EDF / 2018 Reference document

6.

FINANCIAL STATEMENTS Operating assets and liabilities, equity

Due to their characteristics, in compliance with IAS 32, these hybrid loan and bond were recorded in equity in Alpiq’s consolidated financial statements. Since the EDF group did not subscribe to the operation, there was no impact on the value of the investment in Alpiq reported in “Investments in associates and joint ventures”. The difference between the shares of equity as published by Alpiq and as reported in the Group’s consolidated financial statements largely results from this hybrid loan. The value of the EDF group’s investment in Alpiq, valued on the basis of the stock market price at 31 December 2018, is €475 million. 23.4.2 The Alpiq group is operating in a difficult market environment with notably low wholesale prices. Also, Alpiq has no access to final customers on the non-liberalised Swiss market. This unfavourable context has affected the profitability of its generation capacities in Switzerland and furthermore, due to price coverage strategies, Alpiq cannot take advantage in the short term of market price rises. In March 2016 Alpiq announced that it was introducing structural measures in traditional energy generation, to reduce its exposure to wholesale prices with a view to selling some of its generation fleet. These measures did not produce the expected results and the Group subsequently refocused on disposal of its energy service assets. Impairment

When it published its half-year 2018 financial statements on 24 August 2018, Alpiq once again mentioned the difficulties caused by Switzerland’s asymmetrical electricity market regulations. As these risks had already been taken into consideration, no additional impairment was booked by Alpiq in those half-year financial statements. On the strategic level, Alpiq successfully concluded the sale of its energy service activities to the French company Bouygues Construction in late July 2018. This operation enables Alpiq to refocus on its core businesses and improve its liquidities. At the end of August 2018 EDF gave notice to terminate the consortium agreement that has existed between the entity’s founding shareholders since 2005. The agreement will expire in September 2020. The Group is not currently aware of any factor that has arisen since publication of Alpiq’s half-year results to indicate a risk of further impairment on its investment at 31 December 2018. The Group will continue to closely monitor the effective implementation of Alpiq’s action plans and changes in the market context and regulatory environment in Switzerland. Should the Alpiq group recognise impairment in its annual 2018 consolidated financial statements, due to be published on 4 March 2019, the EDF group would reflect that in its half-year 2019 financial statements.

INVENTORIES NOTE 24

The carrying value of inventories, broken down by nature, is as follows:

31/12/2018

31/12/2017

Gross value 10,671

Provision Net value Gross value

Provision Net value

(in millions of euros)

Nuclear fuel Other fuel

(6)

10,665

10,831

(15)

10,816

957

(14)

943

906

(7)

899

Other raw materials

1,613

(302)

1,311

1,526

(283)

1,243

Work-in-progress for production of goods and services

538 840

(30) (40)

508 800

494 768

(48) (34)

446 734

Other inventories

14,619

(392)

14,227

14,525

(387)

14,138

TOTAL INVENTORIES

The more-than-one-year portion mainly concerns nuclear fuel inventories amounting to €7,810 million at 31 December 2018 (€7,932 million at 31 December 2017).

The value of EDF Trading’s inventories stated at market value is €142 million at 31 December 2018 (€179 million at 31 December 2017).

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EDF I Reference Document 2018