EDF_REGISTRATION_DOCUMENT_2017

6.

FINANCIAL STATEMENTS Cash flows and other information

ASSETS HELD FOR SALE AND RELATED LIABILITIES NOTE 46

31/12/2017

31/12/2016

(in millions of euros) Assets held for sale

- -

5,220 2,109

LIABILITIES RELATED TO ASSETS HELD FOR SALE

sale of EDF Polska’s assets (see note 3.4.2); ■ sale of EDF Démász’s assets (see note 3.4.3); ■ sale of EDF Trading’s coal trading and freight business (see note 3.4.4). ■

The decrease in assets held for sale and related liabilities since 31 December 2016 results from the following operations under the disposal plan: sale to Caisse des Dépôts and CNP Assurances of 49.9% of the balance sheet ■ items of CTE (principally comprising RTE shares and a bond) (see note 3.4.1);

EDF’S DEDICATED ASSETS NOTE 47 REGULATIONS 47.1 Article L. 594 of France’s Environment Code and its implementing regulations require assets (dedicated assets) to be set aside for secure financing of nuclear plant decommissioning expenses and long-term storage expenses for radioactive waste. The regulations govern the way dedicated assets are built up, and the management and governance of the funds themselves. These assets are clearly identified and managed separately from the Company’s other financial assets and investments. They are also subject to specific monitoring and control by the Board of Directors and the administrative authorities. The law requires the realisable value of these dedicated assets to be higher than the value of the provisions corresponding to the present value of the long-term nuclear expenses defined above. The Decree of 29 December 2010 made RTE shares eligible for inclusion in dedicated assets subject to certain conditions and administrative authorisation. The Decree of 24 July 2013 revised the list of eligible assets by reference to the Insurance Code, and unlisted securities are also now eligible subject to certain conditions. The Decree of 24 March 2015 contains two measures concerning dedicated assets: the annual allocation to dedicated assets, net of any increases to provisions, ■ must be positive or zero as long as their realisable value is below 110% of the amount of the provisions concerned; subject to certain conditions, real estate property owned by the operators of ■ nuclear facilities may be allocated to coverage of these provisions. Subject to certain conditions, the Decree of 19 December 2016 allows allocation of the shares of CTE, which holds 100% of the capital of RTE, to the portfolio of dedicated assets at 31 December 2017 (see note 47.2.2 below). Given the applicable regulations, these dedicated assets are a highly specific category of assets. Dedicated assets are structured and managed according to a strategic allocation defined by the Board of Directors and reported to the administrative authorities. The strategic allocation is designed to meet the overall objective of long-term coverage of obligations, and determines the structure and management of the portfolio as a whole. It takes into account regulatory constraints concerning the nature and liquidity of the dedicated assets, the financial outlook for the equity and bond markets, and the diversifying contribution of unlisted assets. As part of the strategic allocation review process and in order to pursue the diversification into unlisted assets begun in 2010 with the shares in RTE, in 2013 the Board of Directors approved the introduction of an unlisted asset portfolio alongside the diversified equity and bond investments. This portfolio is managed by the EDF Invest Division, which was formed following the Decree of 24 July 2013 on PORTFOLIO CONTENTS AND MEASUREMENT 47.2

securing the funding for nuclear expenses. EDF Invest has three target asset classes: principally infrastructures, and also real estate and private equity funds. Following the French government’s authorisation issued on 8 February 2013, and the approval of the Nuclear Commitments Monitoring Committee and the Board of Directors’ decision of 13 February 2013, EDF allocated the entire receivable recognised by the French State, representing the accumulated shortfall in CSPE financing at 31 December 2012, to its dedicated assets. This financial receivable was increased in the financial statements at 31 December 2015 by an additional amount estimated at €644 million that was not allocated to dedicated assets, corresponding to the shortfalls in compensation that arose between the beginning of 2013 and the end of 2015, as acknowledged by the State in a ministerial letter of 26 January 2016. In accordance with this letter, the total financial receivable bears interest at 1.72% and will be repaid under a revised schedule ending in late 2020. This schedule was laid down in a ministerial order of 2 December 2016, based on the CRE’s confirmation of the shortfall for 2015. On 22 December 2016, EDF assigned a 26.4% portion of this financial receivable, including the additional receivable corresponding to the shortfalls in compensation between 2013 and 2015, to a pool of investors. Consequently, the realisable value of the non-assigned portion of the receivable, which is totally allocated to dedicated assets, is calculated based on the assignment value at that date. The amount received for assignment of the portion of the CSPE receivable that was allocated to dedicated assets (€894 million) has been reinvested in dedicated assets, in the same way as the reimbursements received (see note 3.7.4). 47.2.1 Certain dedicated assets take the form of bonds held directly by EDF. The rest comprise specialised collective investment funds on leading international markets, managed by independent asset management companies. They take the form of open-end funds and “reserved” funds established solely for the use of the Group (which does not participate in the fund management). These investments are structured and managed in line with the strategic allocation, which takes into consideration international stock market cycles, for which the statistical inversion generally observed between equity market cycles and bond market cycles – as well as between geographical areas – has led the Group to define an overall composite benchmark indicator that guarantees continuation of the long-term investment policy. As a result, for accounting purposes the portfolio is evaluated as a whole, all funds combined, treating the cash flows generated as a group of financial assets. This ensures consistency with the specificities of the dedicated asset portfolio, in particular the legal matching with the liability and the distant timing of significant payments, as disbursements are spread over a period extending beyond 2150. At the year-end, dedicated assets are presented in available-for-sale financial assets in the balance sheet, at their liquidation value. In view of the specific financial characteristics of the dedicated asset portfolio, the Group exercises judgement in determining whether indicators of impairment appropriate to the structure of the portfolio should be taken into consideration. Diversified equity and bond investments

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EDF I Reference Document 2017