EDF_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Cash flows and other information

CONTINGENT LIABILITIES NOTE 45 In addition to the matters reported in note 4.2, the principal contingent liabilities at 31 December 2017 are the following.

Certain first instance rulings rejected all the plaintiffs’ claims, while others awarded compensation. EDF and Enedis sought to apply their Civil Liability insurance policy, but the insurers refused their claims. The Court of Cassation ruling of 9 June 2015 for the Green Yellow case found that Enedis was liable and that the insurance payment was due. However, the insurers continued to refuse to make any payouts on the other pending cases. In an order of 15 March 2017, the CJEU confirmed that the decisions of 10 July 2006 and 12 January 2010 setting the purchase tariffs for photovoltaic energy constitute “intervention by the State or using State resources”, one of the four criteria that characterise State aid. The Court stated that such a support measure, implemented without prior notification to the Commission, is illegal. It is now up to the national courts to act accordingly, particularly by banning application of these illegal decisions. France’s commercial courts and Appeal Courts will issue their decisions in the coming months. EDF and Enedis dispute their liability, and: have decided to take action to group insurance for all claims to their insurers ■ relating to the same damaging event with the same technical cause (connection//contract applications issued between 24 and 31 August 2010), known as “serial losses”; or are filing appeals for the most unfavourable first-instance judgements issued ■ against them; are using the CJEU order as grounds to argue that the producers’ prejudices stem ■ from illegal decisions and thus are not legally reparable. 45.3.1 On 21 June 2012, SUN’R filed a complaint against EDF and Enedis, along with an application for interim measures, with France’s Competition Authority, the ADLC. SUN’R accused Enedis of delays in the procedure for connecting its photovoltaic facilities and EDF of delays in the establishment of the purchase obligation contracts and payment of the related invoices. SUN’R also claimed that EDF ENR had benefited from special treatment from Enedis for the connection of its facilities and from EDF for the payment of its invoices. In a decision of 14 February 2013, the ADLC rejected all the applications made by SUN’R for interim measures but decided to continue the investigation on the merits of the case On 12 January 2018 the ADLC’s investigation departments sent the parties a proposal to dismiss the matter due to the absence of anticompetitive practices by EDF, Enedis and RTE. This proposal is not an indication of the ADLC’s future final decision. Concurrently with its complaint to the ADLC in 2012, on 29 August 2012 SUN’R filed a petition at an urgent applications hearing for expert assessment and provision for costs before the Paris Administrative Court, including a claim for provisional compensation of €1 million from EDF and €2.5 million from Enedis. By order of 27 November 2012, the urgent applications judge (juge des référés) at the Administrative Court of Paris dismissed this petition. On 30 April 2015, SUN’R issued proceedings against Enedis and EDF SA before the Paris Commercial Court, seeking compensation for the loss allegedly caused to it by the delays in the procedure for the connecting its solar energy plant projects to the electricity distribution network. It asked the Court to suspend proceedings pending the ADLC’s decision on the merits of the case, and claimed a provisional amount of €10 million to be applied against future compensation for its loss. In a ruling of 7 November 2016 the Paris Commercial Court dismissed SUN’R’s claim for provisional compensation and suspended proceedings until the ADLC issues a decision on the merits of the case. On 24 November 2015, Sun West, Azimut 56 and JB Solar issued proceedings against Enedis and EDF SA before the Paris Commercial Court on the same grounds. They are currently claiming almost €4 million for the alleged prejudice, but asked the Court to suspend proceedings pending the ADLC’s decision on the merits of the case. In a ruling of 4 December 2017, the Paris Commercial Court rejected claims for provisional compensation made by Sun West, Azimut 56 and JB Solar and suspended proceedings until the ADLC issues a decision on the merits of the case. SUN’R

45.1 EDF

TAX INSPECTIONS

Following inspections of previous years’ accounts, the French tax authorities disputed the tax-deductibility of the provision for annuities following work-related accidents and illness paid by the Company. As this issue related to the special gas and electricity (IEG) statutes, it also concerned RTE, Enedis and Électricité de Strasbourg as well as other entities. In two rulings of 22 November 2017, the Council of State definitively validated the Company’s position and recognised the tax-deductible nature of these provisions, putting an end to all the related litigations. For the period 2008 to 2015, EDF was notified of proposed tax adjustments, notably concerning the tax-deductibility of certain long-term liabilities. This recurrent reassessment, which is applied for each year, represents a cumulative financial risk of some €536 million in income taxes at 31 December 2017. In September 2017 the Montreuil Administrative Court issued two rulings that recognised the tax-deductibility of these liabilities and validated the position taken by the Company. For the years 2012 and 2015, the French tax authorities notified the Company of certain recurrent tax reassessments concerning the Contribution sur la Valeur ajoutée des Entreprises (tax on corporate value added), and questioned the deductibility of long-term provisions. EDF International Following the tax inspections of EDF International for the years 2009 to 2014, the French tax authorities questioned the valuation of the bond convertible into shares issued to refinance the acquisition of British Energy. The total amount concerned is approximately €310 million. EDF International has contested this reassessment, and considers it has good chances of winning the dispute. 45.2 EDF is party to a number of labour lawsuits, primarily regarding working hours. EDF estimates that none of these lawsuits, individually, is likely to have a significant impact on its financial results or financial position. However, because they relate to situations that could concern a large number of EDF’s employees in France, any increase in such litigations could have a potentially negative impact on the Group’s financial position (although the risk has been mitigated by the signature of the agreement on fixed numbers of working days in 2016). PHOTOVOLTAIC PRODUCERS The French authorities’ announcement in autumn 2010 of a forthcoming downward revision to photovoltaic electricity purchase prices triggered an upsurge in connection applications (since at the time the applicable tariff depended on the date at which a complete connection application was filed). Several successive ministerial orders were issued reducing purchase prices. As these price decreases were not sufficient to stem the flow of connection applications, by a decree of 9 December 2010 the Government suspended the conclusion of new contracts for a three-month period, and stated that if the financial and technical proposal for a request had not been approved by 2 December 2010, a new connection//contract application would have to be submitted at the end of this three-month period. A certain number of producers who, as a result of these circumstances, lost their entitlement to the pre-moratorium purchase obligation price brought legal proceedings against EDF as operator of the distribution network in the non-interconnected zones, and against Enedis as network operator for mainland France, claiming that the electricity network operator did not issue the technical and financial connection proposals in time for them to benefit from more advantageous electricity purchase terms. LABOUR LITIGATION ENEDIS – LITIGATION WITH 45.3

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EDF I Reference Document 2017