MANAGEMENT REPORT 2010

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Contents Contents..................................................................................................................................... 2 1 Financial and legal information ........................................................................................... 3 1.1 Key figures .......................................................................................................................... 4 1.2 Economic Environment and Significant Events .............................................................. 6 1.3 Introduction to analysis of results for 2010 ................................................................... 22 1.4 Principal accounting methods sensitive to the use of estimates and judgments ......... 22 1.5 Segment reporting of financial information .................................................................. 23 1.6 Analysis of the consolidated income statements for 2010 and 2009 ............................ 24 1.7 Breakdown of EBIT by geographical area .................................................................... 33 1.8 Net indebtedness, cash flow and investments ................................................................ 44 1.9 Management and control of market risks ...................................................................... 49 1.10 Provisions ........................................................................................................................ 68 1.11 Off balance sheet commitments (commitments given) ............................................... 69 1.12 Subsequent events .......................................................................................................... 69 1.13 Transactions with related parties ................................................................................. 69 1.14 Principal risks and uncertainties .................................................................................. 69 1.15 Significant events related to litigation in process ........................................................ 70 1.16 Financial outlook for 2011 ............................................................................................. 77 1.17 Research and development ............................................................................................ 78 1.18 General information on EDFs capital and governance bodies ................................. 80 2 Social and environmental information .............................................................................. 94 2.1 Social and environmental policy ..................................................................................... 94 2.2 Environmental information ............................................................................................. 96 2.3 Company information .................................................................................................... 107 3 Rsolutions proposed to the combined Ordinary and Extraordinary Shareholders Meeting of May 24, 2011 ...................................................................................................... 128 3.1 Presentation of the resolutions proposed to the combined Ordinary and Extraordinary Shareholders Meeting of May 24, 2011 ................................................... 128 3.2 Draft resolutions to be submitted to the combined Ordinary and Extraordinary Shareholders Meeting of May 24, 2011 ............................................................................. 130

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1 Financial and legal information

2010 was marked by three major operations concerning the Groups scope of activity, which like changes of accounting method and presentation affect financial statement comparability between 2009 and 2010. The ongoing disposal of EnBW and reclassification of the company as a "Discontinued operation" has led to adjustments to the comparative information as published in 2009. These operations are: Sale of the British regulated and deregulated distribution networks, completed on October 29, 2010. The British networks' contribution to the Groups net income (particularly sales and EBITDA) and cash flows thus corresponds to 10 months in 2010 as opposed to 12 months for the comparative 2009 figures reported. Completion of this sale led to derecognition of balance sheet items related to the British networks, and a 6.7 billion decline in consolidated net indebtedness at December 31, 2010. The sale of EnBW, approved by the Board of Directors on December 6, 2010. EnBWs contribution to the Groups net income is now reported in a single line Net income of discontinued operations, and it therefore makes no contribution to consolidated sales or EBITDA for 2009 and 2010. However, its contribution is still included in Group net income. Similarly, EnBWs contribution to the change in cash flows is reported on a specific line for discontinued operations for both years presented. In the balance sheet, the assets and liabilities of discontinued operations are reported on a specific line in 2010 but not adjusted for 2009. The impact of the sale of EnBW on the Groups financial indebtedness will not be recognized until completion of the sale, which is expected to take place by the end of April 2011 at the latest. Application of the equity method for RTE. On December 31, 2010, the French government appointed two further representatives to the Supervisory Board of RTE. This leaves only 4 representatives on the 12-member Board for EDF, which therefore no longer has control over RTE. As a result the equity method is applied to RTE as of December 31, 2010. The Groups income statement (EBITDA in particular), cash flows and investments reflect RTEs contribution for 2010 (the 2009 figures presented are as previously published), but the consolidated balance sheet at December 31, 2010 includes RTE in Investments in associates, making net indebtedness 6.3 billion lower than in 2009. This decrease includes deduction of the Groups receivable on RTE, reflecting the share of EDFs external indebtedness corresponding to financing of RTE.

The consolidated financial statements also have the specificity of including the provisional consolidated financial statements of Edison, as Edisons Board of Directors meeting to approve the 2010 financial statements has been deferred to a date after February 14, 2011.

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1.1 Key figures The figures presented in this document are taken from the EDF groups consolidated financial statements. The comparative figures for 2009 have been restated for the effect of application of IFRIC 18 Transfers of Assets from Customers, IFRIC 12 Service Concession Agreements and IFRS 5 "Non-current assets held for sale and discontinued operations, as well as the change in the consolidated income statement presentation of the effect of net changes in fair value on Energy and Commodity Derivatives, excluding trading activities (see note 2 to the consolidated financial statements). Key figures at December 31, 2010 are as follows. Extracts from the consolidated income statements
Variation (in millions of euros) Sales Operating profit before depreciation and amortization (EBITDA) Operating profit (EBIT) Income before taxes of consolidated companies (2) Net income of discontinued operations (3) EDF net income Net income excluding non-recurring items (4) 2010 65,165 16,623 6,240 1,814 380 1,020 3,961 2009 59,140 15,929 9,306 5,102 311 3,902 3,558 6,025 694 -3,066 -3,288 69 -2,882 403 Variation (%) +10.2 +4.4 -32.9 -64.4 +22.2 -73.9 +11.3(5) Organic growth (%) +4.6 +2.8(1)

(1) The EBITDA growth target announced by the Group for 2010 excludes the impact of the laws extending the TaRTAM transition tariff system beyond June 30, 2010 to June 30, 2011. Without the corresponding provisions, 2010 EBITDA would amount to 17,003 million, 1,074 million higher than in 2009 (organic growth of 5.2%). (2) The income before taxes of consolidated companies corresponds to the EDF groups net income before income taxes, the share in net income of associates, net income contributed by non-controlling interests and the net income of discontinued operations. (3) In application of IFRS 5, the net income of discontinued operations is reported on a specific line in the income statement. (4) Net income excluding non-recurring items is not defined by IFRS and is not directly visible in the consolidated income statements. The definition of this item has been revised in 2010: it corresponds to the Groups share of net income excluding non-recurring items and the net change in fair value on Energy and Commodity derivatives, excluding trading activities, net of tax (see 1.6.10). (5) +17.2% based on constant exchange rates and scope of consolidation.

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Extracts from the consolidated balance sheets

(in millions of euros) Non-current assets Inventories and trade receivables Other assets Cash and cash equivalents, other liquid assets and loan to RTE Assets classified as held for sale (excluding cash) Total assets Equity (EDF share) Non controlling interests Special concession liabilities Provisions Loans and other financial liabilities (2) Other liabilities Liabilities related to assets classified as held for sale (excluding loans and other financial liabilities) Total equity and liabilities
(1) Including cash and cash equivalents of companies held for sale. (2) Including hedging derivatives and the financial liabilities of companies held for sale.
(1)

2010 123,844 32,209 50,333 16,944 17,229 240,559 31,317 5,586 41,161 54,475 51,333 47,320 9,367 240,559

2009 147,147 32,295 47,611 11,745 1,237 240,035 29,891 4,776 39,877 57,992 54,241 52,847 411 240,035

Operating cash flow

2010 (in millions of euros) Operating cash flow (1) 11,446 11,457 -11 0.0
(1) EDF uses operating cash flow to assess the Groups capacity to generate free cash flow. Operating cash flow is not an aggregate defined by IFRS as a measure of financial performance, and is not directly comparable with indicators of the same name reported by other companies. This indicator, also known as Funds From Operations (FFO), is equivalent to net cash flow from operating activities excluding changes in working capital (Cash flow statement) after adjustment for the impact of non-recurring items, less net financial expenses disbursed and income taxes paid.

2009

Variation

Variation (%)

Net indebtedness
2010 (in millions of euros) Loans and other financial liabilities Derivatives used to hedge liabilities Cash and cash equivalents Liquid assets Loan to RTE (3) Net indebtedness of discontinued operations Net indebtedness (4) 47,777 49 (4,829) (9,285)
(1)

2009 53,868 373 (6,982) (4,735) (28) 42,496

(2)

Variation

Variation (%) -11.3 -86.9 -30.8 96.1

-6,091 -324 2,153 -4,550 -1,914 2,619 -8,107

(1,914) 2,591 34,389

-19.1

(1) 9,285 million of available-for-sale financial assets and 0 million of financial assets at fair value. (2) 4,538 million of available-for-sale financial assets and 197 million of financial assets at fair value. (3) At December 31, 2010, loans by the Group to RTE (accounted for by the equity method as of December 31, 2010) are also treated as a reduction in net indebtedness. (4) Net indebtedness is not defined in the accounting standards and is not directly visible in the consolidated balance sheets. It comprises total loans and financial liabilities, less cash and cash equivalents and liquid assets. Liquid assets are financial assets consisting of funds or securities with initial maturity of over three months that are readily convertible into cash regardless of their maturity and are managed according to a liquidity-oriented policy. The definition of net indebtedness has been revised in 2010 to include the Groups loans to RTE, which is accounted for by the equity method from December 31, 2010.

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1.2 Economic Environment and Significant Events

1.2.1 Economic environment 1.2.1.1 GDP growth 1 After a 3.6% downturn in 2009 caused by the recession that affected the world economy from the autumn of 2008, OECD2 countries registered a 2.4% rise in economic activity in 2010, although the growth slowed gradually as the months passed, from +0.8% in the first quarter to +0.4% in the final quarter. This reflects both the recovery in the US economy, driven by resilient household consumption, and a 1.7% rise in the Euro zone as export opportunities declined and many countries introduced measures to consolidate public finances. In 2009, Euro-zone GDP had fallen by 4% (after a +0.5% increase in 2008). In France and the UK, 2010 GDP growth was close to average for the zone, at 1.6% and 1.8% respectively (following respective declines of 2.5% and 5% in 2009). There was noticeable economic growth in Germany in 2010: +3.5% over the year, in contrast to the -4.7% observed in 2009. Italys GDP, in contrast, registered modest growth of +1% in 2010 compared to the substantial negative growth of -5.1% in 2009.

Source: Note de conjoncture INSEE, December 2010. At the date of publication, figures for the final quarter of 2010, and by extension the annual figures, are still estimates. 2 Organisation for Economic Cooperation and Development. Page 6 sur 137

1.2.1.2 Trends in market prices for electricity and the principal energy sources 1.2.1.2.1 Spot electricity prices in France, the United Kingdom and Italy3
France Average baseload price for 2010 (/MWh) Average variation in baseload prices, 2010/2009 Average peakload price for 2010 (/MWh) Average variation in peakload prices, 2010/2009 UK Italy

power plants particular).

(combined-cycle

gas

in

1.2.1.2.2 Forward electricity prices in France and the United Kingdom 5

France Average baseload price for 2010 (/MWh) Average variation in baseload prices, 2010/2009 Average peakload price for 2010 (/MWh) Average variation in peakload prices, 2010/2009

UK

52.4 +1.2% 69.3 -4.3%

52.0 +2.7% 59.0 -3.1%

47.5

48.2

64.3

+10.4%

+17.3%

+0.9%

59

55.6

75.7

+1.3%

+11.2%

-6.8%

In 2010, next-day (spot) prices for electricity in Europe were higher overall than in 2009 against a background of generally rising fossil fuel prices. In France, spot prices rose following the increase in electricity consumption in 2010 (up by +5.5%4 from 2009) associated with the economic recovery and the harsh winter weather at the start and end of the year. The rise in spot electricity prices also reflects the higher coal prices, which led to a 20% increase in generation costs at coal-fired plants between 2009 and 2010. In the United Kingdom, price rises were particularly attributable to the increase in spot gas prices. In Italy, the less pronounced price increase compared to other European countries is explained by expanding interconnection capacities between zones and commissioning of more flexible fossil-fired

There was no clear trend in 2010 in forward electricity prices, which fluctuated with changes in fossil fuel and CO2 emission quota prices, and also in response to expectations of the supply-demand balance for electricity. In France, the 2011 annual contract price followed the same pattern as coal and gas prices during the first half of 2010: a downturn early in the year followed by a recovery in the second quarter. During the second half-year, prices initially retreated in anticipation of a more relaxed supplydemand balance for the coming winter and also as a result of the dollars decline against the euro, which brought down generation costs for coal-fired plants. A rise ensued late in the year in the wake of coal and gas prices. In the United Kingdom, the annual April Ahead baseload contract price moved in line with forward gas prices, ending the year at 59.3/MWh, 13.6/MWh higher than in 2009 as a result of higher gas prices.

France: Average previous day EPEXSPOT price for same-day delivery; United Kingdom: Average previous day EDF Trading OTC price for same-day delivery; Italy: Average previous day GME (PUN) price for same-day delivery. 4 Source: RTE.

France: average EPD 2010 then 2011 annual contract price; UK: ICE average annual contract prices, April 2010 then April 2011 (in the UK, annual contract deliveries take place from April 1 to March 31). Page 7 sur 137

1.2.1.2.3 CO2 emission quota prices6 The price of CO2 emission quotas for delivery in December rose by 8.3% in 2010 compared to 2009 prices, to an average 14.5/t in 2010. After falling below 10/t early in 2009 due to the economic crisis and the lower emission output associated with slower industrial activity, prices then increased: market participants began to purchase quotas in anticipation of the objective for greater cuts in CO2 emissions from 2013. 1.2.1.2.4 Fossil fuel prices7
Coal ($/t) Oil ($/bl) Natural gas (p/th)

the weather conditions in Australia constrained the supply-demand balance for the next few months. The price of coal stood at $122.2/t at December 31, 2010. The average price of oil (Brent) was $80.3/bl in 2010, up by 28.1% over 2009. Apart from a dip in spring reflecting the fears over demand for oil aroused by the economic crisis in Europe, Brent prices rose in 2010. The rise was driven by growth in Asia and the dollars decline against the euro in the second half of the year, which made oil prices attractive for European buyers. The year-end Brent price was $94.8/bl. The price of natural gas under the United Kingdoms annual contract was 48p/th on average in 2010, very similar to 2009 levels. Forward gas prices began the year by continuing the downward trend of 2009 due to abundant supplies, but then recovered when gas stocks were low following particularly harsh winters, and fluctuating supplies from Norway in the summer. Gas prices for the North British Pool (NBP) were 59.8p/th at the end of the year.

Annual average price for 2010 Average price variation, 2010/2009 Highest price in 2010 Lowest price in 2010 Closing price, 2009 Closing price, 2010

99.3

80.3

48.0

+ 19.1% 122.2 85.5 87.1 122.2

+ 28.1% 94.8 69.6 77.9 94.8

+ 2% 60.6 37.0 46.5 59.8

Forward prices for coal (the API2 index for Europe) rose by 19.1% in 2010 compared to 2009 to an average $99.3/t. After a decline in the first quarter of 2010 when inventories were plentiful in Europe, coal prices saw an upturn due to strongly rising Asian demand, which is now competing with European demand for coal from South Africa and Colombia. At the end of the year, procurement problems caused primarily by
6

Average ECX index for the first annual contract of Phase II (2008-2012). 7 Coal: Average ICE index for the first annual contract, for delivery in Europe (CIF ARA) ($/t); Oil: Brent first reference crude oil barrel, IPE index (front month) ($/barrel); Natural gas: Average ICE index for the first annual contract, for delivery starting from October in the UK (NBP) (pence/therm). Page 8 sur 137

Forward electricity prices in France and the United Kingdom

70 65 60

/MWh

55 50 45 40 35 30 May-09 May-10 Nov-09

Electricity-annual baseload contract France EPEX Electricity-annual baseload contract United Kingdom - ICE

Sep-10

Jul-09

Sep-09

Jul-10

Mar-09

CO2 emission quota prices (Phase II, 2008-2012)

19 17 15 13 11 9 7 5 May-09 May-10 CO2 - annual contract - phase 2008-2012 - ICE
All datas are owned by ICE (theice.com)

/t CO2

Nov-09

Mar-10

Nov-10

Jan-09

Jan-10

All datas are owned by ICE (theice.com)

Mar-09

Natural gas and oil prices

105 95 85 0,6 0,55 0,5 0,45 0,4 0,35 0,3 Mar-09 May-09 Mar-10
All datas are owned by ICE (theice.com)

Mar-10

Nov-10

Jul-09

Sep-09

Jul-10

Sep-10

Jan-09

Jan-10

Brent first reference crude oil barrel - IPE index (front month) in $/bl

/ therm

$/ bl

75 65 55 45 35

Natural Gas - annual contract (ICE) for delivery for the United Kingdom (/therm)

Jan-10

Jan-09

May-10

Nov-09

Nov-10

Sep-10

Jul-09

Sep-09

Jul-10

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1.2.1.3 Electricity consumption8 The domestic electricity consumption of France for 2010 totaled 513.3 TWh before adjustments, 5.5% higher than for 2009. After adjustment for weather effects, consumption reached 490 TWh, up by 2.5% from 2009. Growth was relatively buoyant in the first half of 2010 and more moderate in the second half-year. This growth was driven by all customer segments. Following the significant decline of 2009 (-8.6% compared to 2008), electricity consumption by large industrial customers rose again in 2010 (+3%), although it did not return to its pre-crisis level. Household consumption showed a slight increase (+2%). Estimated national electricity consumption for 2010 in the United Kingdom was stable compared to 2009 (approximately 331 TWh), while it rose in Italy9 (approximately 326 TWh). 1.2.1.4 Electricity and natural gas sales tariffs The French governmental decision of August 12, 2010 set the average rise in regulated electricity sales tariffs from August 15, 2010 at 3.8% (excluding the effects of the TaRTAM transition tariff system): 3% for the blue tariff for residential customers, 4% for the blue tariff for non-residential customers, 4.5% for the yellow tariff and 5.5% for the green tariff. The tariff changes of 2010 were a continuation of the tariff reform announced by the authorities in 2009. To achieve
8

equitable treatment for all customers, the reform aims to make electricity tariffs a closer reflection of the true costs of electricity consumed by each type of customer (generation, delivery and supply). French prices are 25-35% below the European average, and thus remain among the lowest in Europe after the 2010 increases. The TaRTAM transition tariff was raised by 0.6% from September 17, 2010. In line with the TURPE 310 indexing adopted by the French Government in a decision of June 5, 2009, network access tariffs were increased on August 1, 2010 by 3.4% for distribution and 2.5% for transmission. In the United Kingdom, EDF Energy raised its electricity tariffs by 2.6% in October 2010 (after a reduction in contractual sale prices for industrial customers and the 8.8% tariff reduction for residential customers in March 2009). Its natural gas tariffs for residential customers were reduced by 3.6% on March 26, 2010 (after a previous reduction of over 6% in October 2009).

Data for France are from RTEs Electricity Report for 2010 and internal data. Data for Italy are supplied by UCTE for the first 9 months and estimates for the last 3 months. Data for the United Kingdom are from the Department of Trade & Industry. 9 Final figure for 2009: 320.3 TWh.

10

The Tarifs dUtilisation du Rseau Public de distribution dlectricit, or TURPE 3 network access tariffs took effect on August 1, 2009 replacing the TURPE 2 tariffs in force since January 1, 2006. Page 10 sur 137

1.2.1.5 Weather conditions 1.2.1.5.1 Temperatures

Temperature variance from normal levels, January to December 2010 11 2010 was the coldest year of the last two decades in France, along with 1996. Relatively low average temperatures were observed across all of Northern Europe and the British Isles. Temperatures in the first quarter were an average 2.3C lower than normal seasonal levels, with January and February recording several strikingly cold spells. Spring and summer temperatures remained lower than normal, with variances of -0.9C and -0.5C respectively and were also lower than in the same periods of 2009. Despite some mild periods, notably in early October and November, the average overall temperature for the autumn was still below normal. A wave of cold weather swept across France in late November. Temperatures in December were exceptionally low, 3C below normal on average.

11

Map comparing average temperatures with normal levels over 30 years (1971-2000 for Western Europe and 1961-1990 for Eastern Europe). Taken from Mto Frances Weather Database. Page 11 sur 137

1.2.1.5.2 Rainfall

Rainfall: Variance from normal: annual average, January to December 2010 12 Across all of Europe, rainfall in 2010 was close to normal along the Atlantic coast countries (from France to Scandinavia, including Germany and the UK). Frequent rainfall circulation in the Mediterranean in the first half of the year caused surplus rainfall in the south of Europe, especially in Spain and Portugal. Central and Eastern Europe had surplus rainfall over the whole of 2010. Rainfall in France was fairly typical, resulting in close-to-normal hydropower output (94%).

12

Map comparing average rainfall with normal levels over 30 years (1971-2000 for Western Europe and 19611990 for Eastern Europe). Taken from Mto Frances Weather Database. Page 12 sur 137

1.2.2 Significant events 13/14 1.2.2.1 Strategic developments 1.2.2.1.1 Development activities worldwide of nuclear

remains unchanged: CEG holds 50.01% ownership and EDF 49.99%. 1.2.2.1.1.2 EDF/Enel/Ansaldo agreement On April 9, 2010, EDF, Enel and Ansaldo Energia signed a partnership agreement to specify areas of potential cooperation for development and construction of four EPR-type nuclear reactors in Italy. 1.2.2.1.1.3 New agreements with Chinese partners On April 29, 2010, EDF signed agreements with two of Chinas largest nuclear operators in order to consolidate its position in the country, confirming the Groups involvement in the worldwide nuclear industrys most extensive construction program. The agreement entered into with CNNC (China National Nuclear Corporation) aims to strengthen the engineering cooperation with EDF that began with construction of the Daya Bay and Ling Ao nuclear plants (Guangdong). The partnership agreement signed with CGNPC (China Guangdong Nuclear Power Holding Company) complements the 2008 joint venture agreement for construction and operation of two EPRtype nuclear reactors in Taishan (Guangdong province). 1.2.2.1.1.4 EDF-DELTA agreement On November 3, 2010, EDF and the Dutch energy company DELTA signed an agreement to collaborate on the future development of a potential second nuclear power plant in Borssele, in the province of Zealand. If EDF and DELTA decide to take the project further, they will probably seek to work with other investing parties, who could have energy drawing rights.

1.2.2.1.1.1 Agreement between EDF and Constellation Energy Group (CEG) On November 3, 2010, EDF and CEG implemented a comprehensive agreement restructuring the companies' collaboration. The agreement, approved by EDFs Boards of Directors on October 26, 2010, eliminates the outstanding put option that entitled CEG to sell EDF certain nonnuclear generation assets for a maximum $2 billion and enabled EDF to take full control over UniStar Nuclear Energy (Unistar). Under the terms of the agreement, EDF acquired CEGs 50% stake in UniStar, thus becoming the sole shareholder of UniStar, a joint venture previously owned 50/50 by EDF and CEG that manages development projects for EPR-type nuclear power plants in the United States (the first project concerns the Calvert Cliffs 3 site in Maryland). CEG undertook to transfer potential new nuclear sites at Nine Mile Point and R. E. Ginna in New York State to UniStar. In exchange for these transactions, EDF paid 140 million to CEG and agreed to transfer to CEG 3.5 million of its shares in CEG. 2.5 million of these shares were transferred during November 2010, with transfer of the remaining 1.0 million shares conditional on CEGs sale of the sites named above. The current ownership structure of CENG (Constellation Energy Nuclear Group)
13

Significant events related to litigation are described in chapter 14. 14 The 2009 Document de Rfrence and a full list of press releases are available from the EDF website: www.edf.com. Page 13 sur 137

1.2.2.1.1.5 Cooperation between EDF and Rosatom

agreement

continuing with other potential industrial partners. Following the Boards decision, an application for a decree authorizing creation of the plant was filed on December 2, 2010. 1.2.2.1.2 Developments European positions 1.2.2.1.2.1 Germany Sale of EnBW The political authorities of BadenWrttemberg wanted to give EnBW a strong regional ownership structure to refocus the companys activities in its region. Meanwhile, after 10 years of cooperation, the EDF group was due to begin renegotiation of its shareholders agreement with OEW, co-controller of EnBW. This renegotiation would have taken place against a complex, uncertain economic background. In view of these factors, EDFs Board of Directors met on December 6, 2010 and accepted the Baden- Wrttemberg regions offer to buy its 45.01% interest in EnBW at the price of 41.5 per share, representing a total transaction value of 4.7 billion. OEW, the other shareholder in EnBW, decided not to sell its Subordinated shares15 to the region and not to exercise its preemption rights on EDF Internationals stake in EnBW. This firm offer comprised an initial downpayment of 1.5 per share paid on December 16, 2010, with settlement of the balance due in April 2011 at the latest. The offer includes no representations and warranties from EDF group in respect of the EnBWs liabilities. This offer represents a 18.6% premium over EnBWs closing share price at December 3, 2010 and is approximately 6
15

On June 19, 2010, EDF and Rosatom (Russian Federation) signed an agreement for cooperation in the fields of research and development, nuclear fuel and nuclear facilities already in existence or under construction. The agreement also covers cooperation in the form of exchanges of experience and training, including visits to industrial sites in both countries. Executive committees will be set up for each area of collaboration, to be supervised by a joint EDF-Rosatom strategic committee. 1.2.2.1.1.6 Extension of plant lifetimes in the United Kingdom Following the UK governments landmark announcements in December 2010 on the reform of its domestic electricity market, British Energys Board of Directors decided to extend the operating lifetime of its Heysham 1 and Hartlepool nuclear plants by 5 years to 2019. Full deployment of EDF Energys Plant Lifetime Extension (PLEX) is also due to extend the lifetimes of all Advanced Gas Reactor (AGR) plants by an average of 5 years and 20 years in the case of Sizewell B (PWR). 1.2.2.1.1.7 EDF: operator of the Penly 3 EPR EDF, as chief operator, presented the Penly 3 project in the public consultation procedure that ran from March 24 to July 24, 2010. The national commission for public consultation submitted its report on the discussions on September 24, 2010, stating that the consultation had been properly conducted. At its meeting of October 26, 2010, EDFs Board of Directors decided to continue preparations for the Penly 3 project up to the final investment decision. EDF will hold the responsibility of nuclear operator, and will also act as architect-assembler. In September 2010, GDF Suez withdrew from the project; discussions are

in

EDFs

25.001% of the capital, subject to specific rules. Page 14 sur 137

times EnBWs estimated EBITDA for 2011. 1.2.2.1.2.2 United Kingdom 1.2.2.1.2.2.1 networks Sale of distribution

1.2.2.1.2.3.2 Start-up of SLOE in the Netherlands On February 12, 2010 the EDF group and DELTA inaugurated the SLOE GCC power plant (870 MW). EDF, which owns 50% of the installed capacity of this plant, is selling its share of the electricity produced on the wholesale market through its subsidiary EDF Trading. The SLOE plant also enables EDF to diversify its energy mix in the Benelux countries by extending the Groups generating facilities in the region, particularly Belgium, through its subsidiary EDF Belgium (which holds 50% of the drawing rights to the Tihange 1 nuclear power plant) and its majority interest in SPE (with a diversified fleet generating a total 1,969 MW). 1.2.2.1.2.4 Italy Fenice / Inter Rao agreement As part of a more general framework agreement entered into by EDF and Inter Rao in November 2009, Fenice, a supplier of energy and environmental services fully-owned by the EDF group and the Russian electricity company Inter Rao, signed an agreement in March 2010 to form a joint-venture named Interenergoeffect to develop energy efficiency projects in Russia. 1.2.2.1.2.5 Developments in the natural gas business 1.2.2.1.2.5.1 Gazoduc South Stream EDF, ENI and Gazprom signed a memorandum of understanding on June 19, 2010 in St. Petersburg concerning EDFs investment in South Stream AG, the company formed for the gas pipeline project under the Black Sea. The Memorandum stipulates that EDF will join the project through a reduction in ENIs stake in South Stream AG and that EDFs share will be at least 10%. Negotiations are continuing between the parties to finalize
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Following the approval received from the European Commission and the French Minister of the Economy on the recommendation of Frances Commission for Investments and Transfers, EDF and EDF Energy finalized the transfer of the British regulated and deregulated electricity distribution networks to the Cheung Kong Group (CKI) on October 29, 2010, for an equity value of 3.2 billion (3.7 billion). This transaction reduced the EDF group's debt by approximately 6.7 billion. 1.2.2.1.2.2.2 Transfer of ownership of the Eggborough coal-fired plant At the time of British Energys restructuring in 2005, Eggboroughs creditor banks were given a call option to acquire ownership of the plant, valid for exercise until August 31, 2009. The terms of this option were unaffected by EDFs takeover of British Energy in January 2009, and it was exercised in August 2009. Ownership of the Eggborough coal-fired plant was transferred with effect from March 31, 2010. 1.2.2.1.2.3 Benelux 1.2.2.1.2.3.1 Purchase of shares from certain minority shareholders of SPE With the purchase of 12.5% of the shares in SPE for the price of 215 million in June 2010, EDF increased its holding in the Belgian utility company to 63.5%. The purchase took place after three shareholders exercised all or part of the put option granted to them by the shareholder agreement applicable when EDF acquired control of SPE.

the terms of the contracts required for implementation of the agreement, especially the tripartite shareholder pact. 1.2.2.1.2.5.2 Discovery of gas in Norway by Edison Edison announced on September 16, 2010 that it had discovered a gas field in the Norwegian sea, with estimated reserves of between 5 and 18 billion m3. Edison has official operator status for the Norwegian plateau. 1.2.2.1.3 Reinforcing renewable energies and environmentally-friendly technologies 1.2.2.1.3.1 Commissioning of the Nam Theun 2 hydroelectric plant in Laos The commissioning of the Nam Theun 2 hydroelectric plant with total capacity of 1,070 MW in early May 2010 marked the completion of construction of this major project for the EDF group in South-East Asia. The plant was inaugurated on December 9, 2010. EDF participated in this project not only as turnkey constructor, but also as a shareholder in Nam Theun 2, the company that operates the facility under a 25-year concession arrangement with the Government of Laos, after which the government will become the plant owner. In September, the Group acquired a further 5% of the capital of Nam Theun 2 Power Company (NTPC), the owner and operator of the plant, raising its holding in the company to 40%. 1.2.2.1.3.2 EDF Energies Nouvelles EDF Energies Nouvelles is aiming to reach a net installed capacity of 4,200 MW by the end of 2012, including 500 MWp of photovoltaic solar power. EDF Energies Nouvelles increased its windpower generation capacity by 273 MW during 2010, to a total 2,923 MW

gross at the end of the year. New windpower plants were commissioned, mainly in Italy (+74 MW), Greece (+64 MW), the UK (+50 MW), Turkey (+34 MW), France (+21 MW) and Mexico (+30 MW). EDF EN also continued to develop its photovoltaic solar power activities, commissioning 186 MWp during the year primarily in Italy, France, Canada, Spain and Greece. At December 31, 2010, its solar capacity in operation totaled 267 MWp gross, plus a further 163 MWp under construction including capacities under construction for the Development and Sale of Structured Assets16 activity. 1.2.2.2 Activities in France 1.2.2.2.1 EDF/Areva agreements In application of the agreement of December 19, 2008 setting forth the principles governing back-end cycle contracts for the post-2007 period, EDF and Areva signed two contracts on July 12, 2010 entitled the EDF-Areva NC Processing-Recycling agreement and the Settlement agreement for recovery and conditioning of EDF waste, the final shutdown and decommissioning of the Areva NC plant at La Hague, and operations at Saint Laurent A. The Processing-Recycling agreement defines the contractual terms for the period 20082012 and the principles governing prices and investments for subsequent periods. As the effects of these new agreements had already been anticipated based on the previous agreements, they have no material impact on the Groups consolidated financial statements. EDF and Areva also signed an agreement extending operation of the Eurodif enrichment plant until the end of 2012 and laying down the operating conditions for 2011-2012. This agreement stipulates that
16

DVAS - Dveloppement-Vente dActifs Structurs. Page 16 sur 137

Eurodif will start operating at its minimum technical capacity as soon as possible, with EDF supplying the electricity over the period. It also provides EDF with an additional 1,000 MW over 2011-2012 to supply electricity to customers, and ultimately a total of 2,000 MW. 1.2.2.2.2 Flamanville 3 Significant progress has been made on the Flamanville EPR project. Key milestones have been reached, including completion of the discharge tunnel, resolution of difficulties with the reinforcement and liner, start-up of electromechanical facilities on the nuclear island and good progress in the machine room. Engineering work was more than 70% complete at the end of 2010. The target date for production of the first commercially viable power output is now set at 2014, with construction costs reestimated at some 5 billion. 1.2.2.2.3 Exeltium On March 25, 2010, EDF signed two amendments to the 2008 agreement with Exeltium. These agreements cover volumes of some 311 TWh, and electricity supplies for the first unit of the EDFExeltium agreement (for approximately 150 TWh) began on May 1, 2010. In compliance with the agreement, Exeltium settled its first advance of 1.7 billion in late April. Deliveries for the second tranche of the agreement are scheduled to start in the early part of 2011.

1.2.2.3 Regulatory environment 1.2.2.3.1 France 1.2.2.3.1.1 NOME Law on the New electricity market organization in France The French NOME law on the New electricity market organization was enacted on December 7, 2010. The implementation decrees are expected to be issued in 2011. The basic principles of this law, which is intended to encourage greater competition on the electricity market in France, are: - development of competition, by allowing other suppliers temporary access (for no more than 100 TWh) to EDFs baseload nuclear energy output until 2025. This applies the principle of regulated access to historical nuclear energy (ARENH - Accs Rgul lElectricit Nuclaire Historique), for which the price will be set by government decision; - peakload consumption management, ultimately requiring all suppliers to have the flexibility to renegotiate deliveries or guarantee sufficient production to supply all their customers; - continuation of the blue tariff for residential and small business customers; the calculation method will be modified from 2015 in accordance with the principle of regulated access to historical nuclear energy; - discontinuation of the yellow and green tariffs for business customers from 2015; - deferral by 5 years, to June 29, 2016, of the deadline for building up the dedicated assets portfolio17.

17

Assets built up in compliance with the Law of June 28, 2006 to cover long-term nuclear commitments. Page 17 sur 137

The impact of this law on the transition tariff (TaRTAM) system is described below. 1.2.2.3.1.2 Prolongation of the TaRTAM transition tariff system The French Law of June 7, 2010 and the NOME law successively extended the TaRTAM transition tariff system until the effective date of the principle of regulated access to historical nuclear energy (ARENH - Accs Rgul lElectricit Nuclaire Historique), which the Group expects to be June 30, 2011, and set forth the conditions in which customers wishing to benefit from this prolongation could do so. Consumers will not be able to leave the transition tariff before the December 31, 2010 deadline or change the tariff parameters during the same period unless there are favorable sustainable changes in activity at a site. The impact of application of these laws on the 2010 consolidated financial statements is a net increase of 380 million to provisions, 115 million of which concern the first half of 2011. 1.2.2.3.1.3 The CSPE The Contribution to the public electricity service (Contribution au service public de llectricit or CSPE) is intended to compensate for certain public service charges assigned to EDF in particular. The CSPE is collected directly from the final customer. It had been set at 4.5/MWh since 2004, limited by the law of February 10, 2000 to a maximum of 7% of the variable portion of the blue tariff (i.e. 5.58/MWh based on current tariffs). Since 2007, CSPE income has been unable to cover expenses, which have been rising regularly, primarily due to rising windpower and solar power output covered by purchase obligations. The shortfall, amounting to 2.8 billion at December 31, 2010, is borne solely by EDF.

Frances 2011 Budget (Loi de finances) of December 29, 2010 reformed the CSPE system, partly in response to a report issued on September 28, 2010 by French parliament members Diefenbacher and Launay, which stressed the need for full coverage of the costs incurred by EDF to carry out its public service missions. This law abolished the legal limit on the CSPE and stated that if the government does not issue a decision in response to the French energy regulator CREs proposal, the unit amount proposed by the CRE automatically applies at January 1 subject to a maximum increase of 3/MWh. As a result, the unit CSPE has amounted to 7.5/MWh since January 1, 2011. In addition, a decree of December 9, 2010, published in Frances Official Gazette (Journal Officiel) of December 10, 2010, suspended the obligation to purchase photovoltaic solar power for three months, except for projects of less than 3kW. The government will use this period for consultation and to establish a new regulation framework for better control over growth in this field of activity. 1.2.2.3.1.4 Hydropower concessions On April 22, 2010, the French Ministry of Ecology, Energy, Sustainable Development and the Sea announced the scope and timetable for renewal of hydropower concessions through a tendering process between now and 2015. The measures concern ten concessions with a combined power of approximately 5,300 MW or 20% of the French hydropower fleets power. For EDF, these renewals represent total power of some 4,300 MW and average annual generation output of 6.8 TWh or 15% of EDFs total gross hydropower output. The State has decided to renew half of these concessions early (2,150 MW out of the total 4,300 MW). In such cases, an
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indemnity is payable to compensate the outgoing operator. Depending on the concessions, calls for tender should be spread over the 2013-2015 period. 1.2.2.3.1.5 Change in governance of RTE and allocation of 50% of RTE shares to dedicated assets A decree of December 31, 2010 appointed two further representatives of the French government to the Supervisory Board of RTE, replacing representatives of EDF. This gives the French government 4 members on the Board, the same number as EDF and employee representatives respectively. As a result, the EDF group no longer has a majority on RTEs Supervisory Board, and therefore no longer has exclusive control over RTEs operating and financial policies as defined by IAS 27. Given the existence of significant influence, particularly through its representative members on the Supervisory Board, the Group's investment in RTE is accounted for under the equity method from December 31, 2010. This led to deconsolidation of 6.3 billion of RTEs indebtedness in the Groups financial statements at December 31, 2010. At the same date, the EDF group allocated 50% of shares in RTE-EDF Transport to its portfolio of dedicated assets. This operation was approved by the Board of Directors on December 14, 2010 and has received the required administrative authorizations18. RTE-EDF Transport remains wholly-owned by EDF. The value of the shares in RTE-EDF Transport allocated to dedicated assets is 2.3 billion. The allocation of 50% of RTE shares diversifies EDFs dedicated asset portfolio
18

while reducing its volatility. Infrastructure assets such as RTE-EDF Transport have predictable profitability and low correlation with other categories of financial assets such as equities or bonds. 1.2.2.4 Governance 1.2.2.4.1 Executive Committee On February 4, 2010, the EDF group formed a new management team headed by Henri Proglio. The members of the Groups Executive Committee (COMEX) at December 31, 2010 are: Henri Proglio, Chairman and Chief Executive Officer, Marianne Laigneau, Group Senior Executive Vice President, Human Resources, Pierre Lederer, Group Senior Executive Vice President, Customers, Optimisation and Trading, Herv Machenaud, Group Senior Executive Vice President, Generation and Engineering, Jean-Louis Mathias, Group Senior Executive Vice President, Activities Coordination in France, Information Systems, Gas and Renewable Energy sources, Thomas Piquemal, Group Senior Executive Vice President, Finance, Vincent de Rivaz, Chief Executive of EDF Energy, and Alain Tchernonog, General Secretary. Denis Lpe, Advisor to the Chairman, is Secretary to the Executive Committee. 1.2.2.4.2 General Management The Chairman and Chief Executive Officer Henri Proglio heads the EDF groups Management Committee, whose members are the members of the COMEX plus: Michle Bellon, Chair of ERDFs Management Board, Catherine Gros, Deputy Group Executive Vice President, Group Communications, Bruno Lescoeur, Deputy Group Executive Vice President, Gas, Anne Le Lorier, Deputy Group Executive Vice President, Corporate Risk Management and Corporate Audit, Philippe Mchet, Director of Institutional Relations, Umberto Quadrino, Chief
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The decree of February 2007 on secure financing of nuclear expenses, which governs constitution of dedicated assets, was amended by the decree of December 29, 2010 which took effect on December 31, 2010.

Executive Officer of Edison, Grard Wolf, Deputy Group Executive Vice President in charge of International Activities. Denis Lpe is Secretary to the Management Committee and Alain Tchernonog chairs the committee in the absence of the Chairman and CEO. 1.2.2.4.3 Board of Directors Jean-Dominique Comolli was appointed as a member of the EDF Board of Directors representing the French government by decree of September 29, 2010, replacing Bruno Bzard. 1.2.2.5 Human Resources 1.2.2.5.1 Employee protection In the wake of the French pension reform law of November 9, 2010, the French government sent the Board of Directors of the CNIEG (the pension body for Frances electricity and gas sector) a proposal for a decree to affiliate electricity and gas sector (IEG) status employees to the standard national pension system for public sector workers. However, these measures will only apply to the IEG sector from 2017. They mainly concern: - a progressive 2-year rise in the official retirement age, the age for automatic qualification for a full pension and the maximum age at which an employee must retire, - discontinuation of special early retirement based on the number of children, for all employees who will only qualify for a pension after January 1, 2017. The increase in the number of contributions required to qualify for a full pension will also apply directly and automatically to the special IEG pension regime (165 quarters will be required from July 1, 2017).

As part of the earlier 2008 pension reform, the Sector-specific Agreement of April 16, 2010 concerning the way the system takes into consideration the specificities of different businesses defined new criteria for attribution of active work (i.e. nonsedentary) classification. The purpose of this is to better reflect current working conditions, and set up a system attributing paid leave entitlements, to be taken after qualifying for retirement, to employees hired on or after January 1, 2009 who would no longer benefit from the advantages of active work status. An amendment to the national personnel regulations will be required before the new active work classification criteria can come into force. In 2010, in compliance with the February 2005 pension coverage agreements with the public pension bodies AGIRC and ARRCO, the rates for validation by additional public pension schemes of previously-earned entitlements became permanent. They were raised to the maximum values possible under the agreements. Negotiations for additional compulsory healthcare coverage ended led to the sector-specific agreement of June 4, 2010. This coverage is applicable from January 1, 2011. 1.2.2.5.2 Working hours The negotiations begun at EDF SA in 2009 concerning the working hours of executives (as defined by French law) have been suspended for the time being. 1.2.2.5.3 Total remuneration An EDF SA 2011 individual pay measures agreement was signed on December 23, 2010 to complement the sectors general measures recommended by employers on November 30, 2010. The overall average increase including all

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general and individual pay measures is 3.95%. On November 10, 2010, two new agreements were signed concerning EDF SAs contribution to the Groups Corporate Savings Plan (PEG) and the Groups collective pension fund plan (PERCO19) for 2011. The terms of the employers contribution to match the payments made to the PEG and PERCO were maintained unchanged. 1.2.2.5.4 Renewal of skills The Training Challenge (Dfi Formation) agreement signed on September 10, 2010 by all unions representing EDF employees is a significant milestone in the Groups ambitions for employee relations in France (EDF SA, ERDF, RTE). The agreement is intended to stimulate social mobility at EDF (by training leading to promotions, and block release programs) and introduce Academies and an EDF Campus to foster innovation and training. These policies, currently being introduced by the Group in France, will be progressively rolled out to other countries. 1.2.2.6 Group financing Details of all financing operations by the Group can be found in note 38 to the consolidated financial statements at December 31, 2010. 1.2.2.7 Scope of consolidation The main changes in the scope of consolidation are presented in note 5 to the consolidated financial statements at December 31, 2010.

19

PEG: Plan dEpargne Entreprise; PERCO: Plan dEpargne pour la Retraite Collectif. Page 21 sur 137

1.3 Introduction to analysis of results for 2010

Pursuant to European regulation 1606/2002 of July 19, 2002 on the adoption of international accounting standards, the EDF groups consolidated financial statements at December 31, 2010 are prepared under the international accounting standards published by the IASB and approved by the European Union for application at December 31, 2010. These international standards are IAS (International Accounting Standards), IFRS (International Financial Reporting Standards) and interpretations issued by the SIC and IFRIC. The comparative figures for 2009 have been restated for the effect of application of IFRIC 18 Transfers of Assets from Customers, IFRIC 12 Service Concession Agreements, IFRS 5, "Non-

current assets held for sale and discontinued activities" and the change in the consolidated income statement presentation of the net changes in fair value on Energy and Commodity Derivatives, excluding trading activities (see note 2 to the consolidated financial statements). In application of IFRS 5, the net income of activities held for sale is presented on a separate line in the income statement for the years presented. The impact of application of IFRS 5 on the figures published in 2009 is presented in note 2 to the consolidated financial statements and almost entirely relates to the sale of EnBW.

1.4 Principal accounting methods sensitive to the use of estimates and judgments

The preparation of the financial statements requires the use of judgments, best estimates and assumptions in determining the value of assets and liabilities, income and expenses recorded for the period, and positive and negative contingencies at year-end. If there are changes in the assumptions used or actual economic conditions differ from current year-end

conditions, the figures in future financial statements may differ significantly from current estimates. The principal sensitive accounting methods involving use of estimates and judgments are described in note 1 to the consolidated financial statements at December 31, 2010.

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1.5 Segment reporting of financial information

Segment reporting presentation complies with IFRS 8, Operating segments. Segment reporting is determined before consolidation adjustments and intersegment eliminations. Intersegment transactions take place at market prices. In accordance with IFRS 8, the breakdown used by the EDF group corresponds to the operating segments as regularly reviewed by the Groups Management Committee. The reporting segments used by the Group are: - France, which refers to EDF, RTEEDF Transport and ERDF, comprising the deregulated activities (mainly Generation and Supply), network activities (Distribution and Transmission) and French island activities; - United Kingdom, which comprises the entities of the EDF Energy subgroup including British Energy and EDF Development UK Ltd;

- Italy, which covers entities located in Italy, particularly the Edison subgroup, TDE and Fenice; - Other International, which covers EDF International and the other gas and electricity entities located principally in continental Europe, but also in the USA, Latin America and Asia ; - Other Activities, which groups together all the Groups other subsidiaries and investments, including EDF Trading, EDF Energies Nouvelles, Dalkia, Tiru, Electricit de Strasbourg and EDF Investissements Groupe. Following the sale of EnBW which has yet to be completed, the former Germany segment is a discontinued operation and is no longer reported as an operating segment.

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1.6 Analysis of the consolidated income statements for 2010 and 2009

Years ended December 31 (in millions of euros) Sales Fuel and energy purchases Other external expenses Personnel expenses Taxes other than income taxes Other operating income and expenses Prolongation of the TaRTAM system Laws of June 7 and December 7, 2010 Operating profit before depreciation and amortization (EBITDA) Net changes in fair value on Energy and Commodity derivatives, excluding trading activities Net depreciation and amortization Net increases in provisions for renewal of property, plant and equipment operated under concessions Impairment/Reversals Other income and expenses Operating profit (EBIT) Financial result Income before taxes of consolidated companies Income taxes Share in income of associates Net income of discontinued operations Net income Net income attributable to non-controlling interests EDF net income Net earnings per share in euros Diluted earnings per share in euros

2010 65,165 (26,021) (10,582) (11,422) (3,227) 3,090

2009 59,140 (22,590) (10,213) (10,708) (2,902) 3,202

(380)

16,623 15 (7,426)

15,929 539 (6,796)

(428) (1,743) (801) 6,240 (4,426) 1,814 (1,079) 134 380 1,249 229 1,020 0.55 0.55

(490) (49) 173 9,306 (4,204) 5,102 (1,432) 104 311 4,085 183 3,902 2.14 2.14

The Groups net income excluding non-recurring income and net changes in the fair value of Energy and Commodity derivatives (excluding trading activities) net of taxes amounted to 3,961 million in 2010 (3,558 million in 2009) (see 1.6.10).
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1.6.1 Sales 10.2% rise in consolidated sales (organic growth of 4.6%)

2010 36,167 10,683 5,647 6,878 5,790 28,998 65,165 2009 34,075 11,236 4,870 3,442 5,517 25,065 59,140 Variation +2,092 -553 +777 +3,436 +273 +3,933 +6,025 Variation (%) +6.1 -4.9 +16.0 +99.8 +4.9 +15.7 +10.2 Organic growth (%) +6.1 -4.4 +15.8 +1.4 +5.0 +2.4 +4.6

In millions of euros France United Kingdom Italy Other International Other Activities Total excluding France Group sales

The EDF groups consolidated sales totaled 65,165 million for 2010, a rise of 10.2% compared to 2009. This growth includes favorable foreign exchange effects of 748 million or +1.3%, essentially attributable to the rise of the pound sterling and the Polish and Brazilian currencies against the euro. Changes in the scope of consolidation20 totaled 2,586 million (+4.4%), and mainly concern the acquisitions of SPE in Belgium and CENG in the United States in late 2009, partly offset by sales of UK networks in October 2010. Excluding these effects, organic growth21 stood at +4.6%. In France, 2010 sales showed organic growth of +6.1%, chiefly in electricity sales. Electricity sales benefited from favorable volume effects (+4.1 points) primarily due to higher nuclear power output, and favorable price effects (+2 points) resulting principally from the tariff rises of August 2009 and 2010.

Sales excluding France (the United Kingdom, Italy, Other International and Other Activities segments) registered a 15.7% increase which incorporates the consolidation of SPE and CENG at the end of 2009 and the opposite effect of sale of the UK networks in October 2010. The organic growth in sales outside France excluding changes in the scope of consolidation and foreign exchange effects was 2.4%. In the United Kingdom, sales showed an organic decline of 4.4% due to unfavorable price effects and a downturn in nuclear generation. In Italy (organic growth of +15.8%), the higher volumes in the electricity and hydrocarbons segments more than compensated for the reduction in average unit sales prices. Sales by the Other International segment showed organic growth of 1.4%, driven mainly by central Europe. The higher level of sales by the Other Activities segment (organic growth of +5.0%) mainly reflects the business growth at EDF Energies Nouvelles and Dalkia,

20

In application of IFRS 5, EnBW has been reclassified as a Discontinued operation for both 2009 and 2010. As a result, there is no impact on the scope effect. 21 The organic growth or decline is the change in Group business that does not incorporate the positive or negative effects of changes in the scope of consolidation (acquisitions or disposals of subsidiaries) or in exchange rates or accounting methods.

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although this was partly offset by lower sales at EDF Trading22. In 2010, sales outside France represented 44.5% of total consolidated sales, compared to 42.4% in 2009. Changes in the scope of consolidation between 2009 and 2010 were the major factor in the difference.

22

EDF Trading sales consist of trading margins. Page 26 sur 137

1.6.2 EBITDA
Consolidated EBITDA up by 4.4%, with organic growth of 2.8% (and 5.2% excluding prolongation of the TaRTAM laws of June 7 and December 7, 2010)
2010 2009 Variation Variation (%) Organic growth (%)

In millions of euros Sales

65,165 EBITDA 16,623

59,140 15,929

+6,025 +694

+10.2 +4.4

+4.6 +2.8

Consolidated EBITDA for 2010 amounted to 16,623 million, up by 4.4% from 2009 (organic growth of 2.8%). This includes a 380 million provision in view of the successive prolongations of the TaRTAM transition tariff system to the second half of 2010, then the first half of 2011 (Laws of June 7, 2010 and December 7, 2010). Without the impact of this factor, organic growth would be 5.2%. The effects of changes in the scope of consolidation
2010 In millions of euros France United Kingdom Italy Other International Other activities Total excluding France Group EBITDA 10,124 2,732 801 1,084 1,882 6,499 16,623

amounted to 42 million (+0.3%), mostly associated with the acquisitions of SPE and CENG in late 2009, partly counterbalanced by the sale of the UK networks in 2010. Foreign exchange effects amounted to +199 million (+1.2%) resulting essentially from rises in the pound sterling and the Polish and Brazilian currencies against the euro.

2009 9,403 3,063 795 654 2,014 6,526 15,929

Variation +721 -331 +6 +430 -132 -27 +694

Variation (%) +7.7 -10.8 +0.8 +65.7 -6.6 -0.4 +4.4

Organic growth (%) +7.7 -5.9 +0.6 +8.0 -7.1 -4.1 +2.8

In France, EBITDA was up by 7.7% compared to 2009. Excluding the impact of successive prolongations of the TaRTAM transition tariff system to the second half of 2010 and first half of 2011, EBITDA registered organic growth of 11.7%, mainly attributable to nuclear output and the favorable effect of the weather on network activities. France contributed 60.9% of consolidated EBITDA for 2010 (59% in 2009).

Outside France, EBITDA decreased by 0.4%, including the effect of consolidation of SPE and CENG late in 2009 and the sale of UK networks in 2010. On a like-for-like basis, the organic change stood at -4.1%. The United Kingdom and Other Activities (where the effect was unfavorable for EDF Trading but favorable for EDF Energies Nouvelles) registered an organic decline, but EBITDA showed organic growth in the Other International segment, particularly central Europe and other European

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countries (Belgium, the Netherlands and Austria). The Group's EBITDA/sales ratio stood at 25.5% in 2010 compared to 26.9% in 2009. The decrease was particularly noticeable in the Other Activities segment (32.5% in 2010 against 36.5% in 2009), mainly for EDF Trading and, to a smaller degree, Italy (14.2% in 2010 against 16.3% in 2009) and the Other International segment (15.8% in 2010 against 19.0% in 2009). The ratio was also down in the United Kingdom (25.6% in 2010 against 27.3% in 2009) but up in France (28.0% in 2010 against 27.6% in 2009). 1.6.2.1 Fuel and energy purchases Fuel and energy purchases amounted to 26,021 million, up by 15.2% from 2009 with organic growth at 4.0%. In France, fuel and energy purchases rose by +3.7%, essentially as a result of the increase in energy purchases under purchase obligations. Outside France, they rose by 24.5% corresponding to organic growth of 4.3%. This organic growth was mainly concentrated in Italy, where it reflected the increase in gas volumes as thermoelectric and industrial requirements rose,and electricity purchases expanded to take advantage of low prices and optimize industrial margins. In contrast, fuel and energy purchases were down in the United Kingdom, following a fall in supply costs on the wholesale electricity and gas markets. 1.6.2.2 Other external expenses Other external expenses amounted to 10,582 million, 369 million (+3.6%) higher than in 2009, with organic growth of +1.3%. In France, other external expenses decreased by 2.2%. This essentially results

from the lower level of storm-related costs in 2010, particularly at ERDF, which was partly counterbalanced by the step-up in maintenance for the generation fleets. Outside France, other external expenses increased by 13.8% (organic rise of 7.4%). There was organic growth in the Other Activities segment, largely driven by business growth at EDF Energies Nouvelles. 1.6.2.3 Personnel expenses Personnel expenses totaled 11,422 million, up by 714 million (+6.7%) compared to 2009, corresponding to organic growth of 4.6%. In France, the 2.8% increase mainly results from the higher workforce numbers associated with skill renewal and pay rises. Outside France, the increase in personnel expenses stood at 19.2%, including the effect of consolidation of SPE and CENG, corresponding to organic growth of 10.5%. The organic growth stood at 18.2% in the UK, mainly reflecting rising pension charges due to inclusion of actuarial losses in profit and loss. 1.6.2.4 Taxes other than income taxes Taxes other than income taxes rose by 325 million, mainly in France. This increase relates to the reversal in 2009 of the FACE23 provision (324 million, corresponding to one years contribution to electrification work in rural areas) after the introduction of the TURPE 3 network access tariffs.

23

Fond dAmortissement des Charges dElectrification (sinking fund for electrification charges). Page 28 sur 137

1.6.2.5 Other operating income and expenses Other operating income and expenses generated income of 3,090 million in 2010, down by 112 million -3.5%) from 2009 (organic decline of 0.4%). In France, other operating income and expenses were positive at 2,466 million, a decline of 241 million (8.9%) explained primarily by various indemnities received in 2009 that were higher than in 2010. Outside France, other operating income and expenses were positive and rising, with a favorable impact of 228 million on a like-for-like basis. The rise was chiefly concentrated in the United Kingdom, which benefited from the sale of the Eggborough plant and a favorable change in provisions for doubtful receivables. The

rise in Italy is attributable to the early termination indemnity recorded by Edison on the end of the subsidy system for certain CIP6 plants, and the rise in the Other Activities segment mainly reflects the gain on disposal of Usti by Dalkia in the Czech Republic. 1.6.2.6. Prolongation of the TaRTAM transition tariff system (Laws of June 7, 2010 and December 7, 2010) In France, an expense of 380 million was recorded in 2010 following prolongations of the TaRTAM transition tariff system to the second half of 2010 and then the first half of 2011 (Laws of June 7, 2010 and December 7, 2010).

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1.6.3 EBIT EBIT down by 32.9%

2010 In millions of euros EBITDA Net changes in fair value on Energy and Commodity derivatives, excluding trading activities Net depreciation and amortization Net increases in provisions for renewal of property, plant and equipment operated under concessions Impairment/reversals Other income and expenses Operating profit (EBIT) 16,623 15 (7,426) (428) (1,743) (801) 6,240 2009 15,929 539 (6,796) (490) (49) 173 9,306 Variation +694 -524 -630 +62 -1,694 -974 -3,066 Variation (%) +4.4 n.s. +9.3 -12.7 n.s. n.s. -32.9 Organic growth (%) +2.8 n.s. +5.5 -12.7 n.s. n.s. -33.9

EBIT totaled 6,240 million for 2010, down by 32.9% from 2009 or an organic variation of -33.9%. plant and equipment operated under concessions between 2009 and 2010 is 1.6.3.1. Net changes in fair value on attributable to ERDF and relates to Energy and Commodity derivatives, reduction of the basis for valuation of excluding trading activities assets renewable during the term of the The net changes in fair value on Energy concession. and Commodity derivatives, excluding trading activities with their intrinsic 1.6.3.4 Impairments volatility, decreased from 539 million in The 1,743 million of impairments 2009 to 15 million in 2010. Most of these recorded in 2010 principally concerns the changes relate to hedging operations United States (929 million), the United recorded separately from the items hedged. Kingdom segment (397 million) and to a lesser extent the Other Activities and Italy 1.6.3.2. Net depreciation and segments. amortization The 630 million increase in net depreciation and amortization is principally attributable to the effect of consolidation of SPE and CENG from late 2009 and the organic growth in depreciation and amortization, which was particularly noticeable in France and at EDF Energies Nouvelles. 1.6.3.3. Net increases in provisions for renewal of property, plant and equipment operated under concessions The 62 million decrease in net increases in provisions for renewal of property, 1.6.3.5 Other income and expenses Other income and expenses resulted in a net expense of 801 million in 2010, compared to net income of 173 million in 2009. In 2009, they mainly included the gain on transfer of Emosson dam drawing rights to Alpiq. In 2010, they include the unfavorable effect of a provision of 750 million for risks related to all the Group's Italian activities (see section 1.7.3.3).

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1.6.4 Financial result

In millions of euros Cost of gross financial indebtedness Discount expense Discount expense Other financial income and expenses Financial result 2010 (2,754) (3,134) 1,462 (4,426) 2009 (2,529) (2,997) 1,322 (4,204) Variation -225 -137 +140 -222 Variation (%) +8.9 +4.6 +10.6 +5.3

The financial result for 2010 is a financial expense of 4,426 million, 222 million (+5.3%) more than in 2009, primarily as a result of: - a 225 million increase in the cost of gross indebtedness resulting from the higher average gross indebtedness, which only partly benefited from the favorable effects of disposal of the Networks in the United Kingdom in late 2010; however, application of the equity method to RTE at December 31, 2010 has no impact on the cost of indebtedness before 2011. - a 137 million increase in discount expenses, concerning the United Kingdom, France, and the impact of consolidation of CENG at the end of 2009; - a favorable 140 million change in other financial income and expenses, caused mainly by the higher returns on assets funding long-term employee benefit obligations and capitalized borrowing costs (capitalized interest). 1.6.5 Income taxes Income taxes amounted to 1,079 million in 2010, corresponding to an effective tax rate of 59.5%. The tax charge for 2009 was 1,432 million, corresponding to an effective tax rate of 28.1%. The increase in the effective tax rate between 2009 and 2010 chiefly relates to the provision for risks in the Italy segment, and impairment booked during the year.

Excluding these factors, the effective tax rate is 29.6%. The rate was adversely affected by taxation of certain components of the gain on sale of the Networks activities in the UK. 1.6.6 Share in net income of associates The Groups share in net income of associates was 134 million in 2010, up by 30 million from 2009. The difference is largely due to unfavorable non-recurring items in 2009, principally in the UK. 1.6.7 Net operations income of discontinued

In 2009 and 2010, this line reports the net income of EnBW, which was in the process of being sold at December 31, 2010. It amounted to 380 million in 2010, up by 69 million (+22.2%). EnBW benefited from its expansion in the electricity business and specific favorable factors such as gains on disposals corresponding to the PRE/PT operation24 and the sale of Geso. 1.6.8 Net income attributable to noncontrolling interests The net income attributable to noncontrolling interests amounted to 229 million in 2010, 46 million more than in 2009. This increase mainly results from Centricas investment in 20% of Lake Acquisitions (which owns British Energy) and the consolidation of SPE from late 2009.
24

Gain on disposal of the heat company PT and revaluation of the existing investment in the Prague electricity distributor PRE. Page 31 sur 137

1.6.9 EDF net income EDF net income was 1,020 million for 2010, down by 73.9% from 2009 (3,902 million). 1.6.10 Net income recurring items25 excluding non-

1.6.11 Net indebtedness27 The Groups net indebtedness declined by 8,107 million in 2010, from 42,496 million at December 31, 2009 to 34,389 million at December 31, 2010. Changes in net indebtedness are explained in section 1.8.

The Groups net income excluding nonrecurring items stood at 3,961 million for 2010, 403 million (+11.3%) higher than for 2009. Based on a constant scope of consolidation and exchange rates, the increase was 17.2%. Non-recurring items and the net change in fair value on Energy and Commodity derivatives excluding trading activities, net of tax, totaled -2,941 million in 2010, mainly comprising impairments and other operating income and expenses related to the United States and Italy and to the TaRTAM provision in France. Non-recurring items and the net change in fair value on Energy and Commodity derivatives excluding trading activities, net of tax, totaled 344 million26 in 2009.

25

Net income excluding non-recurring items is not defined by IFRS and is not directly visible in the consolidated income statements. The definition of this item has been revised in 2010: it corresponds to the Groups share of net income excluding nonrecurring items and the net change in fair value on Energy and Commodity derivatives, excluding trading activities, net of tax (see 1.6.10). 26 +344 million: +362 million of net changes in fair value on Energy and Commodity derivatives excluding trading activities, +220 million for the reimbursement by the French State following cancellation of the European Commissions decision of December 16, 2003, and -238 million of gains and losses on disposals, impairment of securities and operating assets and various provisions.

27

Net indebtedness comprises total loans and financial liabilities, less cash and cash equivalents and liquid assets. Liquid assets are financial assets comprising funds and interest rate instruments with initial maturity of over three months that are readily convertible into cash regardless of their maturity and are managed according to a liquidityoriented policy. The definition of net indebtedness has been revised in 2010 to reflect the Groups loans to RTE, which is accounted for under the equity method from December 31, 2010. Page 32 sur 137

1.7 Breakdown of EBIT by geographical area The EDF groups segment reporting principles are presented in note 8 to the consolidated financial statements at December 31, 2010. The breakdown of EBIT by operating segment is as follows:
In millions of euros 2010 SALES Fuel and energy purchases Other external expenses Personnel expenses Taxes other than income taxes Other operating income and expenses Prolongation of the TaRTAM,transition tariff OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION (EBITDA) Net changes in fair value on Energy and Commodity derivatives, excluding trading activities Net depreciation and amortization Net increases in provisions for renewal of property, plant and equipment operated under concessions Impairments/Reversals Other income and expenses OPERATING PROFIT (EBIT) France 36,167 (10,441) (6,339) (8,401) (2,948) 2,466 (380) United Kingdom 10,683 (5,827) (1,276) (1,305) (75) 532 Italy 5,647 (4,340) (428) (212) (9) 143 Other International 6,878 (4,405) (660) (511) (99) (119) Other Activities 5,790 (1,008) (1,879) (993) (96) 68 Group 65,165 (26,021) (10,582) (11,422) (3,227) 3,090 (380)

10,124

2,732

801

1,084

1,882

16,623

37 (4,361)

(68) (1,513)

0 (471)

157 (578)

(111) (503)

15 (7,426)

(426) 0 0 5,374

0 (397) 45 799

0 (192) (750) (612)

0 (960) (96) (393)

(2) (194) 0 1,072

(428) (1,743) (801) 6,240

In millions of euros 2009 SALES Fuel and energy purchases Other external expenses Personnel expenses Taxes other than income taxes Other operating income and expenses OPERATING PROFIT BEFORE DEPRECIATION AND AMORTIZATION (EBITDA) Net changes in fair value on Energy and Commodity derivatives, excluding trading activities Net depreciation and amortization Net increases in provisions for renewal of property, plant and equipment operated under concessions Impairments/Reversals Other income and expenses OPERATING PROFIT (EBIT)

France 34,075 (10,073) (6,483) (8,174) (2,649) 2,707

United Kingdom 11,236 (5,985) (1,379) (1,121) (81) 393

Italy 4,870 (3,536) (401) (203) (8) 73

Other International 3,442 (2,008) (420) (273) (73) (14)

Other Activities 5,517 (988) (1,530) (937) (91) 43

Group 59,140 (22,590) (10,213) (10,708) (2,902) 3,202

9,403

3,063

795

654

2,014

15,929

23 (4,122)

199 (1,531)

7 (458)

34 (277)

276 (408)

539 (6,796)

(488) 0 320 5,136

0 0 (27) 1,704

0 (43) 0 301

0 (6) (119) 286

(2) 0 (1) 1,879

(490) (49) 173 9,306

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1.7.1 France
In millions of euros Sales EBITDA EBIT 2010 36,167 10,124 5,374 2009 34,075 9,403 5,136 Variation +2,092 +721 +238 Variation (%) +6.1 +7.7 +4.6

1.7.1.1 Breakdown of financial information for the France segment The following breakdown is used in presenting Frances contribution to Group sales and EBITDA: Deregulated activities covering Generation, Supply and Optimization in mainland France, and sales of engineering and consulting services. Regulated activities in mainland France (Transmission and Distribution), which are regulated via the network access tariff TURPE (Tarifs dUtilisation des Rseaux Publics dElectricit). Sales for the regulated activities include the delivery cost included in integrated tariffs (or invoiced directly to customers with CART/CARD28 contracts with the operators for the transmission and distribution networks respectively). Island activities, which covers EDF's Generation and Distribution activities in the island energy systems (IES). 1.7.1.2 Market opening At December 31, 2010, EDFs share of the electricity market for all final customers was 83.4% (85.2% in 2009). Its market share for natural gas was 4% in 2010 (3.8% in 2009). 1.7.1.3 The supply-demand balance The volume of power produced by nuclear generation in 2010 was 408 TWh, up from the 390 TWh generated in 2009. The
28

increase is essentially attributable to a gain of some 2.7 TWh in availability due to fewer shutdown extensions, significantly less industrial action (13.5 TWh), more favorable environmental conditions for generation (1.1 TWh) and less use of nuclear modulation (0.8 TWh) in view of the slight economic upturn after the crisis of 2009. The availability factor for the nuclear fleet improved from 78% in 2009 to 78.5% in 2010, a positive development after three consecutive annual decreases. Hydropower generation output totaled 39 TWh, 10.5% higher than in 2009 due to improved hydropower capability. Fossil-fired generation produced 17 TWh, +0.9% more than in 2009. Sales volumes to final customers were up by 2.3 TWh. The rise in demand (+8.6 TWh) and sales due to 2010s colder weather (+13.7 TWh) was partly counterbalanced by losses of customers and the end of Eurodif services for third parties in 2010, compared to 2009. Due to the higher output, the Groups net purchases on wholesale electricity markets declined compared to 2009. The balance of net sales on the markets (including through VPP29 auctions) improved by 6.8 TWh from 2009. 1.7.1.4 Sales France contributed 36,167 million to Group sales, 6.1% more than for 2009. This rise is almost entirely attributable to electricity sales.

CART: Contrats d'Acheminement avec le Rseau de Transport ; CARD: Contrats d'Acheminement avec le Rseau de Distribution.

29

Virtual Power Plant. Page 34 sur 137

The variation in electricity sales reflects both price effects (+2 points) and volume effects (+4.1 points), caused particularly by the higher net sales on the markets due to higher nuclear power output as described above and also weather factors. The positive price effect principally results from the tariff increases of August 15, 2009 and August 15, 2010, counterbalanced by a negative price effect on capacity auctions. 1.7.1.5 EBITDA Frances contribution to Group EBITDA was 10,124 million, an increase of 7.7% from 2009 (9,403 million). Excluding the effect of the successive prolongations of the TaRTAM transition tariff system to the second half of 2010 and the first half of 2011, EBITDA registered organic growth of 11.7%, primarily resulting from higher nuclear and hydro power output (+21.7 TWh, or 984 million), tariff increases (+470 million) and favorable weather effects on network activities. These effects were partly counterbalanced by the non-recurrence of favorable factors from 2009, such as the 324 million reversed from the FACE provision. Fuel and energy purchases Fuel and energy purchases in France amounted to 10,441 million in 2010, up by 368 million (+3.7%) from 2009. This rise essentially results from the increase in energy purchases under purchase obligations, especially for wind and solar power. Other external expenses and personnel expenses Other external expenses amounted to 6,339 million, down by 2.2% from 2009. Much of this change resulted from the fact that the costs of storm damage in 2010 were lower than in 2009, particularly for ERDF; this was partly offset by continuing maintenance for the generation fleet.

Personnel expenses totaled 8,401 million, a 2.8% increase compared to 2009 reflecting the higher workforce numbers associated will the skill renewal drive and changing pay levels. Overall, these expenses changed little in 2010 (+0.6% from 2009). Taxes other than income taxes These taxes rose by 11.3% (299 million), principally as a result of reversal in 2009 of the FACE provision (+324 million) corresponding to one years contribution for electrification of rural zones after the introduction of the new TURPE 3 network access tariffs. This had no equivalent in 2010. Other operating income and expenses Other operating income and expenses generated net income of 2,466 million, 241 million lower than in 2009. This decline is mainly explained by the gains recorded in 2009 corresponding to final indemnities received, which were higher than in 2010. Prolongation of the TaRTAM transition tariff Law of June 7, 2010 and NOME law of December 7, 2010 An expense of 380 million was booked to cover costs associated with the successive prolongations of the TaRTAM transition tariff system to the second half of 2010 (Law of June 7, 2010) and then the first half of 2011 (NOME law of December 7, 2010). 1.7.1.6 EBIT Frances contribution to consolidated EBIT was 5,374 million, up by 238 million from 2009. This increase reflects the improvement in EBITDA, the higher depreciation and amortisation and the gain recorded in 2009 on transfer of Emosson dam drawing rights.
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1.7.1.7 Breakdown of financial information for the France segment between deregulated activities, network activities and island activities

In millions of euros Sales Deregulated activities Network activities Island activities Eliminations EBITDA Deregulated activities Network activities Island activities

2010 36,167 34,197 13,311 833 (12,174) 10,124 5,905 4,000 219

2009 34,075 32,196 12,533 758 (11,412) 9,403 5,802 3,370 231

Variation +2,092 +2,001 +778 +75 -762 +721 +103 +630 -12

Variation (%) +6.1 +6.2 +6.2 +9.9 -6.7 +7.7 +1.8 +18.7 -5.2

Sales by the network activities registered an increase of 778 million. This reflects the rise in network tariffs of August 2009 and 2010, and the additional income resulting from the volumes delivered (caused by weather conditions and other factors). The 6.2% increase in sales by the deregulated activities is primarily attributable to the favorable impact of the 2009 and 2010 tariff rise, the colder weather in 2010 compared to 2009 and the higher level of net sales on the wholesale markets (including VPP auctions). EBITDA for the network activities rose by 18.7%, due to higher sales revenues as a result of weather and tariff effects and the impact of storm-related costs in 2009, which were 130 million higher than in 2010. EBITDA for the deregulated activities was up slightly. The increase comprises the effect of higher nuclear power output and tariff rises, offset by the non-recurring effect of gains recorded in 2009 on certain long-term contracts, and the additional provision for the successive prolongations of the TaRTAM transition tariff system to the second half of 2010 and the first half of 2011.

The change in EBITDA for the island activities was not significant.

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1.7.2 United Kingdom

Organic growth (%) -4.4 -5.9

2010 In millions of euros Sales EBITDA EBIT 10,683 2,732 799

2009

Variation

Variation (%)

11,236 3,063 1,704

-553 -331 -905

-4.9 -10.8 -53.1

Since January 5, 2009 the United Kingdom segment has included British Energys contribution to the consolidated financial statements. Until October 29, 2010 EDF Energy comprised four operating divisions (business units), respectively handling Networks, Energy Sourcing and Customer Supply, the Existing Nuclear division from British Energy and development of the Nuclear New Build project in the United Kingdom. The Networks business was deconsolidated on October 29, 2010 after its sale to the CKI group. The Eggborough coal-fired plant was also sold, on March 31, 2010 in accordance with the terms of the takeover of British Energy. 1.7.2.1 Sales Sales30 in the United Kingdom amounted to 10,683 million in 2010, down by 4.9% with negative organic growth of 4.4%. The positive foreign exchange effect of the pound sterlings appreciation between 2009 and 2010 (+446 million) is more than offset by the unfavorable effect of the change in scope of consolidation resulting from disposal of the Networks business and the Eggborough plant (-504 million). The organic decline in sales results from:

- sales by Energy Sourcing and Customer Supply, which were marked by lower contractual electricity sales prices for business customers and the 8.8% reduction in tariffs for residential customers in March 2009, despite the 2.6% rise of October 1, 2010. In contrast, gas activities registered growth, as the effect of higher volumes caused by the cold weather outweighed the reduction in tariffs for residential customers (cut by more than 6% in October 2009 and 3.6% on March 26, 2010). - sales in the Existing Nuclear activity were down, largely due to lower generation levels. Lower nuclear power output (48.3 TWh in 2010 after 55.1 TWh in 200931) in 2010 is mainly due to unplanned shutdowns, principally at the Sizewell B plant. 1.7.2.2 EBITDA The United Kingdoms contribution to Group EBITDA was 2,732 million for 2010, down by 10.8% corresponding to negative organic growth of 5.9% compared to 2009. EBITDA for Energy Sourcing and Customer Supply increased as the decline in sales was offset by the fall in fuel and energy purchase prices, particularly for gas. EBITDA for the Existing Nuclear activities was down by 178 million, principally due to an unscheduled shutdown at the Sizewell B plant (-6.8 TWh).
31

30

Sales and EBITDA include customers contributions for connection to networks, in application of IFRIC 18 for 2010 and 2009. The effect on EBIT is neutral (fully included in depreciation and amortization expense).

From January 1, 2009. Page 37 sur 137

Based on a constant scope of consolidation, EBITDA for the Network activities was down slightly, mainly as a result of lower connection income on the regulated networks. 1.7.2.3 EBIT The United Kingdoms contribution to Group EBIT for 2010 was 799 million, a decline of 53.1% from 2009. EBIT was strongly affected by impairment of fossil-

fired assets (397 million) due to the collapse and poor medium-term outlook for the dark spread (gross margin on energy produced by coal-fired plants) and the negative 267 million impact of net changes in the fair value of Energy and Commodity derivatives, excluding trading activities. EBIT also incorporates the gain on the sale of the Networks business.

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1.7.3 Italy
2010 In millions of euros Sales EBITDA EBIT 5,647 801 -612 4,870 795 301 +777 +6 -913 +16.0 +0.8 n.s. +15.8 +0.6 2009 Variation Variation (%) Organic growth (%)

1.7.3.1 Sales Italy32 contributed 5,647 million to consolidated sales, up by 16.0%. Edison registered a 793 million (+18.1%) rise in its contribution to sales, resulting from a recovery in demand in the electricity and hydrocarbons business, although hydrocarbon sales have not yet reattained their pre-crisis level. Growth in the electricity activities was driven by the positive volume effect of higher sales to wholesalers and end customers and was partly offset by the negative price effect caused by falling average sale prices. The hydrocarbon activities benefited from growth in volumes sold on the final markets, which broadly compensated for the unfavorable price effect associated with falling average gas sales prices. Sales by Fenice registered an organic decline of 23 million (-4.7%), primarily due to the transfer of energy supply contracts to Fiat during the second half of 2009 in application of Italys new gas regulations. This transfer did not significantly impact the margin, and was partly offset by a positive development in business volumes. 1.7.3.2 EBITDA The Italy segment contributed 801 million to the Groups consolidated EBITDA, showing organic growth of 0.6%.

Edisons contribution stood at 693 million, down by 14 million (-2%) despite a 84 million indemnity for early termination of the subsidy system for certain CIP6 plants in December 2010. Excluding this effect, the electricity business33 declined as margins on sales and CIP6 plant activity fell, despite favorable volume effects. The hydrocarbon activities contribution to EBITDA was markedly lower than in 2009. These activities suffered from the fall in margins on sales to final customers, resulting mostly from the lower downstream prices: this was cased by supply exceeding demand in Italy and spot prices that were lower than traditional long-term contract prices. This situation led Edison to activate its import contract renegotiation clauses. Results on exploration-generation activities improved in 2010. Fenices contribution to consolidated EBITDA amounted to 110 million for 2010, corresponding to organic growth of 20 million from 2009. The rise particularly results from business growth in Italy and internationally and from the impact of cuts in operating expenses. 1.7.3.3 EBIT Italys contribution to consolidated EBIT stood at -612 million, down by 913 million.

33

32

Edison Group and Fenice.

The effect of gas and foreign exchange hedges associated with electricity sales is reclassified as electricity sales. Page 39 sur 137

A combination of indicators and uncertainties led the Group to book a 750 million in respect of the Italy segment at December 31, 2010. This provision concerns risks relating to all the group's Italian activities. It covers some of the assets recorded in the EDF consolidated accounts following acquisition of Edison in 2005 and, to a less extent, also includes risks associated with the market environments in which Edison does business. The decision to record this provision is specific to the EDF group and in no way indicates the decisions that may be made when Edison prepares its annual accounts in March 2011, in view of information that will be available at that date. The provision also covers risks related to some of Fenices activities on which impairment was recorded.

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1.7.4 Other International

2010 In millions of euros Sales EBITDA EBIT 6,878 1,084 (393) 3,442 654 286 +3,436 +430 -679 +99.8 +65.7 n.s. +1.4 +8.0 2009 Variation Variation (%) Organic growth (%)

The Other International segment principally covers operations in Europe outside the United Kingdom and Italy: Benelux (including SPE) and central European countries, Asian operations (China, Vietnam and Laos), the Norte Fluminense fossil-fired plant in Brazil and nuclear activities in the United States via the 49.99% investment in Constellation Energy Nuclear Group (CENG), and the wholly-owned Unistar. The effect of changes in the scope of consolidation in this segment essentially concern the acquisitions of SPE and CENG in late 2009, and the change in consolidation method applied for Estag from July 1, 2009. The Other International segment benefited from favorable changes, mainly related to Polish and Brazilian currencies rise against the euro. 1.7.4.1 Sales The Other International segment contributed 6,878 million to Group sales for 2010, up by 3,436 million from 2009. The rise is essentially attributable to changes in the scope of consolidation referred to above (+3,199 million). Favorable foreign exchange effects amounted to 188 million. Without these scope and exchange effects, sales would show organic growth of 1.4% compared to 2009.

In Central Europe, sales registered organic growth of +3.7%, driven by Poland where volumes rose due to lower-thannormal temperatures during 2010 and falling electricity sale prices. In the other continental European countries (Belgium, the Netherlands, Austria), the organic variation (excluding the effect of changes in the scope of consolidation) was stable. EDF Belgium's commercial activities were transferred to SPE in October 2010 in order to optimize the customer portfolio. In the Asia-Pacific region, sales were stable (-2% excluding foreign exchange effects), as use of the Laibin B (Figlec) was temporarily reduced from 2009 levels. In Brazil, sales rose by 8.7% with an organic variation of -10.2%, due to a decline in contractual prices, which are partly indexed on the US dollar (which declined against the Brazilian real). Sales in the United States zone amounted to 607 million in 2010, including the first full year of consolidation of CENG. 1.7.4.2 EBITDA EBITDA for the Other International segment, excluding the effects of changes in the scope of consolidation and exchange rates, saw organic growth of 8.0%. In the central European countries, EBITDA rose by 70 million (+18.0%, or organic growth of 12.3%). There were positive contributions from Poland (+5.0%) thanks to favorable weatherrelated volume effects and development of biomass activities, and from Hungary
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(+33.5%), particularly EDF Demasz, benefiting from a recovery in sales margins. EBITDA in other European countries rose by 193 million, an organic increase of 50 million (+89.3%) due particularly to consolidation of SPE over a full year and commissioning of the SLOE CCG plant in the Netherlands in late 2009. SPE, the principal company in the zone, reported EBITDA of 156 million for 2010, reflecting the performance growth in gas and electricity. In the Asia-Pacific region, EBITDA was relatively stable in terms of organic variation. Brazil registered 10.3% growth and an organic variation of -8.0% in EBITDA, primarily due to the buoyant spot market in 2010 which prevented optimization of the margin to the same extent as in 2009.

EBITDA in the United States zone amounted to 186 million in 2010, up by 175 million, chiefly reflecting the effect of consolidation of CENG. 1.7.4.3 EBIT EBIT for the Other International segment was -393 million, principally affected by impairment of 929 million in the US, and the 93 million expense related to the agreements of November 3, 2010 with CENG. This change in EBIT also reflects the favorable impact of net changes in the fair value of Energy and Commodity derivatives (excluding trading activities) associated with SPE, and the unfavorable effect of higher depreciation and amortization charges resulting primarily from the full-year impact of acquisitions of CENG and SPE.

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1.7.5 Other Activities

2010 In millions of euros Sales EBITDA EBIT 5,790 1,882 1,072 5,517 2,014 1,879 +273 -132 -807 +4.9 -6.6 -42.9 +5.0 -7.1 2009 Variation Variation (%) Organic growth (%)

Other Activities principally comprise EDF Energies Nouvelles, EDF Trading, Electricit de Strasbourg and EDFs investment in Dalkia. 1.7.5.1 Sales The contribution by the Other Activities segment to Group sales was 5,790 million, up by 273 million or 4.9% from 2009, with organic growth of 5.0% mainly driven by business expansion at EDF Energies Nouvelles and Dalkia. Nonetheless, this favorable variation was partly counterbalanced by the decline at EDF Trading. EDF Tradings34 sales showed an organic decline of 294 million (-25.7%). This downturn compared to 2009 is explained by seriously deteriorating market conditions. The sovereign debt crisis in Europe and the fluctuating euro/dollar exchange rate had repercussions for the commodity markets, which from early May 2010 were strongly disrupted by decorrelation between price trends on different commodities. Sales at EDF Energies Nouvelles amounted to 1,455 million, a 34% improvement over 2009. Sales were boosted by commissioning of new wind and solar power facilities, and by significant growth in Development and Sale of Structured Assets. Dalkias contribution to sales showed organic growth of 131 million (+6.0%). The chief contributing factor was the favorable weather effect in Europe.
34

1.7.5.2 EBITDA Other Activities contributed 1,882 million to Group EBITDA, 132 million less than in 2009, with an organic variation of -7.1%. The organic decline in this segments EBITDA was principally attributable to EDF Trading, where EBITDA was down by 30.8% from 2009 to 628 million in 2010. EDF Energies Nouvelles contributed 460 million to consolidated EBITDA in 2010 (+34.5%). This increase was mainly explained by growth in wind and solar power generation and the good performance in Development and Sale of Structured Assets. Dalkias EBITDA saw organic growth of 42 million (+14%), primarily due to the gain on the sale of Usti in the Czech Republic. 1.7.5.3 EBIT EBIT for the Other Activities decreased by 807 million compared to 2009. This reflects the decline in EBITDA and the unfavorable impact of adjustments related to net changes in the fair value of Energy and Commodity derivatives, excluding trading activities, mostly used for hedging operations. Depreciation and amortization also increased, principally with the expansion in business at EDF Energies Nouvelles. In 2010, EBIT also includes the 136 million of impairment recorded by EDF Production UK in respect of the North Sea gas fields.
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EDF Trading sales consist of trading margins.

1.8 Net indebtedness, cash flow and investments

Net indebtedness comprises total loans and financial liabilities, less cash and cash equivalents and liquid assets. Liquid assets are financial assets consisting of funds or securities with initial maturity of over three months that are readily convertible into cash regardless of their maturity and are managed according to a liquidity-oriented policy. The definition of net indebtedness has been revised in 2010 to reflect the Groups loans to RTE, which is accounted for under the equity method from December 31, 2010.
Changes in the Groups net indebtedness were as follows:
Variation (%) +4,4

In millions of euros Operating profit before (EBITDA)

2010 depreciation and amortization 16,623 (1,165) (2,197)

2009 15,929 (2,320) (1,367) (869) 84 11,457 (863) (11,576) 1,224 242 (1,902) (12,932) (1,289) (696) (16,577) 577 (758) (319) (17,077) (943) 24,476 42,496

Variation 694 1,155 (830) (1,098) 68 (11) 1 161 (477) (1,224) (551) 559 16,545 (1,064) 409 15,898 8,781 (24) 334 24,989 1,138

Cancellation of non-monetary items included in EBITDA Net financial expenses disbursed Income taxes paid

(1,967) Other items Net cash flow from operations (1) Change in working capital
(2)

152 11,446 298 (12,053)

-0,1

Net operating investments (gross CAPEX less disposals) Non-recurring items Free cash flow
(3)

(309) (1,343) 3,613 (2,353) (287) (679) 9,358

ns

Allocation to dedicated assets, France Net financial investments Dividends paid Other changes (4) (Increase) decrease in net indebtedness, excluding the impact of changes in scope of consolidation and exchange rates Effect of change in scope of consolidation Effect of change in exchange rates

ns

(782) Effect of other non-monetary changes

(5)

15 7,912 of discontinued 195 42,496 34,389

(Increase)/Decrease in net indebtedness (Increase)/Decrease in net indebtedness operations Net indebtedness at beginning of period Net indebtedness at end of period

ns ns

(1) Operating cash flow is not an aggregate defined by IFRS as a measure of financial performance, and is not directly comparable with indicators of the same name reported by other companies. This indicator, also known as Funds From Operations (FFO), is equivalent to net cash flow from operating activities excluding changes in working capital (Cash flow statement) after adjustment for the impact of non-recurring items, less net financial expenses disbursed and income taxes paid. (2) 2010: including the Exeltium advance of 1,747 million received at the end of April 2010. (3) 2009: Payment from the French state after cancellation of the European Commissions decision of December 16, 2003. (4) Mainly contributions received on concessionary assets, investment subsidies and the payment to Areva for decommissioning of the plant at La Hague (2010: 633 million; 2009: 605 million). (5) Mainly corresponds to changes in fair value and accounting reclassifications affecting net indebtedness.

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1.8.1 Net indebtedness The Groups net indebtedness stood at 34,389 million at December 31, 2010, compared to 42,496 million at December 31, 2009, a decrease of 8,107 million over the year. Despite the rise in EBITDA (+694 million) and the decrease in working capital, the Groups free cash flow for 2010 was negative at 309 million, principally due to: - a high level of capital expenditure net of disposals amounting to 12,053 million (see 1.8.4); - financial expenses reflecting the change in average net indebtedness (disposals late in the year). The 8,107 million decrease in net financial indebtedness primarily reflects the sale of distribution networks in the United Kingdom35 and the deconsolidation of RTE's debt. It also comprises the negative impact of the free cash flow, the allocation to dedicated assets (see 1.8.5) and dividends paid (see 1.8.6). 1.8.2 Operating cash flow and free cash flow Operating cash flow was stable at 11,446 million in 2010 (compared to 11,457 million in 2009). It includes the negative impact of increases in income taxes paid, mostly as a result of reimbursement in 2009 of excess provisional instalments paid for 2008 (+1,098 million), and the financial expenses disbursed (+830 million). These effects were offset by cancellation of non-monetary items, which were 1,155 million lower than in 2009, chiefly due to changes in the TaRTAM provisions (net reversals of 850 million in 2009 and 328 million in 2010) and the FACE provision at ERDF (net reversal of
35

318 million in 2009 and increase of 21 million in 2010). The Groups free cash flow for 2010 was negative at -309 million, compared to +242 million for 2009. The 551 million decrease results from the rise in net operating investments and the 1,224 million payment from the French state in 2009 following cancellation of the European Commissions decision of 2003, partly offset by the change in working capital (298 million in 2010 compared to -863 million in 2009, see 1.8.3). 1.8.3 Change in working capital Working capital decreased by 298 million in 2010. The main explanation for the decrease in working capital was the receipt of the first advance under the agreement with the Exeltium consortium, amounting to 1,747 million, counterbalanced by the unfavorable effects of the increase in the CSPE receivable (Contribution to the Public Electricity Service) (-968 million for the parent company EDF) and the increase in inventories (-446 million), mainly nuclear fuel inventories in France.

Impact of the sale and the associated scope effect (see 1.8.5 and 1.8.7). Page 45 sur 137

1.8.4 Operating investments (Gross Capex) Operating investments (gross capital expenditure) for 2010 amounted to 12,241 million, up by 464 million (3.9%) from 2009. Changes over the period in the Groups gross capital expenditure were as follows:
In millions of euros France: Network activities France: Deregulated activities France: Island activities Total France United Kingdom Italy Other International Total International Total Other activities Operating investments (Gross Capex) 2010 3,724 3,655 495 7,874 1,871 381 561 2,813 1,554 12,241 2009 3,377 3,312 473 7,162 2,193 483 380 3,057 1,558 11,777 Variation +347 +343 +22 +712 -322 -102 +180 -244 -4 +464 Variation (%) +10.3 + 10.4 + 4.6 + 9.9 - 14.7 - 21.1 +47.2 - 8.0 - 0.2 + 3.9

Capital expenditure increased in France, decreased for the Other International segment and was stable for the Other Activities segment. The increase in capital expenditure in France was 712 million (9.9%). In the network activities, it essentially concerned the purchase of SNCF networks by RTE and the considerable increase in connections (particularly the photovoltaic solar power producers share) for ERDF. For the deregulated activities, the increase was primarily driven by nuclear activities, with the ongoing construction of the Flamanville 3 EPR and the step-up in the steam generator replacement program compared to 2009. Capacity development investments in 2010 concerned fossil-fired facilities (CT36 at Montereau, CCGT37 at Martigues and Blenod). In addition to steam generators, maintenance expenditure included the ongoing reliability programs for the nuclear and hydropower fleets (SuperHydro and RenouvEau).
36 37

In the United Kingdom, capital expenditure amounted to 1,871 million in 2010, 14.7% lower than in 2009 (322 million). The main factor in this decrease was the acquisition in 2009 of land for the British New Nuclear program, which had no equivalent in 2010. Investments during 2010 concerned the regulated activities (43% - the decrease reflects the sale of distribution networks in October 2010), nuclear activities (29% - up from 2009) and the construction of the West Burton combined cycle power plant. In Italy, capital expenditure for 2010 was 21.1% lower than in 2009, amounting to 271 million at Edison. The main investments in 2010 were for development: fossil-fired plants in Italy and Greece (Thisvi), renewable energy fleets and drilling for the Abu Qir concession in Egypt and in Croatia. Investments by Fenice amounted to 110 million in 2010, down slightly from 2009. In the Other International segment, capital expenditure for 2010 rose by 47.2% compared to 2009, mainly as a result of consolidation of SPE in Belgium and

Combustion turbine. Combined cycle gas turbine.

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CENG in the United States, and acquisition of 50% of Unistar. Capital expenditure in the Other Activities was stable (-0.2%) from 2009, with 1,154 million of investments at EDF Energies Nouvelles in 2010. 1.8.5 Dedicated assets and net financial investments In compliance with the French Law of June 28, 2006 on the sustainable management of radioactive materials and waste, EDF is continuing to build up a portfolio of dedicated assets to cover longterm nuclear commitments. The cash allocation to dedicated assets in France for 2010 amounted to 1,343 million, in addition to the allocation of 50% of RTE shares (2.3 billion) following the decree of December 29, 2010, which had no impact on EDFs cash position in 2010. The cash allocation to dedicated assets during 2009 totaled 1,902 million. The NOME law (on Frances new electricity market organization) extended the deadline for building up the dedicated asset portfolio. See section 1.9.1.6, Management of financial risk on EDFs dedicated asset portfolio. 2010 saw a net financial divestment (excluding allocations to dedicated assets) of 3,613 million, comprising: - gains on disposals undertaken in 2010 (4,345 million), primarily sale of the distribution networks in the United Kingdom (3,655 million) and several entities in the Dalkia group (227 million); - receipt of the sale price for the investment in SNET in France (192 million); - the initial payment received in 2010 for the sale of EnBW (169 million); - investments for external growth in 2010, particularly in Belgium (acquisition of SPE minority shareholdings for 215 million), China (second capital contribution to the two-EPR project in Taishan for 213

million), and the United States (acquisition of a further 50% in Unistar Nuclear Energy (Unistar), raising the Groups ownership to 100%). 1.8.6 Dividends Dividends paid in cash (2,353 million) comprise the balance of the 2009 dividends (1,109 million) and the interim dividend paid in late 2010 totaling 1,054 million, plus dividends paid by Group subsidiaries to their minority shareholders, principally Centrica in the UK (190 million). In 2009, dividends paid in cash amounted to 1,289 million, while a further 938 million of dividends were paid in the form of shares. 1.8.7 Changes in scope of consolidation and foreign exchange effects Changes in the scope of consolidation primarily result from deconsolidation of the UK distribution networks financial debt (3.0 billion) following disposal and RTEs financial debt in France (6.3 billion) following a change in consolidation method. These two operations contributed 9.4 million of the reduction in net indebtedness. Foreign exchange effects (particularly the rise of the US dollar and the pound sterling against the euro38) accounted for 782 million of the change in the Groups net financial indebtedness.

38

The US dollar rose by 7.8% against the euro: December 31, 2009: $0.6942/1; December 31, 2010: $0.7484/1. The pound sterling rose by 3.2% against the euro: December 31, 2009: 1.1260/1; December 31, 2010: 1.1618/1. Page 47 sur 137

1.8.8 Financial ratios

2010 (1) Net financial debt /EBITDA Net financial debt /(Financial debt + equity)
(3)

2009 (2) 2.5 55%

2.2 48%

(1) 2010 ratios based on a comparable scope of consolidation: in the denominator, EBITDA is adjusted for the effect of sale of the UK networks (10 months), while the numerator net financial debt is adjusted to exclude EnBW. The unadjusted ratios are 2.02 and 19.2% respectively. (2) 2009 ratios based on a comparable scope of consolidation: net financial debt excludes EnBW. (3) Equity including non-controlling interests.

Further adjustment for receipt of the sale price for EnBW takes the 2010 Net financial debt/EBITDA ratio from 2.2 to 1.9.

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1.9 Management and control of market risks

1.9.1 Management financial risks

and

control

of

Regular internal audits are carried out to ensure controls are effectively applied. 1.9.1.1 Liquidity position management of liquidity risks and

This chapter sets forth the Groups policies and principles for management of financial risks (liquidity, interest rate, foreign exchange rate, equity and counterparty risks), defined in the Financial Management Framework and the Group counterparty risk management policy introduced by the EDF group. These principles apply only to EDF and operationally controlled subsidiaries (i.e. entities other than Edison, Dalkia and CENG) or subsidiaries that do not benefit by law from specific guarantees of independent management (RTE-EDF Transport and EDF Rseau Distribution France-ERDF). In compliance with IFRS 7, the following paragraphs include information on the nature of risks resulting from financial instruments, based on analyses of sensitivities and credit (counterparty) risks. In view of the Groups international development, a dedicated body was set up at the beginning of 2002 the Financial Risks Control Division (Dpartement Contrle des Risques Financiers - DCRF) - to control financial risks at Group level by ensuring correct application of the principles of the Financial Management Framework. This body also has the task of carrying out a second-level check (methodology and organization) of EDF and operationally controlled group subsidiaries, and an operational verification of financing activities at parent company level. The DCRF issues daily monitoring reports of risk indicators relevant to activities in EDFs trading room.

Liquidity position At December 31, 2010, the Groups liquidities totaled 14,114 million and available credit lines amounted to 11,085 million. The Group also has access to financial resources through short-term issues and bond issue programs. For 2011, the Groups scheduled debt repayments (principal and interest) are forecast at December 31, 2010 at 8,741 million, including 2,641 million for bonds. At December 31, 2010, no Group company was in default on any borrowing. - Management of liquidity risks As part of its policy to manage liquidity, finance its operating investment and external growth program and reinforce long-term debt, the Group undertook bond issues during 2010 (for details see note 38.2.1 to the consolidated financial statements at December 31, 2010 Changes in loans and other financial liabilities). These bonds were issued by EDF in respective amounts of 3,000 million, $2,250 million, 1,000 million and CHF 400 million. Edison also issued bonds in 2010 in the amount of 1,100 million. The average maturity of consolidated debt was thus 8.6 years at December 31, 2010 compared to 7.4 years at December 31, 2009, and EDF SA debt now has average maturity of 10.2 years compared to 8.5 years at December 31, 2009.

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At December 31, 2010, the residual maturities of financial liabilities (including interest payments) are as follows under IAS 39 (values based on exchange and interest rates at December 31, 2010):
Hedging instruments (*) Debt (in millions of euros) 2011 2012-2014 2015 and later Total debt repayment interest expense 8,741 18,161 43,943 70,845 47,777 23,068 Interest rate swaps 50 73 1 124 Currency swaps 93 150 316 558 Guarantees given on borrowings 40 14 143 197

(*) data on hedging instruments include both assets and liabilities

The EDF group was able to meet its financing needs by conservative liquidity management, and obtained financing on satisfactory terms. A range of specific levers are used to manage the Groups liquidity risk: the Groups cash pooling system, which centralizes cash management for controlled subsidiaries. The subsidiaries cash balances are made available to EDF SA in return for interest, so as to optimize the Groups cash management and provide subsidiaries with a system that guarantees them market-equivalent financial terms; centralization of financing for controlled subsidiaries at the level of the Groups cash management department. In this context, EDF Energy and EDF Trading now have credit lines with EDF. The investment subsidiary EDF Investissements Groupe set up in partnership with the bank Natixis Belgique Investissements also provides medium and long-term financing for EDF group subsidiaries;

active management and diversification of financing sources used by the Group: the Group has access to shortterm resources on various markets through programs for French commercial paper (billets de trsorerie), US commercial paper and Euro market commercial paper. For EDF SA, the ceilings for these programs are 6 billion for its French commercial paper, $10 billion for its US commercial paper and $1.5 billion for its Euro market commercial paper. RTE-EDF Transport and EDF Energy also have short-term programs for maximum amounts of 1.5 billion and 1 billion respectively. EDF also has regular access to the bond market through an annually updated EMTN (Euro Medium Term Note) program, registered with the market authorities in France and passported to other EU countries. The current ceiling for this program is 16 billion. EDF Energy, RTE-EDF Transport and Edison also have their own EMTN programs, with ceilings of 4 billion, 6 billion and 2 billion respectively. No drawings have been made on EDF Energys program as this subsidiary is now included in the centralized financing arrangements. EDF also has a 500 million credit line with the European Investment Bank to
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finance generation plants in the French overseas territories. A total of

100 million was drawn on this line during 2010.

The table below sets forth the Groups borrowings of more than 750 million or the equivalent value in other currencies by maturity at December 31, 2010:
Entity Issue date Maturity Nominal amount (millions of currency units) 2,000 1,250 3,269 2,000 1,100 1,500 2,000 1,400 1,200 2,000 2,500 750 1,500 850 1,500 1,750 750 1,000 Currency
(1)

Rate (%)

EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF EDF
(1)

18/11/2008 21/01/2009 15/07/2009 16/01/2009 18/10/2001 29/01/2008 21/01/2009 21/01/2010 23/05/2008 16/01/2009 04/09/2009 04/11/2010 21/04/2010 14/02/2003 29/05/2009 21/01/2009 04/11/2010 14/09/2010

23/01/2013 26/01/2014 17/07/2014 23/01/2015 25/10/2016 05/02/2018 26/01/2019 27/01/2020 29/05/2020 25/01/2021 11/09/2024 12/11/2025 26/04/2030 21/02/2033 02/06/2034 26/01/2039 12/11/2040 22/09/2050

EUR USD EUR EUR EUR EUR USD USD EUR EUR EUR EUR EUR EUR GBP USD EUR GBP

5.6% 5.5% 4.5%

(1)

5.1% 5.5% 5.0% 6.5% 4.6% 5.4% 6.3% 4.6% 4.0% 4.6% 5.6% 6.1% 7.0% 4.5% 5.1%

These two bonds were partially redeemed after two 750 million issues in 2010.

The entities with syndicated loan facilities at December 31, 2010 are EDF, Edison and RTE-EDF Transport: EDFs syndicated loan facility for 6 billion, valid until March 2012 and comprising a 2 billion swingline available for same-day drawing was reimbursed to the extent of 50% in October 2010. It was refinanced by a new syndicated loan facility of 4 billion maturing in November 2015, with two options for 1-year extension. No drawings had been made on either

of these facilities at December 31, 2010; Edisons syndicated loan facility for 1.5 billion is valid until April 2013. No drawing was made on it in 2010; RTE-EDF Transports syndicated loan facility for 1 billion is valid until May 2013, and comprises a 500 million swingline. Another syndicated loan facility for 500 million was set up in June 2010, for a renewable 1-year term. No drawings had been made on these credit facilities at December 31, 2010.

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1.9.1.2 Credit ratings The financial ratings agencies Standard & Poors, Moodys and Fitch Ratings attributed the following long-term and short-term ratings to EDF group entities at December 31, 2010:
Company Agency Standard & Poors EDF Moodys Fitch Ratings RTE-EDF Transport EDF Trading Standard & Poors Long-term rating A+, stable outlook Aa3, stable outlook A+, stable outlook A+, stable outlook Short-term rating A-1 P-1 F1 A-1

Moodys Standard & Poors

A3, stable outlook A, on creditwatch (1) A3, on the watchlist A-, stable outlook BBB+, stable outlook (2) Baa3, stable outlook (3) BBB, negative outlook (4)

N/A A-1 P-2 F2 A-2 N/A F2

EDF Energy

Moodys Fitch Ratings Standard & Poors

Edison SpA

Moodys Fitch Ratings

N/A = non applicable (1) Taken off credit watch by S&P on January 28, 2011 with confirmation of rating as A, negative outlook / A-1 (2) Changed from BBB+, negative outlook /A-2 to BBB, stable outlook/A-2 on November 2, 2010 (3) Changed from Baa2, negative outlook to Baa, stable outlook /A-2 on October 14, 2010 (4) Changed from BBB+, negative outlook /F2 to BBB, negative outlook /F2 on November 9, 2010

1.9.1.3 Management of foreign exchange rate risk

Due to the diversification of its activities and geographical locations, the Group is exposed to the risk of exchange rate fluctuations, which may have an impact on the translation differences affecting balance sheet items, Group financial expenses, equity and net income. To limit exposure to foreign exchange risks, the Group has introduced the following management principles. Local currency financing: To the extent possible given the local financial markets capacities, each entity finances its activities in its own accounting currency. When financing is contracted in other currencies, derivatives may be used to limit foreign exchange risks.

Association of assets and liabilities: the net assets of subsidiaries located outside the Euro zone expose the Group to a foreign exchange risk. The foreign exchange risk in the consolidated balance sheet is managed either by matching with liabilities for acquisitions in the same currency, or by market hedging involving use of financial derivatives. Hedging of net assets in foreign currencies complies with risk/return targets, and the hedging rate varies from 79% to 92% depending on the currency. If no hedging instruments are available, or if hedging costs are prohibitive, the risk on open foreign exchange positions is monitored by sensitivity calculations. Hedging of operating cash flows in foreign currencies: In general, the operating cash flows of EDF and its subsidiaries are in the relevant local currencies, with the exception of flows
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related to fuel purchases which are primarily in US dollars, and certain flows related to purchases of equipment, which concern lower amounts. EDF and the main subsidiaries concerned by foreign exchange risks (EDF Energy, EDF Trading, Edison, EDF Energies Nouvelles) hedge firm or highly probable commitments related with these future operating cash flows.

After taking into account the financing and foreign exchange risk hedging policy, the Groups gross debt at December 31, 2010 breaks down as follows by currency after hedging: 53% in Euros, 29% in pounds sterling and 10% in US dollars. The balance of 8% includes the Swiss franc, the Hungarian forint, the Polish zloty, the Brazilian real and the Japanese yen.

Gross debt structure at December 31, 2010, by currency, before and after hedging
(in millions of euros) December 31, 2010 EUR USD GBP Initial debt structure 28,510 9,257 5,081 Impact of hedging instruments (*) (3,089) (4,568) 8,678 Debt structure after hedges 25,421 4,689 13,759 3,908 47,777 % of debt 53% 10% 29% 8% 100%

Other currencies 4,929 (1,021) TOTAL 47,777 (*) Hedges of liabilities and net assets of foreign subsidiaries

The table below presents the impact on equity of an unfavorable variation in exchange rates on the groups gross debt at December 31, 2010. Sensitivity to foreign exchange risks remains stable overall compared to 2009.

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Sensitivity of the Groups gross debt to foreign exchange rate risks

In millions of euros December 31, 2010 EUR USD GBP Other currencies TOTAL Debt after hedging Debt after a 10% Impact of a 10% unfavorable instruments converted into unfavorable variation in variation in exchange rates Euros exchange rates 25,421 25,421 4,689 469 5,158 13,759 1,376 15,135 3,908 391 4,299 47,777 2,236 50,013

Due to the Groups foreign exchange risk hedging policy for liabilities, the income statement for companies controlled by the Group is marginally exposed to foreign exchange rate risks. The table below sets forth the foreign exchange position relating to net non-operating investments in foreign currency of the Groups principal subsidiaries at December 31, 2010. Net asset position
(in millions of currency units) December 31, 2009 USD CHF (Switzerland) HUF (Hungary) PLN (Poland) GBP (United Kingdom) BRL (Brazil) CNY (China) Assets 5,974 2,282 105,513 2,696 14,454 686 5,187 Bonds 3,400 2,110 Derivatives 1,347 80,064 2,130 8,335 Net position after management (Assets) 1,227 172 25,449 566 2,068 686 5,187

4,051

The assets in the above table are the net assets of the Groups foreign subsidiaries in foreign currencies, adjusted for changes in the fair value of cash flow hedges and available-for-sale financial assets recorded in equity, and changes in the fair value of financial instruments recorded in income. The following table sets forth the risk of foreign exchange loss in equity on the

overall net position relating to the net nonoperating investments in foreign currencies of the Groups principal subsidiaries at December 31, 2010, assuming unfavorable, uniform exchange rate variations of 10% against the Euro. Net positions are converted at the closing rate and impacts are reported in absolute value.

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Sensitivity of net assets to exchange rate risks

December 31, 2010 Net position Net position Impact on after after equity of a management management, 10% converted into variation in in currency Euros exchange rates 1,227 918 92 172 138 14 25,449 92 9 566 142 14 240 2,068 2,403 686 288 29 59 5,187 588 Net position after management in currency 314 125 24,884 1,295 3,683 654 700 December 31, 2009 Net position Impact on after equity of a management, 10% converted into variation in Euros exchange rates 219 22 84 8 92 9 315 32 415 4,147 260 26 7 71

(in millions) USD CHF (Switzerland) HUF (Hungary) PLN (Poland) GBP (United Kingdom) BRL (Brazil) CNY (China)

The foreign exchange risk on available-for-sale securities is mostly concentrated in EDF SA's dedicated asset portfolio, which is discussed in section 1.9.1.6., Management of financial risk on EDFs dedicated asset portfolio. The foreign exchange risk associated with short-term investments and operating liabilities in foreign currencies was not significant for the Group at December 31, 2010.

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1.9.1.4 Management of interest rate risk The Groups exposure to interest rate fluctuations covers two types of risk: a risk of change in the value of fixed-rate financial assets and liabilities, and a risk of change in the cash flows related to floating-rate financial assets and liabilities To limit exposure to interest rate risk, the Group (apart from entities it does not control operationally, notably Edison and CENG) fixes principles as part of its general risk management policy, designed to limit the risk of change in the value of assets invested or possible increases in financial expenses. Some of the debt is variabilized and the spread of exposure between fixed and floating rates is monitored with reference to asset/liability management criteria and expected fluctuations in interest rates. This allocation may involve the use of interest rate derivatives for hedging purposes. The Groups debt after hedging instruments at December 31, 2010 comprised 86% of debt bearing interest at fixed rates and 14% at floating rates. A 1% uniform annual rise in interest rates would generate an approximate 67 million increase in financial expenses at December 31, 2010, based on gross floating-rate debt after hedging. The average cost of Group debt (weighted interest rate on outstanding amounts) was 4.4% in 2010. The table below sets forth the structure of Group debt and the impact of a 1% variation in interest rates at December 31, 2010. The impact of interest rate fluctuations remains stable compared to 2009.

Group debt structure and sensitivity to interest rates

In millions of euros December 31, 2010 Fixed rate Floating rate Total borrowings Initial debt structure 41,150 6,627 47,777 Impact of hedging instruments (49) 49 Debt structure after Impact of a 1% variation in hedges interest rates 41,101 6,676 47,777 67 67

Interest rate variations on fixed-rate debt have no accounting impact. Concerning financial assets, the table below presents the interest rate risk on floating-rate bonds and negotiable debt securities at EDF SA, and their sensitivity to interest rate risks (impact on net income). As fixed-rate negotiable debt securities and bonds are mainly held as part of the dedicated asset portfolio, a detailed sensitivity analysis is provided in section 1.9.1.6.

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Sensitivity of floating-rate securities to interest rate risks

In millions of euros December 31, 2010 Floating-rate securities Value 146 Impact on net income of a Value after a 1% variation in 1% variation in interest rates interest rates 1 145

1.9.1.5 Management of equity risks The equity risk is concentrated in the following areas: Coverage of EDF's nuclear obligations Analysis of the equity risk is presented in section 1.9.1.6, Management of financial risk on EDFs dedicated asset portfolio. Coverage of employee benefit commitments for EDF, EDF Energy and British Energy Assets covering EDFs employee benefit liabilities are partly invested on the international and European equities markets. Market trends therefore affect the value of these assets, and a downturn in equity prices could lead EDF to recognize actuarial losses above the corridor in income. 31% of the assets covering EDFs employee benefit liabilities were invested in equities amounting to 2.1 billion at December 31, 2010. At December 31, 2010, the two pension funds set up by EDF Energy (EDF Energy Pension Scheme and EDF Energy Group Electricity Supply Pension Scheme) were invested to the extent of 37% in equities, representing an amount of 222 million of equities. This is significantly lower than in 2009, due to the sale of EDF Energys distribution networks in October 2010. At December 31, 2010, the British Energy pension funds were invested to the extent of 39% in equities, representing an amount of 1,211 million of equities.

CENG fund CENG is exposed to equity risks in the management of its funds established to cover nuclear plant decommissioning and employee benefit obligations. EDFs long-term cash management In 2010 EDF substantially reduced the portion of equity-correlated investments in its long-term cash management instruments. At December 31, 2010 these investments amounted to a residual 10 million. Direct investment securities At December 31, 2010, EDFs investment in Veolia Environnement amounted to 423 million, with estimated volatility of 46.5% (annualized volatility of monthly returns observed over three years). At December 31, 2010, EDFs investment in AREVA amounted to 313 million, with estimated volatility of 34.5% (annualized volatility of monthly returns observed over three years). 1.9.1.6 Management of financial risk on EDFs dedicated asset portfolio The dedicated assets have been built up progressively by EDF SA since 1999 to cover future decommissioning expenses for the nuclear plants currently in operation, and the long-term storage of radioactive waste.

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This dedicated asset portfolio, for which guiding principles were redefined in the law of June 28, 2006 on sustainable management of radioactive materials and waste, is managed under the supervision of the Board of Directors and its Committees (Nuclear Commitments Monitoring Committee, Audit Committee). The Nuclear Commitments Monitoring Committee (CSEN) is a specialized Committee set up by EDFs Board of Directors when it updated its internal rules on January 25, 2007, in anticipation of the provisions of article 9 of the decree of February 23, 2007. A Nuclear Commitment Financial Expertise Committee (CEFEN) exists to assist the company and its governance bodies on questions of association of assets and liabilities and asset management. The members of this Committee are independent of EDF. They are selected for their skills and diversity of experience, particularly in the fields of asset/liability management, economic and financial research, and asset management. In 2010, dedicated assets received cash allocations of 1,343 million, compared to 1,902 million in 2009 (see note 46 to the consolidated financial statements at December 31, 2010), plus allocation of the RTE-EDF Transport shares on December 31, 2010 at the value of 2,324 million. This value is the net consolidated value of 50% of the Groups investment in RTE (included in investments in associates in the consolidated balance sheet). Planned allocations to dedicated assets were adjusted downwards in March 2010, in response to the proposal to allocate RTE shares, and also the NOME (New electricity market organization) laws proposed deferral to June 29, 2016 of the deadline for establishment of dedicated assets covering all long-term nuclear assets subject to certain requirements (including

the level of coverage of liabilities at June 29, 2011). Disbursements for decommissioning expenses incurred in 2010 were financed by the dedicated asset portfolio to the extent of 362 million, compared to 302 million in 2009. The governance principles set forth the decision-making and control structure for management of dedicated assets. The principles governing the asset portfolios structure, selection of financial managers, and the legal, accounting and tax structure of the funds are also defined. Excluding RTE, strategic asset allocation is based on an asset/liability review carried out to define the most appropriate portfolio model for financing nuclear expenses. A benchmark index is also set for performance monitoring and controlof the overall portfolio risk. Strategic allocation is regularly reviewed, in principle every three years unless circumstances require otherwise. Currently, assets are allocated 50% to international equities and 50% to bonds, although exposure may be different for reasons of tactical allocation. This flexibility was used primarily to absorb the shock of the financial crisis. The equities portion, which was 43.2% at December 31, 2009, was reinforced in the second half of 2010 when equity market trends appeared more favorable, in line with the improvement in economic fundamentals worldwide. At December 31, 2010, the equities accounted for 50.5% of the portfolio (on a like-for-like basis, excluding RTE). The portfolio (excluding RTE shares) contains two sub-portfolios, equities and bonds, themselves divided into secondary asset classes or pockets that correspond to specific markets. A third sub-portfolio, cash, is used to prepare and supply the disbursements related to

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amounts reversed from provisions for plants currently being decommissioned. Tactical asset management is organized around four main themes: supervision of exposure between the two classes, equities and bonds; choice of exposure by geographical area; marginal investment in alternative vehicles to those used in the strategic allocation; selection of investment funds, aiming for diversification: o by style (growth securities, unlisted securities, high-return securities), o by capitalization (major stocks, medium and small stocks), o by investment process (macroeconomic and sectorbased approach, selection of securities on a quantitative basis, etc.), o by investment vehicle (for compliance with maximum investment ratios).

The allocation policy established by the Operational Management Committee39 was developed on the basis of macro-economic prospects for each market and geographical area, and a review of market appreciation in different markets and market segments. EDFs dedicated asset portfolio: Content and performance At December 31, 2010, the overall value of the dedicated asset portfolio was 15,815 million (11,441 million at December 31, 2009).

39

A permanent internal committee for evaluation, consultation and operational decision-making for management of dedicated assets. Page 59 sur 137

Portfolio content under the classification from Article 4, decree 2007-243 of February 23, 2007
Dec 31, 2010 Dec 31, 2010 Dec 31, 2009 Book value in millions of euros Dec 31, 2009 Stock market value in millions of euros

Book value40 in Stock market or millions of realizable value euros in millions of euros Categories 1 Bonds, receivables and other securities issued or guaranteed by an EU member state or OECD country, etc. 2 Bonds, negotiable bills, etc issued by private sector entities 3 Equities, shares and other securities traded on a recognized market, giving access to the capital of companies whose head office is located in the territory of a EU member state or OECD country 4 Shares or units in funds investing in assets referred to in 1 to 3 5 Shares or units in funds investing principally in assets other than those referred to in 1 to 3 6 Real estate shares (shares in unlisted real estate companies) 7 Deposits with BNP Paribas Securities Services Other payables and receivables (dividends receivable, management fees, currency hedges, etc) TOTAL DEDICATED ASSETS EXCLUDING RTE SHARES RTE-EDF Transport shares TOTAL DEDICATED ASSETS

3,040 682

3,342 737

3,038 604

3,375 642

117 7,827 749 None 0.042 -9 12,406 2,015 14,421

125 8,272 1,023 None 0.042 -9 13,491 2,324 15,815

41

117 6,599 447 None 0.025 5 10,810 10,810

142 6,708 569 None 0.029 5 11,441 11,441 42

Breakdown by sub-portfolio and performance in 2010 The breakdown of EDFs dedicated asset portfolio at December 31, 2010 and 2009 is as follows:
December 31, 2010 Incl. RTE Excl. RTE (*) 50.5% 43.0% 42.3% 14.7% 49.5% 100% December 31, 2009 43.2% 56.8% 100%

Investments in equities Investments in bonds RTE-EDF Transport shares

Total 100% (*) relative shares of equities and bond sub-portfolios, excluding RTE shares

40

Sources: BNP Paribas Securities Services for the portfolio excluding RTE, net book value in the individual accounts of EDF for 50% of the shares in EDF RTE Transport. 41 The portfolios stock market value or realizable value includes foreign exchange hedges, which explain the difference from the value reported in note 46 to the 2010 consolidated financial statements. 42 The portfolios stock market value includes foreign exchange hedges, which explain the difference from the value reported in note 27 to the 2010 consolidated financial statements. Page 60 sur 137

The table below shows the performance by sub-portfolio at December 31, 2010 and at December 31, 2009.

Equities sub-portfolio Bonds sub-portfolio Cash sub-portfolio Total portfolio excluding RTE RTE-EDF Transport shares Total dedicated portfolio asset

Dec 31, 2010 Stock market or realizable value in millions of euros 6,807 6,683 1 13,491 2,324 15,815

Dec 31, 2009 Stock market value Benchmark in millions of euros Portfolio index 43 16.15% 2.50% 0.49% 8.79% 14.03% 0.99% 0.44% 7.60% 4,939 6,501 1 11,441 11,441

Performance for 2010

Performance for 2009 Portfolio +28.06% +5.40% +0.83% +13.07% Benchmark index +25.94% +4.35% +0.73% +15.10%

43

Benchmark index: 50% MSCI World DN EUR hedged for the equities sub-portfolio, Citigroup EGBI for the bonds sub-portfolio, 50% MSCI World DN EUR hedged + 50% Citigroup EGBI for the total portfolio. Page 61 sur 137

The variation in EDFs dedicated asset portfolio was influenced in the first halfyear by developments in the sovereign debt crisis and its effects on the international equity markets. The allocation policy gave general priority to increasing diversification on the various markets, and reducing risks related to government bonds from countries adjacent to the euro zone in favor of investment grade corporate bonds, while maintaining low sensitivity to long rates. In view of the financial crisis, which continued into 2010, the Group prudently maintained the portfolios underexposure to equity risks in the first half-year. It subsequently raised the portion of Equity investments in the second half-year when worldwide economic fundamentals and international equity market trends looked more favorable. Thanks to the allocation decisions and careful selection of securities and funds, both sub-portfolios outperformed their benchmark index. The dedicated asset portfolio thus registered a gross change of 890 million (584 million after taxes) in consolidated equity. The distribution of the portfolio between reserved funds and other financial instruments is also presented in note 46 to the consolidated financial statements at December 31, 2010. EDF is exposed to equity risks and interest rate risks through its dedicated asset portfolio. The market value of the equities subportfolio in EDFs dedicated asset portfolio was 6,807 million at December 31, 2010. The volatility of the equities subportfolio can be estimated on the basis of the volatility of the benchmark index, the MSCI World index, which at December 31, 2010 was 15.5% based on 52 weekly performances, compared to 20.2% at December 31, 2009. Applying this volatility to the value of equity assets at the same date, the Group estimates the annual

volatility of the equities portion of dedicated assets at 1,054 million. This volatility is likely to affect the Groups equity. At December 31, 2010, the sensitivity of the bond sub-portfolio (6,683 million) was 4.65, i.e. a uniform 100 base point rise in interest rates would result in a 311 million decline in market value which would be recorded in consolidated equity. While this sensitivity was higher than in 2009 (4.29), it remained well below the sensitivity of the benchmark index (6.23). 1.9.1.7 Management counterparty/credit risk of

Counterparty risk is defined as the total loss that the EDF group would sustain on its business and market transactions if a counterparty defaulted and failed to perform its contractual obligations. The EDF group has a counterparty risk management policy which applies to the parent company and all operationally controlled subsidiaries .This policy defines the organization of counterparty risk management and monitoring, and reporting procedures and circuits. It involves monthly consolidation of the exposures on financial and energy markets and halfyearly consolidation for all activities. The policy also close supervision of Group counterparties (daily review of alerts, special cautionary measures for certain counterparties). These supervision procedures proved their robustness during the financial crisis, when the Group moved to a more frequent (quarterly) consolidation of all counterparty risks. The table below gives details, by rating, of the EDF groups consolidated exposure at the end of September 2010. 87% of the main counterparties for the Groups business qualify as investment grade, a

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stable proportion overall compared to the

AAA September 30, 2010 December 31, 2009 10% 6% AA 23% 23% A 50% 57% BBB 5% 5%

consolidated risk for December 2009.

BB 1% 0% B 0% 0% CCC/C 0% 0% Unrated 11% 9% Total 100% 100%

The exposure to counterparty risk by nature of activity is distributed as follows:

Energy Sales and Cash and asset management purchases and distribution trading (incl. IPP *) (incl. IPP *) 8% 7% 34% 37% 8% 6%

Purchases

Insurance

Total

September 30, 2010 December 31, 2009

* IPP : Industrial Power Plants

5% 6%

45% 44%

100% 100%

Exposure in the energy trading activities is concentrated at EDF Trading. Counterparty risk management for this subsidiary has explicit limits for each counterparty according to its financial robustness. A range of means are used to reduce counterparty risk at EDF Trading, primarily position netting agreements, cash-collateral agreements and introduction of guarantees from banks or affiliates. Particularly for counterparties dealing with EDFs trading room, the Financial Risk Control team has drawn up a framework

specifying authorization procedures and the methodology for calculation of allocated limits (which must correspond to requirements). The level of exposure can be consulted in real time and is systematically monitored on a daily basis. The suitability of limits is reviewed without delay in the event of an alert or unfavorable development concerning a counterparty. The credit risk related to trade receivables is presented in note 26 to the 2010 consolidated financial statements (Trade receivables).

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1.9.2 Management and control of energy market risks 1.9.2.1 Framework for management and control of energy market risks In conjunction with the opening of the final customer market, development of the wholesale markets and on the international scene, the EDF group is exposed to price variations on the energy market which can have a significant impact on its financial statements. Consequently, the Group has an energy markets risk policy (for electricity, gas, coal, oil products and CO2 emission quotas) applicable to EDF and entities in which it has operational control. This policy aims to: define the general framework in which the various Group entities carry out their operational activities (energy generation, optimization and distribution), and their interaction with EDF Trading; consolidate the exposure of the various entities and subsidiaries controlled by the Group on the structured energyrelated markets; implement a coordinated hedging policy at Group level.

an express delegation to each entity, defining hedging strategies and establishing the associated risk limits. This enables the COMEX to set an annual Group risk profile consistent with the financial objectives, and thus direct operational management of energy market risks within the Group, generally over 3-year market horizons; and a specific control process, given its close interaction with the decisions made within the generation and supply businesses. This process involves Group management and is based on a risk indicator and measurement system incorporating escalation procedures in the event risk limits are exceeded.

The Groups exposure to energy market risks through operationally controlled subsidiaries is reported to the COMEX on a monthly basis. The control processes are regularly reappraised and audited.

At Edison and CENG, which are not operationally controlled by EDF, the energy market risk policy and associated control process are reviewed by the companies governance bodies. 1.9.2.2 Organization of risk control The process for controlling energy market risks for entities operationally controlled by the Group is based on: - a governance and market risk exposure measurement system, clearly separating management and risk control responsibilities;

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1.9.2.3 Operational principles for energy market risk management and control The principles for operational management of energy market risks for operationally controlled entities and CENG are based on clearly-defined responsibilities for managing those risks, distinguishing between management of assets (generation and supply) and trading. Managers of generation and supply assets are responsible for implementing a risk management strategy that minimizes the impact of energy market risks on their financial statements (the accounting classifications of these hedges are described in note 40 to the consolidated financial statements). However, a residual risk remains that cannot be hedged on the market due to factors such as insufficient liquidity or market depth, uncertainty over volumes, etc. For operationally controlled entities in the Group, positions on the energy markets are taken predominantly by EDF Trading, the Groups trading entity, which operates on the markets on behalf of other group entities and for the purposes of its own trading activity. As such, EDF Trading is subject to a strict governance and control framework in line with current practices in trading companies. EDF Trading trades on organized or OTC markets in derivatives such as futures, forwards, swaps and options (regardless of the accounting classification applied at Group level). Its exposure on the energy markets is strictly controlled through daily limit monitoring overseen by the subsidiarys management and by the entity in charge of energy market risk control at Group level. Automatic escalation procedures also exist to inform members of EDF Trading's Board of Directors if risk limits (value at risk limit) or loss limits (stop-loss limits) are breached. Value At Risk (VaR) is a statistical measure of the companys potential maximum loss in

market value on a portfolio in the event of unfavorable market movements, over a given time horizon and with a given confidence interval. EDF Trading assesses VaR by the Monte Carlo method, which refers to historical volatilities and correlations estimated on the basis of market prices observed over the 40 previous trading days. The stop-loss limit stipulates the acceptable risk for the trading business by setting a maximum level of loss over a rolling three-month period44. If the limit is exceeded, EDF Tradings Board of Directors takes appropriate action, which may include closing certain positions. In 2010, EDF Tradings commitment on the markets was subject to a daily VaR limit of 45 million (with a daily confidence interval of 97.5%), and a stoploss limit of 70 million45. The VaR limit was reduced in response to the diversification of risks between EDFTrading and EDF-Trading North America. VaR fluctuated between 3.8 million and 23 million over the year. The table below shows the VaR and stoploss limits for 2010 and 2009:
In millions of euros VaR limit (97.5% 1-day) Stop-loss limit 46 New stop-loss limit47 Minimum VaR Average VaR Maximum VaR 2nd-half 2010 45 70 225 3.8 7.3 11.3 6.9 14.8 23.0 8.6 14.0 22.1 7.6 13.4 25.1 1st -half 2010 45 70 2nd-half 2009 48 70 1st -half 2009 38 55

44

The stop-loss limit system was changed on December 15, 2010. The stop-loss limit is now determined based on the maximum reached over a rolling 3-month period. This is closer to trading companies systems and fosters more dynamic management. The limit is set at 225 million. 45 225 million from December 15, 2010. 46 The stop-loss limit system was changed on December 15, 2010 (see note above). 47 From December 15, 2010. Page 65 sur 137

Despite the very high volatility on the markets, the VaR and stop-loss limits were not exceeded in 2010 and EDF Tradings risks remained within the limits of the mandate from EDF at all times. The stoploss has never been triggered since its introduction. At Edison, the governance model separates risk management and control from operational trading activities. For operational purposes, Edison calculates its net exposure48 based on its entire portfolio of assets and contracts (industrial portfolio), apart from those related to trading for the companys own purposes (trading portfolio). The level of economic capital engaged in the markets, expressed in terms of Profit at Risk (PaR)49, is then determined using this net exposure. To meet obligations under IFRS 7, Edison measures the maximum potential decrease in the fair value of financial contracts hedging the risks on its industrial portfolio using a PaR (with a confidence interval of 97.5%). For trading activities, which concern a separate portfolio distinct from the industrial portfolio, Edison sets a limit of 95% VaR. Like the industrial portfolio, Edisons trading portfolio was allocated an amount of economic capital50. This allocation takes account of the risk capital related to the portfolios VaR and the risk capital estimated through stress tests on any non-liquid structured positions.51

SPE was progressively incorporated into the Groups risk management and control system during 2010. At the year-end, the operational principles were in line with the Group model for asset managers. For an analysis of the fair value of the Groups commodity hedging derivatives, see notes 40.4.3 and 40.5 to the consolidated financial statements for the year ended December 31, 2010. For details of commodity contracts not classified as hedges by the Group, see note 41.3 to the same consolidated financial statements.

48

Net exposure is the residual exposure after using all natural hedging options provided by vertical and horizontal integration of the various techniques. 49 Profit at Risk or PaR is a statistical measure of the maximum potential decline, related to unfavourable market movements, in the margin compared to budget for a given time horizon and confidence interval. 50 Economic capital is the capital allocated to deal with market risks. 51 Figures will be available when Edison has published its annual results. Page 66 sur 137

1.9.3 Management of insurable risks The EDF group has an extensive insurance program that is gradually being rolled out to controlled subsidiaries, as well as ERDF and RTE, which are independently managed. The coverage, exclusions, excesses and limits are specific to each contract. The main insurance programs are:
-

General civil liability insurance: this program covers the Group against the possible financial consequences that could arise due to damage or injury (other than nuclear) caused to third parties; Civil liability insurance for directors and senior executives: EDFs insurance program covers the Groups directors and chief executive officers.

Conventional damage policy (Group): EDF is a member of OIL52. Additional insurance coverage is provided by Wagram Insurance Company53 (a 100%-owned EDF subsidiary), other insurers and reinsurers; Damage insurance for the EDF groups nuclear facilities: in addition to coverage through membership of OIL, property damage related to EDFs nuclear installations in France (including following a nuclear accident) and nuclear decontamination costs have been covered since March 1st, 2010 by an insurance policy involving the French nuclear pool and the European Mutual Association for Nuclear Insurance (EMANI), and EnBW benefits from similar coverage. Nuclear damage to British Energy installations is insured by the British pool NRI54 and EMANI; Civil liability insurance specific to nuclear facility operators: EDFs insurance policies meet French legal requirements; British Energy also has similar civil liability insurance in compliance with British law;

The arrangements for setting up damage insurance for the aerial distribution networks of ERDF and the Island Energy Systems are currently under examination. The total value of premiums for all types of coverage provided by EDFs insurance programs and Group programs managed by EDF Assurances was 91.2 million in 2010, of which 59.4 million was borne by EDF.

52

Oil Insurance Limited Mutual Insurance Company. 53 An Irish insurance company wholly-owned by EDF. 54 Nuclear Risk Insurers Limited. Page 67 sur 137

1.10 Provisions

The following table sets forth provisions at December 31, 2010 and December 31, 2009, and assets set aside to secure financing of long-term obligations related to the EDF groups nuclear facilities (see notes 29, 36 and 46 to the consolidated financial statements at December 31, 2010):
(in millions of euros) Provisions for spent fuel management Provisions for long-term radioactive waste management Provisions for back-end nuclear cycle Provisions for decommissioning Provisions for last cores Provisions for decommissioning and last cores Provisions for post-employment benefits Provisions for other long-term employee benefits Provisions for employee benefits Other provisions Total provisions December 31, 2010 December 31, 2009

11,024 6,996 18,020 16,552 3,132 19,684 11,445 1,119 12,564 4,207 54,475

11,147 7,426 18,573 17,320 3,033 20,353 13,118 1,131 14,249 4,817 57,992

Coverage of long-term obligations for the EDF groups nuclear facilities:

(in millions of euros) - EDF: Dedicated assets British Energy: Assets receivable from the NLF and the British government - Other companies Total assets providing secure financing for long-term obligations related to the EDF groups nuclear facilities December 31, 2010 15,829 6,613 518 22,960 December 31, 2009 11,436 6,399 432 18,267

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1.11 Off balance sheet commitments (commitments given)

Off-balance sheet commitments are described in note 42 to the 2010 consolidated financial statements.

1.12 Subsequent events

Details of post balance sheet events can be found in note 49 to the consolidated financial statements at December 31, 2010.

1.13 Transactions with related parties

Transactions with related parties are described in note 47 to the 2010 consolidated financial statements.

1.14 Principal risks and uncertainties

The EDF group policies for risk management and control are described in section 4.1 of the Document de Rfrence. The principal risks and uncertainties to which the Group considers itself exposed are also described in section 4.2 of the Document de Rfrence. This presentation describes the major risks and uncertainties affecting the Group. The Group remains subject to the usual risks specific to its business.

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1.15 Significant events related to litigation in process This chapter is a description of new litigations and of existing ones that have significantly evolved since they were described in section 20.5 of the 2009 Document de Rfrence and section 14 of the 2010 Half-year Financial Report. For further details on these litigations, please refer to those documents. 1.15.1 Labor litigations EDF is a party to a number of labor lawsuits. EDF anticipates that none of these, when considered separately, is likely to significantly impact its profits and financial position. However, as these litigations relate to situations likely to involve a large number of EDFs employees in France, they could represent a systemic risk, which could have a significant negative impact on the Groups financial results. 1.15.2 Tax litigation An audit of the accounts for 2007 and 2008 began in 2010. As at the closing of the 2010 financial year, EDF had received no proposed correction from the tax authorities for those financial years. The deadline for tax reassessments in respect of 2007 is now time-barred, and the audit concerning the year 2008 is continuing. 1.15.3 Verdesis In June 2008, Euro Power Technology filed a complaint and a request for interim measures with the French Competition Authority against EDF and its subsidiary, Verdesis, concerning the biogas activities of the two companies. The French Competition Authority notified the submission of this complaint to EDF on June 9, 2009, and EDF submitted its preliminary observations on June 23, 2009. The French Competition Authority met on February 17, 2010 to assess whether Euro Power Technologys complaint and request for interim measures were admissible. On April 16, 2010, the complaint was dismissed. On April 26, 2010, Euro Power Technology appealed this decision before the Paris Court of Appeal, which dismissed the appeal in a decision of December 2, 2010. A further appeal was lodged with the Cour de Cassation on December 28, 2010. 1.15.4 Red Electrica de Espana (REE) Following their litigation, EDF and REE signed a settlement agreement on June 29, 2010 defining the practical terms for implementing the arbitration ruling, thus putting an end to the dispute. 1.15.5 Alcan Saint-Jean-de-Maurienne On December 31, 1985, EDF, Pechiney (now named Alcan France) and Aluminium Pechiney signed an energy supply contract principally for the supply of Pechineys primary aluminum plant at Saint-Jean-de-Maurienne. Under the terms of this contract EDF undertook to supply volumes of electricity at a set price. The duration of the contract was modified by amendments, and it is due to expire on December 31, 2012 for the Saint-Jean-deMaurienne plant. Further to several written requests from Alcan France to extend the duration of the contract, Alcan France and Aluminium Pechiney served a summons on EDF on August 2, 2007 to appear before the Paris Commercial Court on September 21, 2007 for an initial procedural hearing. After several deferrals, the pleadings were scheduled for October 26, 2009. In its ruling issued on January 18, 2010, the Commercial Court dismissed all of the
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claims by Alcan and Aluminium Pechiney, who filed an appeal against the ruling before the Paris Court of Appeal on March 19, 2010. 1.15.6 Greenpeace A preliminary investigation has been initiated before the Nanterre Criminal Court under concealment of invasion of an automated data processing system after a computer expert from a non-Group agency stated that he had hacked into the computer used by former Greenpeace spokesman in 2006, Mr Yannick Jadot, at the request of an EDF employee. The said employee and his supervisor were formally placed under investigation (mis en examen) on March 24 and June 10, 2009 respectively, and have been subject to disciplinary transfers. EDF was placed under investigation on August 26, 2009. On October 15, 2010, the examining magistrate (juge dinstruction) ordered EDF and the two employees to be sent before the Nanterre Criminal Court. The case is due to be heard by the relevant court in 2011. 1.15.7 Bugey 1 After EDF obtained permission to completely dismantle the Bugey 1 nuclear facility, by decree 2008-1197 of November 18, 2008, an association filed an action for cancellation of the decree before the French Council of State on January 21, 2009. This action was notified to EDF on May 6, 2009. Defense statements were filed on August 7, 2009 by the French State and September 3, 2009 by EDF. A public rapporteur was appointed in October 2010, and the hearing should take place in 2011.

1.15.8 Packaging and interim storage installation for radioactive waste (ICEDA55) Decree 2010-402 of April 23, 2010 authorized EDF to put up a regulated nuclear installation, a conditioning and interim storage installation for radioactive waste in the city of Saint-Vulbas, in Ain. Two petitions for cancellation of the decree were filed with the French Council of State in June 2010, one by Roozen, a horticultural company operating near the site, and the other by a group of environmental protection associations. The defense statements were submitted by the French state and EDF in mid-January 2011. Roozen has also filed two petitions with the Lyon Administrative Court, against the decision of February 22, 2010 in which the Ain local administrative authority (Prfet) granted a building permit to ICEDA. The first of these petitions was filed on April 21, 2010 and sought cancellation of the building permit. The French State and EDF filed their defense statement in mid-July 2010. The second petition, dated November 25, 2010, requested an emergency injunction to suspend the building permit. The petition was refused by an order of the Lyon Administrative Court on December 13, 2010, and Roozen lodged an appeal with the French Council of State on December 28, 2010. 1.15.9 KalibraXE KalibraXE submitted a complaint to the French Competition Authority on January 22, 2007 alleging anticompetitive practices by EDF. This claim came with a request for interim measures. On April 25, 2007, the French Competition Authority considered the case admissible on its merits but dismissed KalibraXEs request
55

Installation de conditionnement et dentreposage de dchets activs. Page 71 sur 137

for interim measures. KalibraXE lodged an appeal against this decision with the Paris Court of Appeal, which dismissed it on June 26, 2007. A ruling of the French Competition Authority of July 8, 2010 decided not to pursue the KalibraXE case, and the matter is now closed. 1.15.10 Secam By a decision of December 10, 1996, the French Competition Authority sentenced EDF for abuse of its dominant market position for having prevented the execution of electricity purchase agreements with independent producers between 1993 and 1995. Following this sentence, the National Association of Independent Producers and Heat Engineers (SNPIET), and approximately twenty producers have introduced an action in payment of damages. A settlement agreement dated July 20, 2007 finally ended the dispute. In July 2007 Secam, which was not a party to the proceedings before the French Competition Authority and civil courts, filed a claim for an indemnification of 79 million before the administrative courts. In a ruling of July 30, 2010, the Chalons-enChampagne Administrative Court dismissed Secams claim. As no appeal was filed within 2 months after the ruling, this litigation is now closed. 1.15.11 Casino The announcement by the Ministry of Ecology, Energy, Sustainable Development and the Sea in Autumn 2009 of a decrease in the photovoltaic electricity purchase prices set by the order of July 10, 2006, caused a heavy increase in requests for purchase contracts, likely to generate a very significant increase in costs to be compensated by the CSPE. In this context, the French Government decided, by an order of January 12, 2010, to modify both the purchase prices of electricity generated from photovoltaic energy and their terms of application. Several producers,

including the Green Yellow companies, subsidiaries of the group Casino operating in the distribution business, then decided to bring proceedings against EDF before the Paris Commercial Court in order that EDF be required to purchase the generated electricity at the more favorable tariff conditions set out by the previous order of July 10, 2006. The French Tribunal des conflits ruled on December 13, 2010 that the dispute was a matter for the judicial courts, and the Paris Commercial Court must now judge the matter on its merits. Approximately ten further litigations on the same grounds are pending, mostly before the judicial courts. 1.15.12 Statoil On February 14, 2003 EDF and Statoil signed a 15-year natural gas procurement contract. In January 2009, the Gasoil 0.2 index, included in the contractual price calculation, ceased to be published, and EDF and Statoil began discussions over its replacement. Failing to reach an agreement, Statoil notified EDF of its decision to trigger the expertise procedure pursuant to the provisions of the contract and submitted, in March 2010, a request for the appointment of an expert to the International Chamber of Commerce (ICC). On November 18, 2010 this expert issued his decision on the replacement index. This decision is final; the parties are bound to abide by it and must amend their contract accordingly. However, a further disagreement then arose between the parties as to the date for retroactive application of the new index in view of the contractual provisions. In January 2011, Statoil sent EDF an invoice for reimbursement of 50 million, applying this index as from February 2009. EDF is contesting this invoice and the retroactive date applied, and paid Statoil 18 million, which it considered due. Discussions with Statoil are continuing.
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1.15.13 Legal proceedings concerning EDFs subsidiaries and interests 1.15.13.1 RTE-EDF Transport 1.15.13.1.1 Annual rent contract with SNCF and transfer of high-voltage lines attributed to SNCF In the dispute over the amount of annual rent paid by RTE to SNCF for use of the high-voltage electricity transmission network facilities attributed to SNCF by the French law of December 30, 1982, the French Council of State declared RTEs appeal inadmissible on January 27, 2011. This decision is final and the matter is thus now closed. In addition, French law 2004-803 of August 9, 2004 on the public electricity and gas service and electricity and gas companies had also set out that SNCFs high voltage electricity transmission network facilities attributed by the law of December 30, 1982 should be sold to RTE. On July 9, 2009 the specially-formed commission Commission Moulin issued its decision on the transfer value of the network, fixing it at 140 million. SNCF filed an appeal against this arbitration decision with the French Council of State on August 20, 2009, considering the transfer value of the facilities to be much higher than the price set by the Commission Moulin. Until the French Council of State rules on the appeal, potentially during 2011, SNCF has proposed to transfer its electricity facilities to RTE. The two companies have reached an agreement on sharing service costs and the sale was agreed for an amount of 140 million, of which only 80 million have been paid by RTE as down-payment. The contracts permitting the transfer of ownership as from May 1, 2010 were signed on May 26, 2010 by SNCF; as a result, RTE is the owner of the lines concerned.

1.15.13.1.2 services

Contribution

to

system

Poweo challenged the mandatory contribution to system services set forth in article 15 of the French law 2000-108 of February 10, 2000, and requested that the contribution should follow market rules. It brought the matter before the CORDIS56 on July 3, 2009. The CORDIS ruled in favor of RTE-EDF Transport in a decision notified to the parties on October 15, 2009. Poweo then lodged an appeal against this decision, which was dismissed by the Paris Court of Appeal on September 7, 2010. The deadline for further appeal by Poweo has now expired and RTE has received a certificate from the French Cour de cassation confirming that no appeal has been filed. 1.15.13.1.3 Tax litigation Since July 2010, RTE-EDF Transport is subject to an audit of its accounts for 2008 and 2009. As at December 31, 2010 no potential reassessment had been identified by the tax inspectors. 1.15.13.2 ERDF 1.15.13.2.1 Tax litigations Since February 3, 2010, ERDF is subject to a tax audit for financial years 2007 and 2008. As at December 31, 2010, ERDF had received no proposed correction from the tax authorities for 2007, and the deadline for tax reassessments in respect of that year has now expired. The audit concerning the year 2008 is continuing.

56

Community Research Information Service.

and

Development

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1.15.13.2.2 Direct Energie Article 23 of the law of February 10, 2000 allows suppliers to offer their customers a single contract for both supply and network access, and enter into a contract known as a GRD-F contract with the network operator for access to the network in order to perform such supply contracts. The current wording of the GRD-F contract provides that in the event of a payment default of the final customer, the supplier must pay ERDF the price corresponding to delivery through the network. Direct Energie challenged this provision through a petition to the CORDIS filed on July 20, 2010. In a decision of October 22, 2010 notified to ERDF on November 17, 2010, the CORDIS ruled that no provision in the current legislation authorized ERDF to force the supplier to bear the risk of nonpayment of the share due to the distributor, and that the supplier must have recovered the amounts due for network use from the final customer before paying them to the network operator. The CORDIS therefore requested that ERDF sends to Direct Energie a new GRD-F contract in compliance with this decision. ERDF lodged an appeal before the Paris Court of Appeal, as this decision undermines the overall balance of the single contract and would increase the complexity of market rules, as well as generating a surplus cost for its implementation that would ultimately be borne by end-customers. 1.15.13.3 Edison 1.15.13.3.1 Legal Action initiated by ACEA SpA concerning Edisons shareholding in Edipower On May 2006, ACEA SpA (ACEA), Romes municipal utility, addressed a complaint to the Italian Government and to Italian regulation (AEEG) and competition (AGCM) authorities, alleging that the joint takeover of Edison by EDF and A2A S.A.

had crossed the threshold of 30% of the share capital of Edipower held by State corporations (as defined by a decree of the Italian Prime Minister, dated November 8, 2000). On July 7, 2006, the AGCM rendered an opinion supporting ACEAs position and officially requiring from the Italian Government and parliament that measures be taken in order to comply with the provisions of the November 8, 2000 decree. In August 2006, ACEA initiated an action against EDF, IEB and WGRMH Holding 4 (along with Edison, A2A S.A., Delmi, Edipower, AEM Turin, Atel and TdE) before the Rome Civil Court. According to ACEA, the crossing of this threshold is a violation of the applicable laws and constitutes an act of unfair competition which could adversely affect the competition on the energy market and the consumers interests. It therefore asked the court to acknowledge the unfair behavior of EDF and A2A S.A, to force EDF and A2A S.A. to sell their stakes in order to remain under the 30% limit and prohibit them from taking and using energy in excess of the 30% threshold, and to compensate ACEA for the prejudice suffered. ACEA also indicated that it would request the court to take interim measures to protect its interests until the court rules on the merits. In January 2007, Endesa Italia joined ACEA in its legal action. The judge refused the filing of additional evidence from ACEA assessing its prejudice at 800 million. The hearing on the merits of the case and on the grounds on which ACEA based itself to assess its prejudice, was initially set for June 26, 2008, and has been postponed several times until January 26, 2011. As EDF and its subsidiaries refused the inter partes proceeding requested by ACEA for the assessment of its prejudice, any potential decision by an Italian judge

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in favor of this assessment should not be binding upon EDF. In December 2010, Endesa Italia, now named E.ON Italia, and EDF signed a settlement agreement in which E.ON Italia undertakes to drop the case and all other claims against EDF in connection with EDFs indirect investment in Edipower. This agreement will be presented to the judge at the hearing of March 24, 2011, as the January 26, 2011 hearing was postponed. 1.15.13.4 BE ZRt In November 2005, the European Commission decided to start a formal investigation on long-term electricity purchase agreements (PPAs) on the grounds of European regulations on State aid. BE ZRt appealed this decision on March 3, 2006. The written procedure came to an end on June 9, 2008. The next step in the appeal will be a court hearing by the European Court of First Instance, at a date that has still not been set. On June 4, 2008, without waiting for the ruling by the European Court of First Instance on the appeal, the European Commission issued a decision requiring the Hungarian Government to terminate the existing PPAs by the end of 2008 and the electricity producers to refund by April 2009 any amounts of State aid received since May 1, 2004, the date on which Hungary joined the European Union. BE ZRt decided to appeal this European Commission decision, initially by supporting the appeals lodged before the European Court of First Instance by other Hungarian producers, and then by filing its own appeal on May 4, 2009. The appeal proceedings against the decision to start a formal investigation, initiated by BE ZRt before the European Court of First Instance in March 2006, are still ongoing.

The Hungarian Government did not challenge the European Commissions decision, and the Hungarian legislator complied with it by enacting a law on November 10, 2008 for termination on December 31, 2008 of all PPAs not already terminated at that date by mutual agreement between the parties. After several discussions between BE ZRt and the authorities, in late April 2010 the European Commission and the Hungarian government finally accepted the principle of netting stranded costs with the State aid paid. As a result BE ZRt will have no illegal State aid to repay. BE ZRts PPAs were thus terminated at December 31, 2008. In order to pursue its business, BE ZRt negotiated an 8-year sales contract with MVM (the state-owned sole Hungarian buyer) for half of its electricity output, and benefited from the Cogen decree57 for the sale of the other half of its output, for a period due to run until 2013. However, in late 2010 MVM informed BE ZRt that it intended to seek termination of this contract, which had become unprofitable due to changes in electricity prices. The failure to reach an agreement is likely to result in a dispute between the two companies. Meanwhile, the Hungarian government has begun reforms to amend the existing Cogen decree, and there is some doubt as to whether BE ZRt can continue to benefit from this decree in 2011. EDF International, whose investment in BE ZRt was undertaken after the companys privatization on specific terms that are now in question, notified the Hungarian State in a letter dated September 26, 2008 that it was entering into a pre-arbitration phase of negotiations under the Energy Charter Treaty (ECT) and the Franco-Hungarian treaty on protection of investments. Subsequently,
57

Decree setting out terms including the tariff for renewable energies and cogeneration, adopted by the Hungarian Government on November 28, 2008. Page 75 sur 137

on May 12, 2009 EDF International sent a notice of arbitration to the Hungarian State on the basis of the ECT, in accordance with UNCITRAL regulation. An initial hearing for these proceedings took place on September 25, 2009, which set the timetable for the arbitration and decided to hold it in Switzerland. EDF International was to finalize its reply by March 26, 2010, but two successive agreements among the parties, validated by the Arbitration Court, extended this deadline to April 15, 2010 when the parties agreed to suspend the arbitration until December 31, 2010. Finally, the date was postponed once more at the request of the Hungarian government to April 30, 2011 in an agreement of December 21, 2010, aiming at reaching an amicable solution. 1.15.14 Litigation arising from the 2010 year-end 1.15.14.1 Syndicat National des Producteurs Indpendants dElectricit Thermique (SNPIET) On December 1, 2010, Frances National Association of Independent Producers and

Heat Engineers (Syndicat National des Producteurs Indpendants dElectricit Thermique - SNPIET) filed a complaint with the French Competition Authority concerning practices employed by EDF and its subsidiary RTE, and a request for interim measures. The investigation services of the Authority transferred this complaint to EDF and RTE on January 11, 2011. The SNPIET claims that EDF and RTE took unfair advantage of their dominant market positions in energy generation and purchase, and electricity transmission. It alleges that RTE favored EDF to select it as supplier in two tender offers of 2005 and 2007, that EDF used predatory pricing in its bids for these tenders, and finally that EDF imposes unfair conditions in its energy purchase contracts with SNPIET members. After discussions involving both parties, a French Competition Authority hearing on interim measures could take place in early April 2011 (no date has been set yet).

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1.16 Financial outlook for 2011

The opening weeks of the year 2011 have seen moderate general growth of the European economies. This recovery is accompanied by restrained inflation. Against this backdrop, electricity demand is also expected to show moderate growth, with a slight rise in wholesale prices in France and the United Kingdom. The rise in coal prices will continue to affect margins (dark spread), especially in the United Kingdom. In Italy, the influence of low spot prices for gas should still be reflected in electricity prices. In France, EDFs business will be affected by significant changes in the regulatory framework resulting from the application of the NOME law reorganizing the countrys electricity market. The expected effective date of this law is July 1, 2011. On the basis of 2010 results, the Group has set itself the following objectives for 2011: organic growth in EBITDA58 of between 4% and 6%59; a net financial debt / EBITDA ratio of between 2 and 2.2 ; 2011 dividends at least equivalent to 2010 dividends.

These growth targets will enable the Group to continue its investments, especially in nuclear maintenance and development.
58

Measured as a percentage of pro forma 2010 EBITDA, based on the 2011 scope of consolidation excluding the British networks, RTE and EnBW. 59 These objectives assume an initial price of 42/MWh for regulated access to historical nuclear energy (ARENH - Accs Rgul lElectricit Nuclaire Historique), consistent with the average tariff for the EDF portfolio of clients under TaRTAM. Page 77 sur 137

1.17 Research and development

Research and development, patents and licenses The primary objective of the EDF groups Research and Development (R&D) Division is to contribute to performance improvement in the operational units, and identify and prepare medium and longterm growth engines. In 2010, the Groups total R&D expenses amounted to 486 million, almost 20% of which were directed into environmental protection: energy efficiency and renewable energies, local impacts of climate change, and other studies concerning environmental issues (biodiversity, water quality, reduction of noise pollution, etc.) and social issues (energy poverty). Close to 70% of EDFs R&D activities each year concern projects instigated by the operational divisions and Group subsidiaries, with the rest concentrated on medium and long-term actions for the future - one of the priority areas of R&D. EDFs Research and Development Division employed more than 2,000 members at December 31, 2010 on six sites (three in the Paris area, one in Germany, one in the UK and one in Poland). In November 2010, EDFs Board of Directors validated the plan to establish EDFs principal R&D center on the ParisSaclay Campus, to benefit from a stronger cooperation dynamic with the higher education and research establishments located nearby. R&D priorities EDFs R&D ambitions focus on three priority areas: - consolidating and developing a carbonfree energy mix; - fostering flexible, low-carbon energy demand;

- adapting the electricity system in response to the latest issues. In the first of these areas, the key objectives are to consolidate the Groups nuclear advantage and develop renewable energies, and to examine the industrial feasibility of carbon capture and storage. In the field of nuclear, hydropower and fossilfired generation, EDF R&D develops instruments and methods to improve operating performance and safely optimize the operating life of the Groups generation facilities, while also preparing for new, stricter environmental constraints. In the field of renewable energies, R&D seeks to identify technological breakthroughs with significant competitive value, and helps to bring the most promising technologies into industrial existence to benefit the Group, particularly in solar and marine energy. For carbon capture and storage, the role of R&D is to evaluate processes in order to take a long-term position in coal-fired generation. R&D works alongside the Heat generation and engineering division on pilot schemes, for instance at Le Havre power plant units with a pilot scheme for amine-based carbon capture. In the second priority area, R&D innovates with new uses for electricity: mobile electricity, heat pumps, energy-saving buildings for different market segments. The R&D teams also contribute to preparation of new offers for customers who are actors in the energy markets, and propose tools and methods to develop customer knowledge, design benchmark energy solutions and improve sales management. To advance sustainable development, EDF R&D is investing in several experiments in Europe to assist future smart cities with local-scale infrastructure optimization, and also participates in other innovations, notably concerning mobile electricity.
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The third priority area for R&D is adapting the electricity system to a carbon-free economy: this will require skills for managing intermittent supply, incorporating new uses of electricity while optimizing generation facilities and network requirements, developing energy management systems on a local scale, and optimizing electricity flows on continental scale. The shift towards smart grids is a cornerstone of these R&D efforts. The R&D teams work on preparation of predicted scenarios and development of energy system models that offer better control of the supply-demand balance. They supply innovative solutions that facilitate incorporation of decentralized intermittent generation, improving management of network assets (wear and tear of equipment, metering procedures, automation to optimize quality and cost, etc). R&D is contributing to the emergence of large continuous-current networks or supergrids in Europe and throughout the world, and covers themes relevant to all areas of the group (smart grids, smart cities, supergrids). EDF R&D: involved in French, European and worldwide research To carry out its research and development programs, EDF R&D concludes partnerships in across the whole world. In France, R&D has a total 12 shared laboratories set up over the years with academic research partners, and technical or industrial centers. Through these laboratories the Group contributes to joint research projects financed by national agencies. R&D also supports four specific chairs of research and development, including through the Foundation for Tomorrows Energies (Fondation pour les Energies de Demain). In Europe, EDF

R&D is involved in some thirty projects. Working with the Energy Technology Institute, the Engineering and Physical Sciences Research Council and several UK universities, it reinforces its profile in partnership-based research in the United Kingdom. In 2010, two new R&D units were opened in Poland and the UK. Among other projects, the British center is involved in research on offshore windpower and nuclear power development, while the Polish center studies issues related to coalfired energy and biomass cofiring. EDF is considering opening other R&D units outside France. In addition to the new British and Polish entities, the Groups R&D joined the French governments Program for Investments with a Future (Programme des Investissements dAvenir), contributing to the Groups smart grid demonstrators. It has also taken part in two Knowledge and Innovation Communities, European Commission initiatives to encourage knowledge and skill transfer between education, research and industry. The priority areas are climate change, intelligent networks and cities, storage, and renewable energies. Intellectual property policy At December 31, 2010, EDF had a portfolio of 418 patented inventions protected by 1,225 intellectual property titles in France and other countries. EDF is also a registered trademark in more than 60 countries.

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1.18 General information on EDFs capital and governance bodies

1.18.1 Changes in the capital At the date of this document, EDFs share capital totals 924,433,331 divided into 1,848,866,662 fully subscribed and paid-up shares with nominal value of 0.50 each. The following table summarizes the authorizations to increase or reduce the capital in force at December 31, 2010 granted to the Board of Directors by EDFs shareholders at their meeting of May 18, 2010, and details of their utilization:
Duration(1) of the authorization and expiry date Maximum total nominal value of the capital increase (in millions of euros) Utilization of authorizations (in millions of euros)

Securities concerned / type of emission Delegation of authority to the Board to increase the capital, maintaining the shareholders preferential subscription right Capital increase comprising all types of securities Delegation of authority to the Board to increase the capital, with no preferential subscription rights for shareholders Capital increase comprising all types of securities Delegation of authority to the Board to make private placement offering(3) with no preferential subscription rights for shareholders Capital increase comprising all types of securities Authorization to the Board to increase the number of shares to be issued in the event of a capital increase with or without preferential subscription rights Capital increase comprising all types of securities Delegation of authority to the Board to increase the capital by capitalization of reserves, profits, premiums or other amounts eligible for capitalization Delegation of authority to the Board to increase the capital as a result of an exchange offer instigated by EDF Authorization to the Board to increase the capital in return for contributions in kind (4) Delegation of authority to the Board to increase the capital to the benefit of members of an EDF group savings plan Offerings reserved for employees

26 months July 18, 2012

45(2)

[none]

26 months July 18, 2012

45(2)

[none]

26 months July 18, 2012

45(2)

[none]

26 months July 18, 2012

15 % of the initial issue(2)

[none]

26 months July 18, 2012 26 months July 18, 2012 26 months July 18, 2012

1,000

[none]

45(2) 10% of the companys share capital up to a maximum of 45(2)

[none]

[none]

26 months July 18, 2012

10 10 % of the capital per 24-month period

[none] [none]

Authorization to the Board to reduce the capital by 18 months canceling treasury shares November 18, 2011
(1) From the date of the shareholders meeting of May 18, 2010 (2) Nominal overall limit for capital increases (3) Offerings covered by an article L.411-2 II of the Monetary and Financial Code. (4) Article L. 225-147 of the commercial code

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At December 31, 2010, the shareholding structure was as follows: French State: Institutional and private investors: Employees: - incl: employee investment fund60 Treasury shares: Total number of shares: 84.48% 13.10% 2.39% 2.10% 0.03%

- The book value of these shares at December 31, 2010 (based on purchase price) was 18,636,871, and their nominal value was 274,301. Treasury shares were acquired for the following purposes: repurchase plan under a liquidity contract, acquisition of shares in the MULTI employee investment fund, and acquisition of shares with no liquidity contract for the purposes of the ACT 2007 free share plan. These shares represented 0.03% of the total share capital at December 31, 2010, distributed by purpose as shown below.

1,848,866,662

1.18.2 Other capital transactions No EDF share is to be attributed to employees under the employee profit-share plan. Information on transactions by the company on its own shares under a liquidity contract (repurchase programs authorized by the shareholders at the general meetings of May 20, 2009 and May 18, 2010): Number of shares purchased and sold in 2010: during the year, EDF purchased 2,607,442 shares and sold 2,294,477 shares in EDF. Average price of share purchases and sales: during 2010, the average purchase price for shares was 36.02 and the average sale price was 36.69. Brokers fees: the fixed commission defined in the liquidity contract was 180,000.00 for 2010. Number of shares registered in the companys name at the year-end, book value (based on purchase price) and nominal value: - 548,601 shares61 were registered in the name of the company at December 31, 2010.

60

Actions EDF employee investment fund (fonds commun de placement dentreprise (FCPE)). 61 Not including participation in Energie MULTI. Page 81 sur 137

Purpose of the repurchase program

Number of shares held

Book value of shares ()

Volume of shares (% of share capital)

Liquidity contract 497,965 Share purchases for the ACT 2007 plan after distribution of free shares 50,636 Acquisition of shares in the Energie MULTI fund 8,743 22,382 0.0005 2,958,013 0.0027 15,678,858 0.0269

At December 31, 2010, the market value of the portfolio based on the closing rate at the same date (30.695) was 62 16,839,308 . No shares were reallocated to other repurchase program purposes. 1.18.3 Allocation of net income The dividend distribution policy is defined by the Board of Directors, depending on the Companys results and financial position and taking into consideration the dividend policies of major French and international companies in the same business sector.

62

Not including participation in Energie MULTI. Page 82 sur 137

The following dividends were paid for the previous three years:
Year 2007 2008 2009 Number of shares 1,822,171,090 1,822,171,090 1,848,866,662 Dividend per share 1.28 1.28 1.15 Total dividends paid (after deduction of treasury shares) 2,330,266,755.20(1) 2,328,200,485.12(2) 2,111,146,365.85(3)

(1) Interim dividend paid in 2007: 1,056,809,460.08 (2) Interim dividend paid in 2008: 1,164,067,897.60 (3) Interim dividend paid in 2009: 1,002,006,770.05 (including 937,815,444.36 paid in the form of new shares)

100% of the dividend is eligible for the special 40% tax allowance under paragraph 3-2 of article 158 of the French tax code. The Board of Directors decided at its meeting of November 30, 2010 that interim dividends of 0.57 per share would be paid from 2010 net income. The corresponding amount, totaling 1,053,582,029.82 (after deduction of treasury shares), was thus paid out on December 17, 2010.

1.18.4 Share price Movements in the EDF share price, which is part of the CAC 40 index, were as follows from its initial listing on November 21, 2005 up to January 31, 2011:

EDF share price from the IPO to January 31, 2011

200,00%

EDF
150,00%

CAC 40 INDEX STXE 600 Util Pr

100,00%

50,00% 32,2 +0,6% 324,65 -0,29%

0,00%

-50,00%

-100,00%

(Source: Bloomberg)
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From January 1, 2010 to January 31, 2011, the EDF share price decreased by -22.5%, the Euro Stoxx Utility index declined by -5.6%, and the CAC 40 declined by -0.2%. At January 31, 2011, the EDF share price at close of business was 32.20 (41.56 at January 1, 2010). Its lowest closing price during the period was 30.28 on July 5, 2010, and the highest closing price was 42.14 on January 8, 2010. EDFs market capitalization at January 31, 2011 was 59.53 billion. 1.18.5 Scope of consolidation shareholding thresholds and

Each share entitles the holder to one vote, and at the date of this document, there is no statutory restriction on the exercise of voting rights by shareholders. At the date of this document, to the companys knowledge no shareholder agreement concerning EDF shares had been concluded. 1.18.7 Corporate governance Corporate governance is described in detail in the 2010 Report by the Chairman of the Board of Directors on corporate governance, internal control and risk management procedures. 1.18.7.1 Board of Directors The Board of Directors determines the orientation of the companys activities and oversees their implementation. It defines all the major strategic, economic, financial and technological orientations concerning the company, and also examines any other matters related to the Companys operation, governing such affairs through its deliberations. In compliance with article 6 of the Law of July 26, 1983 on the democratization of the public sector, the Board of Directors has eighteen members: one third of members are elected by employees and two thirds are appointed by the shareholders after nomination by the Board of Directors, apart from members representing the French government who are appointed by decree. A directors term of office lasts five years. Board meetings are also attended by the head of the French States Economic and Financial Verification Mission for EDF and the Works Council secretary, who have no voting rights To carry out its duties, the Board of Directors has set up five committees of selected members:
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A list of all consolidated companies is included in the notes to the 2010 consolidated financial statements. 1.18.6 Capital structure and voting rights At the date of this document, EDFs share capital consisted of registered or bearer shares which must at all times be held at least 70% by the French State, pursuant to article 24 of the Law of August 9, 2004. These shares are freely negotiable subject to the laws and regulations in force and the statements below, and their sale or transfer is not restricted by any statutory provision. To the best of the companys knowledge, there is no restriction approved by a member of the Board of Directors concerning transfer of his shares within a certain time period, except for restrictions resulting from the Companys code of trading ethics. Shares held through investment funds under the EDF groups corporate savings plan invested in EDF shares, or shares acquired from the State in application of privatization laws, are subject to the unavailability or non-transfer rules resulting from the special provisions applicable to such operations.

The Audit Committee This committee executes the missions assigned to it by the ordinance 2008-1278 of December 8, 2008 which transposed the eighth EU directive of May 17, 2006 on statutory audits of annual accounts into French law. Article L.823-19 of the Commercial Code requires at least one member of the committee to have specific skills in finance or accounting and meet independence criteria defined and disclosed by the Board of Directors. At a joint meeting held on January 14, 2011 the Ethics Committee and the Appointments and Remuneration Committee examined the situation of Mr Mariani with regard to the criteria of independence and specific finance or accounting skills, as recommended by the French market regulator AMF in its Final report on the audit committee of July 22, 2010. The Board of Directors decided at its meeting of January 21, 2011 that Mr Marianis situation met these requirements. Prior to examination by the Board of Directors, the Audit Committee examines and issues an opinion on the Companys financial position, the medium-term plan and budget, the financial report prepared by the Finance Division (EDFs corporate and consolidated financial statements and the Groups management report), risk monitoring, internal audit and control, the insurance policy, the appointment of Statutory Auditors, their independence and their fees, and the financial aspects of any particularly significant external growth or disposal plans. The Nuclear Commitment Monitoring Committee This committee monitors changes in nuclear provisions and issues an opinion on questions of governance of dedicated assets, association of assets and liabilities

and strategic allocation. It ensures that EDFs dedicated asset management complies with the policy for developing and managing those assets. It can draw on the work of the Nuclear Commitment Financial Expertise Committee, which consists of six63 independent experts responsible for advising the Company and its governance bodies on the subject. The Strategy Committee This committee issues an opinion to the Board of Directors on the Companys major strategic orientations, particularly the strategic development plan, the industrial and commercial policy, the public service agreement, strategic agreements, alliances and partnerships, the research and development policy, and external or internal growth or divestment projects requiring Board approval. Since 2010, the Chairman has invited directors who are not members of this committee to attend Strategy Committee meetings. The Ethics Committee This committee ensures that ethical considerations are taken into account in the work of the Board of Directors and the management of EDF. It examines the annual report, excluding the financial statements (management report and sustainable development report), the report by the Ethics advisor, and the reports of the Mediator, the General Inspector for nuclear safety and radiation protection, the Hydropower safety Inspector and the General Inspector for governance in the regulated sector. The Ethics Committee also oversees an annual evaluation of the Board of Directors.
63

At its meeting of October 26, 2010, the Board of Directors designated the 6 members of the CEFEN for a new three-year period. Page 85 sur 137

The Appointments and Remuneration Committee This committee submits proposals to the Board for appointment of directors by the shareholders and sends the Minister of Finance and Minister of Energy an opinion on the remuneration of the Chairman and CEO for approval, concerning the basic and performance-related salary (including the objective criteria and assessment of the CEOs results in the light of the objectives set), and other associated components of pay. This opinion is also sent to the Board of Directors for deliberation and determination of the remuneration level. This committee examines the remuneration of the Chief Officers when necessary, and issues an opinion on the proposed remuneration submitted by the Chairman and CEO: basic and performance-related salary (including the objective criteria and assessment of each Chief Officers results in the light of the objectives set), and other associated components of pay. This opinion is sent to the Minister of Finance and Minister of Energy for approval and is also presented to the Board of Directors, which discusses and sets the salary, objectives and other remuneration for the Chief Officers. The Appointments and Remuneration Committee also sends the Board of Directors its opinion on the terms of remuneration for key management personnel (fixed and variable portions, calculation method, indexation), and the amount and distribution of directors fees. It ensures that succession tables exist for posts on the Executive Committee. During 2010 the Board of Directors met 12 times, and the Committees held a total of 23 preparatory meetings. The attendance rate at meetings of the Board of Directors was 86.6% on average in 2010.

Details of each Directors roles and the functions occupied at December 31, 2010 in all companies are given below (at December 31, 2010): Directors appointed by the General Shareholders Meeting: Henri Proglio Date of birth: June 29, 1949 Chairman and CEO of EDF since November 2009 Chairman of the Board of Directors of EDF Energy Holdings and Transalpina di Energia President of the Fondation EDF Diversiterre and Electra Director of Edison and EDF International Chairman of the Board of Directors of Veolia Propret and Veolia Transport Director of Veolia Environnement Member of the Supervisory Board of Veolia Eau Director of CNP Assurances, Dassault Aviation, Natixis, Fomento di Construcciones y contratas and the European Foundation for the Energies of Tomorrow Member of the Atomic Energy Committee, the High Committee for transparency and information on nuclear safety and the National Committee for Business Sectors of vital importance Director of EDF since September 2004 Philippe Crouzet Date of birth: October 18, 1956 Chairman of the Supervisory Board of Vallourec Director of EDF since November 2009 Mireille Faugre Date of birth: August 12, 1956 General Manager of Assistance Publique Hpitaux de Paris Director of Essilor Director of EDF since November 2009 Michael Jay Date of birth: June 19, 1946

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Crossbench member of the House of Lords, Chairman of the House of Lords Appointments Commission and member of its EU Sub-Committee on foreign, defence and development policy Director of Associated British Foods, Candover Investments, Crdit Agricole SA and Valeo SA Chairman of Merlin (International medical NGO) Honorary Fellow of Magdalen College, Oxford University Director of EDF since November 2009 Bruno Lafont Date of birth: June 8, 1956 Chairman and CEO of Lafarge Chairman of the French association Entreprises pour lEnvironnement (EPE) Advisor to the Mayor of Chongqing (China) Director of EDF since May 2008 Pierre Mariani Date of birth: April 6, 1956 Delegate director and Chairman of the Management Committee of Dexia Member of the Boards of Directors of Dexia Banque Belgique, Dexia Crdit Local and Dexia Banque Internationale in Luxembourg Director of EDF since November 2009 Directors representing the French government, appointed by decree Pierre-Marie Abadie Date of birth: July 13, 1969 Director of Energy at the General division for energy and climate for the French Minister of Ecology, Sustainable development, Transport and Housing, the Minister of the Economy, Finance and Industry and the Minister of Industry, Energy and the Digital Economy Government representative at the Agence Nationale pour la gestion des dchets radioactifs (ANDRA) Member of the Governing Board of the International Energy Agency (IAE)

Director of EDF since August 2007 Jean-Dominique Comolli Date of birth: April 25, 1948 Equity investments Commissioner at the French Ministry of the Economy, Finance and Industry Member of the Supervisory Board of Areva Director of Fonds Stratgique dInvestissement, France Telecom, Air France-KLM and SNCF Director of EDF since September 29, 2010 Yannick dEscatha Date of birth: March 18, 1948 Chairman of the government space policy agency Centre National dEtudes Spatiales (CNES) Member of the Academy of Technologies Chairman of the Board of Directors of Troyes University of Technology Permanent representative of the CNES on the Board of Arianespace SA and Arianespace Participation Director of Thals Director of EDF since November 2004 Philippe Josse Date of birth: September 23, 1960 Director of the National Budget for the Ministry of the Budget, Public Accounts, Civil Service and State reform Director of Air France-KLM and SNCF Director of EDF since April 2006 Pierre Sellal Date of birth: February 13, 1952 French Ambassador Secretary General of the Ministry of Foreign and European Affairs Member of the Supervisory Board of Areva Member of the Atomic Energy Committee and the High Council of the Institut du monde arabe Director of Ecole Nationale dAdministration, Audiovisuel extrieur de France, CulturesFrance, Agence nationale des titres scuriss, Commission de
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rcolement des dpts duvres dart and the Etablissement de prparation et de rponse aux urgences sanitaires Director of EDF since April 2009 Philippe Van de Maele Date of birth: December 29, 1961 Chairman and CEO of the Environment and demand-side management agency Agence de lenvironnement et de la matrise de lnergie (ADEME) Director of CEMAGREF Director of EDF since November 2009 Directors elected by the employees: Christine Chabauty Date of birth: July 19, 1971 Commercial attache for Major Accounts at EDFs Sales Division Member of an industrial tribunal Director of EDF since November2009, sponsored by the CGT union Alexandre Grillat Date of birth: December 8, 1971 Director of Studies for EDF's Head of Strategy Director of EDF since September 2004, sponsored by the CFE-CGC union Philippe Massa Date of birth: November 21, 1949 Engineer at EDFs Thermal engineering center

Director of EDF since November 2009, sponsored by the CGT union Philippe Pesteil Date of birth: September 1, 1957 Internal auditor at the General Technical Department of EDFs hydropower generation and engineering division Director of EDF since September 2004, sponsored by the CFDT union Jean-Paul Rignac Date of birth: May 13, 1962 Research engineer at EDFs Research and Development division Director of EDF since November 2007, sponsored by the CGT union Maxime Villota Date of birth: November 25, 1959 Purchase policy coordinator at the Finance and Industrial relations mission, Tricastin nuclear electricity generation plant Director of EDF since December 2006, sponsored by the CGT union Director whose term of office ended during 2010: Bruno Bzard Director of EDF from August 2002 to September 2010, replaced by JeanDominique Comolli on September 29, 2010

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1.18.7.2 Chairman and CEO and directors compensation The tables below show the compensation and various benefits paid and payable during 2010 to the Groups directors and the chairman and CEO by EDF and its controlled companies at December 31. 1.18.7.2.1 Remuneration of the Chairman and Chief Executive Officer The table below summarizes the compensation and various benefits payable to the Chairman and Chief Executive Officer for 2010.
Summary of compensation, stock options and shares attributed to the Chairman and chief executive officer
2010 Henri Proglio, Chairman and CEO Compensation owed for the year Value of options attributed during the year Value of performance shares attributed during the year TOTAL (en euros) 1,604,820 n/a n/a 1,604,820

Details of components of remuneration The Chairman of the Board of Directors is not paid directors' fees. No stock subscription or purchase options were awarded to the Chairman and CEO in 2010, and no options were exercised by him during the year. Similarly, no performance shares were attributed to the Chairman and CEO in 2010, and no performance share became available.

Henri Proglio benefits from no special pension scheme from EDF, and received no starting bonus or termination indemnity for leaving his functions in the Company. He has no employment contract with the Company. The following table summarizes the remuneration due to the Chairman and CEO for 2010 and paid to him during the year:

Summary of compensation of the Chairman and Chief Executive Officer 2010

Due for 2010

(en euros)
Paid during 2010

Henri Proglio, Chairman and CEO

Fixed salary Variable salary Exceptional salary Directors fees (1) Benefits in kind

TOTAL

1,000,000 600,000 nant n/a 4,820 1,604,820

1,101,370 52,307 nant 10,000(2) 5,187 1,168,864

(1) Company car and benefits in kind in the form of energy. (2) Directors fees for 2009 (until appointment of Henri Proglio as Chairman and CEO on November 25, 2009) paid in 2010.

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1.18.7.2.2 Remuneration of Board Members In compliance with the law, the Chairman of the Board of Directors receives no directors fees, and directors representing the government and employee representative directors also receive no fees for their services as directors. The Board of Directors submits the amount of directors fees to the General Shareholders Meeting for approval. Directors fees are allocated according to attendance at Board and Boards Committees meetings.
Summary of directors fees paid to directors

Board members Philippe Crouzet Mireille Faugre Michael Jay Bruno Lafont Pierre Mariani Henri Proglio (3) Frank E. Dangeard (4) Daniel Foundoulis (4) Pierre Gadonneix Claude Moreau (4) TOTAL (in euros)
(1) For the second half of 2009 and the first half of 2010 (2) For the second half of 2008 and the first half of 2009 (3) Until his appointment as Chairman of the Board (4) Until their term of office expired on November 22, 2009

2010 (1)

2009

(2)

16,000 18,000 17,000 26,000 20,000 10,000 15,250 13,000 11,750 147,000

35,250 34,000 66,250 44,750 42,750 223,000

The decrease in Directors fees between 2009 and 2010 results from the higher number of meetings held by the Board in the second half of 2008 (12 compared to the usual average of 5 or 6) in connection with the acquisitions of British Energy and nuclear assets of Constellation Energy Group.

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1.18.7.3 EDF share ownership by Directors The following directors owned shares in EDF at December 31, 2010:
Number of EDF shares Henri Proglio (shares held directly) Christine Chabauty (shares held through an employee investment fund - FCPE) Philippe Crouzet (shares held directly) Mireille Faugre (shares held directly) Alexandre Grillat (shares held through an employee investment fund - FCPE) Michael Jay (shares held directly) Bruno Lafont (shares held directly) Pierre Mariani (shares held directly) Philippe Pesteil (shares held through an employee investment fund - FCPE) Maxime Villota (shares held through an employee investment fund - FCPE) 51 135 200 106 307 100 150 1 504 25

Messrs Abadie, Comolli, DEscatha, Josse, Massa, Rignac, Sellal and Van de Maele hold no shares in EDF at December 31, 2010. 1.18.7.4 Rules applicable to changes of bylaws Under the French commercial code and article 20-4 of the bylaws, only an extraordinary general shareholders meeting has the power to change the bylaws. However, it is not entitled to increase shareholder commitments, except for operations resulting from reverse share splits carried out under the proper procedures. Subject to the laws applicable to capital increases by capitalization of reserves, profits or issue premiums, the meeting can only validly take decisions if the shareholders present, represented or voting by correspondence own at least one quarter on the first call, and at least one fifth on the second call, of shares carrying voting rights. If this quorum is not met, the second meeting may be postponed to a date no later than two months after the date the meeting was initially called for. Subject to the same requirement, decisions at the extraordinary meeting require a two thirds majority of shareholders present, represented or voting by correspondence. Internal control The Chairmans 2010 report issued in application of article L.225-37 of the Commercial Code, and the Statutory Auditors report, are sent to the Board of Directors at the same time as the management report.

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1.18.8 EDF S.A.

Corporate financial statements at December 31, 2010
In millions of euros Sales excluding taxes Operating profit Profit before exceptional items and tax Net exceptional profit (loss) Net income 2010 40,906 3,693 1,898 254 1,492 2009 38,895 3,926 3,994 987 4,580

1.18.8.1 Net income The 2010 income statement is marked by growth of over 5% in sales and a decrease of close to 6% in operating profit, particularly affected by extension of the TaRTAM transition tariff system to 2010 and 2011. The net financial income was down by 1,874 million: in 2010, impairment was booked in respect of equity investments, whereas in 2009 EDF reversed amounts from impairment on equity investments and foreign exchange losses on the pound sterling. The 733 million decline in exceptional profit in 2010 largely results from the transfer to Alpiq of drawing rights on the Emosson hydropower plant in 2009, in exchange for shares in the company for a value of 481 million. Another factor was the European Court ruling of December 15, 2009 canceling the European Commissions decision of December 16, 2003 which had declared that EDFs non-payment in 1997 of income taxes on the utilized portion of provisions for renewal of French national grid facilities recorded under grantors rights should be classified as state aid, and ordered its recovery by the French State. This led EDF to record 191 million of financial income (corresponding to reimbursement of the interest paid for the period 1997-2004) and 507 million of tax income (corresponding to the principal) in 2009.

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1.18.8.2 Five-year summary of EDF results (EDF SA summary corporate financial statements):
2010 Capital at year-end Capital (M) Capital contributions (M) Number of ordinary shares in existence Number of priority dividend shares (with no voting rights) in existence Maximum number of future shares to be created By conversion of bonds By exercise of subscription rights Operations and results of the year (M) Sales excluding taxes Earnings before taxes, employee sharing, depreciation and provisions Income taxes Employee profit share for the year Earnings after taxes, employee profit sharing, depreciation and provisions Earnings distributed Interim dividend distributed Earnings per share (/share) Earnings after taxes and employee profit sharing, but before depreciation and provisions Earnings after taxes, employee profit sharing, depreciation and provisions Dividend per share Interim dividend per share Personnel Average number of employees over the year Total payroll expense for the year (M) 1,054 40,906 profit 4,906 660 1,492 38,895 4,531 402 4,580 2,111(2) 1,002 39,003 3,842 (346) 867 2,328(2) 1,164 33,638 5,838 835 4,934 2,330(2) 1,057 32,891 10,269 1,176 6,055 2,113 924 2009 924 2008 911 2007 (1) 911 2006 911 -

1,848,866,662 1,848,866,662 1,822,171,090 1,822,171,090 1,822,171,090

2.30 0.81 0.57 60,380 3,377

2.23 2.48 1.15 0.55

(2)

2.30 0.48 1.28 0.64

(2)

2.75 2.71 1.28 0.58

(2)

4.99 3.32 1.16

59,837 3,265 2,025

59,131 3,178 1,917

58,778 2,940 1,737

96,856 4,278 2,420

Amounts paid for employee benefits and similar (social security, company benefit 2,125 schemes, etc) (M) (1) In 2007, distribution activities were transferred to a subsidiary (2) Including the interim dividend paid out

1.18.8.3 Payments to Suppliers Since December 1, 2008, the Company has applied the French law of modernization of the economy and settles supplier invoices within 60 days of the invoice date.

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2 Social and environmental information

2.1 Social and environmental policy

2.1.1 Framework for EDFs sustainable development policy The EDF groups environmental and social policy draws on the principles stated in its Agenda 21 64 and the United Nations Global Compact65, which the Group joined in 2001. The Group has formally defined its action in a sustainable development policy that addresses the relevant key issues, guided by EDFs ethical approach. This is reflected in an environmental policy focusing on climate change prevention and protection of biodiversity, a social policy promoting access to energy, local responsibility and contributions to energy-related education. The Groups sustainable development policy is also being developed through more specific commitments such as the Public Service Agreement signed with the French government.

2.1.2 Implementation of social and environmental commitments The Group has a sustainable development department whose task is to stimulate, coordinate, support and report on action by the operational divisions of EDF and Group companies to honor their sustainable development commitments. The heads of sustainable development in the principal Group companies meet in a Sustainable Development Committee formed in late 2008. Their task is to supervise implementation of Group policy and seek coherence in the actions taken, while respecting the independence of each component of the group. The Group also has an environmental management system (EMS) that is used in all entities. Major investment projects in the Group undergo a sustainable development assessment before being examined by the COMEXs Commitments committee. Exchange and genuine dialogue with all stakeholders in its business are a key aspect of the sustainable development policy for the Group as a whole and each individual company. For EDF, this is achieved through consultation bodies local to generation facilities and industrial establishments (such as the Liaison and information committees at the nuclear power plants) and partnerships with nongovernmental organizations. Centrally, in 2008 the Group continued dialogue with panels of independent
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64

A program for action for the 21st century developed at the 1992 Earth Summit and adopted by countries that signed the Rio de Janeiro declaration of June 1992. The EDF Groups Agenda 21 is available from its website: www.edf.com. 65 An international initiative by the SecretaryGeneral of the United Nations, asking member companies to adopt, promote and implement ten universal principles on human rights, working standards, environmental protection and anticorruption.

advisors who have relevant experience and specialist knowledge of a field related to key issues for the Group or representative of the expectations and interests of society in general. The Sustainable Development (SD) Panel is chaired by a non-Group member and plays a consultative role for the Group's orientations, providing critical appraisal of the implementation of its sustainable development commitments. Sustainable development is also a commitment of transparency to stakeholders, and indicators are reported to the Board of Directors via the annual report and sustainable development report available online at www.edf.com. The indicators used are based on the criteria defined in the Global Reporting Initiative66, the NRE67 law and the Global Compact commitments. The Group is progressively rolling out a process to have the quality of these non-financial indicators verified by the Statutory Auditors. At our request, for 2010 the statutory auditors have issued a review report equivalent to a moderate assurance68 opinion for the Group. The sustainable development information published by the Group is based on valuations by ratings agencies or non-financial analyst departments acting on investors behalf. Since 2005, EDF has been included in the ASPI index, an ethical index comprising 120 firms assessed on the basis of their sustainable development performance by the French CSR rating agency Vigeo.

66

An association for the development of reporting standards. 67 French law on new economic regulation. 68 An intermediate level of certification expressing a conclusion as to the absence of significant error on a selection of indicators. Page 95 sur 137

2.2 Environmental information

2.2.1 Changes in regulations Following the European Commissions presentation of its Climate Package on January 23, 2008, several laws were enacted in 2009 to achieve the three ambitious targets set by the European Union for 2020: a 20% reduction in greenhouse gas emissions, a 20% increase in energy efficiency, and a 20% proportion of renewable energies in energy consumption. These laws, published in the OJEU69, principally comprise: - directive 2009/28/EC on promotion of the use of energy from renewable sources; - decision 406/2009/EC on the effort of Member States to reduce their greenhouse gas emissions; - directive 2009/29/EC amending the greenhouse gas emission allowance trading scheme; - directive 2009/31/EC on the geological storage of carbon dioxide, which sets out the legal framework for this activity. In line with the objective to extend and reinforce the measures introduced by the IPPC directive of 1999, the Council adopted the new industrial emissions directive (IED) on November 8, 2010. This directive lays down stricter emission standards for NOx, SO2 and particulates that will apply from 2016. Exemptions will apply for a limited period of time (from 2016 to 2023) for large, old combustion facilities. In France, the law on implementation of decisions resulting from the Environment Round Table process known as Grenelle 1,
69

published in Frances Official Gazette (Journal Officiel) of August 5, 2009, covers a range of medium to long-term general environmental commitments and objectives (such as reducing greenhouse gases and improving energy efficiency). These orientations and objectives have been put into action through French law 2010-788 of July 12, 2010 on the national commitments for the environment, known as Grenelle 2. As the ministrys press release stated, this law introduces six major areas of work: the battle against global warming (in the construction industry, town planning, transport, energy control, etc), protection of biodoversity, development of sustainable agriculture, risk prevention and health protection, application of sustainable waste management, introduction of governance appropriate to this ecological evolution in our society and our economy. The law nonetheless requires enactment of more than two hundred implementation decrees, many of which are likely to concern EDF business (in particular, approximately forty will concern the fields of energy, energy efficiency, and construction). 2.2.2 Environmental system management

The Groups entities use an environmental management system (EMS) with ISO 14001 certification, initially awarded in 2002 and renewed in 2008 for a three-year period. The EMS was simplified in 2006 in order to organize the initiatives, objectives and indicators according to the commitments in the Groups environmental policy, led by a Supervisory Board and groups focusing on specific
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Official Journal of the European Union.

themes. Half of the Groups contribution to profit sharing for EDF employees depends on the degree of achievement of EMS targets. EDF SAs 2008-2011 profit sharing agreement, signed in July 2008, defines criteria for achievement of ethical, environmental and social objectives. 2.2.3 Environmental research Through its medium and long-term preparatory action, EDFs R&D is panning for the Groups future and also helps to address to environmental issues: - consolidating and developing a carbonfree energy mix, sustaining the Group's nuclear advantage and helping to make France independent of fossil fuels for its energy needs, by optimizing the operating lifetimes of nuclear and hydropower plants, contributing to industrial emergence of renewable energies (solar power, geothermal energy, etc.), developing efficient, low-carbon energy uses (such as heat pumps) and examining the industrial feasibility of carbon capture and storage. - adapting the electricity system to new issues, contributing to electricity network safety and developing research in three fields: increasing transmission line transit capacities, optimizing the fleet of distribution assets and managing the shift towards more intelligent networks. - controlling energy demand, by integrating new technologies for better customer service, making them actors in the system (smart meters, incorporating renewable energies into homes, etc). For example, the new construction industry rules on heat performance of buildings are ambitious and require a new stage in electricity instruments and solutions. A new laboratory named Bestlab, which began operation in 2010, can carry out natural-climate performance assessments of new building components with innovative integration of high thermal

insulation, ventilation, recovery of free energies, and energy production. This new laboratory puts EDF at the forefront of knowledge of new solutions. 2.2.4 Contributing to the battle against climate change Thanks to the high proportion of nuclear and low-carbon renewable energy plants in its generation fleet (including hydropower), the EDF group firmly intends to remain the leading energy operator in the combat against climate change and reduction of greenhouse gas emissions. It subscribes to the EU objective of a minimum 20% reduction in emissions between 1990 and 2020, taking into account the diversity of local energy situations. The Groups commitment in its sustainable development policy to remain the lowest carbon emitter of all Europes large energy operators is achievable through optimized operation of existing generation facilities and large-scale renewal of the fleet. Meanwhile, the Groups strategy also involves helping customers to reduce their own CO2 emissions by creating and promoting ecoefficient packages and advice on rational energy use. A plan to reduce emissions from EDFs buildings and vehicle fleets, and an employee motivation program to encourage personal commitment to the fight against climate change, were rolled out in 2010. Each Group company now has its own specific strategy adapted from the Group strategy, as appropriate to its business and the energy environment in which it operates. 2.2.4.1 Reducing CO2 emissions by industrial facilities, particularly in generation 95% of EDFs electricity generation in France produces no CO2 emissions, keeping the specific emission rate for 2010 to under 40g CO2/kWh, compared to the average of around 330 CO2/kWh for

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neighboring European countries70. The EDF groups worldwide specific emission rate was 108.9g CO2/kWh in 2010 (EDF estimates, including emissions related to heat generation). EDF has several ways to reduce its greenhouse gas emissions: - In the short term, optimization of the generation fleet by improving operating performance, factoring carbon costs into ranking of generation facilities. - In the longer term, adapting the generation fleet: renewing plants, protecting hydropower potential, developing renewable energies and downgrading the highest-pollution facilities. One of the Groups strategic objectives is sustainable, profitable development of its involvement in renewable energies in Europe and worldwide, by industrial control of mature techniques, technological innovation for newly-emerging techniques such as marine energies (with the PaimpolBrhat hydropower fleet), and research programs to facilitate integration of renewable energies into the distribution and transmission network. These developments concern generation facilities both centralized (for example, the Nam Theun 2 hydropower plant in Laos) and decentralized (assisting customers in on-site energy generation). In 2010, EDF nergies Nouvelles Rparties (EDF ENR), a subsidiary of EDF (50%) and EDF nergies Nouvelles (50%), contributed to electricity generation using photovoltaic energy, by fitting customers with solar PV generators. Installed capacities in 2010 were 10.7MWp for the turnkey B2B model and 2.9MWp for the external investor B2B model.

The Group is continuing to develop activities in centralized generation. In France, its subsidiary EDF nergies Nouvelles expects to increase capacities in renewable energies, either independently or in conjunction with partners, to 4,000 MW by 2012 for all types of power, including 500 MWp of solar PV power. With installed capacity of 4,512 MW gross (3,335 MW) in operation or under construction throughout the world, EDF Energies Nouvelles is in line with its objectives. In 2010, EDF Energies Nouvelles commissioned 477 MW of new generation capacities, an increase of over 16% compared to 2009. Developments in windpower EDF Energies Nouvelles continued development in 2010 in windpower, its main growth area. It increased its generation capacities by 273 MW over the year, leasing to a total of 2,923 MW gross by December 31, 2010. Newly-commissioned facilities71 were mainly located in Italy (+74 MW), Greece (+64 MW), the United Kingdom (+50 MW), Turkey (+34 MW), France (+21 MW), and Mexico (+30 MW). At December 31, 2010, EDF Energies Nouvelles had 918 MW under construction (564 MW net) and a portfolio of windpower projects totaling 13,784 MW. As part of its business in development and sale of structured assets, EDF Energies Nouvelles finalized the sale of the Canton du Quesnoy plant (10 MW) in France, and sale of the Linden (50 MW) and Nobles (201 MW) facilities in the US.

70

The 15-member European Union in 2007 (International Energy Agency, October 2009).

71

Net of capacity sales. Page 98 sur 137

Developments power

in

photovoltaic

solar

EDF Energies Nouvelles continued development in photovoltaic solar power, its second priority development area. In 2010, installed solar power capacity amounted to 267 MWp gross. Facilities came on line in Italy (+72 MWp), France (+44 MWp), Canada (+35 MW), Spain (+29 MWp) and Greece (+6 MWp). At December 31, 2010 the Group had a total of 163 MWp gross under construction. As part of its business in development and sale of structured assets, EDF Energies Nouvelles sold three units (32 MWp) of the Gabardan plant in south-west France, a first unit at the Saint-Symphorien plant (12 MWp) and 16 MWp in large-scale rooftop projects (industrial and commercial buildings, hangars and warehouses). Other developments In Italy, Edison signed a Pact for the Environment with the national Ministry for the Environment and Land and Sea Protection, making a commitment to expand generation from renewable energies in Italy (400 MW in total: 31 MW in small hydropower, 356 MW in windpower and 22 MW in solar power). In hydropower, the commissioning of Nam Theun 2 for commercial operation in Laos on April 30, 2010 was a major event. In biomass production, Fenice S.p.A. in Italy opened four new cogeneration plants, reducing CO2 emissions compared to other plants (savings are estimated at between 7 and 30% depending on the plant). Finally, in 2010 EDF and Delta, the fourthlargest Dutch electricity operator, inaugurated the SLOE Centrale CCG plant (870 MW) in the Netherlands.

2.2.4.2 Promoting eco-efficiency and effective use of electricity to Group customers The solutions developed and marketed by EDF incorporate energy efficiency, use of renewable energies in buildings, and incentives for restraint in energy consumption. They are organized around: - demand side management (DSM) services: insulation, building renovation; - development and intensive integration of new distributed energies into buildings for heat generation (heat pump, solar waterheaters, woodburning stoves and fireplaces); - management of the load curve to reduce or defer peakload CO2producing consumption; - use of smart meters to optimize networks and carry out remote measurement services and actions that can reduce greenhouse gas emissions; - green energy options offered to customers, producing no CO2 emissions, or partly carbon-offset offers. In France for example, EDF is preparing for the arrival of the smart meter, which is an essential factor in development of smart grids. The Group is experimenting with various services in Brittany (the voluntary ENBRIN program) and the Linky experimental zone in central France around Lyons. November 2010 also saw the launch of the first energy operators i-phone offer, the energy label app which helps customers to choose low-energy household appliances and lamps appropriate to their energy consumption. Based on the energy label attached to products on sale in retail outlets, the app provides an estimation of the appliances energy consumption
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expressed in both euros and kWh, and the CO2 emission rate. 2.2.4.3 Reducing diffuse CO2 emissions from EDF buildings and employee travel habits In addition to direct emissions by energy facilities, EDF is committed to reducing its diffuse emissions from office buildings, company vehicles and business-related travel, through the DSM program with Group employees (such as the Action Plante awareness raising campaign). Company Commuter Plans have been introduced in most of France and will be rolled out progressively to all Group companies. The targets for reduction of diffuse emissions by the service buildings owned and leased by the Group fall into the following areas : -DSM actions through adjustment of the way installations are operated; - optimization of surface occupation; - renewal of owned buildings; - use of the best available technology; - application of energy performance contracts for all office locations under subcontracted management. One illustration is the renovation of a 1960 EDF building in the Part-Dieu business zone of Lyons, which will be completed in early 2011 after two years of work. This project aims to improve energy performances and obtain HQE72 certification. The new-look building will be a showcase for the Groups expertise in energy efficiency, with high performances achieved through :

- heat insulation and external solar protection, - heating and air conditioning by means of a ground water heat pump, associated with a system of radiant ceiling heating in the offices, - a double flow ventilation system, which recovers heat from air extracted from the building and uses it to reheat new filtered air drawn from outside, - office lighting using standard lamps that detect human presence and automatically adjust light levels, - enhancement of external facades using light-emitting diodes (LED), - rooftop solar power production covering approximately 100 m, - a technical building management system for optimum supervision of installations. In 2010, the Groups Real Estate division began a certification procedure through pilot operations for two buildings: the first (CAP Ampre) is testing the French NF Btiment tertiaire en exploitation Dmarche HQE* certification, and the second (Wagram) is testing the English Breeam In Use scheme (BRE Environmental Assessment Method). 2.2.4.4 Motivating employees in the fight against climate change The success of the Groups internal sustainable development awards, which received 538 applications for the fourth annual round of prizes in 2010, shows the strength of EDF employees commitment to these themes. 23 projects won prizes: they concerned the themes of climate change, energy efficiency, protection of biodiversity, access to energy and locallyfocused development.

72

Haute Qualit Environnementale environmental quality.

high

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This internal competition gives Group employees an opportunity to bring attention to initiatives and projects developed in the course of their work, or outside the company. For the Group, it is a chance to detect innovative practices that can be adopted and replicated in a business approach, to encourage more synergies between companies in the Group. Employee motivation is fostered through a range of consciousness-raising campaigns with employees both at home and work, with incorporation of sustainable development concerns into profit share incentives. 2.2.4.5 Adapting the Groups businesses to climate change As climate change also has direct impacts on the physical environment in which generation, distribution and transmission are carried out, and on energy demand, the EDF group has a strategy for adaptation to climate change, adopted by the Sustainable Development Committee in June 2010. This strategy concerns current and future industrial plants, customer offers, production/consumption optimization, and R&D themes, organized around the following aims: - Evaluating the impact of climate change (currently in operation and predicted) on installations and activities, - Adapting the installations where relevant to reduce their sensibility to extreme weather conditions, - Taking future weather and climate into consideration in the design of new facilities, - Improving resistance to extreme changes and situations that are harder to predict.

2.2.5 Containing the environmental and public health impacts of activities and facilities, including the impact on biodiversity As well as the concern for compliance with regulations, EDFs environmental management system contains a commitment for constant improvement of practices and performances in public and environmental protection. 2.2.5.1 Controlling nuclear power development and operation in France One of the key issues in the EDF groups sustainable development policy is supporting the complementary balance between nuclear energy and renewable energy. Nuclear energy is one response to the key energy issues of supply security, climate change and control of energy costs, because it can simultaneously meet energy needs and sustainable development concerns. However, the acceptability of nuclear energy varies across the countries where the Groups entities, subsidiaries and investments are to be found. This means that in addition to its operators strict responsibilities and duty to deliver top-quality management, EDF must be prepared to stand alongside the relevant authorities and answer questions raised on the nuclear component of the energy mix. It must also be well aware of all aspects and impacts of nuclear energy, from uranium extraction and mineral resource issues at the front end of the cycle to concerns over site decommissioning and waste management at the back end of the cycle. Plant safety during operation is the top priority for the EDF group. It is taken into consideration from the initial design stage, and is regularly monitored, together with implementation of an employee motivation policy and large-scale investment programs. Regular nuclear safety
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inspections are carried out both by external and internal bodies. External inspections of the safety of nuclear facilities in France are carried out by the French Nuclear Safety Authority73. Events are classified on a scale of 1 to 7, with 7 being the most serious (the INES International Nuclear Event Scale). Incidents of no consequence for nuclear safety are classified as discrepancies or level 0 events. There was no serious event or above-limit discharge in 2010. The results for 2010 continue the trends of 2009, with a slight fall in the number of significant safety events, from 10.93 per reactor in 2009 to 10.45 in 2010. The average number of level 1 events in 2010 was 1.2 per reactor, and the average number of unclassified events (level 0) was 10.4 per reactor. Safety results over the last five years are stable overall. 2.2.5.1.1 Radioactive effluents Management of gas and liquid radioactive discharges by the nuclear plants is governed by strict regulations and EDFs ambition to limit the environmental and health impacts of its installations, reaffirmed in the Groups environmental policy. In terms of radioactive emissions, plant performance depends not only on the efficiency of effluent processing systems, but also on operating practices. The action taken in plant design and operation has brought radioactive gas and liquid discharge to a very low minimum level. From 1990 to 2002, while already operating well below the regulatory limits, EDF reduced its liquid emissions (excluding tritium and carbon-14) by a factor of 25. Subsequently, liquid emissions were halved between 2002 and
73

2008. Environmental measurements taken by the operator are monitored to confirm that running the installations has no impact. These controls are supplemented by sampling and measurements carried out by external laboratories and universities through radioecological and hydrobiological campaigns, which confirm the lack of impact in the long term. Chemical waste campaigns are designed to improve control of effluents, similar to the efforts deployed for radioactive effluents. Special attention is paid to water cooling circuits due to the volumes of discharge involved. Biocides are used to control the spread of micro-organisms in the water contained in these circuits. 2.2.5.1.2 Nuclear waste Radioactive waste is classified by activity level and lifetime, following the classification used by the French national agency ANDRA74. Waste is listed in an inventory stating its location, and the data are published and regularly updated by ANDRA. Four industrial principles govern management of this waste: limiting quantities, sorting by nature, stable conditioning, isolation from humans and the environment. Limited quantities of radioactive waste are produced: 1 MWh of nuclear electricity (equivalent to a months consumption for 2 households) generates some 11g of radioactive waste, 90% of which is shortlife waste. In 2010, 1,140 tonnes of spent nuclear fuel were removed from EDFs generation sites. EDF applies a strategy of gradually increasing the performance of nuclear fuel. The objective is to raise nuclear energy output by increasing the combustion rate
74

Autorit de Sret Nuclaire.

Agence nationale pour la gestion des dchets radioactifs. Page 102 sur 137

and optimizing operating cycles to improve nuclear plant availability, while allowing for shutdown schedules in line with seasonal variance in demand. EDFs current strategy for the nuclear fuel cycle, in agreement with the French state, is to process and recycle spent fuel and recycle the plutonium separated in this process in the form of MOX fuel. With current recycling capacities, approximately 1,050 tonnes of spent fuel is processed, from total fuel consumption of approximately 1,200 tonnes each year. To ensure that future generations will not have to bear the cost of managing spent fuel and decommissioning nuclear plants, EDF sets aside provisions and is progressively building up dedicated assets to cover these provisions. In 2010, provisions for decommissioning and last cores amounted to 19,684 million, and provisions for the back-end nuclear cycle totaled 18,020 million. The price per KWh thus includes all expenses related to this obligation, i.e. the cost of managing long-life waste and the cost of plant decommissioning and current waste conditioning. 2.2.5.2 Controlling fossil-fired power development and operation The growing proportion of renewable energies in the mix of energy generated in all countries, and the inclusion of nuclear energy where acceptable, leads to an overall reduction in use of fossil-based energies (coal, oil and natural gas), and the use of traditional fossil-fired power plants. These energies nonetheless remain important, including in France where nuclear energy and hydropower are predominant. Fossil-fired plants still have an essential role to play in the real-time balance between electricity generation and electricity consumption, and provide the means to respond rapidly to fluctuations in demand and unforeseen peaks in

consumption throughout the year and in cold spells. The environmental performances of fossilfired plants have been constantly improved in response to the stricter requirements introduced in successive revisions of the applicable regulations. Investment programs incorporate the requirements for improvement of air quality and reduction of atmospheric emissions. They also refer to the regulations on greenhouse gases, taking into consideration security of supply and the cost of fossil fuels. All the measures introduced (installation of flue gas denitrification systems, reinforced dust capture equipment, changes of fuel, optimization of combustion, etc.) have significantly reduced specific emissions and the overall level of sulfur dioxide (SO2), nitrogen oxide (NOx), and dust produced for the same electricity output quantity, in line with the two deadlines for application of the LCP directive set at January 1, 2008 and January 1, 2016. The renovation and adaptation programs for existing fleets are continuing with additional investments, implementing best in class technologies for energy efficiency, combustion and decontamination techniques (CCG plants in France, Italy and the United Kingdom). Since the DeNox75 plants were commissioned in 2007 and 2008, atmospheric emissions have fallen considerably. Further plant modernization and use of better-quality fuel (oil with very very low sulfur content and solid residues) are contributing to the ongoing reduction in emissions. In 2009, the operating licenses for all fossil-fired plants were renewed in compliance with the EUs IPPC Directive. Other important events were:

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A system to reduce nitrogen oxide. Page 103 sur 137

- commissioning of the two combustion turbines at Montereau, currently oil-fired and due to switch to gas in spring 2011. - the start of a project to transform the oilfired units at Porcheville 3 and Cordemais 3, to be equipped with low-NOx burners and run on oil with a very low sulfur content and scheduled to come on line by the end of 2011. EDF estimates that these measures have cut NOx emissions in its fossil-fired fleet by some 30%-35% since 2007. Under the Groups sustainable development policy, volumes of SOx, NOx, and dusts produced by this fleet will be at least halved between 2005 and 2020. EDF has also entered into partnerships with industrial entities that reuse its waste, such as the gypsum produced by flue desulfurization, which is used in plaster manufacturing, or the ashes produced by coal combustion, which are used as an additive in concrete and cement for road surface products or filling. 2.2.5.3 Controlling hydropower development and operation The EDF group has for many years attached great importance to strengthening its role in water management, developing its knowledge of ecosystems and the way they function, and reducing the impact of its industrial plants on the environment with continuity in the ecological and sedimentary environment. EDF is increasingly active on the international scene, in the WBCSDs76 Water working group (EDF joined the Water Leader Group in 2010), in its commitment to the 6th World Water Forum that will be held in Marseille in 2012, and in the partnership with the World Water Council on the theme of water and energy planned for 2012/2013.
76

The tenders for renewal of hydropower concessions in France have led operators including EDF to define operating methods that offer further improvements in the balance between energy generation, other uses of water and respect of the environment, particularly through coordinated management using catchment feeding (i.e. coordinated management of hydropower plants along the same waterway). Finally, for plant safety a full check-up of each of the 150 large dams is carried out every ten years, together with a drain-down or a structural inspection using underwater equipment. These operations are carried out under strict control by State departments (DRIRE77 and STEEG78. In 2010, EDF carried out 14 full technical dam inspections. 2.2.5.4 Control of other impacts Ground contamination The Groups industrial activities can cause ground pollution. EDF addresses these question for all Group real estate assets in four stages: identification of real estate sites completed for EDF, identification of sites potentially affected by pollution, analysis of soil samples from the potentially polluted sites, beginning with the sensitive areas which are placed under supervision to control sources of pollution and develop a management plan, and lastly rehabilitation where relevant in compliance with the future use and regulatory requirements.

77

World Business Development.

Council

for

Sustainable

Direction Rgionale de lIndustrie, de la Recherche et de lEnvironnement - the regional industry and environment department. 78 Service Technique de lnergie lectrique et des Grands Barrages, au sein du Ministre de lconomie, des Finances et de lIndustrie: the technical service for electric power and large dams, attached to the French Ministry of Economy, Finance and Industry. Page 104 sur 137

Askarel transformers European directive 96/59/EC of September 16, 1996 requires an inventory of equipment containing PCBs and PCTs79, together with a national plan for decontamination and the gradual elimination of these substances, which are principally found in certain electricity transformers and condensers. Decontamination of equipment containing these substances was to be completed by December 31, 2010. At that date EDF had only one askarel transformer still in operation, polluted to the extent of more than 500 ppm/PCB, and scheduled for withdrawal in early 2011. However, some monitoring bulletins for dangerous waste have yet to be returned for equipment on Reunion Island and Guadeloupe that was eliminated in early December 2010. EDF can thus boast exemplary results for treatment of PCB-contaminated equipment, with more than 1,775 items eliminated since 2005. The elimination plan for Group companies enabled almost all of them to meet the deadline successfully. At ERDF, all polluted equipment with over 500 ppm/PCB was eliminated under the PCB program for treatment of polluted materials by December 31, 2010. 1,425 transformers remained at industrial sites authorized to process them, and were due to be eliminated in the first few weeks of 2011. In all, more than 65,000 items were withdrawn from the network and treated. Non-nuclear waste EDF prepares an annual review of management of non-nuclear waste produced by generation and research activities in the previous year. For 2009 and 2010, the actual recycling rate for all
79

non-nuclear waste produced by generation and engineering work in mainland France (excluding fly ash and gypsum, which are fully recycled) was 73.6% and 79.6% respectively. 2.2.5.5 Controlling emergencies and environmental crises To control the risks of industrial accidents with consequences for the natural environment and/or public health, each Group company identifies potential events with environmental impact, manages the emergencies that may result and carries out the corresponding crisis drill exercises. Emergencies are handled through a centrally-organized procedure involving Group Management, and the necessary information is supplied to the administrative authorities and the media. Intervention processes are regularly reviewed and improved as relevant. 2.2.5.6 Contributing to biodoversity protection Ever since its first generation facilities began operation, EDF has been committed to developing knowledge of their impacts and introduction of evasive or compensatory measures such as restoration of major migration channels for fish, with particular investment in research and design for fishways, and installation of artificial rivers connecting the areas upstream and downstream of obstacles, which benefit the entire ecosystem. Given the pace of change in regulations, several actions have been taken across all EDF group entities in favor of unspoilt areas and wild species. With the launch by the Groups Sustainable Development Committee in 2009 of a Biodiversity working party, a methodology was developed to determine the biodiversity profile of each Group company, and a shared biodiversity management approach was introduced through a ISO 4001 management system.
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Polychlorinated biphenyls (PCBs) polychlorinated terphenyls (PCTs).

and

To raise employee awareness, EDF is preparing a series of biodiversity guides. A Hydropower biodiversity guide was published in 2010 and is to be reprinted soon. A series of other guides (7 in all) is under development and should be published in 2011. EDF also works in collaboration with NGOs, universities and research laboratories such as the Nicolas Hulot Foundation for Man and Nature (Fondation Nicolas Hulot pour la Nature et lHomme), the Coastal Protection Agency (Conservatoire du Littoral), French Nature Reserves (Rserves Naturelles de France), the Bird Protection League (Ligue pour la Protection des Oiseaux) and the French Committee of the International Union for Conservation of Nature. In 2009, the charity EDF Diversiterre became a partner of the Tara Oceans expedition to advance understanding of marine ecosystems and biodiversity, and discover more about the oceans key roles in carbon lock-in and climate change mechanisms. EDF communicates its commitment to biodiversity to the general public, school groups and local government representatives though projects such as its involvement in the 2009 and 2010 editions of the French festival Fte de la nature.

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2.3 Company information

2.3.1 Corporate social responsibility 2.3.1.1 Background and objectives In 2010, EDF clearly expressed its human resources ambition with a dual social/economic aim, and reaffirmed its RH strategy, defining three major priorities for the coming years shared by all of the Groups businesses and companies: To develop skills and stimulate social mobility; - To make recognition of each individuals importance, quality of life in the workplace and constant concern for health and safety drivers of a shared commitment to sustainable performance; - To introduce greater diversity and strengthen the Groups shared culture, particularly at management and expert level. These priorities lie at the heart of the social dialogue that continued in 2010, when 19 agreements were signed at various levels (operational departments in France, subsidiaries and the Group). 2.3.1.2 Implementation of the Corporate Social Responsibility Agreement EDFs CSR agreement signed in 2005 was renewed in January 2009 for a 4-year period. This new agreement strengthens the Group's commitments, especially regarding subcontracting, the battle against climate change, and biodiversity. In 2010, in liaison with the management, the Worldwide dialogue committee examined six themes in greater depth: career paths, advance planning and social support for industrial restructuring, antidiscrimination, subcontractor relations, -

vulnerable customers and information sharing and social dialogue. 2.3.1.3 Social responsibility policy towards suppliers and subcontractors Outsourcing is part of the commitment to permanent progress and social dialogue. The agreement signed at EDF in 2006 was judged to have been beneficial by the Groups co-signatories. It is one expression of the Groups CSR agreement, and has been renewed indefinitely, highlighting the intent to maintain industrial and service collaboration in the long term. This approach enables service providers to reinforce their activities and extend their capacity for sustainable expansion, rather than merely signing short-term or one-off contracts. For subcontractors and their employees this agreement is a guarantee that their work for EDF will take place in optimum employment, qualification, working and health and safety conditions, and in full knowledge of the risks inherent to the activities exercised. The monitoring committee for this agreement was set up in 2007 and meets three times a year, with the participation of signatories and representatives of EDFs various businesses, to examine progress on the action taken under the agreement. Several types of action have been implemented across all those businesses, for example: - improving the reception and working conditions for subcontractors on the nuclear and fossil-fired generation sites,

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- concerted action with outsourcers in the nuclear business, to increase the sectors attractiveness and develop appropriate training, - awarding socially responsible labels for service providers in customer relations centers, - a sustainable development between EDF and its suppliers. charter

2.3.1.4 Jobs, skills and training EDF is facing new challenges today. Its businesses are evolving along with technological, economic, and environmental stakes in the energy sector, and the groups ambitions for development in France and internationally. Human resource and skills requirements have also intensified with the resumption of industrial investments and expansion in nuclear engineering activities, particularly the relaunch of nuclear operations. EDF must rise to the challenge of skill renewal, preparing to replace the 25-30% of the workforce who could retire in France by 2015. This proportion rises to almost half in the maintenance and operative workforce for generation, engineering and distribution. Recruitment, mobility and training are essential drivers for optimizing skill management. EDF spent more than 8.3% of its total payroll on training. 83% of employees received training in 2010, equivalent to 60 hours per year per employee. EDF uses a network of some thirty training centers in France for this purpose, with nearly 1,000 permanent internal trainers (1% of the Groups workforce in France). The Training Challenge agreement signed with all the unions on September 10, 2010 has also helped to restimulate the Groups training policy in France (EDF, ERDF, RTE). This agreement is designed to foster social mobility (training leading to promotion, and block release arrangements) and introduce Academies and EDF Campuses with a focus on effective, innovative training. This Group policy for France will be extended gradually to other countries. EDF, ERDF and RTE hired more than 5,000 new employees in 2010. In the
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Environmental, social and corporate criteria are also incorporated into purchasing strategies (assessment of supplier skills and feedback), starting from the initial preparation of specifications developed in close collaboration with the business activities using outsourcers. The charter is integrated into the general terms and conditions and must be signed by all suppliers doing business with EDF. This charter sets forth reciprocal commitments including: conduction of sustainable development/corporate social responsibility audits at the premises of suppliers and service providers to ensure these commitments are respected; - integration of social responsibility criteria in forming the panel of suppliers and collecting feedback after completion of services; - inclusion of modules concerning socially responsible subcontracting in training for purchasers, advisors and actors in the purchasing process. In 2010, a program of 56 sustainable development audits was executed, based on the standards contained in SA 8000 and ISO 14001 concerning EDF suppliers established outside France.

current highly competitive labor market, EDF stepped up communication on its employer image to new graduates, with actions such as: - the 4th Energy Day recruitment fair in November 2010, which gave more than 2,000 students and recent graduates from engineering schools and universities the chance to find out about jobs and career opportunities in the EDF group; - the launch of the energy sectors first serious game, Energy TaskForce, at engineering schools and universities in Europe (this is an adventure game for engineering students and recent graduates from six countries, to promote the Group's business lines). Meanwhile, more than 2,700 block release trainees joined the Group in France in 2010 on post-secondary or postgraduate apprenticeship or training contracts, bringing the number of such employees in the Group to more than 4,800 or 4.5% of the Groups workforce. In 2010, EDF hired young people with no qualifications. 100 young employees were hired on block release training contracts in all Group sectors (transmission, distribution, generation, supply, island energy systems). More than 3,000 mentors provide guidance and support for these trainee employees as they acquire and develop their skills at EDF. 2.3.1.5 Equal opportunities and diversity The EDF group believes that a company should reflect the society in which it operates, and equality is a driver for the EDFs economic performance. Article 5 of the Groups CSR agreement addresses the prevention of discrimination, respect of diversity and promotion of equal opportunities, and these questions were covered in commitments made as early as 2006 and renewed in 2009.

The many actions undertaken include: - an anti-discriminatory practice policy which was reviewed with union organizations in 2009: it involves programs to raise awareness in managers, HR directors and employees, action plans for populations likely to be victims of discrimination (e.g. women and disabled people), themed studies, testing of recruitment processes, and a procedure for handling complaints made internally or to Frances equal opportunities and diversity body, the HALDE. - lifting of the age and nationality restrictions on employment with EDF in France, as set forth in the IEG statutes, by the decree of July 2, 2008. - elaboration of a handbook on the place of faith in the company, to help managers and HR personnel handle requests in compliance with the law, HALDE recommendations and the interests of the company, with due respect for individuals and their fundamental rights. This initiative was awarded the diversity management trophy in 2010. Since 2008, a Diversity Day has been held annually across the Group, with events to promote diversity and fight all kinds of discrimination. These initiatives reached 30,000 Group employees in 2010. EDFs particular concern for inclusion of disabled employees goes back 20 years. Under the new three-year agreement signed by EDF on February 25, 2009, the company reaffirmed its commitment to hire at least 4% of disabled people, and in 2010 110 disabled employees were hired at EDF, 42 at ERDF and 10 at RTE. EDF also runs a voluntary campaign to hire several dozen young disabled people on block release training every year (55 were recruited in 2010 at EDF, ERDF and RTE). Meanwhile, EDF is continuing its policy of purchasing from the protected sector,

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making approximately purchases in 2010.

8 million

of

its employees and contractors are a key concern for the company. EDFs health and safety policy, initially drawn up in October 2003, was reviewed and a new version signed in March 2009. Changes in the work environment, new forms of jobs and longer working lives have brought out new concerns requiring reorientation of the policy, which results from cross-disciplinary dialogue between the actors concerned (management, experts, doctors, employee representatives). It is underpinned by respect for the individual, a value it places at the core of organizations. A year after its creation, a review confirmed the value of the National Council for Health at Work80, set up experimentally in late 2008. This led to negotiation of a collective agreement on social dialogue for health and safety at work, which was signed in November 2010. In a move to a new level, policy rollout campaigns have focused on extending the health and safety field to incorporate preventive health programs. A number of programs concerning ergonomics and psychosocial risks have been developed. Psychosocial risk prevention is covered by a collective agreement on Preventing psychosocial risks and improving quality of life at work at EDF SA, signed in November 2010, and action plans at RTE and ERDF. In addition to this attention to health, action has been taken to reinforce accident prevention through a focus on the core risks of the companys business (risks related to electricity, road transport and falls from height). Frances National observatory of quality of life in the workplace81, set up in 2007, is a
80 81

The Group also has proactive campaigns for equality in the workplace, and signed a second agreement for gender equality at work in December 2007. This agreement includes commitments on six themes: longterm change in mentalities, promotion of a gender mix in the workplace and in recruitment, equal career opportunities, equal training opportunities, consideration of working hours and conditions, and the work/life balance. In 2010, pay equality for men and women was broadly achieved as regards principal salary and performancerelated salary (less than 0.1% difference). EDF is involved in a new movement for older employees: a senior action plan was presented to the Central Works Committee in December 2009 in compliance with French legislation (decrees of May 20, 2009). The number of employees aged 55 and over is on the rise: this age group currently represents 9% of the workforce (8% in 2009), and over 50s account for 34% (32% in 2009). The Group has made a commitment to helping employees aged 55 and over to stay in work and improve working conditions for older employees. Particular aims include changing current perceptions of work for older employees, encouraging career development throughout the employees working life using milestones in the second part of a career (mid-career interviews are being progressively introduced), facilitating older employees access to training and improving preparation for the transition between work and retirement. 2.3.1.6 Health and safety and quality of life in the workplace The EDF group operates in a hightechnology sector where workplace risks are also high, and the health and safety of

Conseil National de Sant au Travail. Observatoire national de la qualit de vie au travail. Page 110 sur 137

forum for dialogue between doctors, managers, social partners and external experts and has held ten meetings since it was formed. The Observatory monitors working conditions, commissions studies and issues recommendations. In 2008, it recommended introducing an EVREST (Evolutions et Relations en Sant au Travail) system at EDF, to give the company crossed indicators on health and work concerning employees working conditions (hours, workload, physical exposure, job content), training, lifestyle and state of health. This system was designed and introduced in 2009 by company doctors on a voluntary basis. By the end of 2010, 68 doctors had taken part and 1,150 questionnaires had been completed, enough for preliminary local studies. On the question of industrial accidents, EDF has undertaken wide-scale prevention and training efforts for more than ten years, achieving a very significant reduction in the rate of industrial accidents causing sick leave. With a frequency rate of under 5 (3.8) for the eighth consecutive year, the 2010 results place EDF among Europes safest electricity operators. Occupational radioprotection dosimetry and

EDF is continuing its efforts to bring individual doses from exposure to radioactivity below the regulatory limit. In 2010, once again no exposure above the legal annual whole-body limit of 20mSv was observed. In 2010, over a rolling 12month period three individuals registered a dose higher than 16 mSv, the vigilance threshold set by EDF (compared to 10 individuals in 2009). Since 2001, no person has registered a dose higher than 20 mSv/ 12 months, and since 2004 no person has exceeded 18 mSv. In 2010, EDF recorded only one significant radioprotection incident, classified as level 2, when a worker was exposed during maintenance work. EDF is maintaining heightened vigilance in radioprotection, both for personnel and for external contractors: the 23,000 EDF employees and the 20,000 employees of contractors who work in the nuclear zones. 2.3.1.7 Social dialogue One of EDFs priorities is to uphold its long tradition of social dialogue and consultation, to serve the company's objectives and employee development. Social dialogue has evolved noticeably. In a little over 10 years, collective negotiation has become the major channel for social regulation in the company. The formation of the IEG (gas and electricity) sector in France in 2000, and the social agendabased approach designed to structure dialogue every two years have been the main determinants of the change in social dialogue. The 3rd social agenda signed for the period 2008-2010 by all the unions expired in July 2010. Close to fifty collective company agreements were signed under this agenda.

The average annual collective dose of all workers, employees of both EDF and outside companies working in the power plants, has been halved in less than 10 years. In 2010, the average collective dose was 0.68 mansieverts (mSv) per reactor per year, the lowest ever for the nuclear fleet, placing EDF among the top-ranking operators worldwide for the same type of reactor. This is close to the 2009 result (0.69 mSv) and must be considered in context, as the volume of exposed work in 2010 was lower than in 2009. Over ten years, the campaigns undertaken by EDF and its contractors have reduced collective dosimetry per reactor by 43% (1.08 mSv per reactor per year in 2000).

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The European Works Committee, set up in 2001, is consulted on the Groups major policies and is particularly informed of the Groups economic, financial and social strategies. In 2010, the Committee worked on the disposal of the UK distribution networks, the Groups nuclear strategy, the NOME law on new organization of the electricity market, the Groups health and safety record and the consolidated financial statements. An agreement to form a Group Committee for France was signed on September 1, 2008 with all union organizations. This new framework for dialogue covers all the EDF groups 14 companies (including RTE and ERDF), providing a place for exchange of opinions on the Groups strategy and prospects in France in economic, financial and social matters. This Group Committee met three times in 2010. 2.3.1.8 Special pension system for the electricity and gas industries (IEG) in France The special IEG pension system was reformed in 2008 and 2010: the first reform was part of the reform for special pension systems, and the second resulted from the law of November 9, 2010 reforming general pension systems and the French public sector. This law does not apply directly to the special pension systems, for which the regulations must be amended by decree. The CNIEG gas and electricity sector pension body issued an opinion on the proposed modification to the IEG pension system on January 6, 2011. The draft law transposes all parts of the standard reform to the IEG system, particularly the progressive 2-year rise in the pension entitlement age, including for early retirement. This will only come into force in 2017 in view of the timetable for implementation of the 2008 reform. As in the public sector, special early retirement

arrangements based on the number of children will be phased out, and the period of service required to qualify for early retirement in the active work category will also be increased progressively by two years. The High Energy Council also issued an opinion on the plan to raise the age limit for IEG workers; from 2017, the maximum age will be progressively raised from 65 to 67. 2.3.1.9 Additional employee protection Since 2008, IEG employees in Group companies in France have benefited from additional social protection concerning: - the additional invalidity benefit (sectorspecific agreement of April 24, 2008), applicable since July 1, 2008 ; - welfare provision: life insurance and education allowance (under the sectorspecific agreement of November 27, 2008), applicable since January 1, 2009; - the additional pension scheme (introduced by the sector-specific agreement of February 21, 2008 and a group agreement of December 12, 2008), plus company-specific measures, applicable since January 1, 2009 (October 1, 2010 for ERDF); - the service pay-cheque (CESU) system applicable since February 2009; - additional healthcare coverage (sectorspecific agreement of June 4, 2010), applicable since January 1, 2011. With the exception of the CESU, these benefits are co-financed by the employer and compulsory contributions for employees. 2.3.2 The EDF groups social policy The EDF groups social policy is an integral part of the Groups sustainable development policy. It is designed to create
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and enhance ties with all external stakeholders, optimize and strengthen action with vulnerable customers and populations, and boost internal bonds within the Group. The principles of the policy comply with the UN Global Compact and are taken up in the corporate social responsibility (CSR) agreement. The three main strategies of the social policy are: - to facilitate access for energy and energy eco-efficiency; - to forge long-term close links with the local communities where EDF operates by supporting local development projects, especially housing projects, and contributing to integration of disadvantaged people in construction and environmental sectors; - to contribute to education on energyrelated questions. EDF supported and illustrated its social policy by releasing two booklets presenting more than 80 social measures for responsible contribution. The next three paragraphs present some examples from the three areas of strategy in the policy. 2.3.2.1 Accessibility to energy energy eco-efficiency and

to a section of its customer base, offers opportunities to advise customers on energy usage, and facilitates recovery of energy debts. At December 31, 2010, EDF was a partner in 126 mediation points across France, plus 50 contact points set up with the charity SOS Famille during 2010. In France, EDF is a partner in the Fondation Abb Pierres 2,000 roofs for 2,000 families initiative which aims to finance the construction or upgrading of 2,000 low-rent homes. This action should help develop a model for general application, providing access to energy eco-efficiency for the most disadvantaged families at a moderate cost. In Guyana, EDF is developing electrification and working on network security, particularly for interior communities, whose territories are scattered widely across an inaccessible area without roads, communications, industrial facilities or services. Local diagnoses have been carried out with all stakeholders. More than 10 noninterconnected sites, home to 3,000 to 5,000 people, will have electricity by 2012. In the United Kingdom, EDF Energy is participating financially for three years in the governments Community Energy Saving plan (CESP) to improve home insulation in disadvantaged areas. EDF Energy estimates that this program will concern more than 100,000 homes in the next two years. For 15 years now EDF has been contributing to energy access campaigns in developing countries (Morocco, Senegal, South Africa). In cooperation with the ADEME (Environment and Energy Efficiency Agency), EDF has developed a viable, durable, replicable concept: the Decentralised Service Company. The main features are as follows:

EDF goes beyond its regulatory obligations in its action for vulnerable customers. In France, 8 million people live below the poverty threshold (INSEE 2007), and the charity Fondation Abb Pierre estimates that more than 3.4 million households do not have stable access to energy. EDF has a range of measures to help people in this situation: To facilitate access to energy, EDF participates in mediation bodies providing information and assistance for prevention and resolution of difficulties encountered by local residents. This brings EDF closer

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- Locally-formed companies, run by local managers, that are financially profitable and have at least 10,000 customers in a defined area; - Use of effective technologies appropriate to the local context: photovoltaic kits, micro-networks, prepaid meters, etc; - Sale of diversified energy services for a fixed price or measured by meter: lighting, electricity, enhanced housing, etc for all types of customer: residential, small business, local authorities, etc; - Financial support dedicated exclusively to investments that make services accessible to local populations. By the end of 2010, these companies were providing energy services to more than 300,000 people. 2.3.2.2 Developing and preserving local relations with the areas where EDF is established In conducting its industrial and commercial activities and projects, the EDF group is attentive to the economic and social issues of the areas where it operates, with particular focus on helping the unemployed back to work. Construction sites bring benefits for the local area. In jobseeking support in France, EDF and ERDF aim to offer 1,000 people in difficulty an opportunity to gain experience and qualifications through block-release training in a business with a future by 2012. EDF also has special programs to train young people, particularly those finding it difficult to join block release schemes. Its Trait dUnion campaign set up by the Sales Division is active in helping young people to gain work and qualifications in customer service positions. By the end of 2010, 569 people including 200 young

people in difficulty, were in training programs, especially in customer relations centers, through the Trait dUnion and Tremplin campaigns (with an objective of 700 in 2012). In France, in Chambry, the TIRU Group, an EDF subsidiary specializing in recycling of household waste as renewable energy, and fellow company Trialp, set up Valespace, providing all-round support to help socially vulnerable people construct a career plan and find work. About 70 people are hired each year as sorting staff. As vectors for entry to the workplace, EDF promotes socially responsible purchasing through its sustainable development policy, but also in its threeyear agreement for inclusion of disabled workers (in the section on the protected sector and organizations where the majority of the workforce is disabled annual objective of 6 million of purchases) and in the socially responsible subcontracting agreement. EDF is increasing its purchases from schemes designed to help people back to work through economic activity (2.1 million in 2010). In Asia, commissioning of the Nam Theun 2 dam in Laos on April 30, 2010 was a major event. Nam Theun 2 is more than simply a profitable industrial project: it is an exemplary sustainable development project, with its significant social and economic component, and the developers special care to set it harmoniously in its natural environment. 16 villages were created or moved to fill the reservoir, and 1,240 families have been rehoused in new homes built in a traditional style. An extensive health program has been set up to monitor the 6,000 people who live alongside the reservoir, using new and renovated health centers offering services

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such as advice to local mayors on measures to prevent childhood malnutrition. Agriculture was practiced extensively in the area before the dam was built, and agriculture and livestock programs will help to gradually intensify farming activities that contribute to household income. 2.3.2.3 Contributing to education on the key energy issues EDF is developing programs to educate people on the major energy issues such as energy control and respect of the environment. These programs are designed for a range of target audiences (schools, local authority employees, businesses, EDF employees, etc). In France, EDF has set up the website Energie Sphere to inform young people and provide a discussion forum on the theme of energy. The site has videos, articles, events and games to find out all about energy: how it is produced and its impact on the environment and climate change. All young users of Energie Sphere can express their opinion and suggest subjects to be covered. The site contains recommendations for habits and action that will make for more efficient use of energy in everyday life. EDF is also contributing to a structured educational course on questions of energy and sustainable development, which reaches 100,000 children every year (one eighth of an age group). The children visit a generation site and/or attend a lecture approved by the national education system. In the United Kingdom, EDF Energy has created a web portal that contributes to childrens education on environmental issues (www.jointhepod.org). This project is supported by the European Eco-schools program and the British NGO Eden Project. The aim of raising the awareness

of 2.5 million children by 2012 was achieved in 2010, two years early. 2.3.3 The Public Service in France Legal definition of Public Service in France The Public Electricity Service is defined in articles 1 and 2 of French law 2000-108 of February 10, 2000. The Public Electricity Service is intended to guarantee electricity supply throughout all the national territory, in the general interest. It ensures balanced development of electricity supply, development and operation of public electricity transmission and distribution networks, and supply of electricity at the regulated tariffs. The Public Service Agreement A Public Service Agreement between the French State and EDF was signed on October 24, 2005 in application of article 1 of the law of August 9, 2004. The agreement defines the respective commitments of EDF and the French state for the period 2005-2007, and sets out the terms of financial compensation for these public service commitments. It will remain in force as stipulated in its own provisions, until a new agreement is signed. This agreement is the framework agreement for the Public Electricity Service missions conferred on EDF and its regulated subsidiaries in the open electricity market in France. It is examined annually by the parties and a review is carried out every three years. EDF prepares an annual monitoring report on its commitments.

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Commitments of network operators)

EDF

(excluding

2.3.4 Methodological information on the social and environmental indicators for 2010 2.3.4.1 Data consolidation The quantitative social and environmental data in this report was collected via the EDF groups consolidation reporting software packages. Social and environmental indicators are consolidated under the rules for accounting consolidation, and with reference to relevance criteria for human resources and environmental impact. Companies fully consolidated for accounting purposes are also fully consolidated for production of the social and environmental indicators. Companies proportionally consolidated for accounting purposes are also proportionally consolidated for production of the social and environmental indicators. Companies accounted for under the equity method are not included in the preparation of social and environmental indicators, with the exception of RTE, which is accounted for under the equity method from December 31, 2010. In addition to these rules, the scope of consolidation for social data only includes companies with a significant workforce (more than 50 employees) acquired more than 6 months ago. For environmental information, the criteria applied are based on subsidiaries industrial activities (generation, distribution and transmission) that are significant in terms of environmental impact. Only companies that have been included in the scope of consolidation for longer than one year and were still in the scope of consolidation at December 31, 2010 were taken into account. Since EnBW was sold before the year-end, its
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EDFs Public Service commitments relate to: - access to the public electricity service, supply of electricity to customers who have opted to stay with the regulated tariffs, and promotion of social cohesion. - generation and supply, including implementing the energy policy, maintaining safe, environmentally-friendly electricity generation, and contributing to the safety of the electricity system. Commitments of network operators The network operators ERDF and RTE have made commitments through the Public Service Agreement concerning management of public networks and the safety of the electricity system. These commitments are financed by the TURPE network access tariff. They mainly concern network safety, quality of supply, safety of third parties and protection of the environment: four areas where the identified expectations of customers and local authorities are particularly high. Agreement on public services in rural areas On September 28, 2010, the French government and EDF, and eight other major Public Service operators, signed a partnership agreement for more public service entitled + de services au public, designed to develop access to a range of services for Frances rural populations.

data are excluded for the whole of the year 2010. To facilitate comparability between 2009 and 2010, data for EnBW have also been excluded in 2009 in accordance with financial consolidation rules. Based on the criteria defining the scopes of environmental and social reporting, the following companies are included in the 2010 reporting for the first time: ESTAG, SPE, Constellation Energy Nuclear Group and SLOE Centrale (environmental reporting only for SLOE Centrale). Social indicators The social indicators are prepared for this report on the basis of a glossary of definitions drawn up in 2010. EDF SA: Since 2007, calculation of the absenteeism rate only includes the following categories of absence: absences for sickness, absences due to work-related accidents, including on the journey between home and work, and miscellaneous absences (unpaid leave, unexplained absences, etc). Absences relative to company and union activities, early retirement leave and maternal absences are not included. The absenteeism rate is calculated based on the theoretical number of hours worked. EDF SA and ERDF: The EDF SA workforce reported includes employees who are co-employed by both EDF and GDF Suez. An employee working 50% for EDF counts as 0.5 in the published workforce. As in 2009, the 2010 workforce excludes company doctors and people employed under various social measures (apprentices, qualification contracts) i.e. a total of 3,164 persons at EDF SA and 1,752 persons at ERDF at December 31, 2010. Staff on long-term leave (> 90 days) are also excluded.

Data on the number of days leave for work-related accident at EDF SA is supplied by the HR information system after consistency checks based on the list of accidents recorded in the security information system. For EDF Energy, the reported hours worked include certain reasons for absence. Group data: Changes in the consolidated group are not entirely reflected in arrivals and departures recorded by Group subsidiaries, and this is the main reason for the variance between the 2010 workforce as reported and as recalculated based on 2009 workforce and arrivals/departures. In France, the frequency of work-related accidents does not include accidents on the home-work journey. Outside France, such accidents may be taken into account when local legislation considers them as workrelated accidents. The number of fatal accidents includes work-related accidents and accidents on the home-work journey, but does not include fatal accidents for subcontractors. Environmental indicators The environmental indicators are prepared for this report on the basis of a set of descriptions and methodologies that make up the EDF group reporting standards for 2010. All indicators on consumption and emissions relate to the electricity and heat generation process. The accounting data on provisions decommissioning and last cores, and the back-end nuclear cycle, consolidated Group data taken from Groups consolidated accounts. for for are the

Indicators on cooling water include water drawn from and returned to rivers, sea and ground water, and may also include water
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drawn from distribution networks and returned to waste water networks. For nuclear plants located on the coast and fossil-fired plants, the quantities of cooling water drawn/returned are calculated based on the operating time and nominal debit from pumps. "Fresh water indicators (including brackish water where relevant) have been added for 2010. Data on non-nuclear waste are taken from information available at the year-end concerning the quantities removed and the elimination channels. For ERDF, the 2010 reporting on waste concerns a rolling 12-month period, except for PCB waste which concerns the calendar year. Except in unusual cases (e.g. broken posts, specific parts of posts), wooden posts are excluded from the reporting as ERDF does not monitor the number of wooden posts withdrawn and transferred. Concrete posts are also excluded, because the current reporting arrangements cannot provide satisfactory monitoring figures. The quantity of nonnuclear waste recycled or in the process of being recycled by ERDF is underestimated, as it excludes some recycled PCBs not taken into account because of the current reporting arrangements. CO2 and SO2 emissions by EDFs power plants are measured or calculated based on fuel analysis or standard emission factors. CO2 and SO2 emissions by EDFs fossilfired plants cover all phases of electricity generation, including plant start-up and shutdown. EDF SA's SF6 emissions are calculated based on the mass balance of SF6 bottles or a nominal annual leakage rate of 2% of the volume of SF6 contained in facilities.

The indicator for Very low level radioactive waste from decommissioning comprises: - Actual tonnage of waste sent directly to the low level storage center, - The tonnage of waste sent to the Centraco fusion unit, weighted by an estimated ratio, calculated annually based on 3-year reports from the processing subsidiary Socodei, to arrive at the share of very low level radioactive waste sent ultimately to the appropriate storage center. The Low and medium level short-life solid radioactive waste produced by reactors in operation indicator does not include waste resulting from occasional maintenance (vessel lids, steam generators). The volume of waste calculated corresponds to the volume of waste stored at the Aube center (after compacting, incineration and fusion). The volume of waste resulting from reconditioning of waste produced and conditioned in previous years is not included. The High and medium level, long-life solid radioactive waste indicator includes an uncertainty relating to the conditioning ratio (number of packages actually made after processing of one tonne of fuel), which can only be observed after the event as this ratio essentially depends on the blends used to optimize operations. This indicator is an estimate based on ongoing application of current practices for conditioning long-life waste which projects the current conditioning into the near future. Data for the Medium level radioactive waste reported by Existing Nuclear, EDF Energys nuclear division, are based on the inventory of nuclear waste in the UK drawn up by the Nuclear Decommissioning Authority. The figure is an estimate of the annual volume of waste that will be
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considered and classified as medium level radioactive waste when the nuclear generation sites are shut down, and includes the volume of conditioning required to transport the waste from the sites. All medium level radioactive waste is stored at the nuclear generation sites, awaiting a national decision on their final treatment. Low level radioactive waste includes desiccants sent for processing in the form of medium level radioactive waste, in compliance with applicable regulations. The Solid low and medium level radioactive waste of Constellation Energy Nuclear Group (CENG) covers radioactive waste that is not high level. The Nuclear Regulatory Commission (NRC) draws a distinction in the US between three types of solid low and medium level radioactive waste: types A, B and C, depending on the activity (A being the lowest-activity). Data reported by CENG are volumes of conditioned waste removed from site declared to the NRC. The Nuclear fuel delivered indicator reported by Constellation Energy Nuclear Group is the quantity of fuel delivered to generation sites. These quantities are expressed in grammes of uranium, and are reported by suppliers and declared to the NRC. Environmental protection expenses are expenses declared by the various entities of EDF. The definition of environmental protection expenses used by the Group is derived

from the CNC recommendation of October 21, 2003 (itself inspired by the European recommendation of May 30, 2001). Environmental protection expenses are identifiable, additional expenses incurred to prevent, reduce or repair damage to the environment that has been or may be caused by the Group as a result of its business. They relate, for example, to: - Waste elimination and waste limitation efforts, - Anti-pollution measures for the ground, surface water and underground water, - Protection of air and climate quality, - Reduction of noise emissions, - Protection of biodiversity and the landscape, - Plant decommissioning. The amount of these expenses is assessed on their cost excluding taxes, allocated between three main categories: - operating expenses (including studies that qualify as operating expenses), not including expenses covered by a provision, - investment expenditure (including the related studies), - amounts allocated to including discount expenses. provisions,

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Performance indicators
FINANCE Provisions for decommissioning and last cores Provisions for back-end nuclear fuel cycle Indemnities paid or payable following a court ruling in an environmental matter ENVIRONMENT FUELS AND RAW MATERIALS Total fuel consumption Nuclear reactor fuel Coal Heavy fuel oil Domestic fuel oil Natural gas Industrial gas Total consumption of raw materials from sources outside the company WATER Cooling water drawn Cooling water returned

Unit

2010(1)

2009(1)

2008

Scope 2010 2009 2008

GRI Ref.

million 19,684 million 18,020 thousand 8

18,900 17,694 810

14,142 15,538 84.5

2 2 1

2 2 1

2 2 1

t kt kt kt 106m3 10 m
6 3

1,138 20,211 1,625 448 8,072 3,707

1,141 20,248 1,793 439 6,296 2,809

1,282 25,300 1,950 306 9,259 5,716

1 2 2 2 2 2

1 2 2 2 2 2

1 2 2 2 2 2

EN 1 EN 1 EN 1 EN 1 EN 1 EN 1

109m3 109m3

53.9 53.3

50.9 50.3

45.9 45.7

2 2

2 2

2 2

EN 8 EN 21

(1) Excluding EnBW GRI: Global Reporting Initiative GC: Global Compact Scope 1: EDF S.A. (Distribution activities were transferred to the subsidiary ERDF in 2008) Scope 2: EDF group n.c.: Not Communicated n.a.: Not Applicable

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Performance indicators ENVIRONMENT AIR Gas emissions Total CO2 emissions (including installations not subject to quotas) SO2 emissions NOx emissions Dust CH4 emissions N2O emissions SF6 emissions Non-nuclear waste Dangerous waste Non-dangerous waste Non-nculear industrial waste recycled or removed for use Ash produced (2) ENERGY Renewable energies : quantity of electricity and heat generated using renewable energy sources (other than hydro) Direct energy consumption by primary source Internal consumption, pumping electricity Internal consumption, electricity MANAGEMENT Environmental protection expenses including provisions Environmental management (ISO 14001)

Unit

2010(1)

2009(1)

2008 2010

Scope 2009 2008

GRI Ref.

Mt kt kt t kt eq. CO2 kt eq. CO2 kt eq. CO2

75.7 187.9 167.6 7,929 41.6 287.9 98.3

72.5 198.6 158.6 8,333 34.5 284.7 NC

91.6 192.4 168.2 7,644 5.3 NC NC

2 2 2 2 2 2 1

2 2 2 2 2 2 NC

2 2 2 2 1 NC NC

EN16 EN20 EN20 EN20 EN16 EN16 EN16

t t t kt

40,679 21,785 16,212 198,422 138,319 82,606 190,353 117,818 68,228 3,581.4 3,581.5 581,694

1 1 1 2

1 1 1 2

1 1 1 1

EN 22 EN 22 EN 22 EN 22

GWh

10,385

8,412

6,186

EN 6

TWh TWh

6.6 22.6

6.8 22.4

6.5 23.3

1 1

1 1

1 1

EN 3 EN 3

1,384 million 650

2,477 1,691

2,496 1,775

1 EN 30

Group-wide Environmental Management System (ISO 14001)

(1) Excluding EnBW (2) The unit is the kt for 2009 and the tonne for 2008. GRI: Global Reporting Initiative GC: Global Compact Scope 1: EDF S.A. (Distribution activities were transferred to the subsidiary ERDF in 2008) Scope 2: EDF group n.c.: Not Communicated n.a.: Not Applicable

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Nuclear indicators EDF SA Radioactive emissions to water (1) Tritium Carbon 14

Unit

2010

2009

2008

GRI Ref.

TBq/unit GBq/unit

NC NC

16.4 12.1

17.4 13.0

EN 21 EN 21

Radioactive emissions to air (1) Carbon 14 Tritium TBq/unit TBq/ unit NC NC 0.16 0.49 0.17 0.42 EN 20 EN 20

Nuclear waste Low and medium level short-life solid radioactive waste High and medium level long-life solid radioactive waste Transported spent nuclear fuel m3/TWh m3/TWh t 12.4 0.88 1,140 12.8 0.88 1,102 11.7 0.87 1,179 EN 24 EN 24 EN 24

Nuclear indicators EDF Energy (Existing Nuclear division consolidated in 2009) Radioactive emissions to water Tritium

Unit

2010

2009

2008

GRI Ref.

TBq/unit

102

122

NA

EN 21

Radioactive emissions to air Carbon 14 Tritium Nuclear waste Uranium sent off site Low level radioactive waste sent off site Medium level radioactive waste generated TBq/unit TBq/unit 0.58 0.9 0.55 1.5 NA NA EN 20 EN 20

t m3 m3

131 498 162

147 607 170

NA NA NA

EN 24 EN 24 EN 24

(1) Radioactive emissions to water and air concern the previous year (N-1) and are therefore reported for 2009 but not communicated (n.c.) for 2010. GRI: Global Reporting Initiative GC: Global Compact Scope 1: EDF S.A. (Distribution activities were transferred to the subsidiary ERDF in 2008) Scope 2: EDF group n.c.: Not Communicated n.a.: Not Applicable

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Nuclear indicators Constellation Energy Nuclear Group Radioactive emissions to water Tritium

Unit

2010

2009

2008

GRI Ref.

TBq/unit

11.11

NA

NA

EN 21

Radioactive emissions to air Carbon 14 Tritium TBq/unit TBq/unit 0.69 1.41 NA NA NA NA EN 20 EN 20

Fuel Nuclear fuel delivered t 34 NA Nuclear waste Low and medium level solid radioactive waste sent off site m3 735 NA GRI: Global Reporting Initiative GC: Global Compact Scope 1: EDF S.A. (Distribution activities were transferred to the subsidiary ERDF in 2008) Scope 2: EDF group n.c.: Not Communicated n.a.: Not Applicable

NA

EN 24

NA

EN 24

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Group performance indicators Unit SOCIAL WORKFORCE NUMBERS AND BREAKDOWN (AT DEC 31) (1) EDF + ERDF + RTE TOTAL EDF group Total executives (as defined by French regulations) Percentage of women executives Non-executives Gender equality : - Male workforce - Female workforce - Male executives - Female executives no. no. no. no. 121,009 37,833 30,306 8,925 122,006 37,401 28,108 7,994 122,762 38,151 26,436 7,108 no. no. 105,393 158,842 105,129 159,407 104,929 160,913 2010* 2009* 2008

Scope 2010-2008

GRI Ref.

1 2

LA 1 LA 1

no. % no.

39,231 22.7% 119,611

36,102 22.1% 123,305

33,543 21.2% 127,370

2 2 2

LA 1 LA 13 LA 13

2 2 2 2

LA 13 LA 13 LA 13 LA 13

HIRING / DEPARTURES Recruitments Other new staff (1) Retirements Resignations (2) Redundancies and dismissals Other departures (1) WORKING TIME Part-time employees no. 17,719 18,953 21,971 2 LA 1 no. no. no. no. no. no. 13,790 3,105 4,708 2,929 1,924 10,457 11,734 10,130 4,280 2,415 1,482 5,804 12,533 2,092 4,578 3,760 1,901 3,083 2 2 2 2 2 2 LA 2 LA 2 LA 2 LA 2 LA 2 LA 2

(1) Workforce variations due to first consolidation or deconsolidation are included in Other new staff and Other departures respectively. In 2009, EDF Energys consolidation of British Energy led to 6,016 Other new staff, and in 2010 deconsolidation of the network business led to 5,190 Other departures. (2) Departures during the trial period are included in Other departures. In 2008, 248 departures during the trial period were classified under Resignations. GRI: Global Reporting Initiative * Excluding EnBW

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Performance indicators HEALTH AND SAFETY Fatal accidents Injury frequency rate Industrial and work-home journey accidents (causing leave of one day or more)

Unit

2010*

2009*

2008

Scope 20102008

GRI Ref.

no.

15 4.5

12 4.5

13 6.2

2 2

LA 7 LA 7

no.

1,145

1,104

1,504

LA 7

MANAGEMENT-EMPLOYEE RELATIONS Percentage of employees covered by collective bargaining agreements (3) TRAINING Number of employees benefiting from training (4) EMPLOYMENT AND INTEGRATION OF EMPLOYEES WITH DISABILITIES Number of employees with disabilities (5) (6)

% no.

94% 127,332

94% 99,217

95% 102,629

2 2

LA 4 LA 10

no.

3,078

2,854

3,364

LA 13

(3) Excluding Dalkia International. (4) In 2010, excluding ESTAG, in 2009, excluding EDF Energy, Dalkia International, in 2008, excluding EDF Energy, Dalkia International, EDF Trading (5) Excluding EDF Energy and EDF Trading. (6) In 2010 and 2009 the figure collected by Edison does not include the subsidiary Abu Qir, which was consolidated during 2009. GRI: Global Reporting Initiative * Excluding EnBW

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Unit EDF SA performance indicators (excluding distribution) SOCIAL WORKFORCE NUMBERS AND BREAKDOWN (AT DEC 31) Total EDF staff covered by collective bargaining agreement (at Dec 31) Other permanent EDF staff not covered by collective bargaining agreement Other non-permanent EDF staff not covered by collective bargaining agreement Total EDF SA staff not covered by collective bargaining agreement Total EDF SA Total executives (as defined by French regulations) Percentage of women executives Non-executives Technicians and supervisory staff Operatives Gender equality - Male workforce - Female workforce - Male executives - Female executives HIRING/DEPARTURES Recruitments Integration & rehiring Other new staff (1) Retirements Resignations Redundancies and dismissals Deaths Other departures (1) OVERTIME Number of hours of overtime OUTSIDE CONTRACTORS Average number of temporary staff (2) WORKING TIME Full-time employees Part-time employees Employees on contracts allowing overtime no. Thousands no. % no. no. no. no. no. no.

2010

GRI Ref.*

61,615 287 299

LA 1 LA 1 LA 1 LA 1 LA 1 LA 1 LA 13 LA 13 LA 13 LA 13

no. 586 no. 62,201 24,752 24.1% 37,449 31,820 5,629

no. no. no. no.

44,035 18,166 18,781 5,971

LA 13 LA 13 LA 13 LA 13

no. no. no. no. no. no. no. no.

3,519 327 744 2,180 88 10 86 1,508

LA 2 LA 2 LA 2 LA 2 LA 2 LA 2 LA 2 LA 2

2,642

(2010) ND (2009) 989

LA 1

no. no. no.

52,593 9,608 7,395

LA 1 LA 1 LA 1

(1) Not including arrivals and departures of seasonal staff on fixed-term contracts. (2) 2010 figure unavailable at the reporting date.

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Unit Performance indicators ABSENTEEISM Absenteeism Hours of maternity or paternity leave / total working time HEALTH AND SAFETY Fatal accidents Injury frequency rate Severity rate Industrial and work-home journey accidents (causing leave of 1 day or more) WAGES / SOCIAL SECURITY CONTRIBUTIONS / PROFIT SHARE Main salaries (average per month): Executives Technicians and supervisory staff Operatives Personnel expenses Average profit share per employee MANAGEMENT-EMPLOYEE RELATIONS Number of collective bargaining agreements signed (France) Percentage of employees covered by collective bargaining agreements (3) TRAINING Number of employees benefiting from training EMPLOYMENT AND INTEGRATION OF EMPLOYEES WITH DISABILITIES Number of employees with disabilities Number of employees with disabilities hired CHARITABLE WORKS Committee budgets (1% requirement) million no. % no. million % %

2010

GRI Ref.*

4.0% 0.8%

LA 7 LA 7

no.

6 3.8 0.16 341

LA 7 LA 7 LA 7 LA 7

no.

4,204 2,548 1,865 5,433 1,272

EC 1 EC 1 EC 1 EC 1 EC 1

19 99% 51,885

HR 5 LA 4 LA 10

no. no.

1,558 111

LA 13 LA 13

186

(3) EDF staff are not covered by a collective bargaining agreement as defined by law, but are covered by the IEG (electricity and gas sector) statutes.

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3 Rsolutions proposed to the combined Ordinary and Extraordinary Shareholders Meeting of May 24, 2011 3.1 Presentation of the resolutions proposed to the combined Ordinary and Extraordinary Shareholders Meeting of May 24, 2011

In addition to the ordinary resolutions that are submitted to your approval, we ask that you decide, on an extraordinary basis, the renewal of the authorization for the Board of Directors to reduce the share capital by cancellation of treasury shares, the update of the bylaws to reflect the latest legal and regulatory developments and additionally to amend the bylaws to provide for a bonus dividend payable to shareholders holding their shares in registered form for more than two years. Ordinary resolutions: First and second resolutions: Approval of the reports and the annual financial statements and consolidated financial statements for the financial year ended on December 31, 2010 Both resolutions submit to your approval EDFs corporate financial statements and the EDF Groups consolidated financial statements, as approved by the Board of Directors at its meeting held on February 14, 2011. Third resolution: Allocation of the net income for the financial year ended on December 31, 2010 and distribution of dividends It is proposed to the shareholders to vote to pay a dividend amounting to 2,126,196,661.30, or 1.15 per share, and to allocate the balance of the distributable profit to retained earnings. In view of the interim dividend of 0.57 per share paid out on December 17, 2010, the balance of the distributable dividend amounts to 1,072,342,663.96, or 0.58 per share, and will be paid on June 6, 2011.

Fourth resolution: Agreements governed by article L. 225-38 of the French commercial code The shareholders are required to examine the conclusions of the Statutory Auditors special report and to approve the agreements mentioned therein. Fifth resolution: Directors fees awarded to the Board of Directors This resolution proposes to set the total amount of the directors fees awarded to the members of the Board of Directors at 200,000 for the 2011 financial year and for future financial years until a further decision of the shareholders. The proposed increase in the amount of directors fees takes into account the number of Board of Directors and committees meetings contemplated to be held in 2011. Sixth and seventh and resolutions: Renewal of terms of office of Statutory Auditors It is proposed to the shareholders to renew the term of office of the current Statutory Auditors, namely KPMG SA and Deloitte et Associs, for a period of six financial years, which expires at the Shareholders Meeting approving the 2016 financial statements. The renewal of the Statutory Auditors has been subject to a request for proposals which results have been examined by the Audit Committee on January 24, 2011 and to a notice from the Audit Committee to the Board of Directors. Eighth resolution: Appointment of a new substitute Statutory Auditor
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It is proposed to the shareholders to appoint KPMG Audit IS, as substitute Statutory Auditor, for a period of six financial years, which expires at the Shareholders Meeting approving the 2016 financial statements. Ninth resolution: Renewal of the term of office of a substitute Statutory Auditor It is proposed to the shareholders to renew the term of office of the substitute Statutory Auditor, namely BEAS, for a period of six financial years, which expires at the Shareholders Meeting approving the 2016 financial statements. Tenth resolution: Authorization for the Board of Directors to carry out transactions on the Companys own shares It is proposed to the shareholders to renew the authorization granted by the combined Ordinary and Extraordinary Shareholders Meeting of May 18, 2010 and to thus authorize the Board of Directors to implement a new share repurchase program, over a period of eighteen months, within the limit of 10% of the share capital, in accordance with the ceiling provided by law. The maximum purchase price is set at 90 per share, with a cumulative maximum total purchase of 10% of the share capital over the period and a maximum holding at any time of 10% of the share capital. The maximum amount of funds dedicated to these operations is 2 billion over the period. Extraordinary resolutions: Eleventh resolution: Authorization for the Board of Directors to reduce the share capital by cancellation of treasury shares It is proposed to the shareholders to renew the authorization granted by the combined Ordinary and Extraordinary Shareholders Meeting of May 18, 2010 and to allow the Board of Directors, as necessary, to cancel

all or part of the shares redeemed under the shares buyback plan and to reduce the share capital within the legal limit of 10% of the share capital per periods of 24 months. Twelfth, thirteenth and fourteenth resolutions: Amendments to the bylaws It is proposed to the shareholders to decide to amend articles 10, 19 and 20 of EDFs bylaws to comply with the latest legal and regulatory developments, and in particular those resulting from the French implementation of the Directive of July 11, 2007 on the exercise of certain rights of shareholders in listed companies. Fifteenth resolution: Amendments to the bylaws regarding bonus dividend It is proposed to the shareholders to decide to amend article 24 of EDFs bylaws for the purpose of setting forth a bonus dividend provision (dividende major). This decision would enable any shareholder who, at the end of the financial year, has held registered shares for at least two years, to receive a bonus dividend in respect of such registered shares, equal to 10% of the dividend per share, as approved by the Shareholders Meeting. The number of shares giving entitlement to such increases may not exceed 0.5% of the share capital per shareholder as at the end of the relevant financial year. The first bonus dividend shall not, in accordance with applicable laws, be distributed before the end of the second financial year following the amendment of the bylaws, namely in 2014 for the dividend to be distributed in respect to the 2013 financial year. Extraordinary and ordinary resolution: Sixteenth resolution: completion of formalities Powers for

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3.2 Draft resolutions to be submitted to the combined Ordinary and Extraordinary Shareholders Meeting of May 24, 2011

ORDINARY MEETING AGENDA: Approval of the reports and financial statements for the year ended on December 31, 2010. Approval of the reports and consolidated financial statements for the year ended on December 31, 2010. Allocation of the net income for the year ended on December 31, 2010 as reported in the financial statements, and distribution of dividends. Agreements governed by article L. 22538 of the French commercial code. Directors fees awarded to the Board of Directors. Renewal of the term of office of a Statutory Auditor. Renewal of the term of office of a Statutory Auditor. Appointment of a substitute Statutory Auditor. Renewal of the term of office of a substitute Statutory Auditor. Authorization for the Board of Directors to carry out transactions on the Companys own shares MEETING

ORDINARY RESOLUTIONS FIRST RESOLUTION (Approval of the reports and financial statements for the year ended on December 31, 2010) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, after examination of the management report from the Board of Directors and the reports of the Statutory Auditors, approves the financial statements for the year ended on December 31, 2010 comprising the balance sheet, income statement and appendix, as presented, and the operations reflected in those financial statements and summarized in those reports. It sets the profit for the year at 1,492,289,091.04. It is emphasized that the overall sum of expenses and charges concerned by article 223 quater of the French tax code is 1,678,351 for 2010, and that the related tax amounts to 577,856. SECOND RESOLUTION (Approval of the reports and consolidated financial statements for the year ended on December 31, 2010) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, after examination of the management report of the Board of Directors and the report of the Statutory Auditors on the consolidated financial statements, approves the consolidated financial statements for the year ended on December 31, 2010 comprising the consolidated balance sheet, consolidated income statement and appendix, as presented, and the operations reflected in

EXTRAORDINARY AGENDA:

Authorization for the Board of Directors to reduce the capital by cancellation of treasury shares Amendment to article 10 of the bylaws. Amendment to article 19 of the bylaws. Amendment to article 20 of the bylaws. Amendment to article 24 of the bylaws.

ORDINARY AND EXTRAORDINARY MEETING AGENDA: Powers for completion of formalities.

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those financial statements and summarized in those reports. THIRD RESOLUTION (Allocation of the net income for the year ended on December 31, 2010, as reported in the financial statements, and distribution of dividends) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, after examination of the report of the Board of Directors and the report of the Statutory Auditors on the financial statements: (i) notes that the distributable profit, taking into account the positive amount of retained earnings of 4,917,232,754.50 and before deducting the interim dividend described below, amounts to 6,409,521,845.54; (ii) decides to set the dividend at 1.15 per share; (iii) notes that, given that an interim dividend of 0.57 per share was paid out on December 17, 2010, the balance of the dividend to be distributed for the 2010 financial year amounts to 1,072,342,663.96, or 0.58 per share; (iv) decides to allocate the balance of the distributable profit to retained earnings. The total dividend (including the total amount of the interim dividend mentioned above), based on the number of shares as of December 31, 2010, amounts to a maximum of 2,126,196,661.30 given that any shares held by the Company at the date of distribution of the dividend will not confer rights to the dividend. The Shareholders Meeting gives all powers to the Board of Directors to determine, in light of the number of shares held by the Company at the date of the distribution of the dividend, the total amount of the dividend and, consequently,

the amount of the balance of distributable profits allocated to retained earnings. The ex-dividend date is June 1, 2011 and the balance of the dividend to be distributed will be paid out on June 6, 2011. In the event the dividend is paid to individuals who have their tax domicile in France, the total dividend is eligible for the special 40% tax allowance under article 158, 3-2 of the French tax code. In addition, it is possible to elect that the gross amount of the dividend be subject to a fixed levy in final discharge at the rate of 19%, under the conditions of article 117 quater of the French tax code. Dividends distributed in the past three years were as follows:
Year Number of shares Dividend per share 1.28 1.28 1.15 Total dividends paid (after deduction of treasury shares) 2,330,266, 755.20 2,328,200, 485.12 2,111,146, 365.85 Portion eligible for the tax allowance(1) 100% 100% 100%

2007 2008 2009

1,822, 171,090 1,822, 171,090 1,848, 866,662

(1) Special 40 % tax allowance under paragraph 3-2 of article 158 of the French tax code.

FOURTH RESOLUTION (Agreements governed by article L. 22538 of the French commercial code) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, after examination of the special report of the Statutory Auditors on agreements governed by article L. 225-38 of the French commercial code, takes note of the conclusions of the report and approves the agreements mentioned therein.

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FIFTH RESOLUTION (Directors fees awarded to the Board of Directors) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, after examination of the report of the Board of Directors, decides to set the amount of directors fees awarded to the members of the Board of Directors for the current year and future years at 200,000, until a further decision is made by the Shareholders Meeting. SIXTH RESOLUTION (Renewal of the term of office of a Statutory Auditor) The Shareholders Meeting deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, decides to renew the term of office of the Statutory Auditor, KPMG SA, member of the Compagnie rgionale de Versailles, which registered office is located at Immeuble Le Palatin, 3 cours du Triangle, 92939 Paris-La-Dfense Cedex, France, for a period of 6 financial years, which expires at the Shareholders Meeting approving the financial statements of the financial year ending on December 31, 2016. SEVENTH RESOLUTION (Renewal of the term of office of a Statutory Auditor) The Shareholders Meeting deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, decides to renew the term of office of the Statutory Auditor, Deloitte et Associs, member of the Compagnie rgionale de Versailles, which registered office is located at 185 avenue Charles-deGaulle, 92200 Neuilly-sur-Seine, for a period of 6 financial years, which expires at the Shareholders Meeting approving the

financial statements of the financial year ending on December 31, 2016. EIGHTH RESOLUTION (Appointment of a substitute Statutory Auditor) The Shareholders Meeting deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, decides to appoint KPMG Audit IS, member of the Compagnie rgionale de Versailles, which registered office is located at Immeuble Le Palatin, 3 cours du Triangle, 92939 Paris-La-Dfense Cedex, as substitute Statutory Auditor, for a period of 6 financial years, which expires at the Shareholders Meeting approving the financial statements of the financial year ending on December 31, 2016. NINTH RESOLUTION (Renewal of the term of office of a substitute Statutory Auditor) The Shareholders Meeting deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, decides to renew the term of office of the substitute Statutory Auditor, BEAS, member of the Compagnie rgionale de Versailles, which registered office is located at 7-9, Villa Houssay, 92200 Neuilly-sur-Seine, for a period of 6 financial years, which expires at the Shareholders Meeting approving the financial statements of the financial year ending on December 31, 2016. TENTH RESOLUTION (Authorization granted to the Board of Directors to carry out transactions on the Companys own shares) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Ordinary Shareholders Meetings, after examination of the report of the Board of Directors:

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terminates, with immediate effect, the unused portion of the authorization to purchase shares in the Company given by the Shareholders Meeting of May 18, 2010 in the seventh resolution; authorizes the Board of Directors to purchase shares in the Company with a view to: remitting shares when rights are exercised attached to marketable securities giving access to the share capital by reimbursement, conversion, exchange, submission of a warrant or by any other means, immediately or at a later date, and carrying out all hedging operations for the obligations of EDF (or one of its subsidiaries) in respect of those marketable securities; holding shares for future remittal in exchange or payment for any external growth or contribution operations; ensuring the liquidity of EDFs share by an investment service provider through a liquidity contract coherent with the code of ethics recognized by the French market authority; attributing shares to members of EDF Group employees, notably under any share purchase or free share allocation plan benefiting members or former members of personnel in the conditions set forth by the law, particularly articles L. 225-197-1 and following of the French commercial code or articles L. 3332-18 and following of the French labor code (including any transfer of shares covered by these articles of the labor code), and carrying out all hedging operations for these operations; reducing the Companys capital by cancelling all or some of the shares purchased, subject to the approval by the Shareholders Meeting of the 11th resolution.

Purchases of shares in the Company may concern a number of shares such that: the number of shares the Company purchases during the period of a repurchase program must not exceed 10% of shares making up the share capital at the day of this Shareholders Meeting, it being specified that when shares are redeemed to ensure the liquidity of the EDF share under the conditions defined above, the number of shares taken into account for calculating the 10% limit is the number of shares purchased net of the number of shares sold during the term of this authorization ; and the number of shares the Company holds directly or indirectly at any time must not exceed 10% of the shares making up the Companys share capital.

Acquisitions or transfers of these shares may be carried out by all means, particularly on a market or over the counter, including via acquisition or transfer of blocks, use of derivative financial instruments or notes or securities giving access to the Companys shares, or by setting up options, at such times that the Board of Directors or the person acting on its authority shall decide. The maximum amount of funds dedicated to execution of this share repurchase program shall be 2 billion. The purchase price shall not exceed 90 per share; however, the Board of Directors may adjust the maximum purchase price in the event of capitalization of premiums, reserves or profits resulting in either a rise in the nominal value of shares or in creation and attribution of free shares, and in the event of a share split or reverse share split, or any other operation affecting equity, to reflect the effect of these operations on the share value.

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This authorization is granted for a maximum duration of 18 months from the date of this meeting. The Shareholders Meeting grants all powers to the Board of Directors to implement this authorization, and may delegate its authority, in order to place all orders in the stock exchange or off-market, allocate or reallocate the shares acquired to the various objectives pursued, under the applicable legal and regulatory conditions, complete all formalities, and in general do everything that is necessary. The Board of Directors must inform the Shareholders Meeting each year of the transactions undertaken in application of this resolution. EXTRAORDINARY RESOLUTIONS: ELEVENTH RESOLUTION

operations affecting the share capital after the date of this meeting; Authorizes the Board of Directors to allocate the difference between the repurchase value and nominal value of cancelled shares to the available premiums and reserves; Grants all powers to this end to the Board of Directors, with the possibility of subdelegation as permitted by the law and regulations applicable, to set the terms and conditions, amend the Companys bylaws accordingly, and more generally to take all necessary action. The authorization given to the Board of Directors under this resolution is valid for a duration of 26 months as from the date of this meeting. TWELFTH RESOLUTION

(Authorization for the Board of Directors to reduce the capital by cancellation of treasury shares) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Extraordinary Shareholders Meetings, after examination of the report of the Board of Directors and the report of the Statutory Auditors, in accordance with article L. 225-209 of the French commercial code: Terminates, with immediate effect, the unused portion of the authorization given by the Extraordinary Shareholders Meeting of May 18, 2010 in its 16th resolution; Authorizes the Board of Directors to reduce the capital by cancellation of all or some of the shares purchased under the Companys share repurchase program, by up to 10% of the existing capital in 24month periods. This 10% limit applies to the amount of the Companys capital, adjusted if necessary to take into account

(Amendment to article 10 of the bylaws) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Extraordinary Shareholders Meetings after examination of the report of the Board of Directors, decides to amend paragraph 2 of article 10 (Sale and transfer of shares) of the bylaws of the Company as follows: In addition to the legal obligation to inform the company of the holding of certain thresholds of the share capital or of the voting rights, any individual or entity, acting alone or in concert, who would come to directly or indirectly hold a number of shares corresponding to 0.5% of the share capital or of the voting rights of the company must, at the latest prior to the closing of the negotiations of the fourth trading day following the day of the threshold crossing, notify the Company, by registered letter with return receipt requested, the total number of shares, voting rights and securities giving access to the capital it holds.

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The remainder of the article remains unchanged. THIRTEENTH RESOLUTION (Amendment to article 19 of the bylaws) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Extraordinary Shareholders Meetings after examination of the report of the Board of Directors, decides to amend paragraphs 1, 2 and 3 of article 19 (Statutory Auditors) of the bylaws of the Company as follows: The control of the companys financial statements is carried out by two statutory auditors, appointed by the shareholders meeting for a period of six financial years, pursuant to article L. 823-3 of the French commercial code, and performing their duties in accordance with the law. They are convened, in application of article L. 823-17 of the French commercial code, to all of the board of directors meetings, which examine or decide on the annual or interim financial statements, as well as all of the shareholders meetings. Pursuant to article L. 225-228 of the French commercial code, the chairman and chief executive officer and, as the case may be, the deputy chief executive officer , where such persons are directors, do not take part in the vote of the board of directors which proposes the appointment of the statutory auditors to the shareholders meeting. The remainder of the article remains unchanged. FOURTEENTH RESOLUTION (Amendment to article 20 of the bylaws) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Extraordinary Shareholders Meetings after examination of the report of the Board of Directors, decides to amend article 20 (Shareholders

Meetings) of the bylaws of the Company as follows: Paragraph 1, subparagraph 4: Any shareholder may grant powers to any individual or entity of its choice for the purpose of being represented to a shareholders meeting. The proxy as well as its possible revocation have to be in written form and communicated to the Company. The proxy is revocable under the same form as that required for the appointment of a representative, electronically as the case may be. The holders of shares duly registered on behalf of an intermediary under the conditions of article L. 228-1 of the French commercial code may be represented under the conditions of the aforementioned article by a registered intermediary. Paragraph 1, subparagraph 8: This subparagraph is deleted. Paragraph 2, subparagraphs 1 and 2: The shareholders meetings are convened by the board of directors or, failing which, by the statutory auditors or any person duly authorized for such purpose. They are held at the registered office or at any other location indicated in the notice of meeting. They can be held by videoconference or by telecommunications means enabling the identification of the shareholders and which types and conditions of use are set out in articles R. 225-97 to R. 225-99 of the French commercial code. In this case, the shareholders who attend the meeting via such means in compliance with legal requirements, are deemed present, for the calculation of the quorum and of the majority. Unless otherwise provided by law, the notices of meeting occur at least fifteen days before the date contemplated for the shareholders meeting and such period is reduced to ten days for shareholders meetings held upon second notice and for postponed shareholders meetings.

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Paragraph 3, subparagraph 3 : One or several shareholders representing at least the proportion of capital set out by law, or any association of shareholders meeting the legal requirements and acting in compliance with law and within the legal timeframe, may require the addition of items [points] or draft resolutions to the agenda. The request to add items to the agenda must be justified. In addition, pursuant to the French labor code, the works council may require the addition of draft resolutions to the agenda. The remainder of the article remains unchanged. FIFTEENTH RESOLUTION (Amendment to article 24 of the bylaws) The Shareholders Meeting, deliberating in compliance with the quorum and majority requirements for Extraordinary Shareholders Meetings after examination of the report of the Board of Directors, decides to amend article 24 (Allocation of financial results) of the bylaws of the Company as follows: Article 24 Allocation of financial results 1. The profit and loss account which recapitulates the income and expenses for the financial year underlines by difference, after deduction of the amortization and depreciations, the profit or loss for the financial year. Out of the profit for the financial year less any previous losses, if any, at least 5% is deducted for the legal reserve fund. This deduction is no longer compulsory once the reserve has reached one tenth of the share capital; it starts again if, for any reason, the legal reserve falls below this tenth. The distributable profit is composed of the profit of the financial year, less the previous losses and the amounts to be entered in the reserves in application of the

law or bylaws and increased by the profits carried forward from prior years. The shareholders meeting shall withhold any amounts from this profit it deems appropriate either to allocate to any optional reserve funds or to carry it forward. In addition, the shareholders meeting may decide to distribute part of the distributable reserves; in such event, the decision shall state expressly the reserve items from which the distribution has been made. However, dividends shall be paid first from the financial years distributable profit. Except in case of share capital reduction, no distribution may be made to shareholders where the equity are or may become, further to such distribution, less than the amount of capital increased by the reserves which are non-distributable as per applicable laws and bylaws. The difference of revaluation is not distributable, it may be incorporated in all or in part of the share capital. Losses, if any, are entered into a special account to be deducted from the profits of later financial years until they have been absorbed or to be discharged by means of a reduction of the share capital. 2. Any shareholder who, at the end of the financial year, has held registered shares for at least two years and still holds them at the date of payment of the dividend in respect of this financial year, shall receive in respect of such shares a bonus equal to 10% of the dividend paid for the other shares, including any dividend which is paid in new shares. Where applicable, the increased dividend will be rounded down to the nearest cent. New shares thus issued shall rank pari passu with the existing shares in respect of which they were issued, for the purpose of calculating the rights to bonus dividend and increased distributions.

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Similarly, any shareholder who, at the end of the financial year, has held such registered shares for at least two years and still holds them at the issuance date of a share capital increase by way of capitalization of reserves, profits or premiums that gives rise to bonus shares distribution, shall receive additional bonus shares equal to 10% of the number distributed, rounded down to the nearest whole number in case of fractions. The number of shares giving entitlement to such increases may not exceed 0.5% of the share capital per shareholder as at the end of the relevant financial year. In the event of a dividend payment in shares or bonus shares distribution, any additional shares shall rank pari passu with the shares previously held by the shareholder for the purpose of determining any bonus dividend or bonus shares distribution. However, in the event of fractions: - where the shareholder exercises its option for the payment of the dividend in shares, the shareholder meeting the legal requirements may pay a balancing amount in cash to receive an additional share;

- in the case of a bonus shares distribution, the rights to any fractions of a share arising from the increase shall not be negotiable and the corresponding shares shall be sold and the proceeds distributed to the holders of such rights no later than thirty days after the registration in their account of the whole number of shares allocated to them. The provisions of this paragraph shall apply for the first time to the payment of the dividend to be distributed in respect of the financial year ending on December 31, 2013, determined by the ordinary shareholders' meeting to be held in 2014. EXTRAORDINARY AND ORDINARY RESOLUTIONS: SIXTEENTH RESOLUTION (Powers for completion of formalities) The Shareholders Meeting grants all powers to the bearer of an original, a copy or an extract of the minutes of this meeting to carry out all legal and administrative formalities, and file and register all information required by the laws in force.

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