EDF / 2019 Universal registration document

1. The Group, its strategy and activities Group strategy

Moreover, the promotion of innovation, based on experiments (“labs” and co-construction platforms with customers) and on an open innovation programme contributes to this transformation. The creation at end-2017 of the EDF Pulse Croissance incubator and corporate venture, which is responsible for “new businesses”, supplements the range of tools that EDF is gradually acquiring to meet the challenges in this area. It uses the levers of incubation, investment in external start-ups (through the Electranova funds) and technological partnerships (see section 1.4.6.1.3 “EDF Pulse Croissance”). The digital transformation involves employees and internal modus operandi, customer relations and the management and design of industrial assets. The creation at end 2016 of a Transformation and Operational Efficiency Department, which combines the Group’s activities relating to information systems, purchasing, real estate and shared services, reflects the Group’s desire to speed up in this field. Since several years, the EDF group has placed the focus of digital transformation at the strategic level and has carried out an in-depth review of its internal organisation and training. In particular, in 2019, an internal academy dedicated to the new digital professions was created. In the field of data, the Group has adopted in 2018 a data management policy and set up a “data analytics” plant for nuclear, thermal and renewable electricity generation, with the pooling of expertise. In 2019, this plant expanded its scope and a second plant was created for tertiary data (real estate, purchasing, etc.). Performance improvement has always been a priority for the EDF group. The current economic and financial context further increases the urge for such improvement. The Group is strengthening control of its costs to bring them into line with its environment. The approach is adjusted depending on the scopes involved (cross-disciplinary functions, operating entities, etc.) and a number of projects have already produced results in terms of reduction of operating expenses, optimisation of the working capital requirement and improved management (cash-based management, project management team, cyber-security management), with the aim of enhancing the competitiveness of support activities and giving businesses performance levers. “Let’s Talk Energy”, a collective intelligence initiative to support transformation initiated in the first half of 2018 to harness the intelligence of EDF employees towards the construction of the Group’s medium- and long-term scenarios, was continued in 2019 in connection with the publication of the multi-year energy programme (see section 3.3.1.2.5 “Dialogue and consultation about our projects”). Lastly, in the nuclear sector, 2019 was also marked by the launch at year-end of the “excell” plan, which seeks to enhance the industrial quality, expertise and governance of major nuclear projects (see section 1.4.1.2.4). Research & Development to support 1.3.3.6 energy transition Research & Development (R&D) has a crucial role to play in developing low-carbon solutions, all the while reinforcing the safe and economically efficient operation of existing and future facilities (See section 1.6 “Research & development, patents and licences”). CAP 2030 success factors 1.3.3.7 CAP 2030 enables the Group to develop a portfolio of assets focused on low-carbon, renewable and nuclear energy, services for customers, decentralised energy solutions. The key success factors of CAP 2030 are: the expansion of the range of offers and exemplary customer relations; ■ the management of major projects, in particular the new models for nuclear ■ reactors, the “ Grand Carénage ” programme or the development of Nuclear New Build; the selectiveness of investments in projects; ■ cost control; ■ the transformation of the Group’s modus operandi and the commitment of all. ■

In this context, the implementation of the Group’s performance plan announced on 22 April 2016 has made it possible to achieve the following goals: a reduction in operating expenses  (1) of €1.24 billion from 2015 to 2019, with ■ target savings of €1.1 billion on the same period; an asset disposal plan of approximately €10 billion between 2015 and 2020, ■ already achieved in 2018; strengthening of the balance sheet via a capital increase totalling €4.0 billion and ■ the option of dividend payment in shares in respect of financial years 2015-2016-2017, chosen by the State in particular (cumulative €5 billion). The Group is pursuing its investment programme in line with its CAP 2030 strategy (see section 1.3.4 “Investment Policy”). Moreover, the Group is continuing the work on its modus operandi through its transformation programme, “accountability, simplification and innovation/digital technology”: structuring of the Group’s operations into 20 business units, and overhauling of ■ management indicators; professionalisation of project managers, with the setting up of an external ■ certification programme; simplification of some processes: purchasing, training, reporting, etc.; ■ development of innovation, with the creation of new services in start-up mode ■ supported and financed by “EDF Pulse Croissance” (see section 1.4.6.1.3 “EDF Pulse Croissance”), support for participative innovation, with more than 30 places of innovation throughout the Group and the internal and external EDF Pulse Awards; deployment of a digital strategy: cultural transformation with the new season of ■ the “Y Project” (participation of 30 young people), increasing use of collaborative tools and structuring to harness data to support customers, and to optimise maintenance and operating costs. Investment policy 1.3.4 Investments in 2019 1.3.4.1 The Group continued its programme of gross operating investments for a total amount of €16.7 billion in 2019, versus €16.2 billion in 2018. Total net investments excluding disposal plan were €13.9 billion in 2019. These include Linky (headed by Enedis) for €0.8 billion and HPC for €1.8 billion. Excluding Linky and HPC, the main net investment items, excluding strategic disposals, were those made in nuclear maintenance (mainly “ Grand Carénage ”) for €4.3 billion, the Flamanville 3 project for €0.8 billion, regulated activities in France and the islands (excluding Linky) for €3.6 billion and services for €0.3 billion. Lastly, in renewable energies, net investments totalled €0.4 billion, a reduced amount due to the disposal of 50% of the Scottish NnG facilities, which initiated a deconsolidation of the associated debt and thus reduced the nominal amount of net investments. Asset disposals represented €0.5 billion in 2019. The Group’s disposal plan reached its target of €10 billion by the end of 2018 and was extended to 2019 and 2020 with an additional target of €2 to €3 billion.

(1) At comparable scope and exchange rates. At constant pension discount rates. Excluding change in the operating expenses of the service activities.

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EDF | Universal registration document 2019