EDF_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Notes to the consolidated financial statements

The final agreements concerning Hinkley Point C were signed on 29 September 2016 following the final investment decision authorized by EDF’s Board of Directors on 28 July 2016. Under the Strategic Investment Agreement, EDF holds 66.5% of the project entity HPC and CGN holds 33.5%. As announced on 21 October 2015, the HPC project entity and the British government’s Department of Energy and Climate Change (DECC) have finalised the terms for the Contract for Difference (CfD) that was approved in October 2014 by the European Commission as compliant with EU regulations on State aid. This CfD was signed on 29 September 2016 and is designed to guarantee returns on the electricity produced and sold by HPC, through payments based on the differential between the contractual strike price defined below and the market price over a 35-year period beginning once the plant starts operation. Impacts on the 2016 consolidated financial statements The agreements signed notably led to the partial sale by EDF to CGN of Hinkley Point C (33.5%) and Sizewell C (20%). As these are non-controlling interests, Hinkley Point C and Sizewell C remained fully consolidated and the operation had no impact on net income. This operation had an impact of €(548) million on EDF’s share of equity and €1,510 million on the non-controlling interests’ share of equity. These amounts comprise the reallocation to non-controlling interests of part of the goodwill of EDF Energy, which was essentially recognised when the Group took over British Energy in 2009. The amount received in 2016 for these sales was €830 million. CGN also participated to the extent of its ownership interest in the capital increases undertaken by Hinkley Point C and Sizewell C after these operations, in the total amount of €469 million. 3.7.3 On 6 October 2016, EDF raised the equivalent of €5.4 billion through a series of senior bond issues in US dollars, Euros and Swiss Francs. Details are as follows: EDF undertook a €3 billion multi-currency senior bond issue in 4 tranches: ■ a €1,750 million Green Bond, with 10-year maturity and a fixed coupon ■ of 1%, a €750 million bond with 20-year maturity and a fixed coupon of 1.875%, ■ a CHF 400 million bond, with 8-year maturity and a fixed coupon of 0.3%, ■ a CHF 150 million bond, with 12-year maturity and a fixed coupon ■ of 0.65%; on the same day, EDF raised US$2.7 billion from some twenty investors through ■ 2 senior Formosa bonds on the Taiwanese market: a US$491 million bond, with 30-year maturity and a fixed coupon ■ of 4.65%, a US$2,164 million bond, with 40-year maturity and a fixed coupon ■ of 4.99%. These transactions enable the Group to further diversify its investor base and extend the average maturity of its gross debt. Senior bond issues

Extending the nuclear reactors’ operating lifetimes beyond 40 years also offered clearly positive returns that are higher than in a 40-years scenario, even in the event of long-term price depression. Furthermore, the principle of operating lifetimes of more than 40 years is laid down in France’s multi-year energy plan (Programmation Pluriannuelle de l’Énergie (PPE)) adopted by Decree 2016-1442 of 27 October 2016 as a necessity for secure power supplies. Extending the depreciation period of the 900MW series is consistent with the objectives of the PPE (particularly development of renewable energies, and control of greenhouse gas emissions). The best estimate for the depreciation period of the 900MW series is now 50 years. This accounting estimate does not affect the ASN’s decisions to authorise continued operation. Authorisations will be given individually for each unit after each 10-year inspection, which is currently the case as required by law. The Group therefore undertook this change of accounting estimate at 1 January 2016 for all its power plants in the 900MW series in France, except for Fessenheim. The impacts on the 2016 consolidated financial statements were the following: at 1 January 2016, ■ provisions relating to nuclear power generation were reduced by ■ €2,044 million due to timing differences in the payment schedules, including €1,657 million concerning provisions covered by dedicated assets; assets were reduced by the same amount, in accordance with IFRIC 1. This ■ decrease was almost entirely taxable, generating a current tax liability of €679 million. the impacts on 2016 net income were estimated based on an unchanged ■ depreciation period of 40 years: a €965 million decrease in the depreciation charge due to the reduction in ■ the value of assets and the extension of the depreciation period; a €90 million decrease in the cost of unwinding the discount due to the ■ reduction in provisions; a €42 million decrease in income due to the lower level of partner ■ advances made to EDF under the nuclear plant financing plans; these effects led to overall increases of €1,013 million in the income before ■ taxes, and €664 million in consolidated net income. agreements On 21 October 2015, EDF and China General Nuclear Power Corporation (CGN) signed a Strategic Investment Agreement for joint investment in the construction of two EPRs at the Hinkley Point C site (HPC) in Somerset. The agreement also includes a UK partnership to develop the new nuclear power plants Sizewell (SZC) in Suffolk and Bradwell B (BRB) in Essex. Hinkley Point C: signature of the final 3.7.2

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EDF I Reference Document 2017