Earnings Transcript for EDF.PA - Q4 Fiscal Year 2021

Emilio Zito: Good morning. Good morning, everybody. Thanks for joining the EDF Annual Results 2021 Annual Results Conference Call. Before leaving the floor to our Chairman and CEO, Jean-Bernard Lévy; and our Group CFO, Xavier Girre, let me introduce you to a short video with the key highlights of the year. I hope you'll enjoy our results later. Thank you.

Jean-Bernard Levy: Ladies and gentlemen, welcome. Welcome to this meeting, eagerly awaited meeting, where we will present to you the annual results of EDF Group. Certainly, the pandemic situation is improving, but in application of health regulations, we can still only welcome a few people here at our headquarters. So many of you are connected remotely, and thank you for that. Today, we will look back at our performance in 2021. Many successes in 2021, and I would like to extend my congratulations to all the EDF teams. The people I meet outside the companies always tell me about the spirit of the EDF and also Enedis employees and their great consideration for our public. So I would like to take this opportunity to express my gratitude to all of them. 2021. In 2021, we have met our commercial, operational and financial objectives. As a result, EDF Group's EBITDA shows a significant growth. The number stands at €18 billion. This is well above the guidance we provided you in February 2021. In my view, this is a very encouraging result due to the increase in nuclear power production in France, due to a significant improvement for regulated activities in France, due to capital gains on disposals and the great performance of Edison and also a great performance for EDF Trading. You wondered about a one-off difficulty last October. But despite this episode, our trading activity had its best year ever in 2021. We have generated a substantial profit. Our net current result is €4.7 billion. This is more than doubled compared to 2020 figures and exceeds the results of 2019. Net income group share has also risen. It was €650 million in 2020. It is above €5 billion in 2021. Our cost-cutting plans have been fully achieved a year ahead of schedule. And also, our divestment plans have been fully achieved 1 year ahead of schedule. This has significantly contributed to the control of our ratio of net financial debt-to-EBITDA, which stands at 2.39 in December 2021 compared to 2.61 at the end of 2020. Yesterday, the Board of Directors of EDF decided to propose the payment of a dividend of €0.58 per share for the 2021 financial year. This corresponds to a payout ratio of 45% of net current income. It should be noted that the French state has undertaken to opt for payment of the dividend in shares. The pandemic, which has impacted the entire world over the past 2 years, is still not behind us. But in the face of this ordeal, EDF has been working tirelessly day after day in all of its businesses and for all its customers. Throughout the crisis, we have continued to produce and sell electricity in France and in the countries where we operate. We have implemented strict protocols to protect our employees and subcontractors, and this worked well. We were able to capitalize on the lessons learned from the pandemic. We made the most of this period to expand and accelerate our business transformation processes. At the request of the French state and on a temporary basis, we have been appointed as a backup utility to ensure continuity of electric supply for customers whose supplier has failed, and there have been a few. This procedure has been activated so that no customer in France was cut off due to the failure of their power supplier. Another important policy implemented in 2021 was to put an end to power cuts for residential customers not paying their bills. Nothing obliged us to do this, but we decided to replace the cutoff with a power limit of 1 kilovolt-amperes, which allows clients in difficulty to have access to a vital minimum amount of electricity. In order to meet the post-COVID challenge of a decarbonized economic recovery, we are pursuing our strategic objectives. As you know, we call it our CAP 2030 strategy. In Energy Services, we are supporting our customers by offering them solutions that will enable them to achieve carbon neutrality. This ambition is reflected in the 1.16 contracts signed, on average, per customer in our 4 priority countries and in the rapid onboarding of subscribers to energy contracts through our subsidiary, Enedis. In terms of decarbonated electricity production, we have increased our renewable power capacity by 3.1 gigawatt. And we reached an unprecedented score of 91% of decarbonated production group-wide in all countries combined. Another key to success is innovation. I will mention just one striking example. Last year, we provided support to 22 startups through EDF Pulse ventures. Just an example of one of them called Persefoni. Maybe you should keep an eye on it. As you may know, its business is to measure the carbon footprint of companies, and we have great confidence in their positioning and in the value of their business model. The four low-carbon action plans that we have launched in recent years to enable us to accelerate and amplify our path to carbon neutrality have continued to deliver concrete results that meet our expectations. We will come back to you in the coming weeks to detail the concrete progress achieved in these plans and to present our hydrogen strategy. Our Raison d'être, which was implemented in 2020, lies at the heart of our policy of social and environmental responsibility. Two indicators that we have been monitoring for some time, I would like to share them with you. First, our carbon intensity is already 5x lower than the European average, and it is continuing to fall. So we've done it faster and better than announced. Second important indicator to us is gender diversity. We are committed to diversity every day, and we are working to include more women at all levels of the company. For example, 29.8%, not to say 30%, of the group's management committees are made up of women. This figure is significantly higher than the average of companies listed on the CAC 40 Index. And to keep the movement going, I have asked to further boost our targets for the 2026 milestones. Let me now turn to sustainable finance tools, which are at the heart of EDF's financial strategy. In '21, we innovated with the issue of a senior green bond for a nominal amount of €1.85 billion as well as another innovation, €1.25 billion hybrid social bond. We remain convinced that sustainable finance, for which we are the frontrunners in France, sustainable finance will accelerate the energy transition. Revolving lines of credit indexed to ESG criteria now represent €9.3 billion, which is more than 72% of all EDF Group lines of credit. And we would like to reach 100% in the coming years. I'm sure you appreciate this high standard of commitment. And of course, at the beginning of this year, we were pleased to see nuclear power integrated in the delegated act of European taxonomy, which does recognize nuclear power as an energy for the future. Let me now focus on a few highlights of the past year. As far as nuclear power is concerned, as you know, this is the first pillar of our decarbonized production, we are living in an exceptional year on several accounts. The President's speech, President Emmanuel Macron's speech in Belfort last week, we'll consider it a speech of refoundation. As such, the construction of 6 and maybe possibly even 14 EPRs in the next 30 years as well the development of SMRs, small modular reactors projects, we believe this is a turning point for the next 3 decades indeed. In the immediate future, we are focused on launching this very important program. We are also focused on the progress of the Flamanville 3 project. Many steps have been achieved in 2021, in particular the repair of the primary circuit feed-through welds. Today, Flamanville 3 is almost complete. We recently reviewed the fuel loading schedule, moving it to the second quarter of 2023. Across the channel, we are very happy with the bill presented by the British government. This bill defines the financing model for new nuclear projects, including Sizewell C. This shows the importance that great Britain attaches to nuclear power in its ambitions to reduce climate change. Last week, we also announced plans to acquire a part of GE Steam Power's nuclear business. With this project, we intend to strengthen our mastery of key technologies and skills for both the existing fleet and for new nuclear reactor projects. The other key activity in our low-carbon production is renewables. We are intensifying year after year our footprint in an increasingly competitive environment. Our business is developing rapidly, both in France and all continents like Brazil, Saudi Arabia, the United States, China, Chile and many others. We have a vast portfolio of projects totaling 76 gigawatts, gross, and this includes both wind and solar power. And I would like to mention a couple of major successes in 2021

Xavier Girre: Thank you, Jean-Bernard. Good morning, everybody. I will now detail and explain our 2021 results. As just presented by Jean-Bernard, our 2021 key figures have improved materially compared to 2020. Sales amounted to €84.5 billion, a 21.6% organic growth. EBITDA reached €18 billion, up by €1.8 billion. Net recurring income stood at €4.7 billion compared to €2 billion 1 year ago. And net income, group share, raised to €5.1 billion compared to €650 million in 2020. Net financial debt is quite stable, with a slight increase of €0.7 billion to €43 billion. This enabled the net financial debt-to-EBITDA ratio to improve to 2.39x at the end of '21 versus 2.61x at the end of 2020. Comparing these results with 2019, which was not impacted by the COVID crisis, we can see on this slide that 2021 did experience a strong growth, EBITDA up by nearly 8% and net recurring income up by more than 20%. As you know, to offset the impacts of 2020 COVID crisis on the group's financial situation, we announced a disposal and cost savings plan mid-2020. The disposal plan was successfully completed at the end of 2021, 1 year in advance. The positive effect accounted for circa €3.7 billion on group's economic debt compared to a target of €3 billion. Operating expenses reduction were also achieved 1 year in advance. The cumulative reduction reached €545 million, excluding inflation, at the end of 2021 compared to a target of €500 million over the period 2019 to 2022. As just detailed, the EBITDA improved materially compared to 2020. This was mainly due to the significant improvements in the French regulated activities in Italy and in the other activities, partially offset by a material decrease in the U.K. Let me now detail the evolution of each segment of the group. Starting with France, generation and supply activities. EBITDA remained stable year-on-year as a combination of 2 opposite effects. A positive contribution from the energy volume effect for €1.1 billion. Nuclear output increased significantly by 25.3 terawatt-hours year-on-year with an improved availability of the fleet and a lower modulation versus 2020, which was impacted by the COVID crisis. The impact of energy prices turned negative for an estimated €1.1 billion. First, prices for 2021 were hedged at a lower price versus 2020. As disclosed 1 year ago, the hedge price of fixed cost generation output was around €45 per megawatt-hour for '21 to be compared with around 46 terawatt-hours -- €36 per megawatt-hour for 2020. Second, unexpected outages of nuclear plants and poor electricity at the end of the year resulted in purchases on the market at extremely high prices. In contrast, energy buybacks in 2020 were made at low prices. Downstream activities evolved slightly negatively for circa minus €249 million. Customers' losses for an estimated minus 13.1 terawatt-hours were not entirely offset by higher capacity price. The return of customers back to EDF at the end of '21 had a short-term negative effect as EDF had to buy the corresponding volumes on the market at very high prices. Furthermore, EBITDA benefited from the reduction in production taxes as part of the French recovery plan for an estimated €322 million. France regulated activities improved by €0.8 billion, a 15% organic growth. This increase in EBITDA resulted primarily from a 15.8 terawatt-hour increase in distributed volumes due to the sanitary crisis recovery and climate, contributing positively for €251 million; a growth in new grid connections after a slowdown in 2020, which made a positive contribution of €159 million; and third, reduced production taxes for €130 million. The EBITDA of EDF Renewables decreased organically by 3.7%. The main impact was the extreme cold snap in Texas in Q1, hitting for an estimated minus €95 million. Indeed, as a consequence of this exceptional event, EDF Renewables had to buy back power at extremely high prices to cover its contractual commitments. However, generation as a whole reached 17 terawatt-hours, a 10.5% growth driven by the commissioning of new capacities. U.K. EBITDA dropped by €0.9 billion. It was a consequence of a decrease in nuclear generation of 4 terawatt-hours for an estimated impact of around minus €198 million and the decline in realized prices stemming from a significant volume of buybacks at high market prices for an estimated minus €550 million. Supply business was also impacted by the energy crisis with energy prices not fully passed on to the residential customers in the context of the cap on variable tariffs. Green Network Energy, Utility Point and Zog Energy customers were integrated under the supplier of last resort mechanism, representing a total of nearly 600,000 residential clients. It required purchases of additional volumes at high prices, which should, however, be recovered over time through the supplier of last resort mechanism managed by Ofgem. At the end of 2021, EDF Energy operates 5.5 million residential contracts. The B2B segment improved relative to 2020, which had been penalized by the COVID crisis. Italy had an excellent year. Edison broke the €1 billion mark. Its EBITDA improved by €362 million, a 53% positive variation with key drivers. First, electricity activities improved via better availability of the CCGTs, the optimization of ancillary services and an increased contribution from renewables in a high-price environment. And gas activities benefited from the capital gain on the sale of IDG, the recovery from the COVID crisis for the B2B segment and the colder climate versus 2021. Other activities increased from €0.3 billion to €1.8 billion, a very material improvement of €1.6 billion. EDF Trading achieved its best year ever, reaching a €1.2 billion EBITDA in the context of a very high volatility in commodity markets. And gas activities improved by around €0.9 billion, presenting mainly from the revaluation of long-term contracts in the context of a significant improvement of U.S.-to-European medium- and long-term spreads. Coming back to the overview of the EBITDA variation per segment. Dalkia had a strong EBITDA growth of 32%, attributable to the recovery in services and works post its health crisis. And EBITDA also improved, thanks to business growth in the U.K. The EBITDA of Framatome grew organically by 18.5% at EDF Group's contribution level, with higher generation in fuel and manufacturing plants and higher sales volumes for installed and base business both in North America and in France. At Other International, the EBITDA of Belgium declined primarily from reduced wind farm production linked to less favorable wind conditions versus 2020 and electricity buybacks at high prices, particularly at the end of the year. In Brazil, EBITDA increased in organic terms, thanks to the positive indexation of EDF Norte Fluminense's power purchase agreement tariff. This slide now presents another view of the positive variation of the EBITDA, focusing on the main effects. A positive volume effect of €1 billion, mainly composed of higher generation in France, increased distributed volumes and grid connections for Enedis and a recovery in the supply and service business. This was partially offset by lower generation in the U.K. and lower capacity volume in France. A negative price effect of minus €0.7 billion mainly related to buybacks at very high prices in France and the U.K. and partly compensated by the revaluation of long-term gas contracts, and higher-capacity price were invoiced to customers. A third effect was the production tax cut for positive €0.5 billion. And fourth one, the exceptional performance of EDF Trading, which contributed positively for €0.6 billion. Disposals also, as you see, brought in an additional €0.3 billion. Let's now move to the other items of the P&L. EBIT was up by €1.4 billion to €5.2 billion. This improvement is mainly explained by the €1.8 billion EBITDA increase; a decrease of €0.5 billion of other operating income and expenses, which includes the proceeds of €0.5 billion corresponding to the settlement indemnity with AREVA; the net result of the disposal of the stake in CENG for minus €0.4 billion; the costs related to the anticipated closure of Dungeness B for minus €0.3 billion; and some other costs. Net income, group share, reached €5.1 billion, a €4.5 billion improvement versus 2020. As detailed previously, EBIT increased by €1.4 billion. Financial results amounted to a positive €0.4 billion in '21 to be compared to minus €2.6 billion in '20. This significant improvement is mainly explained by, first, the dedicated assets, up by €1.5 billion with a strong performance in '21 in the context of favorable market conditions; the change in the fair value of the portfolio booked a positive €2.7 billion this year versus plus €1.2 billion 1 year ago. Coverage ratio of the dedicated assets stood at 109.3% end of '21 compared to 103.6% end of December '20. As a reminder, the fair value variation is not included in the calculation of the net income excluding nonrecurring items. Second significant point, the decrease in the unwinding discount of €1 billion, largely owing to a lesser reduction of the net discount rate for nuclear provisions in France between '20 and '21 than between '19 and '20. You can note that the discount rate for the nuclear provisions stood at 2% real the end of '21 versus 2.1% 1 year before. Income tax followed the evolution of the EBIT and financial results with an €0.5 billion increase. The group's share in net income of associates increased by €0.2 billion with a particular -- and with, in particular, an improvement of the result of RTE and JERAGM. Last, the deduction of net income from minority interests contributed positively for €0.25 billion related primarily to the loss of nuclear activities in U.K. in '21. As a result of all these evolutions, net income, group share, came to €5.1 billion compared to €0.7 billion in 2020. The slides now shows the main elements from net income, group share, to net recurring income. Three elements explain most of the €1.7 billion increase in the nonrecurring items net of taxes

Jean-Bernard Levy: Thank you very much for this, Xavier Girre. Let's now talk about 2022. As you may have noted, several events have marked the beginning of the year. First, exceptional measures were announced by the government to limit price increases in 2022. Second, due to the discovery of defects in the safety injection circuit piping of several nuclear reactors, we announced maintenance outages for these reactors, and we have revised the nuclear production forecast. The new forecast is 295 to 315 terawatt-hours for 2022 and 300 to 330 terawatt-hours for 2023. Despite the excellent results we have presented to you today, we would like to draw your attention to the 2022 challenge as these events will have a significant impact on our finances. But the current constraints must not prevent us from moving forward. Obviously, last week's announcement from the French President, Emmanuel Macron, position us as a major player in France's industrial recovery. French President of the Republic has announced two important projects that concern us directly. First of all, in the nuclear sector, there will be the launch of a program to build 6 EPR2 reactors, and there will be studies for potentially 8 more such EPR2 reactors. He has also announced the continued operation of all existing reactors in the fleet, except in case of safety concerns. The launch of the SMR program has been confirmed with €500 million, which will be dedicated to the EDF project called NUWARD. The second major announcement is to accelerate the development of renewable energies, an area to which we are already very committed with an enviable market share in a sector where, as we all know, competitors are numerous and competition is fierce. In order to achieve our ambitions, we have drawn up an action plan to support our strategy. We will submit to the Board of Directors as soon as possible a project for a capital increase of approximately €2.5 billion. The French state, our largest shareholder, has announced already its intention to subscribe to this rights issue in proportion to its current holdings in EDF's capital, which is close to 84%. Subsequently, we will propose an option to pay dividends in the form of shares, a scrip dividend, for both year 2022 and year 2023. The French state has also indicated its own intention to receive these dividends as shares for these same 2 years. And we have also planned a new divestment plan of about €3 billion between early 2022 and the end of 2024. It's clear we are facing difficult times, and I would like the French state for its very clear support and its alignment with the strategy we have proposed. I also know that while this may continue for the next 2 years, the group's employees are doing their best. They are fully mobilized to limit the impact of this situation, and they deserve our gratitude. We will overcome this moment. We will build the best decarbonized electrical production grid in France for the next 30 years. Government support, as I said, is strong, immediate and concrete. This is the meaning of the announcements made by French President Emmanuel Macron and with the more detailed information I have outlined for you today. We have a clear and coherent road map both for public policies and for EDF Group's strategy. This road map will guide our investment. It will define our performance and results. We require investment and we also require better performance. We need to be proud of this responsibility, proud that we fight against carbon pollution, proud that we transform our behavior, proud that we bring jobs back to France, proud that we contribute to France's balance of trade and also proud that we continue to make of EDF a leader in its markets and that we attract the best talents and we have the amazing reach that we will continue to have beyond our borders. We are at a turning point. I'm happy to be part of it and to implement it. Thank you very much. And with this, we will now turn to Q&A. Xavier and myself and our colleagues from the ExCom will be happy to answer your questions. And I hope we have some questions, and I will turn it now to you.

Operator: We have the first question from Sam Arie from UBS.

Sam Arie: I think I'd just like to ask if you could start by helping us understand the logic or the math you've done for the rights issue targeting €2.5 billion. So why particularly that number and not more or less? I'm sure there's a logic behind it. It'd be really helpful to walk through that. And then secondly, I suppose the other big topic here is our expectations for this year. And in your scenario that you set out on Page 33, I mean, I guess there's a ton of questions we could ask you, but one that I have is, can you just help us understand how you have treated the -- I think it was €1.6 billion of carryover to 2023? I guess that's not included here, although at the time, I think in January, you said it's possible that could be booked in the 2022 year. So I just wanted to clarify if there's a possible €1.6 billion to add back to Page 33 as well. The first question, logic on the rights issue, and second question on the scenario for 2022.

Jean-Bernard Levy: Thank you. Thank you very much for this. I will respond to the first question. I will let Xavier respond to the second one. Why €2.5 billion? I would say for two reasons. The first one is that the -- we consider it enables us to follow up with our strategy and keep our investment strategy totally consistent with the mission that has been assigned to EDF both for the short term and for the long term and regarding both nuclear and renewables. The second one is that to be very precise, at this stage, we have a shareholder approval through the AGM that still gives us a leeway of slightly above 500 million shares. And of course, the exact amount for the rights issue will be the multiple of 500-plus million shares by the amount per share once we have the discount that has been deducted from the share price and once we have the DPS that has been deducted from the share price, because this will be the way it will be organized. So as a placeholder, we consider this may lead to a rights issue of, say, €5 per share. No one knows today. It will be a market input, not a company input, but we intend to issue 500 million new shares. And we consider at this stage it will amount to roughly €2.5 billion. Now for the second question, Xavier?

Xavier Girre: Yes. Thank you, Jean-Bernard. And thank you for your question. As you referred to, these €1.6 billion, these are what you call carryover or the postponement of the additional regulated tariff beyond 4%. So this is not including -- included in our '22 EBITDA, and this will be recognized in EBITDA in '23.

Operator: We have the next question from Peter Bisztyga from Bank of America.

Peter Bisztyga: So two from me, please. Firstly, could you tell us a little bit more about how far progressed you are with your investigations in the -- into the welding problems? Have you now had a chance to look at the entire fleet? And do your nuclear outage estimates for 2022 and 2023 reflect the final view of the work that needs to be done? Or should we expect further updates as the year progresses? Then my second question is on the €2.5 billion capital raise. I'm just wondering if you could give us a little bit of insight on how you determined whether that was the right number or not because your EBITDA is clearly going to be very volatile this year and probably next year. So I'm just wondering why is it €2.5 billion, not €1 billion, not €5 billion? What credit metrics are you sort of targeting with that?

Jean-Bernard Levy: Okay. Thank you for your questions. I will let Cedric Lewandowski respond to the first question. It will be in French for a very precise wording. And I will let Xavier respond to your second question, our friend from BofA. Cedric?

Cedric Lewandowski: Thank you, Jean-Bernard. As Jean-Bernard said, we are confronting to difficult times. And I'm sorry, but I will have to express myself in French to be precise.

Jean-Bernard Levy: Thank you, Cedric. And Xavier, on the second question, please?

Xavier Girre: Yes. Your question was about the volatility of the credit metrics and volatility of the EBITDA. So first, you're right, I mean, our EBITDA may be very volatile, in particular in 2022, and this is why we do not give any 2022 EBITDA guidance. We've given some building blocks in order to help you understand the key stakes we'll have this year, but this is subject to high price volatility. As regards our credit metrics that we have announced, so our goal for '23 is clearly net financial debt-to-EBITDA around 3 or below 3 and adjusted economic debt-to-adjusted EBITDA between 4.5 and 5. And clearly, this is our commitment, to reach this goal for '23. Obviously, I mean, we -- our 2023 are less exposed to market price than 2022 because our position is not short as it is for '22.

Jean-Bernard Levy: Thank you, Xavier.

Operator: The next question, from Ajay Patel from Goldman Sachs.

Ajay Patel: A couple of questions, please. Firstly, just on CapEx for the outages. Is there any additional CapEx investments that will be needed? And can you give us an idea of the order of magnitude? And then I'm just thinking, look, you set yourself a target on net debt -- financial net debt-to-EBITDA of around 3x. Historically, your leverage has been around -- being less than 2.5x. So are the measures that you're announcing today to safeguard the business for the next couple of years? But ultimately, with the future path that you have on investments and -- and maybe when you get a bit more certainty around that issue, could we need more balance sheet deleveraging to get back to that 2.5x that you had? Or are you intending to run the business at higher leverage beyond 2023? A little bit of clarity there would be very useful.

Jean-Bernard Levy: Thank you for your question. At this stage, we are not in a position to give any precise number for the cost of repairing or changing the part of the piping which will need to be changed. This is something we are working on. And -- but we have an idea of what it could cost us in very broad terms. Too early to share with you, but this range is included in our 2023 debt-to-EBITDA guidance. On the second issue, we do intend to keep our debt-to-EBITDA ratio at 3x as a maximum, below 3 as we have done recently. And we intend to keep that within our permanent objectives with -- as a permanent objective. We say around -- circa because we have so much volatility, as we have seen, for instance, with that very-late-in-the-year price hike in 2021 that we want to be cautious. But for our investors, for our creditors, let's be clear, 3 is really our target. Below 3 is really our target. Now in the future, it is quite obvious that following the speech in Belfort by President Macron, we will have to finance the construction of new nuclear units, which will deliver revenues a long time after we have started to spend a significant amount of money. And we will have to find a way, and we are working with the French state on this very important matter. And the French state itself will have to work out the right solution with the regulator in the European Union. We are working in -- to implement it in such a way that the weight of the significant CapEx on EDF remains under control and that we will remain with that below-3 target. So we have different ways to organize this, and it's too early to discuss which way will be decided, will be approved, how it will operate. And this is a matter for this year, next year, maybe even into 2024 before the full decision is made and the full numbers are computed and how we will indeed fund our share of the new reactors. And it will be our share. It is obvious that we will not fund all of it. So that's what I can answer at this stage. So this is very strongly -- a very strong constraint, a very strong objective that we have to work out. And the -- you won't be surprised to know that we are working hard on it, but there's -- it's not such an urgent matter at this stage.

Ajay Patel: Yes. I just have one follow-up, if I may. Just in your slides, you do highlight that the regulatory situation stays relatively, well, similar to the previous status quo, 100 terawatt-hours of ARENH. I'm just thinking, well, commodity prices are high, as we see. The pressure on the end consumer is only -- it's still there. What solutions are you hearing or potentially could exist to stop an intervention and reduce profitability in '23 and effectively push those leverage numbers to above 3x? Is there any early inklings that you can give us at this stage?

Jean-Bernard Levy: We are providing this information due to the clear messages that we have had from the state regarding the exceptional one-off decision that was made about a month ago. And we have done this in full consistency with what the state and ourselves have been discussing, including in the boardroom.

Operator: The next question, from Emmanuel.

Emmanuel Turpin: My first question is a follow-up on your comments on the inspections around the corrosion effects. You mentioned that you had identified likely work or repairs to be done on 11 reactors. That leaves us 45 which may not require any work. My question is about your level of confidence that indeed those pipes are fine for the remaining 45. Have you got the same level of confidence around that fleet, i.e., have you concluded satisfactorily your file of physical inspections? Or do you have a varied level of confidence around this fleet? And if so, on what proportion of this fleet do you have a high level of confidence that it's fine and on what proportion are you still continuing inspections? My second question is on Slide 33. As 2022 is a bit of a crunch year for all the issues you explained, 2023 should be fine if nuclear production is where it is and even finer for the year after. But 2022 is where it hurts. And my question is about the dotted lines, the other effects box. It's finely positioned on your charts. It could be positive or negative. And I would like your help to list maybe the main moving part. So from what I could see from your slides in 2021, for instance, is that you had a markedly negative effect of volume buybacks in the U.K. Do you expect to be in that position in 2022 directionally? Or should it be sorted? And, well, you had a fantastic year in trading. Difficult to budget anything on trading, but maybe we should assume less than €1.2 billion. Question about production taxes. Is that positive for 2021 only? Or does it continue in '22? One last point. Overall for 2021, when you look at the effect of the weather versus a normal year, was it a net positive or a net negative? And of course, any element, positive or negative, you would like to highlight to us for that other boxes?

Jean-Bernard Levy: Okay. Thank you for your two questions. The first one is easy to respond. We are providing the market -- as we are obliged to, we are providing the market with all the relevant information about the defects, the cracks that we have been finding when we have various investigations into each and every reactor, each and every piping within the reactors. And I will just respond that all that needs to be known by the market is known by the market. And this is, of course, consistent. There is, of course, consistency between our understanding of potential outages or repairs on various reactors and the numbers we are providing, whether they are in terawatt-hours or in euros. And your other question is on the other effects of 2022. I think Xavier spent a lot of time in his presentation just a few minutes ago providing you with what were the good news and also the more difficult areas in our 2021 performance. It is clear that this, we call it, the bridge between '20 and '21 and what you can expect in '22 will be exactly a reflection of your own questions. Can we still have an excellent year at Edison or not? Can we have a fantastic year at EDF Trading or not? Can we recover from a pretty poor number at EDF Energy or not? And so on and so forth. And at this stage, we are providing you with these dotted lines on Page 33. We do not want to speculate so early in the year about what could happen in 2022.

Operator: And the next question, from Louis Boujard from ODDO.

Louis Boujard: Just wanting to come back on the cracks, but this time mostly focusing on the 11 plants which are at stake here. I understand in your answer that in fact, in the fleet, in these 11 plants which are out in outage mode or which are planned to be in outage mode in the next 2 years, part of them is because of repair and the other part of it is only because of further investigations that will be needed on this fleet. Could you tell us if part of this fleet needs to go from further investigations to actual repair? Would it have any impact into your current assumptions in terms of outage? Or is it already indirectly included into your guidance for nuclear output for 2022 and 2023? My second question as well, maybe to have a bit more view regarding the potential volatility in 2022 earnings and 2023, mostly regarding your strategy in terms of purchasing back the power. Have you started to purchase back the power that is needed in 2022 already or not yet? And on 2023, considering the nuclear output that you're going to have, are you already at a level where you might have to buy back a bit of power or where it's just a question of not selling this power and then it's just a question of cost of opportunity for you for 2023?

Jean-Bernard Levy: Thank you, Louis, for your two questions. Regarding the first one, as I said a few minutes ago, each time we know about an outage, we provide the response, we provide the information immediately into the what we call REMIT or the EMEA-related set of news. And so I will just ask you to look it up as each and every reactor outage is mentioned. And obviously, as -- if some of them need repair, this is including into the outage duration. On the second question, yes, indeed, for 2022, we do have to start our buybacks. There is some low liquidity on the market. It does not prevent us from being present on the market. There are also some uncertainties. There were some detailed specific rules on our end, and I don't think it is appropriate that I would comment anymore what we do on a day per day basis regarding this situation. But just obviously, we have to buy back some power for 2022. And regarding 2023, we are adjusting our policy according to the new guidance that was provided a few days ago only.

Operator: We have the next question from Vincent Ayral from JPMorgan.

Vincent Ayral: And so basically, coming back, I mean, the two questions here. We've got a capital increase. We don't know where the financial state of EDF will be at the end of '22 and -- nor '23 fully. And we don't know if there is a floor to the outages. So these are the key issues into this capital increase, and it's difficult for us to assess if €2.5 billion is enough. So when we look here on your Slide 33, basically I know this is volatile and -- prices every day. But could it be fair to say that you're missing at least a good €10 billion of cash flows in '22? And could this be a good way to basically approach the situation? And that would mean potentially that a €2.5 billion rights issue may just be a temporary fix and more is needed after basically when we've got a floor on the outage and maybe after the elections. So that leads -- and so that's question one, basically. I know it's a follow-up, it's been asked. But as with size, is it really enough? And the second question is basically post election. Macron announced this nuclear renaissance plan. He also said that the government would go back to discuss with the commission on the reregulation of the nuclear. So here, we're not talking about the newbuild, which would likely be regulated, but for the existing. What failed with the commission last time, we still don't know. Do you have any color on that? And what gives the -- some confidence to government that this time around, whoever wins the election has a good shot at getting the situation sorted and avoiding the type of issues we see?

Jean-Bernard Levy: Thank you. Maybe I will turn to Xavier to go back to the building blocks that he already described for 2022, and then I will take the second question you raised. And then we will put an end to this conference. Xavier?

Xavier Girre: Yes. As regards 2022, I mean, the gist of this 33 slide is to show you that the EBITDA and hence cash flow will be very poor in '22. So I will not answer precisely to your question. I will not give you any figure. But obviously, the free cash flow will be very significantly negative in '22. This is why the action plan has been set and presented today. And this is why also we've given our goals for '23, which are absolutely key with our -- once more, this net financial debt-to-EBITDA goal, below 3 at the end of '23. And in the meantime, we will, of course, implement the action plan that has been presented. As regards '22, I mean, there is volatility. Jean-Bernard has also highlighted that. So it's clearly not possible to be more specific about '22.

Jean-Bernard Levy: Thank you. And then your second question is about the upcoming discussions with the French -- between the French state and the regulator in Brussels, especially regarding energy policy and internal market and, of course, competition. This will be handled by the French state. Obviously, the way to organize the regulation, the financing of these new reactors will be key in our future operations. It will be key in a change in the way that EDF operates. You very rightly said that what was presented in 2020 and 2021 in the end did not work. There was no agreement between the French state, which we supported very strongly and technically with a lot of data, and the European Commission. We do believe that there will be -- now and also after the elections in France, there will be time to go back to present a new design for what we want to achieve and that the French government and the EU will be successful in implementing what is needed for the success of the energy policy in France with the decarbonization, the growth in low-carbon electricity to replace fossils. You say you do not know what did not go well. I think we were very transparent about what we were proposing. We had a huge amount of discussions with the financial community, with the press and, of course, with the employees and their representatives. So I think what we try to implement is very well known to all of you and we don't have time to redefine it. Obviously, time will tell what would be the changes to what was presented back in 2021. And one of the major ones will be that, obviously, we will need to find the right way to regulate and finance the new nuclear build. So I think with this, we can end the conference. I want to thank all of you for your presence and your questions. And the EDF IR team will help you through the huge amount of information which are provided -- which is provided to you as of today. So let me also thank the IR team of EDF for the great work in achieving today their goal of providing all these detailed information to you for further exchanges. And thank you again. Have all a good day.