EDF / 2018 Reference document

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

Net indebtedness 5.1.5.2 Net indebtedness comprises total loans and financial liabilities, less cash and cash equivalents and liquid assets. Liquid assets are financial assets consisting of funds or securities with initial maturity of over three months that are readily convertible into cash and are managed according to a liquidity-oriented policy.

The Group’s net indebtedness stood at €33,388 million at 31 December 2018 compared to €33,015 million at 31 December 2017.

2018

2017

Variation Variation (%)

(in millions of euros)

Operating profit before depreciation and amortisation (EBITDA)

15,265 (1,253) (1,062)

13,742 (1,796) (1,209)

1,523

+11.1

Cancellation of non-monetary items included in EBITDA

Net financial expenses disbursed

Income taxes paid

(389)

(771)

Other items including dividends received from associates and joint ventures

383

221

Operating cash flow (1) Change in working capital

12,944

10,187

2,757

+27.1

462

1,476

Net investments (2)

(12,107)

(9,810)

Cash flow after net investments

1,299 (501)

1,853

Dedicated assets

(1,171)

5.

Cash flow before dividends (3)

798

682

Dividends paid in cash

(1,278)

(891) (209) 3,855

Group cash flow

(480) (111)

Other monetary changes

(Increase)/decrease in net indebtedness, excluding the impact of changes in exchange rate

(591)

3,646

Effect of change in exchange rates Effect of other non-monetary changes (Increase)/decrease in net indebtedness Net indebtedness at beginning of period NET INDEBTEDNESS AT END OF PERIOD

97

701

121

63

(373)

4,410

33,015 33,388

37,425

33,015 Operating cash flow is not an aggregate defined by IFRS as a measure of financial performance, and is not directly comparable with indicators of the same name (1) reported by other companies. This indicator, also known as Funds From Operations (“FFO”), is equivalent to net cash flow from operating activities excluding changes in working capital after adjustment where relevant for the impact of non-recurring effects, less net financial expenses disbursed and income taxes paid. Net investments are operating investments and financial investments for growth, net of disposals. They also include net debts acquired or transferred in (2) acquisitions or disposals of securities, investment subsidies received, non-Group partner investments, Linky, new developments and the assets disposal plan of the Group. Cash flow before dividends is not an aggregate defined by IFRS as a measure of financial performance, and is not comparable with indicators of the same name (3) reported by other companies. It is equal to the operating cash flow defined in note (1) after the change in working capital, net investments defined in note (2), and net allocations to dedicated assets.

Operating cash flow 5.1.5.2.1 The operating cash flow amounted to €12,944 million in 2018 compared to €10,187 million in 2017, an increase of €2,757 million (+27.1%). This change mainly reflects: the increase of EBITDA (+€1,523 million); ■ a decrease in income taxes paid (-€389 million in 2018 versus -€771 million in 2017), ■ mainly due to lower taxable income for the Group in France.

Change in working capital 5.1.5.2.2 Working capital improved by €462 million in 2018. This change is mainly explained by: gains resulting from the working capital improvement plan, essentially on ■ inventories and trade receivables (+€242 million); favourable effects relating to the CSPE (+€258 million), principally resulting from ■ excess compensation which was affected by the rise in market prices (expenses on purchase obligations decreased). The difference between the 2017 and 2018 change in working capital (-€1,014 million) is essentially explained by: receipts of margin calls in 2017 in connection with the optimisation and trading ■ activity, compared to payments in 2018 of approximately -€700 million; purchases of capacity certificates at high prices (-€201 million). ■

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EDF I Reference Document 2018