectives of ensuring the provision of financial information that is of high quality, consistent and offers the same substance to different audiences, and to ensure the compliance of the financial information with the laws and regulations in force. Furthermore, the EDF group has adopted a code of market ethics reiterating the principles and rules applicable to transactions involving securities of the EDF or listed companies of the EDF group. Alongside the dissemination of this code, awareness-raising actions on exchange rules have been carried out among Group employees, especially as regards precautions and obligations related to inside information and black-out periods during which executive managers and certain employees holding inside information must refrain from making transactions involving the Company’s shares. Specific business line provisions 2.2.2.4 The nuclear field 2.2.2.4.1 The nuclear safety policy of the EDF group specifies that nuclear safety is the first priority, under all circumstances, in the nuclear activities of the EDF group. Safety is based on a clear principle of responsibility and control. Each company of the Group operating nuclear facilities acts within the framework of the legal and regulatory instructions specific to the country in which it is located and has the obligation to comply with them. Each one ensures the nuclear safety of its facilities and constantly improves the level, based on its methods, skills and values. The Group develops common principles aiming to obtain the best level of prevention of incidents and protection of workers, the public and the environment. These principles apply to all stages of the activity, both for new projects and for the existing fleets. The Group closely involves its industrial partners with the achievement of these objectives. Each company is responsible for the proper conduct of its nuclear activities and sets the appropriate delegations at each decision and action level. The Group guarantees the allocation of the necessary resources for nuclear safety. An internal entity in charge of an independent safety evaluation is put in place at the level of each site, each company and of the Group (IGSNR) (1) . Each one reports to the manager concerned, independently of other managerial functions; furthermore, each one has the duty to alert the superior hierarchical level if the reaction of the level directly involved is not what is expected. The Group's nuclear operating companies regularly receive international evaluation teams (WANO (2) Peer Review and OSART (3) from the IAEA). Clear and honest communication on the events and their possible impacts are promoted within the Group. This high-quality dialogue is sought and maintained with the salaried personnel and its representatives, subcontractors, the supervisory authorities (Nuclear Safety Authority in France, Office for Nuclear Generation in the United Kingdom), local communities and all other stakeholders in nuclear safety. The Nuclear Safety Council, which the Chairman and CEO of EDF chairs, meets several times a year and, in February, examines the annual assessment of nuclear safety for the EDF group. A General Inspector for nuclear safety and radiation protection is appointed by the Chairman and CEO to whom he/she reports. He/she carries out inspection missions on all of the nuclear activities of the EDF group. Each year, it gives an opinion on safety within EDF. Its report is presented and debated in the Nuclear Safety Council. It is then made public.

IGSNR: The General Inspector for Nuclear Safety and Radiation Protection. (1) WANO: World Association of Nuclear Operators. (2) OSART: Operational Safety Analysis Review Team, International Atomic Energy Agency (IAEA). (3)

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EDF I Reference Document 2018