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RISK FACTORS AND CONTROL FRAMEWORK Risks to which the Group is exposed

Group’s activities are described in section 1.4.5 “International activities”. Certain Group investments and commitments are exposed to risks and uncertainties associated with doing business in countries that may experience, or have experienced, periods of political or economic instability. Several countries in which the Group operates have regulations that are less advanced and less protective, practice or may introduce controls or restrictions on repatriation of profits and capital invested, levy or may levy specific taxes and fees affecting energy businesses and impose or may impose restrictive rules on the business of international groups. In these countries, identified in particular by assessments performed by credit insurance groups (including COFACE) the electricity sector is also subject to sometimes rapidly changing regulations or regulations which may be influenced by political, social and other considerations, which may affect the operations or financial position of Group subsidiaries in a way that is contrary to its interests. The occurrence of any of these events may have an adverse impact on the Group’s activities, and financial position. Lastly, the Group has developed or built a portfolio of Independent Power Plants (IPPs) in different parts of the world, including Brazil, Vietnam, Laos and China, in which it plays one or more roles (engineering, project owner, project manager, investor, operator). In these different capacities, the Group may incur liability or its financial performance may be affected, especially if the return on capital employed for the IPPs is lower than expected, if long-term electricity contracts or pass-through clauses, if applicable, are challenged, or in the event of major changes to electricity market rules in the relevant country. Risks associated with amendments to the IFRS standards applicable to the Group. The EDF group’s consolidated financial statements for the financial year ended 31 December 2017 have been prepared in accordance with the applicable international accounting standards published by the International Accounting Standards Board (IASB), as approved by the European Union as at 31 December 2017 (see note 1.1 to the consolidated financial statements for the financial year ended 31 December 2017). This accounting standards framework evolves and new standards and interpretations are currently in the process of being drafted or approved by the competent international bodies. The Group is studying the potential impact of these standards and interpretations, but cannot foresee their development or potential impact on its consolidated financial statements. The Group’s expansion strategy may not be implemented in accordance with the objectives set by the Group. The Group intends to continue its development as an efficient and responsible electricity producer, a champion of low-carbon growth in France, in its core countries in Europe (United Kingdom, Italy, Belgium) and internationally in line with the CAP 2030 strategy, combining the search for drivers of growth with the exploitation of existing assets. The strategy and drivers of the Group’s transformation are described in section 1.3 “Strategy of the EDF group”. The Group’s upstream/downstream integrated model enables better management of the risks related to physical and market uncertainties, with the aim of maximising gross margin. See section 1.4 “Description of the activities of the Group”. In order to procure the resources for its strategy, the Group thus implements programmes that focus on expansion, reorganisation, increasing profitability (see the discussion below of the risk factor entitled “The Group has set up programmes that aim to improve its operating and financial performance and increase its financial flexibility”) and disposals. These programmes may be supplemented by a strategic analysis of assets which may itself lead to a requirement for additional financial agility, giving rise to these disposals. The Group intends to develop and consolidate its integrated range of services solutions, notably eco-energy efficiency services, within a process of sustainable RISKS RELATED TO THE 2.1.3 TRANSFORMATION OF THE GROUP

development that is local to customers and regions. The energy services market is very competitive, and the energy efficiency market has strong development potential (see section 1.4.6.1 “Energy Services”). The integration of Dalkia into the Group since 25 July 2014 reinforces this expertise and development sector (see section 1.4.6.1.1 “Dalkia”). However, the Group cannot guarantee that its service offer will be successful or that it will always be able to implement its expansion policy in this area, which may have an adverse impact on its financial position and outlook. In the new energies field, EDF relies primarily on its EDF Énergies Nouvelles subsidiary (see section 1.4.1.5.3 “EDF Énergies Nouvelles”), which does business in numerous countries. The profitability of these developments is often dependent on the support policies adopted in the various countries. The Group cannot guarantee that the support programmes will not change in some of these countries and adversely impact the profitability of investments made. With regards to nuclear activities, (see section 2.1.5 “Specific risks related to the Group’s nuclear activities”), the Group may not achieve the expansion that it anticipates or it may be unable to carry out projects that it has initiated in France and abroad, or it may be unable to carry out such projects over their duration under satisfactory economic, financial and legal conditions. In particular, through partnerships or equity investments, the EDF group is committed to international projects for the construction and operation of nuclear power plants (notably in China and the United Kingdom). These projects require obtaining administrative authorisations, licences, permits and, in certain cases, setting up additional partnerships. These are projects of large-scale and long duration, involving numerous industrial partners and significant investments, for which the financing conditions may still be subject to confirmation. Given the economic climate, obtaining such funding may be delayed. Also, changes to the regulatory framework in certain countries could have an impact on the commitments and liability of EDF. Even when it has negotiated protective contractual arrangements, the Group cannot guarantee that any or all of these projects will be carried out in accordance with the anticipated schedules, under satisfactory economic, financial, regulatory or legal conditions or that they will, in the long term, generate the profitability anticipated at the outset, which could have an adverse impact on the financial situation of the Group and on its image. Furthermore, the expansion of the Group’s gas business is an important issue, both in terms of the use of gas in power generation and the development of gas offers (see section 1.4.6.2 “Gas activities”). The outlook for global supply and demand for gas is changing (the boom in unconventional sources of gas, particularly in the United States, rising demand in emerging countries, etc.). The competitive environment for the gas sector is evolving in France and in Europe with the emergence of new operators and the mergers of energy companies. The dependence of European countries on imports of natural gas is already high and continues to increase, due mainly to the depletion of local resources and increasingly distant supply sources. To implement its gas strategy, the Group must not only have access to competitive sources of supply, but also to logistical infrastructure (such as storage, gas pipelines and LNG terminals) that allow it to transport its gas to locations near points of consumption, have the requisite flexibility and generate synergies between the various entities of the Group, including those which it does not control. The Group cannot guarantee that it will always, under competitive financial conditions, have access to gas supply sources (through long-term contracts or the acquisition of gas fields, for example) or to gas infrastructure, or be able to generate the synergies anticipated. All of these factors may slow the expansion of the Group’s gas strategy, which could have an adverse impact on its activities, financial position and outlook. Moreover, in the event of a harsher global geopolitical context, the Group cannot guarantee that it could withdraw from projects in which it has committed itself either rapidly or under acceptable economic conditions (see section 1.4.5 “International activities”). More generally, the Group may face unexpected changes in its regulatory, economic and competitive context, which may render its decisions inappropriate, or it may encounter difficulties in implementing or changing its strategy, which may have an adverse impact on the Group’s business, financial position and outlook.

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