EDF / 2018 Reference document

FINANCIAL STATEMENTS Notes to the consolidated financial statements

Of these 150 welds: 87 welds were compliant with requirements; ■ 33 welds had quality deficiencies and had to be repaired. The work on site to ■ repair these welds began in late July 2018; EDF also decided to rework a further 20 welds which, although they had no ■ defects, did not meet the break preclusion requirements defined by EDF during the EPR design phase. The files for adjustments to the first welds was sent to the ASN, and on-site welding work began in November 2018; for 10 other welds, EDF submitted a proposal to the ASN detailing a specific ■ justification method to confirm the high level of safety at the plant throughout its operating life. After a final analysis this number was reduced to 8. It also became clear from checks that one of these eight welds had a small quality defect. The ASN will closely examine EDF’s specific justification method in the next few months. Commissioning schedule and construction costs On 25 July 2018 (see EDF’s press release of the same date), the Group presented an update concerning these inspections, and adjusted the Flamanville EPR schedule and target construction costs: the target date for loading the nuclear fuel was scheduled for the end of the ■ fourth quarter of 2019, with start-up and hot functional testing planned for late 2018; the target construction costs were revised from €10.5 billion to €10.9 billion ■ (in 2015 euros, excluding borrowing costs). On 21 January 2019 (see EDF’s press release of the same date) EDF announced that the schedule for hot functional testing had been revised, and it is now expected to commence during the second half of February 2019. The schedule and estimated construction costs remain tight. They include a timetable for receiving authorisations from the ASN as explained above, which among other factors is contingent on the ASN completing its examination of the methods proposed by EDF for repairing the welds in the main secondary system, as stated in the Group’s press release of 31 January 2019. On 29 January 2019 the Chairman of the ASN announced that the ASN will issue a statement in May 2019 concerning the validation programme for the welds in the main secondary system, saying “if it turns out that the eight welds in the reactor containment building structure also need reworking then it will not be possible to meet the deadline.” A detailed update on progress on the Flamanville EPR, particularly the schedule and construction cost, will be issued after the ASN’s statement has been published. EDF is not currently in a position to assess the impact in the event the ASN does not validate the proposed approach.

The total gross amount of the increase (including the issue premium) was €4,018 million, and 632,741,004 new shares were issued at the unit issue price of €6.35. This total amount comprised: a €316 million increase in the share capital; ■ a €3,702 million gross increase in the issue premium. ■ Issue expenses (net of taxes) were charged to the issue premium. In accordance with its commitment, the French State subscribed for an amount of €3 billion or approximately 75% of the capital increase, and after this operation held 83.10% of the Company’s share capital. 3.11.2 On 22 December 2017 AREVA SA, AREVA NP and EDF completed the sale to EDF of an interest conferring exclusive control over New NP (renamed Framatome since January 2018), a 100% subsidiary of AREVA NP. EDF’s acquisition of 75.5% of Framatome’s capital was based on an adjusted valuation of €2.47 billion (for 100% of the capital), with no transfer of financial debt. This price was equivalent to a forecast 2017 EBITDA multiple of 8x (1) . In application of IFRS 3 (revised), the Group finalised recognition of the business combination in its accounts at 31 December 2018 (see note 5.1). The purchase price at that date is set at €2.6 billion (for 100% of the capital), €132 million more than the initial estimation due to: price adjustments based on the final accounts at the completion date of the ■ transaction (31 December 2017); estimated earn-out payments, some of them contingent on achievement of ■ performance targets measured after completion of the purchase: the final amount of up to €245 million should be established during 2019; estimation of certain guarantees granted to EDF by AREVA NP in the sale ■ agreement of 22 December 2017. Framatome’s provisional opening balance sheet at 31 December 2017 for 100% of the capital is presented in note 3.2.4.1 to the consolidated financial statements at 31 December 2017, and the final opening balance sheet is shown in note 5.1. On 3 February 2018, Teollisuuden Voima (TVO) filed an appeal before the General Court of the European Union against the European Commission's decision of 29 May 2017 that authorised EDF’s purchase of Framatome under antitrust regulations. TVO later withdrew its appeal and the Court announcement of 16 May 2018 removing the case from its register was made public at the end of May. 3.11.3 On 31 March 2017, EDF finalised the sale to Caisse des Dépôts and CNP Assurances of a 49.9% stake in the electricity transmission entity Coentreprise de transport Acquisition of 75.5% of Framatome Sale of 49.9% of CTE It had an impact of €1,462 million in 2017 on other income and expenses (€1,289 million on consolidated net income), and contributed to a decrease of approximately €4 billion in the EDF group’s net indebtedness, based on a sale price of €1.3 billion for the portion not allocated to dedicated assets and a net reduction of €2.8 billion in net indebtedness due to loss of control over CTE. Since this operation, EDF’s 50.1% investment in CTE, stated at historic value, has been accounted for under the equity method and is entirely allocated to dedicated assets. d’électricité (CTE), which has held 100% of RTE since December 2016. The sale was based on a valuation of €8.2 billion for 100% of RTE.

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3.11

SIGNIFICANT EVENTS

AND TRANSACTIONS OF 2017 Capital increase by EDF SA 3.11.1 On 30 March 2017, EDF undertook a cash capital increase with preferential subscription rights for existing shareholders.

Normalised pro forma EBITDA for the activities acquired, excluding large projects. (1)

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EDF I Reference Document 2018