EDF_REGISTRATION_DOCUMENT_2017

5.

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

Operating profit (EBIT) 5.1.4.3 EBIT was down by 25.0% from 2016.

Variation (%)

2017

2016 Variation

(in millions of euros)

EBITDA

13,742

16,414

(2,672)

-16.3

Net changes in fair value on Energy and Commodity derivatives, excluding trading activities

(355)

(262)

(93)

+35.5

Net depreciation and amortisation

(8,537)

(7,966)

(571)

+7.2

Net increases in provisions for renewal of property, plant and equipment operated under concessions

(58)

(41)

(17) 121

+41.5 -18.9 n. a. -25.0

(Impairment)/reversals

(518) 1,363 5,637

(639)

Other income and expenses

8

1,355

7,514

(1,877)

EBIT

n. a.: not applicable.

Net increases in provisions for renewal 5.1.4.3.3 of property, plant and equipment operated under concessions The €17 million increase between 2016 and 2017 in net increases in provisions for renewal of property, plant and equipment operated under concessions is attributable to the France - Regulated activities segment. Impairment/reversals 5.1.4.3.4 In 2017, impairment amounted to €518 million and principally concerned the United Kingdom (€246 million) and Italy (€150 million) (see note 13 to the 2017 consolidated financial statements). In 2016, impairment amounted to €639 million. Other income and expenses 5.1.4.3.5 In 2017, other income and expenses amounted to €1,363 million and principally concerned a gain of €1,462 million on the sale of 49.9% of the Group’s investment in CTE (see note 14 to the 2017 consolidated financial statements). In 2016, other income and expenses principally comprised income of €112 million following the favourable outcome of a dispute with the Hungarian State.

The Group’s consolidated EBIT amounted to €5,637 million for 2017, down by €1,877 million from 2016. This decrease and the higher level of net depreciation and amortisation are partly offset by the rise in other income and expenses. Net changes in fair value on Energy and 5.1.4.3.1 Commodity derivatives, excluding trading activities The net changes in fair value on Energy and Commodity derivatives, excluding trading activities, decreased from -€262 million in 2016 to -€355 million en 2017. Net depreciation and amortisation 5.1.4.3.2 Net depreciation and amortisation was up by €571 million compared to 2016. The France - Generation and supply activities segment registered a €447 million increase in net depreciation and amortisation, essentially explained by the accelerated depreciation of oil-fired facilities in the thermal fleet, an increase in assets associated with provisions following revision of the discount rate, and a volume effect on maintenance investments in the nuclear fleet. The France - Regulated activities segment registered a €123 million increase in net depreciation and amortisation, much of it attributable to the impact of the Linky (1) smart meter rollout.

Financial result 5.1.4.4

Variation (%)

2017

2016 Variation

(in millions of euros)

Cost of gross financial indebtedness

(1,778) (2,959)

(1,827) (3,417)

49

-2.7

Discount effect

458 590

-13.4 +30.9 -32.9

Other financial income and expenses

2,501

1,911

(2,236)

(3,333)

1,097

FINANCIAL RESULT

The financial result for 2017 corresponds to a financial expense of €2,236 million, €1,097 million improvement from 2016. This change is explained by: a decrease in the cost of gross financial indebtedness, as charges on the bond ■ issues of 2017 and the full-year effect of charges on the bond issues of October 2016 were offset by repayments over the year and a favourable foreign exchange effect, mainly concerning the USD; a decrease of €458 million in discount effect, principally due to a less ■ pronounced year-on-year decrease in the discount rate for nuclear provisions in

France at 31 December 2017 than 31 December 2016 (-0.1% for real rates, compared to -0.2% in 2016). At 31 December 2017, the discount rate stood at 4.1% including an average inflation rate of 1.5% (4.2% and 1.5% at 31 December 2016); a €590 million improvement in other financial income and expenses, notably ■ due to the rise in gains on sales of dedicated assets (€985 million in 2017 compared to €428 million in 2016).

Linky is a project led by Enedis, an independent EDF subsidiary as defined in the French Energy Code. (1)

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EDF I Reference Document 2017