Universal Registration Document 2022

In Italy, net investments were down by €209 million, notably due to acquisitions in the renewable energies sector in 2021 that had no equivalent in 2022.

The decrease in net investments by the Other International segment is principally attributable to the acquisition of Essent by Luminus in 2021.

5.1.4.3 Group cash flow

Group cash flow for 2022 amounted to -€24,603 million, significantly lower than the -€1,525 million recorded in 2021. It is essentially explained by cash EBITDA of -€12,811 million, principally affected by the drop in French nuclear power output, and the change in working capital (+€8.3 billion from 2021).

5.1.4.3.1 Asset disposals

Asset disposals totalled €535 million in 2022. They essentially concerned the sale of the EDF Energy Services business in the United States.

5.1.4.3.2 Dedicated assets

In compliance with French Law no. 2006-739 of 28 June 2006 on the sustainable management of radioactive materials and waste, EDF has built up a portfolio of dedicated assets to secure financing of its long-term nuclear obligations (see section 5.1.6.1.6).

In general, the changes concerning dedicated assets comprise:

• allocations to reach full coverage of obligations;
• reinvestment of financial income (dividends and interest) generated by these assets;
• withdrawals of assets corresponding to the costs incurred over the period to meet long-term nuclear obligations falling within the scope of the Law of 28 June 2006;
• exceptional withdrawals proposed to the governance bodies in charge of managing dedicated assets when the value of the portfolio exceeds the amount of the obligations to be financed; such withdrawals must be validated by these bodies.

The net change of -€233 million in dedicated assets in 2022 corresponds to the second and third of these categories.

5.1.4.3.3 Dividends paid in cash

In 2022 EDF paid out €1,085 million comprising:

• the 2021 dividend (€72 million) paid by EDF ⁽¹⁾;
• payments made in 2022 to holders of perpetual subordinated bonds for the “hybrid note” issues (€606 million);
• dividends paid by Group subsidiaries to their minority shareholders (€407 million).

5.1.4.4 Effect of change in exchange rates

The foreign exchange effect had a favourable impact of €85 million on the Group’s net indebtedness, mainly due to the rise of US dollar against the euro reduced by the decline of the pound sterling against the euro ⁽²⁾.

5.1.4.5 Other non-monetary changes

Other non-monetary changes totalled €508  million at 31 December 2022, compared to €1,150 million at 31 December 2021. They mainly consist of changes in the fair value of debt instruments and new leases (IFRS 16).

5.1.5 Financial outlook

2023 objectives ⁽³⁾ released on 17 February 2023 ⁽⁴⁾ are as follows:

• Net financial debt / EBITDA: ≤ 3x
• Adjusted economic net debt / Adjusted EBITDA ⁽⁵⁾: ≤ 4.5x

5.1.6 Management and control of market risks

See section 2.2.2. “Management of financial and market risks” of the 2022 Universal Registered Document.

5.1.6.1 Management and control of financial risks

This section sets forth the policies and principles for management of the Group’s financial risks defined in the strategic financial management framework (liquidity, interest rate, foreign exchange rate and equity risks), and the Group counterparty risk management policy set up by EDF. These principles apply only to EDF and operationally controlled subsidiaries or subsidiaries that do not benefit by law from specific guarantees of independent management such as Enedis. In compliance with IFRS 7, the following paragraphs describe the nature of risks resulting from financial instruments, based on analyses of sensitivities and credit (counterparty) risks.

An independent unit in the Group’s Risk Division, the Financial Risks Control Department (Département Contrôle des Risques Financiers et Investissements – CRFI), is in charge of financial risk control at Group level, mainly by ensuring correct application of the principles of the strategic financial management framework (July 2015). It also has the task of carrying out a second-level check of the risk of

counterparty default (methodology and organisation) for EDF entities and operationally controlled Group subsidiaries (excluding Enedis), and a first-level check of financing activities by EDF’s trading room. The CRFI Department also carries out a second-level check of management activities concerning the dedicated asset portfolio.

The CRFI Department issues daily and weekly monitoring reports of risk indicators relevant to activities in EDF’s trading room.

Regular internal audits are carried out to ensure controls are actually applied and are effective.

5.1.6.1.1 Liquidity position and management of liquidity risk 5.1.6.1.1.1 Liquidity position

The Group’s liquidities at 31 December 2022, consisting of liquid assets, cash and cash equivalents, totalled €29,455 million and available credit lines amounted to €14,051 million.