EDF_REGISTRATION_DOCUMENT_2017

6.

FINANCIAL STATEMENTS Notes to the consolidated financial statements

COMPARABILITY NOTE 2

There were no accounting changes during 2017.

SIGNIFICANT EVENTS AND TRANSACTIONS NOTE 3 CAPITAL INCREASE BY EDF SA 3.1

On 31 December 2017, the Group completed its acquisition of 75.5% of Framatome. Simultaneously with completion of this transaction between EDF and AREVA SA, Mitsubishi Heavy Industries Ltd and Assystem took investments of 19.5% and 5% respectively in Framatome. The immunisation mechanisms and guarantees set out in the final share purchase agreement signed with EDF on 22 December 2017 also apply to Mitsubishi Heavy Industries Ltd and Assystem. Finally, the three new shareholders of New NP decided to change the name of New NP to Framatome from 4 January 2018. On 3 February 2018, Teollisuuden Voima (TVO) brought an action before the European General Court seeking cancellation of the European Commission’s decision of 29 May 2017 that authorised EDF’s takeover of Framatome, on the grounds that it breaches the regulation on control of concentrations. The notice of the action, which should state the pleas in law and the main arguments put forward by TVO, has not yet been published in the Official Journal of the European Union and EDF is not currently informed of its content. 3.2.1 EDF and AREVA SA signed a non-binding memorandum of understanding on 30 July 2015 that formalised the state of progress on discussions concerning their contemplated partnership. This memorandum had three sections: acquisition by EDF of exclusive control over AREVA NP. The plan was that EDF ■ should hold majority control of AREVA NP, while AREVA SA would hold up to 25% in a strategic partnership that could potentially involve other minority partners; formation of a dedicated company (Edvance, created on 17 May 2017), owned ■ 80% by EDF and 20% by AREVA NP (and now by Framatome), to optimise design and construction for nuclear islands and command-control systems for new projects in France and internationally; conclusion of a comprehensive strategic and industrial partnership agreement. ■ A further non-binding memorandum of understanding was signed by the same parties on 28 July 2016, formally acknowledging the EDF Board of Directors’ approval of the final valuation of the activities to be acquired by EDF, and taking note of new developments since early 2016, i.e.: the negative outcome of discussions with TVO on the initial proposed ■ arrangements to give EDF total protection against the risks of the Olkiluoto 3 (OL3) project, leading to the following new transaction structure: formation of a company, New NP, over which EDF would acquire exclusive control: this company would take over the contracts held by AREVA NP except for the OL3 contract and certain other contracts involving risks that EDF did not intend to bear (see the following point); the cases of non-quality observed at AREVA NP’s Le Creusot plant, whether ■ insufficient control of carbon content (“carbon segregation”) or the presence of irregularities in the manufacturing records. The new memorandum of understanding laid down the principles for indemnification and protection of EDF against the consequences of these issues: non-transfer of terminated contracts to New NP, specific indemnities and a general guarantee, quality audit-related conditions precedent for completion of the acquisition; History

On 30 March 2017, EDF undertook a cash capital increase with preferential subscription rights for existing shareholders. The total gross amount of the increase (including the issue premium) was €4,018 million, and 632,741,004 new shares were issued at the unit issue price of €6.35. This total amount comprises: a €316 million increase in the share capital; ■ a €3,702 million gross increase in the issue premium. ■ Issue expenses (net of taxes) are charged to the issue premium. In accordance with its commitment, the French State subscribed for an amount of €3 billion or approximately 75% of the capital increase, and after this operation held 83.10% of the Company’s share capital. The dilution of the French State’s shareholding results in a larger free float, as the proportion of shares in the Company held by the public (including employees) was raised from 14.25% to 16.81% as a result of the capital increase. OF FRAMATOME Following approval of the operation by their respective Boards of Directors on 13 and 14 December 2017, AREVA SA and EDF signed definitive binding agreements on 22 December 2017 setting the terms for the sale to EDF on 31 December 2017 of an interest giving EDF exclusive control over a 100% subsidiary of AREVA NP (“New NP”) that comprises the former AREVA group’s activities relating to the design and manufacturing of nuclear reactors and equipment, fuel assemblies and services to the nuclear installed base. Under the terms of these agreements, EDF’s acquisition of 75.5% of New NP’s capital was based on an adjusted valuation of €2.47 billion (for 100% of the capital), with no transfer of financial debt. This price was equivalent to a 2017 forecast EBITDA multiple of 8x (1) . This amount may be adjusted upwards or downwards based on the accounts at the completion date (31 December 2017) once they have been finalised. Depending on achievement of certain performance targets measured after the completion date, it may also be subject to earn-out payment of up to €245 million. EDF also benefits from liability guarantee clauses. The contracts for the EPR Olkiluoto 3 project and the resources required to complete the project, as well as certain contracts relating to components forged in Le Creusot plant, are not part of EDF’s acquisition and remain with AREVA NP, part of AREVA SA. The signing of these binding agreements of 22 December 2017 followed issuance of a positive opinion by the Board of the French Nuclear Safety Authority (Autorité de sûreté nucléaire - ASN) on 28 June 2017 regarding commissioning of the Flamanville 3 reactor vessel. EDF decided on 12 July 2017 to waive the condition precedent concerning the absence of anomalies on the primary circuit as it concerned the carbon segregation identified in parts of this reactor vessel. These agreements also followed the completion and satisfactory conclusion of the quality audits undertaken at the Le Creusot, Saint-Marcel and Jeumont plants, regarding contracts transferred to New NP. For these contracts, EDF has a guarantee from AREVA SA for any residual risk related to the quality audits. ACQUISITION OF 75.5% 3.2

Normalised pro forma EBITDA for the activities acquired, excluding large projects. (1)

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EDF I Reference Document 2017