EDF_REGISTRATION_DOCUMENT_2017

THE GROUP'S PERFORMANCE IN 2017 AND FINANCIAL OUTLOOK Operating and financial review

GROUP CASH FLOW

Variation (%)

2017 (209)

2016 Variation

(in millions of euros) Group cash flow (1)

(1,565) +86.6 Group cash flow is not an aggregate defined by IFRS as a measure of financial performance, and is not comparable with indicators of the same name reported by (1) other companies. It is equivalent to the operating cash flow after net change in working capital, net investments, allocations and withdrawals from dedicated assets, and dividends. 1,356

DETAILS OF NET INDEBTEDNESS

Variation (%)

31/12/2017

31/12/2016 Variation

(in millions of euros)

Loans and other financial liabilities Derivatives used to hedge liabilities

56,846 (1,176)

65,195 (3,965)

(8,349)

-12.8 -70.3

2,789

Financial liabilities reclassified as liabilities related to assets held for sale (1)

-

1,458

(1,458)

-100.0 +27.6

Cash and cash equivalents

(3,692) (18,963)

(2,893) (22,266)

(799) 3,303

Available-for-sale financial assets – Liquid assets Financial assets reclassified as assets held for sale (1)

-14.8

5.

-

(104)

104

-100.0

33,015

37,425

(4,410)

-11.8

NET INDEBTEDNESS (2)

Net indebtedness of assets held for sale in 2016 principally concerned CTE (the Company that holds 100% of RTE (1) ) and Polish companies. (1) Net indebtedness is not defined in the accounting standards and is not directly visible in the Group’s consolidated balance sheet. It comprises total loans and (2) financial liabilities, less cash and cash equivalents and liquid assets. Liquid assets are financial assets consisting of funds or securities with initial maturity of over three months that are readily convertible into cash and are managed according to a liquidity-oriented policy.

ECONOMIC ENVIRONNEMENT 5.1.2 Trends in market prices for electricity 5.1.2.1 and the principal energy sources In an interconnected European market, analysis of market prices in France and the rest of Europe provides important context.

Spot electricity prices in Europe were higher overall in 2017 than 2016. This increase in prices is notably explained by rising coal and CO 2 prices. 2017 also saw a substantial decline in water levels and a wave of severe cold weather in January, with temperatures 5-6°C below normal in most European countries.

Spot electricity prices in Europe (2) 5.1.2.1.1

France United Kingdom Italy Germany Belgium

Average baseload price for 2017 (€/MWh) Variation in average baseload prices, 2017/2016 Average peakload price for 2017 (€/MWh) Variation in average peakload prices, 2017/2016

45.0

51.7

53.9

34.2

44.6

22.4%

5.3% 26.1% 18.0% 21.8%

53.7

56.7

61.4

42.7

54.8

17.4%

-1.3% 27.9% 21.2% 17.2%

The comments below concern baseload prices. In France , the increase in spot prices for electricity is explained by higher commodity prices compared to 2016. A very cold month of January, poor nuclear availability and drought affecting hydropower generation also helped to push spot prices upwards. Demand for electricity stood at an average 54.6GW (478.7TWh) for the year, relatively stable compared to 2016. Consumption for the first quarter showed marked contrasts depending on the month, as temperatures were very low in January while the month of March was one of the warmest since 1957, with temperatures on average 2°C above normal. Nuclear power output amounted to an average 43.3GW (379.1TWh), down by 1% from 2016, which was a year of low production particularly in the final quarter. The first quarter of 2017 was marked by outages for additional tests concerning the carbon segregation issue, and in the final quarter the four Tricastin units were shut down at the request of the ASN.

Wind power and solar power output both increased (+0.4GW and +0.1GW respectively). Power generation by fossil-fired thermal plants in France rose by 8TWh due to the cold weather of January, but also the low water levels. Annual production reached 53.4TWh, of which 16.1TWh were produced by EDF-owned plants. Gas-fired plants produced 41TWh, coal-fired plants close to 10TWh and oil-fired plants around 2TWh. Spot commodity prices for gas and coal registered year-on-year increases of 20% and 40% respectively, driving a significant rise in generation costs and therefore spot prices. In the United Kingdom , average spot electricity prices rose by 5.3% from 2016 to €51.7/MWh. The increase was most marked in the first quarter due to the cold weather of January. In Italy , average spot prices registered a year-on-year rise of 26.1% to reach €53.9/MWh for 2017. In Germany , spot prices stood at an average €34.2/MWh (baseload) and €42.7/MWh (peakload), with respective increases of €5.2/MWh and €7.5/MWh from 2016. Prices in Germany were negative for 146 hours, compared to 97 hours in 2016. Negative prices generally occur when unavoidable renewable energy

An independent EDF subsidiary as defined in the French Energy Code. (1) France and Germany : average previous day EPEXSPOT price for same-day delivery; (2) Belgium : average previous day Belpex price for same-day delivery; United Kingdom : average previous day EDF Trading OTC price for same-day delivery; Italy : average previous day GME price for same-day delivery.

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EDF I Reference Document 2017