EDF / 2019 Universal registration document

6. Financial statements Financial statements

On 22 December 2016, EDF assigned a 26.4% portion of this financial receivable, including the additional receivable corresponding to the shortfalls in compensation between 2013 and 2015, to a pool of investors. Consequently, the realisable value of the non-assigned portion of the receivable, which is totally allocated to dedicated assets, is calculated based on the assignment value at that date. The amount received for assignment of the portion of the CSPE receivable that was allocated to dedicated assets (€894 million) was reinvested in dedicated assets, in the same way as the reimbursements received (see note 3.5). After receiving the ministerial letter of 31 May 2018 authorising EDF, subject to conditions, to increase the portion of unlisted assets in its dedicated assets, on 29 June 2018 the Board of Directors validated the following new strategic allocation for dedicated assets: yield assets (target: 30% of dedicated assets), consisting of infrastructure assets, ■ including the shares of CTE, and real estate property; growth assets (target: 40% of dedicated assets), consisting of equity funds ■ investing in listed or unlisted equities; fixed-income assets (target:30% of dedicated assets), consisting of listed bonds ■ or listed bond funds, unlisted debt funds, receivables and cash. These targets should be reached gradually, mainly by reinvesting fixed-income assets in yield assets. Growth assets and fixed-income assets 38.2.1 Certain growth and fixed-income assets take the form of bonds held directly by EDF. Others consist of specialised collective investment funds on leading international markets, managed by independent asset management companies. They take the form of open-end funds and “reserved” funds established for the Group (which does not participate in the fund management). The listed equity funds consist of international equities (mainly in North America but also in Europe, Asia-Pacific and emerging countries). Listed bonds and listed bond funds consist of sovereign and corporate bonds. These investments are structured and managed in line with the strategic allocation, which takes into consideration international stock market cycles, for which the statistical inversion generally observed between equity market cycles and bond market cycles – as well as between geographical areas – has led the Group to

define a long-term investment policy with appropriate allocation between growth assets and fixed-income assets. Under the new strategic allocation, growth assets also include a small portion of funds invested in unlisted equities, and fixed-income assets also include a small portion of funds invested in unlisted debt. These funds are managed by EDF Invest (see note 38.2.2). In the course of operational asset monitoring, EDF applies long-term, specific management rules defined and supervised by its governance bodies (maximum investment ratios, volatility analyses and assessment of individual fund manager quality). Yield assets 38.2.2 The yield assets managed by EDF Invest consist of assets related to investments in infrastructures and real estate. Through investment funds, EDF Invest also manages growth assets and fixed-income assets (see note 38.2.1). At 31 December 2019, the assets managed by EDF Invest represent a total realisable value of €6,498 million, including €6,080 million of yield assets. Yield assets particularly include: 50.1% of EDF’s shares in CTE, the joint venture that owns RTE, in compliance ■ with Decree 2016-1781 of 19 December 2016 amending the Decree of 23 February 2007. These shares amount to €2,926 million at 31 December 2019 (€2,738 million at 31 December 2018); EDF’s investments in Terega, Porterbrook, Autostrade per l’Italia, Q-Park, ■ Thyssengas, Aéroports de la Côte d’Azur, Madrileña Red de Gas (MRG), Géosel, Central Sicaf, Ecowest SCI A and B, Nam Theun Power Company, companies that own wind farms in the United Kingdom (Bicker Fen, Glass Moor II, Green Rigg, Rusholme, Fallago Rig and Fenland), and companies that own solar power plants (Catalina Solar, Switch) and wind farms (MiRose, Red Pine) in the United States. Valuation of EDF’s dedicated assets 38.2.3 Dedicated assets are classified in the balance sheet according to their accounting nature: investments, investment securities, and marketable securities. They are valued under the accounting principles presented in note 1.

Details of the portfolio at 31 December 2019 are as follows:

31/12/2019

31/12/2018

Net book value

Realisable value

Realisable value

Net book value

(in millions of euros)

Investment in CTE (the company that owns RTE)  (1)

2,705

2,926

2,705

2,738

Other investment securities  (2) Other financial investments Dedicated assets – Investments

22,246

24,816

20,136

20,830

2,623

2,965

2,156

2,385

27,574

30,707

24,997

25,953

Marketable securities

192 192 684

192 192 688

Dedicated assets – Marketable securities

CSPE receivable  (3)

2,060

2,080

Total dedicated assets before hedging

28,450

31,587

27,057

28,033

Hedging instruments and other  (2)

(5)

37

(369)

(344)

TOTAL DEDICATED ASSETS AFTER HEDGING  (4) 27,689 EDF’s investment of 50.1% of CTE, the company that holds 100% of the shares in RTE. The realisable value of CTE at 31 December 2019 in the above table has (1) been determined by an independent assessor, in the same way as for EDF Invest’s other assets. Including €391 million of securities acquired in late December 2018 for which payment was made in early January 2019. (2) The receivable consisting of accumulated shortfalls in compensation at 31 December 2015, less the portion assigned on 22 December 2016 and reimbursements (3) received since then, in line with the repayment schedule. The realisable value of the CSPE receivable is estimated based on market rates. Limiting the value of certain investments in compliance with Article 16 of Decree 2007-243 concerning calculation of the regulatory realisable value of dedicated (4) assets has no effect at 31 December 2018 or 2019. 28,445 31,624 26,688

Net book value and fair value include unmatured accrued interest.

450

EDF | Universal registration document 2019

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