EDF / 2018 Reference document

THE GROUP’S PERFORMANCE IN 2018 AND FINANCIAL OUTLOOK Operating and financial review

EBITDA at EDF Trading amounted to €633 million in 2018, an organic increase of €263 million (+73.5%) from 2017. This rise follows the increase in the trading margin mentioned earlier in the discussion of sales, which was driven by high volatility on the markets (see section 5.1.4.1.2.9).

EBITDA for the Other activities segment also benefited from a substantial capital gain on the final operation of the real estate sale programme initiated in 2015.

Operating profit (EBIT) 5.1.4.3 EBIT was down by 6.3% from 2017.

2018

2017

Variation Variation (%)

(in millions of euros)

EBITDA

15,265

13,742

1,523

+11.1

Net changes in fair value on Energy and Commodity derivatives, excluding trading activities

(224)

(355)

131

-36.9 +5.5

Net depreciation and amortisation

(9,006)

(8,537)

(469)

Net increases in provisions for renewal of property, plant and equipment operated under concessions

(50)

(58)

8

-13.8 +15.4 -107.7

(Impairment)/reversals

(598) (105) 5,282

(518) 1,363 5,637

(80)

Other income and expenses

(1,468)

(355)

-6.3

EBIT

5.

Net increases in provisions for renewal of 5.1.4.3.3 property, plant and equipment operated under concessions The €8 million decrease between 2017 and 2018 in net increases in provisions for renewal of property, plant and equipment operated under concessions is attributable to the France – Regulated activities segment. Impairment/reversals 5.1.4.3.4 In 2018, impairment amounted to €598 million (see note 13 to the 2018 consolidated financial statements). In 2017, impairment amounted to €518 million. Other income and expenses 5.1.4.3.5 In 2018, other income and expenses amounted to -€105 million (see note 14 to the 2018 consolidated financial statements for details). In 2017, other income and expenses amounted to +€1,363 million and principally comprised a gain of €1,462 million on the sale of 49.9% of the Group’s investment in CTE.

The Group’s consolidated EBIT amounted to €5,282 million for 2018, down by €355 million from 2017. This downturn, despite the higher EBITDA, is essentially explained by the sale of 49.9% of CTE during 2017, which had no equivalent in 2018, and the rise in net depreciation and amortisation. Net changes in fair value on Energy 5.1.4.3.1 and Commodity derivatives, excluding trading activities The net changes in fair value on Energy and Commodity derivatives, excluding trading activities, amounted to -€355 million in 2017 and -€224 million in 2018. In Italy, this change was mainly attributable to the renegotiation of long-term gas contracts in recent years, which has reduced the impact of volatility. Net depreciation and amortisation 5.1.4.3.2 Net depreciation and amortisation was up by €469 million compared to 2017. The France – Generation and supply activities segment registered a €169 million increase in net depreciation and amortisation, essentially explained by a volume effect related to newly-commissioned facilities in the nuclear fleet. This rise was partly offset by the effect of oil-fired thermal plant closures. The France – Regulated activities segment registered a €145 million increase in net depreciation and amortisation, principally attributable to the step-up of the Linky (1) project and investments in connections and network reinforcements.

Financial result 5.1.4.4

2018

2017 (1) (1,778) (2,959)

Variation Variation (%)

(in millions of euros)

Cost of gross financial indebtedness

(1,716) (3,486)

62

-3.5

Discount effect

(527)

+17.8 -84.3

Other financial income and expenses

393

2,501

(2,108) (2,573)

FINANCIAL RESULT +115.1 No restatements have been made for the first application of IFRS 9 from 1 January 2018, in accordance with the simplified approach allowed by IFRS 9. (1) (4,809) (2,236)

an unfavourable change of €527 million in the discount effect, principally due to a ■ larger decrease between 2017 and 2018 in the real discount rate applied to calculate nuclear provisions in France at 31 December 2018 (-0.2% for the real rate) than the previous year (-0.1% for the real rate). At 31 December 2018, the discount rate was 3.9% incorporating an average inflation rate of 1.5% (respectively 4.1% and 1.5% at 31 December 2017, and 4.2% and 1.5% at 31 December 2016);

The financial result for 2018 corresponds to a financial expense of €4,809 million, €2,573 million higher than in 2017. This change is explained by: a €62 million decrease in the cost of gross financial indebtedness. The expenses ■ on bond issues of 2018 and the full-year effect of the issues of October 2017 were more than offset by the lower financial expenses following redemption of a bond during the year;

Linky is a project led by Enedis, an independent EDF subsidiary as defined in the French Energy Code. (1)

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EDF I Reference Document 2018