EDF_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Notes to the consolidated financial statements

Determination of provisional goodwill 3.2.4.2 The provisional goodwill recorded on the operation, under the partial goodwill method and based on a 75.5% ownership percentage, is determined as follows.

(in millions of euros) Purchase price for the investment

1,868 1,868

Consideration transferred at 31 December 2017 (A)

Fair value of the Framatome assets acquired

611 611

Fair value of assets acquired and liabilities assumed (B)

1,257

PROVISIONAL GOODWILL (A)-(B)

3.3

CLARIFICATIONS ON THE HINKLEY

The acquisition price used to calculate provisional goodwill is the adjusted provisional price paid when the transaction was completed. The provisional goodwill recognised mainly corresponds to: Framatome’s pre-existing customer relations with the EDF group (see note 3.2.2); ■ Framatome’s future customer relations (with EDF and external customers) and ■ technologies; Framatome’s human capital. ■ Non-controlling interests 3.2.4.3 Framatome’s non-controlling interests, amounting to €199 million at 31 December 2017, consist of the shareholders Mitsubishi Heavy Industries (19.5%) and Assystem (5%). These shareholders acquired their interests on 31 December 2017. Impact of the operation on the Group’s 3.2.5 net income and net indebtedness The acquisition of Framatome has no impact on the Group’s net income in 2017, due to the acquisition date (31 December 2017). The acquisition price paid, €1,868 million (1) , leads to an equivalent increase in the Group’s net indebtedness at 31 December 2017. The operation took place on the basis that no financial net indebtedness would be transferred. The Framatome subgroup is a new subgroup established for the purpose and at the date of the operation (see note 3.2.3). The figures shown below are thus the best estimates for the activities taken over in the acquisition, taking into consideration operations with the EDF group. On this basis, if the acquisition had taken place at 1 January 2017 instead of 31 December 2017, full consolidation of Framatome from 1 January 2017 (excluding the effects of purchase price allocation) would have led to an increase in Group sales and operating profit before depreciation and amortisation of approximately €1.7 billion and €0.2 billion respectively. Framatome expects its operating profit before depreciation and amortisation to increase in 2018 due to growth in non-Group sales and better control of costs (particularly costs related to non-quality and corporate costs). Impact of acquisition of control over Framatome on the Group’s key indicators for 2017 3.2.6

POINT C PROJECT The HPC project cost and timetable review undertaken after EDF’s final investment decision in September 2016 in conjunction with the project company (NNB) concluded that: the milestone of the first nuclear safety concrete for the building of Unit 1, ■ scheduled for mid-2019, is confirmed provided that the final design, which is on a tight schedule, is settled by the end of 2018; project completion costs are now estimated at £19.6 billion (in 2015 sterling (2) ), ■ £1.5 billion (in 2015 sterling) more than previous estimates. This new estimate assumes successful completion of operational action plans, in partnership with suppliers. The estimated additional costs (3) result mainly from a better understanding of the design, which has been adjusted to meet the regulators’ requirements, the volume and sequencing of work on site and the gradual implementation of supplier contracts. EDF’s projected rate of return (IRR) is now estimated at about 8.5% compared to about 9% initially; the risk of deferral of the Commercial Operation Date (COD) is estimated at ■ 15 months for Unit 1 and 9 months for Unit 2. This risk would entail an additional potential cost of around £0.7 billion (in 2015 sterling). In such a case, the IRR for EDF would be around 8.2%. The project company NNB will examine and implement the recommendations of the review in compliance with its rules of governance. The project management team is working hard to meet the initial delivery objective of the end of 2025 for Unit 1, and to identify and implement action plans to reduce costs and risks. 3.4.1 On 31 March 2017, EDF finalised the sale to Caisse des Dépôts and CNP Assurances of a 49.9% stake in the electricity transmission entity Coentreprise de transport d’électricité (CTE, formerly C25), which has held 100% of RTE since December 2016. After completion, EDF, Caisse des Dépôts and CNP Assurances hold respective stakes of 50.1%, 29.9% and 20.0% in CTE. The sale was based on a valuation of €8.2 billion for 100% of RTE. The new shareholder agreement strengthens RTE’s long-term investment strategy, which seeks to maximise transmission system infrastructure efficiency in support of the energy transition. Impacts on the consolidated financial statements This operation has an impact of €1,462 million on other income and expenses (€1,289 million on consolidated net income), and contributed to a decrease of approximately €4 billion in the EDF group’s net indebtedness. DISPOSAL PLAN 3.4 Finalisation of the sale of 49.9% of CTE

6.

Based on a price of €2,475 million for 100% of the capital. (1) Excluding interest during construction and forex effects versus the reference exchange rate for the project: £1 = €1.23. (2) Net of action plans. (3)

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EDF I Reference Document 2017