EDF_REGISTRATION_DOCUMENT_2017

5.

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

EDF Investissements Groupe has a syndicated credit facility for €1,000 million (expiring in September 2020). At 31 December 2017, there were no drawings on this credit facility.

Edison has a credit line with the European Investment Bank for €275 million (which is fully drawn) and a credit line with a pool of banks for €300 million, on which no drawings on had been made at 31 December 2017.

Credit rating 5.1.6.1.2 The financial ratings agencies Standard & Poor’s, Moody’s and Fitch Ratings attributed the following long-term and short-term ratings to EDF group entities at 31 December 2017: Company Agency Long-term rating Short-term rating

A-, negative outlook (1) A3, stable outlook A-, stable outlook Baa2, stable outlook BBB-, stable outlook (2) BB+, stable outlook Baa3, stable outlook

Standard & Poor’s Moody’s Fitch Ratings Standard & Poor’s Standard & Poor’s Moody’s Moody’s

A-2 P-2 F2 n.a. A-3 B n.a.

EDF

EDF Trading EDF Energy

Edison

= not applicable. n.a. S&P revised EDF’s outlook from stable to negative on 20 November 2017 (1) S&P revised EDF Energy’s outlook from stable to negative on 20 November 2017. (2)

Management of foreign exchange risk 5.1.6.1.3 Due to the diversification of its activities and geographical locations, the Group is exposed to the risk of exchange rate fluctuations, which may have an impact on the translation differences affecting balance sheet items, Group financial expenses, equity and net income. To limit exposure to foreign exchange risks, the Group has introduced the following management principles: local currency financing: to the extent possible given the local financial markets’ ■ capacities, each entity finances its activities in its own accounting currency. When financing is contracted in other currencies, derivatives may be used to limit foreign exchange risk; matching of assets and liabilities: the net assets of subsidiaries located outside ■ the Euro zone expose the Group to a foreign exchange risk. The foreign exchange risk in the consolidated balance sheet is managed by market hedging involving use of financial derivatives. Hedging of net assets in foreign currencies complies with risk/return targets, and the hedging ratio varies depending on the currency,

ranging from 36% to 66% for the principal exposures. If no hedging instruments are available, or if hedging costs are prohibitive, the foreign exchange positions remain open and the risk on such positions is monitored by sensitivity calculations; hedging of operating cash flows in foreign currencies: in general, the operating ■ cash flows of EDF and its subsidiaries are in the relevant local currencies, with the exception of flows related to fuel purchases which are primarily in US dollars, and certain flows related to purchases of equipment, which concern lower amounts. Under the principles laid down in the Strategic financial management framework, EDF and the main subsidiaries concerned by foreign exchange risks (EDF Energy, EDF Trading, Edison, EDF Énergies Nouvelles) are required to hedge firm or highly probable commitments related to these future operating cash flows. As a result of the financing and foreign exchange risk hedging policy, the Group’s gross debt at 31 December 2017 breaks down as follows by currency after hedging:

GROSS DEBT STRUCTURE BY CURRENCY BEFORE AND AFTER HEDGING 31 December 2017 (in millions of euros) Initial debt structure Impact of hedging instruments (1)

Debt structure after hedges

% of debt

Borrowings in EUR Borrowings in USD Borrowings in GBP

27,609 17,224 9,495 2,518 56,846

18,454 (14,752) (2,331) (1,371)

46,063 2,472 7,164 1,147 56,846

81%

4%

13%

Borrowings in other currencies

2%

-

100%

TOTAL DEBT

Hedges of liabilities and net assets of foreign subsidiaries. (1)

The table below presents the impact on equity of a variation in exchange rates on the Group’s gross debt at 31 December 2017. EXCHANGE RATE SENSITIVITY OF THE GROUP'S GROSS DEBT 31 December 2017 (in millions of euros) Debt after hedging instruments converted into Euros

Impact of a 10% unfavourable variation in exchange rates

Debt after a 10% unfavourable variation in exchange rates

Borrowings in EUR Borrowings in USD Borrowings in GBP

46,063 2,472 7,164 1,147 56,846

-

46,063 2,719 7,880 1,262 57,924

247 716 115

Borrowings in other currencies

1,078

TOTAL DEBT

282

EDF I Reference Document 2017