Electricite de France : Transcript of the Investors and Analysts conference HY 2021 (PDF - 294.24 KB)

EDF

2021 Half-Year Results

29 July 2021

EDF: Half-Year Results 2021	29 July 2021

2021 HALF-YEAR RESULTS

Jean-Bernard Lévy

Chairman and Chief Executive Officer

First of all, let review some of the highlights of the last few months.

The first half of 2021 marks the return to growth in our sales and our margins after 2020, which of course was affected by the sanitary crisis. Our teams are resolutely continuing to deploy our CAP 2030 strategy. In this respect, let me highlight the significant growth of our renewable projects' portfolio, a strong commercial momentum, and significant progress in all our main industrial projects.

HIGHLIGHTS (1/2)

On the first slide, you will see our major highlights, and if I start with nuclear. We have raised, as you know, our nuclear output estimate for the whole of 2021. The new range is from 345 TWh to 365 TWh. This new estimate shows the successful rollout of our activities scheduled for the first half of the year.

Let me also highlight the success of the fourth ten-yearly outage of the Tricastin 2 reactor. We completed this outage 10 days ahead of the initial schedule. Tricastin 2 is therefore the fourth 900 MW reactor to have received authorisation to operate beyond 40 years and it shows how we have now good control of these very complex operations of the VD4 10-year outage.

Let me also remind you that last February, the French Nuclear Safety Authority, the ASN, issued its generic decision on the conditions for the continued operations of 900 MW reactors beyond 40 years. This ruling confirms the prospect of continued operations for a further 10 years for the whole fleet.

Regarding the 1300 MW reactors, and we have 20 such reactors, time has come to bring their accounting depreciation period into line with EDF's industrial strategy of pursuing the operations of certain units beyond 40 years in accordance with France's Multiannual Energy Programme, what we call the PPE.

The technical, economic and governance conditions are now in place to extend the depreciation period of 1300 MW reactors to 50 years, as we did in 2016, five years ago, for the 900 MW fleet. This accounting change applies from 1 January 2021, but in no way it prejudges the ASN's position regarding the industrial programme that EDF will have to submit as part of the fourth 10-yearly inspections for such reactors, which will start in 2026. So, very similar to what we did for the 900 MW reactors back in 2016.

Regarding Flamanville 3, repair operations on the eight penetration welds of the main secondary circuit are underway following the ASN's approval for the intervention by remotely operated robots. In June, we submitted to the ASN a summary of our studies on the handling of the nozzles on the main primary circuit. We are opting for the scenario of fitting a retainer clamp around the three concerned nozzles. The dossier is currently in the hands of ASN.

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EDF: Half-Year Results 2021	29 July 2021

Flamanville 3 has already received all the fuel assemblies required for the loading of the fuel, which is scheduled for the fourth quarter of next year.

Regarding nuclear new built, in May, we submitted to the French government the study that had been requested concerning the feasibility and the conditions for the success of such a programme of building three pairs of EPR2 reactors in France.

And in the UK, we are discussing currently with the British government on the financing scheme for two EPRs on the Sizewell site. This project is clearly identified in the Energy White Paper, which was released by the British government at the end of 2020.

The reaffirmation of the role of nuclear power in achieving carbon neutrality by 2050 in the UK comes at a key moment. As we know, several of the UK's nuclear power plants are approaching their closure dates. All of them have already had their operating life extended thanks to the investments made 10 years ago or more by EDF Group. This is also the case for Dungeness B, the final shutdown of this station was confirmed in June - but I'd like to stress that this plant was in operation for 10 years longer than what was the initial closure date when we acquired British Energy.

At the same time, at Hinkley Point, where I was on Tuesday, civil engineering work and the installation of equipment on the nuclear islands of the EPR reactors are making strong progress. Currently, close to 7,000 people work every day on the site in full compliance with health regulations in place.

The first six months of the year confirm the growth momentum of our renewable activities. Our project portfolio has increased by 10% since end 2020 and now reaches 66 GW and these are gross numbers. In the same period, capacity under construction has also increased by 8%. So, we are on track to achieve our ambition of 60 GW net renewable capacity, so this is net 60 GW, including hydro, by 2030. You may remember that we revised this ambition upwards earlier this year.

Our renewable projects are growing in many regions across the world. A month ago, we won a very important 1.5 GW offshore wind farm project off the coast of New Jersey, one of the most powerful in the United States. It will be produce the equivalent of the consumption every year of 700,000 homes. We have also in the US been awarded three solar projects, for in total 300 MW. In Brazil, we recently commissioned a 344 MW wind farm.

In France, we continue to implement our Solar Plan. This year, we have been awarded 13 ground- mounted solar projects with a total capacity of 75 MW.

On the hydro side, our Nachtigal dam project in Cameroon, which when it is finished will provide 30% of the country's energy needs. This project is making good progress. More than 40% of the civil engineering works have been completed.

HIGHLIGHTS (2/2)

If I turn to the next slide, in terms of customers and services, we have many reasons to be satisfied. The number of our residential customers taking up market offers for electricity supply has increased almost 18% since the beginning of 2021 and is now close to 1.2 million. We are also growing in terms of the number of electricity, services and gas contracts per customer, in line with our goal of reaching 1.5 contracts per customer by 2030.

Our range of offers continues to expand, this time in the area of distributed solar and of energy efficiency for businesses. We have also been very active in the renewable Power Purchase Agreement market. Let me mention three such PPAs that we signed since the beginning of the year with major French Groups like Bouygues, RATP, which is the metropolitan transportation system in Paris area, and with SNCF, the French railways.

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EDF: Half-Year Results 2021	29 July 2021

Also, I'm pleased to point out that our subsidiary Enedis is close to complete the deployment of the Linky smart meter programme. More than 32 million such Linky meters have been installed. We are at 95% of the global target.

Our sense of innovation in the fields of mobility and green hydrogen leads to several promising developments. By the end of June, we have already rolled out 144,000 charging points in Europe. Our subsidiary Pod Point, which active in the UK and also in Norway, saw a 28% growth in the number of charging points deployed since the beginning of the year. So, we are one of the great providers of charging stations.

In Oxford, the consortium led by our subsidiary called Pivot Power has already installed 50 MW of batteries as part of a Superhub project: the largest fast and ultra-fast charging network in the UK, which will be completed in 2022.

We are also making headway on the hydrogen front. As an example, in Germany, Hynamics our subsidiary is participating in the large renewable hydrogen production project of 300 MW for industrial applications. The project is shortlisted as Important Projects for Common European Interest (IPCEI) in Brussels.

Let me conclude this part with two major international projects. In the Ivory Coast, we have signed the financing agreements for Biovea, the largest biomass power plant in West Africa with a capacity of 46 MW. This is an exemplary project, it will have a transformative effect on the local economy, and the construction is due to start before the end of the year.

In Laos, EDF signed a development agreement for a 240 MW hybrid floating solar project located on the reservoir of the Nam Theun dam, a dam which we designed several years ago, and which is operated by our subsidiary NTPC.

ENVIRONMENTAL & SOCIAL ACHIEVEMNTS AND TARGETS (1/2)

On the next slide let me highlight some of our major achievements on our environmental and social targets. As you know, a little over a year ago we adopted a "raison d'être" purpose, that permeates all our activities. It is at the heart of our social and environmental responsibility policy. We are pursuing ambitious objectives with determination.

Firstly, our carbon intensity. As you know it is already five times lower than the European average, but is still falling when compared to the first half of 2019 and remains almost stable compared to the first six months of 2020, which were impacted by the health crisis. We are therefore well on the way to our objective to only have 35g/kWh of carbon in 2030 and to full carbon neutrality in 2050 on all three scopes of carbon dioxide emissions.

Another example is the presence of women in the Group at the end of 2020. Women were 29% of the members of our management bodies. This is a level significantly higher than the average for companies on the major French index, CAC 40, and have achieved this target three years ahead of schedule. We have now raised our targets. The new target is 33% women in major management bodies by 2026 and a number between 36% and 40% in 2030.

ENVIRONMENTAL & SOCIAL ACHIEVEMNTS AND TARGETS (2/2)

We also continue to innovate in the field of sustainable finance, a key driver for the energy transition and another facet of our CSR policy. In May, we achieved a double world "first". We issued Social Hybrid Bonds for an amount of 1.25 billion euros. First, it is the first ever social hybrid bond in the world to be issued by a corporate player and at the same time it is the first social bond issued by any company in the "utility" sector.

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EDF: Half-Year Results 2021	29 July 2021

This allows us to finance our eligible investments and at the same time guarantee that the purchases related to these investments will be a 100% made among SMEs and SMIs, thus safeguarding regional employment areas in France and in the United Kingdom.

We are also very proud that earlier in the year we entered CAC 40 ESG index, which is a new stock market index of 40 companies that have demonstrated best practice in Corporate Social Responsibility.

At EDF, "commitment" goes hand in hand with "results-oriented culture". And this is particularly important in the case of CSR, where common evaluation standards only begin to emerge. So, I am pleased to announce the publication, today, of our first impact report. This publication provides a global picture of the externalities of our actions. It highlights the contribution of our CSR policy to the achievement of the priority sustainable development goals as defined by the United Nations. This is a further proof of the seriousness of our commitments that stem from our raison d'être.

Let me now turn to our main performance indicators.

H1 2021 KEY FIGURES

On the slide H1 2021 Key Figures, we have seen a clear upturn in our performance when compared to the first half of 2020. Our sales and EBITDA have both increased strongly, respectively by 14% and 30% compared to the first half of last year.

The increase in the EBITDA is mainly due to the increase in nuclear output in France, in a context of rising electricity and gas prices, of slightly colder weather, and of the growth in connection operations of our subsidiary Enedis.

Our net income, excluding non-recurring items, has tripled when compared to the first half of 2020. It stands at €3.7 billion. This increase mainly reflects the growth in EBITDA and in recurring financial result, as well as lower depreciation in connection with the extension of the depreciation period for the 1,300 MW plants, which I mentioned a few minutes ago.

Net income - Group share stands at nearly 4.2 billion euros.

Our net financial debt to EBITDA ratio has improved compared to the end of 2020 and stands at 2.21 times, confirming the robustness of our financial structure.

2019-2021 EVOLUTION

On the next slide you can see that this upturn cannot be explained solely on the basis of a comparison with a period marked in 2020 by the health crisis. Indeed, as we mentioned at the time of the annual results, the impact of the health crisis on EDF's finances was contained. Hence, the increases in our EBITDA and our net income excluding non-recurring items are also very strong when compared to the first half of 2019, as you can see on this slide. I therefore see in this positive trend - 19 to 21 - a return to growth that we all hope will be sustainable.

Let me now thank you for your attention and hand over to Xavier Girre who will provide details for our financial results.

Xavier Girre

Group Senior Executive, Vice President, Group Finance

I will now detail our 2021 half year results.

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