OFGEM FINANCIAL INFORMATION REPORTING YEAR ENDED 31 DECEMBER 2010 Under the Ofgem issued “Energy Supply Probe – Proposed Retail Market Remedies”, changes to generators and suppliers licences were made requiring licence holders to publish financial information to aid comparability of suppliers and generators. This “Segmental Reporting” satisfies Standard Licence Condition 19A of the Gas and Electricity Supply Licences and Standard Licence Condition 16B of the Electricity Generation Licence. EDF Energy (UK) Ltd and its subsidiaries (“EDF Energy”) operate through 3 operational business units supported by corporate services. These are “Energy Sourcing and Customer Supply”, ”Nuclear Generation”, “Nuclear New Build” and “Corporate Steering Functions and Company Shared Services & Integration”. The principal activities of these business units and support services are: Energy Sourcing and Customer Supply (ESCS): the provision and supply of electricity and gas to residential, commercial and industrial customers, the provision of services relating to energy, including purchasing of fuel for power generation and the generation of electricity; Nuclear Generation (NG): the generation of electricity through its fleet of nuclear power stations and Nuclear New Build (NNB): the development and construction of new nuclear power plants in the United Kingdom Corporate Steering Functions and Company Shared Services and Integration (CSF/CSSI): the provision of support services including HR, Finance, Property and IT, and the development of greater integration and synergies across the company where possible. The results of NNB are excluded from the scope of the Ofgem requirements hence NNB indirect and direct costs are not included in the analysis below. No consolidated statutory accounts have been prepared which include all UK operations of the EDF Energy group of companies. The results of EDF Energy are fully consolidated into the financial statements of EDF S.A which are publicly available. EDF Energy has been included within the United Kingdom segment of the Segmental note in the EDF S.A statutory accounts which can be found at http://www.edf.com/html/RA2010/en/pdf/EDF2010_fin_001_va.pdf. The results shown in the EDF SA statutory accounts are euro-denominated and also include the results of the Networks business which was sold on 29 October 2010. Recently Ofgem have provided further guidance in relation to their preferred classification of certain costs and revenues which have led to the re-classification of items from the 2009 Segmental Reporting published last year. For comparison purposes the 2009 Segmental Reporting has been restated using the revised guidance and can be found in Appendix 1. The format used for the Segmental Reporting is consistent with the Ofgem guidance issued in the Financial Information Reporting: Amended Guidance. edfenergy.com Page 1 of 7 OFGEM FINANCIAL INFORMATION REPORTING YEAR ENDED 31 DECEMBER 2010 EDF Energy Segmental Analysis 2010 Generation Electricity supply Gas supply Aggregate Non supply Unit Nuclear Domestic Non-domestic Domestic Non-domestic Nuclear business 2010 (1) 2010 (2) 2010 2010 2010 2010 2010 Total revenue £M 2,116 1,504 1,636 3,726 948 16 6,326 Revenue from sales of £M 2,107 1,467 1,632 3,725 946 16 6,319 electricity and gas Other revenue £M 9 37 4 1 2 0 7 Total operating £M 1,283 1,150 1,709 3,564 954 7 6,234 costs Direct fuel costs £M 290 820 919 2,474 522 6 3,921 Other direct costs £M 118 178 479 931 247 0 1,657 Indirect costs £M 875 152 311 159 185 1 656 EBITDA £M 833 354 (73) 162 (6) 9 92 DA £M 285 449 14 9 7 0 30 EBIT £M 548 (95) (87) 153 (13) 9 62 Volume TWh, therms 47.9 23.7 15.8 47.8 1017.4 19.6 WACO F/E/G £/MWh, p/th 6.06 34.60 58.16 51.76 51.3 30.6 (1) Figures shown represent 100% of nuclear capacity, shared 80/20 by EDF Energy and Centrica (2) Includes results of Eggborough for the first three months prior to divesture and Sutton Bridge for the full year which were both managed under Hold separate Arrangements and excludes the proceeds on disposal of Eggborough edfenergy.com Page 2 of 7 OFGEM FINANCIAL INFORMATION REPORTING YEAR ENDED 31 DECEMBER 2010 Assumptions used in the preparation of this table are as follows: Segments Generation includes, coal and gas fired generation, nuclear generation, wind farms, Independent Power Purchase agreements and other contractual relationships entered into by EDF Energy. By its nature nuclear generation has high associated fixed costs and relatively low fuel (uranics) costs when compared to fossil generation (see WACO section below). For this reason nuclear and non nuclear generation have been shown in two separate columns within ‘Generation’ in the Segmental Reporting. EDF Energy is involved in several joint ventures, primarily in relation to the production of power from renewable sources. Joint ventures are accounted for by proportionate consolidation and results are included within the Non Nuclear Generation segment. Revenue Generation revenues from sales of electricity include sales to external third parties as well as internal customers within EDF Energy. Supply revenues from sales of electricity and gas include only those revenues from the direct sale of electricity and gas to customers. Other revenues for the reported segments includes: Nuclear Generation: Provision of ancillary services to other nuclear facilities. o Non-Nuclear Generation: Sale of Renewable Obligation Certificates, by-products (e.g. ash, gypsum), ancillary service income and income received in o relation to an external tolling arrangement. Supply – Domestic electricity and Domestic gas: Other revenue relates to charges to customers for non-energy supply services provided e.g. energy saving o products, insurance products etc. Please note that: - EDF Energy operates a market reflective transfer pricing arrangement between its Generation and Supply businesses, with traded volumes transferred from the market facing book at actual traded price or a price reflective of the market price. - the hedging policy within EDF Energy for Generation businesses will lead to volumes of energy being sold in advance of delivery dates. The hedging policy attempts to remove the impact of short-term market volatility. Direct fuel costs Direct fuel costs for Non-Nuclear Generation reflects the direct costs of coal, oil and gas required to produce power. Fuel costs relating to Nuclear Generation principally include the cost of uranics (including fabrication) and spent fuel management costs. Direct fuel costs for the supply segments include the cost of purchasing energy in advance through bilateral contracts as well retrospectively through the industry imbalance mechanisms edfenergy.com Page 3 of 7 OFGEM FINANCIAL INFORMATION REPORTING YEAR ENDED 31 DECEMBER 2010 Please note that the hedging policy within EDF Energy for Supply businesses will lead to volumes of energy being sold or purchased in advance of delivery dates. The hedging policy attempts to minimise risk for the respective segments (in particular for domestic customers) and eliminate short-term market volatility. Other direct costs Other direct costs includes all costs, excluding direct fuel and metering costs, considered by EDF Energy to be included within Gross Margin for management reporting. This includes all costs incurred in delivering energy to customers (e.g. BSUoS, distribution costs,…) and environmental costs (Carbon, CESP, CERT,…) but does not include customer or business support costs (e.g. customer service costs, HR costs). Indirect costs Indirect costs contains all non gross margin operating costs including metering charges (net of income received), staff costs, property costs, head office recharges, bad debt expense, etc. The costs relating to EDF Energy Corporate functions (CSF & CSSI) are allocated to the 3 operational Business Units (ESCS, NG, NNB) based on specific key drivers for the various cost concerned. CSSI costs cover Shared Services, Property and Facilities, IT Operations and IT Projects and Transformation and allocations are based upon usage relating to each service. CSF costs relate to the central Corporate teams (Finance, HR, Strategy) and the allocation of costs is determined on an equitable basis across the business units. Indirect costs within business units, allocation per segment: ESCS (all non nuclear segments) indirect costs are allocated across non-nuclear generation and supply segments where the costs are principally incurred o within that segment. Where a function cannot be linked directly to a segment (e.g. HR, Finance) the associated costs have been apportioned to each segment based on appropriate cost drivers. This provides a better allocation of functional costs and is a change from last year’s publication where these costs were allocated by volume generated/supplied. It also is consistent with the overhead cost allocation methodology used for Ofgem probe enquiries in relation to the Domestic Market. NG business unit operates as a standalone segment and hence no judgemental apportionment of NG indirect costs is required o EBITDA/EBIT Earnings before interest, tax, depreciation and amortisation (EBITDA) is the net of revenues less direct costs, other costs, and indirect costs. Earnings before interest and tax (EBIT) are as above, but after deduction of depreciation and amortisation. Depreciation and Amortisation charges in the Non-Nuclear Generation segment include an impairment of £340m against the non-nuclear generating assets of the Group As in 2009, gains/(losses) from