EDF / 2018 Reference document

PRESENTATION OF EDF GROUP Description of the Group's activities

In sales and marketing, Edison continues to grow its electricity and gas sales to individuals and to the SME segment, aiming for excellence in customer relationship and focusing on selected loyal customers. In parallel, Edison intends to maintain its position as a leader in the business-customer market by developing an advisory approach in energy as well as innovative products and services made possible by market and regulatory changes, such as customer aggregation. Improvements in the sales process in recent years have resulted in better service to customers. Growing customer satisfaction, combined with the development of low-carbon offers and value-added services targeted by segment will strengthen ties with the end market and create the conditions for an expansion of the customer base. nergy services 1.4.5.2.3.4 Edison develops, sells and manages energy and environmental services via a dedicated business unit called “Energy Services Market Division” (ESMD). The activities of Fenice as well as those of Edison Energy Solutions have been integrated into this new unit. The proposed solutions are dedicated to the development of energy efficiency projects intended for major industrial clients, small and medium-sized enterprises and tertiary customers. With the acquisition of two firms active in public services, the ESMD aims to consolidate its position in a sector that is in a growth phase in terms of the demand for energy services. Sersys' environmental activities complete the service offering. The business models are adapted to the requirements of the customers: the ESMD's entities design, build and manage, on behalf of its customers, assets such as cogeneration/tri-generation plants, photovoltaic installations, electricity substations, thermal power plants for industrial use, cold generation power plants, compressed air generating plants, fluid distribution systems (electricity, gas, hot or refrigerated air, compressed air, industrial gas, water) and industrial water treatment plants. The range of services is completed by a consulting activity in terms of energy, management of environmental securities and internal and external training for customers and partners. The ESMD has around 420 customers; contracts with the FCA group still account for over half of Fenice's business. The projects are developed in the form of industrial partnerships or performance contracts with customers; the financial model is also adapted to the requirements of the customer and may range from assistance to the customer with third-party financing as far as direct investment by Edison (Esco) in the projects. As part of its growth strategy of providing an integrated service offering for all segments of the market, Edison is active in the wood pellet heating and urban heating sectors through its 51% stake in Comat Energia, acquired in March 2017. The ESMD's range was further supplemented with the purchase of a 60% stake in Magnoli & Partners, an architecture consulting firm specialising in digital models of buildings to facilitate energy efficiency. Edison is active in the public services sector via Edison Facility Solutions (formerly Energon Facility Solutions, acquired in 2017) and Zephyro, which specialises in energy efficiency and integrated energy management, most notably for hospitals in Lombardy, Veneto and Lazio regions. After buying 71.3% of Zephyro Spa's ordinary shares (or 70.66% of its total shares) from Prima Holding Srl in July 2018, Fenice bid for the remaining ordinary shares on the AIM Italia market. As a result of its stock purchases, Fenice now owns 99.93% of Zephyro's ordinary shares and 99.05% of its total share capital. Priced at €10.25 per share, the stock purchases cost around €106 million in total. Consequently, Borsa Italia delisted Zephyro ordinary shares and warrants from the AIM Italia market with effect from 23 October 2018. Given the further purchases, Fenice holds 99.499% of the total share capital of Zephyro. Energy efficiency operations are carried out abroad (Spain, Poland, Morocco) by Fenice subsidiaries.

In order to become more competitive and bolster its gas supply chain in Italy, Edison is further strengthening and diversifying its long-term import contracts. In exploration and production, Edison possessed, at the end of 2018, 56 concessions and exploration permits in Italy and 41 abroad, and approximately 209 million barrels equivalents in reserves. Abroad, Edison’s most significant asset is the Abu Qir gas field in Egypt; in early 2009, Edison purchased the exploration, production and development rights for this field for an initial period of 20 years, extendable by further 10 years. At the end of 2017, the consortium, in which Edison holds an 11.25% stake with Sonatrach, Repsol and DEA Deutsche Erdoel AG, commissioned the output of the Reggane Nord gas fields in Algeria in the Sahara desert. Lastly, Edison is also active in Croatia, the UK and Norway, where it has licences for the North Sea, Norwegian Sea and Barents Sea. Gas infrastructures Edison is involved in various gas import infrastructure projects (see section 1.4.6.2.2.2 “Infrastructures”), such as IGI Poseidon, 50%-owned by Edison, a company involved in the development of several projects that aim to connect Greece and Italy (ITGI-Poseidon), Greece and Bulgaria (IGB, in 50/50 partnership with Bulgaria), as well as Greece and Cyprus (EastMed). In 2018 the final investment decision was taken to invest in the IGB project and construction will begin in 2019. In 2017, Edison, Depa and Gazprom signed a cooperation agreement to work together in establishing a southern route for Russian gas supplies from the Black Sea, through the development of a gas pipeline project between Greece and Italy under the Ionian Sea. If geopolitical developments allow for the southern pipeline to go through Greece, the project will be able to benefit from the activities already developed on the ITGI-Poseidon project. Edison also has the right of use of 80% of the Rovigo offshore regasification terminal's capacity (6.4Gm 3 out of 8Gm 3 a year) where LNG imported from Qatar with Ras Laffan Liquified Natural Gas Company Limited II (RasGas II) is regasified. Concerning LNG, in 2018 Edison began to build a Small Scale LNG supply chain to sell LNG on the wholesale market and thereby support the development of a sustainable fuel for transport by road and sea. The first stage of the project consists of setting up an onshore depot at the port of Ravenna, where the LNG will be stored via a small dedicated LNG terminal, and will be undertaken by Depositi Italiani GNL, a new entity jointly held by Edison (49%) and Petrolifera Italiana Rumena (51%). Edison will have right of use to 85% of the depot's capacity of over 1Mm 3 of LNG a year and will be able to supply LNG to 12,000 lorries and up to 48 ferries. Sales and marketing 1.4.5.2.3.3 In 2018, Edison sold 29.4TWh of electricity in Italy (compared with 28.2TWh in 2017, i.e. up 4.2%), of which 18.8TWh were generated and 10.6TWh were purchased on the markets. Sales to end-customers amounted to 13.7TWh, up by 25.3% compared with 2017 across all segments. At the end of 2018, Edison was serving around 656,200 electricity customers and around 936,200 gas customers, both in the business and residential segments. In February 2018, Edison finalised its purchase of GNVI (renamed Edison Energie) from Naturgy (previously Gas Natural Fenosa), thus acquiring a customer base with a very low churn rate located in Central and Southern Italy. This enabled it to extend its activities in the country and increase its customer portfolio by 50%. During the year Edison further integrated Edison Energie in its operations in order to maximise existing synergies. Edison also acquired Servigas, a residential boiler maintenance specialist with 90,000 contracts presenting a number of synergies, especially with Assistenza Casa, a firm that installs and maintains innovative household appliances and smart home systems in which Edison bought a 51% stake in 2017. Furthermore, Edison continued expanding into the retail market with the purchase in late April 2018 of Attiva, a firm that sells gas to 30,000 end customers in Apulia.

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EDF I Reference Document 2018