EDF / 2018 Reference document

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

At 31 December 2018, EDF has an overall amount of €10,292 million in available credit facilities (syndicated credit and bilateral lines): the syndicated credit line amounts to €4 billion and expires in December 2023. ■ No drawings had been made on this syndicated credit line at 31 December 2018; bilateral lines represent an available amount of €6,162 million, with expiry ■ dates extending to September 2023. The level of this available financing is very frequently reviewed to ensure the Group has sufficient backup credit facilities; the amount available from the credit lines with the European Investment Bank is ■ €130 million. €70 million had been drawn on one credit line of €200 million at

31 December 2018. Three other credit lines were fully drawn at 31 December 2018 for amounts of €225 million, €500 million and €500 million. EDF Investissements Groupe has a syndicated credit facility for €400 million (expiring in September 2020). At 31 December 2018, there were no drawings on this credit facility. Edison has a credit line with the European Investment Bank for €268 million (which is fully drawn) and a credit line with a pool of banks for €350 million, on which no drawings had been made at 31 December 2018.

Credit rating 5.1.6.1.2 The financial ratings agencies Standard & Poor’s, Moody’s and Fitch Ratings attributed the following long-term and short-term ratings to EDF group entities at 31 December 2018:

Company

Agency

Long-term rating

Short-term rating

A-, negative outlook (1) A3, stable outlook A-, stable outlook Baa2, stable outlook BBB-, negative outlook (2) BBB-, stable outlook (3) Baa3, stable outlook

Standard & Poor’s Moody’s Fitch Ratings Standard & Poor’s Standard & Poor’s Moody’s Moody’s

A-2 P-2 F2 n.a. A-3 A-3 n.a.

EDF

5.

EDF Trading EDF Energy

Edison

n.a.: not applicable. S&P revised EDF’s outlook from stable to negative on 20 November 2017. (1) S&P revised EDF Energy’s outlook from stable to negative on 20 November 2017. (2) S&P revised EDISON’s long-term rating from BB+ to BB- and short-term rating from B to A-3 on 19 June 2018. (3)

Management of foreign exchange risk 5.1.6.1.3 Due to the diversification of its activities and geographical locations, the Group is exposed to the risk of exchange rate fluctuations, which may have an impact on the translation differences affecting balance sheet items, Group financial expenses, equity and net income. To limit exposure to foreign exchange risks, the Group has introduced the following management principles: local currency financing: to the extent possible given the local financial markets’ ■ capacities, each entity finances its activities in its own functional currency. When financing is contracted in other currencies, derivatives may be used to limit foreign exchange risk; matching of assets and liabilities: the net assets of subsidiaries located outside ■ the Euro zone expose the Group to a foreign exchange risk. The foreign exchange risk in the consolidated balance sheet is managed by market hedging involving use of financial derivatives. Hedging of net assets in foreign currencies complies

with risk/return targets, and the hedging ratio varies depending on the currency, ranging from 31% to 72% for the principal exposures. If no hedging instruments are available, or if hedging costs are prohibitive, the foreign exchange positions remain open and the risk on such positions is monitored by sensitivity calculations; hedging of operating cash flows in foreign currencies: in general, the operating ■ cash flows of EDF and its subsidiaries are in the relevant local currencies, with the exception of flows related to fuel purchases which are primarily in US dollars, and certain flows related to purchases of equipment, which concern lower amounts. Under the principles laid down in the Strategic financial management framework, EDF and the main subsidiaries concerned by foreign exchange risks (EDF Energy, EDF Trading, Edison, EDF Renewables) are required to hedge firm or highly probable commitments related to these future operating cash flows. As a result of the financing and foreign exchange risk hedging policy, the Group’s gross debt at 31 December 2018 breaks down as follows by currency after hedging:

GROSS DEBT STRUCTURE BY CURRENCY BEFORE AND AFTER HEDGING 31 December 2018 (in millions of euros) Initial debt structure

Impact of hedging instruments (1)

Debt structure after hedges

% of debt

Borrowings in EUR Borrowings in USD Borrowings in GBP

26,783 20,546 9,250 2,609 59,188

21,438 (17,564) (2,414) (1,460)

48,221 2,982 6,836 1,149 59,188

81%

5%

12%

Borrowings in other currencies

2%

-

100%

TOTAL DEBT

Hedges of liabilities and net assets of foreign subsidiaries. (1)

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EDF I Reference Document 2018