EDF / 2018 Reference document

6.

FINANCIAL STATEMENTS Notes to the consolidated financial statements

2017 as published

IFRS 9 restatements

2017 restated

(in millions of euros)

Operating profit before depreciation and amortisation

13,742

- - - -

13,742

Operating profit

5,637

5,637

Cost of gross financial indebtedness

(1,778) (2,959)

(1,778) (2,959)

Discount effect

Other financial income and expenses

2,501

215 215 (96)

2,716

Financial result

(2,236)

(2,021)

Income taxes

(147)

(243)

Share in net income of associates and joint ventures (1)

35

57

92

3,289

176

3,465

GROUP NET INCOME

Relates to the investment in CENG. (1)

SIGNIFICANT EVENTS AND TRANSACTIONS NOTE 3 THE FIRST OF TWO EPR REACTORS 3.1 AT CHINA’S TAISHAN NUCLEAR POWER PLANT BEGINS COMMERCIAL OPERATION

This portfolio, whose assets are located in the Paris area and other regions in France, has a total surface area of approximately 430,000m 2 . The operation was coupled with an operating lease contract to the EDF group. The closing of this transaction marks the completion of EDF group's €10 billion asset disposal plan for 2015-2020.

On 14 December 2018, CGN and EDF announced that Taishan nuclear power plant’s unit 1 had become the world’s first EPR to begin commercial operation. This last milestone was reached on 13 December 2018 after successful completion of the final statutory test of continuous operation at full power for 168 hours, which showed that all the requirements for the reactor’s safe operation were met. Comprising two 1,750MW EPR reactors, Taishan nuclear power plant is the biggest cooperation project to have taken place between China and France in the energy sector. Taishan’s two reactors are capable of supplying the Chinese power grid with up to 24TWh of carbon-free electricity a year, tantamount to the annual electricity consumption of 5 million Chinese users, whilst at the same time preventing the emission of 21 million tonnes of CO 2 a year. The Taishan project is being led by TNPJVC, a joint venture founded by CGN (51%), EDF (30%) and a regional Chinese utility called Yuedian (19%). The EDF group and its subsidiary Framatome supplied the third-generation EPR technology, which meets the highest international safety standards. EDF also contributed operating experience gained from the construction of its Flamanville 3 EPR, and this was a crucial factor in successfully completing the initial phases of the Taishan 1 construction project. Taishan 1 is providing its experience in project management and technological expertise for EPRs around the world. The first reactors to benefit from this experience are the two Hinkley Point C units currently being built in the UK. EDF and CGN are partners in two other British projects: the Sizewell C EPR project, and the Bradwell B project which is based on Hualong technology.

3.3

COMPLETION OF THE SALE OF

EDF’S STAKE IN DUNKERQUE LNG Following a competitive auction process launched in early 2018, the EDF group announced on 29 June 2018 that it had entered into exclusive negotiations with two groups of investors for the disposal of its 65.01% interest in the share capital of Dunkerque LNG, owner and operator of the liquefied natural gas (LNG) terminal in Dunkirk. A consortium composed of Fluxys, AXA Investment Managers – Real Assets, on behalf of its clients, and Crédit Agricole Assurances undertook to acquire a stake of 31%, and a consortium of Korean investors, led by IPM Group (comprised of InfraPartners Management Korea Co. Ltd. in Seoul and InfraPartners Management LLP in London) in collaboration with Samsung Asset Management Co., Ltd and consisting of Samsung Securities Co. Ltd., IBK Securities Co. Ltd. and Hanwha Investment & Securities Co. Ltd., acquired a stake of 34.01%. Based on the prices paid by the two consortia, the average enterprise value for 100% of Dunkerque LNG amounted to €2.4 billion. This transaction allowed Fluxys, already a 25% shareholder of Dunkerque LNG, to take control of and consolidate Dunkerque LNG with the support of Axa Investment Managers – Real Assets and Crédit Agricole Assurances. EDF, as a customer of Dunkerque LNG, is still committed in the long term to the terminal, which will continue serving the Group’s gas strategy. The EDF group signed binding agreements for this sale with the same consortia on 12 July 2018. Once the required regulatory approvals had been given, the EDF group completed the sale of its stake in the Dunkerque LNG terminal on 30 October 2018. Following this sale, valuation of the long-term agreement between EDF and Dunkerque LNG for reservation of LNG regasification capacities led to recognition of a €737 million increase in provisions for onerous contract (see note 32). Due the gain of €755 million generated, this operation has a net impact of €18 million on other income and expenses (see note 14). It also contributes a €1.5 billion reduction in the EDF group’s net financial indebtedness, based on a sale price of approximately €1 billion net of cash transferred.

3.2

SALE OF A PORTFOLIO OF MORE

THAN 200 REAL ESTATE AND BUSINESS ASSETS BY THE EDF GROUP TO COLONY CAPITAL

On 28 November 2018, the EDF group, largely via its subsidiary Sofilo, completed the sale of a portfolio of over 200 office buildings and business assets to investment vehicles managed by Colony Capital.

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I Reference Document 2018