EDF_REGISTRATION_DOCUMENT_2017

FINANCIAL STATEMENTS Notes to the financial statements

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 (1) ), ■ £1.5 billion (in 2015 sterling) more than previous estimates. This new estimate assumes successful complestion of operational action plans, in partnership with suppliers. The estimated additional costs (2) 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. OF 49.9% OF CTE On 14 December 2016, EDF entered into a binding agreement with Caisse des Dépôts and CNP Assurances for the acquisition by Caisse des Dépôts and CNP Assurances of 49.9% of the capital of Réseau de Transport d’Electricité (RTE) (3) , and the modalities of a long-term partnership to promote the development of RTE. The final agreed value was set at €8,200 million for 100% of RTE’s equity. Under the chosen structure for the sale, on 23 December 2016 EDF transferred all the shares in RTE to a new company, which at the time was named C25, in exchange for shares in C25 to the value of €5,143 million and a cash payment of €2,667 million. At 31 December 2016, this operation was reflected in EDF’s financial statements through a €3,780 million gain on sale recorded in the exceptional result (see note 2.5 to EDF’s 2016 financial statements). Regarding the recognition of EDF’s investment in C25 in the balance sheet, the portion to be retained by EDF after the operation (50.1%) was classified as an investment, and the portion to be sold in 2017 to Caisse des Dépôts and CNP Assurances (49.9%) was classified as investment securities. On 31 March 2017, EDF finalised the sale to Caisse des Dépôts and CNP Assurances of the 49.9% stake in the electricity transmission entity Coentreprise de transport d’électricité (CTE, the former C25), which had held 100% of RTE since December 2016. After completion, EDF, Caisse des Dépôts and CNP Assurances were the co-owners of CTE, respectively holding stakes of 50.1%, 29.9% and 20.0%. Finalisation of the operation generated a €388 million gain, recorded in the exceptional result at 31 December 2017 (see note 14). At 31 December 2017, EDF’s 50.1% stake in CTE is classified as an investment in the balance sheet, at the value of €2,705 million. In accordance with decree 2016-1781 of 19 December 2016, EDF’s remaining investment in C25 (50.1%) is entirely allocated to dedicated assets (see note 38.2.3). FINALISATION OF THE SALE 2.4

Framatome’s activities 2.2.2 The new Framatome group’s activities are principally the following: industrial design, production and installation of nuclear plant components for the ■ existing nuclear fleet, and for management of major new reactor projects; service activities to improve the availability and competitivity of nuclear ■ installations, while reinforcing the safety of nuclear steam supply systems through production of instrumentation and control systems; production of nuclear fuel assemblies for electricity operators and certain ■ research reactors. These activities are exercised through six business units, mostly located in France, Germany and the United States: Engineering and Design Authority: development, design, certification and ■ licensing of nuclear steam supply systems and related services; Large projects: management and execution of new nuclear reactor projects, from ■ engineering to project completion; Installed Base: maintenance and engineering services for existing nuclear fleets ■ and fleets under construction; Fuel: development, design, licensing and production of fuel assemblies and core ■ components for Pressurised Water Reactors (PWR), Boiling Water Reactors (BWR) and research reactors; development of zirconium products; Components: design and production of heavy equipment and mobile equipment ■ for nuclear power plants; Instrumentation and Control (I&C): design and production of instrumentation and ■ control systems for the safety for steam supply systems in operation and new builds. EDF was a major customer of Framatome before the acquisition that was finalised on 31 December 2017, and will remain so after the operation (see note 39 on related parties). EDF uses Framatome for production of its fuel assemblies, plant maintenance operations and equipment purchases (supply and installation of steam supply systems, etc). Framatome is also the supplier of the steam supply system and instrumentation and control for EDF’s new EPR reactors currently in construction (Flamanville 3 and Hinkley Point C), covering the whole process from initial design to commissioning.

6.

2.2.3

Accounting treatment in EDF’s

financial statements EDF acquired its investment in Framatome on 31 December 2017.

The takeover of Framatome involved the acquisition of 98,805,807 shares representing 75.5% of the Company’s capital, for the price of €1,894 million including purchasing expenses. These shares are classified as investments in the balance sheet (see note 18). The acquisition also had impacts on balance sheet commitments (see note 36).

2.3

CLARIFICATIONS ON THE HINKLEY

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:

Excluding interest during construction and forex effects versus the reference exchange rate for the project: £1 = €1.23. (1) Net of action plans. (2) 29.9% for Caisse des Dépôts and 20% for CNP Assurances. (3)

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EDF I Reference Document 2017