2018 REGISTRATION DOCUMENT - Engie EPS

2018 REGISTRATION DOCUMENT ANNUAL FINANCIAL REPORT INTEGRATED DOCUMENT

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Dated 30 April 2019

ELECTRO POWER SYSTEMS S.A.

2018 REGISTRATION DOCUMENT

French société anonyme with a Board of Directors and a share capital of € 2,553,372

Registered office: 115, rue Réaumur, 75002 Paris, France

Paris Trade and Companies Register - 808 631 691

Pursuant to its general regulations, and notably its article 212-3, the French Market Authority (the “AMF”) has registered the present Registration document on 30 April 2019 under the number R.19-020 (the “Registration Document”). This document cannot be used for the purpose of the financial transaction unless it is completed by a note d’opération duly authorized by the AMF. It was prepared by the Company and is the responsibility of its signatories.

In accordance with the provisions of article L. 621-8-1, I of the French Monetary and Financial Code, registration was made after the AMF verified that the document is exhaustive and comprehensive and the information contained in it is consistent. It does not imply that the AMF has verified the accounting and financial information presented herein.

Copies of the present Registration Document are available at no cost at the registered office of the Company, located at 115, rue Réaumur, 75002 Paris, as well as at the premises of the controlled Italian entity (EPS Elvi Energy S.r.l.) located in via Anton Francesco Grazzini 14, Milan, Italy, and on the AMF website (http://amf-france.org), and the Company’s website (www.engie-eps.com).

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INDEX OF CONTENTS

CONTENTS Page

PERSONS RESPONSIBLE ................................................................................................... 15 1.1 Person responsible for the Registration Document ..................................................... 15 1.2 Statement of the person responsible for the Registration Document and the Annual Financial Report ............................................................................................................................ 15

STATUTORY AUDITORS ...................................................................................................... 16 2.1 Principal Statutory Auditors ............................................................................................ 16 2.2 Alternate statutory auditors ............................................................................................ 16 2.3 Resignation of the Statutory Auditors ........................................................................... 17 2.4 Fees of the statutory auditors ......................................................................................... 17

SELECTED FINANCIAL INFORMATION .............................................................................. 19 RISK FACTORS ..................................................................................................................... 25

4.1 Risks associated with the success of the ENGIE EPS Group’s products ................. 25 4.2 Risks associated with the ENGIE EPS Group’s project development activity .......... 27 4.3 Risks associated with certain market pricing trends ................................................... 32 4.4 Risks associated with client base and suppliers .......................................................... 32 4.5 Risks associated with the ENGIE EPS Group’s financial performance...................... 34 4.6 Risks related to the ENGIE EPS Group’s international development ......................... 35 4.7 Risks associated with regulatory compliance and defective products ...................... 36 4.8 Risks associated with the intellectual property ............................................................ 39 4.9 Financial Risks ................................................................................................................. 40 4.10 Risks associated with the ENGIE EPS Group’s organization ...................................... 43 4.11 Risk Insurance and coverage.......................................................................................... 46

INFORMATION ABOUT THE ISSUER .................................................................................. 49 5.1 History and evolution of ENGIE EPS Group .................................................................. 49 5.2 Investments ....................................................................................................................... 53

PRESENTATION OF THE ENGIE EPS GROUP................................................................... 55 6.1 The ENGIE EPS Group overview .................................................................................... 56 6.2 Outlook of the reference markets ................................................................................... 65 6.3 Technology and portfolio of products ........................................................................... 72 6.4 Business model and commercial results ...................................................................... 81 6.5 ENGIE EPS Group Organisation ..................................................................................... 88 6.6 Information Systems within ENGIE EPS: Cybersecurity as governance model ....... 91 6.7 Regulations applicable to the ENGIE EPS Group ......................................................... 97 6.8 Main events which have affected the main activities or the main markets .............. 101 6.9 Dependence towards certain agreements ................................................................... 101

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6.10 Financial risks related to the consequences of climate change and measures taken by the Company to control such risks by implementing a low-carbon strategy in every component of its activity ............................................................................................................ 101

ORGANISATIONAL STRUCTURE ...................................................................................... 103 7.1 Organisational Structure ............................................................................................... 103 7.2 The ENGIE EPS Group ................................................................................................... 103 7.3 List of existing branches ............................................................................................... 107

PROPERTY, PLANTS AND EQUIPMENT .......................................................................... 109 8.1 Property, plants and equipment ................................................................................... 109 8.2 Environmental issues .................................................................................................... 111

OPERATING AND FINANCIAL REVIEW FOR THE FINANCIAL YEARS ENDED ON 31 DECEMBER 2016, 2017 and 2018 .............................................................................................. 112 9.1 Financial information ..................................................................................................... 112 9.2 The principal factors affecting performance of the ENGIE EPS Group during the period 113 9.3 Post-closing events, December 2018 ........................................................................... 113 9.4 Presentation of the principal items of the consolidated income statement and comparison of financial period ended 31 December 2018, 2017 and 2016 ........................... 114 9.5 Results of the Company ................................................................................................ 127

CASH FLOW AND SHARE CAPITAL OF THE ENGIE EPS GROUP ................................ 130 10.1 Financial sources of the ENGIE EPS Group ................................................................ 131 10.2 Net financial position ..................................................................................................... 133 10.3 Cash flow for FY 2018, 2017 and 2016 ......................................................................... 134 10.4 Restrictions on the use of the capital .......................................................................... 137 10.5 Expected sources of financing ..................................................................................... 137

RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES ..................................... 138 11.1 Intellectual property strategy ........................................................................................ 138 11.2 Research and development activities in-house .......................................................... 147 11.3 Research and development activities in the context of research projects .............. 147 11.4 Future investments in Research & Development ....................................................... 148

TREND INFORMATION ....................................................................................................... 153 12.1 Key trends having affected the production, sales and inventory ............................. 153 12.2 Known trends, uncertainties, commitment requests and events reasonably likely to affect the Company’s outlook and production, sales and inventory ..................................... 153

PROFIT FORECASTS ......................................................................................................... 156 ADMINISTRATIVE AND EXECUTIVE BODIES .................................................................. 157

14.1 Board of Directors and Managing Director .................................................................. 157 14.2 Mission of the Board of Directors................................................................................. 167 14.3 Meetings of the Board of Directors .............................................................................. 168 14.4 Major accomplishment of the Board of Directors ....................................................... 170 14.5 Attendance and participation rate to the Board of Directors .................................... 170

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14.6 The Chairman and the Internal Rules of the Board of Directors ............................... 171 14.7 Assessment of the operations of the Board ................................................................ 172 14.8 Separation of the Managing Director from the Chairman role .................................. 172 14.9 Remuneration of the Board of Directors ...................................................................... 173 14.10 Remuneration of the Managing Director and top management ............................ 174 14.11 Executive Committee ................................................................................................. 177 14.12 Information provided to the Board of Directors ..................................................... 178 14.13 Independence Criteria and Committees .................................................................. 179 14.14 Independence criteria of the members of the Board .............................................. 179 14.15 Absence of conflicts of interests ............................................................................. 180 14.16 Absence of convictions or official sanctions, or disqualification decision ........ 180 14.17 Information referred to under article L. 225-37-5 of the French Commercial Code 181

REMUNERATION AND BENEFITS ..................................................................................... 182 15.1 Remuneration and benefits paid to the members of the management of the Company ...................................................................................................................................... 182 15.2 Fees and other remuneration paid to the members of the Board of Directors ........ 185 15.3 Compensation of the CEO and the Chairman of the Board of Directors.................. 186 15.4 Provisional amounts reported by the ENGIE EPS Group and its subsidiaries for the purposes of payment of pensions, retirement or other benefits ........................................... 188 15.5 Allocation of Stock Appreciation Rights to the corporate officers in 2018 ............. 188 15.6 Free shares ..................................................................................................................... 192 15.7 Employment contract and additional information ...................................................... 192

FUNCTIONING OF ADMINISTRATIVE AND EXECUTIVE BODIES .................................. 193 16.1 Management of the Company (members of the management and of the Board of Directors) ...................................................................................................................................... 193 16.2 Information on the agreements binding on the directors and the Company ........... 193 16.3 Specialised committees ................................................................................................. 193 16.4 Transactions by members of the Management or of the Board of Directors on the shares of the Company (or persons related to them) .............................................................. 198 16.5 Corporate governance ................................................................................................... 201 16.6 Information on control and risk management procedures ........................................ 203

EMPLOYEES ....................................................................................................................... 215 17.1 Number and allocation of employees by position ...................................................... 215 17.2 Holdings and stock options held by ENGIE EPS executives and employees ......... 215 17.3 Profit sharing and participation agreements ............................................................... 216

PRINCIPAL SHAREHOLDERS ........................................................................................... 217 18.1 Ownership of the share capital ..................................................................................... 217 18.2 Voting rights of the principal shareholders ................................................................. 217 18.3 Control of the Company ................................................................................................ 217 18.4 Agreements likely to entail a change of control ......................................................... 219

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RELATED PARTY TRANSACTIONS .................................................................................. 220 19.1 Intra-group Operations .................................................................................................. 220 19.2 Significant agreements concluded with related parties ............................................. 220 19.3 Special report by the statutory auditors on regulated agreements and commitments 223

FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS, FINANCIAL SITUATION AND RESULTS ........................................................................................................ 224 20.1 Consolidated Financial Statements of the ENGIE EPS Group for the financial year ended 31 December 2018 ........................................................................................................... 224 20.2 Company’s accounts for the financial year ended 31 December 2018..................... 224 20.3 Date of the last financial information ........................................................................... 224 20.4 Dividend distribution policy .......................................................................................... 224 20.5 Judicial proceedings and arbitration ........................................................................... 224 20.6 Significant change in the financial or commercial situation ..................................... 225

SUPPLEMENTARY INFORMATION ................................................................................... 226 21.1 Share capital ................................................................................................................... 226 21.2 Articles of incorporation and articles of association ................................................. 229

SIGNIFICANT AGREEMENTS ............................................................................................ 235 22.1 Summary of significant agreements ............................................................................ 235 22.2 Summary of agreements concluded under extraordinary conditions ...................... 235

THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATION OF ANY INTEREST ............................................................................................................................ 236

DOCUMENTS ACCESSIBLE TO THE PUBLIC.................................................................. 237 INFORMATION ON HOLDINGS .......................................................................................... 238 ENVIRONMENTAL AND SOCIAL INFORMATION ............................................................ 239 COMPARISON TABLES ...................................................................................................... 240

ANNEX 1 ....................................................................................................................................... 243 Consolidated Financial Statements FY 2018 ............................................................................ 243 ANNEX 2 ....................................................................................................................................... 307 Report of the statutory auditors on FY 2018 ............................................................................ 307 ANNEX 3 ....................................................................................................................................... 314 Statutory Accounts FY 2018 ....................................................................................................... 314 ANNEX 4 ....................................................................................................................................... 336 Report of the statutory auditors on Statutory FY 2018 ........................................................... 336 ANNEX 5 ....................................................................................................................................... 343 Special Report on Regulated Agreements ................................................................................ 343

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The English version of the registration document is a free translation of the official registration document prepared in France and registered with the Autorité des Marchés Financiers on 30 April 2019 under number R.19-020.

All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions expressed therein, the original version of the registration document in French takes precedence over this translation.

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GENERAL REMARKS

(1) DEFINITIONS

In this Registration Document, unless specified otherwise the terms below have the following meanings:

• 2020 Strategic Plan means the plan that describes the ongoing evolution of all of the technological challenges facing the ENGIE EPS Group, its development strategy and the corresponding financial objectives until 2020.

• Agile Organisation means the Organisation that has been implemented by ENGIE EPS to increase the flexibility and responsiveness of the Project Management Team. In Agile the teams are small and work in an iterative way (Sprint): the organization is therefore able to constantly update the project. The teams are proceeding on a common cadence and are coordinated to face large and complex challenges, generating value for the organization and above all for the end customer.

• Associé en Finance means the independent expert appointed by ENGIE EPS according to the article 261-1 I of the General Rules of the AMF General Regulation.

• Backlog means, as of a given date, the estimated revenues and other income attributable to (1) purchase orders received, contracts signed and projects awarded as of the date hereof, and (2) Project Development contracts associated with a Power Purchase Agreement, where the agreed value is a price per kWh of electricity and an amount of MW to be installed.

• Balance of System means the management and optimization technology platform composed of power and control electronics coupled with intelligent software.

• BESS means Battery Energy Storage Systems.

• BMS means Batteries Management System.

• Board of Directors means the Conseil d’Administration of the Company, in place and as composed as at the date of publication of this Registration Document.

• CO2 means Carbon Dioxide.

• Company or ENGIE EPS means the company ENGIE EPS S.A., a French limited liability corporation (société anonyme) with its registered office located at 115, rue Réaumur, 75002 Paris, France, and registered with the Trade and Companies Register of Paris under number 808 631 691.

• Consolidated Financial Statements of the ENGIE EPS Group: means the consolidated financial statements of the Company prepared in accordance with IFRS norms as adopted by the European Union on fiscal year 2016, 2017 and 2018 contained in Annex 1 of this Registration Document.

• CSR means the Corporate Social Responsibility report.

• Curtailment means the curtailment of energy which may be technical, hence of production, or economic. The technical or production curtailment means that the grid operator decides not to authorise the source of renewable energy production to supply the grid. In other words, the energy produced by the wind farm, or the solar plant is not distributed at the level of the grid. Curtailment may also be economic and

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hence generated by negative prices, which may be applied to the market and which act as a brake on production.

• DC means Continuous Current.

• DC/DC means Continuous Current and converter of continuous current.

• Demand Response means an opportunity for consumers to play a significant role in the operation of the electric grid by reducing or shifting their electricity usage during peak periods in response to time-based rates or other forms of financial incentives. Demand Response programmes are being used by electricity system planners and operators as resource options for balancing supply and demand. Such programmes can lower the cost of electricity in wholesale markets, and in turn, lead to lower retail rates. Methods of engaging customers in Demand Response efforts include offering time-based rates such as time-of-use pricing, critical peak pricing, variable peak pricing, real time pricing, and critical peak rebates. It also includes direct load control programmes that give power companies the ability to cycle air conditioners and water heaters on and off during periods of peak demand, in exchange for a financial incentive and lower electricity bills.

• DER means Distributed Energy Resources.

• DROOP Virtual Inertia Algorithm means the control algorithm present in the firmware of the ENGIE EPS Group’s PCS that allows the power electronic device to have the same inertial response of a rotating machine.

• EFSI means the European Fund for Strategic Investments.

• EIB means the European Investment Bank.

• EIB Financing means a €30 million unsecured facility made available to EPS Elvi to finance its growth, continuous research, development and innovation activities and the commercialisation of its products.

• EIB Warrants means the EIB 660,513 share warrants (bons de souscription d’actions) issued by the Company as remuneration for the first tranche of the Financing loan facility. Each warrant has been subscribed by the EIB for a price of €0.01 and, upon payment of an exercise price of €0.20, give the right to receive one ordinary share of the Company.

• Electric and Hybrid Vehicles means vehicles operating by battery and vehicles combining both electric vehicle transmission and an Internal Combustion Engine (“ICE”).

• ElectroTM means the fuel cell technology platform first developed by the ENGIE EPS Group.

• ElectroSelfTM means the patented technological platform, entirely integrated into an open architecture and composed of three basic elements: P2G module, a storage unit and a G2P electricity supply system.

• ESOP means “Employee stock option plan”.

• EPS Elvi means EPS Elvi Energy S.r.l. (formerly Elvi Energy S.r.l.), an Italian limited liability company with its registered office located at Piazza del Tricolore 4, Milan, Italy,

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and registered with the Trade and Companies Registry of Milano under the number MI 2082791.

• EMEA means the zone of Europe, Middle East and Africa.

• ENGIE means ENGIE, a société anonyme incorporated under the laws of France, registered with the Registre du Commerce et des Sociétés of Nanterre under number 542 107 651 andhaving its registered office located at 1 place Samuel de Champlain, 92400 Courbevoie, France.

• ENGIE Acquisition: acquisition by ENGIE of a strategic ownership interest in ENGIE EPS of around 56.1% of the Company’s share capital and voting rights, which closed on 7 March 2018, followed on 29 March 2018 by the filing of a simplified mandatory tender offer which closed on 14 June 2018. As a result of the tender offer, ENGIE (through its subsidiary GDF International) holders 59.89% of the share capital and voting rights of EPS (post-exercise by ENGIE, through its subsidiary GDF International, of all of the instruments giving access to the capital subscribed in the offer.

• ENGIE EPS Group means the Company and the ENGIE EPS Group Companies.

• ENGIE EPS Group Companies means as at the date of the present Registration Document, collectively or, when used in the singular form, each of them, EPS Elvi, EPS Manufacturing, EPS USA, MCM and Comores Energies Nouvelles S.a.r.l.

• ENGIE SPA means the sale and purchase agreement between the majority shareholders of ENGIE EPS and GDF International signed on 24 January 2018.

• Energy Density means quantity of energy which may be delivered with regard to the volume or to the mass of the source of energy considered.

• EPS Manufacturing means Electro Power Systems Manufacturing S.r.l. (formerly Electro Power Systems S.p.A.), an Italian limited liability company with its registered office located at Piazza del Tricolore 4, Milan, Italy, and registered with the Trade and Companies Registry of Milano, Italy under the number MI - 2073745as well as in certain instances its subsidiaries.On 8 February 2017 EPS Manufacturing has been leased to EPS Elvi.

• EPS India means Electro Power Systems India Private Limited, a limited liability company with its registered office located K-61 Basement, Jangpura Extension, 110014, New Delhi (India).

• EPS USA means Electro Power Systems Inc., a limited liability company with its registered office located at 160 Greentree Drive, Suite 101, Dover, 19904 Kent County, USA.

• Euronext Paris means the regulated market of Euronext Paris.

• Firmware means the PCS software.

• Frequency Regulation concerns the provision or absorption of brief variations in power, in order to maintain equilibrium between supply and demand and hence the frequency of the current. Frequency Regulation is often guaranteed by the grid operator.

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• GDF International means GDF International, a société par actions simplifiée incorporated under the laws of France,with registered office in Courbevoie (92400), 1 place Samuel de Champlain (France) and number of registration with the Companies Register of Nanterre 622 048 965.

• G2P means Gas to Power.

• Grid Support Solutions or Grid Connected Solutions means hybrid energy storage systems developed to stabilize electrical grid in developed countries, heavily penetrated by renewable sources.

• GW means Gigawatt.

• GWh means Gigawatt-hour.

• Distributed Solutions means Grid Support Solutions or Grid Connected Solutions and Off-Grid Power Generation Solutions or Microgrids and Off-Grid Solutions developed by the ENGIE EPS Group.

• HyESS® or HyESS means the Hybrid Energy Storage Systems. The patent has been registered on 26 February 2016.

• HPP means Hybrid Power Plant, are generation plant using both renewable sources and fuel-powered systems, equipped with battery energy storage.T means Information technology.

• HSEQ means Health, Safety, Environment and Quality.

• IEA means the International Energy Agency.

• IPP (“Independent Power Producer”) means an entity which is not a public utility, but which owns facilities to generate electric power for sale to utilities and end users.

• KW means Kilowatt.

• KWh means Kilowatt-hour.

• Li-ion means Lithium-ion.

• MCM means MCM Energy Lab S.r.l., an Italian limited liability company with its registered office located at Via Anton Francesco Grazzini 14, Milano and registered with the Trade and Companies Registry of Milano under the number MI 1829289.

• Mobility Solutions (or e-Mobility) means control techniques for the management of devices in full Electric and Hybrid Vehicles in collaboration with suppliers of electrical devices qualified as suppliers in the automotive sector.

• MW means Megawatt.

• New Incentive Plan means the new profit-sharing plan adopted by the Board of Directors on 6 March 2018, under the ENGIE SPA.

• Off-Grid Power Generation Solutions or Microgrids and Off-Grid Solutions means microgrids systems and support to power off-grid and weak-grid areas at a lower cost and more reliably than fossil fuels developed in emerging economies.

• Options refer to the options to subscribe shares of the Company, issued by the Board of Directors pursuant to an authorization granted by the extraordinary shareholders’

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meeting of the Company held on 16 February 2015 (19th resolution), on 21 June 2016 (20th resolution) and 21 June 2017 (13th resolution), exercised by their beneficiaries, or replaced by SARs in the case of unexercised options.

• Order Intake consists of the aggregate contract value in terms of MW or euros with reference to all purchase orders received, contracts signed and projects awarded for a period.

• POOL Algorithm means the control algorithm used within the EMS (Energy Management System) that allows to manage the power flow of the ENGIE EPS Group’s systems.

• P2P means Power to Power.

• PCS means Power Conversion Systems.

• PEM means Proton Exchange Membrane.

• Pipeline means the estimate, to date, of the amount of potential projects, tenders and requests for proposal for which the ENGIE EPS Group has decided to participate or respond.

• PPA (“Power Purchase Agreement”) means a contract between two parties, one which generates electricity (the seller) and one which is looking to purchase electricity (the buyer).

• Project Development is when the ENGIE EPS Group acts directly, or with its partners, to develop, own and manage the electricity generation and storage system and conclude the associated PPA.

• PV means Photovoltaic.

• R&D means research and development.

• SARs means Stock Appreciation Rights, a “cash” instrument which replaced the existing stock options and warrants, reproducing the economic profile of a stock options or a warrant.

• Spinning Reserve means generation capacity that is on-line but unloaded, and can respond quickly when needed for minutes (primary reserve) or hours (secondary reserve).

• Technology Partnership Agreement or TPA means an agreement between two or more parties that implies a technical cooperation in order to to form and carry on a for-profit business. Among other things, it states (1) the nature of the technological project, (2) the capital contributed by each party, and (3) their rights and responsibilities.

• T&D means Transport & Distribution.

• TCO means Total cost of ownership.

• TSO means Transmission System Operators and refers to the operators of the electricity transmission networks.

• V means Volt.

• W means Watt.

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• Warrants refer to the warrants (bons de souscription d’actions) allowing, upon exercise, to subscribe shares of the Company, issued by the Board of Directors pursuant to an authorization granted by the extraordinary shareholders’ meeting of the Company held on 16 February 2015 (18th resolution) and 21 June 2016 (21st resolution), exercised by their beneficiaries, or replaced by SARs in the case of unexercised warrants.

• Wh means Watt-hour.

(2) DISCLAIMER

This Registration Document contains information about the Company’s activities and the markets in which it operates. This information comes from studies carried out by internal or external sources (e.g.: industry publications, specialist studies, information published by market research firms, analysts’ reports). In the Company’s opinion, this information gives a fair and true picture of its reference markets and its competitive position in that market at the time of writing. However, this information has not been verified by an independent expert and the Company cannot guarantee that a third party using different methods to collate, analyse or calculate market data will obtain the same results.

This Registration Document also contains forward looking statements about the Company’s objectives and development strategies. Such statements may be identified by the use of the future or conditional tense and by terms of a prospective nature such as “estimate”, “consider”, have as objective”, “expect to”, “intend”, “should”, “hope”, “could”, “may” and other variations and similar terminology. Readers’ attention is drawn to the fact that these objectives and development strategies are not historical data and should not be interpreted as a guarantee that the facts or data will occur, that the assumptions will be proven correct, or that the objectives will be achieved. By their very nature it is possible that the objectives will not be achieved and that the information in this Registration Document may be proven incorrect without the Company being under any obligation to update them, subject to applicable regulations, in particular the General Regulations of the AMF.

Investors are advised to take into careful consideration the risk factors described in chapter 4 “Risk factors” of this Registration Document before making an investment decision. Should any or all of these risks materialise, they may have a negative impact on the Company’s activity, financial position, profits or objectives. Furthermore, other risks, not yet identified or considered not significant by the Company, may have a similar negative impact and investors may lose all or part of their investment.

A glossary defining the main scientific and technical terms used here is provided at the beginning of this Registration Document.

Certain statistical data (including data expressed in thousands or millions) and percentages presented in this registration document have been rounded. If applicable, the totals presented in this registration document may present insignificant deviations from the totals that would have been arrived at by adding up the exact (non-rounded) values in the statistical data.

(3) INCORPORATION BY REFERENCE

In accordance with Article 28 of the European Commission Regulation (EC) No 809/2004 of 29 April 2004, this Registration Document incorporates by reference the following information:

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• the Consolidated Financial Statements of ENGIE EPS Group and the Statutory Auditors’ report for the year ended 31 December 2016 on pages 375 to 451 and on pages 456 to 460 of the Registration Document filed with the AMF on 27 July 2017 under number filing number R.17-0057;

• the annual financial statements and the Statutory Auditors’ report for the year ended 31 December 2016 appearing on pages 514 to 550 and on pages 555 to 559 of the Registration Document filed with the AMF on 27 July 2017

• the Consolidated Financial Statements of ENGIE EPS Group and the Statutory Auditors’ report for the year ended 31 December 2017, on pages 246 to 297 and on pages 299 to 304 of the Registration Document filed with the AMF on 13 July 2018 under number filing number R.18-057;

• the annual financial statements and the Statutory Auditors’ report for the year ended 31 December 2017 appearing on pages 258 to 379 and on pages 381 to 386 of the Registration Document filed with the AMF on 13 July 2018.

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PERSONS RESPONSIBLE

1.1 Person responsible for the Registration Document

Carlalberto Guglielminotti, Chief Executive Officer.

1.2 Statement of the person responsible for the Registration Document and the Annual Financial Report

“I hereby certify, after having taken all reasonable measure for this purpose and to the best of my knowledge, that the information contained in this Registration Document is in accordance with the facts, and that it makes no omission likely to affect its scope.

I hereby certify that, to the best of my knowledge, the financial statements have been prepared in accordance with applicable accounting standards and provide a true and fair view of the assets and liabilities, financial position and profit or loss of the Company and of all the consolidated companies, and that the management report gives a true and fair picture of the changes in the business, profit or loss and financial position of the Company and of all the consolidated companies, as well as a description of the main risks and uncertainties to which they are subject.

I have obtained a completion letter from the statutory auditors in which they state that they have audited the information relating to the financial position and the financial statements presented in this Registration Document and read the Registration Document in its entirety.”

30 April 2019

Carlalberto Guglielminotti

Chief Executive Officer

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STATUTORY AUDITORS

2.1 Principal Statutory Auditors

BDO France – Léger & associés, member Compagnie Régionale des Commissaires aux Comptes de Paris.

43-47, avenue de la Grande Armée, 75116 Paris

Represented by Eric Picarle

Date of appointment: 21 June 2016

Duration of mandate: 4 years

Date of expiration of the mandate: at the close of the General Shareholders’ Meeting called to approve the financial statements for the year ending 31 December 2019.

RBB BUSINESS ADVISORS, member of the Compagnie Régionale des Commissaires aux Comptes de Paris

133 bis, rue de l’Université, 75007 Paris

Represented by Jean-Baptiste Bonnefoux

Date of appointment: 6 March 2015



2.2 Alternate statutory auditors

DYNA AUDIT, member of the Compagnie Régionale des Commissaires aux Comptes de Paris

35, rue de Rome 75008 Paris

Represented by Mr. Laurent Courquin

Date of nomination: 21 June 2016



GROUPE RBB, member of the Compagnie Régionale des Commissaires aux Comptes de Paris

133 bis, rue de l’Université, 75007 Paris

Represented by Philippe Rouer

Date of appointment: 6 March 2015



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2.3 Resignation of the Statutory Auditors

On the 15 April 2016 the Statutory Auditor Ernst&Young et autres, represented by Laure-Hélène de la Motte, and the Alternate Auditor Auditex, represented by Patrick Rolland, appointed on 22 December 2014 for six years mandate, decided to resign from their office.

Their resignation has been justified with the fact that EPS Manufacturing decided to not renew Ernst&Young Reconta S.p.A. mandate, that expired in April 2016, with the approval of the financial statements for the year ending on 31 December 2016.

2.4 Fees of the statutory auditors

BDO France - Léger & Associés

Amount in Euro (taxes excluded) %

2018 2017 2016(1) 2018 2017 2016

Certification, review of the annual financial statements and annual consolidated financial statements

ENGIE EPS 130,000 122,390 177,172 58% 70% 83 %

Other services

Certification of the environmental and social responsibility information’s presence regarding ENGIE EPS

0 14,420 0 0% 8% 0 %

Comfort letter and completion letter on the 2018 July prospectus

64,000 28%

Sub-total 194,000 136,810 177,172 86% 78% 83 % Other services provided by the networks to the integrated subsidiaries

ELVI EPS/EPSM/MCM Audit 32,000 37,942 22,506 14% 22% 10% Others (2) 15,800 Sub-total 32,000 37,942 38,306 14% 22% 7 % TOTAL 226,000 174,752 215,478 100% 100% 100 % (1) including E&Y’s fees (2) Audit fees related to the IPO’s process

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RBB Business advisors

Amount in Euro (taxes excluded) %

2018 2017 2016 2018 2017 2016

Certification, review of the annual financial statements and annual consolidated financial statements ENGIE EPS 55,000 57,555 33,938 48% 76% 100 %

Other services

Comfort letter and completion letter on the 2018 July prospectus

59,708 0 52% 0% 0 %

Others 18,600 0% 24% 0 % Sub-total 114,708 76,155 33,938 100% 100% 100 % Other services provided by the networks to the integrated subsidiaries

Legal, tax, employment matters and others

0 0 0 0% 0 % 0 %

Sub-total 0 - - 0% 0 % 0 % TOTAL 114,708 76,155 33,938 100% 100% 100 %

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SELECTED FINANCIAL INFORMATION

The Consolidated Financial Statements of the ENGIE EPS Group shown in this Registration Document reflect the accounting situation of Electro Power Systems S.A. (the “Company” or “ENGIE EPS”) and of the ENGIE EPS Group Companies (together with the Company, the “ENGIE EPS Group”).

The selected financial information presented below refer to the Consolidated Financial Statements of the ENGIE EPS Group for the years ended on 31 December 2016, on 31 December 2017 and on 31 December 2018.

The selected financial and operational data that follows has to be read in relation to the information contained in chapters 9 “Operating and Financial Review” and 10 “Cash Flow Share Capital of ENGIE EPS Group” of this Registration Document.

(1) On 1st January 2016, the Group acquired 100% of the corporate capital of Elvi Energy S.r.l and 30% of its subsidiaries MCM Energy Lab S.r.l. The remaining 70% of MCM was acquired on 18 January 2016. These acquisitions were accounted as Business Combination under IFRS 3.

(2) EBITDA (excluding Stock Option and Incentive Plans expenses) is not defined by IFRS. It is defined in notes 3.5 and 4.6 of the ENGIE EPS Group’s 2018 Consolidated Financial Statements.

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Revenues and Other Income

Revenues for 2018 amount to 15,541 K€ and are composed of construction contracts for 13,600 K€, sales of goods for 1,451 K€ and services rendered to the customers for 490 K€.

The following tables show distribution of construction contract over Grid-connected Solutions, Microgrids and Off-Grids Solutions and Mobility Solutions and the geographical distribution of revenues during the relevant period.

REVENUES – Constructions Contracts (amounts in Euro) 31/12/2018 31/12/2018(*) 31/12/2017 31/12/2016

Grid-connected Solutions 7,707,011 4,965,326 1,268,733 3,469,871

Microgrids 5,029,763 4,900,627 4,293,906 1,136,239

Mobility Solutions 863,459 397,318 2,300,577 876,928

REVENUES – Constructions Contracts 13,600,234 10,263,271 7,863,216 5,483,038

(*) Like-for-Like, based on a comparable scope of accounting standards under IAS 11 and IAS 18

REVENUES AND OTHER INCOME BY INSTALLATIONS GEOGRAPHICAL AREAS (amounts in Euro)

31/12/2018 31/12/2018(*) 31/12/2017 31/12/2016

ASIA PACIFIC 2,537,228 2,198,559 750,109 1,827,233

EUROPE 10,338,017 7,339,724 8,170,843 3,420,799

USA 43,929 43,929 200,000 248,713

AFRICA 2,707,250 2,707,250 778,227 1,330,166

LATIN AMERICA 34,258 34,258 107,186 487,904

TOTAL REVENUES AND OTHER INCOME 15,660,681 12,323,718 10.006.365 7,314,815


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Income from Operating Activities and adjusted Income from Operating Activities

Income from Operating Activities in 2018 is a loss of 11,898 K€, compared to a loss of 5,994 K€ in 2017 and 8,472 K€ in 2016.

Adjusted Income from Operating Activities is presented in the following table:

Adjusted Income from Operating Activities is a non-IFRS metrics. Adjusted Income from Operating Activities excludes the impact of updated valuation of Stock Option and Incentive Plans and non-recurring items. In 2018, Adjusted Income from Operating Activities is basically negative for 6,339 K€ under IFRS 15 - and 6,595 K€ on a like-for-like basis according to IAS 11-18, the standard used for comparison during the year 2018 - because the ENGIE EPS Group keeps incurring in costs linked to its development phase. In 2018 the ENGIE EPS Group booked non-recurring expenses for 2,627 K€ mainly related to the acquisition and integration in the ENGIE group and specific phases of company growth and set up of business development departments. These operating expenses cannot be qualified as exceptional or extraordinary, but still they are linked to unusual and infrequent elements, for significant amounts, presented by the ENGIE EPS Group on a separate line, in order to facilitate the understanding of the current operating activity.

As a reminder, 2016 adjusted Income from Operating Activities include the costs linked to the new production plants (Rivoli and Cosio Valtellino), as well as those of the laboratory in Milan Bovisa.

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Consolidated Statement of Changes in Equity (2016, 2017 and 2018)

Order Intake, Backlog and Pipeline

Order intake represents 41.3 MW, or approximately € 10.9 million for the year ended 31 December 2018.

Backlog as of 14 March 2019 is € 52.4 million, of which € 42.7 million of final and irrevocable orders on an EPC basis, and € 9.7 million of Project Development contracts associated with a Power Purchase Agreements, for which financing is currently being structured.

Backlog

As of 14 March 2019, Pipeline is significantly increasing and stands at over € 300 million.

The growth of the Pipeline over the period 2016 – 2018 represents a compound annual growth rate of 74%.

Order Intake

(amounts in Euro mln)

31/12/2018 31/12/2017 31/12/2016

10.9 16.6 12.1

Pipeline

(amounts in Euro mln)

31/12/2018 31/12/2017 31/12/2016

302 150 100

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The following chart defines Pipeline, Backlog and Order Intake:

The following table shows the Backlog breakdown by geographical areas of installation:

The following table shows the Backlog breakdown by application:

The following table shows the Backlog breakdown by customer:

For a detailed description of the main events affecting the ENGIE EPS Goup performance after the 31 December 2018, please refer also to paragraph 9.3 of this Registration Document.

as at 14 March 2019

Europe 12%

APAC 2%

Africa 25%

LATAM 61%

PROJECT BACKLOG BY GEOGRAPHICAL AREAS OF INSTALLATION

PROJECT BACKLOG BY APPLICATION

as at 14 March 2019

Microgrids 31%

Grid-connected Solutions 68%

Mobility Solutions 1%

PROJECT BACKLOG BY CUSTOMER

as at 14 March 2019

Governments / IPP 24%

Utilities 72%

Telecom 1%

Others 3%

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RISK FACTORS

The material risks to which the ENGIE EPS Group is exposed, based on its own assessment, are described below. Other, lesser risks or risks unknown to date could also affect the ENGIE EPS Group. If these risks were to materialize, they could have a significant negative impact on the ENGIE EPS Group’s operations, financial position and earnings, image and prospects, and/or on the ENGIE EPS share price.

4.1 Risks associated with the success of the ENGIE EPS Group’s products The ENGIE EPS Group operates in the growing renewable energy market, in which new, break-through, technologies are being experienced and developed, by start-up companies and large, traditional incumbent actors alike. The ENGIE EPS Group has to keep-up with these changes in order to remain successful. The growth of the renewable energy market itself depends in part on the lower attractiveness of traditional fossil energy sources and on public policies favouring the development of renewable energy sources – those two trends could reverse and negatively impact the growth of the ENGIE EPS Group’s market share.

4.1.1 Risks associated with the adoption of the ENGIE EPS Group’s hydrogen based Distributed Solutions and with technological changes in the energy industry that could render the ENGIE EPS Group’s technology obsolete.

The markets for energy storage targeted by the ENGIE EPS Group (both in terms of sector and geography) are characterized by technological change and evolving industry standards.

The ENGIE EPS Group has developed its Distributed Solutions around hydrogen. Hydrogen production by the process of water electrolysis with an electric current (“power to gas” application, “P2G”) is well known, as is the production of electricity from hydrogen (“gas to power” application, “G2P”). The ENGIE EPS Group has deployed a solution combining both processes where hydrogen is used as energy storage, and the electricity used in the first reaction may be returned later (application P2P). The ENGIE EPS Group cannot guarantee that the constraints to the adoption of P2P or G2P taken separately in terms of profitability, logistical constraints and low modular systems will not adversely impact the perception of and adoption of a method of storing energy to produce hydrogen, such as that sold by the ENGIE EPS Group.

Competition vis-à-vis the ENGIE EPS Group’s systems will also come from improvements to the current Balance of System technologies and the entrance of new alternative Balance of Systems technologies integrated or developed by other players or the growth of the market share of these new technologies and system integrators, more efficient, more power and/or energy dense and/or less costly (e.g. silicon carbide or higher voltage power conversion, high speed energy management systems, etc.). Each of these competitors has the potential to take market share or reinforce its share in each market targeted by the ENGIE EPS Group.

Even if it is not directly confronted by an alternative breakthrough technology, the future success of the ENGIE EPS Group will depend on its ability to adapt quickly to changing technologies, to adapt its products and technologies to evolving industry standards and to improve the performance, power and energy density

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and reliability of its systems and technologies in order to incorporate promptly these incremental innovations.

To achieve market acceptance for its technologies, the ENGIE EPS Group must effectively anticipate and offer products that meet changing customer demands and compete against alternative solutions. If the ENGIE EPS Group fails to develop products that meet these challenges in a timely and cost-effective manner, its ability to renew its contracts with existing customers and its ability to create or increase demand for its technologies and products will be harmed.

4.1.2 Risks associated with competitors that are larger than the ENGIE EPS Group

Some of the companies in the energy industry (including large industrial groups, developers and system integrators with separate business units involved in energy storage technologies, e.g. Siemens, GE, ABB, Schneider, Wartsila) have substantially greater capital resources, research and development staff, facilities and experience available to them than the ENGIE EPS Group does. Such entities have applied and can apply in the future these resources to develop products which are in competition with, and more competitive than, the ENGIE EPS Group’s products. Additionally, they may be able to devote greater resources to promotion and sale of such products. Even now that the ENGIE EPS Group belongs to ENGIE, there can be no assurance that it will benefit from higher resources than before and that the ENGIE EPS Group’s competitors will not succeed in developing or marketing technologies that are more effective or less expensive than those developed or marketed by the ENGIE EPS Group or that would render its technology or business model obsolete or non-competitive.

4.1.3 Risks associated with the dependence of the ENGIE EPS Group’s operations on the development of renewable energy market and volatile oil and energy prices

The renewable energy market is relatively young compared with the fossil fuel and nuclear energy markets. The renewable energy market may grow less rapidly or develop differently than currently predicted by the ENGIE EPS Group or industry analysts. Many factors may affect the rate of growth in installed capacity and the attractiveness of renewable energy as compared to other energy sources, including:

• the performance, reliability and availability of the energy generated by renewable energy facilities as compared with other, conventional sources of energy; or

• fluctuations in economic and market conditions that affect the price of, and demand for, conventional energy sources, such as increases or decreases in the price of conventional energy sources (such as oil, natural gas and other fossil fuels), and changes in the cost, efficiency and equipment investment needed for other electricity producing technologies. The price of oil, natural gas and other hydrocarbons and other energy prices are volatile and vary notably in response to fluctuations in supply and demand at local, regional and global levels, and due to political entities, such as the Organization of Petroleum Exporting Countries (“OPEC”), and general economic and political conditions.

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In the field of energy storage solutions integrated with renewable energy sources, the decline in oil and gas prices, reducing the cost of producing electricity from fossil fuels could make the solutions proposed by the ENGIE EPS Group less competitive against other solutions, such as diesel generators and gas and coal conventional generation and therefore reduce the interest in and market for the ENGIE EPS Group’s solutions. Furthermore, if the renewable energy market grows less quickly or in a different manner than anticipated, equity and debt investor appetite for these investments may decline, and the ENGIE EPS Group may have difficulty in funding its development targets or business objectives.

4.1.4 Risks tied to the evolution of national or international policies and regulation

The ENGIE EPS Group expects it will encounter an evolving national and international policy and regulatory framework across the energy markets in general, and the energy storage market specifically, for a relatively long period of time. This evolution is likely to lead to uncertainty for the ENGIE EPS Group, its customers and its partners regarding the conditions for commercialization and usage of the ENGIE EPS Group’s technology.

The adoption or implementation of new laws, regulations or government policies, or the formulation of specific requests from the competent authorities or the loss of a vital approval for the operation of production facilities could restrict the ENGIE EPS Group development opportunities, its ability to continue production and/or require significant investment. For example, government policy and regulation may (i) force potential customers to implement energy solutions which may impact the development of the infrastructure required by the ENGIE EPS Group’s technology or (ii) prevent the deployment of storage technologies and, therefore, affect the ENGIE EPS Group’s business, results and prospects.

Further, activities related to energy storage are at present favoured by certain public policies both at the national and international levels that support carbon free energy either through favourable rates, tax credits, subsidies or other mechanisms such as environmental regulations limiting carbon dioxide emissions. These policies could be altered or even be reversed, because a government decides instead to favour traditional energy sources, such as coal in the U.S. currently, or because of budget constraints leading to a reduction of public funds available for implementing such policies.

The occurrence of one of these factors could bring about a reduction or a slowing in the demand for the renewable energy sources, storage technologies and/or the activity of the ENGIE EPS Group.

4.2 Risks associated with the ENGIE EPS Group’s project development activity

Grid-Support Solutions and Off-Grid Power Generation Solutions are complex projects, extensive in scope and subject to significant uncertainties. When designing the project, to respond to a request for proposal (“RFP”) either for a Grid-Support Solution or an Off-Grid Power Generation Solution, the ENGIE EPS Group makes certain assumptions on the costs, viability and reliability of the technical solutions that it will implement, and these could be wrong, leading to mis-pricing of the project by the ENGIE EPS Group and impacting its profitability. It also makes certain assumptions on the size of the market being targeted and the revenues that the project will generate, and these could also be wrong,

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with the same consequences for the ENGIE EPS Group. Finally, as the ENGIE EPS Group takes more and more a Project Development approach (as opposed to an Engineering, Procurement and Construction one – see the introduction of chapter 6), it needs to secure financing for the project and, for Off-Grid Power Generation Solutions, a Power Purchase Agreement.

When operating as the project developer, the ENGIE EPS Group is in charge of successfully completing and commissioning the project. It may not be able to do so as planned or at all. In the course of development, the ENGIE EPS Group may uncover problems or encounter difficulties with projects (for instance linked to obtaining the land rights and permits necessary or the necessary connection to the grid) which result in delays or additional costs that could render the projects less competitive than the ENGIE EPS Group initially anticipated. This could lead to project postponement or abandonment, delays in payments to be received from counterparties or penalties to be paid to them, to the project being less profitable than expected and result in significant losses, depreciations or write-offs.

4.2.1 Risk associated with securing and designing projects

4.2.1.1 Risks associated with the complexity of Distributed Solutions

The Distributed Solutions have a high degree of complexity, which entails extensive client education and project incubation, and may condition the growth potential of the ENGIE EPS Group. Furthermore, the complexity of the Distributed Solutions increases the risks of design inaccuracies or performance misestimation, implying the risk of potential cost overruns during execution or performance penalties from clients during operation.

4.2.1.2 Risk associated with the actual revenue pool targetable by the projects differing from the potential revenue pool anticipated by the ENGIE EPS Group

Within the context of responding to RFPs, the ENGIE EPS Group undertakes and will undertake case studies based on working hypotheses developed with network/grid operators, with the aim of determining the market that will be served by the contemplated project and the revenues it will be able to capture. These case studies are based on complex and general parameters, from the industry and/or specific data from that instance (client activity, applications, geographic area, and climate conditions). It is therefore difficult for the ENGIE EPS Group to generalize results to the entire market and determinate the actual market from the specific results of the case studies.

The ENGIE EPS Group cannot guarantee that the economic benefit of these case studies can be generalized in all circumstances and provide a valid benchmark to assess the profitability of new projects.

4.2.1.3 Risk associated with obtaining financings

When operating as a Project Developer, the ENGIE EPS Group depends on arranging financing from various sources, in particular external debt financing. It also needs, in certain circumstances, to be able to post bonds for tenders.

The ENGIE EPS Group may experience difficulty, under certain conditions or in certain markets, in securing debt financing for its projects in a timely fashion, on

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terms that enable satisfactory project profitability or even at all, or such financing may be subject to restrictive terms that increase project operating costs and reduce project values. Furthermore, the ENGIE EPS Group’s ability to obtain debt financing for its projects may vary by jurisdiction and as the ENGIE EPS Group expands into new markets, there can be no assurance that banks that provided debt financing for the ENGIE EPS Group’s projects in the past will continue to do so for new projects or markets. Factors that could adversely impact the availability or cost of financing for the ENGIE EPS Group’s projects include, but are not limited to, the following:

• an increase in market interest rates, which would increase the cost of debt financing and hence lower the projects’ returns on investment;

• diminished credit quality of the ENGIE EPS Group’s counterparties (network/grid operators);

• elevated country or state risk, particularly in non-OECD markets;

• technical or legal issues for a project, identified in the course of the bank due diligence;

• lack of availability of, or difficulty securing, sufficiently bankable technologies or equipment for planned projects; and

• adverse general lending market conditions.

If the ENGIE EPS Group is unable to arrange debt financing or if it is only available on unfavourable terms, the ENGIE EPS Group may not be able to build some projects or may be able to do so only on less profitable terms.

4.2.1.4 Risk associated with securing a PPA

A key component of the ENGIE EPS Group’s Off-Grid Solutions is to secure a PPA for the project. The ENGIE EPS Group may not be able to secure such PPAs, and in particular PPA with purchasers whose counterparty risk supports bank financing, on terms enabling sufficient project profitability or at all.

The value and viability of the ENGIE EPS Group’s renewable energy projects depends upon its ability to sell the electricity produced by the relevant projects under agreements with creditworthy counterparties at adequate price levels, in particular pursuant to PPAs. Financing for the ENGIE EPS Group’s projects in most of its markets is generally contingent on securing one or more PPAs for the relevant project.

If the ENGIE EPS Group is unable to secure PPAs for its projects or is unable to secure PPAs on sufficiently favourable terms, it will generally be unable to sanction such projects or secure project financing for those projects or may only be offered financing on unfavourable terms. Failure to build such projects will result in write-off of the relevant development costs.

4.2.2 Risks associated with the successful completion of the projects

4.2.2.1 The ENGIE EPS Group may not be able to complete projects under construction

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Once a project has been awarded to the ENGIE EPS Group, it remains subject to risks in the construction phase relating in particular to engineering, equipment or EPC performance. The inability to complete construction, or to complete it on a timely basis, may result in contractual defaults, termination of PPAs, impairment of assets or a reduction in the period of eligibility for specified tariffs as a result of a failure to meet certain milestones, among other adverse consequences. Projects may encounter a range of difficulties in the construction phase that result in delays or higher than expected costs that may not be fully covered or adequately addressed by EPC guarantees, damages clauses or insurance, including but not limited to the following:

• delays due to unforeseen events;

• damage to equipment in the course of delivery as a result of accidents or otherwise;

• adverse weather, environmental and geological conditions, force majeure and similar events;

• theft and vandalism; and

• regulatory authorisations or difficulties in obtaining permits.

There can be no assurance that any individual project will be completed and reach commercial operation. If these efforts are not successful, the ENGIE EPS Group may abandon a project under construction and write off the costs incurred in connection with such project. Further, ineffective project management and execution in the construction phase could result in delays or unanticipated cost overruns in respect of completed project.

Some of these risks and other, related ones, are more further developed below:

4.2.2.2 Risks related to Distributed Solutions developed for sophisticated grid operations

Distributed Solutions are the result of long-term complex projects with major actors in the grid business, such as TSOs and major utilities. They require the implementation of reliable solutions, in particular with regard to the grid-tie or grid-forming inverter, algorithms of the remote management and industrialization in order to be replicated on a large scale.

For all Distributed Solutions, the ENGIE EPS Group’s products are installed directly on site, without the possibility of testing in full in the context of the factory acceptance test (“FAT”). Any failure, fault or delay in testing, sites and installations or on their remote control system could adversely affect the ENGIE EPS Group’s reputation, competitiveness and reduce its ability to sell its products. The Distributed Solutions on-site and their remote control may encounter problems and delays for a number of reasons, including the failure of technologies implemented by the ENGIE EPS Group, the failure of the technology owned by other companies and integrated in the ENGIE EPS Group’s Distributed Solutions, failure to combine these technologies properly, operator error, and the failure to ensure the maintenance and servicing of test prototypes correctly. Most of these potential problems and delays are beyond the ENGIE EPS Group’s control. In addition, these site installations, by their nature, can involve delays associated with

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products and changes to their design, as well as the involvement of third parties in particular for testing and test protocols.

In addition to the impact on the completion of a particular project, any problems or difficulties of Distributed Solutions on site, whether from technology, installation, or remote management, could adversely affect the ENGIE EPS Group’s reputation and the reputation of its products and limit sales, especially as customers of these applications consist of major utilities and grid operators. Such failures or faults could deteriorate relations with customers, prevent the participation to tenders and requests for proposal and force the ENGIE EPS Group to further develop its technology to address these failures before installations on other sites, increasing research and development costs and manufacturing costs and the costs of its concurrent projects.

4.2.2.3 Risks tied to the deployment of the ENGIE EPS Group’s solutions in off-grid areas

The market of Off-grid Power Generation Solutions and therefore for off-grid areas is characterized by geographical fragmentation, often in remote areas that require the deployment of significant human, educational, financial, logistical and technical expertise. Operational and financial risks associated with this market could be larger than those inherent in projects related to these applications. The inability of the ENGIE EPS Group to manage these risks could jeopardize its position or its profitability in these markets, as the Atakama Desert, Puntland and South Pacific Islands.

4.2.2.4 Risks associated with the reliability of systems designed for microgrids

The systems that are developed for Off-Grid Power Generation Solutions and microgrids in particular applications are particularly complex. These applications imply levels of technology, logistics, and innovation that are particularly high, notably as concerns the remote and local management of the electrical microgrid. There is no guarantee that the ENGIE EPS Group would successfully manage these complexities.

4.2.2.5 Risks associated with contractual targets, performance milestones and failure to meet such target and milestones

The ENGIE EPS Group has a number of customers and prospective contracts that require adherence to milestones and performance targets. In the event that the ENGIE EPS Group fails to meet particular milestones or performance targets under its commercial contracts, collaborations, joint developments or joint venture arrangements, it would likely result in the failure of the project and possibly the termination of the commercial contract, collaboration, joint development or joint venture.

4.2.2.6 Risks associated with warranty claims

The ENGIE EPS Group produces high technology systems and provides its customers with a warranty period of 2 years and, upon payment of a specific warranty extension, up to 20 years. The ENGIE EPS Group manufactures and buy single components applying strict standards and tolerances using complex manufacturing processes and rigid procurement policies. Failures of any component could give rise to substantial product warranty costs and claims and

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significant in-house and on-field repairing costs. At present, the ENGIE EPS Group has not yet had to face any material warranty claims. Accordingly it does not have a provision for warrantees in its accounts. These costs are typically un-predictable and generally not insurable.

4.3 Risks associated with certain market pricing trends The ENGIE EPS Group is faced with both declining prices of competing technologies and rising prices of certain raw materials used in its solutions.

4.3.1 Risk generated by declining prices of competing technologies

The market for businesses for whom a continuous supply of electricity is necessary to their operations and the diesel generators industry are mature sectors and are served by both traditional diesel and gas generators manufacturers and large industrial players like Caterpillar, Wartsila, Tesla, Nidec, BYD, ABB, NEC, RES, Aggreko, and Siemens and by emerging technology providers. The industry is characterised by progressive sales price erosion both for traditional and for emerging technologies in both cases mainly thanks to the increased volume and improved manufacturing processes.

This trend is expected to become more pronounced in the future and the ENGIE EPS Group could be unable to offset this drop in prices with an increase in volume of systems sold or the development of new solution on a timely and cost-effective basis, or even to reduce its costs.

4.3.2 Risks associated with volatility or increases in raw material prices

The ENGIE EPS Group, its manufacturers and the companies within its supply chain, purchase lithium, titanium, cobalt, nickel and platinum typically used in electronic components, battery-based technologies and electrolytic cells and stacks. Price increases with respect to raw materials used in developing and manufacturing the ENGIE EPS Group’s products that cannot be recovered by a corresponding price increase in the ENGIE EPS Group’s products could have a material adverse effect on the competitiveness and success of the ENGIE EPS Group’s solutions.

Further, a shortage of such primary materials could, beyond the impact on prices, delay production and/or require that changes be made to certain components of the systems developed or used by the ENGIE EPS Group. This would impact the ENGIE EPS Group’s capacity to complete its projects in time.

4.4 Risks associated with client base and suppliers The ENGIE EPS Group faces a limited number of clients, some of which are large. It is also dependent on certain suppliers.

4.4.1 The ENGIE EPS Group’s revenues depend on a small number of clients

The ENGIE EPS Group currently relies on revenues from a small number of customers and there can be no assurance that it will be able to retain them or obtain additional new customers.

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The following table shows the revenues of the ENGIE EPS Group’s generated by its 10 largest customers in 2018 and the percentage that these represent in relation to 2018 total sales:

The ENGIE EPS Group might not be able to retain its principal clients or continue developing business relationship with such clients. The ENGIE EPS Group might even lose one or several principal clients (in case of non-renewal or early termination for example).

4.4.2 Risks associated with large customers having significant buying power and complex decisional processes

The energy market, including the renewable energy and energy storage markets, are characterized by the presence of sizeable clients (such as government-backed single buyers, large vertically integrated government-owned utilities, large industrial groups interested in energy solutions) with significant buying power and very complex decisional processes that involve several departments in order to have a purchase order approved (i.e. procurement, infrastructure, grid, innovation, legal, finance and research and development departments). Business development activity of the ENGIE EPS Group requires proximity in order to regularly deal with the different decision makers in the ENGIE EPS Group’s targeted markets.

The strong buying power of these customers could reduce the ENGIE EPS Group’s gross margins, impacting its profitability, while the complexity and length of the decisional process could create a delay in the issue of purchase orders.

4.4.3 Risk of dependence on certain suppliers of raw materials or core components and certain sub-contractors

The ENGIE EPS Group carries out all the research and development and engineering activities relating to its Distributed Solutions. However, the ENGIE EPS Group relies on third party suppliers of raw materials and to assemble all or part of its solutions. In 2018, the three principal suppliers represented 25% of the purchases.

Client Revenues 2018 %

Client 1 5,887,178 38%

Client 2 2,478,409 16%

Client 3 2,188,759 14%

Client 4 1,450,950 9%

Client 5 660,122 4%

Client 6 583,189 4%

Client 7 543,729 3%

Client 8 380,712 2%

Client 9 361,616 2%

Client 10 280,396 2%

Total 10 principal clients 14,815,060 95%

Revenues 2018 15,660,681 100%

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The following table shows the amount of purchases from the 10 largest suppliers of the ENGIE EPS Group in 2018 and the percentage that this amount represents in relation to the total purchases in 2018:

Furthermore, there are relatively few counterparties who have the necessary scale and skill set to produce the components of the ENGIE EPS Group’s systems or to assemble them in containerized solutions. Accordingly, due to a supplier’s failure to supply materials or components in a timely manner, or to supply materials and components that meet the ENGIE EPS Group’s quality, quantity or cost requirements, the ENGIE EPS Group could have to replace one of the existing strategic manufacturers. In this situation, there may be a limited number of alternatives and the ENGIE EPS Group may not be able to secure commercially acceptable terms (in particular in terms of lead times, delivery and manufacturing set-up times) or at all from an alternative manufacturer.

If a third-party manufacturer were to breach its contractual commitments to supply the ENGIE EPS Group’s products, the ENGIE EPS Group’s only redress may be to sue the manufacturer for damages and such an action could be time-consuming and costly, and, even if successful, may not adequately compensate the ENGIE EPS Group for any delays suffered, loss of profit or loss of business opportunity.

Furthermore, the ENGIE EPS Group frequently subcontracts a part of the maintenance and installation of its products to third parties. As such, the ENGIE EPS Group cannot maintain the same level of oversight and control over these outsourced operations as it would if these operations were carried out internally and relies on its suppliers in terms of quantity, quality, yield and costs of services and products. If one such third party fails to fulfil its obligations in a timely manner and in compliance with the specifications, the ENGIE EPS Group may not be able to complete its projects, install and assure the maintenance of its products and systems in a timely manner and within the required quality standards.

4.5 Risks associated with the ENGIE EPS Group’s financial performance

The ENGIE EPS Group’s revenues and profits are exposed to two potential causes of volatility: in the short term, that linked with success on the tenders and RFPs to which the ENGIE EPS Group participates; in the medium to longer term, in addition to that first factor, the irregularity of revenues generated by long-term contracts.

Suppliers Purchase 2018 %

Supplier 1 2,819,027 15%

Supplier 2 1,341,000 7%

Supplier 3 564,918 3%

Supplier 4 412,952 2%

Supplier 5 391,013 2%

Supplier 6 384,440 2%

Supplier 7 332,781 2%Supplier 8 263,517 1%

Supplier 9 240,413 1%

Supplier 10 236,272 1%

Total 10 principal suppliers 6,986,333 38%Total 2018 18,538,334 100%

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4.5.1 Risk related to the potential volatility linked to the ENGIE EPS Group’s success in tenders and RFPs

The ENGIE EPS Group’s business depends in particular on the success of a limited number of tenders and RFPs, which the ENGIE EPS Group will wish to respond, but which individually can represent a multiple of the revenue compared to the historical sales of the ENGIE EPS Group.

Therefore, sales and the ENGIE EPS Group operating results may vary significantly and unexpectedly from one period to another.

4.5.2 Risks related to the sales and operational cycle for Distributed Solutions

The ENGIE EPS Group may enter into long-term contracts for its Distributed Solutions, which sales and operational cycle, including a preparatory phase and an implementation phase may occur over several months. This risk will increase as the ENGIE EPS Group keeps pursuing a Project Developer model. A number of events may occur during (i) the project preparation phase, such as the questioning of the project, despite the length of the test phases, studies, efforts and funds pledged by the ENGIE EPS Group, and (ii) the execution phase, such as technical problems relating to the components supplied by the ENGIE EPS Group or third parties, delays of subcontractors, financial difficulties of users or partners, resulting in an increase of costs or of losses.

There could also be delays and lag between the execution of these contracts, the recording in revenues and the actual receipt of the amounts. Therefore, the ENGIE EPS Group’s revenues could experience a significant time difference between payments and expenses, with an impact on its cash flows.

4.6 Risks related to the ENGIE EPS Group’s international development

The ENGIE EPS Group has operations in multiple countries and is there exposed to the general risk associated with being a multinational group, but these risks are enhanced as some of these operations are conducted in emerging countries.

4.6.1 Risks associated with operating in multiple foreign countries

Besides the countries in which the ENGIE EPS Group is active today, i.e. Somalia, Comoros, New Caledonia, Kenya, Chile, the operations of the ENGIE EPS Group might be extended to other countries (i.e. Brazil, Indonesia and the Philippines) in accordance with its strategy. The international deployment of the ENGIE EPS Group will expose it to different economic, fiscal, legal, regulatory and political frameworks. The possible complexity of these and future rules and regulations could result in delays in project execution and/or significant costs in order to assure compliance with these rules and regulations.

The costs associated with entering and establishing in such new markets may be higher than expected, and the ENGIE EPS Group may face significant competition in such markets and a range of risks and challenges including:

• regulatory and legal requirements affecting its ability to enter new markets through joint ventures with local entities such as difficulties in obtaining

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regulatory local approvals and authorisations or export and import restrictions;

• difficulties in managing overseas operations;

• difficulties and delays in contract enforcement and the collection of receivables under the legal systems of foreign countries;

• unclear multiple regulatory and tax regimes (including regulations relating to transfer pricing and withholding at the point of generation and other taxes on remittances and other payments from subsidiaries) and divergent commercial and employment practises and procedures;

• foreign investment restrictions and currency risks, foreign exchange controls and restrictions on repatriation of funds; and

• economic and/or financial sanctions concerning certain countries notably those taken or imposed by the United Nations, the European Union, France or the United States.

The ENGIE EPS Group could be unable to manage the risks related to its expansion and growth in new markets and therefore fails to establish a strong presence in those markets.

4.6.2 Risks associated with operating in emerging markets

A portion of ENGIE EPS’s actual and future businesses and projects are located in countries outside the EU and North America, mainly in Africa (Kenya and Nigeria), Central and South East Asia (Indonesia) and Central-Southern America, where the socio-political framework and macroeconomic outlook are less stable than in the OECD countries. Adverse political, social and economic developments, such as internal conflicts, revolutions, establishment of non-democratic regimes, protests, strikes and other forms of civil disorder, contraction of economic activity and financial difficulties of the local governments with repercussions on the solvency of state institutions, inflation levels, exchange rates, disruptions to economic activity, loss of output, plant closures and shutdowns, project delays, the loss of personnel or assets and similar events in those non-OECD countries may negatively impair ENGIE EPS’s ability to continue operating in an economic way, either temporarily or permanently. They may force the ENGIE EPS Group to evacuate personnel for security reasons and to increase spending on security.

The ENGIE EPS Group could be unable to manage the risks related to its expansion and growth in emerging markets and/or frontier markets.

4.7 Risks associated with regulatory compliance and defective products

The ENGIE EPS Group’s activities are subject to a vast and complex array or regulations, notably because its products contain certain potentially dangerous substances such as hydrogen, oxygen, lithium and caustic potash. Because of the international nature of its activities, the ENGIE EPS Group is subject to different regulatory regimes in each country in which it operates and also to the international sanction’s regimes. Finally, the ENGIE EPS Group could face substantial liability claims as a result of a defect in one of its products.

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4.7.1 Risks linked to the specific regulatory environment applicable to Distributed Solutions

The products and technologies used by the ENGIE EPS Group are governed by numerous regulations including environmental, quality, health and safety. This regulatory framework is complex and specific depending on the activity performed (production, transport or storage of electrical components, hydrogen, oxygen and lithium) and depending on the type of application (stationary, mobility and portable). It is also different in each country in which the ENGIE EPS Group operates. It is incumbent on the ENGIE EPS Group to identify the regulations applicable to each product developed for its business and to meet the requirements.

In addition, the use of hydrogen, lithium and advance system integration technologies as an energy storage source involves a technological breakthrough, the development of which may be hindered by existing regulations not always suited to the technology.

Monitoring and complying with this vast array of regulations and their developpement is costly and time consuming. Even though the ENGIE EPS Group has dedicated resources assigned to this task, there is no guarantee that it will comply with all applicable regulations. Any such compliance failure could result in delays in the completion of the ENGIE EPS Group’s projects, exclusion from tenders and RFPs, being barred from operating in the relevant jurisdiction, facing fines or be held liable for any resulting damages.

4.7.2 Risks associated with environmental damages resulting from the development, manufacturing and operations of its Distributed Solutions

The ENGIE EPS Group’s business exposes it to the risk of harmful substances escaping into the environment, resulting in personal injury damage to or destruction of property and natural resources.

The substances dangerous for the environment handled in the manufacturing phase, in particular during the testing of the equipment, are (i) hydrogen, (ii) oxygen and (iii) caustic potash. Hydrogen is an explosive gas which may cause explosion and fire, especially in an atmosphere enriched with oxygen. Caustic potash in aqueous solution is the electrolyte used on our alkaline electrolysers. The solution is highly corrosive and irritant and an accidental release of caustic potash may affect and damage the environment because of its basic pH. Lithium is also flammable and accordingly potentially dangerous. In addition, acids and heavy metals contained in the battery-based technologies integrated in the Distributed Solutions deployed by the ENGIE EPS Group can be toxic and potentially dangerous.

The ENGIE EPS Group’s operations may not comply with future laws and regulations, and the ENGIE EPS Group may be required to make significant unanticipated capital and operating expenditures in order to comply with those. If the ENGIE EPS Group fails to comply with applicable environmental laws and regulations, governmental or administrative authorities may seek to impose fines and penalties on it or to revoke or deny the issuance or renewal of operating permits and third parties may seek damages. Under those circumstances, the

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ENGIE EPS Group might be required to curtail or cease operations, conduct site remediation or other corrective action, or pay substantial damages.

In addition, the ENGIE EPS Group may be held responsible for damages beyond the scope of its insurance coverage and the ENGIE EPS Group’s current insurance policies may not adequately reimburse it for costs incurred in settling environmental damage claims, and in some instances, it may not be reimbursed at all. The ENGIE EPS Group also cannot predict whether it will be able to maintain insurance coverage on acceptable terms.

4.7.3 Risks related to international sanctions

The ENGIE EPS Group operates and has clients and partners located around the world, including in emerging countries. As such the ENGIE EPS Group must comply to international sanctions regimes relating to corruption, money laundering and terrorism financing, in the jurisdictions in which it operates.

In particular, the ENGIE EPS Group must comply with the sanctions regimes imposed by the United States of America, the European Union and the United Nations on certain countries, entities and individuals.

These regimes are complex, frequently overlapping and frequently changing. There is no guarantee that the ENGIE EPS Group will not run afoul of these regimes, directly but also, and more likely, because of the ENGIE EPS Group’s relations with a third party that would itself violate them. Third party compliance is particularly difficult to monitor and these sanctions regimes can assign liability to an innocent party because of such monitoring failures.

As at the date of this Registration Document, the ENGIE EPS Group is not subject to any sanction procedure and/or any international sanctions. Also, the ENGIE EPS Group has limited commercial relationships with certain counterparties located in sanctioned countries (such as Somaliland), but these are carried out in compliance with applicable laws and regulations.

Any such violation of a sanctions regime could result in exclusion from tenders and RFPs, being barred from operating in the relevant jurisdiction or facing substantial fines.

4.7.4 Risks related to defective products

The risk of defective products creating the ENGIE EPS Group liability is inherent in the development, manufacturing, marketing and sale of its products. A product is considered defective when it does not provide the expected performance or the safety which a person is entitled to expect.

The exposure of the ENGIE EPS Group to such liability is heightened because of the production and usage of technologies and media in its products. Storage technologies and media, like hydrogen, oxygen or lithium, are flammable and accordingly potentially dangerous. In addition, acids and heavy metals contained in the battery-based technologies integrated in the Distributed Solutions deployed by the ENGIE EPS Group can be toxic and potentially dangerous.

Any accident involving the ENGIE EPS Group’s solutions could generate huge civil and criminal liabilities and impact the demand for products developed by the

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ENGIE EPS Group or substantially stop the general acceptance of such products. Furthermore, the ENGIE EPS Group’s reputation could also be affected by negative publicity resulting from difficulties or accidents in connection with its products.

4.8 Risks associated with the intellectual property

Intellectual property, know-how and trade secrets constitute a very important part of the ENGIE EPS Group’s assets and value. Even if they are protected by patents or confidentiality measures within the ENGIE EPS Group or agreements with third parties, there is no guarantee that they can be successfully protected.

4.8.1 Risks associated with dependence on proprietary technology underpinned by intellectual property which the ENGIE EPS Group may not be able to obtain, maintain, defend or enforce

The ENGIE EPS Group’s success will depend in part on its ability to obtain, maintain, defend and enforce its patents, registered trade secrets and the other intellectual property rights that underpin its proprietary technologies and products.

There is no assurance that:

• any currently pending or future patent applications will be granted;

• that the ENGIE EPS Group’s patent applications (and any subsequent or resulting granted patents) will not be challenged by third parties;

• where patents have been issued to the ENGIE EPS Group, that others will not be able to design around such patents to create a competing technology or product;

• that competitors will not develop similar products which are not within the scope of the ENGIE EPS Group’s patents;

• that third parties’ rights, including third party patents, will not have an adverse effect on the ENGIE EPS Group’s ability to pursue some or all aspects of its business;

• that, where the ENGIE EPS Group relies on confidential and/or proprietary know-how, others will not gain access to it notwithstanding the ENGIE EPS Group’s protocols for protecting that know-how; or

• that protection of patents or other intellectual property rights protection will be available or effective in all the jurisdictions that the ENGIE EPS Group is targeting.

The protection by the ENGIE EPS Group of its intellectual property rights represents a significant cost tied notably to the cost of obtaining and maintaining intellectual property rights and other related payments. This cost could greatly increase if the ENGIE EPS Group has to defend its intellectual property rights. The ENGIE EPS Group may have to pursue court proceedings, potentially in more than one jurisdiction, to enforce its intellectual property rights. Intellectual property litigation is typically costly and time-consuming and its outcome is often unpredictable and, as such, even if the ENGIE EPS Group is successful in defending its intellectual property, the costs incurred and the diversion of

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management time and attention could have a material adverse effect on the ENGIE EPS Group’s business, results, prospects, or financial condition. Any failure to defend its intellectual property rights could result in competitors having access to the technologies developed by the ENGIE EPS Group both internally and could entail the loss by the ENGIE EPS Group of a competitive advantage.

Furthermore, the ENGIE EPS Group faces the risk that there may be patents issued to third parties that relate to its proposed product applications and technology of which the ENGIE EPS Group is not aware or that it must challenge in the courts to continue its operations as currently contemplated. Hence, if the ENGIE EPS Group is found to infringe a third party’s patent, the ENGIE EPS Group could be required to obtain a license from such third party to continue developing and marketing its products and technology or the ENGIE EPS Group may elect to enter into such a license in order to settle litigation or in order to resolve disputes prior to litigation. However, the ENGIE EPS Group may not be able to obtain any required license on commercially acceptable terms or at all. The ENGIE EPS Group could also be forced, including by court order, to cease to develop or market products based on the infringing technology or product and/or pay financial penalties. Any of these events could have a material adverse effect on the ENGIE EPS Group’s business, financial condition, results of operations or prospects.

4.8.2 Risks associated with the inability to protect confidentiality of information, trade secrets, know-how and intellectual property generally

When the ENGIE EPS Group cooperates with large groups and utilities, information and/or products may be disclosed or entrusted to public or private entities, clients, subcontractors or any other contracting party under current or future agreements with the ENGIE EPS Group, for the purpose of deployment, testing and development. In such cases, the ENGIE EPS Group requires the signature of confidentiality agreements.

Technologies, source codes, software, firmware and know-how generally, as well as proprietary unpatented and/or un-patentable data are deemed equivalent to trade secrets which the ENGIE EPS Group seeks to protect in part through such confidentiality agreements. However, despite the huge effort of the ENGIE EPS Group is dedicated to that, there is no guarantee that the methods used by the ENGIE EPS Group to protect intellectual property and/or know-how will give the expected level of protection or will be complied with by third parties, nor that the ENGIE EPS Group will be able to take action in the event of non-compliance. More specifically, the ENGIE EPS Group has no control over the conditions under which the third parties with which it does business in turn use the services of other parties and protect their confidential information, despite any clauses it may include in its confidentiality agreements.

4.9 Financial Risks

The ENGIE EPS Group is exposed to financial risks, mostly linked to an interest rate linked to the extent that 100% of its financial debt is denominated at floating interest rate. It is also exposed to credit and/or counterparty risks and a liquidity risk. The Company proceeded to a specific revue of its exposure to its liquidity risk and considers that it is able

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to meet future scheduled payments. Finally, although it has little exposure to foreign currency risks as of today, the ENGIE EPS Group considers that this risk will increase as it expands internationally.

4.9.1 Interest rate risk

The ENGIE EPS Group is exposed to an interest rate risk to the extent that credit lines are float-rate financing linked to Euribor.

The ENGIE EPS Group’s financial debt at 31 December 2018 was 4,050 K€, 100% of which was denominated at floating interest rate.

4.9.2 Credit and/or counterparty risks

Credit risk is the risk that a counterparty will not meet its obligation under a financial instrument or customer contract, leading to a financial loss. The ENGIE EPS Group is exposed to credit risk from its operating activities (primarily for trade receivables under PPA) and from its financing activities, including deposits with banks and foreign exchange transactions.

The ENGIE EPS Group seeks to reduce counterparty credit risk under its PPA in part by entering into contracts with state-owned companies, private companies or other customers of strong credit quality and by obtaining guarantees of the off-taker’s obligations. However, to the extent that any of the ENGIE EPS Group’s current or future PPA counterparty do not have, or lose, such strong credit quality and the ENGIE EPS Group cannot obtain government guarantees, it is or will be exposed to heightened credit risk. Similarly, the ENGIE EPS Group may not be able to fully limit exposure to regional economic downturns and the resulting credit risk, despite locating its assets in different geographic areas. These risks can increase when global or regional economies are experiencing periods of volatility.

Customer credit risk is managed by the administration, finance and control department at each reporting date on an individual basis for major clients. The maximum exposure to credit risk is represented by the carrying amounts of trade receivable in the Consolidated Financial Statements of the ENGIE EPS Group (approximately € 8 million as at 31 December 2018).

The ENGIE EPS Group does not hold counterparty insurance but the requirement for impairment is analysed by the administration, finance and control department for each new customer and reviewed at each reporting date on an individual basis for major client. The calculation of estimated risk is based on actual incurred historical data.

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4.9.3 Liquidity risk

The liquidity risk represents the risk that the financial resources are not sufficient to fund the financial and commercial obligations within the pre-established periods and due dates. The risk of liquidity to which the ENGIE EPS Group is subject to may emerge from late payments on its sales and more generally from the difficulty of obtaining financing to support operational activities in the time necessary.

Capacity to obtain additional financings depends on a certain number of factors, in particular the ENGIE EPS Group’s operational performance and financial situation, the market conditions and other factors that are not subject to the ENGIE EPS Group’s control. Such factors can also make the financing’s terms and conditions uninteresting for the ENGIE EPS Group. It might not be able to raise additional funds when needed and, consequently, its capacity to run its business correctly, to develop it and to progress may be affected.

The ENGIE EPS Group monitors its exposure to a risk of a shortage of funds using a recurring liquidity planning tool in a short-term base and the annual budgeting process in a medium/long term base.

The revenue stream of the past three years did not allow the ENGIE EPS Group to finance its own cash needs and shareholders’ support has been material to keep the Company a going concern.

These funds are sought with banks and are subject to bank guarantees or with equity commitment.

The following table shows the schedule of the ENGIE EPS Group’s debt and the treasury’s amount at 31 December 2018:

Table on the schedule of the ENGIE EPS Group’s debt and the treasury’s at 31 December 2018

NET FINANCIAL POSITION (amounts in Euro)

31/12/2018

Cash and cash equivalent 10,860,527

Cash at banks and petty cash 10,860,527

Net financial debts (4,050,862)

Current financial liabilities (2,240,696)

Non-current financial liabilities (1,810,167)

NET FINANCIAL POSITION 6,809,665

Other financial liabilities – revaluation of the EIB Warrant liabilities 0

NET FINANCIAL POSITION – after revaluation of the EIB Warrant liabilities (IFRS 2)

6,809,665

The Company proceeded to a specific revue of its exposure to its liquidity risk and considers that it is able to meet future scheduled payments.

See note 4.27 of the Consolidated Financial Statements of the ENGIE EPS Group.

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4.9.4 Risks associated with foreign currencies

The ENGIE EPS Group expects to be exposed to currency exchange rate risk. The Consolidated Financial Statements of ENGIE EPS are prepared in euros, and historically, the ENGIE EPS Group has carried on its business in euros, and will continue to do so. However, a significant part of the ENGIE EPS Group’s business might be conducted in the future in currencies other than euro such as the US Dollar. The ENGIE EPS Group is likely to sign contracts under which payments are expected to be made and received in other currencies, particularly in emerging countries’ currencies as Brazilian Real. Also, a part of the ENGIE EPS Group’s purchases is made in currencies other than euro, such as the US Dollar.

Therefore, the ENGIE EPS Group is exposed to exchange rate, conversion and transaction costs. The risk associated with currency fluctuations occurs during the conversion into euros of the value of assets and liabilities not denominated in euros, and the results of its subsidiaries not denominated in euros. To the extent that the exchange rates of these currencies are exposed to fluctuations, they are likely to affect the Consolidated Financial Statements of the ENGIE EPS Group, which could also have a significant effect on the ENGIE EPS Group’s financial position and its results, as represented in the ENGIE EPS Group’s accounts. The risk related to foreign exchange rate changes may occur due to the difference in exchange rates between the closing date of the commercial transaction and the date of settlement.

Currently, the ENGIE EPS Group’s exposure to foreign currency risk is not specifically hedged. In the future, the ENGIE EPS Group may consider entering into hedging agreements.

In 2018, the ENGIE EPS Group registered costs in foreign currency for a total amount of 809 K USD and 1 K GPB, 18,862 K CLP and 4 K CHF corresponding to a total amount of 1,010 K€. This amount is not significant compared to the total costs of the ENGIE EPS Group in 2018. However, the ENGIE EPS Group considers that this risk will increase as it expands internationally.

4.10 Risks associated with the ENGIE EPS Group’s organization In addition to certain risks specific to the ENGIE EPS Group’s organisation, investors are faced with the risk associated with being a minority shareholder.

4.10.1 Risks related to the holding company structure

The Company is a holding company whose main assets consist in its direct or indirect interests in its subsidiaries, including its subsidiary EPS Manufacturing and EPS Elvi and MCM, which respectively generates and will generate most of the ENGIE EPS Group’s financial flows. The core assets of the ENGIE EPS Group’s business, including material contracts for the activity and the ENGIE EPS Group’s development are held by EPS Elvi. The capacity for the latter to make payments in favour of the Company depends on economic, commercial and contractual considerations and legal constraints that may be applied from time to time.

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Therefore, the ENGIE EPS Group cannot guarantee that any future profitability or results of the operating subsidiaries will allow financial flows to the Company sufficient to cover future payments of any dividend to its shareholders.

The Company has been incorporated in 2014 and, since then, it has been active as holding of the ENGIE EPS Group. Several investments have been made – directly and indirectly - by the Company in Italy and abroad pursuant to the strategy developed by its Board of Directors. Although the ENGIE EPS Group Companies are principally located in Italy, the Company envisages a continuous worldwide expansion in terms of networking and clients.

At the date of this Registration Document, the Company has its tax residence in France, despite the fact that the Company holds currently Italian assets such as the investment held in the ENGIE EPS Group Companies and, hence, the risk of being identified as Italian taxpayer cannot be excluded, the Board of Directors believes that the Company has been actually and effectively managed from France so far. This is, in the opinion of the Board of Directors, particularly evident from the fact that the ENGIE EPS Group in 2018 held 16 Board of Directors’ meetings in Paris, lasted on average 1.25 hour and with an attendance rate of approximately 79.2%.

In addition, the Company did not cause any events – such as disposal of investments or dividends upstream – that may trigger material taxes to be paid both in Italy and in France.

The ENGIE EPS Group is subject to a risk of transfer price relating to operations performed with counterparties belonging to ENGIE group worldwide.

4.10.2 Risk of not being able to retain qualified and key human resources

The success of the ENGIE EPS Group and its business strategy are dependent on its ability to attract and retain key management, commercial and technical personnel, including those with engineering expertise.

The ENGIE EPS Group’s solutions require customizations, interventions, engineering, installation and commissioning support as well as structured post-sale service level. To provide this, the ENGIE EPS Group has set up a specialized engineering department and suitable technical support made by electrical system engineers, an extremely rare job position. However, the increase in system sales may require that the ENGIE EPS Group recruit accordingly further qualified personnel to perform this type of operation. As a result of recent improvements in economic sentiment and the relative scarcity of qualified electrical engineers in Italy, the level of competition for the services of qualified engineers is high which may hinder the ENGIE EPS Group’s recruitment efforts, lead to higher than planned staff attrition and/or lead to increased personnel costs.

To manage this staff growth phase and scarcity issue, the ENGIE EPS Group is studying the possibility of establishing new partnerships with an international scope with companies who could take over all or part of such support and installation activities post sale. One of the preferred partnership in that sense may be with ENGIE.

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In case the ENGIE EPS Group is unable to recruit quickly enough, or if the ENGIE EPS Group was unable to establish such partnerships, the ENGIE EPS Group may not be able to penetrate certain markets and / or honour its commitments. The ENGIE EPS Group’s development pace could be affected.

In addition, some of the ENGIE EPS Group’s senior executives have built up extensive technological and scientific experience throughout their academic and professional careers, such as Daniele Rosati (who is Chief Technology Officer) and Giuseppe Artizzu (who is Executive Director – Global Strategy). If any such executive leaves the ENGIE EPS Group, this could result in a loss of know-how and strategic drive which would weaken several corporate governance, business and technology processes, especially if the executive joins a competitor, as well as gaps in the range of strategic and technical skills that could slow down operations and might adversely impact the ENGIE EPS Group.

To date, the ENGIE EPS Group has taken out a so-called “key person” risk insurance policy (covering permanent disability and/or death). In view of this risk and for the future mitigation of the key person dependency, the ENGIE EPS Group has put in place a retention plan including in particular, a remuneration policy and growth schemes based on performance. There is no assurance, though, that these measures would be successful in retaining such personnel.

4.10.3 Risk of dependence on ENGIE (through its subsidiary GDF International), majority shareholder of the Company

As of the date of this Registration Document, ENGIE (through its subsidiary GDF International) holds 60.48% of the Company's share capital and voting rights.

Furthermore, the ENGIE group is both a client and a business partner and provider for the ENGIE EPS Group. The current backlog includes a large part (67%) of projects for which EPS will deliver for ENGIE group companies. In the pipeline, this part amounts to 79%. In these situations, ENGIE group companies will contract ENGIE EPS Group’s services and products, the final client being either a government owned or private “off-taker”. In other situations, the ENGIE EPS Group will directly contract with a third-party client, and subcontract certain execution activities to ENGIE group entities (see paragraphs 12.1 and 18.3).

Within the context of its review of the general conduct of the ENGIE EPS Group’s business, the Board of Directors is kept informed of the contractual relationships with the ENGIE group, which are carried out at arms’ length. Those concluded directly between the Company and ENGIE or a controlled subsidiary of ENGIE are subject to the regulated agreements framework pursuant to articles L.225-38 et seq. of the French Commercial Code (see paragraph 18.3 for a description of the agreements entered into between the ENGIE EPS Group and the ENGIE group). As of now, no other procedure to examine the contractual relationships with the ENGIE group is contemplated.

ENGIE could therefore have a significant influence on the ENGIE EPS Group's strategic decisions and/or may adopt or reject all resolutions submitted to the shareholders of the Company for approval at ordinary and extraordinary general meetings, including the nomination of members of the Board of Directors, the approval of the annual accounts and the distribution of dividends and the

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authorization to carry out capital increases or other issues of securities, mergers or contributions or any other decision requiring the approval of the shareholders of the Company under the conditions provided for by law. In these situations, ENGIE’s interest may not be always aligned with that of the other, minority, shareholders, who would therefore, in such a situation, have limited opportunities to make their views prevail.

Due to the majority shareholder and principal business partner position of ENGIE, the ENGIE EPS Group is therefore highly dependent on contractual terms negotiated with the ENGIE group.

4.11 Risk Insurance and coverage

There is a risk that the ENGIE EPS Group’s insurance policies may not be adequate. However, the ENGIE EPS Group has implemented a coverage policy for the main insurable risks with a guaranteed upper limit that the ENGIE EPS Group considers consistent with its activities and the volume of its actual business. The ENGIE EPS insurance policies taken so far by the ENGIE EPS Group are detailed in the table below:

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The total premiums paid for all of the ENGIE EPS Group’s insurance policies amounted to 220 K€, 143K€ and 60K€ in fiscal years 2018, 2017 and 2016 respectively.

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INFORMATION ABOUT THE ISSUER

5.1 History and evolution of ENGIE EPS Group

5.1.1 Corporate name of the Company

The Company’s corporate name is Electro Power Systems S.A and is commercially known as ENGIE EPS.

5.1.2 Place and registration number of the Company, SIRET number and VAT number

The Company is registered through the Registry of Commerce and the Companies of Paris under the identification number 808 631 691.

The SIRET number of the Company is 808 631 691 00033. Its NAF/APE code is 7490B.

The Company’s VAT number is FR66808631691.

5.1.3 Date of incorporation and duration of the Company

The Company was founded and registered on 26 December 2014 for a period of 99 years, with the expiration date of 25 December 2113, barring anticipated dissolution or extension.

5.1.4 Corporate seat of the Company, legal status and applicable legislation

The registered office of the Company is located at:

115, rue Réaumur, 75002 Paris, France

• Phone: +33 1 71 18 29 12

• Email: [email protected]

• Website: www.engie-eps.com.

The Company has been incorporated under the form of a société anonyme with a Board of Directors governed under French law.

5.1.5 History and evolution of ENGIE EPS Group

(i) History of ENGIE EPS Group and of the Company

EPS Manufacturing was created in 2005 as spin-off of the Politecnico di Torino and until 2013 it was entirely focused on the research, development and deployment of small-scale systems to produce and store electricity via proprietary electrolysis and fuel cell technologies. EPS Manufacturing deployed its technology mainly in the telecommunication sector marketing mainly its fuel cell product for backup applications, named ElectroTM.

In 2009 ENGIE EPS Group started the development of an integrated new storage system, the ElectroSelfTM, enabling the storage and production of electricity utilising hydrogen and oxygen self-produced on site, so as to reduce the logistical costs associated with the external supply of hydrogen or diesel. ENGIE EPS Group industrialized the production of the ElectroSelfTM technology and provided

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in field, self rechargeable backup and emergency supply systems, mainly to telecom and mission critical applications. This has been an important step of the technology incubation phase.

With the appointment of Carlalberto Guglielminotti as Chief Executive Officer in the last quarter of 2013, EPS Manufacturing exited from the technology incubation phase and decided to focus its development strategy entirely in the field of vertically integrated energy storage solutions. In particular, the new phase has been focused on the development of hybrid energy storage solutions (HyESS®) to master the intermittency of renewable energy sources and become an actor of the energy transition.

In particular, the rational behind the HyESS® platform was focused on the integration of the hydrogen technology with a newly developed management and optimization technology platform, composed of power and control electronics coupled with intelligent software, entirely developed and produced within ENGIE EPS Group and named Balance of System Platform (please refer to paragraph 6.1 “ENGIE EPS Group overview” of the Registration Document).

In the context of this new industrial project, in December 2014, the Company was incorporated in France.

The new start-up phase in the energy storage sector, together with the growing investors interest in the specificity of the equity story of ENGIE EPS and in the storage and renewable energy industry, led the shareholder base to become more international. In particular, this ongoing dialogue leveraged by ENGIE EPS towards the financial community has been the enabler of:

• the success of the IPO in April 2015, in which the Company issued 1,974,032 new shares at a subscription price of 7.30€ per share, raising €14.4 million; and

• the success of the capital increase via private placement in December 2015, through which the Company issued additional 701,500 new shares at a subscription price of €6.80, raising €4,8 millions.

In 2015 ENGIE EPS Group has been focusing on several strategic activities, such as business development and engineering and R&D team expansion: compared to the beginning of 2014 ENGIE EPS Group expanded its team by 250% and in terms of global organization ENGIE EPS Group counted, at the end of FY2015, 57 persons including management, VPs and partners, based in Europe, South Africa, the USA and Singapore.

During 2015 ENGIE EPS announced its strategic partnership with Bryanston Resources, a leading firm in the mining and natural resources sector and a partnership with Nanyang Technological University of Singapore, related to the Asian development of the ENGIE EPS Group and a new demo site in Singapore.

In November 2015 the Company inaugurated its new manufacturing plant in Turin (Rivoli) dedicated to HyESS®, and built up a pipeline of industrial-scale and unsubsidized projects.

In December 2015 ENGIE EPS signed a “Framework Cooperation Agreement” with Enel aimed at the development of integrated hybrid energy storage solutions

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for microgrids and rural electrification as well as support in both on and off-grid settings (please refer to paragraph 6.1.4 “Mission, Strategy and action plan of the ENGIE EPS Group” of the Registration Document).

In January 2016, the Company finalized the acquisition of (i) EPS Elvi, the energy and system engineering division of Elvi Elettrotecnica Vitali S.p.A. and (ii) MCM Energy Lab, a leading R&D laboratory participated by the Politecnico di Milano University (please refer to paragraphs 7.2.4 and 7.2.5 of the Registration Document), which definitively made ENGIE EPS a vertically integrated energy storage player specialized in Grid Support Solutions and Off-Grid Power Generation Solutions.

In March 2018, the majority stake of ENGIE EPS was acquired by the ENGIE group, aiming at building a broad industrial partnership to scale up globally.

In September 2018, the ENGIE EPS Group officially opened the new industrial site in Cosio (Sondrio) for strengthening its manufacturing and production capability.

(ii) Important events

As a consequence of the investments and strategic activities carried out in 2016, 2017 and 2018 has been the year in which ENGIE EPS has deployed microgrids and energy solutions globally providing a double-digit growth over the whole year and achieved significant results:

• ENGIE acquisition: On 24 January 2018, ENGIE (via GDF International) signed a share purchase agreement with EPS’s main shareholders to acquire a majority stake in ENGIE EPS (previously EPS), slightly above 50% of the share capital and voting rights. This acquisition was completed on 8 March 2018. As a result of this acquisition, ENGIE launched a simplified tender that ran from 1 to 14 June 2018. The results of the tender were announced by the AMF on 18 June 2018 with ENGIE (through its subsidiary GDF International) holding 59.89% of the Company's share capital and voting rights.

• Registration Document: On 13 July 2018, the AMF has registered the 2017 Registration Document under number R.18-057, which has been published on the ENGIE EPS website (www.engie-eps.com).

• New Incentive Plan: On 6 March 2018, as part of the acquisition by ENGIE, a new long-term Incentive Plan, linked to the development of the Company, was put in place to secure and strengthen the commitment of the management team until 2021 (the “New Incentive Plan”). The New Incentive Plan replaced the existing stock-options and warrants that have been granted to Directors, managers and employees since the IPO, by a “cash” instrument, i.e. Stock Appreciation Rights (“SARs”).

• Establishment of EPS Mobility: Effective from 11 April 2018, the Company set up a branch in Italy, following the spinoff of the e-Mobility and Power Electronics Lab going concern from EPS Elvi to ENGIE EPS. From a strategic-entrepreneurial perspective, the sale of the E-Mobility will allow EPS Elvi – while the mobility and power electronics R&D activities will be segregated at the parent level in the E-Mobility – to purely focus on the energy sector, reducing the fixed costs of the R&D infrastructures,

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increasing profitability and thus the ability to finance its own business growth, also in light of the sizeable recent order intake increase.

• EIB Financing prepayment: On 9 May 2018, ENGIE EPS signed a prepayment agreement with the EIB to terminate the equity-linked financing up to €30 million signed on 11 April 2017, following the ENGIE Acquisition. Under this prepayment agreement, ENGIE‘s mandatory tender offer was extended to the warrants held by the EIB. The two undrawn tranches were cancelled and, on 6 September 2018, ENGIE EPS repaid the €10 million first tranche.

• Capital increase: On 6 August 2018, ENGIE EPS announced the successful completion of its capital increase with shareholders’ preferential subscription rights with the subscription period running from 20 July 2018 to 30 July 2018 (the “Rights Issue”). The final gross proceeds of the transaction amounted to €30,321,292.50, corresponding to the issuance of 3,191,715 new shares. ENGIE EPS’ share capital, following the Rights Issue, amounts to €2,553,372, represented by 12,766,860 shares with a par value of €0.20 each. As a result of its participation to the Rights Issue, ENGIE (through its subsidiary GDF International) owns 60.48% of the capital and voting rights of EPS.

The net proceeds have been used to reimburse financings due, in the amount of €12.4 million (including the first tranche of €10 million due under the EIB Loan Reimbursement), to finance additional working capital needs (in the amount of €11 million), and in particular the 2020 Strategic Plan (notably investment in R&D and technology) and complementary activities in relation to the implementation of Project Development (including implementation of necessary commercial infrastructure).

(iii) Awards

In 2012 ENGIE EPS was awarded as Worldwide Technology Pioneer by the World Economic Forum, and listed in the 100 Cleantech businesses worldwide published by the Cleantech Group.

The same year, Ilaria Rosso, Chief Innovation Officer and co-founder of ENGIE EPS, and author of more than 50 articles and scientific publications, won the European prize rewarding women in the innovation sector, “European Prize for Women Innovators”.

In 2014, ENGIE EPS won first prize in the Venture 4i in Grenoble in 2014, first prize in the Italian Venture Forum 2014 and was included among 20 companies selected for the European level of the Tech Tour.

In 2015, ENGIE EPS was selected as a “growing success story” for the Tech Tour Growth Forum in Geneva and Lausanne on 19-20 March 2015, and selected in June 2015 by the World Economic Forum as one of the top companies worldwide to participate at the “Future of Electricity Workshop 2015” in New Delhi (India).

ENGIE EPS in 2015 received in the context of the European Project Horizon 2020 (please refer to paragraph 11.3 “Research and development activities in the context of research projects” of this Registration Document), the official “Seal of Excellence”, the certificate delivered by European Commission, signed by Carlos

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Moedas, Commissioner of Research, Science and Innovation, certifying the excellence in terms of real market potential, technology, quality of the team, efficiency of implementation and business plan.

More recently, ENGIE EPS has been:

• selected by McKinsey & Co. as leading player for hybrid energy storage at the Utility of the Future congress in Singapore (2016); and

• identified as leading player in the market for microgrids and mini-grid by Bloomberg New Energy Finance (2017 and 2018).

• being invited at several international forum and seminars, among which:

– EY Strategic Growth Forum Mediterranean 2017, Rome, Italy;

– “Eccellenze Italiane” (“Italian excellences”), Banca Mediolanum, Milan, Italy;

– 43° Forum The European House – Ambrosetti, Cernobbio, Italy;

– Annual Meeting of electrotechnical researchers at Polytechnic of Milan, Italy;

– "Enternext Conference” at HEC, Jouy-en-Josas, France;

– Journée “Efficience énergétique et environnemental” at SFAF, Paris, France;

– “Prophet Day” at Polytechnic of Milan, Italy.

5.2 Investments

5.2.1 Major investments carried out by the ENGIE EPS Group for 2018

The total volume of investments carried out by the ENGIE EPS Group in 2018 is equal to 3,917 K€, compared to 2,729 K€ in 2017. In 2016 the total amount of investments was 5,216 K€ (that included intangible assets deriving from EPS Elvi and MCM acquisition for 2,635 K€). The major investments (tangible assets and intangible assets) carried out over the last three years, were fully invested in Italy.

Specifically, within the total intangible assets amount, in 2018 the ENGIE EPS Group continued to invest in the develop of new and existing projects. The major investments can be summarized as follows:

• 1,229 K€ investment in the Prophet project. The main goal of this project is to develop and improve the control predictive algorithm for a multi-Distributed Energy Resources (“DER”) microgrid. The new optimized control will ensure the microgrid secure operation and lower the energy cost, making best use of renewable generation and storage capability.

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Moreover, the project will investigate the impact on the grid given by the introduction of Electric and Hybrid Vehicles, their optimal management in terms of charging, grid services they can offer and how they can create business cases in the microgrid context. The technical studies and the software developments already had a practical validation, since all the enhanced algorithms have been tested on a multi-good microgrid installed at the Energy Department of Politecnico di Milano. The main activities under study have been already outlined in the EPS Technology Roadmap:

– Optimization algorithms and control predictive functions;

– Distributed Smart Storage for behind-the-meter grid services;

– Distributed Smart Generation for multi-services and multi-revenues optimization;

– VPP: transform a microgrid into a Power Plant;

– V2G to transform a car into a revenue generating asset;

– Electric and Hybrid Vehicles fast charging, to study the impact of future Electric and Hybrid Vehicles charging.

• 676 K€ investment for the improvement of HyESS® (Hybrid Energy Storage Systems) platform that will enable EPS to face the Distributed Energy Resources (DER) evolution and support (i) the new role of the algorithms in light of data predictors, (ii) the machine learning and Artificial Intelligence, (iii) VPP and (iv) Electric and Hybrid Vehicles integration in smart grid. Development realised in 2018 consist mainly in further development on Hydrogen Module integrated in HyESS®;

• 551 K€ for the development on power electronics, e-Mobility and standardised product solutions. In detail this development regards new C-BESS-900, C PV-900 and 100kW - 1500 VDC inverter and the design of new standard containers suitable for applications of grid-scale storage and big-scale solar plant;

• 135 K€ for the Enterprise Resource Planning development to support efficient, reliable and lean actions and to enable the agile project management methodology implemented by the ENGIE EPS; and

• 154 K€ related to new patents and licenses.

For the source of financing of these investments please refer to the paragraph 10.5.

5.2.2 Major investments in progress

In 2019 the ENGIE EPS Group continued to invest in the development of existing and new projects.

5.2.3 Future investments

At the date of this Registration Document, ENGIE EPS Group does not anticipate major investments on which the managing bodies of the Company would hold firm commitments.

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PRESENTATION OF THE ENGIE EPS GROUP

The principal technical and commercial terms are defined in the Glossary appearing at the beginning of this Registration Document.

The ENGIE EPS Group operates in the sustainable energy sector, specializing in energy storage solutions and microgrids that enable the transformation of intermittent renewable sources into a stable power source.

With this goal, the ENGIE EPS Group has developed a flexible technological platform, suitable for integration with hydrogen, batteries, generators, and any kind of renewable source, named HyESS®, Hybrid Energy Storage Systems or (“HyESS”), better described in 6.1.1 and 6.3.1.

HyESS®, being a technological platform, is composed by several modular components, better described at 6.3.3, which are:

– suitable for 3 different applications (i) Grid Connected Solutions, (ii) Microgrids and Off-Grid Solutions and (iii) Mobility Solutions, as better described at 6.1.1; and

– addressing both (i) emerging countries to power people reliant on diesel generation and (ii) developed economies to support the electrical grids heavily penetrated by renewables, as described at 6.2.1.

While Mobility Solutions are deployed when requested by historical customers, the ENGIE EPS Group strategy is entirely focused on deploying Grid Support Solutions in developed countries (see 6.2.1) and Off-Grid Power Generation Solutions in emerging economies (see par. 6.2.1).

The business model of the ENGIE EPS Group until today has been to act exclusively as technology provider and general contractor, selling its solutions on a turn key basis like an Engineering, Procurement and Construction (“EPC”) player (see 6.4.1), with a fully vertical integrated approach on the value chain (see 6.4.2).

Nevertheless, as described in more detail in section 12.2, the ENGIE EPS Group is also developing a Project Development activity in which it develops and builds Off-Grid Power Generation Solutions but remains (at least for a time) the owner and the operator, and signs a PPA with a customer who will buy the electricity produced. In this contract, the customer agrees to purchase electricity produced using technologies developed by the ENGIE EPS Group at a fixed price per kWh for a number of years determined in advance.

In the usual EPC (Engineering, Procurement and Construction) approach, the ENGIE EPS Group delivers the Off-Grid Power Generation Solution to its customer, who is the owner and manager of the renewable energy plant and the associated storage system (i.e. the owner-operator) and who is responsible for finding a buyer for the electricity produced. "Project Development" is a different approach: the ENGIE EPS Group acts directly or together with its partners to develop, own and manage the electricity generation and storage system, and execute the associated PPA. In this case, the ENGIE EPS Group acts as the owner operator or IPP and its customers are electricity utilities, grid operators, industrials or institutions (municipalities, governments, communities, etc.) that buy electricity generated by the system (known as off-takers). The ENGIE EPS Group must therefore obtain the land, land rights and permits necessary for the development of the renewable energy and associated storage power plant, negotiate the long-term PPA with the electricity buyers, negotiate the agreements to interconnect the power plant system

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with the power grid and then manage the interconnection with the grid and the transmission of electricity.

6.1 The ENGIE EPS Group overview

6.1.1 Summary of the ENGIE EPS Group’s activity and installed base

Created in 2005 in Torino as a spin-off of the Politecnico and formerly known as Electro Power Systems or EPS, the ENGIE EPS Group designs, develops and markets energy storage solutions, mainly in hybrid configuration and therefore complex systems.

The ENGIE EPS Group ’s mission is to foster the energy transition by mastering the intermittency of renewable energy sources. By providing cutting edge systems to control the intermittency of renewables – enhanced by storage technologies – and an unique hydrogen and oxygen storage platform, which enables longer autonomy without resorting to diesel or gas fuelled generators, the ENGIE EPS Group ’s technologies enable communities to be powered by renewable energies 24/7 more cleanly and less expensively.

The ENGIE EPS Group is a technology pioneer in this field.

The ENGIE EPS Group is focused on hybrid, storage and power conversion solutions for both flexibility and capacity requirements of any national grid or microgrid, developing and commercializing:

• in developed countries, energy storage systems to stabilize electrical grids penetrated by renewable sources (“Grid Support” or “Grid Connected Solutions”); and

• in emerging economies, microgrids to power off-grid areas at a lower cost than fossil fuels (“Off-Grid Power Generation” or “Microgrids and Off-Grid Solutions”).

This dualism of hybrid solutions which can provide at the same time flexibility and capacity to any grid or microgrid, is aimed at solving the problem of intermittence of renewables and to contribute to the implementation of the energy transition, namely the development of a balanced electricity generation model on the basis of new renewable energy sources (wind and photovoltaic power) and of electricity distribution via so-called smart grids.

The ENGIE EPS Group leases two production sites, as well as offices and a research and development laboratory in Italy.

The ENGIE EPS Group’s hybrid energy storage and microgrid systems and support are intended for users and infrastructures for which uninterrupted electricity supply or energy storage capacity is critical. The solutions offered by the ENGIE EPS Group are aimed both at end users and actors in the electricity market, notably commercial and industrial infrastructures, utilities and grid operators responsible for electricity transport and distribution.

The ENGIE EPS Group’s value added consists of being able to provide a clean, effective and competitive Grid Support Solutions and Off-Grid Power Generation Solutions, being able at the same time to provide:

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• grid stabilisation by providing “Flexibility” (providing power supply in a short time, during peak demand or generation conditions; and

• the storage of energy in large quantities with a limited footprint providing “Capacity” (providing a stable power supply for a relatively long.

Historically, responding to the Capacity requirements of electrical grids or microgrids has been the first focus of the ENGIE EPS Group, as such Capacity needs are served mainly by gas turbines and diesel generators. For that reason, the ENGIE EPS Group developed an integrated new storage system, the ElectroSelfTM, permitting the storage and production of electricity utilising hydrogen and oxygen self-produced on site (“Hydrogen Module” or “ElectroSelf”), so as to reduce the logistical costs associated with the external supply of hydrogen or diesel. The ENGIE EPS Group industrialized the production of the ElectroSelfTM technology and provided in field, self rechargeable backup and emergency supply systems, mainly to telecom and mission critical applications. This has been an important step of the technology incubation phase.

With the appointment of Carlalberto Guglielminotti as Chief Executive Officer in the last quarter of 2013, the ENGIE EPS Group focused its development strategy primarily in the field of vertically integrated energy storage solutions, i.e. the vertical integration of the proprietary electrolysis and fuel cell technologies patented by the ENGIE EPS Group with a management and optimization technology platform (the “Balance of System Platform”), composed of power and control electronics coupled with intelligent software, entirely developed and produced within the ENGIE EPS Group.

Because of its open architecture, and thanks to the know-how and technology of the ENGIE EPS Group, the Balance of System Platform enables intelligent coupling with traditional batteries and power generation technologies (including renewables), in addition to (or even without) the Hydrogen Module. This allows the commercial deployment by the ENGIE EPS Group of HyESS®, a flexible solution, suitable for integration with hydrogen, batteries, generators, and any kind of renewable source.

Initially developed as an add-on to a traditional hydrogen fuel cell (ElectroTM, the first product of the ENGIE EPS Group) and then the self-rechargeable technology

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of the ENGIE EPS Group (the ElectroselfTM) the Balance of System Platform, through HyESS has become a stand-alone solution. It can be developed, alone or together with the Hydrogen Module, in the ENGIE EPS Group’s Grid Support Solutions and Off-Grid Power Generation Solutions. As a result, in the HyESS configuration, the Hydrogen Module is integrated in the Balance of System Platform, and the hydrogen storage becomes an optional module of the ENGIE EPS Group’s systems, representing however one of the major distinctive factor if the ENGIE EPS Group product offer in the market.

This positioning as a “pure-player” specialized in hybrid solutions with a structured know-how at the Balance of System Platform level, has sparkled interest in the market, even more than the hydrogen storage module.

As of the date of this Registration Document, the ENGIE EPS Group has installed 59 large scale projects:

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Notably, the ENGIE EPS Group has commissioned in 2018 among others:

• an energy storage system sized 20 MW/10 MWh for Endesa, Enel’s spanish subsidiary, co-located with the 1.2GW Litoral coal power station in Spain;

• an energy storage system sized 500kW/822 kWh for Edison, EdF’s italian subsidiary, in Altomonte, Italy;

• an energy storage systems sized 1 MW/348 kWh with Toshiba SCiB Li-ion titanate batteries coupled with the ENGIE EPS Group Balance of System for ENGIE in Drogenbos, Belgium;

• an energy storage system sized 125 kW/137 kWh for Terna, in Giannutri, Italy.

In the Off-Grid Power Generation Solutions field the ENGIE EPS Group technology serves:

• a 12 MW microgrid for a mining site in Australia powering approx. 1,600 people;

• a 10.4 MW microgrids in aggregate for two resorts in Maldives powering approx. 2,300 people;

• a 8.3 MW microgrids for two cities in Somalia powering approx. 162,000 people; and

• a microgrid integrated with 1MWh of hydrogen storage for a village in Chile powering approximately 300 people.

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In addition the ENGIE EPS Group has under commissioning:

• a 22.1 MW microgrid (Phase 1) in the Comoros Islands powering approx. 341,500 people;

• a 15.1 MW microgrid in New Caledonia (Lifou) powering approx. 10,200 people;

• a 2 MW microgrid in Somalia powering approx. 60,000 people;

• a 1.8 MW microgrid in Singapore (Semakau) in collaboration with ENGIE.

An aggregate over 521,300 people are powered by renewables and the ENGIE EPS Group solutions every day.

The capacity of the ENGIE EPS Group to achieve such results notably rests on its holding of intellectual property rights and know-how accumulated over more than ten years of experience on site with the Politecnico di Milano and Politecnico di Torino and 20 million running hours in-field, as well as on the quality of its management team. The ENGIE EPS Group has thus filed a total of 89 patents and 186 patent applications in total, of which the ENGIE EPS Group is actively pursuing only 41 in different key countries, potentially applicable worldwide and holds 597 trade and industrial secrets.

In the 2015 financial year during which the ENGIE EPS Group concentrated almost exclusively on the industrialisation and pre-selling of Capacity solutions, revenues amounted to € 0.4 million. In 2016, the first year of commercialization of the full product suite, revenues amounted to € 7.1 million. In 2017, revenues amounted to € 9.9 million with a total Order Intake of €16.6 million. In 2018, revenues amounted to € 15.5 million with a total Order Intake of € 10.9 million (please refer to paragraph 9.4.1 of this Registration Document).

Furthermore, the ENGIE EPS Group operates in e-Mobility sector. For e-mobility the ENGIE EPS Group works with some of the most important operators in the field of railway and automotive applications, applying its proprietary technology for the purpose: on the one hand to enhance the electric mobility as a grid asset, and on the other to improve vehicle safety through the same sophisticated control techniques developed in the energy sector.

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The main applications in which the ENGIE EPS Group is active in e-Mobility are:

• Development of Vehicle-to-Grid systems to enable the supply of ancillary services to the grid (frequency and voltage adjustments) by the storage systems present in electric and hybrid vehicles (EV) when connected through fast charging infrastructures.

• Optimization of Electric and Hybrid Vehicles storage systems and related Battery Management Systems in order to realize static energy storage systems using Second Life Batteries from Electric and Hybrid Vehicles application.

• Development of electronic systems for the management of complex networks for railway signalling on metropolitan railway and for high-speed railway with high reliability controller (SIL4).

• Telemetry systems and control electronics for the management of predictive diagnostics for high-speed trains and Electric and Hybrid Vehicles.

• Development of control techniques for the management of devices in full Electric and Hybrid Vehicles in collaboration with suppliers of electrical devices qualified as suppliers in the automotive sector (collectively, “Mobility Solutions”).

For further details on revenues by activity and geographical area please refer to paragraph 9.4.1.

6.1.2 Principal strengths of the ENGIE EPS Group

(i) “Systemist” with proprietary technology

The ENGIE EPS Group has the ambition to stand out among storage providers on the market thanks to its innovative use of its proprietary technology, being a “system and solution provider” rather than a system integrator. The ENGIE EPS Group has a proprietary hydrogen storage system, but it is the ability to combine this with other storage technologies together with Spinning Reserve control into a hybrid storage system that is perceived by the market as a key differentiator1. Customer needs are complex and highly varied and the ability of the ENGIE EPS Group to offer bespoke solutions provides a very good fit with the needs of this rapidly evolving market.

Market experts2 see the Balance of System Platform and therefore the storage control technology, regardless of the storage medium utilized (hydrogen or batteries), as an emerging key differentiator in the power storage market. The ENGIE EPS Group now has a full suite of modular energy management systems, power conversion systems, firmware and software (please refer to paragraph 6.3.3 of this Registration Document) to vertically integrate any power generation and storage technologies into sophisticated Grid Support Solutions and Off-Grid Power Generation Solutions.

1 Cantor Fitzgerald, 10 November 2016, EPS Initiation Note, Alternative Energy & Resource Efficiency 2 ibidem.

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The ENGIE EPS Group has therefore the ability to adapt its technology and its Balance of System Platform to any customer need, which might require, from time to time and depending on the specific business case, more Flexibility or more Capacity (please refer to paragraph 6.1.1 of this Registration Document).

(ii) Competitiveness

The profitability analysis carried out with market operators on site demonstrates an economic advantage of the ENGIE EPS Group’s solutions for different types of energy storage applications, for both Capacity and Flexibility applications. In particular with Off-Grid Power Generation Solutions, when HyESS is coupled power generation and storage technologies to form an hybrid power plan, particularly in tropical zones, the ENGIE EPS Group estimates the global cost of electricity generation of such a plant, i.e. the cost of firm solar power, can range from 55 to 150 €/MWh3 on a non-subsidised basis, therefore significantly cheaper than any diesel production and competitive with regard to traditional and polluting centralized electricity traditional systems.

On the other hand, in Grid-Support Solutions, where the balance of system and the EPC represents from 50% to 80% of the value added of any energy storage system (please refer to paragraph 6.3.2 of the Registration Document) – the commercial successes achieved with leading utilities such as Enel, EdF and ENGIE, with the award, in 2017, of a string of flagship contracts confirms the position of HyESS as an extremely competitive platform.

3 Source: ENGIE EPS Group.

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Competitive landscape of the ENGIE EPS Group

The competitive landscape of the ENGIE EPS Group represented above clearly outlines the competitive advantage of the ENGIE EPS Group from the business model perspective. Indeed, very few players are vertically integrated in the whole value chain, while the ENGIE EPS Group is acting in each single vertical, and this is the main reason why the ENGIE EPS Group is entitled to be classed as a system provider « vertically integrated » from both the technology and the business model perspective. In other terms, while the vertically integrated business model of the ENGIE EPS Group has enlarged the competitive landscape, the total vertical integration of the ENGIE EPS Group is a key differentiator of the ENGIE EPS Group towards any customer, as by choosing the ENGIE EPS Group as a System Provider, customers gain a one-stop-shop partner across the application spectrum.

The competitive landscape for Mobility Solutions is different as several players are vertically integrated (e.g. Bosch, Magneti Marelli, etc.), however here the ENGIE EPS Group does not compete with traditional players and do not address a dedicated business development effort. On the contrary, the ENGIE EPS Group has a more pull-marketing approach, as the ENGIE EPS Group is being contacted by big players in the industry to develop special Mobility Solutions leveraging on the energy storage and microgrid know-how that is extremely rare in the automotive and railway sector and constitute a distinctive factor for the ENGIE EPS Group.

(iii) Know-how and field experience

The ENGIE EPS Group’s open architecture, vertically integrated technology and expertise in system integration represent the result of more than 10 years’ research and development, initially undertaken within the Politecnico di Torino (specialising, among other things, in hydrogen-based applications) and the Politecnico di Milano (in energy and power conversion applications). This experience is difficult to replicate and hence represents a competitive advantage over any new entrants to the market.

The intellectual property of the ENGIE EPS Group is protected by 89 patents and 186 patent applications in total, of which the ENGIE EPS Group is actively pursuing only 41 in different key countries, (please refer to chapter 11 of this Registration Document).

The portfolio of patents covers the entire hybrid approach of the ENGIE EPS Group to the market, including hybridization of the power conversion trough renewables, batteries and hydrogen, islanding microgrid operations, the full hydrogen value chain and the system integration, but also production of hydrogen, storage of hydrogen and production of electricity on the basis of hydrogen, emphasising in particular, at the system level, the intelligent management of energy and system integration. At the same time, numerous innovations developed at the level components (e.g. power electronics and control, master controllers, source codes of the software to manage grid and microgrids, flow field of the fuel cell, and firmware of the power conversion).

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The ENGIE EPS Group has thus accumulated know-how which it considers not easy to replicate, given the requirements of its end users, operating conditions and integration with existing infrastructure.

The innovative features of the technologies developed by the ENGIE EPS Group were acknowledged at the international level, as is illustrated by the awards which it has received. The ENGIE EPS Group was, already during its technology incubation phase awarded “Technology Pioneer” of the World Economic Forum and in the Cleantech 100 list (2012). Following the IPO and the official starting of the commercialization phase, the ENGIE EPS Group has been:

– selected by McKinsey & Co. as leading player for hybrid energy storage at the Utility of the Future congress in Singapore (2016).

– identified as leading player in the market for microgrids and mini-grid by Bloomberg New Energy Finance (2017).

Dr. Ilaria Rosso, Head of Innovative Projects and co-founder of the ENGIE EPS Group, has to her name more than 50 articles and scientific publications and in 2011, won the European prize rewarding women in the innovation sector, “European Prize for Women Innovators”.

The ENGIE EPS Group counts industrial secrets in 597 protected trade secrets and 200,000 hours of software and firmware coding when coupled with registered patents leverage and increase the protection of the intellectual property.

Daniele Rosati, Chief Technology Officer and co-founder of EPS Elvi, is co-author of several international publications in the field of Power Electronics and Renewable Energies, co-inventor of one of the most important patent of the ENGIE EPS Group “Universal Conversion and Control System for Distributed Power Generation” and lecturer and visiting professor at the Power Generation Systems, Renewable Energies and Microgrids course at the Department of Energy of Politecnico di Milano.

6.1.3 Mission, Strategy and action plan of the ENGIE EPS Group

The energy scenario is evolving rapidly, as well as the role of utilities and Transmission System Operators (TSOs). The structure of the electricity system is undergoing significant paradigm changes with growth of the penetration of intermittent renewable sources, fragmentation and distribution of the production points, diffusion of efficient and innovative technologies and a shift in the axis of energy production value to the supply of services. As a result, the traditional distinction between power producers and consumers can, in a smart distributed model, be overcome and a new figure of “prosumer” can play a key role in new electrical grids.

These new concepts overcome the conventional configuration of traditional power systems based on a concept created in 1882 by Thomas Edison with the first coal plant in lower Manhattan and relying on large centralized power plants, connected to users through long transmission power lines and wide distribution networks. This network architecture was based on an uni-directional power flow, from the top to the bottom, which can now be replaced by a new system able to involve active

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users, which can generate power from their own renewable sources and may invert the direction of power flows in the distribution network.

In this new framework, traditional electrical power networks can go through an evolution similar to that of information systems, which passed from large main frames and centralized servers to local personal computer networks first, and finally to the internet, through a diffusion of distributed processing capabilities.

In the changed context of reference, the ENGIE EPS Group’s mission is focused on unlocking the energy transition, pioneering hybrid storage solutions and transforming intermittent renewables into a reliable power supply. The ENGIE EPS Group advocates competitive and technology-neutral energy and emission markets. Through the seamless integration of the best battery technologies, and the ENGIE EPS Group’s hydrogen and oxygen platform for long autonomy, the ENGIE EPS Group intends to enable renewable energies to power society: reliably, affordably and sustainably.

The ENGIE EPS Group’s Strategy is focused on two specific areas:

(1) Grid Support Solutions: The ENGIE EPS Group’s technology in this sector is aimed at providing customers with hybrid storage solutions and energy storage systems to master the intermittency of renewables. This sector has two specific sub-areas which differ in terms of addressable customer and system size:

– Grid-scale storage applications, aimed at providing grid operators with energy storage systems addressing the burgeoning demand for primary, secondary and tertiary reserve, reactive power and black-start capabilities, aimed at lowering grid costs and therefore electricity cost for consumers.

– Distributed smart storage applications (“behind-the-meter”), aimed to provide commercial and industrial users with energy storage systems to compress their energy bills, by peak-shaving their consumption profile, optimizing the utilization of distributed generation, enabling participation in Demand Response schemes, and delivering sustainable back-up power and power-quality.

(2) Off-Grid Power Generation Solutions: The ENGIE EPS Group’s technology in this market is aimed at enabling renewables as a reliable and affordable stand-alone power source in emerging markets, displacing diesel and oil-fired generation. In this sector, the ENGIE EPS Group fosters a bottom-up, distributed model of greenfield electrification, in order to provide clean energy 24/7 at cost lower than diesel generation, which is the only alternative in such areas.

For Mobility Solutions, on the contrary, the ENGIE EPS Group follows a pull-approach, as the ENGIE EPS Group, being contacted by big players in the industry to develop special Mobility Solutions leveraging on the energy storage and microgrid know-how, decided to not set a dedicated strategy for such applications.

In other terms, so far the ENGIE EPS Group has entirely devoted its action plan towards grid-scale Grid Support Solutions and Off-Grid Power Generation Solutions (please refer to the installed base breakdown in paragraphs 6.4.3 of the

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Registration Document). A mapping of business cases of Grid Support Solutions for distributed smart storage applications has been undertaken from the end of 2018, also in light of potential synergies with the corporate client base of the ENGIE group. An organic commercial strategy around this segment of Grid Support Solution is likely to follow between the second part of 2019 and early 2020.

6.2 Outlook of the reference markets

The ongoing transition in electrical power generation from fossil fuels and nuclear power to renewable energy sources has given rise to new challenges that have seen storage technology take centre stage.

Storage could be a profitable enabler of this transition and therefore, from the IPO in April 2015 and in particular from Q3 2015, the business model of the ENGIE EPS Group had been increasingly focused on:

– Grid Support Solutions: as intermittent and unpredictable renewable energy progressively displaces traditional power plants, electricity grids increasingly need storage systems that provide both Capacity and Flexibility to stabilize the grid from the intermittency of renewables; and

– Off-Grid Power Generation Solutions: to serve the 1.1 billion people and energy intensive businesses around the world that are not currently reached by a reliable electric power grid, to replace diesel-fuelled generators that currently provide power and Capacity to the final users and make better use of renewable energy sources.

According to the recent report of the McKinsey Global Institute4 on disruptive technologies, the energy storage market on the network/grid level is one of the twelve breakthrough technologies which will contribute to transforming the global economy. However, energy storage per se does not represent a new concept: more than 100GW of pump-turbine storage has already been installed on a global scale. It nevertheless is experiencing strong growth, sustained by the need for an energy transition.

Indeed, energy demand and the global component of electricity in total energy demand have both practically doubled over the last 40 years, although a large part of electricity production is still provided by fossil resources with a “large carbon footprint”.

In this context, governments and the principal national actors in the energy sector are thus led to favour and support technologies and energy production models which are more respectful of the environment, such as production from renewable energy sources thus entailing the deployment of storage solutions at the level of the distribution network.

This vision also complies with the position of the International Energy Agency (“IEA”), according to which, implemented energy policies should have the objective of producing 65% of electricity from renewable energy sources by 20505, and of reducing emissions of CO2 linked to energy production by 50% by that date.

An energy storage device essentially consists of converting electricity into a form which may be stored and reconverted for subsequent use, thereby providing energy on demand. In this way, on the grid-scale, during periods of strong demand, these systems allow producers and electricity suppliers to store excess electricity generated during periods of

4 McKinsey Global Institute, Disruptive Technologies; Advances that will transform life business, and the global economy, May 2013, pp 96-

97. 5 Technology Roadmap, Energy Storage, International Energy Agency, OECD/IEA, 2014, p. 26.

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low demand, which the grid operator would otherwise be obliged to curtail, and thus waste, as may be the case during intermittent excess production of electricity linked to renewable energies. Indeed, since wind power and solar energy are resources dependent on weather conditions, their intermittent character poses a certain number of problems for grids in terms of the stabilisation, regulation and compensation mechanism. The bottlenecks within the electricity supply system thus translate into excess renewable electricity, which cannot be transferred to the grid and which must be curtailed by the network operators, in order to balance power production and energy demand and allow the allocation of electricity deriving from other sources. Conversely, when renewable energy sources do not deliver the expected amount of electricity because weather conditions are not as initially expected, the network operators must turn on alternative power sources, often gas turbine or diesel generators, with a higher marginal cost.

Electricity storage solutions are also expected to play a decisive role in the production of electricity close to the point of consumption and within the context of a smart grid. The concept of “distributed generation”, namely electricity produced in small quantities close to points of use, rather than in large quantities at a limited number of production sites, is gaining ground, since it should permit the grid to manage the matching of supply and demand at all times in a more rational way.

Another factor militating in favour of the deployment of energy storage systems lies in the possibility for developing countries, which benefit from strong growth, to contribute to satisfying their energy needs. Advanced energy storage systems indeed permit the supply of off-grid zones and may also be used in support of current electrical grids, in order to increase their capacity until new infrastructure is implemented.

6.2.1 Grid Support Solutions market in developed countries

Energy storage is not a new market, or a new technology, or a new application at the level of electrical grids for Grid Support Solutions.

In addition to the traditional applications of pumped storage and energy storage applications in the form of compressed air, it is batteries which, in all of their forms, are at the heart of energy storage technologies. This process allows producers and electricity suppliers to use energy surpluses produced during periods of low demand in periods of high demand. Energy storage advantages and applications are not however exclusively limited or strictly reserved to producers and electricity suppliers.

By 2025, energy storage could indeed represent a potential market of US$ 90-635 billion per year, notably depending on the size of the electric and hybrid batteries segment for the adaptation of vehicles6 in the mobility sector.

On its turn, the global stationary energy storage market, therefore excluding any impact from mobility and off-grid power generation, will grow to a cumulative 125GW/305GWh by 2030, attracting $103 billion in investment over this period.7 Although this will represent a fraction of total installed generation capacity, which is expected to be on average higher than 300GW on a annual basis, the electricity system will look fundamentally different. Utility-scale storage becomes a practical alternative to new-build generation or network reinforcement, especially for

6 McKinsey Global Institute, Disruptive technologies: Advances that will transform life, business, and the global economy, May 2013, p. 100. 7 2017 Global Energy Storage Forecast, 16 November 2017, Bloomberg New Energy Finance

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underutilized assets in some markets. Behind-the-meter storage, therefore Grid Support Solutions connected directly behind the meter of the customer and not the main grid, will increasingly be used to provide system services, such as peaking capacity, on top of customer applications.

According to the data published by Bloomberg New Energy Finance in November 2017 eight countries are expected to lead the market: 70% of capacity on a megawatt basis would be installed in the U.S., China, Japan, India, Germany, U.K., Australia and South Korea by 2030. Regionally, energy storage build will be roughly equally spread across APAC, EMEA and the Americas. In the earlier years, between 2017 and 2020, APAC will represent almost half of the total installed capacity, as South Korea, Japan, Australia and China have supported earlier build in these markets.

In the near term, utility-scale storage is built to provide system-level applications, like to ones installed by the ENGIE EPS Group with Terna in Italy and Endesa in Spain, but aggregating behind-the-meter energy storage will increasingly become a viable alternative as the market for customer-sited storage grows. This is the reason why by 2030, behind-the-meter projects are expected to represent just over half of total installed capacity.

In 2017, short-duration balancing and renewable energy integration are key applications for energy storage, and this is confirmed by the fact that strong majority of the ENGIE EPS Group revenues are coming from Grid Support Solutions.

In parallel, opportunities emerge for renewable energy integration. A number of markets, such as Australia, Japan, Chile, and Mexico, have begun requiring new renewable energy build to be co-located with energy storage. Meanwhile, South Korea is offering generous subsidy multipliers for energy dispatched from renewable energy-plus-storage projects.

The residential and commercial and industrial (C&I) markets become dominant. By 2030, Bloomberg New Energy Finance expects 69GW/157GWh to be behind-the-meter, making up over 50% of total capacity. This is a major shift from today, where behind-the-meter is the smaller of the two segments. This would be driven by retail tariff offset economics, demand charges and aggregation opportunities.

In addition, energy storage is a potential alternative to traditional poles and wires investments at the transmission and distribution level. 8% of total storage build by 2030 based on power output will be, according to Bloomberg New Energy Finance8, located at the distribution level. Although distribution-level storage projects already exist, driven by utilities in the U.S. and U.K., more comprehensive regulatory reform will be required before energy storage for network deferral becomes commonplace. Aggregation, or greater control, of behind-the-meter resources could reduce the need for new grid investments, and in that direction Terna issued in 2017 the new regulation 300/2017/R/EEL, to set a master plan for such deployments. Transmission-level deployments will make up less than 2% of total storage build by 2030, as market operators focus on the distribution level.

8 2017 Global Energy Storage Forecast, 16 November 2017, Bloomberg New Energy Finance

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The global outlook according to the data published by Bloomberg New Energy Finance in November 20179 can be summarized as follows:

– In total, energy storage is a $103 billion investment opportunity spread across multiple geographies. Energy storage project development will require significant investment to grow the market from 2.8GW/4.9GWh in 2016 to 125GW/305GWh in 2030 (i.e., a compound growth rate of 31% over the period 2016-2016).

– Lithium demand will increase from 200 metric tons to 7,845 metric tons between 2016 and 2030. Demand for other key materials such as nickel, manganese and cobalt will also increase significantly over this period.

– Average lithium-ion battery prices fell 73% from 2010 to 2016. Bloomberg New Energy Finance latest analysis indicates that average battery pack prices (cells plus packs) will reach around $73/kWh by 2030. Cell prices alone will be much lower. This is significantly lower than the Bloomberg New Energy Finance’s previous estimate of $120/kWh in their 2016 outlook, and is based on a more detailed analysis of the lithium-ion battery experience curve, and on their proprietary bottom-up cost model for lithium-ion batteries. This equates to an annual rate of cost reduction of around 10% from now to 2020, falling to around 7% annually by 2030. This obviously will have a dramatic positive impact on the business of the ENGIE EPS Group, as batteries are the most expensive component integrated in HyESS®. Being EPS an EPC contractor which delivers turn-key systems, any reduction in the lithium-ion battery cost would automatically entail and increase in competitiveness of the ENGIE EPS Group’s solutions generally.

From the global energy outlook perspective, cheaper coal and cheaper gas will not derail the transformation and decarbonisation of the world’s power systems. By 2040, zero-emission energy sources will make up 60% of installed capacity according to Bloomberg New Energy Finance10. Wind and solar will account for 64% of the 8.6TW of new power generating capacity added worldwide over the next 25 years, and for almost 60% of the $11.4 trillion invested.

By 2040, flexible capacity, which includes power storage, Demand Response and all the flexibility and capacity applications that constitute the Grid Support Solutions market, will account 8% of the 13.5GW global installed capacity.

9 2017 Global Energy Storage Forecast, 16 November 2017, Bloomberg New Energy Finance 10 New Energy Outlook 2016, Bloomberg New Energy Finance

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In that growing market, the ENGIE EPS Group is positioned as a tier 1 player particularly thanks to the 20MW Grid Support Solution deployed with Endesa, the Spanish utility part of the Enel group, for the supply of an Energy Storage System (ESS), with a power capacity of 20 MW (see paragraph 5.1.5 of the Registration Document). The storage system will be the largest in Spain and aims to make the plant more flexible and improve its response to the load fluctuations in the current electricity system resulting from the intermittency caused by an increased penetration of renewables. Even more importantly, this system is a landmark reference for the ENGIE EPS Group as it place the ENGIE EPS Group in the ranking of the companies that have developed the largest systems in the world.

6.2.2 Off-Grid Power Generation Solutions in emerging economies

The growth of the storage market is also starting to affect emerging and frontier markets. Storage companies are now pushing forward some of the most ambitious new mini-grids and independent energy systems and the same is true for commercial and industrial projects. As a result, Off-Grid Power Generation Solutions in emerging markets are rising up the strategic priority list for several storage companies and more broadly global energy players.

According to the International Energy Agency11, in 2017, 1.1 billion people — roughly 14 percent of the earth’s population — do not have access to grid electricity.

In addition, diesel generators ensure electricity generation in almost all islands and to all the commercial and industrial (C&I) users based in under-electrified areas, despite their high generation costs from €0.24 per kWh to €0.45 per kWh12, simply because there is no simple, feasible alternative. This is a sizable market, representing an installed fleet in 2015 of over 630 GW of diesel generation

11 Energy Access Outlook 2017, IEA 12 ENGIE EPS analysis based on customers data in real installations.

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capacity13. Based on an estimated price per MW of €1.4 million (Company estimate), this represents an addressable market of €882 million.

This segment of the population, has an unfulfilled need that represents a significant market opportunity.

In that context, the market for micro-grids and hybrid generation in emerging economies is getting bigger, with particularly strong demand from islands, remote regions, and the mining sector. According to the Q2 2018 Frontier Power Market Outlook published by Bloomberg New Energy Finance, the fundamental outlook for decentralized energy in remote areas has improved, amid record PV shipments, rising diesel prices, accelerating lending from development financiers and ambitious commitments from the likes of ENGIE and Enel. In particular:

– Financing announcements by Development Finance Institutions (DFIs) and energy access venture funding totalled $3.5 billion in 1Q 2018, up from $2.5 billion last quarter. More activity by the leading development finance banks accounted for the difference. Microgrid business models have narrowed the funding gap with pay-go solar, which has long been the darling of investors.

– Sales of PV modules to non-OECD markets are booming, and it is not just India anymore. The Middle East, Latin America and several African countries have grown significantly in recent months. Africa is also up, led by a surge in Morocco. Pakistan, formerly a key market, has been sluggish since last summer.

– The PV boom stands in sharp contrast to declining sales of diesel generators, which are commonly used to power inaccessible areas or for backup supply. In South Africa, a tightening of the available power capacity amid escalating financial pressures on Eskom renewed concerns about load shedding in the coming months. A full repeat of the past supply crisis still looks unlikely according to Bloomberg New Energy Finance, but any regional outages or even just the elevated risk of them could see demand for diesel generators and other on-site power sources in South Africa pick up.

– It is now becoming easier than ever to combine multiple generation sources such as the grid, diesel, PV and storage, even for relatively small sites. Over the past six months, all ENGIE EPS competitors like ABB, GE, Schneider Electric, and Siemens all introduced new products specializing in small-scale microgrids. These are primarily for applications such as backup for Commercial and Industrial (C&I) facilities, single building microgrids or remote community electrification.

The UN will hold a ministerial summit this summer to take stock of progress towards its goal of reaching universal access to energy. Three years after it was announced, the goal has gained notable buy-in among energy giants, but almost only in Europe. Enel, Iberdrola, ENGIE and Total together aim to reach 52 million

13 Cumulated market for 1980 to 2010, representing an installed capacity of diesel generators with a nominal power of 500 kW or greater and

assuming a 30-year generator lifetime (Revisiting Energy Storage, BCG, 2011) plus 7.2GW on a annual basis deployed from 2010 to 2015 assuming that just 48% of them are used for power generation (The addressable market for off-grid renewables, Sizing the diesel generator market, Bloomberg New Energy Finance, 16 May 2017).

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people by the end of 2020. Acquisitions or joint ventures with startups are an integral part of that strategy, and in that context has to be seen the acquisition by ENGIE of the controlling stake in ENGIE EPS.

In a market that is getting bigger, ENGIE EPS is particularly focused on the Asia Pacific region and Africa.

In the Asia Pacific, ENGIE EPS’ focus countries are Indonesia, Thailand, Vietnam, Malaysia, Philippines and Bangladesh, for a simple reason: such countries today in aggregate have 195 GW installed generation capacity grid connected14: 56 GW have been added just in the last 5 years, but such figures do not take into account the 35 GW of new diesel capacity additions15. This indicates that diesel in such countries is used not just for occasional backup power but plays a key role in the countries’ power system as a distributed energy resource. In this context, even with a cautious view of stable growth of additional capacity in the coming years (without taking into account the upside potential linked to economic development and rural migration to cities), this should represent 7 GW of additional installed capacity per year.

Figures in Africa are not so different from the Asia-Pacific ones: the main countries of focus for ENGIE EPS are mainly South Africa, Egypt and Nigeria, which today in aggregate have 94GW installed generation capacity grid connected16: 18 GW have been added just in the last 5 years (excluding the 35 GW of additional diesel capacity during the period, as in APAC). Notwithstanding the above, even under conservative assumptions, this should represent 7 GW per year of additional installed capacity per year.

Completed and Pipeline electrification projects location, Bloomberg New Energy Finance. State of the Microgrid Market, 25 January 2018.

The addressable market of ENGIE EPS in terms of Microgrids completed and Pipeline of projects is almost entirely concentrated in APAC, Africa, and islands. Such focus of ENGIE EPS is also in line with the completed and Pipeline electrification projects tracked by Bloomberg New Energy Finance as shown in the Figure below.

14 The addressable market for off-grid renewables, Sizing the diesel generator market, Bloomberg New Energy Finance, 16 May 2017. 15 The addressable market for off-grid renewables, Sizing the diesel generator market, Bloomberg New Energy Finance, 16 May 2017. 16 The addressable market for off-grid renewables, Sizing the diesel generator market, Bloomberg New Energy Finance, 16 May 2017.

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In addition, it has to be noted that for Off-Grid Power Generation Solutions in emerging markets ENGIE EPS acts not only as a technology provider, but also as a project developer (see paragraph 12.2).

From the project development perspective, the competitive landscape is totally different as the companies active in the Microgrid development sector are still in early development, with limited specialisation to date. Most experimentation is focused on innovative business models, and on products to help manage assets and customers, including rugged smart meters. Generation and distribution equipment is, with some notable exceptions, generally off-the-shelf. There is a clear trend towards the provision of, and demand for, 24/7 AC power, and the scaling up of Microgrids that provide limited amounts of electricity. Several players are deploying such assets on a merchant basis, first identifying and developing promising sites and then signing up retail customers. In other instances, companies identify a single anchor off-taker that takes on much of the retail risk17. In that early stage competitive ecosystem, as shown in the Figure below just two companies are at the same time active in both Microgrids project development and energy storage systems, ENGIE EPS and Fluidic Energy.

In parallel, ENGIE EPS has to face competitors that are not strictly microgrids developer but on the contrary large conglomerates specialized in traditional diesel generation that are increasingly focusing their business model in emerging countries where they already deployed conventional power diesel generation. The diversification of such players, mainly Caterpillar, Wartsila, and Aggreko, is devoted to hybridize the installed fleet or new capacity addition with renewables and eventually storage.

Company categorisation by area of activity, Company profiles: mini-grids in emerging markets, Bloomberg New Energy Finance, 10 February 2017.

6.3 Technology and portfolio of products

6.3.1 HyESS as technology platform: control and stability performance, beyond batteries and hydrogen

The ENGIE EPS technology has been extensively tested during the power intensive project of Terna, approved by the Ministry of Economic Development (MiSE) in the context of the 2012 Defence Plan, that increased the security of the electrical systems in the country’s major islands by installing 40 MW of energy storage.

17 Company profiles: mini-grids in emerging markets, Bloomberg New Energy Finance, 10 February 2017

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Storage Lab will not only support the safe management of the electricity grid, but also host activities to develop smart grid applications. Italian and foreign universities and research centers will be part of such challenging activities.

ENGIE EPS has played an important role in this Terna project, acting as a system provider in partnership with Toshiba, and as a systems provider for General Electric, which successfully completed the commissioning and testing phases in March 2016.

ENGIE EPS’s outstanding results in this project have been published in Environment and Electrical Engineering (EEEIC), 2015 IEEE 15th International Conference, “Commissioning and testing of the first Lithium– Titanate BESS for the Italian Transmission Grid” 18

Such results have been made possible thanks to ENGIE EPS’s intellectual property, that covers in full this vertical integration and technological innovations with 89 patents and 186 patents applications in total, of which the ENGIE EPS Group is actively pursuing only 41 in different key countries, 597 trade and industrial secrets and more than 20 million running hours of the technology in-field (please refer to 11 of the Registration Document).

The IP strategy of the ENGIE EPS Group is presented in paragraph 11.1 of the Registration Document.

One of the most important patents, entitled “Conversion and control system for distributed generation” regards the innovative universal power conversion systems (PCS) and controller capable of managing multiple renewable sources, energy storage (including hydrogen) and loads, both on-grid and off-grid. More specifically:

– the power converters are able to operate an automatic and instant transition from MPPT (Maximum Power Point Tracking) to RPPT (Required Power Point Tracking) operation mode with respect to the renewable sources;

– the power converters and the controllers are capable of managing multiple configurations including one or more renewable sources, some or no energy storage means, presence of single load or the grid; and

18 The IEEE paper deals with the commissioning and testing by Terna of the 1MW/1MWh Energy Storage System composed by Toshiba

batteries and Power Conversion System, controllers, transformer, and SCADA manufactured, containerized and commissioned by EPS Elvi.

Commissioning has been done in the Codrongianos substation, both in grid-connected and islanded operation. Test results show that round trip efficiency and power accuracy target values are met and that the BESS can effectively be used for black-starting a MV grid.

The field tests performed on Terna’s first LTO BESS showed that the target performance values are met or even exceeded. Most significantly the measured round trip gross efficiency is 89.2%, and the net efficiency (also including auxiliary losses) is 86.5%.

This excellent result has been possible due to the reduced auxiliary loads power, namely of the HVAC system, thanks to the wide temperature operating range of LTO batteries. The BESS rated energy and power values (1MW/1MWh) have also been verified. Measured PCS power accuracy is about 0.5%, which is in line with the expected measurement error.

BESS overload test showed a substantial overload capability of LTO batteries, whereas the PCS power output is limited to 1.3 p.u.; temperature measurements also evidenced that the thermal time constant of the PCS is about 200 s, significantly lower than the one of LTO batteries.

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– the system is able to commute with a seamless transition in less than 20ms (milliseconds) from on-grid to off-grid and islanded operation (“Seamless Transition”).

Such patent has been registered with the aim to be coupled, in order to increase the non-replicability, with two main trade secrets: the “DROOP Virtual Inertia” at the inverter level and the “POOL Algorithms” at the energy management system level.

Such unique innovations, essentially enable any microgrid powered by a renewable power plant coupled with HyESS, to perform exactly like a national electrical grid, securing stabilization of renewables intermittency and microgrid stability, together with Spinning Reserve and full virtual inertia, as shown in the charts below19.

Thanks to the DROOP Virtual Inertia, the ENGIE EPS HyESS technology provides inertia and Spinning Reserve to any national grid or microgrid in 125µs (micro-seconds) like a rotating system, with no recourse to the energy management system20.

This chart below represents the ability of the ENGIE EPS DROOP Virtual Inertia Algorithm to react in less than 125µs (micro-seconds), and to stabilize a drop in frequency in less than 20ms (milliseconds).

Such a fast reaction, with a frequency stabilisation in less than 20ms, is particularly important in today’s Frequency Regulation process, where the rotating masses of conventional power plants, which are synchronized with the grid frequency, react automatically to frequency deviations by reducing the gradient of the frequency deviations within the first milliseconds to seconds of a frequency dip. This Frequency Regulation mechanism is called rotating mass or system inertia and is replaced in the Frequency Regulation process by Primary Control Reserve (“PCR”), which is the first Frequency Regulation product available today.

19 Yellow outlines the solar intermittency from 300 to 1200W/mq (75 to 300kW). Green shows the RPPT (Requested Power Point Tracking),

i.e. the solar power reduced due to the instant load demand requirement 20 P-ref value still at “0” before, during and after the grid event.

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From a grid perspective, faster regulation products are required when conventional generators providing the rotating mass today are getting replaced by renewable generators, which are not able to provide rotating mass to the system. In the central European grid area, today this trend is in part compensated by the size of the overall system and the number of conventional systems connected to the grid in countries with smaller renewable shares than Germany or Italy. In smaller grid areas, such as in the UK or in Ireland, fast Frequency Regulation products are already present in the ancillary markets.

In the UK the currently introduced enhanced Frequency Regulation tender, which demands full power to be delivered within one second, is a reaction of UK national grid to the changes of the energy transition, in particular a lower number of conventional generators connected to the grid. In Ireland’s DS3 ancillary service program, two inertial response products as well as various fast response products cover the Frequency Regulation process before the PCR product would be activated in the German market. PJM Interconnection LLC (PJM) is a regional transmission organization (RTO) in the United States. It is part of the Eastern Interconnection grid operating an electric transmission system serving all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia, and the District of Columbia. In the PJM market in the US, Frequency Regulation assets are remunerated a premium for the speed and precision within the Frequency Regulation process, which has therefore a similar effect than the introduction of faster Frequency Regulation products.

On a technical level, Frequency Regulation products that are faster than PCR and thus have faster activation periods than 30 seconds until full activation can be offered by battery storage. Traditional battery storage can deliver full power within time frames of 250 milliseconds if following the frequency, and can even form the frequency if operated in grid-forming mode.

Thanks to the DROOP Virtual Inertia, the ENGIE EPS technology guarantee a 125µs reaction, with a frequency stabilisation in less than 20ms.Such fast response is already necessary today in any island microgrids, where the stable and reliable operation of the microgrid imperatively requires a permanent balance between electricity generation and demand. When forming the frequency, battery storage must deliver system inertia to the grid.

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In other terms, one of the biggest technological challenge in any microgrid, and the biggest potential for fast Frequency Regulation products in grid-support applications, is already addressed by the ENGIE EPS technology.

With such operational modes, ENGIE EPS has reproduced in a modular and scalable system for microgrid or islanded operations, the exact functioning of a national grid, where:

– the energy storage system through the power conversion technology manages in full the frequency stabilization without any alternator, gas turbine or diesel generator;

– controllers thanks to the POOL algorithms just allocate the Spinning Reserve and the dispatching algorisms between the different assets connected to the grid.

6.3.2 HyESS as a product: the value added in any energy storage system and microgrid

ENGIE EPS’ HyESSTM system offers a synergistic combination of Capacity and Flexibility (on this distinction please refer to paragraph 6.4.2 of this Registration Document); in this way, it exceeds the performance of any system using traditional batteries or hydrogen taken alone. The integration of these two technologies into the HyESSTM system also entails a reduction in the footprint of all of the installed batteries.

The solution proposed by ENGIE EPS provides coverage of a large range of supporting applications for the network in a smart grid context, hour by hour or on a seasonal scale. Its global cost is lower than that of traditional batteries or of other chemical storage solutions, due to the piloting of the optimisation of performance guaranteed by the Balance of System Platform developed by ENGIE EPS.

In addition, from the economical perspective, this solution presents the advantage of being able to calibrate power and energy independently, by optimising recovered energy, by minimising the cost of investments and the required space (the footprint may be divided by two relative to the traditional batteries), as well as increasing the quantities of stored energy (up to ten times relative to traditional batteries) with a global electrical efficiency (“round trip”) able to reach up to:

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– 98.8% at the power conversion (PCS) level;

– 97.1% at the Balance of System Platform level (including cooling and auxiliaries);

– 96% for a turn-key energy storage system integrated with batteries (including cooling and auxiliaries) able to address any Flexibility application for any grid ofr microgrid;

– 60% for a turn-key energy storage system integrated with batteries and hydrogen module (including cooling and auxiliaries, excluding heat exchanger) able to address any Flexibility and Capacity application for any grid or microgrid, and therefore competing directly with diesel generation which has an average efficiency of approximately 30%.

The HyESSTM is therefore an efficient and flexible Balance of System Platform, and may in other terms, when coupled with renewables, create competitive microgrids that can replace the 600GW of installed fleet of diesel generators, but with a lower levelized cost of electricity, completely clean and with a higher efficiency.

6.3.3 HyESS components: enabling flexibility thorough modularity and scalability

(i) Components of the Balance of System Open Innovation Platform

From the technology incubation phase ENGIE EPS has focused its efforts on the system level, developing its Balance of System Open Innovation Platform, i.e. power and control electronics able to manage, at the same time, hydrogen and batteries. Thanks to acquisition of EPS Elvi and to the R&D investment carried out in 2016 (please refer to 5.2 of this Registration Document), ENGIE EPS further enhanced the products incorporated in HyESSTM to enable a real Smart Distributed Power Generation, suitable to operate both on-grid and off-grid:

– Power Conversion Systems (“PCS”), i.e. bi-directional inverters with a scalable power range of 20, 35, 70, 125, 250, and 900 kVA, which are the core technology of the HyESSTM.

– Battery Management Systems (“BMS”), which monitors and governs any Battery Technology, including those integrated into HyESSTM.

– Master Controller (“BMC”), which is the hardware and software technology that manage the energy storage system.

– Microgrid Controllers (“MGC”), a device particularly important in microgrids in order to control and manage in remote the whole combination of a renewable power plant with HyESSTM.

– Energy Management Systems (“EMS”, and together with the BMC and MGC, collectively “Digital Controls”), which optimizes the energy flows in any on and off-grid condition.

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– Hydrogen Module, or ElectroSelfTM, which complement the battery storage to provide Capacity to the microgrid and enabling a full diesel replacement.

All PCS, BMS, Hydrogen Module and Digital Controls have been tested and certified by internationally recognized labs, and are in conformity with the applicable standards to electrical safety and grid code compliance:

– IEC 62109-1 and IEC 62109-2

– IEC62477-1

– CEI 0-21 and CEI 0-16, including all. N-bis.

The same HyESS platform constitutes also the technological basis of any Mobility Solutions deployed.

(ii) Smart Power Conversion Systems

The “heart” of any energy storage system and even more importantly of any microgrid is the bi-directional inverter integrated into the PCS, which interfaces the renewable source or the energy storage to the grid and governs the power flow between generators, user load, grid and storage systems.

The new PCS must comply with the most recent standards (in Italy CEI 021 e CEI 016, in Germany VDE ARN 4105), which set more complex requirements on the electrical interfaces to the grid, so called “Smart Inverters”.

The “smart inverters”, which are eligible for connection to the electrical national grid, must have excellent regulation capabilities in order to respect the grid codes imposed by DSO and TSO (Distribution and Transmission System Operators).

The smart inverters developed by the ENGIE EPS Group have been the first which passed the test and issued the conformity to the new CEI 016 All. N-bis, regulation mandatory from 1 January 2016 which set out the more strict requirements for the connection to the Italian network and which will be the basis of future IEC (International Electrotechnical Commission) regulations.

(iii) Microgrids and “virtual inertia” Power Conversion Systems

A microgrid can be also seen as a small power system composed of one or more Smart Distributed Power Generation units, that can be operated independently

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from the main grid (public distribution network) where present. Microgrids include user loads and energy storage systems as well.

Essentially, microgrids are a smaller version of the large power grid, which is a collection of generation sources and loads kept in balance by a control system. Microgrids have the added feature of being able to operate in parallel with the main grid or in isolation from it. More specifically a microgrid can:

– be connected to the main grid (or bulk power system) and exchange active (P) and reactive (Q) power with it.

– work isolated, either on a temporary basis (due to a fault on the main grid), or permanently (“Islanding Mode” or “Islanded Microgrid Function”).

In an islanded microgrid the stability of frequency and voltage must be assured with regulation techniques similar to those applied to the main grid.

The PCS integrated in any HyESSTM solutions have a unique feature compared to traditional inverters: they assure in any microgrid power regulation techniques identical to those applied to the main grid, and therefore a stabilisation of the grid which is triggered before any frequency downfall. In other terms, ENGIE EPS’s PCS ensure a “virtual” inertia, Spinning Reserve and power quality to any microgrid exactly on the same terms as a Transmission System Operator. This feature, named DROOP Virtual Inertia Algorithm (please refer to paragraphs 6.3.1), is the output of years of applied research arising from the System Engineering Division of ENGIE EPS, entirely composed by engineers with a PhDs in Electrical Engineering.

(iv) Hydrogen Module

The Hydrogen Module is an optional feature of any microgrid developed by ENGIE EPS and, together with the Seamless Transition, the DROOP Virtual Inertia Algorithm and the solid competitiveness, one of the main distinctive factors of the ENGIE EPS technology advantages.

ElectroSelfTM is a patented technological platform, entirely integrated into an open architecture and composed of the following three basic elements:

(1) the Power-to-Gas module for production of hydrogen from electricity (P2G): high-pressure electrolyser, producing hydrogen and oxygen on site at a pressure of 30 bar by electrolysis of water, specifically designed for combination with the ElectroTM fuel cell;

(2) a storage unit: a storage module for hydrogen and oxygen, or a gas storage module, able to integrate every storage technology, including the storage of hydrogen in solid form and storage by compression, permitting storage of up to 120kWh in less than 1m2; and

(3) The Gas-to-Power electricity generation module based on hydrogen (G2P): supply system based on a fuel cell, named ElectroTM, producing water and electricity from hydrogen and oxygen (pure or undiluted in air) with a power output of 1.5 to 25kW per module.

The integration of these components, entirely developed and manufactured by ENGIE EPS and its principal partners, constitutes the ElectroSelfTM module, a scalable hydrogen storage module permitting electricity generation applications on

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the basis of electricity (P2P), by offering power modules of up to 25kW. The complete integration of the system was notably made possible by:

– the implementation of innovations developed by ENGIE EPS, such as technologies for operating direct oxygen fuel cells with specific electrolysis and liquid cooling; and

– the Balance of System Platform, patented and integrated into an open architecture method and intelligent management, associated with dedicated power and control electronics, which the ENGIE EPS Group developed and manufactured in-house.

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6.4 Business model and commercial results

6.4.1 Sales channels and business model

ENGIE EPS pursues two methods for the sale and distribution of its solutions on a EPC basis:

– the direct channel: this is the strategy used throughout Europe, where ENGIE EPS manages its clients directly and autonomously. The proximity of the business development, essentially composed of members of the management team, to its clients is crucial for exploiting this channel. This is why ENGIE EPS has deployed the majority of its current installed base with Italian customers or Italian branches of international customers (ENGIE, Enel, Edison, Terna, Toshiba, T&D, General Electric, Telecom Italia);

– partnerships: in all of the other geographical zones, in the absence of a local business development team, ENGIE EPS works with commercial partners which facilitate its access to these markets and which aided it in opening these. Indeed, a local partner provides two fundamental elements: on the one hand, access to good contacts among the clients and on the other, support for the implementation of its activities. Historically, ENGIE EPS has always ensured that it selects partners benefiting from stable business relationships with potential clients in the target region, or in certain cases, it was itself selected by such partners. The assistance of a partner offers a guarantee to the client of access to long-term installation capacities and also permits the creation of synergies: the local partner is able to propose innovative solutions and to complete its product positioning by virtue of a competitive system; and

– ENGIE group partnerships: after the acquisition by ENGIE of a controlling stake in ENGIE EPS, ENGIE EPS has also concluded certain alliances and partnerships with entities of the ENGIE group to widen its market reach. Through this channel ENGIE EPS can access ENGIE’s global installed base, business development and customer service platform – creating important synergies for ENGIE EPS, both in terms of avoided costs and also in terms of accelerated time to market.

Starting from a market analysis and progressing according to a formal approach, ENGIE EPS determines how and where to invest its economic resources.

Clients choosing products aimed at end users are generally large organisations, such as grid operators, utilities, telecom operators or suppliers of infrastructure, which follow long and strictly regulated procedures before adopting new technologies. In this context, choosing a local partner or having a strong business development and system engineering team established locally proves to be a decisive choice.

When the client has confirmed its interest and the analysis of the Total Cost of Ownership (“TCO”) concludes in favour of positive results, the first tests are executed in order to demonstrate the performance of the product and its reliability.

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If technological tests prove conclusive, the product forms the object of a qualification by the sourcing/purchasing department of the client, which is then alone capable of issuing purchase orders of notice to proceed.

Developing a new market and bringing it to a state of maturity may thus take up to two years, starting from the decision to focus its commercial efforts on a specific geographical region.

6.4.2 Business Model vertically integrated

In the Grid-Support Solutions area ENGIE EPS generally participates in the tenders and request-for-proposal (RFPs) launched by utilities and grid operators, acting as a technology and system provider. In the Off-Grid Power Generation Solution area the business model is more complex. Specifically, any Off-Grid Power Generation Solutions project has several actors active in the project value chain: hardware manufacturer, software developers, project developers, EPC21 and system integrators, project owner (i.e. the entity acting as an independent power producer which sell electricity to the final users), financing providers, and operations and maintenance (O&M) actors.

Below is the representation given by Bloomberg New Energy Finance of ENGIE EPS Position from the business model perspective in the Off-Grid Power Generation Solutions area.

Bloomberg New Energy Finance correctly represents that ENGIE EPS is acting not only as a technology provider, responsible in full for the hardware and software of its installations, but also as EPC contractor. This has a particular implication from the business model perspective as ENGIE EPS is not only in charge of its technology (HyESS), but also responsible for all the power generation and storage technologies to which its HyESS is connected, including renewables, generators, batteries, etc.

In other terms, ENGIE EPS acts as the general contractor of the microgrid as its technology is the enabler of the whole functioning of the microgrid.

21 Engineering, Procurement, and Construction

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Such business model implies generally the responsibility for the procurement, engineering and construction of the whole microgrid, including ground preparation, renewables installation and commissioning of the whole hybrid power plant.

However, before 2017, given the early stage of the company, in the majority of the cases ENGIE EPS left to the final customer the procurement (and the related gross margin) of the other components of the microgrid like solar panels and batteries, keeping in any event the responsibility for the functioning and stability of the entire microgrid.

Fort this reason, in the Off-Grid Power Generation Solution area, ENGIE EPS outlines in its installed base (please refer to paragraph 6.1.3 (ii) of the Registration Document), on the one hand, the total power installed of its systems, and on the other hand the most important data, which is the total installed power of the microgrid. In this respect, it has to be noted also that the size of the microgrid has not only an impact from the revenues and margins perspective, but also from the pricing perspective of the ENGIE EPS technology.

If in the Grid-Support Solutions area, pricing of a the Balance of System Platform can be easily represented as an average cost for different installations. in the Off-Grid Power Generation Solutions areas the pricing is referred to in terms of cost of the energy generated by the microgrid per MWh.

For this reason, pricing of HyESS in Off-Grid Power Generation Solutions is not only related to the power of the system self-standing, but also significantly dependent from the total installed power of the microgrid, which is the best metric to assess the complexity of the system, the pricing dynamics, and the related importance in terms of credentials of the installed base.

Finally, given the increasing size of the its Pipeline of projects in the Off-Grid Power Generation Solutions area, ENGIE EPS is also assessing the possibility to complete the value chain positioning acting also as a project owner. This would deepen the vertical integration of the business model as, acting as (or partnering with) an independent power producer or an ESCO22, this would – in the opinion of the management – dramatically accelerate the project development and the Pipeline conversion into orders.

6.4.3 Credentials and references of ENGIE EPS

Despite these constraints and despite the limited resources available for commercial development, at least until the acquisition of the majority stake by Engie considering the substantial investments devoted to research, development and industrialisation, ENGIE EPS is posting significant results from the perspective of its commercial activity and market positioning. The breakdown of cumulative installed base is summarised in the following tables, representing for sake of clarity in a breakdown:

• the installed base of the Company until 31 December 2015;

• the installed base of EPS Elvi before the acquisition by EPS which took effect from 1 January 2016. It has to be noted that from 1 January 2016 the

22 Energy Services Company

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systems installed by EPS Elvi before the acquisition count as a credential of the ENGIE EPS Group;

• the total installed base of the ENGIE EPS Group in 2016 only, therefore from 1 January 2016 to 31 December 2016;

• the total installed base of the ENGIE EPS Group in 2017 only, therefore from 1 January 2017 to 31 December 2017; and

• the total installed base of the ENGIE EPS Group in 2018 only, therefore from 1 January 2018 to 31 December 2018.

The tables above are a summary of the detailed installed base, and summarize:

(1) With the breakdown by criteria (power/energy) of systems installed by ENGIE EPS Group until 31.12.2018:

• Power (MW): the nominal power capacity (in megawatt) of the energy storage system connected to the HyESS.

• Energy (MWh): the nominal energy capacity (in megawatt-hours) of the energy storage system connected to the HyESS.

• EPS system (MVA): the nominal power capacity (in megawatt) of the power conversion or distribution system integrated into the

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HyESS or installed by ENGIE EPS for other applications (solar, wind, distribution networks, backup applications, etc.).

(2) With the breakdown by application (Off-Grid Power Generation Solutions/Grid Support Solutions) of systems installed by the ENGIE EPS until 31.12.2018:

• Off-Grid Power Generation Solutions: the total power output (MW) of the microgrid to which HyESS is connected or installed by EPS. Such data includes, as outlined in the figure below) the power of any HyESS, renewables and generator composing the microgrid. This is also the most important data in the Off-Grid Power Generation Solutions area (please refer to paragraph 6.4.2 of the Registration Document).

• Grid Support Solutions: the nominal power capacity (in MW) of the power conversion system (PCS) connected to the grid to provide grid services or power quality to the respective customer. It includes utility scale and behind-the-meter solutions.

The charts above outlines that the EPS Elvi acquisition completed on 1 January 2016 has played a pivotal role in leveraging the credentials of ENGIE EPS Group at the beginning of 2016, and increasing the installed base by 28% (4.4 MW) in terms of power, and by 15% (6.9 MWh) in terms of energy.

More importantly, the EPS Elvi credentials have played an important role in particular in the Off-Grid Power Generation Solutions areas, where ENGIE EPS Group at the time of the acquisition had a structured technology proposition but no credential (the HyESS at that time was in the final certification phase) while EPS Elvi had already installed its power conversion systems in microgrids for a total installed power of 9.1 MW.

However, as better described in the charts below, FY2016, FY2017 and FY2018 have been transformational from the perspective of the installed base. In 2017, ENGIE EPS Group had 23.5 MW installed and under commissioning, i.e. more than the total installed base of ENGIE EPS Group, including the EPS Elvi credentials, at the end of 2015 (7.4 MW) and in 2017, ENGIE EPS Group had 8.4 MW installed and under commissioning with an increase of the total installed base of 48% compared to the end of December 2016.

From the application perspective, the deployment effort carried out by ENGIE EPS Group in 2016 is even more evident. In 2016, ENGIE EPS Group installed 26.5 MW for Off-Grid Power Generation Solutions, i.e. approximately 2.9 times the aggregated installed base of EPS Elvi from 2012 to 2015. The dramatic increase in the installed base is also evident in the Grid-Support Solutions area, whereas in 2016, ENGIE EPS Group installed 12.1 MW for Network Support Solutions, approximately 1.9 times the total installed base of ENGIE EPS Group, including the EPS Elvi credentials, at the end of 2016 (6.7 MW)

In 2017, ENGIE EPS Group installed 4.1 MW for Off-Grid Power Generation Solutions and 36.4 MW for Network Support Solutions, approximately 1.9 times the total installed base mainly due to a 20 MW EPC contract with Enel / Endesa

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for the design, construction and control of the largest utility-scale storage system in Spain.

This storage system will be located in Almeria and will be composed of 24 inverters, 16 containers, 8 of which for PCS and 8 for Li-ion storage, with a total installed capacity of 20MW/11.7MWh.

In 2018, ENGIE EPS Group installed and had under commissioning 39.2 MW for Off-Grid Power Generation Solutions, approximately equal to the total installed base mainly due to the Phase 1 of the project “Comoro”.

In terms of geographical breakdown, ENGIE EPS installed and has under commissioning the majority of its systems outside Italy (16%), primarily in other European countries (58%), in Asia Pacific (18%) and Africa (8%).

The pie-charts above outlines the geographical reach of the ENGIE EPS strategy described in paragraph 6.4.1 of the Registration Document. As of 31 December 2018, while Africa and APAC represent approximately 26% of the total historical installed base, when analyzing the Off-Grid Power Generation Solutions market, they represent more approx. 95% of the installed base.

On the date of this Registration Document, ENGIE EPS’s client portfolio includes leading names such as ENGIE, Enel, Endesa, Toshiba, General Electric, Terna, Edison EDF, Northern Power Systems, Hitachi-Siemens, ATM, RFI (Rete Ferroviaria Italiana), NECSOM, FZSonick, ABB, and Telecom Italia.

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6.5 ENGIE EPS Group Organisation

6.5.1 Executive team

The executive team is presented in chapter 14 “Administrative and executive bodies” of this Registration Document.

6.5.2 Research and development activities of the ENGIE EPS Group

Engineering and R&D are principally carried out at the Rivoli and Milan premises, where innovations regarding of design are studied in close collaboration the Politecnico di Torino and the Politecnico di Milano. The R&D team works towards the objective of finding new solutions for materials, design and management of devices, together with the engineering team, which works on the continuous improvement of the system.

As on the date of this Registration Document the technology, engineering, innovation and R&D teams include 53 employees engaged in research projects, among which there are 42 engineers, 11 technicians and scientists, and out of the 53 resources 9 of them holds a Ph.D or MBA equivalent. There is a high level of know-how within the ENGIE EPS Group, notably in power electronics and dedicated control systems, which is difficult to reproduce.

6.5.3 Production activity and logistics chain

All of the manufacturing activities carried out at the various ENGIE EPS sites are certified and compliant with ISO standards: in particular, with the ISO 9001 standard regarding the quality control system and the ISO 14001 standard regarding environmental management. In 2014, EPS Elvi requested ISO 18001 standard certification (workplace health and safety management system or “OHSAS”), and has obtained OHSAS 18001 standard certification in 2015.

In 2017 ENGIE EPS implemented the integrated management system compliant to ISO 9001:2015, ISO 14001:2015 and BS OHSAS 18001:2007 for the following application field:

“Design, manufacturing, site installation, commissioning, service and consulting related to:

• microgrids and integrated systems for distributed power generation;

• energy storage systems, also in hybrid configuration, with any electrochemistry or storage media, including hydrogen;

• power conversion, distribution, monitoring and control electronic devices and related software and firmware”;

In June 2017 the integrated management system of EPS Elvi was certificated by RINA and in August satisfactorily overcame the qualification process of the main utilities.

(i) Production and test activities

Production and test activities for essential components and complete systems are carried out at the Rivoli (TO) and Delebio (SO) sites in Italy. In September 2018, the manufacturing and production activities of ENGIE EPS has been moved from Delebio to Cosio (SO), in a plant where the manufacture of all ENGIE EPS products, the assembly and the tests are managed by a team of 38 technicians and engineers, with

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the support of engineering and research and development teams, who also have a space dedicated to test activities and to the validation of new solutions.

(ii) Manufacturing capacity and quality control process

With the organisation and current resources in terms of labour and tooling, the production capacity of the Rivoli manufacturing plant is limited to 2MW per month for HyESS coupled with hydrogen, but 400MW per year of HyESS on a stand alone basis considering also the area of the Cosio facility.

More precisely, the new manufacturing plant in Rivoli was refurbished in the second half of 2015 and it has been operating since January 1, 2016, with a surface of 3,500smq internally and approx. 1,000sqm externally. Thanks to the EPS Elvi acquisition in December 2015, approximately 3,000sqm internally (and more than 2,000sqm externally) in Delebio (SO), Italy, and 800sqm offices and laboratories in Milan were added in early January 2016. In September 2018, the manufacturing and production site has been moved from Delebio to Cosio (SO). The new site is distributed on an area of approximately 2,500sqm internally (and more than 2,500sqm externally). As a result, thanks to more than 10,000sqm of manufacturing areas, ENGIE EPS has today an aggregate manufacturing capacity in terms of plants for approximately 400MW of HyESS, including 24MW purely dedicated to hydrogen sub-systems of this Registration Document).

The purchase of raw materials for the production of ENGIE EPS’s systems follows demand and requires planning for components, notably in order to minimise the size of the laboratory and to manage cash flow.

Key components, such as inverters, controllers, fuel cells, and system assembly are manufactured internally, allowing ENGIE EPS to achieve better quality control of each of its products.

Thanks to two service agreements in force between EPS Manufacturing and Elvi Automation on the one hand and between EPS Elvi and Elvi Automation on the other hand, the ENGIE EPS Group can count on highly-qualified workforce, skills and equipment, activating in outsourcing the following services: technical office, warehouse, workshop, project management and logistics, procurement.

The manufacturing process is flexible between the Rivoli plant and the Cosio facility. The Rivoli plant is dedicated to the manufacturing of standardized modular components (HyESS, ElectroSelfTM, hydrogen modules and switchboards). The arrangement (wiring and Balance of System Platform) of the container takes place in Cosio. Performance of the Factory Acceptance Test (“FAT”) in accordance with the clients approved test plans and specifications to show that system is at a point to be installed and tested on site is made in both the Cosio facility and the Rivoli plant depending on the customer and project’s needs. Once the FAT is completed, the container is then shipped on-site for the installation and commissioning phase.

6.5.4 System Engineering and client support Service throughout the commercial process

The ENGIE EPS Group’s System Engineering Department is devoted to the technical monitoring of all of the activities of its clients.

This System Engineering Department provides the connection between the technical services (production and research and development) and the commercial services (business development and marketing).

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The activities managed by this Department may be summarised in three principal phases: pre-production, production and post-production.

(i) The preproduction phase: System Engineering:

During this phase, the client and the System Engineering Department defines the technical solution which best corresponds to the requirements of the client. Its principal missions are as follows:

– technical support for business development: all of the activities of analysis, data collection, technical replies, which the client may need during the evaluation phase;

– customization of the solution: when the products marketed to end users cannot comply directly with the client’s demand, personalisation is necessary. The department then carries out a technical analysis, in order to define a solution which may involve technical modifications, or even the design of a customized product;

– technical documentation: with the aid of the research and development and marketing services, the service develops and updates all of the technical documentation linked to the products (technical manuals, product and technical data sheets); and

– the pre-installation study: carried out in order to guarantee a quality installation. It allows the company in charge of the installation to define and then provide the necessary solution in technical and logistical terms.

(ii) The production phase:

As external controller of the procedure, the System Engineering Department devotes itself to monitoring the production of the units. At the same time, the System Engineering Department follows the technical activities required to ensure the training of the integrator, of the end user or of the partner who shall be in charge of the installations and of the maintenance activities. Its principal missions are as follows:

– control of the production procedure: the System Engineering Department acts as guarantor for the client, in order to detect any risk in the procedure and to reply to the client’s request;

– the review of installation manual: as soon as the integrator or the client has a specific question, the System Engineering Department provides an installation manual which shall serve as support during the installation;

– technical training on site and at a distance: before the installation in series, the System Engineering Department provides a programme of the activities dedicated to the transfer of know-how necessary to the integrator or to the end user, in order to permit the correct use of the systems. These activities are grouped under the “EPS Academy” programme including training sessions on site, video courses or technical meetings with appropriate presentations and “ENGIE EPS Insight Lunch” providing regular training session (available in classroom or as on-line training) delivered by internal specialist on specific topics (such as competitiveness or security); and

– the ordinary and extraordinary maintenance of the product: at the highest level of its know-how transfer activities, the System Engineering Department may hold a special session of the ENGIE EPS Academy for experienced technicians who will be in charge of the technical assistance for the systems,

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conducting the procedure for ordinary and extraordinary activities. This activity is reserved for deployment campaigns for platforms sold to end users or special projects. In any case, the transferred information does not represent intellectual property and is not patented.

(iii) The post-production phase:

The System Engineering Department then provide the technical support which the client may require after the delivery of the systems, in particular in the commissioning phase. This includes the technical assistance but also the monitoring, remote control and the collection of data from the units, if necessary. Its principal missions are as follows:

– technical assistance during the guarantee and post-guarantee period: this activity covers the activities of the technicians on site. When a guarantee covers this activity, the System Engineering Department together with the Project Management Office may manage the logistics and the activities associated with the ordinary maintenance of the systems. When the guarantee is not in place or has expired, the System Engineering Department is capable of responding to the specific demand of the client, of evaluating the corrections to be made and of acting according to an agreement established on the basis of the technical analyses previously executed;

– the monitoring and the control at a distance service: each energy storage and emergency supply solution developed by ENGIE EPS may be monitored and controlled at a distance. The System Engineering Department manages the data room in which the files are collected, carrying out the surveillance on the basis of the Remote Monitoring platform, which allows it to verify any malfunction and to analyse the system and provide assistance at a distance, as required. This activity is extensively demanded by end users when the maintenance is subcontracted and minimises the costs linked to the intervention of a technician on site, which has all the more important for remote sites; and

– client information feedback in statistics: by virtue of monitoring at a distance and collection of data, the System Engineering Department is able to permit the client to analyse the grid data as soon as the systems are installed. By virtue of this analysis, the System Engineering Department may draw up a technical report, which supports the internal evaluation.

6.6 Information Systems within ENGIE EPS: Cybersecurity as governance model

The process of implementation of the Cybersecurity Framework started in 2016 has been further evolved and propelled in 2017 and in 2018, thanks to the solid partnership built with ENGIE, ENGIE EPS has further increased the level of general security.

The governance model implemented in 2016 as the information system (“IS”) of the ENGIE EPS Group is still active and guides also today an accountability framework designed to ensure that IT resources are employed appropriately in the ENGIE EPS Group organization, keeping the focus on the two main themes: the management of downside risk and the fostering of upside potential.

The first facet, Information technology (“IT”) risk governance, is concerned with decisions for minimizing threats (e.g., security and cybersecurity risks) and failures (e.g., unsuccessful project implementations). The second facet, IT value governance, is concerned with maximizing the value of IT investments and the ENGIE EPS’s ability to leverage its

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information systems resources.

In 2017 ENGIE EPS implemented the new Enterprise Resource Planning (ERP) system, which is currently in use, integrating in full the management of core business processes including:

– administration and finance, including consolidated figures of any ENGIE EPS Group Company

– cash management

– internal control and reporting

– procurement process

– production planning

– manufacturing and service delivery

– human resources management

– inventory and materials management

– shipping

The business processes previously created on the ENGIE EPS Group ERP has been further optimized and now the database is linked to a powerful business intelligence tool (“BI”) which allows to explore data, run effective analysis, build interactive dashboard and create smart reports.

BI, combines business user self-service, with enterprise wide data governance focused on performance management. It links the insight provided by BI to the planning and control cycles of the enterprise and easily implements planning solutions, profitability applications and scorecards to effectively align performances with corporate strategic objectives.

ENGIE EPS has significantly invested since 2016 in cybersecurity aspects at both the corporate and product level.

The whole IS strategy and IT of ENGIE EPS has been absorbed into the cybersecurity strategy of the ENGIE EPS Group with a risk management approach based on the guidelines provided by the “Framework for Improving Critical Infrastructure Cybersecurity” issued by the National Institute of Standards and Technology (NIST) on 12 February 2014.

At the corporate level the ENGIE EPS Group developed voluntary the Cybersecurity Framework, a set of industry standards and best practices to help organizations manage cybersecurity risks within the ENGIE EPS Group (the “Framework”).

The Framework focuses on using business drivers to guide cybersecurity activities and considering cybersecurity risks as part of the organization’s risk management processes. The Framework consists of three parts: the Framework Core, the Framework Profile, and the Framework Implementation Tiers. The Framework Core is a set of cybersecurity activities, outcomes, and informative references that are common across critical infrastructure sectors, providing the detailed guidance for developing individual organizational Profiles. Through use of the Profiles, the Framework will help the organization align its cybersecurity activities with its business requirements, risk tolerances, and resources. The Tiers provide a mechanism for organizations to view and understand the characteristics of their approach to managing cybersecurity risk.

The Framework includes a methodology to protect individual privacy and civil liberties when critical infrastructure organizations conduct cybersecurity activities. While processes and

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existing needs will differ, the Framework can assist the ENGIE EPS Group in incorporating privacy and civil liberties as part of a comprehensive cybersecurity program.

Building from those standards, guidelines, and practices, the EPS Framework provides a common taxonomy and mechanism for EPS to:

– Describe the current cybersecurity posture;

– Describe the target state for cybersecurity;

– Identify and prioritize opportunities for improvement within the context of a continuous and repeatable process;

– Assess progress toward the target state;

– Communicate among internal and external stakeholders about cybersecurity risk.

Table 1 – Framework implementation progress

Date Maturity Level (%)

0 1 2 3

March 2017 6 75 17 1

September 2017 1 54 41 4

March 2018 1 45 38 16

September 2018 0 19 46 34

At the date of this Registration Document, the ENGIE EPS Group developed the Framework Core, achieving Implementation Tier 3 and 2 and targeting Tier 1 for the end of 2018. Table 1 reports, at four time points, the fraction of Framework requirements implemented at each specific maturity level, where the range spans from “0 – not implemented” to “3 – fully automated”. Thanks to the Company’s effort, the implementation steadily proceeds towards higher maturity, which in turn implies reaching higher Implementation Tiers. In the table it is apparent that a majority of requirements transitioned in the direction of increased maturity.

The EPS Framework is adaptive to provide a flexible and risk-based implementation that can be used with a broad array of cybersecurity risk management processes. Examples of cybersecurity risk management processes include International Organization for Standardization (ISO) 31000:20093, ISO/IEC 27005:20114, National Institute of Standards and Technology (NIST) Special Publication (SP) 800-395, and the Electricity Subsector Cybersecurity Risk Management Process (RMP) guideline23.

23 U.S. Department of Energy, Electricity Subsector Cybersecurity Risk Management Process, DOE/OE-0003, May 2012

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Figure below describes the common flow of information and decisions at the following levels within the EPS organization:

– Executive level (“Executives Level”)

– Business/Process level (“Business Level”)

– Implementation/Operations level (“Operations Level”)

The executive level communicates the mission priorities, available resources, and overall risk tolerance to the Business Level. The Business Level uses the information as inputs into the risk management process, and then collaborates with the Operations Level to communicate business needs and create a Profile. The Operations Level communicates the Profile implementation progress to the Business Level. The Business Level uses this information to perform an impact assessment. Business Level management reports the outcomes of that impact assessment to the executive level to inform the organization’s overall risk management process and to the Operations Level for awareness of business impact.

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At the product level, the ENGIE EPS Group has opted for a full compliance with the NISTIR 7628, i.e. the National Institute of Standards and Technology Interagency Report 7628, providing for the Guidelines for Smart Grid Cyber Security, including proposed updates to the existing actors and logical interfaces.

The ENGIE EPS Group also complies with EIC TC57 by the National Electric Sector Cybersecurity Organization Resource (NESCOR) that implements:

– Level 1 (Autonomous DER Generation and Storage)

– Level 2 Facilities DER Energy Management

Within year end 2018, the ENGIE EPS Group will implement a remote control regime for all the systems, which will collect the data log in a centralized and redundant database. Customized dashboards will be designed and implemented in order to monitor each and every facet of the systems operations, including alarms and errors. A prototype is currently in an advanced development phase and enables the visualization of historical data about installed plants, as well as the automated generation of operational reports the target profile for 2019 is to use the database and its historical records in order to perform predictive maintenance, like this both EPS and its customers will benefit from a very important added value as it will be possible to prevent downtimes and implement optimization actions which will guarantee a financial gain and will obviously imply an higher reputational visibility.

In the first quarter of 2018 significant investments were made at the infrastructural level in order to create a group directory service, the Active Directory Domain Services (“AD-DS”) which is also a domain controller. This service authenticates and authorizes all users and computers in a domain type network assigning and enforcing security policies for all computers and installing or updating software. Additionally, it is possible to enforce privilege separation within the whole domain, thus enabling administrative access for authorized personnel in a streamlined way, without trading off security. This process has facilitated to determine if a user that has logged in into a computer (that is part of a Windows domain), the AD-DS checks the submitted password and determines whether the user is a system administrator or normal user. Also, the AD-DS allows an easier management and storage of information, provides authentication and authorization mechanisms, and establishes a framework to deploy other related services that are implemented in EPS in order to automate some activities, such as Patch management and to centralize others such as:

• Group policy

• Security policy

• User management

• Device management

• Assets life cycle

• Security certificates

• License management

• Password management (GDPR compliant)

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In this scenario, a domain is defined as a logical group of network objects (computers, users, devices) that share the same Active Directory database. A single database (replicated for business continuity reasons) for all ENGIE EPS Group is situated in northern Italy. Two or more domains collected together constitute a domain tree. The latter connected in a contiguous namespace, are linked in a transitive trust hierarchy, where at the top of the structure is the ENGIE forest. This represents the collection of trees that share a common global catalogue, directory scheme, logical structure, and directory configuration. In our case, the ENGIE forest represents the security boundary within which users, computers, groups, and other objects are accessible.

Each entity connected to the Network has an identified cybersecurity officer or security contact that participates to the ENGIE cybersecurity governance in liaison with the Business Unit CISO who participates to the Cyber Security Governance Committee. The Cybersecurity officer or contact must report security incidents to the Global Security Operations Center and participate to the required processes and events organized by the ENGIE EPS Group Cyber Security Department.

The mentioned links and information exchanges with other entities inside the ENGIE ecosystem are requirements stated by its cybersecurity policy. ENGIE EPS, as a member of this larger organization, complies with the policies set forth by the central governance. In particular, at the corporate level ENGIE’s ENSEMBLE program establishes a common collaboration platform and tight integration, allowing for sharing a secure environment within the whole ENGIE ecosystem. On top of this, products comply with ENGIE ICS Security Framework, an internal reference aimed at keeping a high cybersecurity standard throughout

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ENGIE’s digitalization process.

For year 2019, ENGIE EPS’s cybersecurity roadmap foresees the adoption of Microsoft Intune. This solution offers a centralized control panel for mobile device management, thus enabling the enforcement of ENGIE EPS Group policies on aspects such as device cybersecurity, data protection, and mobile productivity. With this approach, IT staff can more efficiently keep track of the cybersecurity status of the Company and its assets, providing also a higher level of protection for sensitive data and intellectual property.

Finally, the entry into force of the Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (“General Data Protection Regulation”, or “GDPR”) would imply one of the biggest changes to the European data protection regime since the approval of the Data Protection Directive and a completely different approach regarding the cybersecurity measures. The Company has already started to make a risk assessment (including domain names, DNS, SSL, and social media usernames) by evaluating risks that might occur during the processing of personal data and mitigate them by implementing technical and organisational measures; however, the GDPR does not state the specific security measures or the minimum technical standards of such security measures in order to be considered as sufficient or compliant but simply sets the duty on businesses to assess and decide what type of measure shall be implemented in order to comply with the regime stated in the GDPR and to avoid to the maximum extent possible any cyber security breach or data leakage. As a result, the measures implemented will have to be constantly monitored in order for them to guarantee an adequate level of security.

6.7 Regulations applicable to the ENGIE EPS Group

The activity of ENGIE EPS and its development are essentially impacted (favourably or unfavourably) by the following regulations, even if ENGIE EPS is not always the direct object of these regulations.

6.7.1 Regulation applicable to the production and conservation of hydrogen by ENGIE EPS

The activities of ENGIE EPS cover, among other things, the production and storage of hydrogen, as well as all other activities executed by ENGIE EPS in order to ensure the installation of its equipment. In this regard, ENGIE EPS is obliged to observe certain specific provisions and in particular, to comply with provisions No. 62282-3-

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100 (products) and No. 62282-3-300 (installations) stipulated by the International Electrotechnical Commission, the principal global organisation in charge of preparing and publishing international standards in the field of electric, electronic and associated technologies. ENGIE EPS is obliged to follow certain technical stages when implementing its equipment. More specifically, the aforementioned provisions list a set of standardised regulations to be applied to the implementation of fuel cell technology. Moreover, the International Electrotechnical Commission imposes other regulations and safety rules intended exclusively for the implementation of the technology in potentially explosive atmospheres (see rule 60079). In Italy, these provisions, as well as those linked to the production and storage of hydrogen, were already transposed by a ministerial decree dated 31 August 2006, which notably provided for a series of regulations: to be applied (a) in order to prevent fires and explosions; and (b) during the manufacturing and functioning phases of the technologies relating to hydrogen-based systems.

6.7.2 Regulation applicable to ENGIE EPS products and equipment

Considering the portfolio of products developed by ENGIE EPS and more specifically, during their design and implementation phase, ENGIE EPS is obliged to apply the following European directives (the European directives listed under points (i) to (iv) more specifically govern the general framework to be observed for obtaining CE marking, which allows ENGIE EPS Group to sell its products freely in the European market):

– Directive 2006/42/CE (also termed the “Machines Directive”) applies to machines as well as to interchangeable equipment, safety devices, lifting accessories, chains, cables and belts, and for removable mechanical transmission devices and hence to ENGIE EPS’s portfolio of products. Pursuant to its provisions, certain measures must be taken in order to ensure that the design of the equipment may be marketed and/or commissioned, on condition that it satisfies certain specific requirements, the aim of which is to not endanger the health and safety of individuals and as appropriate, of domestic animals or goods, when they are installed, maintained and used in accordance with their initial intended use or under reasonably foreseeable conditions. More specifically, the Directive imposes specific requirements on so-called potentially dangerous equipment and more specifically: (a) each item of equipment must comply with the requirements regarding health and safety; (b) each item of equipment must necessarily be accompanied by its own technical file; and (c) each item of equipment must be accompanied by certain items of supplementary information, such as practical instructions. Moreover, certain procedures are required in order to evaluate the achieved level of compliance required and to establish the CE declaration of compliance, which is obligatory for obtaining and affixing CE marking on the product. This directive was transposed into Italian law by legislative decree No. 17 dated 27 June 2010 and into French law by decree No. 2008-1156 dated 7 November 2008.

– Directive 2006/95/CE (also termed the “Low Voltage Directive”) is also applicable to ENGIE EPS’s portfolio of products since this refers to the electrical material intended for deployment within certain voltage limits. This directive principally provides for common objectives regarding safety rules, in order that any item of electrical equipment approved by an EU member state is judged to be fit for use in all of the other EU countries. The “Low Voltage Directive” does not impose specific technical standards to be

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observed, but instead rests on the technical standards of the International Electrotechnical Commission for guiding industries in the production of safe equipment; consequently, all of the provisions provided by this Directive must necessarily be read in view of the standards decreed by the International Electrotechnical Commission. Pursuant to the provisions of the Directive, certain necessary and appropriate measures must be taken in order to ensure that the electrical material is only designed and marketed on the market if, having been manufactured pursuant to good engineering practices regarding safety in effect within the European Community, it does not endanger the safety of individuals, domestic animals or goods, when it is installed, maintained and used in the applications for which it was designed. The compliance of the products with the standards is a mandatory condition for obtaining the declaration of CE compliance. This directive does not have to be transposed into Italian law since it results from other directives, which have already been transposed. The same holds in French law (directives 73/23/CEE and 93/68/CEE, codifying directive 2006/95/CE, were transposed respectively by decrees no. 75–848 of 26 August 1975, and No. 2009-890 of 22 July 2009).

– Directive 2004/108/CE (also termed “Electromagnetic Accounting Directive” (CEM)), applies to all electronic and electric products likely to be capable of disturbing the electromagnetic environment. Consequently, electronic or electrical industry manufacturers shall ensure and be able to demonstrate that their products are compliant with the requirements of the directive, in order to affix the CE marking necessary for marketing such products within the European Union. This directive demands that all products comply with the basic requirements regarding protection principally the following ones: (a) electromagnetic perturbations produced by the device shall not exceed a threshold set by harmonised regulations. This threshold is the one above which an item of radio, telecommunications or any other item of equipment will not be able to function as foreseen; and (b) the device must have a level of immunity to electromagnetic perturbations, in accordance with its intended use, which allows it to function without unacceptable degradation of its dedicated performance. This Directive also provides for the implementation of internal procedures, which must be correctly applied in terms of assessment of compliance, in order to achieve the technical requirements more effectively. This directive has also been transposed into Italian law by legislative decree No. 194 dated 6 November 2007 and into French law by decree No. 2006-1278 of 18 October 2006.

– Directive 97/23/CE (also termed “Directive for equipment under pressure”) establishes standards for the design and manufacture of equipment under pressure (such as ships, storage reservoirs under pressure, heat exchangers, steam generators, boilers, industrial piping, security equipment and accessories under pressure). In reality, the equipment under pressure is extensively used in (high temperature) processing industries, in energy production, in the delivery of public services, heating, air conditioning, gas storage and transport. Moreover, this directive sets the requirements regarding administrative procedures for implementing the “assessment of compliance” for equipment under pressure. Within the context of the European Community regime the directive, the equipment under pressure, the assembly is mentioned above, shall maintain the pressure and volume safety thresholds, satisfy the essential security requirements regarding the

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design, manufacture and tests and lastly, must comply with the appropriate procedures in terms of assessment of compliance. This Directive was also transposed into Italian law by Legislative Decree No. 93 of 25 February 2000, and into French law by a decree of 26 August 1997, and Decree No. 99-1046 of 13 December 1999.

– Directive 94/9/CE (also termed “Directive on devices to be used in an explosive atmosphere”) the object of which is to harmonise the health and safety requirements for the manufacturer, the users, as well as individuals working with devices which may be exposed to a potentially explosive atmosphere. These essential health and safety requirements are specific regarding: the potential sources of ignition of the equipment intended to be used in potentially explosive environments, autonomous protection systems, intended to be operational following an explosion and with the principal objective of immediately ending the explosion and/or of limiting the effects of flares and pressure linked to the explosion, the safety devices intended to ensure the secure functioning of such an item of equipment regarding the source of ignition and the secure functioning of the autonomous protection systems and components with no autonomous function necessary for the secure functioning of such an item of equipment or of such autonomous protection systems. Directive 94/9/CE, among other things: (i) provides for harmonised requirements for non-electrical equipment, for the equipment intended to be used in potentially explosive environments, due to risks linked to dangerous dusts and to protection systems, (ii) imposes obligations on individuals who place the products into circulation and/or into service, whether this is the manufacturer, its legal representative, the importer or any other responsible person. This directive was transposed into Italian law by Presidential Decree No. 216 of 23 March 1998, and into French law by Decree No. 96-1010 of 19 November 1996.

– In parallel to this Directive, Directive 99/92/CE identifies the zones at risk to be taken into account on installation of an item of equipment presenting the conditions for a potentially explosive atmosphere. Each zone must contain a minimum category of devices which must be used in order to limit any potentially dangerous situation. This directive obliges the end user to obtain a document evaluating the risks before installation. This directive was also transposed into Italian law and more specifically, by Legislative Decree No. 233 of 12 June 2003. In French law, it was transposed by Decree No. 2011-758 of 28 June 2011.

– Directive 2010/35/UE (also termed the “TPED Directive”) governs all of the necessary safety and precautionary measures for the transport of the equipment under pressure within the EU. It regulates all equipment under pressure which may contain gas and that have to be moved. This directive applies to the design, manufacture, and assessment of compliance and to the periodic reassessment of transportable bottles, tubes, cryogenic containers and tankers for the transport of hydrogen cyanide gas, hydrogen fluoride and hydrofluoric acid. It also covers the associated valves and rechargeable and non-rechargeable bottles. This directive applies to the existing equipment, as well as to new equipment installed since its date of entry into effect on 1 July 2001. The compliance of the equipment is verified by periodic assessments. Associated with Directive 97/23/CE (also termed “equipment under pressure”), it implements certain of the standards defined

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by the ADR (European Agreement concerning the International Carriage of Dangerous Goods by Road), regarding the design, manufacture, tests, transport and maintenance of all equipment under pressure. The TPED directive was transposed into Italian law by Legislative Decree No. 78 of 12 June 2012.

– Directive 2002/95/CE, (also termed “Directive on the restriction of the use of certain hazardous substances in electrical or electronic equipment” or “RoHS Directive”). The RoHS Directive targeted six hazardous substances of concern. The maximum tolerated concentration is 0.1% by unit of weight of homogenous material for lead, mercury, hexavalent chromium, polybromobiphenyl (PBB), and polybromodiphenyl ether (PBDE) and 0.01% for cadmium. In 2011, the EU revised the RoHS Directive (“Directive 2011/65/UE” or also “RoHS Directive 2.0”), which replaced the initial RoHS directive on 3 January 2013. It essentially mentions the same substances as the original directive. This directive has the object of eradicating certain dangerous substances from new electrical and electronic equipment (also termed “EEE”). The producers of electrical and electronic equipment falling within the field of the directive shall ensure that their products comply with the requirements of the directive. The requirements of the RoHS Directive apply exclusively to finished products which fall within its field of application. The RoHS Directive prohibits the introduction into circulation within the European Economic Area of all new electrical and electronic equipment containing lead, mercury, hexavalent chromium, polybromobiphenyls (PBB) and polybromodiphenyl ether (PBDE), with the exception of certain specific applications, at concentrations exceeding the values decided by the European Commission. These values were established at 0.01% by weight of homogeneous material for cadmium and 0.1% for the five other substances (consequently, the RoHS 2.0 Directive maintains these percentages unchanged). The RoHS Directive was transposed into Italian law by Legislative Decree No. 27 of 4 March 2014, and into French law by Decree No. 2005-829 of 20 July 2005.

6.8 Main events which have affected the main activities or the main markets

The information given pursuant to chapter 6 of this Registration Document has not been influenced by exceptional factors other than the regulations referred to in paragraph 6.7 above.

6.9 Dependence towards certain agreements

ENGIE EPS’s results notably depend upon the effective protection of its industrial property rights, which are a significant asset, as described in paragraphs 6.1.1 of this Registration Document, and the performance of certain suppliers of raw materials or core components and certain sub-contractor as outlined in paragraph 4.4.3 of this Registration Document.

6.10 Financial risks related to the consequences of climate change and measures taken by the Company to control such risks by implementing a low-carbon strategy in every component of its activity

Although climate change is not directly affecting our business, one of the ENGIE EPS Group top priority is climate protection.

In fact, the ENGIE EPS Group aim is to tackle this issue by further expanding renewable energies, both in mature economies and in emerging countries, and to contribute to replacing older and polluting power plants, which generate high levels of emissions, with new and highly

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efficient plants.

ENGIE EPS is playing a key role in structuring the energy transition so as to solicit and enable a carbon-neutral electricity supply, while at the same time being in a position to make provision for future energy needs with a high quality of backup power supply over the long term.

In the public debate, climate protection also plays an important role. Our stakeholders, mainly customers, institutions and politicians expect us to support the accomplishment of ambitious targets and to deliver a consistent approach directed towards the reduction of greenhouse gas emissions.

Our operations require energy which gives rise to the carbon dioxide emissions, directly or indirectly. To reduce greenhouse gas emissions, the ENGIE EPS Group has decided to introduce a hybrid corporate fleet and will also evaluate the introduction of electrical vehicles for urban business trips.

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ORGANISATIONAL STRUCTURE

7.1 Organisational Structure

The diagram here below presents ENGIE EPS as at the date of the Registration Document.

The percentages represent capital and votting rights.

For a further description of the consolidated perimeter please refer to paragraph 3.8 of the Consolidated Financial Statements of the ENGIE EPS Group included in the Annex 1 of this Registration Document

7.2 The ENGIE EPS Group

7.2.1 Electro Power Systmes S.A., the parent company

Electro Power Systems S.A., a limited liability company governed by French law, was incorporated and registered on 26 December 2014, the shares of which have been admitted to trading on Euronext Paris on 21 April 2015, which is dedicated to the commercialization and holds all of the share capital of and voting rights in EPS Manufacturing, EPS Elvi, MCM, EPS USA and 49% of the share capital of Comores Energies Nouvelle. EPS India, which had not been operating since 2013, is not included in the consolidation perimeter.

On 24 January 2018, the main shareholders of the Company (360 Capital Partners, Ersel and Prima Industrie) entered into a sale and purchase agreement with GDF International, a company belong to ENGIE EPS, to acquire a majority stake of the Company slightly above 50% of the share capital and voting rights. In order to achieve that threshold, the agreement also involved the members of the Board of Directors and the management team. The agreement aimed to build up a partnership to scale up globally and to be a strategical partner of ENGIE EPS as new leader of the energy transition towards decentralised energy solutions. The closing of the transaction – that occurred on 7 March 2018 - was subject to the condition precedent of the setting up of a new retention and long-term incentive plan to secure and strengthen the full commitment of the management team until 2021, linked to the development of the Company and an exercise price of at 9,5€ per share. It was followed by the filing of a simplified mandatory tender offer at the same price on 29 March 2018, subject to the fairness opinion of Associé en Finance. Following the tender (which closed on 14 June 2018) ENGIE (through its subsidiary GDF International) holds 59.89% of the

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Company’s share capital and voting rights (post-exercise by ENGIE (through its subsidiary GDF International) of all of its Warrants tendered in the offer).

7.2.2 Electro Power Systems Manufacturing S.r.l.: EPS Manufacturing: (formerly Electro Power Systems S.p.A.)

EPS Manufacturing is an Italian limited liability company, incorporated on 25 January 2005 in Torino, Italy. Its registered office is located

in Piazza del Tricolore 4, 20129 Milan, Italy, its R&D and manufacturing centre is located in Rivoli and an operational office is in Aosta, all dedicated to hydrogen R&D, production and commercialization.

The share capital is € 1,004,255.

In November 2015, EPS Manufacturing inaugurated its new manufacturing plant in Rivoli (Turin), that replaced the premises located in Moncalieri, Strada Carignano 48/2 (offices and R&D laboratories) and the manufacturing located in Aosta, Via Lavoratori Vittime del Col du Mont 36 (for development and production activities) (please refer to paragraph 8.1.2 of the Registration Document).

The new Turin production hub is a cutting-edge facility with 3,500 m2 of floor space, and a production capacity of 2MW per month of HyESS systems coupled with hydrogen, and 400MW per year of HyESS on a stand alone basis.

The facility, in addition to the new administrative and logistics offices, hosts the final phase of development of the HyESS coupled with hydrogen.

The ENGIE EPS Group’s management team decided to terminate the lease agreements of the abovementioned facilities in Aosta and Moncalieri and move the centre of the operations to Rivoli for incremented business needs, to strengthen the link between R&D and production and centralize in a single location all R&D and hybrid-systems related operations.

The termination of Moncalieri went into effect on 1st December 2015, whereas a new lease of Aosta has been entered until 2021.

Nevertheless, EPS Manufacturing’s aim is to maintain a smallest research unit in the Valle d’Aosta Region, closest to the Piedmont confines, to strengthen the partnership with local companies and enter the network of companies and research centres operating in that area.

For that purpose EPS Manufacturing, in February 2016, after a meeting held with the regional assessor, sent to Vallèe d’Aoste Structure S.a.r.l. a formal request for the rental of region’s premises situated in Point St Martin. On 11th August a news lease agreement was signed for the new premises in Viale Carlo Viola 78, Pont Saint Martin (Aosta-IT).

The transformation of EPS Manufacturing from a joint stock company (S.p.A.) to a limited liability company (S.r.l.) has been determined in order to obtain a cost reduction due to the simplified management system and, at the same time, to increase the flexibility connected to the governance of limited liability company type of company.

The Company holds 100% of the share capital of EPS Manufacturing.

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7.2.3 Electro Power Systems Inc.: EPS USA

The registered office of EPS USA is in the state of Delaware, 160 Greentree Drive, Suite 101, Dover, of 19904, Kent County, United States.

The premises of EPS USA are located at the Galvanize campus in San Francisco (http://www.galvanize.com/campuses/san-francisco-soma), a co-working space at 44 Tehama St, San Francisco CA 94105, USA.

EPS Manufacturing holds 100% of the share capital in EPS USA, which is dedicated to commercialization.

7.2.4 EPS Elvi Energy S.r.l.: EPS Elvi (formerly Elvi Energy S.r.l.)

On 30 November 2015 a sale and purchase agreement (“SPA”) has been entered into by and between Elvi Elettrotecnica Vitali S.p.A. (“Elvi Elettrotecnica Vitali”) and ENGIE EPS for the acquisition of a stake equal to the 100% of the share capital of a newco owned by Elvi Elettrotecnica Vitali called Elvi Energy S.r.l. (now EPS Elvi). The article 5.1 of the SPA provides that, subject to the satisfaction of the Conditions Precedent (as defined into the SPA), on the Closing Date, the Parties should execute the notarial deed and transfer the shares of EPS Elvi in front of the Notary Public by virtue of a notarial quota deed of transfer and ENGIE EPS should pay the price. The SPA expressly states that “the transfer of the shares of EPS Elvi shall be effective and in full force on from 1 January 2016” (article 5.1, II Paragraph). Therefore, from a legal perspective, the acquisition come in full force since 1 January 2016 and from that date the ownership of EPS Elvi moved from Elvi Elettrotecnica Vitali to ENGIE EPS, as confirmed by the certificate of good standing issue by the Companies’ Register of Milan.

Effective from 1 January 2016, the Company purchased the entire share capital of EPS Elvi, a company fully controlled by Elvi Elettrotecnica Vitali, and 30% of MCM – a leading R&D laboratory in which the Politecnico di Milano University is a shareholder - for around €2.4 million, of which around 48% of the proceeds will be reinvested in the Company via a capital increase reserved to Elvi and to EPS Elvi management team, and representing approximately 2.1% of the current share capital of the Company.

On 8 August 2017, the capital increase of the Company reserved for the management has been duly executed through the issuance of 196,932 shares with a par value of 0.20 €. The new shares have been issued at a unit price of 7.15 €, representing a par value of 0.20 € and 6.95 € issue premium, accounting for a total increase in capital, issue premium included, of 1,408,063.80 €. The following persons subscribed at most the number of shares indicated below:

During the Extraordinary General Meeting of EPS Elvi on 8 February 2017, it was approved the change of corporate name into EPS Elvi Energy S.r.l.

Beneficiary

Number of shares Subscription amount

Elvi Elettrotecnica Vitali S.p.A 58,842 shares €420,720.30

Mr. Nicola Vaninetti 47,761 shares €341,491.15 Mr. Gabriele Marchegiani 29,820 shares €213,213.00

Mr. Gabriele Marchegiani 7,175 shares €51,301.25

Mr. Paolo Morandi 31,807 shares €227,420.05Mr. Francesco Castelli Dezza 9,567 shares €68,404.05

Mr. Irino Mazzucco 4,784 shares €34,205.60Mr. Daniele Rosati 4,784 shares €34,205.60 Ms. Luisa Frosio 2,392 shares €17,102.80Total 196,932 shares €1,408,063.80

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7.2.5 MCM Energy Lab S.r.l.: MCM

In the context of the EPS Elvi acquisition, the Company indirectly purchased the 30% of the quotas in MCM through its participation of 100% in EPS Elvi. On 18 January 2016, the Company acquired the remaining 70% of the share capital of MCM; in particular, the Company bought a stake representing the 10% of the share capital of MCM previously held by Politecnico di Milano and the 60% of the quotas held by the university researchers. The transition was concluded for 315,000 euros, of which around 76% of the proceeds will be reinvested in ENGIE EPS via capital increase reserved to EPS Elvi management team.

MCM is a spin-off of the Politecnico di Milano. MCM activity consists of the development, design and supply of digital control and static energy conversion systems which can be used as critical components in various applications, always with the aim of achieving energy savings. The main component of MCM technology is the Universal Digital Control System that provides an advanced interface to the public grid for Distributed Generation systems, suitable for all sources, such as wind, photovoltaic, gas micro cogeneration and mini hydroelectricity plants.

The Company holds 100% of the quota in MCM, of which 70% directly and 30% indirectly through its participation in 100% of the corporate capital of EPS Elvi.

7.2.6 Electro Power Systems India Pvt Ldt: EPS India

EPS India is a representative office with no autonomous operations or assets of its own.

The registered office of EPS India is in New Delhi (India), K-61 Basement, Jangpura Extension, 110 014, and is dedicated to commercialization.

Since 2013 EPS India has ceased its operational activities. As a consequence, starting from 2013 it has been excluded from the Consolidated Financial Statements of the ENGIE EPS Group, also considering it is not material in terms of impact on assets, liabilities, revenues and costs.

7.2.7 Comores Énergie Nouvelles S.A.R.L.

Comores Énergies Nouvelles S.A.R.L. On 15 August 2018 ENGIE EPS and Vigor International Limited ("Vigor") set up a jointly-held Comorian subsidiary, Comores Énergies Nouvelles S.A.R.L. ("Comores Énergies Nouvelles" or the" SPV"), a special purpose vehicle in charge of the construction, commissioning, ownership, operation and maintenance of the generation plants up to 10 MW nominal capacity in aggregate in the islands of Anjouan and Mohéli (Comoros Islands), and which will act as supplier under the power purchase agreements with the local utilities.

The SPV is a limited liability company governed by the Revised Uniform Act of OHADA on the law of commercial companies and the economic interest grouping adopted on 30 January 2014 in Ouagadougou (Burkina Faso), and all subsequent complementary or modifying laws with registered office at Ridjal Building, Moroni - Dar Saanda, PO 2223, Moroni, Comoros.

7.2.8 ENGIE EPS Group Companies operational focus

ENGIE EPS and EPS Elvi. are operational entities focused in providing specific services. In particular:

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(i) ENGIE EPS is providing several services: Business Development, Internal Control and Business Intelligence, Administration and Finance, Legal and Compliance, Financial and General Management;

(ii) EPS Elvi is being the operational and sales division. In addition, the company has leased both EPS Manufacturing and MCM and carries out also the operations of R&D and manufacturing of standardize module and systems; and

(iii) EPS Manufacturing is focusing exclusively on developing and maintenance of intellectual property assets.

For a detailed description of operations between ENGIE EPS and its controlled companies please refer to paragraph 19.1.

7.3 List of existing branches

On 2 November 2017, the company acquired from its subsidiary EPS Elvi the business line "E- Mobility & Power Electronics Lab".

In this so-called e-Mobility sector, the ENGIE EPS Group is working with some of the most important operators in the rail and automotive sector.

Its own technology is used to make electric mobility an asset in the transport network, and to improve vehicle safety (sophisticated control techniques developed in the Energy’s sector).

Main applications in the field of e-Mobility are:

• Systems enabling the provision of ancillary services to the transmission network (frequency and voltage adjustment);

• Optimization of storage systems for electric vehicles and related battery systems;

• Electronic signalling management systems for complex railway networks (metropolitan and high-speed trains);

• Telemetry and electronic control systems for the preventive management of diagnostics for high-speed trains and electric vehicles;

• Equipment control techniques for electric vehicles, in collaboration with manufacturers of electrical appliances in the automotive sector.

The definitive purchase price amounted to €876,122.

Revenues of this branch in 2018 amounted to €467,016. A loss of €484,242 was reported in FY 2018.

The main income items of this branch, included in the overall result of the company are as follows:

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INCOME STATEMENT

31/12/2018 12 months

Revenues (net of taxes) 467,016

Stock and fixed assets 374,850

Cost of goods sold and other income 643,679

ADDED VALUE 198,187

Personnel cost 682,430

GROSS OPERATING EXPENSES (484,243)

Other products 61

Amortizations and provisions 0

Other expenses 60

EBIT (484,242)

Financial result 0

CURRENT RESULT (484,242)

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PROPERTY, PLANTS AND EQUIPMENT

8.1 Property, plants and equipment

8.1.1 Location

The registered office of the Company is located in Paris at 115, rue Réaumur, 75002 Paris, by way of a sublease agreement, effective since 1 January 2018 for a duration of 2 years with ENGIE SOLAR S.a.S, a French joint company. Under the terms of this agreement, ENGIE Solar provided the Company with offices and supplies certain services, such as reception, collection and forwarding of mail. The annual rent (net of tax) was 2,400 Euro.

8.1.2 Lease agreements

EPS Manufacturing leased the premises of a plant located in Viale Carlo Viola 78, Pont Saint Martin (Aosta-IT), a lease agreement with Valle d’Aosta Structure S.a.r.l. has been signed on 15 July 2016, with an annual rent (net of tax) 12,000 Euro:

– From 11 August 2016 to the second quarter 2017: 600 Euro per month, and

– From second quarter 2017 till the end of the agreement: 1.000 Euro per month

EPS Manufacturing, leases also premises in Rivoli (Torino).

The lease agreement of this facility in Rivoli was concluded for a six year term, and tacitly renewable for a new six-year period, with the company Bercap S.r.l. Under the terms of this agreement, Bercap provides EPS Manufacturing with a plant with a surface of 3,500sqm internally (and approx. 1,000sqm externally), located at Via Paracca, 12/d, 10098 Rivoli (Turin) for carrying out its development and production activities on HyESS, in addition to the new administrative and logistics offices.

Following the ENGIE EPS Group new organizational structure, the plant has been located by EPS Elvi since 2017.

EPS Elvi acquisition in early January 2016, added production capacity thanks to the Delebio Facility for approximately 3,000sqm internally (and more than 2,000sqm externally) in Delebio (SO), Italy, and 800sqm offices and laboratories in Milan. On 1 September 2018 EPS Elvi terminated the lease agreement for the plant of Delebio and entered a new lease Agreement with Zecca Prefabbricati S.p.A. for the Cosio Facility, a completely refurbished and renewed area including manufacturing and production site and offices. The agreement entered into force on 15 September 2018 and will last for six (6) years (i.e. expiring on 14 September 2024).

EPS Manufacturing leases an office for its registered office in Piazza del Tricolore 4, 20129 Milan (Italy) through a sublease agreement with Cautha S.r.l., entered on 10th July 2015 for a duration of one year and renewed each year for an aditional year. The annual rent (net of tax) is 13,935.83 Euro.

In the context of the EPS Elvi and MCM acquisition and in consideration of the fact that such companies already carried out their activities in two premises respectively located in Milan and Delebio and already leased by ELVI FIN S.p.A. to Elvi., two further lease agreements were entered into by and between ELVI FIN S.p.A. and EPS Elvi on 29 December 2015.

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COMPANY LOCATION TERM AND RENEWAL

RENT WITHDRAWAL TERMINATION RIGHTS

EPS Manufacturing

Pont Saint Martin Viale Carlo Viola n. 78

6 years as of 15 July 2016, with the provision of tacit renewal for further terms of 6 years

- 600 € per month from 15 July 2016 to the second quarter 2017;

- 12.000 € per year from the second quarter 2017.

EPS Manufacturing

Rivoli (TO) Via Paracca 12/D

6 years as of 21 July 2015, with the provision of tacit renewal for further terms of 6 years

- 7.500 € from 21 July 2015 to 31 December 2015

- 91.000 € for 2016;

- 103.500 € for 2017;

- 120.000 € for 2018 and following years.

EPS Manufacturing

Milano Piazza del Tricolore 4

1 year and renewal for 1 additional year-periods from 10 July 2015

- 13.935,83 € per year.

EPS Elvi Milano Via Anton Francesco Grazzini n. 14

6 years as of 1 January 2016, with the provision of tacit renewal for further terms of 6 years

- 45.000 € for the first lease year;

- 45.000 € for the second lease year;

- 40.000 € for the third lease year;

- 35.000 € for the fourth lease year;

- 40.000 € for the fifth lease year;

- 40.000 € for the sixth lease year;

The Lessee is entitled to withdraw from the agreement at any time by giving 6 months prior writte notice

The Lessee is entitled to terminate the agreement in case (i) of change of control of the shareholding structure of the Lessor of (ii) the Lessor goes under any bankruptcy procedure.

EPS Elvi via Dei Molini n. 22 Cosio Valtellino (Sondrio), Italy

From 15 September 2018 to 14 September 2024 (tacitly renewable for a six-year period)

Annual rent equal to:135.363,00 €

Electro Power Systems

115 Rue Réaumur, 75002 Paris, France

From 1 January 2019 to 31 December 2021 (renewable for a one-year period)

Annual rent equal to:2.400 €

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8.2 Environmental issues

The environmental issues that may affect the Company’s use of its tangible fixed assets are further described in paragraph 4.7.2 “Risk associated with environmental damages resulting from the development, manufacturing and operations of its Distributed Solutions” of this Registration Document.

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OPERATING AND FINANCIAL REVIEW FOR THE FINANCIAL YEARS ENDED ON 31 DECEMBER 2016, 2017 and 2018

9.1 Financial information

The Consolidated Financial Statements of the ENGIE EPS Group shown in this Registration Document reflect the accounting situation of the Company and the ENGIE EPS Group.

The Company was incorporated and integrated into the Registre du commerce et des sociétés de Paris on 26 December 2014.

At the date of this Registration Document, four entire financial years were closed, on 31 December 2015, 31 December 2016, 31 December 2017 and 31 December 2018.

The selected financial information presented below is the Consolidated Financial Statements of the ENGIE EPS Group for the years ended on 31 December 2016, 31 December 2017 and 31 December 2018.

The Consolidated Financial Statements of the ENGIE EPS Group are prepared in accordance with IFRS as issued by the IASB and adopted by the European Union. These Financial Statements were reviewed by the statutory Auditors of the ENGIE EPS Group. The report on the Consolidated Financial Statements of ENGIE EPS Group for the year ended on 31 December 2018 is presented in Annex 2 of this Registration Document.

The company financial statements for the years ended on 31 December 2016, 31 December 2017 and 31 December 2018 have been prepared pursuant to French accounting standards (defined as the “Statutory Accounts”) appearing in Annex 3 of this Registration Document. The reports of the Company’s statutory auditor on the Statutory Accounts are presented in Annex 4 of this Registration Document.

The ENGIE EPS Group consolidation perimeter underwent several amendments during the financial years ended 31 December 2016, 2017 and 2018.

On 1 January 2016, ENGIE EPS acquired 100% of the former Elvi Energy S.r.l. (now EPS Elvi Energy S.r.l.) and 30% of its subsidiary MCM Energy Lab S.r.l. The remaining 70% of MCM Energy Lab S.r.l. was then acquired on 18 January 2016. The acquisition is treated in accordance with international accounting standard IFRS 3, as a business combination.

Comores Énergies Nouvelles was incorporated on 20 July 2018. ENGIE EPS subscribed 60% of the share capital. The remaining 40% was subscribed by Vigor International Ltd. On 20 November 2018, ENGIE EPS exercised the put option granted by the shareholders agreement signed with Vigor International Ltd and sold 11% of the total issued capital. As at 31 December 2018 ENGIE EPS owns 49% of Comores Énergies Nouvelles. The entity is consolidated pursuant to the equity method in the 2018 Consolidated Financial Statements.

Other changes in the perimeter correspond to the creation and dissolution of representative or marketing subsidiaries in certain countries, with none of these subsidiaries having significant activity of their own.

The consolidation perimeter as of 31 December 2018 includes: Electro Power Systems S.A., EPS Manufacturing S.r.l., EPS Elvi Energy S.r.l., MCM Energy Lab S.r.l., EPS Inc., all consolidated line by line, and Comores Énergies Nouvelles consolidated pursuant to the equity method.

The reader is invited to read the following information on ENGIE EPS Group’s financial situation and results together with all of this Registration Document, notably the consolidated accounts of ENGIE EPS Group and the attached notes, as well as the Statutory Accounts appearing in chapter 20 (Financial Information Concerning the Issuer’s assets, financial

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situation and results) of this Registration Document.

9.2 The principal factors affecting performance of the ENGIE EPS Group during the period

The main factors affecting the performance of the ENGIE EPS Group during the analysed period were:

• Investments and commitment of financial resources for research and development, namely the purchase of goods and technical services, and the hiring of qualified personnel both from inside and outside the company, aimed at the Prophet project, the control predictive algorithm for a multi-Distributed Energy Resources (“DER”) microgrid, the HyESS® platform, power electronics and e-Mobility, the Hydrogen Module integrated in HyESS® and ENGIE EPS Group’s Enterprise Resource Planning (ERP), which required financial resources equal to approx. € 3,193 million. In particular, at the end of 2018, 1,229 K€ were invested in the Prophet project, 676 K€ for the development and completion of HyESS®, 551 K€ for the development of power electronics and e-Mobility solutions and in detail new C-BESS-900, C PV-900 and 100kW - 1500 VDC inverter suitable for applications of grid-scale storage and big-scale solar plant; 135 K€ for the ERP development to support efficient, reliable and lean actions and to enable the agile project management methodology; and 154 K€ related to new patents and licenses.

• Strengthening and enhancement of the human resources structure, resulting in increased personnel costs and the research and selection of highly qualified specialists, both in purely technical areas for both the operational management, administrative and corporate governance. The process started in the second half of 2015, and was still ongoing in 2018, absorbing a financial capacity of approximately €3.7 million in 2016, €3.5 million in 2017 and €4.4million in 2018 (corresponding to Personnel costs).

• ENGIE EPS Group’s strategy is to secure framework and win long-term framework agreements where the sales cycle may be extended over several months. Some divergences may arise between the closing of these agreements and the record of the corresponding revenues. This could entail, in case of significant agreements, a possible volatility of ENGIE EPS Group revenues and cash flows.

• Other current Assets as of 31 December 2018 (1,982 K€) are mainly composed by VAT receivables for 1,463 K€, and prepaid expenses for 295 K€. VAT receivables reported in FY 2018, amounting to 1,463 K€, have been formally reported to Italian tax authority within an official sworn declaration from independent advisor and have been requested as a refund for a total amount of 541 K€. The remaining amount will be used as a tax credit to offset cash-taxes due on a monthly base during 2019.

• As at 31 December 2018, cash in hand was reported at 10,861 K€, compared to 4,238 K€ as at 31 December 2017.

9.3 Post-closing events, December 2018

Except for those listed below, no other significant events occurred between the year end date and the date when the Board of Directors authorized the 2018 Consolidated Financial Statements publication.

• Palau Government RFP: on 15 February 2019, the Government of the Republic of Palau decided, for internal reasons, to re-open an RFP for the building of dispatchable solar PV project in support of the achievement of its energy goals. The

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launched of the RFP entails negotiating and signing a new PPA with the winner. ENGIE EPS believes that its unique, utility-scale project was the most competitive when it won the first RFP and is still the best offer. ENGIE EPS has therefore every confidence that it will again propose the most suitable solution to Palau’s expectation.

9.4 Presentation of the principal items of the consolidated income statement and comparison of financial period ended 31 December 2018, 2017 and 2016

The following table presents the principal items of the consolidated income statement for the financial periods ended 31 December 2018, 2017 and 2016:

CONSOLIDATED INCOME STATEMENT (amounts in Euro) 31/12/2018 31/12/2018(*) 31/12/2017 31/12/2016

Revenues 15,540,960 12,203,997 9,898,994 7,087,993

Other Income 119,721 119,721 107,371 226,823

TOTAL REVENUES AND OTHER INCOME 15,660,681 12,323,718 10,006,365 7,314,816

Cost of goods sold (10,983,399) (8,667,255) (6,030,347) (4,080,690)

GROSS MARGIN FROM SALES 4,677,282 3,656,463 3,976,018 3,233,856

% on Revenues 30% 30% 40% 46%

Personnel costs (4,352,366) (4,352,366) (3,503,332) (3,696,249)

Other operatinf expenses (1) (1,647,802) (1,647,802) (2,102,364) (2,899,101)

Other Costs for R&D and industrial operations (3,279,710) (2,515,276) (115,026) (614,895)

EBITDA excluding Stock options and Incentive plans expenses (2) (4,602,596) (4,858,981) (1,744,704) (3,976,389)

Amortization and depreciation (1,655,407) (1,655,407) (1,276,156) (1,219,064)

Impairement and write down (289,038) (289,038) (65,174) (264,343)

Non reccuring income and expenses dan integration costs (2,627,433) (2,627,433) (2,576,662) (1,391,870)

Stock options and Incentive plans (2,723,817) (2,723,817) (331,539) (1,620,213)

EBIT (11,898,290) (12,154,675) (5,994,235) (8,471,879)

Net financial income and expenses (692,014) (692,014) (747,538) (45,230)

Revaluation of European Investment Bank warrant liabilities (IFRS 2) and other impacts of EIB loan prepayment

3,777,134 3,777,134 (3,086,219) 0

Income Taxes 78,532 78,532 818,482 (40,493)

NET INCOME (LOSS) (8,734,638) (8,991,024) (9,009,510) (8,557,602)

Attribuable to:

Equity holders of the parent company (8,734,638) (8,991,024) (9,009,510) (8,557,601)

Non-controlling interests 0 0 0 0

Basic earnings per share (0,83) (0,85) (1,10) (1,09)

Weighted average number of ordinary shares outstanding 10,525,521 10,525,521 8,155,295 7,881,807

Diluted earnings per share (3) (0,83) (0,85) (1,10) (1,09)

(*) Like-for-Like, based on a comparable scope of accounting standards under IAS 11 and IAS 18. (1) In order to be clear and comprehensive in the Notes of the Consolidated Financial Statements, Installation costs incurred in 2017 have been reclassed in a pro-forma basis from “Other operating expenses” to “Other costs for R&D and industrial operations”. (2) EBITDA excluding stock option and Incentive Plans expenses is not defined by IFRS. It is defined in notes 3.6 and 4.6. (3) Considering the negative net result, Diluted earnings per share has been aligned to Basic earnings per share.

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9.4.1 Revenues and Other Income

IFRS 15 is mandatorily applicable starting from 1 January 2018. The ENGIE EPS Group opted for the simplified retrospective method (or “prospective method”). The transition impacts have been recognized in Equity opening balance as at 1 January 2018. According to paragraph C8 of IFRS 15, the following tables show the amount by which revenues are affected in the current reporting period by the application of this standard as compared to IAS 11, IAS 18 and related interpretations applied before the IFRS 15 adoption.

Revenues for 2018 amount to 15,541 K€ and are composed of construction contracts for 13,600 K€, sales of goods for 1,451 K€ and services rendered to the customers for 490 K€.

Revenues for 2018 are as follows: 57% for Grid Support Solutions, 6% for e-Mobility and 37% for Microgrids and Off-Grid Solutions

The main construction contracts relate to Grid Connected Solutions, Microgrids in Africa and Asia Pacific and Mobility Solutions in Europe.

The increase compared to 2017 is due to the growth in the number and size of projects as a consequence of the investments and strategic activities carried out between 2015 and 2017.

During the FY 2018, ENGIE EPS, despite the effort dedicated to the M&A operations that distinguished that period (i.e. ENGIE Acquisition and subsequent capital increase), continued to stay focused on the growth of revenues both with the scale-up on project contracts (e.g. the first construction on a 20MW utility-scale storage system in Spain completed during the second half of 2017), and the start-up of new projects such as in the Comoros, Somalia, New Caledonia and Singapore; achievements that have been reached thanks to the strong collaboration with ENGIE. More importantly, growth is also due to grid-connected solutions in Europe mainly driven by the 24 MW of storage systems that went online in Spain, Italy and Belgium.

The project mix during has been characterized by a growth in grid-connected solutions impact, mainly due to the abovementioned projects realised in Europe.

REVENUES AND OTHER INCOME(amounts in Euro) 31/12/2018 31/12/2018 (*) 31/12/2017 31/12/2016

Construction contracts 13,600,234 10,263,271 7,863,216 5,483,038 Rendering of services 489,777 489,777 403,689 373,895 Sales of goods 1,450,950 1,450,950 1,632,089 1,231,060 REVENUES 15,540,960 12,203,997 9,898,994 7,087,993 Other Income 119,721 119,721 107,371 226,823 TOTAL REVENUES AND OTHER INCOME 15,660,681 12,323,718 10,006,365 7,314,816(*) Like-for-like, based on a comparable scope of accounting standards under IAS 11 and IAS 18

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The main construction contracts generating revenues in 2018 and 2017 are the following:

Projets > 50 k€ FY 2018 FY 2017

Grid-Support Solutions: Europe 6,802,091 2,736,853

Grid-Support Solutions: Telco Italy 287,250 796,692

Grid-Support Solutions: USA system integrator - 613,947

Grid-Support Solutions: Asia Pacific - 123,876

Microgrids & Off-Grid Power Generation Solutions: East Africa 2,661.785 751,238

Microgrids & Off-Grid Power Generation Solutions: Asia Pacific 2,188,759 117,789

Microgrids & Off-Grid Power Generation Solutions: Europe 642,012 292,520

Microgrids & Off-Grid Power Generation Solutions: Latin America - 107,186

e-Mobility : Europe 415,968 1.801,212

e-Mobility : Middle East 322,259 325,709

e-Mobility : Asia Pacific - 171,156

TOTAL 13,320,125 7,838,177

Rendering of services mainly correspond to maintenance and supply of services to telecom operators for which the ENGIE EPS Group has installed its solutions in the previous years.

Sales of Goods are represented by sales of products, where the ENGIE EPS Group is not involved in the system integration or the construction phase.

In 2017 Revenues amounted to 9,899 K€ and were composed of construction contracts under IAS 11 for 7,863 K€, sales of goods for 1,632 K€ and services rendered to the customers for 404 K€.

Revenues for 2017 were as follows: 16% for Network Support Solutions, 29% for e-Mobility and 55% for Microgrids and Off-Grid Solutions.

Revenues for 2016 amounted to 7,088 K€ and were composed of sales of goods for 1,231 K€, services for 374 K€ and construction contracts for 5,483 K€. The revenues breakdown for 2016 is as follows: 20% for the telecommunication sector for Grid Connected Solutions; 30% for the energy sector for On-Grid and Mobility Solutions; and 50% for Microgrids and Off-Grid Solutions. In the 2016 consolidated financial statements, the ENGIE EPS Group determined that it is acting as a principal for the technology partnership agreements with AD and MGH customers, due to the changes that have arisen since 1 January 2016 and that affect the assessment of the indicators provided by the IAS principle.

Other income amounts to 120 K€ in 2018 and includes mainly write-off of payables due to settlement agreements reached with old suppliers and other minor operational incomes.

Other Income amounted to 107 K€ in 2017 and 227 K€ in 2016, when it was mainly related to European subsidies for development and research projects.

With respect to the financial support and subsidies of public institutions related to specific projects carried out in the context of the ordinary operating activity of the ENGIE EPS Group, these are registered under revenues, since they are effectively received, and they are registered under cash flow deriving from operating activities. Recording under revenues is linked to the confirmation of a reasonable assurance

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that the ENGIE EPS Group will comply with the conditions associated with the subsidy and that this will effectively be received. Their recording under revenues is made for the financial year during which the costs corresponding to the subsidised projects is recorded. The effective payment of the subsidy and hence the corresponding impact on cash flow may be staggered over time due to the deadlines for the public-sector institution which has granted the subsidy to verify that the conditions associated with the subsidy have been fulfilled effectively and the payment deadlines appropriate to public sector entities have been met.

During 2018 and 2017 allocation of Revenues and other income on single legal entity is:

In the context of the ENGIE EPS Group reorganisation and simplification launched in 2018:

• the majority of operations, including Pipeline of projects, sales and research and development activities have been moved to EPS Elvi;

• Mobility activities have been moved to ENGIE EPS through its Italian branch;

• all intellectual property investments have been carried out by EPS Manufacturing while all other activities have been subject to the transfer of going concern to EPS Elvi; and

• the MCM going concern, mainly related to research and development for external customers, has been transferred to EPS Elvi.

In the connection with the simplification plan put in place by the ENGIE EPS Group, the entire transfer of the revenues of MCM and EPS Manufacturing to EPS Elvi was completed on 8 February 2017 and was effective from 1 January 2017.

In parallel to the operational activities of EPS Elvi, ENGIE EPS is carrying out its own business development activity for the most important customers, particularly where its status of company listed on the regulated market of Euronext in Paris may have importance. In this respect, ENGIE EPS signed the flagship Technology Partnership Agreement with ENEL Green Power for the construction of the first hydrogen enabled microgrid in Chile, the experimental phase of which has been concluded in 2017 and for which maintenance has begun in 2018. Furthermore, ENGIE EPS is carrying out the activities related to Mobility Solutions, and particularly a contract with one of the largest players worldwide in the automotive industry.

During 2018, 2017 and 2016, revenues and other income by geographic areas, of installation are as follows:

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REVENUES AND OTHER INCOME BY INSTALLATIONS GEOGRAPHICAL AREAS (amounts in Euro)

31/12/2018 31/12/2018(*) 31/12/2017 31/12/2016

ASIA PACIFIC 2,537,228 2,198,559 750,109 1,827,233

EUROPE 10,338,017 7,339,724 8,170,843 3,420,799

USA 43,929 43,929 200,000 248,713

AFRICA 2,707,250 2,707,250 778,227 1,330,166

LATIN AMERICA 34,258 34,258 107,186 487,904

TOTAL REVENUES AND OTHER INCOME 15,660,681 12,323,718 10.006.365 7,314,815


9.4.2 Order Intake, Backlog and Pipeline

Order Intake 2018 accelerated to 41.3MW, representing approximately €10.9 million including not only utility-scale storage systems but also microgrids, smart islands and control systems for mobility and distribution applications.

Backlog as of 14 March 2019 represents €52.4 million, of which €9.7 million are Project Development contracts associated with a Power Purchase Agreement, for which the financing is currently being structured24 and €42.7 million are firm and irrevocable orders on an EPC basis, including a solar-plus-storage project awarded in partnership with ENGIE Solar representing 61% of the Project Backlog. This includes the total EPC value of such solar-plus-storage project whereas the related revenue recognition for the PV portion (approx. 55% of the Project Backlog) will depend on the final allocation of the EPC responsibilities between ENGIE EPS and ENGIE Solar.

Pipeline as of 14 March 2019 represents € 302 million and increased by 101% compared to 28 March 2018, meaning that projects converted into Backlog have been replaced by new opportunities under development.

The main regions where these systems have been installed or are under commissioning are Asia, North Africa, Southern Europe, and the Middle East. This result confirms the effectiveness of the EPS business model, which has been strengthened by the team and the technology that has enabled EPS to increase its portfolio to 43 customers in 18 countries.

9.4.3 Cost of goods sold

In 2018, cost of goods sold, which consists of purchases of raw materials and semi-finished and finished products, such as switchboards and electric materials, amounts to 10.167 K€ (4,387 K€ in 2017 and 2,950 K€ in 2016), and significantly increased because of the growth of the ENGIE EPS Group in terms of number and size of the projects. In a separate line, the costs related to finished products is shown, with reference to technology partnership agreements summing up to 1,159 K€ (1,537 K€ in 2017 and 1,195 K€ in 2016) related to the purchases of goods resold to clients.

The following table presents the details of the purchases of raw materials, consumables and finished products:

24 The Armonia project represented a 100MW microgrid, which had been awarded to ENGIE EPS (see 12 October 2018 press release) and was

included in the backlog after that date. Following the Palau government’s decision, for internal reasons, to reopen the tender (see 15 February 2019 press release), it is no longer included in the backlog.

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9.4.4 Personnel costs

Personnel costs correspond to the set of fixed and variable items of remuneration paid to employees (including CEO and managing directors), as well as travel and expenses costs, social security contributions and charges linked to pension and related commitments. This item also includes few redundancies and early retirement incentives. Since 2015, the ENGIE EPS Group has undertaken a significant hiring process which is still in progress in 2018, aimed to achieve a top-level and functionally adequate organizational structure, and to make sustainable targeted growth programs, given the pipeline and company strategic objectives.

The following table details staff costs and their evolution over the relevant financial years:

In 2018, total personel cost increased by 849 K€. The increase in salaries and wages is due to the increase in the number of employees partially offset by the capitalization of specialized personnel working hours spent on development projects amounting to 2,010 K€. The same effect is recorded in social contributions that have increased by 120 K€.

It has to be noted that the decrease in personnel cost from 2016 to 2017 is due to the capitalization of specialized personnel working hours spent on development projects partially offset by the growth in the number of employees. The impact was recorded in the salaries and wages line item (1,182 K€) and in social contributions (473 K€).

The increase in employee benefits and Other costs (mainly related to personnel’s travel costs) is mainly related to the growth of activities and projects developed by ENGIE EPS in 2018.

The total workforce of the ENGIE EPS Group is described in the following table:

The number of employees highlighted in the above-mentioned table is calculated on a “Full Time Equivalent” basis, and for 2018, differ from the total workforce at the end of the year of 100 persons mentioned in paragraph 17.1.

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EPS Elvi and MCM acquisition realized in 2016 have played a material impact in terms of personnel costs, mainly given by the contribution of the 23 full time equivalent FTE acquired with the two companies (EPS Elvi and MCM): this evolution was necessary to give a proper and appropriate structure to the Company and its development.

During the financial year, the ENGIE EPS Group capitalized 31% of its personnel costs in R&D, i.e. an amount of 2,000 K€ on a total of 6,400 K€, the remaining, 4,400 K€ is recorded as costs as highlighted in the above-mentioned table.

9.4.5 Other operating expenses

The details and evolution of the Other Operating Expenses are provided in Note 4.4 to the 2018 Consolidated Financial Statements, Note 4.4 to the 2017 Consolidated Financial Statements and Note 9.5 of the 2016 Consolidated Financial Statements.

Since 2016, 2017 and 2018 have been significant years concerning both research and development effort (product development and a brand new manufacturing plant) and staff and supportive function growth (new hired highly qualified staff recruiting and hiring), the item Other operating expenses has been focused only on recurring costs and expenses that will most probably occur in coming years. A specific line in the P&L has been added to properly allocate all costs and expenses related to non-recurring events occurred during the relevant periods.

During all the three periods, the compensation of the Board Chairman and of the CEO is not included in Other Operating Expenses, but it has been reclassified in the item Personnel costs, because of the business development, operative role played by both persons.

In 2018 the items amount 1,648 K€ while it was 1,385 K€ in 2017 and 2,453 K€ in 2016. In order to be clear and comprehensive, Installation costs incurred in 2017 and in 2016, accounted under Other operating expenses have been reclassified to Other costs for R&D and industrial operations, amounting to 718 K€ for 2017 and amounting to 446 K€ for 2016.The following table details the operating expenses over the relevant financial years:

The increase in Other Operating Expenses is mainly due to the growth of the EPS ENGIE structure, necessary to support the growth of the business. Despite revenues increasing by 23% on a like for like basis, based on accounting standards under IAS 11 and IAS 18, operating expenses have only increased by 19% thanks to cost rationalization and a more efficient internal organizational structure.

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The significantly higher amount in 2016, was due to a higher level of activity of the ENGIE EPS Group considering that from 1 January 2016, ENGIE EPS is comprised of two new companies in its perimeter, two operational plants (Rivoli and Delebio), one more office and laboratory building in Milano Bovisa, in addition to the one already in place in Aosta, and all the costs related to functioning, maintenance, tax and legal services.

9.4.6 Other costs for research and development and industrial operations

The ENGIE EPS Group uses a reclassification of operating costs that cannot be considered as structure costs as they are related to installation activities and research and development of new products that will be sold in future years. In order to be clear and comprehensive, Installation costs incurred in 2017 and in 2016, accounted under Other operating expenses have been reclassed to Other costs for research and development and industrial operations, amounting to 3,071 K€ for 2018, 718 K€ for 2017 and amounting to 446 K€ for 2016.

The cost of research and development and industrial operations are as follow:

These costs have been identified on a separate line of the P&L in order to facilitate the understanding of the ENGIE EPS Group’s effort to invest in cutting-edge technology and undertake innovative projects in order to meet the requirements of its key clients.

Industrial operations costs for 2018 amount to 3,071 K€ while they were 718 K€ in 2017 and 446 K€ in 2016. The increase is due to the higher level of activity of the ENGIE EPS Group especially linked EPC operations and in particular to the to external assembling and services outsourced to qualified partners.

The impact of Not capitalized, research and development costs was 208 K€ in 2018, while 115 K€ in 2017 and 68 K€ in 2016. This item is related to cost of goods and services that, given their nature, have not been classified to be capitalized in accordance with IFRS. They refer to costs whose economic and financial effectiveness had been limited, prudentially booked at cost during the relevant periods, as from an economic and finance perspective they will not have any impact in subsequent years.

9.4.7 EBITDA (excluding Stock Option and New Incentive Plans expenses)

Earnings Before Interest, Tax, Depreciation and amortization (“EBITDA”) is non-IFRS defined metrics.

The ENGIE EPS Group uses adjusted EBITDA (excluding Stock Option and New Incentive Plans expenses) as an indicator of its operating performance. The ENGIE EPS Group considers that certain operating income and expenses should be excluded in determining the adjusted EBITDA (excluding Stock Option and New Incentive Plans expenses). These income and expenses, although in limited numbers, cannot be qualified as exceptional or extraordinary, but correspond to unusual, abnormal and infrequent significant amounts that the ENGIE EPS Group

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presents separately to facilitate the comprehension of current operational performances.

Adjusted EBITDA (excluding Stock Option and New Incentive Plans expenses) for the three financial yeas is detailed as follows:

ADJUSTED EBITDA (excluding Stock options and Warrants) (amount in Euro)

31/12/2018 31/12/2017 31/12/2016

EBITDA - excluding Stock Option and Warrants (4,602,596) (1,744,704) (3,976,389)

Other costs for R&D and industrial operations 208,482 (115,026) 614,895ADJUSTED EBITDA (excluding Stock-options and Warrants) 4,394,114 (1,629,678) (3,361,494)

9.4.8 New Incentive Plans

The line refers to the accrual of New Incentive Plans for employees and management. In accordance with the new profit sharing plan adopted on 6 March 2018, stock options and warrants plans have been replaced with Stock Appreciation Rights (“SARs”), and, where applicable, Additional Stock Appreciation Rights (“Additional SARs”). On 28 September 2018 the Board of Director approved a new plan for a total number of 510,000 SARs of which 255,000 were allocated as at 31 December 2018 neither to board members nor mandataires sociaux.

Following this new plan:

• the previously vested stock options and warrants have been exercised during the simplified tender by ENGIE (through its subsidiary GDF International) except for 200,000 vested stock options granted to the CEO which were replaced by SARs. The previously vested stock options and warrants not exercised have been waived by their beneficiaries;

• the previously unvested stock options and warrants were replaced by Transformed SARs on a one-to-one basis – different SARs matching the strike prices of the different previously existing stock options or warrants are not subject to any performance conditions and are only linked to the condition of presence within the ENGIE EPS Group;

• in addition, Additional SARs with special characteristics, including performance conditions, linked to the achievement of revenue and EBITDA levels consistent with the 2020 Strategic Plan and the Company's retention rates for 2018 to 2020, were distributed to the CEO and other managers.

The SARs and the Additional SARs provide a new vesting period and benefit from a floor price of €9.50 adjusted to €8.87 as a result of the capital increase operation realized in August 2018.

In view of the granted SARs’ features and a settlement of the benefits that will be made in cash instead of equity instruments, this plan is qualified as “cash-settled” according to IFRS 2.

See note 4.10 to the 2018 Consolidated Financial Statements for a description of the accounting and the dilutive impact of the New Incentive Plans.

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9.4.9 Amortisation and depreciation

Amortisations correspond principally to the amortisation of technical installations, equipment and electronic material and to items of intellectual property of the ENGIE EPS Group. In 2016 the item amounted to 1,219 K€, while it increased up to 1,276 K€ in 2017 and 1,655 in 2018.

AMORTIZATION AND DEPRECIATION (amount in Euro) 31/12/2018 31/12/2017 31/12/2016

Amortization (1,415,677) (1,077,076) (1,021,200)

Depreciation (239,730) (119,080) (197,863)

TOTAL AMORTIZATION AND DEPRECIATION (1,655,407) (1,276,156) (1,219,064)

The increase in “Amortization” costs reported at 31 December 2018 is mainly due to following main reasons:

• Investment in the Prophet project (see paragraph 5.2.1).

• investment for the improvement of HyESS® (Hybrid Energy Storage Systems) platform that will enable ENGIE EPS to face the Distributed Energy Resources (DER) evolution and support (i) the new role of the algorithms in light of data predictors, (ii) the machine learning and Artificial Intelligence, (iii) Virtual Power Plant and (iv) Electric and Hybrid Vehicles integration in smart grid. Development realised in 2018 mainly consists in the further development of the Hydrogen Module integrated in HyESS®;

• development on power electronics, e-Mobility and standardised product solutions. In detail this development regards new C-BESS-900, C PV-900 and 100kW - 1500 VDC inverter and the design of new standard containers suitable for applications of grid-scale storage and big-scale solar plant;

• Enterprise Resource Planning development to support efficient, reliable and lean actions and to enable the agile project management methodology implemented by ENGIE EPS;

• new patents and licenses.

The increase in Amortization and depreciation costs reported at 31 December 2017 is due to following main reasons:

• R&D investments for the improvement of HyESS®, in particular the design review of HyESS® platform, the development of Power Quality project to adapt firmware already used in PCS to HyESS® technology and have access to the market of application for big industrials, the development of a control system for a multi-DER microgrid supplying heat and electricity in order to ensure its secure and efficient operation in the presence of high penetration of renewable generations;

• R&D developing expenses capitalized on power electronics and e-Mobility solutions and in detail new CBESS-900, C PV-900 and 100kW - 1500 VDC inverter suitable for applications of grid-scale storage and big-scale solar plant;

• further development on Hydrogen Module integrated in HyESS®;

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• capitalized expenses on Enterprise Resource Planning development to support efficient, reliable and lean actions and to enable the agile project management methodology implemented by the ENGIE EPS Group;

• new patents and licenses.

As a reminder, following EPS Elvi and MCM Acquisition, the “Purchase Price Allocation” procedure was finalized, Trade Mark Net Present Value was determined as 976.2 K€. The capitalized value impacted Amortization cost for 325.4 K€ in 2016, 2017 and 2018, assuming a 3 years’ amortization period.

In 2016, Amortisation and depreciation increased by 1,133 K€, from 86 K€ for the financial year 2015 to 1,219 K€ for the financial period 2016. Depreciation increased in the same period by € 159 K€, while Amortization increased by 974 K€.

The increase in Amortization and depreciation costs reported at 31 December 2016 is mainly due to the following main reasons:

• R&D developing expenses capitalized, due to the positive conclusion of the certification phase for the HyESS® and the HyESS® coupled with the Hydrogen Module, and consequent beginning of the commercialization, started to be amortized at P&L (358 K€ in 2016).

• Following EPS Elvi and MCM Acquisition, that represents a business combination as defined by the IFRS 3, the “Purchase Price Allocation” procedure was finalized, Trade Mark Net Present Value was determined at 976.2 K€. The capitalized value impacted Amortization cost for 325.4 K€ in 2016, assuming a 3 years’ amortization period.

9.4.10 Impairment and write down

The depreciation (or appreciation) of assets corresponds principally to the loss/gain of value which may result from the value tests carried out on assets constituted by the equipment, inventories, intangible assets or debts held by ENGIE EPS.

In 2018 the items amount to 289 K€ while it was 65 K€ in 2017 and 264 K€ in 2016.

No impairment loss was identified by the ENGIE EPS Group as of 31 December 2018 on the goodwill (amounting to 1,569 K€) emerging from the acquisitions of Elvi Energy and MCM in 2016.

In 2017 the write down mainly corresponded to future completion costs on Telecom construction contract (56 K€).In 2016, this item was equal to 264 K€ and the write down mainly related to depreciation for bad debt recorded during the financial year 2016 for 102 K€, and to the provision for future contract losses on construction contract for 156 K€, linked to the hybrid hydrogen power plant and storage development project.

9.4.11 Non-recurring and income expenses

This item includes expenses considered as non-recurring as those mainly related to specific phases of company growth and setting up of the accounting, administration and business development departments. These operating expenses cannot be qualified as exceptional or extraordinary, but still they are linked to unusual and infrequent elements, for significant amounts, presented by the ENGIE EPS Group on a separate line, in order to facilitate the understanding of the current operating activity.

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In 2018, Non-recurring income and expenses are mainly characterized by non-recurring M&A costs linked to the ENGIE acquisition and capital increase operation amounting to 1,385 K€. External partners support for the set-up of the business development international platform decreased from 1,022 K€ in 2017 to 429 K€ in 2018. A strong reduction of non-recurring travel, communication and roadshow expenses, legal, accounting and certification expenses can also be highlighted in 2018 with respect to previous periods. As a consequence of the ENGIE Acquisition, non-recurring costs with a total value of 213 K€ related to the integration in the ENGIE group have been recorded.

As mentioned above, these costs are not representative of the ENGIE EPS Group’s ordinary activity although they may have occurred in the past years and they are likely to occur again in future years.

2017 was characterized by a growth in the size of EPS’ contracts (e.g. the first construction on a 20MW utility-scale storage system in Spain and the commissioning of a 12 MW microgrid powering an entire mining site in Australia), during which Order Intake rose to € 16.6 million thanks to development of new business opportunities. Internal functions were restructured and the ENGIE EPS Group set up of a new certified Integrated Management System in parallel with an intense due diligence process in the context of the ENGIE Acquisition.

Compared to 2016, this item increased by 1,185 K€, from 1,392 K€ as of 31 December 2016 to 2,577 K€ as of 31 December 2017. This can mainly be explained by an increase in non-recurring external support and advisors for legal, accounting and certification incurred both in order to face the due diligence processes and the growth of its business activities. During 2017 ENGIE EPS Group performed non-recurring activities related to the qualification process with utilities and regulatory processes, external partners support for the set-up of the business development international platform, and non-recurring recourse to independent financial institutions to increase the level of financial communication.

In 2016, non-recurring income and expenses were mainly related to business set up costs and unusual legal, forensic, compliance, road shows and audit costs, still deriving from the IPO or from the listing activities.

In particular, in 2016, the item amounted to € 1,392 K€ consisting of 272 K€ related to non-recurring Distribution and Business development expenses, 762 K€ related to non-recurring tax, accounting and legal advisory expenses, 183 K€ related to non-recurring Travel, Communication and Roads expenses and 175 K € are linked to non-recurring litigation charges.

9.4.12 Income from Operating Activities

Income from Operating Activities is a loss of 11,898 K€ in 2018 while was a loss of 5,994 K€ in 2017, and 8,472 K€ in 2016.

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9.4.13 Net Financial Income and expenses

The item includes interests and charges on bank account, exchange rate differences on EU trades and the financial expenses related to the European Investment Bank warrants. For a full description of EIB Financing and EIB Warrants accounting treatment, please refer to Note 4.27 of the 2018 Consolidated Financial Statements.

9.4.14 Taxes

Income tax 2016, amounting to 40 K€, relates to current taxes accounted for MCM, as well as to deferred tax calculated on PPA deriving from Elvi acquisition.

In 2017, the item is positive for 818 K€ and includes income and deferred taxes and the tax assets registered in the light of the Decree 27.05.15 issued by the Italian Ministry of Economics and Finance (Industria 4.0 National Plan) for an amount of 720 K€.

The income and deferred taxes amounts to 78 K€. The decrease from the previous year is due the tax asset registered in 2017 in light of the Decree 27.05.15 issued by the Italian Ministry of Economics and Finance (Industria 4.0 National Plan) for 720 K€ (see note 4.20 of the Consolidated Financial Statements of the ENGIE EPS Group included in the Annex 1 of this Registration Document).

Any Deferred Tax Asset (“DTA”) has been accounted for FY 2018. The following table shows the amount of tax losses carried forward and the related non-accounted deferred tax asset as at 31 December 2018:

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9.4.15 Net profit

The net loss amounted to 8,735 K€ at the end of 2018 while was 9,010 K€ at the end of 2017 and 8.558 K€ at the end of 2016.

9.5 Results of the Company The activity performed during the past financial year resulted in a turnover of 3,187 K€ compared to 1,417 K€ for the previous fiscal year, with an increase of 125%.

Total operating expenses amounted to 6,384 K€ after provisions and depreciation for 13 K€.

The total cost of personnel, including social security contributions, increased from 24 K€ to 705 K€. The increase is mainly due to the integration of the Italian branch EMobility.

The operating result amounted to -2,822 K€ compared to -1,300 K€ for the previous financial year, marking a decrease of 117%.

The financial result, amounting to 82 K€, compared to -2,236 K€ for the previous financial year, shows a result before taxes amounting to -2,740 K€ compared to -3,537 K€ as of 31 December 2017.

The extraordinary result amounts to 353 K€, compared with 39 K€ for the previous year.

No income tax was accounted for this year.

Net Result as of 31 December 2018 improved by 32% compared to 2017, from -3,498 K€ to -2,387 K€ (75% of turnover excluding taxes).

9.5.1 Balance sheet

Gross Value Amortisation and

depreciation

31/12/2018 31/12/2017

ASSETS

Intangible assets

Patents 101,625 25,808 75,817 25,750

Goodwill 213,538 213,538

Other intangible assets 374,190 374,190 87,708

Financial assets

Investment in other companies 59,891,379 2,253,383 57,637,996 45,716,206

Other non current financial assets 300 300 300

TOTAL NON CURRENT ASSETS 60,581,032 2,279,191 58,301,841 45,829,964

Inventories

Work in progress 374,850 374,850

Receivables

Trade receivables 4,827,191 4,827,191 2,098,367

Credit notes from suppliers 3,510 3,510 7,447

VAT receivables 254,502 254,502 171,461

Other current receivables 10,692,731 119,376 10,573,355 1,003,298

Other

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Cash and cash equivalents 8,061,370 8,061,370 1,385,658

Prepayments and accrued income

Prepaid expenses 43,398 43,398 61,434

TOTAL CURRENT ASSETS 24,257,553 119,376 24,138,177 4,727,664

TOTAL ASSETS 84,838,585 2,398,567 82,440,018 50,557,628

LIABILITIES 31/12/2018 31/12/2017

Issued capital 2,553,372 1,687,926

Share premium 83,811,019 54,418,664

Retained earnings (7,966,221) (4,468,438)

Profit (Loss) of the period (2,386,604) (3,497,783)

NET EQUITY 76,011,565 48,140,369

Financial liabilities

Loans and debts with credit institutions 418

Financial liabilities with subsidiaries 113,772 865,257

Current liabilities

Trade liabilities 4,407,786 1,428,330

Social security and tax debts 382,905 123,055

Other debts

Other debts 1,488,194 200

Deferred revenue 34,953

DEBT 6,427,610 2,417,259

Translation differences 843

TOTAL LIABILITIES 82,440,018 50,557,628

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9.5.2 Income statement

9.5.3 Company’s results for each of the last five fiscal years

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9.5.4 Activity of subsidiaries

The main subsidiary of ENGIE EPS is EPS Elvi Energy. 2018 turnover of EPS Elvi Energy (after elimination of group intercompany) amounts to 13,907 K€ under IFRS 15.

9.5.5 Non deductible expenses

In 2018, ENGIE EPS SA did not supported any non-deductible expenses (article 223 of French Tax Code)

9.5.6 Table payments delays clients/suppliers

As provided by article L.441-6-1 and D. 411-4 of the French Commercial Code (“Code de Commerce”), the following table shows the ageing of invoice received and note paid as of 31 December 2018.

For further information, see note 4.25 of the Consolidated Financial Statements of the ENGIE EPS Group as of 31 December 2018, presented in Annex 1.

CASH FLOW AND SHARE CAPITAL OF THE ENGIE EPS GROUP

The principal events affecting the cash flow and the structure of the ENGIE EPS Group’s balance sheet during the financial year 2018 are:

• Repayment of instalments of Intesa Sanpaolo, Unicredit and Sella medium-long term loan and Intesa short term working capital financing for an amount of 2,304 K€ (please refer to paragraph 4.27 of the Consolidated Financial Statements presented in the Annex 1 for further details);

• Capital increase of 30,258 K€, 28,931 K€ for the Right Issue (net of the related expenses) and 1,327 K€ for the exercise of Stock Options and Warrants;

• On 6 September 2018, in compliance with the prepayment agreement signed with the EIB, ENGIE EPS proceeded with the early repayment the EIB Financing for a total amount of €10 million;

• Strengthening of the managerial structure of the ENGIE EPS Group through several significant recruitments;

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• Other investment in tangible and intangible assets for 3,917 K€ (of which investments in projects of development for €3.2 million of which €2.9 million capitalized); and

• Change in working capital at 31 December 2018 is 4,049 K€.

In 2017 the main events affecting the cash flow and the balance sheet structure of the ENGIE EPS Group were:

• Disbursement, on 29 June 2017, of the first tranche of €10 million of the equity-linked financing of up to €30 million with the EIB, guaranteed EFSI;

• signing of a 20MW Contract with Endesa, the Spanish utility part of the Enel group, for the supply of an Energy Storage System (ESS), with a power capacity of 20 MW and a lifetime of 8 years. The project financial structure required a significant investment in working capital (about € 3 million);

• Investments in projects of development for €2.6 million;

• strengthening of the managerial structure of the ENGIE EPS Group through several significant recruitments;

• other investment in tangible and intangible assets for 250 K€; and

• change in working capital at 31 December 2017 is -5,821 K€.

As a reminder, in 2016 the main events affecting the cash flow and the balance sheet structure of the ENGIE EPS Group were:

• opening of the new manufacturing plant in Rivoli;

• grant, in the second semester 2016, of bank loans amounting to 10 M€ at the end of the year;

• development of the new product HyESS©;

• strengthening of the managerial structure of the ENGIE EPS Group through several significant recruitments;

• finalization of EPS Elvi and MCM acquisition, with an additional cash-out of 315 K€.

10.1 Financial sources of the ENGIE EPS Group

As of 31 December 2018, the ENGIE EPS Group equity amounts to 13,521 K€ before the impact of the Revaluation of European Investment Bank warrants liabilities (IFRS 2) and to 17,298 K€ after this revaluation. The increase of 18,935 K€ with 2017 (negative equity of 1,637 K€) is mainly attributable to:

• the reclassification on reserves for Stock Options and Warrants (1,454 K€);

• the capital increase of 30,258 K€ realized during the year;

• the losses recorded during the financial year 2018 for 8,735 K€ (12,512 K€ excluding the impact of 3,777 K€ related to the Revaluation of European Investment Bank warrants liabilities;

• the impact of IFRS 15 first time adoption of -1,075 K€;

• changes in other comprehensive income and other movements amounting to -59 K€.

Since its creation and until 31 December 2018, the ENGIE EPS Group has principally been financed by:

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• financings from shareholders in the form of private cash capital increases;

• access to public capital market in April (IPO), December 2015 and August 2018;

• conversion of convertible bonds into shares (before IPO);

• current account advances (before IPO);

• supplier credits (before IPO);

• bank loans as further detailed (starting form H2 2016).

To further support Group’s growth, the ENGIE EPS Group has obtained the following bank loans:

• In July 2016 Unicredit approved a short-term credit line of 500 K€ to provide additional working capital and a medium-long term credit line of €2 million mainly dedicated to EPS’s development plan and requested cash collaterals, for an amount of €0.5 million. The relevant facility agreements were entered on 19 September 2016 and the medium-long term credit line has been drawn down on the same date.

The medium-long term credit line of €2 million has been completely repaid in January 2019.

In addition to this, EPS entered 26 October 2016 into (i) a 5-year agreement for € 3.5 million of new committed credit lines with Intesa Sanpaolo S.p.A. (“Intesa Sanpaolo”) (House Bank of the ENGIE EPS Group) mainly designated for HyESS© research and development and (ii) short-term credit lines for € 3 million, still with Intesa Sanpaolo, to face the additional working capital requirements and to boost the ongoing projects (especially in Africa and Asia).

• A further medium-long term credit line of € 1 million was approved by Banca Sella on 9 November 2016.

• In H2 2017 the short-term credit lines issued by Intesa Sanpaolo have been reduced to €1.3 million and new guarantee facilities for €1.7 million have been released by the same financial institution in order to ensure the issuance of performance bonds related to EPS projects. Intesa Sanpaolo requested cash collaterals, for a total aggregate amount of €0.9 million.

• On 6 March 2018 Intesa Sanpaolo, approved an additional € 3 million working capital facility to support the ENGIE EPS’ growth. This working capital facility, related to the 20MW Contract with Enel, was granted with a cash collaterals for an amount of €1.5 million then reduced to €0.9 million. This amount has been completely repaid before the end of 2018 once the project has been completed.

Credit lines obtained after 31 December 2018

ENGIE EPS has constantly been supported by Intesa Sanpaolo, which in February 2019 approved, subject to customary condition precedents for ENGIE group companies, additional €7.5 million facilities for research and development.

In March 2019 Unicredit approved a short-term credit line of €1.6 million to provide additional working capital for the project Lifou.

EIB Financing

• In June 2017 ENGIE EPS obtained an equity-linked financing up to € 30 million with the EIB backed by the EFSI, with the aim of supporting ENGIE EPS’ growth. The was composed of 3 five-year tranches, the first of which amounting to € 10 million – which

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was drawn down on 29 June 2017 – did not accrue any interest, while the second and the third would have, respectively, an interest rate of 7% and 5%.

• Following the acquisition by ENGIE, the EIB considered that its support role for innovation and growth sectors under EFSI had been fulfilled. It therefore informed ENGIE EPS of its intention to trigger change of control clause and consequently to request the early repayment of the first tranche of €10 million disbursed in June 2017 and the cancellation of the two tranches of €10 million each not yet drawn. The first tranche did not bear interest but was accompanied by 660,513 warrants issued to the EIB, each giving the right to subscribe for one share of the Company as of 1 July 2017. The EIB tendered its warrants in the tender offer and ENGIE (through its subsidiary GDF International) exercised the warrants on 15 June 2018.

• On 9 May 2018, ENGIE EPS signed a prepayment agreement with the EIB to terminate the equity-linked financing up to € 30 million signed on 11 April 2017, following to the occurrence of Change-of-Control Event under the Finance Contract.

• On 6 September 2018, in compliance with the prepayment agreement signed with the EIB, ENGIE EPS proceeded with the early repayment the EIB Financing for a total amount of €10 million.

10.2 Net financial position

Total cash and cash equivalents as at 31 December 2018 is €10.9 million while was €4.2 million in 2017 and €5.5 million in 2016.

The cash position at 31 December 2018, represented by liquid assets, amounted to € 10.9 million compared to € 4.2 million at the end of 2017. A portion of the liquid assets serves as cash collateral to guarantee financings received by the ENGIE EPS Group that are included in net debt. The ENGIE EPS Group considers that € 1.8 million of this cash collateral is liquid to the extent that the release of the guarantees is under its control.

The increase in the Net Financial Position during the last period reflects the investments made by the ENGIE EPS Group to set up the current industrial footprint, product industrialization and business results mainly financed by the shareholders, the European Investment Bank and Intesa Sanpaolo as house bank of the ENGIE EPS Group. In parallel, the increase of the Net Financial Position is also impacted by the working capital needs generated by the growth in orders and revenues. In particular, trade working capital at 31 December 2018 is in strong increase compared to 31 December 2017.

Net financial position as at 31 December 2018 is positive for € 6.8 million; however, the ENGIE

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EPS Group also uses the Adjusted Net Financial Position that considers the VAT receivable outstanding for € 1.5 million and the negative net outstanding amount of trade working capital for € 2.6 million, resulting in total € 10.9 million.

10.3 Cash flow for FY 2018, 2017 and 2016

The following table presents the cash flow over the financial years considered:

Cash position at the end of the period is the amount held on bank balances both in Euro and in other currencies and cash deposits at leading credit institutions, including petty cash. The cash liquidity is mainly held in Euro currency.

10.3.1 Cash flows deriving from operating activities

Cash flows deriving from the operating activities represent net cash flow consumption of 7,410 K€ in 2018 (and was 9,585 K€ in 2017 and 4,409 K€ in 2016).

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In 2018, in addition to EBITDA (excluding stock options and New Incentive Plans expenses) and non-recurring charges, the net cash deficit of 7,410 K€ can be detailed as follows:

• trade receivables and prepayments are 10,291 K€ versus 11,189 K€ in 2017;

• inventory is 3,053 K€ versus 997 K€ in 2017; and

• trade & other payables are 8,260 K€ in 2018 versus 4,746 K€ in 2017.

In 2017, in addition to EBITDA (excluding Stock Option and Warrant Plans expenses) and non-recurring charges, the net cash deficit of 9,585 k€ was detailed as follows:

• trade receivables and prepayments are 11,189 k€ versus vs 6,504 k€ in 2016;

• inventory is 997 k€ versus 1,144 k€ in 2016; and

• trade & other payables are 4,746 k€ in 2017 versus 6,006 k€ in 2016.

In 2016, the net cash deficit of 4,409 K€ was detailed as follows:

• trade receivables and prepayments variation was 1,691 K€;

• inventory variation was 470 K€; and

• trade & other payables variation was 2,881 K€.

10.3.2 Cash flows deriving from investments

In 2018 EPS, invested:

• 1,229 K€ investment in the Prophet project (see paragraph 5.2.1).

• 676 K€ investment for the improvement of HyESS® (Hybrid Energy Storage Systems) platform that will enable EPS to face the Distributed Energy Resources (DER) evolution and support (i) the new role of the algorithms in light of data predictors, (ii) the machine learning and Artificial Intelligence, (iii) VPP and (iv) Electric and Hybrid Vehicles integration in smart grid. Development realised in 2018 consist mainly in further development on Hydrogen Module integrated in HyESS®;

• 551 K€ for the development on power electronics, e-Mobility and standardised product solutions. In detail this development regards new C-BESS-900, C PV-900 and 100kW - 1500 VDC inverter and the design of new standard containers suitable for applications of grid-scale storage and big-scale solar plant;

• 135 K€ for the Enterprise Resource Planning development to support efficient, reliable and lean actions and to enable the agile project management methodology implemented by the ENGIE EPS; and


In 2017 EPS, invested:

• 937 K€ for the improvement of HyESS® (Hybrid Energy Storage Systems) platform that will enable EPS to face the Distributed Energy Resources (DER) evolution and support (i) the new role of the algorithms in light of data predictors, (ii) the machine learning and Artificial Intelligence, (iii) Virtual Power Plant and (iv) Electric and Hybrid Vehicles integration in smart grid. In detail the development projects realized during 2018 consist mainly in the design

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review of the HyESS® platform, the development of Power Quality project to adapt firmware already used in PCS to HyESS® technology and have access to the market of application for big industrials, the development of a control system for a multi-DER microgrid supplying heat and electricity in order to ensure its secure and efficient operation in the presence of high penetration of renewable generations;

• 707 K€ for the development on power electronics and e-Mobility solutions and in detail new C-BESS-900, C PV-900 and 100kW - 1500 VDC inverter suitable for applications of grid-scale storage and big-scale solar plant;

• 495 K€ for the further development on Hydrogen Module integrated in HyESS®;

• 307 K€ for the Enterprise Resource Planning development to support efficient, reliable and lean actions and to enable the agile project management methodology implemented by the ENGIE EPS Group; and


As a remainder in 2016 1,463 K€ were invested in development and finalization of the HyESS® integrated with the Hydrogen Module, 157 K€ on “Other Products Development” and 196 K€ in Information Technology software licenses and development for the new Group Business Intelligence Enterprise Resource Planning (ERP). Moreover, 190 K€ have been invested in the new production plant in Rivoli plus 98 K€ for instruments, machineries, furniture and other related expenses.

10.3.3 Cash flows deriving from financing activities

In 2018, net cash flow deriving from financing activities was positive for 17,952 K€ against 11,073 K€ in 2017 due in particular to:

• Repayment of instalments of Intesa Sanpaolo, Unicredit and Sella medium-long term loan and Intesa short term working capital financing for an amount of 1,905 K€;

• Capital increase of 30,258 K€, 28,931 K€ for the Right Issue (net of the related expenses) and 1,327 K€ for the exercise of Stock Options and Warrants;

• Reimbursement for 10M€ of EIB loan.

During 2017, the cash flow deriving from financing activities represented a positive flow of 11,073 K€ principally due to:

• Drawing of on the first tranche of EIB Financing for €10 million;

• Repayment of instalments of Intesa Sanpaolo, Unicredit and Sella medium-long term loan for an amount of 476 K€;

• Capital increase of 1,480 K€ reserved to the former management of EPS Elvi.

In 2016, net cash flow deriving from financing activities was positive for 6,529 K€, due to:

• grant, in the second half of 2016, of bank loans for the sustainment of the ENGIE EPS Group’s growth and for working capital requirements. (6,522 K€);

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• strong decrease of the cash flow from public grants, in line with the ENGIE EPS Group’s strategy to attain a non-subsidized business model (from 781 K€ in 2015 to only 5 K€ in 2016).

10.3.4 Changes in working capital requirements

The following table indicates in detail the change in working capital requirements during the relevant periods:

10.4 Restrictions on the use of the capital

The ENGIE EPS Group is not facing any restriction on the use of its capital having a significant direct or indirect effect on the ENGIE EPS Group’s financing, other than guaranties securing the financings.

10.5 Expected sources of financing

The ENGIE EPS Group believes that its funding needs will be covered by available cash and the possible use of its existing credit facilities, as well as those already approved (subject to customary conditions precedent for ENGIE group companies). However, it may call upon the capital markets on an ad hoc basis.

If necessary, dedicated financing could be established for very specific projects.

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RESEARCH AND DEVELOPMENT, PATENTS AND LICENCES

11.1 Intellectual property strategy

ENGIE EPS’s strategy with respect to intellectual property is not to maximise the number of patents, but rather to best protect know-how by combining (i) patents at the system level, (ii) the patents at the component level and (iii) trade secrets.

ENGIE EPS constantly considers the opportunity to obtain patents rights on inventions that arise out of extensive research and development activities, strengthening the protection of the know-how at national and international level. The internationalization process that ENGIE EPS has undertaken in recent years makes essential the increased investment in the protection and enhancement of intellectual property rights, in order to prevent competitors and to avoid possible infringement and litigation with other players.

The IP strategy of the ENGIE EPS Group is summarized in the chart here below

Balance of System Intellectual Property coverage (Source ENGIE EPS Group)

The ENGIE EPS Group decided to protect 17 inventions, that geographically result at the date of this Registration document in 89 patents, granted in Canada, China, several European Patent Convention Countries (i.e. 25 European States), Indonesia, Russia, South Africa, South Korea and the United States, as well as 186 patent applications in total, of which the ENGIE EPS Group is actively pursuing only 41 in different key countries, including Canada, further several European Patent Convention Countries, India, and other selected countries of Patent Cooperation Treaty (PCT).

The ENGIE EPS Group has decided to partially reduce the number of targeted countries, 33, in order to focus on countries aligned on the ENGIE EPS Group’s business development strategy.

The ENGIE EPS Group’s patent portfolio covers the entire hybrid approach of ENGIE EPS to the market, including hybridization of the power conversion through renewables, batteries and hydrogen, islanding microgrid operations, the full value chain of hydrogen: hydrogen production, hydrogen storage and power generation using hydrogen, with a strong focus on energy system integration and management. Indeed, inventions are always related to system architecture and overall management of hybrid energy storage systems.

At the component level (e.g. power electronics and control, master controllers, source codes of the software to manage grid and micro-grids, flow field of the fuel cell, firmware of the power conversion etc.) the ENGIE EPS Group decided to manage related R&D innovations

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as industrial secrets resulting in 597 protected trade secrets and 200,000 hours of software and firmware coding.

11.1.1 Patents

The patent entitled “Conversion and control system for distributed generation”, officially granted un in Italy, regards the innovative Universal Power Conversion Systems (“PCS”) and Controller capable of managing multiple renewable sources, energy storage and loads, both on-grid and off-grid. Specifically:

• the power converters are able to operate an automatic and instant transition from MPPT (Maximum Power Point Tracking) to RPPT (Required Power Point Tracking) operation mode with respect to the renewable sources;

• the power converters and the controllers are capable of managing multiple configurations including one or more renewable sources, some or no energy storage means, presence of single load or the grid; and

• the system is able to seamlessly commute (< 20 ms) from on-grid to off-grid and islanded operation (“Seamless Transition”).

The patent entitled “Microgrid control system for the production and distribution of electric power coming from multiple power sources of different type and its control method” regards the innovative hierarchical control structure on two levels of the ENGIE EPS Group HPP powering a microgrid: a first control level for PCS of electric power coming from multiple power sources and a second control level for a microgrid controller (“MGC”) able to cooperate with the first control level to provide intelligent control functions of the overall microgrid according to a given priority. Control system of PCS comprises seven control functions which integrates also the essence of the DROOP Virtual Inertia Algorithm (which is coupled with other 55 trade secrets, please also refer to paragraph 1.1.4 of this Registration Document), and allows dynamic variation of the role of the multiple power sources and storage systems in order to guarantee microgrid stability. The patented innovation guarantees flexible configuration, effective sizing of equipment and improved security of the microgrid. The patent application has been filed in Italy and extended in the 146 Countries of the Patent Cooperation Treaty (PCT), where it is under evaluation.

The patent family “Backup fuel cell electric generator comprising a compact manifold body, methods of managing the operation thereof” regards the innovative direct oxygen technology architecture with smart management methods of the overall G2P module. It protects the hybrid configuration and related management of both fuel cell stack and battery start-up unit and protects specific management methods for start-up and shut-down (also in remote) of the G2P module. The patent includes the smart method to detect and recover flooding of fuel cell stack to guarantee reliability of the G2P module and to check the presence of gas leakages to guarantee safe and reliable operation of G2P module. It has been granted in Indonesia, Russia, South Africa and South Korea and it is under examination in India. in the United States and in Canada, it led to two divisional applications, both granted. In European Patent Convention Countries, it led to five divisional applications, three of them granted in some of the aforesaid Countries.

The patent entitled “Management of operation of a PEM-fuel-cell-stack backup electric generator” regards an innovative control and management strategy and procedures for the fuel cell stack monitoring, preservation and top reliability of the G2P module in all such cases in which the stack may decrease the performance or

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have a failure. All such procedures are able to avoid the stack performance decrease and are entirely managed in remote.

It has been granted in some European Patent Convention Countries, Canada, China, Indonesia, South Africa, South Korea and the United States.

The patent entitled “Management of the operation of a system for producing electric power from hydrogen and hydrogen from electric power” regards the integrated architecture of the ElectroSelfTM platform and operational management strategy of each sub-system (G2P module, P2G module, hydrogen/oxygen storage with or without compression) in the overall platform. The patent covers the architecture of the integrated solution, but in particular the smart interaction among the sub-systems. For instance, a smart interaction among the ElectroSelfTM subsystems is necessary to manage the instant variation of the hydrogen production, compression and electricity generation. Such variations shall be managed because of the floating of the inputs (e.g. electricity variable production from renewables) and the load/power utilization variation required by the customer on site, which shall immediately entail a reaction of the system and then a variation of the compression and hydrogen production. It has been granted some European Patent Convention Countries, China, Indonesia, South Africa, South Korea and the United States (where it has proceeded after a continuation in part, “CIP”) and it is under examination in Canada.

The patent entitled “Fuel cell electric power generator and management method thereof” regards the management method for the smart start-up of the ElectroSelfTM platform. Specifically, the patent describes the innovative methods and efficient process to recover heat from G2P module and speed up the electrolyser and whole system quick start up in cold environmental conditions. It has been granted in several European Patent Convention Countries, Canada, China and Russia.

The patent entitled “Stack of improved fuel cells and electric power generator comprising said stack” regards the innovative architecture of the power electronics directly integrated onto the fuel cell stack. It has been granted in Canada, China, some European Patent Convention Countries and the United States.

The patent entitled “Method for pre-heating of a electrolytic stack and electrolytic stack” regards the Innovative design and management of an electrolytic stack for preheating the electrolytic stack and increasing its electrical efficiency. It has been granted in Italy.

The patent entitled “Method of regulation of the electrolyte composition in a plant comprising of a fuel cell” regards the innovative method to keep constant electrolyte concentration in a system comprising electrolyser and fuel cell, to assure performance and lifetime of HyESSTM platform. It has been granted in Italy and is under examination in some European Patent Convention Countries.

Finally, the patent entitled “Equipment and purging method in a fuel cell” regards the innovative management of purging of a fuel cell system to assure efficiency and safe operation of HyESSTM platform. It has been granted in Italy and in Europe.

11.1.2 Patents held jointly

The patent entitled “Hydraulic multiplier device for compressing gas” that regards Innovative design of booster for hydrogen compression, with zero leakage and 100% reliability is granted in Italy and jointly owned with Fluido System S.r.l.

The ENGIE EPS Group entered with Fluido System S.r.l., an Italian limited liability company, an agreement governing the management and use of this patent, jointly

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filed and jointly held by the two contracting parties. Under the terms of such agreement, each party can use and exploit the patent without requiring the consent of the other. Nevertheless, the agreement states that Fluido System S.r.l. cannot commercially exploit it without the prior consent of ENGIE EPS.

11.1.3 Trade secrets

In addition to the aforesaid protection policy at the patent level (i.e. management methods algorithms, power electronics and control electronics, electrolytic cell and fuel cell stack), trade secrets grew considerably in importance in the ENGIE EPS Group’s intellectual property portfolio, particularly after the acquisition of EPS Elvi and MCM with their relevant resources in terms of non-registered intangible assets.

A total number of 597 trade secrets have been identified in three main areas: Energy Management, Mobility and Power Electronics and Hydrogen. In such three main areas, the ENGIE EPS Group selected the most 20 important clusters of innovative processes, software and algorithms which represent a unique competitive advantages for the ENGIE EPS Group:

A. Energy Management

(1) DROOP Virtual Inertia: drawings, electrical schemes, calculations, software blocks,

(2) POOL Algorithms: software blocks

(3) BESS control: Software blocks

(4) Software libraries (Master controller)

(5) Converter design: drawings, electrical schemes, list of materials;

(6) Sizing, technical and economical calculations: models

(7) BMS integration: drawings, electrical schemes, software blocks

(8) Container design: drawings, modelling, calculations

(9) Protection coordination: technical specification, drawings

(10) Test procedures: procedures for testing components (PCS, controllers)

(11) Simulation models: model

B. Mobility Solutions and Power Electronics

(1) Control board design: drawings, electrical schemes, software blocks

(2) Firmware control functions: software blocks

(3) MV Converters: drawings, electrical schemes, software blocks

(4) Railway signalling products: drawings, electrical schemes, software blocks

(5) Predictive diagnostic: models.

C. Hydrogen

(1) Flow fields of bipolar plates: drawings of flow fields for both air and oxygen fuel cell stacks with different operating pressure;

(2) DC/DC converters: drawings, electrical schemes, list of materials;

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(3) Products: P&ID (Process and Instrumentation Diagram), electrical schemes of different power ranges of P2G and G2P products; and

(4) Test procedures: procedures for testing components (fuel cell stack, alkaline stacks, DC/DC), leakage tests, durability tests.

The above mentioned trade secrets contained in the 20 clusters identified above, include lists of materials, drawings, electrical diagrams, test reports, manuals, firmware, software and control algorithms, regarding e.g. junction boxes, controllers, remote monitoring systems, technologies for the integration of controllers with battery management systems, power houses with specific designs and power electronics comprising software, firmware and communication and control boards.

Between such trade secrets, two of them represent a unique technology advantage of the ENGIE EPS Group: the “DROOP Virtual Inertia” at the inverter level and the “POOL Algorithms” at the energy management system level.

Thanks to the DROOP Virtual Inertia, the EPS HyESS technology provides inertia and Spinning Reserve to any national grid or microgrid in 125µs (micro-seconds) and EPSTM trademarks have enabling a stabilization of any drop in frequency in less than 20ms (milliseconds), like a rotating system, with no recourse to the energy management system and therefore with no necessity for any fast and expensive communication protocol.

On the other hand, thanks to the POOL Algorithms, any HyESS is able to allocate the Spinning Reserve leveraging sophisticated dispatching algorisms between the different assets connected to the grid.

Such unique innovations protected by trade secrets, essentially enable any microgrid powered by a renewable power plant coupled with HyESS, to perform exactly like a national electrical grid, securing stabilization of renewables intermittency and microgrid stability, together with Spinning Reserve and full virtual inertia.

As to the advantages of such unique technical performance, please refer to paragraph 6.3.1 of the Registration Document.

Such trade secrets have been already secured according to the applicable Cybersecurity Framework (please refer to paragraph 6.6 of the Registration Document) and the formalization process in technical documentation, adequate to apply for the legal protection recognized at European Union level to non-registered industrial has been accomplished on 16th October 2017. Updating of trade secret list (and related data) is performed periodically (every six months) by the Head of Innovative Projects of the ENGIE EPS Group, who collects information from reference person of each area (Energy Management, Mobility and Power Electronics and Hydrogen.

11.1.4 Trademarks

The ENGIE EPS Group considers with particular attention the protection of trademarks that distinguish its corporate identity (in particular Electro Power SystemsTM) and its main products (in particular, HyESSTM), recognizing the competitive advantage guaranteed by the industrial property and the importance of being the holder of property rights regarding its trademarks.

Indeed, trademark registrations assure to Electro Power Systems the exclusive right to use marks that distinguish its products and, at the same time, prohibiting their use by potential competitors in the countries in which they are registered.

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Namely, Electro Power SystemsTM, is registered in China and South Africa and still pending in India. ElectroSelfTM trademark is registered at national level in Italy and in all the European Union (28 European Countries), as well as in Brasil, Mexico, South Africa, South Korea, and the United States, and is under examination in China, India and Indonesia. HyESSTM trademark has been filed in all of the European Union. Lastly, EPSTM and EPS endless energy. everywhere.TM trademarks have been filed in all of the European Union.

11.1.5 Summary of the ENGIE EPS Group’s patents

The current number of granted and pending patent applications includes all countries covered by the European Patent Convention and the Patent Cooperation Treaty. However, the ENGIE EPS Group is currently targeting a number of target countries to focus its intellectual property strategy on the development of the ENGIE EPS Group's business.

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11.2 Research and development activities in-house

Since its foundation, the ENGIE EPS Group has committed significant funds to its research and development activities. These investments led to the creation of unique Hybrid Energy Storage Systems (HyESS) able to provide at the same time Flexibility and Capacity to any grid or microgrid (please refer to paragraph 6.3.2 of the Registration Document).

In 2017-2018 research and development activities have been focused on a modular and scalable technology platform composed by Power Conversion Systems (PCS), Battery Management Systems (BMS), Microgrid Controllers (MGC), Energy Management Systems (EMS) coupled with intelligent software (Balance of System platform).

On the other side, research and development effort has also been put on the hydrogen and oxygen storage self-rechargeable technology based on the vertical integration of proprietary electrolysis and fuel cell technologies patented by the ENGIE EPS Group (ElectroSelf platform).

This open architecture led to a vertically integrated Hybrid Energy Storage technology for the Capacity and Flexibility requirements of any electrical grids or microgrid, according to a technology-neutral approach: HyESS may integrate from time to time different batteries or the proprietary hydrogen module, according to the specific application requirements, assuring seamless, safe and stable power supply.

11.3 Research and development activities in the context of research projects

Many of the research activities mentioned in paragraph 11.2 have been carried out in the context of international research projects in collaboration with industrial partners and centres of excellence in research.

The ENGIE EPS Group is willing to continue to participate as partner in many research and development projects supported by European, national and regional authorities enabling it to exploit the expertise and know-how of the ENGIE EPS Group and to acquire new knowledge in order to continue the path of the innovation process of its products.

The main projects are:

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• HEALTH CODE project: real operation PEM fuel cells health-state monitoring and diagnosis based on –DC/DC converter embedded Electrochemical Impedance Spectroscopy (EIS). The European project aims at implementing an advanced monitoring and diagnostic tool for μ- CHP and backup PEM fuel cell systems. The ENGIE EPS Group is part of a consortium characterized by partners with a wide experience in the industry and research fields, such as Dantherm Power in Hobro (Denmark), EIFER Europäisches Institut fur Energieforschung EDF-KIT Ewiv in Karlsrhue (Germany), Università degli Studi di Salerno (Italy), University of Aalborg (Denmark), Torino E-District Consorzio (Italy), FCLAB of Université de Franche-Comté in Belfort (France), Vitamib in Grenoble (France). The ENGIE EPS Group acts as final user of the diagnostic tool to be developed, to be implemented in the future product versions for energy storage applications, and contributes to the integration of the diagnostic tool in the fuel cell system. The project started in September 2015 and ended on the 31st December 2019. EPS costs were €280.487, 100% funded.

• REMOTE project: Remote area Energy supply with Multiple Options for integrated hydrogen-based Technologies. The European project submitted in April 2017 as part of the Horizon 2020 programme (H2020-JTI-FCH-2017-1) was awarded in December 2017 and started on 1st January 2018. The project aims to demonstrate Hybrid Energy Storage Systems integrated with the Hydrogen Module supplied by renewables in four isolated micro-grid or off-grid remote areas. The ENGIE EPS Group will develop three of the four microgrids. The ENGIE EPS Group together with Polytechnic of Turin has built up an international consortium characterized by partners that are leading players in sustainable energy, such as Enel Green Power in Rome (Italy), Ballard Europe in Hobro (Denmark), Hydrogenics Europe in Westerlo (Belgium), Powidian in Chambray-lès-Tours (France), Horizon in Serres (Greece), IRIS in Torino (Italy), TronderEnergy in Trondheim (Norway), SINTEF in Trondheim (Norway), Centre for Research and Technology Hellas in Thermi Thessaloniki (Greece). The project will run for 48 months. ENGIE EPS budget is €2,566,500, 70% funded. The ENGIE EPS Group will co-finance the Project for the remaining 30%, of the expenses, i.e. an amount up to € 769,950.

• Training Program for Somalian technicians. The project was awarded in 2017 by the DeveloPPP.de program, set up by the German Federal Ministry for Economic Cooperation and Development, aiming at training a group of about 30 Somalian technicians to make them maximally autonomous for the installation, management and maintenance of MicroGrids to be developed in Somalia in next years by the ENGIE EPS Group. The first phase of the building capacity and qualification of about 30 Somalian technicians has been successfully carried out in the 2nd quarter of 2017 in Garowe, Somalia. The foreseen activities in 2018 were not be performed because of political instability of the area and it was decided to close the project. ENGIE EPS costs were €119,239, 44% funded. ENGIE EPS co-financed the project for the remaining 56% of the expenses, i.e. an amount of €66,774.

11.4 Future investments in Research & Development

ENGIE EPS intends to pursue its innovation path with significant investment in research and development activities also thanks to a strong integration with the ENGIE Research’s organization, through a common technology roadmap. Development

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activities are expected to keep the competitive advantage of the ENGIE EPS in terms of Balance of System of the HyESSTM platform.

11.4.1 Research and development activities for Energy Storage products development

ENGIE EPS is aiming to lead the energy transition, and a constant Research and Development on products is required to provide operating blocks to pioneering systems. In order to produce cutting-edge products, new businesses and new markets have to be continually monitored and explored, while deep knowledge of international regulation is mandatory, as well as a constant investigation of different battery suppliers and technologies; furthermore, a continuous optimization of existing solutions is required to reduce costs and to shorten production time.

To fulfil those requirements, some specific projects were planned:

• Emerging businesses will be explored deeply, with an express project aimed at exploiting the potential of Distributed Energy Resources, through the development of a Management Systems “DERMS”.

• Some products will be developed with the required certification for US market.

• A close link to regulations and new storage technologies will be granted by ad hoc projects covering the participation to IEC committees and providing the integration of new batteries in ENGIE EPS systems.

• A precise work of standardization and optimization of containerized solutions will be completed, in order to reduce costs of Balance of Systems and engineering.

• A family of Behind the Meter Energy Storage Systems will be developed, aimed to match the behind the meter market.

11.4.2 Research and development activities for e-Mobility systems with advanced BMS development

In order to enter the emerging e-mobility market a specific project was set. Its aim is to design, test and validate a series of products and functionalities for exploiting the value of Electric and Hybrid Vehicles batteries in providing energy services to the grid (such as V2G applications).

To this end, a reliable ageing model and a real time battery model will be developed and integrated into a modular advanced BMS for the control of first- and second-life battery systems. The BMS firmware will include functions for the optimization of battery operations and the provision of V2G services.

11.4.3 Research and development activites for Energy Management System (“EMS”) and Power Management System (“PMS”) controllers

Due to the multifaceted complexity of this project, dealing with optimization and control functionalities, it was split in 9 subparts.

Through the PROPHET and REIDS-SPORE sub-projects, ENGIE EPS expects to conceive and roll-out the new EMS platform, making possible to optimally combine the energy mix of electrical, thermal and hydrogen-based assets.

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Predictive functionalities will boost the system performances, tackling renewable and load variations in advance.

The need to tackle larger off-grid microgrids led to investigate the new PMS control functionalities in 2 sub-projects. Indeed, an evident transition from single busbar systems, traditionally referred as Combined Hybrid Power Plants, to networks featured by dispersed generation appears evident. This implies the need for more detailed power system simulations, with the aim of assessing potential load flow, stability and protections issues and the consequent mitigation solutions. Moreover, such electrical topological change increases the likelihood of communication failures between the electrical nodes, and it led to develop a distributed control architecture, overcoming typical Master&Slave limitations.

Three further sub-projects look at the improvement of the plant controller architecture for grid connected Battery Energy Storages. In this framework are investigated also the combined installation of storages with solar farms and critical loads, respectively for complying with ramp rate requirement of the grid operators and offering power quality mitigation functionalities.

Considering the resulting increased complexity of the EMS and PMS layers, two last sub-projects tackle the standardization and debugging of the resulting architecture, as well as the assessment of more powerful HW control platforms.

11.4.4 Research and development activities for Computer Science and Artificial Intelligence Algorithms Developments

The Computer Science and AI Algorithms Development lab has the vision of taking the ENGIE EPS Research and development roadmap to the next level.

One of the most important goals is to further the techniques used for the development of the ENGIE EPS EMS via the pioneering PROPHET project. Due to the complexity of the problem at hand, ENGIE EPS needs to be at the forefront of developing advanced algorithms in artificial intelligence and machine learning to tackle it effectively.

Furthering the cause of the PROPHET project, ENGIE EPS also wants to explore a software platform based on blockchain technology for the management of transactions at the EMS - DERMS level of microgrids and VPPs with a large number of users.

Another vital direction is to provide a software platform which will help supervise and monitor the plant and the assets in the portfolio. A dashboard like this is pivotal for a plant operator as it not only serves as a first interface which gives an overview of the state of being of the plant and its assets via KPIs but also provides information on alarms and faults that might be hampering the proper functioning, hence, increasing the overall efficiency of the plant both in terms of revenues and performance.

Finally, ENGIE EPS also wants to complete the cybersecurity framework for both ENGIE EPS and the connection to the plants aligning it with the work done by ENGIE’s Thematic Lab (based on Laborelec) and aim to reach the TIER 4 level.

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11.4.5 Research and development activities for new Microgrid Optimization Sizing Tool Development

The integration within ENGIE offered to ENGIE EPS to leverage on predefined tools, which on the other hand need minor refinements in order to fully fit to its needs.

In the context of the previously described framework, this project is expected to:

– Adapt PROSUMER tool, in collaboration with ENGIE’s EYES Thematic Lab, for both grid connected and islanded systems;

– Assess whether the EMS developed in the context of PROPHET could be deployed as a sizing tool for off-grid microgrids;

– Continue overhauling and developing internal sizing tools for supporting both Business Development and Project Engineering Teams. In this framework a new version of the Round Trip Efficiency calculation tool as well as an update of the battery characteristic data should be released.

11.4.6 Research and development activities for Power and Control Electronic Devices Development

The development of innovative technologies for Power and Control Electronics is aimed at enabling the design of new products in the fast-growing sectors of power converters systems (PCS), e-mobility, predictive diagnostics, energy storage systems, both stationary and distributed on electrical vehicles with advanced Battery Management Systems capable to perform new functions as vehicle-to-grid, smart charging, and Second Life Batteries.

The enabling technologies include:

• Development of a new and updated HW control platform, based on ARM processors and FPGA devices

• Development of new control board for PCS, microcontroller based, with high precision, high speed (32bit and floating point) and low power consumption

• Development of mini-PC based controllers, capable of wireless communication protocols and utilizing operating systems for high-level programming languages

• Development of control algorithms to implement transformerless operations of parallel connected PCS and for harmonic compensation

• Development of quality FirmWare rules for compliance with international standards and certification purposes

These new technologies will allow to obtain:

• High power density MW scale PCS using 1500Vdc operation

• Certifications of PCS according to all international standard (IEC, UL)

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• Predictive diagnostics, based on Cyber Physical Devices, for EEPS Microgrids

• New functions as Remote FW update

• Advanced BMS with real time ageing model of battery

Benefits to EEPS Products and Systems:

• Cost reduction (service costs and production costs)

• Footprint reductions of PCS’s containers

• High Reliability, Availability and Maintainability

• New functions of PCS and ENGIE EPS Power Systems

11.4.7 Research and development activities for Hydrogen Open Innovation Platform scale-up

ENGIE EPS changed its approach from product developer to system provider and integrator of third party technologies, to best fit the energy market. To cover all the range of applications, it becomes crucial to establish partnerships with chosen suppliers to increase the platform in terms of size and of possible applications.

It has been considered of relevant importance to develop a solution that can cover not only the needs of the P2P market but also those of the hydrogen industrial production and the refuelling station.

The existing Hydrogen platform, based on the 25kW P2P brick, will be developed up to TRL9 taking advantage of the activities of 3 ENGIE EPS existing projects (REIDS, PROPHET and Remote).

This project is divided in 3 sub-projects:

• Hydrogen industrial & mobility market development: Analyse and develop a new market internally to the ENGIE BUs ecosystem for hydrogen industrial and mobility (refuelling stations) application, working as a System Provider and Integrator of third party technologies.

• Hydrogen scale-up in Open Innovation Platform + Refuelling: Study, definition and development of a new modular Open Innovation Technological Sub-Platform dedicated to hydrogen industrial application, P2G and G2P application and hydrogen refuelling stations. ENGIE EPS new platform will be developed in the range of 250kW-10MW through the integration of third party technologies.

• 25kW isolated DC/DC converter: Realization of a special isolated bi-directional DC/DC converter dedicated to 25 kW P2P Hydrogen module of HyESS platform to be used in the REIDS, PROPHET and REMOTE projects.

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TREND INFORMATION

12.1 Key trends having affected the production, sales and inventory

As detailed in paragraph 20.3, in 2018 revenues increased by 57%, amounting to 15,541 K€ under IFRS 15 – and by 23% amounting to 12.234 K€ on a like-for-like basis according to IAS 11-18.

This growth is mainly driven by the success of grid-connected storage solutions deployed in Europe. These positive developments are also attributable to ENGIE EPS's credibility obtained thanks to projects with Enel, Terna, Edison and Endesa.

In particular, production and tests for the microgrid in the Comoros Islands and a hydrogen-based storage system in Singapore have been completed and the site construction has already been started. In parallel, ENGIE EPS has commissioned 20MW storage system with Endesa in Spain, a smart islands projects in Italy, battery storage systems for grid support and conventional power generation in Italy and Belgium.

The Backlog as at 14 March 2019 is € 52.4 million, of which € 42.7 million of final and irrevocable orders on an EPC basis, and € 9.7 million of Project Development contracts associated with a Power Purchase Agreements, for which financing is currently being structured. The Pipeline as of 14 March 2019 is significantly increasing and stands at over € 300 million, which means that the projects converted into Backlog have been replaced by new opportunities under development.

For a detailed description of main events affecting the ENGIE EPS Group performance after the 31 December 2018, please refer also to paragraph 9.3 of the Registration Document.

12.2 Known trends, uncertainties, commitment requests and events reasonably likely to affect the Company’s outlook and production, sales and inventory

2018 played a central role in ENGIE EPS 's strategy. Order Intake of 41.3MW MW or approximately € 10.9 million in 2018, coupled with the Industrial Partnership with ENGIE and the new corporate identity, has strengthened ENGIE EPS’ international reputation and credibility as a supplier of energy storage systems and micro-grids.

In addition, most of the orders concern EPC (Engineering, Procurement and Construction) contracts and multi-year maintenance contracts to which are now added Project Development contracts associated with PPAs. These contracts have been key to securing ENGIE EPS’ growth plan, managing larger projects and increasing the value of orders.

This positioning is the result of the investments made since the IPO in April 2015, making it possible to move from the status of a new player to that of an industrial operator, with a solid production capacity, exclusive technology, skills in system engineering, as well as a new integrated management system certified by RINA which made it possible to participate, well before the ENGIE Acquisition, in invitations to tender alongside global players.

The energy market is changing rapidly, as is the role of electricity utilities and grid operators. The structure of the electricity system is undergoing significant paradigm shifts with the increasing penetration of intermittent renewable energy sources, the

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fragmentation and distribution of electricity generation points, the diffusion of efficient and innovative grid storage and management technologies and a shift in value added creation from energy production to service provision.

In this context, ENGIE EPS activity is increasingly focused on Project Development, directly or indirectly through its partners, particularly in emerging countries.

In the usual EPC (Engineering, Supply and Construction) approach, ENGIE EPS delivers the Micro-Grid to its customer, who is the owner and manager of the renewable energy production plant and associated storage system ("owner operator") and who is responsible for finding a buyer for the electricity produced.

Project Development is a different approach: ENGIE EPS acts directly or with its partners to develop, own and manage the power generation and storage system, and conclude the associated PPA.

The ENGIE EPS Group acts as owner, operator or IPP (Independent Power Producer) and its customers are electricity utilities, grid operators, industrialists or institutions (municipalities, governments, communities, etc.) that purchase the electricity generated by the system (off-takers).

The ENGIE EPS Group must therefore obtain land, land rights and permits necessary for the development of the renewable energy production and associated storage plant, negotiate the long-term PPA with electricity buyers, negotiate agreements to interconnect the system with the electricity grid and then manage interconnection with the grid and transmission of electricity.

The conduct of these Project Development activities depends on the country concerned: in some countries, the project is initiated by the authorities or the network operator who launch a call for tenders for a PPA; in other countries, ENGIE EPS approaches interested operators directly as part of its Project Development activity to offer them a Micro-Grid with the associated PPA contract (including as part of a concession for electricity production at a fixed price per MWh).

This Project Development business model may involve ENGIE EPS entering projects developed by its partners at different stages, participating in the development of these projects through the integration of ENGIE EPS technology, or even investing in the project to finance development.

However, the objective is not to retain a long-term interest in these projects on the ENGIE EPS Group's balance sheet, but to sell them to network operators, IPPs, commercial and industrial players (C&I), other owners and managers of electrical systems (owner operators), or investors in long-term projects generating constant returns.

The Project Development activity, initiated in 2017, continued in 2018 and is a major change for ENGIE EPS and help it achieve its 2020 objectives. This will also require greater sophistication and financial strength, which can be ensured with the support of ENGIE.

In this context, as of 14 March 2019, the Backlog corresponds to €52.4 million, an increase of 109% compared to 28 March 2018. ENGIE’s projects played a pivotal role, including a solar-plus-storage project awarded in partnership with ENGIE Solar representing 61% of the Backlog. This includes the total EPC value of such solar-plus-storage project whereas the related revenue recognition for the PV portion (approx. 55%

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of the Backlog) will depend on the final allocation of the EPC responsibilities between ENGIE EPS and ENGIE Solar.

It should be noted that the Backlog should eventually consist mainly of contracts related to the Project Development activity.

According to Bloomberg New Energy Finance, the partnership with ENGIE will provide ENGIE EPS with "access to ENGIE's customer base and project portfolio. ENGIE will also serve as an industrial partner enabling ENGIE EPS to access capital at a lower cost.”

The two business models pursued by ENGIE EPS (EPC and Project Development) lead to a different revenue profile and financial structure.

In the first case, revenue is generated on a percentage-of-completion basis and then during maintenance operations as part of a service contract.

In the second case, the cost and financing of the entire development of the project should be borne pending the recurring revenues generated by the PPA, once the project has been completed and connected, and, where applicable, the proceeds from the sale of the interest in the project.

ENGIE EPS’ integration process within the ENGIE group started in 2018 and resulted in a positive outcome. ENGIE’s contribution to business development represents 67% from a Backlog perspective and 79% at the Pipeline level. More importantly, hundreds of megawatts of microgrids and specifically solar plus storage projects will be tendered in the coming months around the globe, and ENGIE EPS with the support of ENGIE Solar is well positioned with a unique vertically integrated turn-key proposition. Microgrids and utility scale storage have been prioritized for development by ENGIE and will play a significant role in ENGIE’s renewable strategy plan.

In addition, during ENGIE’s Capital Markets Day held on 28 February 2019 in London, further emphasis has been given to ENGIE EPS’s positioning as a microgrid world market leader as well as future opportunities for microgrids and energy storage.

In this context, ENGIE and ENGIE EPS management teams will continue to work together to maximize synergies and determine the appropriate level of integration between their respective businesses.

Once the effects of such integration can be better assessed, ENGIE EPS will provide an update of its strategic plan for the 2020 and beyond over the course of 2019.

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PROFIT FORECASTS

Not applicable

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ADMINISTRATIVE AND EXECUTIVE BODIES

The Company is incorporated in the form of a joint stock company with a Board of Directors.

A descriptive summary of the principal stipulations of the articles of association of the Company and of the internal regulations relating to specialised committees, appears in chapter 16 “Functioning of Administrative and Executive Bodies” of this Registration Document.

14.1 Board of Directors and Managing Director The Board of Directors has decided to adopt the Corporate Governance Code for Small and Mid-cap companies published by MiddleNext in December 2009 and updated in September 2016 (the “MiddleNext Code”) as ENGIE EPS’ reference for corporate governance practices and procedures, and to draft this Registration Document. The MiddleNext Code is available on the following website: http://www.middlenext.com/IMG/pdf/Code_de_gouvernance_site (in French only).

Since the listing of the shares of the Company on Euronext Paris (occurred on 21 April 2015), the ENGIE EPS Group has been gradually implementing the recommendations contained in the MiddleNext Code and intends to continue this process. In line with this, the members of the Board of Directors have been informed of the items included in the “Points to be watched” (Points de vigilance) sections of the MiddleNext Code, which set out the main issues to be addressed to ensure that the Company’s governance system operates smoothly. In addition, in accordance with AMF recommendation 2013-20 issued on 18 November 2013, this Registration Document contains a summary table setting out the recommendations in the MiddleNext Code that are not relevant to the Company or which the Company has elected not to apply (see paragraph 16.5 of this Registration Document).

Pursuant to Article L. 225-37 of the French Commercial Code, the chapters 14, 15 and 16 of this Registration Document present, for the financial year ended on 31 December 2018, the information on the corporate governance, including regarding the composition of the Board, the compliance with the principle of balanced representation of men and women within the Board, the conditions of preparation and organization of the works of the Board, and the limitations imposed by the Board of Directors to the powers of the Managing Director.

The rules and operating procedures of the Board are provided under French law and further set out in the Company’s articles of association (“By-Laws”) and the internal rules of the Board of Directors (“Internal Rules”) which has been adopted by the Company on 6 March 2015. The last update of the By-Laws is dated 1st January 2019.

14.1.1 Composition of the Board of Directors

Article 14 of the By-Laws provides for the conditions of appointment of the members of the Board of Directors, as well as their duties in performing such functions. The members of the Board were appointed by the ordinary Shareholders’ meeting for three (3) years. Exceptionally, the ordinary meeting of shareholders may appoint some directors for less than three years or, as the case may be, reduce the term of office of one or several directors, to ensure a staggered renewal of office of the Board members.

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As of the date of this Registration Document, the Board of Directors is composed of nine members, as follows25:

– Jean Rappe, Chairman

– Carlalberto Guglielminotti, Managing Director

– Giuseppe Artizzu, Director

– Anne Harvengt, Director

– Sophie Mertens-Stobbaerts, Director

– Masimo Prelz Oltramonti, Director

– Audrey Robat, Director

– Sabrina Maggio, Director

– Alexander Katon, Director

The following table presents the composition of the Board of Directors as of the date of this Registration Document and the principal mandates and positions held by the directors of the Company during the last five years:

25 On 7 March 2018 all the Board members resigned from their office as Directors with immediate effect and the Board co-opted the

following members: Jean Rappe (appointed as Chairman), Carlalberto Guglielminotti (appointed as Managing Director), Massimo Prelz Oltramonti, Frédérique Dufresnoy (of which the mandate has been ended at the date of the Annual General Meeting), Anne Harvengt, Sophie Mertens-Stobbaerts, Audrey Robat and Sonia Levy-Odier. Such appointments were ratified by the Shareholders during the Annual General Meeting held on 26 June 2018.

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NAME AND PROFESSIONAL ADDRESS

OFFICE HELD WITHIN THE COMPANY

DATES OF THE FIRST APPOINTMENT AND EXPIRATION OF

MANDATE AGE

PRINCIPAL OPERATIONAL DUTIES OUTSIDE THE COMPANY (WITHIN ENGIE EPS GROUP AND OUTSIDE ENGIE EPS GROUP)

Jean Rappe Chairman of the Board of Directors

Appointment: 7 March 2018 by co-optation and ratified on 26 June 2018

56 Mandates and positions held on the date of this Annual Financial Report within ENGIE EPS Group:

Rue de Réaumur, 75002 Paris (France)

None

Expiration of mandate: at the end of the general meeting called to rule on the accounts for the financial year ended on 31 December 2020

Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group: CEO and Chairman of ENGIE Solar

Mandates and positions held within ENGIE EPS Group during the last five years and which are no

longer held: None

Mandates and positions held outside ENGIE EPS Group during the last five years and which are no longer held:

Board positions in IPP projects in the Middle East

Carlalberto Guglielminotti Chief Executive Officer and Director

Appointment: co-opted on 7 March 2018 and ratified on 26 June 2018


Strada Privata Anton Francesco Grazzini 14, 20158 Milan (Italy)

Chief Executive Officer of EPS Manufacturing, EPS Elvi, MCM Energy Lab S.r.l, Director of Electro Power Systems Inc and Electro Power Systems India Pvt. Ltd.

Expiration of mandate: at the end of the general meeting called to rule on the accounts for the financial year ended on 31 December 2020 First appointment: 22 December 2014

Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group: Independent non-executive Chairman and Board member of 360 Capital Partners Italia S.r.l.


longer held: None


Operating Partner of 360 Capital Partners Co-founder and Chairman of Blackshape Aircraft and Restopolis (today The Fork) Member of the Board of Directors of Eataly Net S.r.l. and Musement S.r.l. Associate at Linklaters

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MANDATE AGE


Giuseppe Artizzu Director Appointment: 26 June 2018 44 Mandates and positions held on the date of this Annual Financial Report within ENGIE EPS Group: Strada Privata Anton Francesco Grazzini 14, 20158 Milan (Italy)

Executive Director of ENGIE EPS, Director of EPS Elvi, Electro Power Systems Inc., Electro Power Systems India Pvt. Ltd.


Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group:

Member of the Board of Directors of Cautha S.r.l.

First appointment: 16 February 2015


longer held: Director of EPS Manufacturing

Mandates and positions held outside ENGIE EPS Group during the last five years and which are no

longer held: Associate Executive Director and Board member of Job & Co

Anne Harvengt Director Appointment: 7 March 2018 by co-optation and ratified on 26 June 2018


Boulevard Simon Bolivar 34-36, 1000 Brussels (Belgium)

None

Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group: None



longer held: None

Mandates and positions held during the last five years and which are no longer held outside ENGIE EPS Group:

None

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MANDATE AGE


Sophie Mertens-Stobbaerts Director Appointment: 7 March 2018 by co-optation and ratified on 26 June 2018


7, avenue Herbert Hoovert, Bruxelles (Belgium)

None

Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group: None



longer held: None


longer held:

Board member of International Power (Suffolk) Limited

Board member of International Power (Noorfolk) Limited

Board member of IP Malaysia

Board member of International Power (Condor) Limited

Board member of International Power (Merlin) Limited

Board member of National Power Limited

Massimo Prelz Oltramonti Director



2 Rosslyn Hill NW3 1PH London, UK

Director of Electro Power Systems Inc.

Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group: Advisory Board member of the risk capital fund DN Capital

Chairman of Eveka S.A. Expiration of mandate: at the end of the

general meeting called to rule on the

Mandates and positions held within ENGIE EPS Group during the last five years and which are no longer held:

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MANDATE AGE


accounts for the financial year ended on 31 December 2019

Director of EPS Manufacturing

First appointment: 16 February 2015 as Director; 8 April 2016 as Chairman (unitil 7 March 2018)


longer held:

Director of GMT Communication Partners Board member of Bigpoint Gmbh Board member of Asiakastieto AS

Managing director of Honei III Ltd (Malta), and Honey IV Ltd (Malta) holding held by Melita Capital plc Advisory Board member of Docu group Gmbh

Audrey Robat 80 avenue du Général de Gaulle 92800 Puteaux (France)

Director


37 Mandates and positions held on the date of this Annual Financial Report within ENGIE EPS Group: None


Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group:

Board member at SMA in Monaco

Board member at EDT and Marama Nui in French Polynesia

Board member at Unelco in Vanuatu

Board EEC in New Caledonia.


None Mandates and positions held outside ENGIE EPS Group during the last five years and which are no

longer held: None

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MANDATE AGE


Sabrina Maggio Director Appointment: 26 June 2018 49 Mandates and positions held on the date of this Annual Financial Report within ENGIE EPS Group:

Via Chiese 72 20126 Milano (Italy)

None

Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group: Director of Polo Sanitario Sardegna Centrale – Società di Progetto S.p.A.



None


None

Alexander Katon Director Appointment: 27 September 2018 55 Mandates and positions held on the date of this Annual Financial Report within ENGIE EPS Group:

1 Avenue Road, Craigawon (UK)

None

Mandates and positions held on the date of this Annual Financial Report outside ENGIE EPS Group: Executive Director at InfraCo Africa



Head of Strategy and Comms of Engie META region (Sep 2011-Feb 2013)


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MANDATE AGE


None

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The mandates of board members Audrey Robat, Anne Harvengt and Sophie Mertens-Stobbaerts will expire at the annual general meeting convened in June 2019 to approve the financial statements for the year ending on 31 December 2018. The Board of Directors that will be held early May 2019 to convene the annual general meeting, will decide if the mandates of such board members will be renewed or not.

Massimo Prelz Oltramonti and Alexander Katon are considered as “independent” directors, pursuant to the criteria defined by the Board of Directors and presented in paragraph 14.14 of this Registration Document.The fact that Massimo Prelz Oltramonti benefit from an incentive plan is not sufficient to establish that he has a significant financial relationship with the Company (see paragraph 16.5 of this Registration Document).

14.1.2 Biographies of the Board of Directors and of the Managing Director

Jean Rappe: Jean Rappe is the CEO at ENGIE Solar. He joined the ENGIE group 30 years ago at the very start of the privatizations in the utility sector. Most of his career has been oriented toward business development outside Europe. He worked and lived in the New York, Singapore and Dubai. Mr. Rappe has been strongly associated with ENGIE EPS Group’s power generation activities in the Middle East, a region in which he has helped make ENGIE the leading independent power producer. He holds an engineering degree from the Catholic University of Louvain in Belgium where he also obtained a post-graduate management degree.

Carlalberto Guglielminotti: he received two JD degrees cum laudae (Paris and Turin) and MBA with merit. More than ten years’ experience in the high-technology, energy and digital sectors. He spent more than 3 years as Operating Partner at 360 Capital Partners, the leading venture capital investment fund in Italy and France, specialising in the selection of investments, technologies and management of the companies in the fund’s portfolio. He was co-founder of Blackshape Aircraft and Restopolis (now TheFork.it, Trip Advisor group) and has been a board member of various companies, notably Eataly Net and Musement. Prior to his MBA, he spent more than four years as an associate at Linklaters and was seconded to the Royal Bank of Scotland, specialising in industrial and financial restructuring and structured finance transactions in the renewable energy sector.

Giuseppe Artizzu: Executive Director, Global Energy Strategy, degree cum laudae in economics and finance. He spent his entire career focusing on the global energy markets, of which ten years with Lehman Brothers in London, Milan and Rome, as an energy specialist. He was responsible for the utilities sector in Southern Europe and coordinated the bank’s corporate finance activities in the European renewable energy field. Thereafter, he focused on the development of greenfield renewable energy projects in Italy. Giuseppe is a visiting professor at Politecnico di Milano, and a member of the board of the Ridef Master Course in renewable energy and energy efficiency.He also maintains a blog on energy-related questions for the Huffington Post and is an occasional contributor to the specialist reviews Qualenergia, Staffetta Quotidiana and Quotidiano Energia.

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Anne Harvengt: Anne Harvengt is the Chief of Strategy, Merger & Acquisitions and Communication Officer at Tractebel ENGIE. She joined the ENGIE group in 2004 and is currently part of Tractebel’s Executive Committee. Mrs. Harvengt gained broad international experience in Asia Pacific and India from 2009 until 2016 as CFO and CEO in several of ENGIE’S business units. Based in Brussels, she is now driving the change of Tractebel ENGIE’S activities towards a decentralised, decarbonised and digitalised energy world, by creating new business opportunities, adding new competences and co-building a new transformational leadership culture.

Sophie Mertens-Stobbaerts: Sophie Mertens-Stobbaerts joined the ENGIE group in 2016 (GDF Suez) as Vice President of Risk Control and Business quality. Mrs. Mertens-Stobbaerts is currently Chief Strategy Officer, in charge of Communication, Institutional relations and Corporate Social Responsibility at ENGIE Africa, after holding various positions in the group. She graduated in Economics at the Université Libre de Bruxelles.

Massimo Prelz Oltramonti: Massimo Prelz Oltramonti began his career in strategic consultancy with the Boston Consulting Group in Paris. He then joined Olivetti, where he worked first in Corporate Development (external growth and venture capital), both in the United States and in Europe, then as Managing Director of the Financial Information Services division (Radiocor s.r.l.). He returned to the venture capital sector with Alta Berkley Associates in London, before turning to private equity, firstly with Advent International, then with Spectrum Equity and later with GMT Communication Partners. He held the positions of chairman of the board of directors of Jazztel Plc, of Deputy Chairman of Primacom AG and of member of the board of directors of a number of listed companies, including ESAT Telecom, SBS SA, Edap-Technomed SA, Esaote SpA, and Cityfibre Holding plc. He is also chairman of the investment committee of the venture capital fund DN Capital and director of Gigaclear plc (UK).

Massimo Prelz Oltramonti has been a director of EPS Manufacturing until 11 April 2016.

Audrey Robat: Audrey Robat is Chief of Strategy, Risk Management and Métier Link Officer at ENGIE France Networks. She began her career as a merger-acquisition analyst for Aforge Finance in Paris.

Mrs. Robat then joined the ENGIE group, where she held various positions within the Finance Department at the Headquarter and at business units for about ten years. Currently she is the Chief of Strategy, Risk Management and Métier Link Officer at the Business Unit ENGIE France Networks. She is the director of various ENGIE group entities in Monaco, French Polynesia, New Caledonia and Vanuatu.

Sabrina Maggio: Graduated in “Economics - Business Management” from the University of Economics and Commerce in Turin (Italy), Sabrina Camilla Maggio began her career in the Italian branch of DIAGEO, UK Food & Drink Corporation, in 1996, as FP&A Financial Analyst, with responsibility of UK GAAP Reporting and Brand Profitability’s Control. In 2000 she joined Lear Corporation, US Global Leader in Automotive Seating and Electrical Systems, where she worked till 2016, in the Finance area, through increasing challenges,

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from Italy FP&A Manager, to Divisional Controller and finally as Italy Business Group CFO, always with responsibility over Business Management Control, shareholder’s value enhancement, New Business evaluation, and finally Group’s M&A referent for Europe.

In 2016 she joined the ENGIE group, Leader in Energy and Services, as Italy CFO, with responsibility over Financial, Administrative, Business Controlling areas and Procurement.

Alexander Katon: graduated in Economics from the University of Newcastle (UK), Alexander Katon started his career as Business Development director at Globeleq Ltd, he then moved to GDF Suez Energy Internation as Head of Communication and Strategy and finally to Infraco Africa as Executive Director. He is currently General Manager at Summit Global Power.

14.1.3 Diversity and rationale behind the composition of the Board

The Board takes particular care in the selection of its members. Directors are chosen for their ability to act in the interests of all stakeholders and not only all shareholders, as well as for their expertise, experience and understanding of the strategic challenges in markets where ENGIE EPS operates. The composition of the Board is intended to adhere closely to the principles of diversity and to reflect the geographic mix of the business verticals (insofar as possible), to provide a range of technical skills, and to include individuals with in-depth knowledge of ENGIE EPS’ activities.

On the date of this Registration Document, the Board of Directors consists of 5 men and 4 women. Among the 9 members of the Board of Directors, 8 are foreign nationals. The Company has the objective of ensuring that the choice of members of its Board of Directors provides for a diversity of skills from its members, and has a balanced representation of men and women, in accordance with the applicable legal requirements. Pursuant to article L. 225-18-1 of the French Commercial Code, the proportion of women within the Board of Directors has successfully reached the 40% threshold. At the date of this Registration Document, the Board of Directors has 9 (nine) members, including 2 (two) independent directors (22.2%) and 4 (four) women (44.4%).

No independent Director has material business ties with the Company or any other ENGIE EPS Group entity.

Directors hold office for a term of three years and may be re-elected. Exceptionally, the ordinary General Meeting may, pursuant to article 14 of the By-Laws, appoint or one or several Directors for a period of less than three years or, depending on the case, reduce the term of office of one or more directors to enable a staggered renewal of directors. To comply with French law and pursuant to the By-Laws, the number of Directors over the age of 70 is limited to one Director.

14.2 Mission of the Board of Directors

The Board of Directors determines the scope of the Company’s business and shall ensure its implementation. Subject to the powers expressly granted to the shareholder’s meeting and within the limits of the Company’s By-Laws, the

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Board is vested with the powers to ensure the good functioning of the Company and shall address any matters and concerns related thereto.

The Board of Directors defines ENGIE EPS's strategy, long-term objectives and overall policies.

It regularly supervises the management of the business and in particular progress made on metrics it has identified. It appoints corporate officers to manage ENGIE EPS Group policies.

It ensures the existence and effectiveness of risk management and internal control procedures and oversees the quality of information provided to shareholders and to the financial markets in the financial statements and in connection with major financial transactions.

As required by law, the Board of Directors approves the financial statements for publication, proposes dividends, and makes decisions on significant investments and financial policy.

At least three days ahead of Board meetings, each Board member receives a pack of documents, so that he or she can review and/or investigate the issues to be discussed.

The ENGIE EPS Group's senior executives make regular presentations to single Board members that require further information, and in particular the Managing Director and the other operations executives in each area of responsibility discuss regularly the potential for growth, competitive positions, the ambition, the strategy for achieving it and the principal elements of their action plans.

In particular, independent Board members are also kept regularly informed of questions, comments or critiques from shareholders, whether at meetings with shareholders or by mail, e-mail or telephone.

Upon joining the Board, all directors receive training and sufficient information aligned with their specific needs and which relates to the specific area in which the ENGIE EPS Group operates and its organisation. They meet the Chairman of the Board of Directors, the Managing Director and the ENGIE EPS Group's senior executives. Meetings are also organized with certain executives and external advisors. Site visits are arranged to provide an overview of the ENGIE EPS Group's businesses and a better understanding of each one. Board members continue to receive training for as long as they remain on the Board on a continuous basis.

14.3 Meetings of the Board of Directors

The Board meets as often as necessary in the Company’s interest and at least 4 times per year. The dates of the following year’s meetings are set no later than one month before the end of the year, except for extraordinary meetings. The independent directors meet at least once a year without the executive directors in attendance, to conduct the performance evaluation of the Managing Director and the executive director.

Calls to Board meetings are sent to directors by email at least five days before each meeting. The Statutory Auditors are invited to attend the Board Meetings called to review the interim and annual financial statements, as provided for in Article L.823-17

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of the French Commercial Code.

In 2018, the Board of Directors held 16 meetings, 4 of which on the dates planned in 2018 (28 March, 15 May, 28 September and 11 November) and 12 additional meetings not planned:

– on 22 January, in Milan, on the authorisation to enter into a Sale and Purchase Agreement (“ENGIE SPA”) with the ENGIE group (through GDF International) for the purchase of a majority stake of the share capital of the Company and all relevant items in relation with the acquisition;

– on 2 March, in Milan, for the approval of the 2018 Budget and of the new Incentive Plan following the signing of the ENGIE SPA;

– on 6 March, in Milan, for the allocation of SARs to Board Members and key employees of the Company;

– on 7 March, in Paris, for the resignation of certain Board members and the co-optation of directors;

– on 15 March, in Paris, for the approval of ENGIE EPS corporate strategy and business strategy highlights: 2018 Budget key targets, 2020 Strategic Plan details, Backlog of orders and projects Pipeline highlights and on the cash flow management strategy;

– on 28 March, in Paris, for the review and approval of the Consolidated Financial Statements of ENGIE EPS Group for the financial year ended on 31 December 2017. In addition, it was reviewed all the documents for the filing with the AMF of the draft response offer document;

– on 12 April, in Paris, for the review and approval of the statutory financial statements for the financial year ended on 31 December 2017;

– on 24 April, in Paris, for the review and approval of the 2017 Registration Document and the set of documents to be filed with the Autorité des Marchés Financieres;

– on 9 May, in Paris, for the approval of the EIB Prepayment and for the reiteration of the reasoned opinion (avis motivé) on the tender offer and approval of the amended draft response offer document (projet de note en réponse);

– on 15 May, in Paris, approval of the report of the Board of directors to be submitted to the annual ordinary and extraordinary general shareholders’ meeting and the approval of the remuneration report;

– on 3 July, in Paris, for the approval of the capital increase with preferential subscription rights and delegation of powers;

– on 20 September, in Paris, for the amendment of the Internal Rules of the Board of Directors and of the Market Ethics Charter and for the approval of the change of the Company’s name;

– on 28 September, in Milan, for the approval of the 2018 half year consolidated financial statements;

– on 9 November, in Paris, for the approval of the appointment of an independent director and of medium-long term budget (2019-2024);

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– on 15 November, in Paris, for the approval of the 2018 Q3 financial results; and

– on 14 December, in Paris, for the presentation of the 2019 Agile Organisation and for the recommendation of the Remuneration and Nomination Committee on the 2019 Organization and Compensation Beef-up Plan.

The meetings lasted on average 1.25 hour.

14.4 Major accomplishment of the Board of Directors

The matters discussed by the Board in fiscal year 2018 and the decisions taken covered a wide range of areas, including:

– business developments: during four meetings, the Managing Director and the executive directors presented the ENGIE EPS Group’s general position from the previous period: changes in key financial indicators, “key events” in commercial and technical fields, state of competition, growth opportunities, pipeline of projects, update on backlog, business opportunities, operational highlights;

– 2019-2024 medium term Plan budget: this was discussed during one meeting held on 9 November 2018;

– H1 2017 and yearly consolidated financial statements: they were approved by the Board after hearing the reports of the Audit Committee and the Statutory Auditors;

– governance: the Board approved the 2019 Agile Organisation during the meeting held on 14 December 2018;

– compensation of corporate Directors and officers: the Board allocated Directors’ fees to its members and also approved the allocation of SARs to its newly appointed Board member.

– committee reports: the Board heard, for the preparation of its deliberations above in the areas that concern them respectively, reports by the Audit Committee (five reports), and the Remuneration and Nomination Committee (five reports).

14.5 Attendance and participation rate to the Board of Directors

The By-Laws and Internal Rules state that Directors may participate in certain meetings by videoconference or other telecommunications link, with the exception of those cases explicitly stipulated, such as the approval of the financial statements and preparation of the Management Report. Under the Internal Rules, Directors who participate in meetings in this way are included in the calculation of the quorum and voting majority for the meeting.

The Company’s Statutory Auditors were invited to attend all the Board Meetings and they participated at 16 out of 16 Board Meetings.

The table below shows the number of Board and Committee Meetings in 2018, as well as their members and the individual attendance at each of these meetings. The average attendance of Directors at Board Meetings was 79,2% (this rate has been calculated on the total number of meetings during the year).

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Board of Directors

Audit Committee

Remuneration and Nomination

Committee

NUMBERS OF MEETINGS in 2018 16 5 5

Massimo Prez Oltramonti

100% 100% 100%

Carlaberto Guglielminotti

92,3% - -

David Peiretti 75% 50% -

Emanuela Banfi 75% - -

Giuseppe Artizzu 100% - -

Sonia Levy Odier 100% 100% 100%

Cesare Maifredi 75% - 100%

Michela Costa 100% - -

Jean Rappe 100% 100% 100%

Frédérique Dusfresnoy

84,6% - -

Anne Harvengt 69,2% - -

Sophie Mertens-Stobbaert

69,2% - -

Audrey Robat 76,9% 50% -

Antonio Volpin 0% - -

Alexander Katon 50% - 100%

Sabrina Maggio 100% 100% -

14.6 The Chairman and the Internal Rules of the Board of Directors

The Chairman of the Board of Directors represents the Board of Directors and organizes and directs its work, on which he reports to the shareholders at the Annual General Meeting. He also represents the Board in matters concerning third parties such as employee representatives, the external auditors and shareholders. The Chairman oversees the functioning of all of the Company's corporate governance structures and, in particular, ensures that the Board members are able to fulfil their mission. The Board of Directors may appoint a Vice Chairman to chair Board meetings in the Chairman's absence.

On 6 March 2015, the Board of Directors adopted its Internal Rules, which sets out the duties of the members of the Board of Directors, their missions and the functioning rules of the Board. It also sets out the respective duties and powers of the Chairman of the Board of Directors and of the Managing Director, and of the special committees set up by the Board of Directors. The Internal Rules have been amended on 20 September 2018.

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The full text of the internal rules of the Board of Directors, in their version dated 20 September 2018, is available at the ENGIE EPS website (www.engie-eps.com).

14.7 Assessment of the operations of the Board

The Board of Directors, in accordance with the Internal Rules, assesses and debates about its functioning once a year.

Upon request of the Chairman and following the recommendation of the Audit Committee, a formal assessment of the effectiveness of the Board of Directors' operating procedures was entrusted to the General Counsel under the leadership of the Remuneration and Nomination Committee.

The assessment was performed by the Remuneration and Nomination Committee in December 2018 through individual interviews of each of the non-executive Board members and, in order to strengthen the commitment to the best corporate governance practices, it covered the following objectives:

• review the operating procedures of the Board;

• ensure that important issues were suitably prepared and discussed;

• measure the contribution of each Director to the Board’s accomplishments.

A questionnaire prepared by the Remuneration and Nomination Committee in order to perform such Board assessment had been circulated and completed by the non-executives Board members. The questionnaire was divided into four sections: (i) size and composition of the Board of Directors; (ii) meeting execution and Board of Director Organization; (iii) Chairman’s Role, CEO’s role and Directors’ role; and (iv) Remuneration and Nomination Committee and Audit Committee.

On the 13 December 2018 the Remuneration and Nomination Committee hold a meeting, during which it reviewed the answers given by the Board members, taking note of the overall positive feedback and focusing on the negative comments or evaluations and making recommendations to the Board about the areas of improvement.

As a result of the assessment, the Remuneration and Nomination Committee outlined that an important area of improvement would have been the balance of powers between the Managing Director and the Board with regard to the decisional processes and strategic business decisions.

Upon release by the Remuneration and Nomination Committee of the report of questionnaires, the Board decided that no amendment of the Internal Rules of the Board of Directors was necessary.

A new Board assessment will be performed in 2019.

14.8 Separation of the Managing Director from the Chairman role

On 6 March 2015, the Company chose to separate the positions of chairman of the Board of Directors and managing director. The members of the Board of Directors apppointed, among themselves a charmain of the board and a managing director.

On 7 March 2018 Jean Rappe replaced Massimo Prelz Oltramonti as Chairman of the Company. Carlalberto Guglielminotti is Managing Director.

This governance structure creates a clear separation between the strategic planning

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and oversight functions that are the responsibility of the Board of Directors, and the operational and executive functions that are the responsibility of senior management lead and chaired by the Managing Director and Chairman of the Board of Directors.

The Managing Director is also Managing Director of all the subsidiaries of the ENGIE EPS Group (following the relevant formal resolutions taken by the Board of Directors of any single ENGIE EPS Group company) and has the authority to manage the operations and functions of the ENGIE EPS Group. Limits are placed upon the powers of the Managing Director, and these limits are set by the Board of Directors, based on the recommendations of the Chairman of the Board. The Managing Director has to obtain the prior consent of the Board to take the following decisions:

• any acquisition or sale of an asset, activity, or any transaction with any entity, of whatever nature, which has not been taken into account in the annual budget and which represents an amount (on an individual basis or an accrued basis on a 12-month period) exceeding 500,000 Euros;

• any acquisition of a shareholding of another entity;

• any conclusion, amendment, or termination of agreements regarding intellectual property rights (namely, any right related to designs, models, inventions, projects, know-how, whether patentable or not) belonging to the ENGIE EPS Group, including the licence agreements, outside of the normal course of business;

• any conclusion, amendment, or termination of agreements whose amount represent an annual amount of 500,000 Euros whose duration exceeds 12 months;

• any loan agreement entered into by the Company and any conclusion, amendment, waiver, renewal or extension of loans granted to the Company, which have not been taken into account in the annual budget and whose amount exceed 1,000,000 Euros;

• besides the provisions of article L. 225-35, al.4 of the French Commercial Code on the grant of security interests, endorsements and guaranties, the grant of any security interest or guarantee under French of foreign law, and any amendment or extension of any such security, for an amount or a value exceeding 500,000 Euros;

• the approval of the annual budget, business plan and their amendments or adjustments; and

• the introduction by the Company of any judicial or administrative proceedings, the conclusion of a settlement of any claim against the Company, when the claimed amount exceeds 500,000 Euros.

14.9 Remuneration of the Board of Directors

The Board of Directors shall allocate attendance fees between the directors at the proposal of the Remuneration and Nomination Committee, on the basis of the global amount of the attendance fees allocated by the annual general meeting. This allocation shall consider the effective participation of the Directors at the Board meetings and their participation in the specialised committees of the Board.

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The performance of particular missions may entail a supplementary amount of attendance fees attribution or exceptional remuneration payment, subject to the regime of the regulated agreements.

The shareholder’s general meeting, by means of decisions dated 26 June 2018, set the global amount of attendance fees to be allocated among the members of the Board of Directors for the financial year to be ended on 31 December 2018 at 120,000 Euros.

The Board of Directors, on 14 December 2018 decided to approve the Remuneration and Nomination Committee suggestion to allocate the global amount of 104,397.49€ in such a way that (i) Mr Cesare Maifredi, Mr David Peiretti, Mrs Emanuela Paola Banfi and Mrs Michela Costa, Board members from 1 January to 7 March 2018 received 1,875€ each; (ii) Mr Giuseppe Artizzu received an amount for its role as Board member until 7 march 2018 (pre-ENGIE Acquisition), equal to 1,875€; (iii) Mrs Sonia Levy Odier, independent member of the Board and member of the Audit Committee and of the Remuneration and Nomination Committee until 26 June 2018, received 22,314.16€; (iv) Mr Massimo Prelz Oltramonti independent Board member from 1 January to 7 March 2018 received 41,875€; (v) Mrs Anne Harvengt, Mrs Sophie Mertens Stobbaert and Mrs Audrey Robat received 7,500€ each; (vi) Mrs Sabrina Maggio, Board member until 26 June 2018 and part of ENGIE until 30 October 2018 received 1,666.66€; and (vii) Mr Alexander Katon, independent member of the Board and member of the Audit Committee and of the Renmuneration Committee received 6,666.66€.

14.10 Remuneration of the Managing Director and top management

In 2016, the Remuneration and Nomination Committee examined the Executives Compensation 2014 Report issued by OD&M (GI Group) and identified a number of recommendations to guide the preparation of the renewal of the mandates in the coming years. It also provided an opinion to the Chairman of the Bpardon remuneration issues utilizing as annual report the Executives Compensation 2014 Report issued by OD&M (GI Group) as a basis for its recommendations made to the Board of Directors on 25 February 2016. The analysis was particularly based on a benchmark approach, in accordance with the MiddleNext Code.

According to these recommendations, the Remuneration and Nomination Committee firstly analysed the cash compensation level for Managing Directors in listed companies in Italy, by sector, segment, market capitalization and revenues generated. The geographical choice has been mainly driven by a conservative approach, in particular by the fact that salaries in Italy are below the French standard and that the ENGIE EPS management is resident in Italy.

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In addition, the Remuneration and Nomination Committee analysed the mix between fixed cash compensation, short term cash incentives (STI) and long-term incentives (LTI) for Managing Directors and Executive Directors in listed companies in Italy.

The first outcome of the analysis performed by the Remuneration and Nomination Committee has been an evident inconsistency between the market practice and the ENGIE EPS remuneration policy for executive directors and key managers, which does not contemplate any STI and LTI based on performance and to be paid in cash.

However, the Remuneration and Nomination Committee outlined two main reasons as logical rationale behind this inconsistency. The first reason is the fact that the cash LTI and STI have been replaced by a stock grant, in the form of warrants and stock options plans with a minimal strike price, which in particular for the Managing Director accounts approximately 42% of the equity based incentive plan.

The second reason for that inconsistency is mainly driven by the fact that the remuneration level of the Chief Executive Officer compared to the industry for Small and Mid-Cap listed companies with a market cap below 100m€, is at the low end of the industry.

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In other terms, the analysis made by the Remuneration and Nomination Committee highlights that the absence of an LTI and STI plan cash based, is not a breach of the recommendation of the MiddleNext Code in terms of excessive fixed remuneration, but rather a lack in cash based on incentives for the Managing Director’s activity.

In the short term this peculiarity, in light of the early stage of development of the ENGIE EPS Group in terms of financial performance and the recent raise of new equity on the market, seems to be counterbalanced by a compelling equity-based incentive plan.

At the same time, from the retention perspective, the Remuneration and Nomination Committee noted in Chart 3 (Compensation clusters) above that in absolute terms:

– Post graduates are paid in line with average listed companies (“ALC”);

– EPS key managers are paid better than middle-management positions (Quadri) in ALC; and

– EPS Executives are paid in line with top managers (Dirigenti) according to market practise but significantly less than roles with equivalent positions and responsibilities in ALC.

The analysis carried out by the Remuneration and Nomination Committee benchmarked the pay ratios with the average listed company – where the absolute remuneration values are significantly higher than small and mid-cap companies – exclusively because of a better granularity in terms of data available for all top management functions.

The pay ratios assessed by the Remuneration and Nomination Committee outlined the ENGIE EPS Group’s remuneration policy balance compared to ALC. In particular, the report outlines the balance between:

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• Managing Director pay versus:

– post graduate entry salary: 5.2 times vs. 36.5 times for ALC

– top executives (Executive Director and COO) level: 18% higher, in line with ALC

• top executives (Executive Director and COO) pay: 4.4 times the post-graduate entry salary vs. 31 times for ALC, but 45% higher than other top management roles, significantly below the ALC level.

• Top management (Executive VPs and “Chief” roles): 3 times the post-graduate entry salary vs. 17 times for ALC.

With reference in particular to the transparency principle mentioned in the MiddleNext Code, the Remuneration and Nomination Committee stressed the fact that the directorship agreements of the Executives, except for the remuneration, have exactly the same format, terms and conditions and fully comply with the recommendation of the Remuneration and Nomination Committee made to the Board of Directors on 26 November 2015 (the “Remco Guidelines”).

In particular, the Remco Guidelines, strictly in compliance with the MiddleNext Code, led the Board to:

– limit the pension and social security regimes of the Executives;

– exclude any severance indemnity (TFR) for the Executives;

– limit benefits of the Executives to insurance policies and a company car with a monthly renting fee in line with traditional managerial positions (and not C-level positions); and

– exclude any other benefits in kind or particular benefits, except for traditional working tools and reimbursement of expenses.

In addition, in order to increase the stability of the management on the one hand, and implement an appropriate retention plan for the Executives from the other hand, the Remco Guidelines, as complied with by the Board in the approval of the directorship agreements, recommended a 1-year:

– prior notice for the Board to remove or revoke the Executives without cause; and/or

– prior notice for the Executives to resign without good reasons;

14.11 Executive Committee

The senior management of the Company is organized in the form of an Executive Committee which meets on a regular basis to discuss decisions to be taken by the management of the Company. Its composition may evolve depending on the evolution of the structure of the Company’s senior management and its functioning is not subject to the Internal Rules.

To ensure a proper information flow between the Board members and the senior management, the Chairman of the Board is also a member of the Executive Committee. All Board members can attend the meetings and Vice Presidents and key managers of the ENGIE EPS Group are usually invited either as observers or to report on specific

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matters.

The ENGIE EPS Group's gradual transition from a product manufacturer of storage products to a provider of turn-key energy storage solutions has led to a realignment of responsibilities and change in the composition of the Executive Committee. As of 31 December 2018, the Executive Committee was composed as follows:

– Carlalberto Guglielminotti, Managing Director;

– Giuseppe Artizzu, Executive Director;

– Stefano Terranova, General Manager;

– Michela Costa, Executive Vice President of Corporate Operations;

– Andrea Rossi, Chief Business and Financial Officer;

– Giovanni Ravina, Chief Innovation Officer;

– Daniele Rosati, Executive Vice President of Engineering;

– Nicola Vaninetti, Executive Vice President Systems & Products;

The Executive Committee meets once a month and is the linchpin of the management structure. It is responsible not only for discussing and developing strategies to be recommended to the Board of Directors, but also for monitoring implementation of these strategies once the Board has approved them. The Executive Committee tracks implementation of action plans, monitors business unit performance, and assesses the potential benefits of growth opportunities and the risks inherent in its business operations. It implements the strategy developed by the Board of Directors and the Chief Executive Director. It helps to shape strategy, coordinate and share initiatives and track cross-functional projects to ensure the alignment of action plans deployed by ENGIE EPS Group companies.

14.12 Information provided to the Board of Directors

All necessary documents to inform the Board members about the agenda and any matters to be discussed by the Board are enclosed with the notice of meeting or sent, handed to or otherwise made available to them before every meeting with a reasonable advance.

Each Board member is required to ensure that he or she has all the information they deem essential for the Board and the Board special committees in order to properly perform their duties. If any information is not provided or if a Director believes that information may have been withheld, he or she should request it to be provided. Board members’ requests are submitted to the Chairman of the Board or to the Managing Director since the two positions are separated, who should ensure that Board members are able to fulfil their duties.

Before any meeting, all Board members also receive a complete Board Pack, which contains all useful as well as business-critical information about all events or transactions that are material to the Company. In addition, they receive copies of all press releases published by the Company.

Board members have been informed of the standard black-out periods for 2018, during which they may not trade in ENGIE EPS shares or any instruments that have ENGIE EPS shares as their underlying, either directly or through a third party. On 25th February

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2016, the Board approved the Market Ethics Charter, which extended the duration of the standard blackout periods to 30 days preceding the publication both of the annual/half year results and any quarterly result and states that Board members are considered as permanent insiders because they regularly receive price-sensitive and other confidential information. On 15 November 2018, the Board of Directors resolved to adopt the Market Ethic Charter of ENGIE. The full text of the Market Ethics Charter is available at the ENGIE EPS website (www.engie-eps.com).

Directors may, if they deem it necessary, receive additional training in the specifics of the Company, its business and its industry. Upon their appointment, the members of the Audit Committee are provided with specific details about the Company’s accounting, financial and operational practices.

14.13 Independence Criteria and Committees

Under the terms of article 15 of the By-Laws, the Board may decide to create specialized committees responsible for assisting it with its works.

On 6 March 2015, pursuant to article 11 of the Internal Rules, two committees were established: an Audit Committee and a Remuneration and Nomination Committee. The composition, attributions and operating rules of such committees are described in paragraph 16.3 of the Registration Document.

14.14 Independence criteria of the members of the Board

In accordance with the Internal Rules, the Board ensures the presence of at least two independent Directors among the Board Members.

Currently, the term "independent Director" has no definition under French law. However, Internal Rules of the Board has set a definition which is based on the MiddleNext Code and which specifies that five criteria allow to justify the independence of Board members, which is characterized by the absence of significant financial, contractual or family ties which may impair the independence of judgment. These criteria are:

(i) not being an employee or corporate officer of the company or its group company, and not having been in the last three years;

(ii) not be a significant customer, supplier or banker of the company or its group or for which the company or its group represents a significant part of the activity;

(iii) not be a company's reference shareholder;

(iv) not have close family ties with a corporate officer or a reference shareholder; and/or

(v) not be an auditor of the company over the last three years.

Based on this definition, the Board of Directors, in accordance with the report of the Remuneration and Nomination Committee, considers that the two following Directors are independent:

• Massimo Prelz Oltramonti (Chairman of the Board from 8 April 2016 to 7 March 2018); and

• Alexander Katon. The Board of Directors considered that the fact that he was the Head of Communication and Strategy of GDF Suez Energy International

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prior the ENGIE Acquisition does not call into question this independence.

The independence of the concerned Board of Directors members has been assessed at the time of their appointment. It will be assessed again at the Board of Directors meeting to be held early May 2019 to convene the Annual General Meeting, during which the mandate of three Board of Directors members must be renewed (or not).

To comply with the criteria mentioned above, the Remuneration and Nomination Committee periodically provides the Board of Directors with a list of Directors considered independent under those criteria.

14.15 Absence of conflicts of interests

To the best of the Company’s knowledge, with the exception of the elements described below, there is no potential conflict of interest between the duties regarding the Company of the members of the Board of Directors and the Managing Director and their private interest:

• certain members of the Board of Directors of the Company are direct or indirect shareholders of the Company and/or holders of SARs, as described in paragraph 15.5 “Allocation of SARs to the coporate officers in 2018” of this Registration Document;

• the regulated agreements concluded by the Company are described in art. 19.2 “Related Party Transactions” of this Registration Document;

• there was no arrangement or understanding concluded with major shareholders, customers, suppliers or others, pursuant to which, one of the members of the Board of Directors or member of senior management of the Company was selected as a member of the administrative or management bodies or member of senior management;

• no restriction has been accepted by the members of the Board of Directors or the Managing Director regarding the disposal within a certain period of time of their holding in the Company’s securities;

• Mr Alexander Katon was the Head of Communication and Strategy of GDF Suez Energy International prior the ENGIE Acquisition. He has no business relationships with ENGIE EPS.

The Internal Rules provides under Article 18 that Directors have an obligation to inform the Board of any conflict of interest, even potential, and must refrain from participating in the deliberations related thereto.

With the exception of Mr. Carlalberto Guglielminotti, who signed an employment contract with EPS Elvi on 26 June 2018, no other member of the Board of Directors has entered into any employment contract with any member of the ENGIE EPS Group and granting any benefits as a result of such contract.

14.16 Absence of convictions or official sanctions, or disqualification decision

The members of the Board of Directors currently in office have indicated to the Company that:

• they have never been subject to any convictions in relation to fraudulent offences for at least the previous five years;

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• they have never been associated to any bankruptcies, receiverships or liquidations for at least the previous five years; and

• they have never been subject to any official public incrimination and/or sanctions of such person by statutory or regulatory authorities and whether such person has never been disqualified by a court from acting as a member of the administrative, management or bodies of an issuer or from acting in the management or conduct of the affairs of any issuer for at least the previous five years.

14.17 Information referred to under article L. 225-37-5 of the French Commercial Code

Pursuant to article L. 225-37-5 of the French Commercial Code, the following elements may be potentially relevant in the event of a public offer:

• Structure of the Company’s share capital: the Company is controlled by ENGIE (through its subsidiary GDF International), which holds 60.50% of the Company's share capital and voting rights.

• Restrictions provided for under the bylaws related to the voting rights and share transfers – provisions of agreements brought to the Company’s knowledge pursuant to article L. 233-11 of the French Commercial Code: the By-Laws do not provide for any restriction related to the voting rights or the share transfers. No provision referred to under article L. 225-37-5, 2° of the French Commercial Code has been disclosed to the Company. The Company, pursuant to articles L. 233-7 and L. 233-13 of the French Commercial Code (crossing of thresholds and treasury shares) has knowledge of direct and indirect shareholdings.

• List of holders of shares to which are attached specific control rights: there are no specific control rights attached to the shares issued by the Company.

• Control mechanism provided for in employees’ shareholding system: the Company has not set up any participation agreement.

• Shareholders’ agreements brought to the Company’s knowledge and including restrictions on share transfers and the exercise of voting rights: to the Company’s knowledge, there are no shareholders’ agreements between the shareholders of the Company.

• Rules applicable to the appointment and replacement of the members of the Board of Directors and to the amendment of the bylaws: there are no specific rules in the By-Laws or in any other agreement entered into between the Company and another entity regarding the appointment and replacement of the members of the Board of Directors and the amendment of the By-Laws which will be relevant in the event of a public offer.

• Powers of the Board of Directors in the event of a public offer: the delegations granted by the shareholders’ meetings to the Board of Directors which are still ongoing are detailed in paragraph 21.1.5 of the Registration Document.

• Agreements entered into by the Company which may be amended or terminated in the event of a change of control, and agreements entered into by the Company which provide for specific indemnities to be granted to the

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members of the Board of Directors or to employees, if they resign or are dismissed without good cause, or if their position is terminated because of a tender offer:

– the employment agreement signed with Mr. Andrea Rossi and EPS Elvi Energy;

– the employment agreement signed with Ms. Michela Costa and EPS Elvi Energy;

– the directorship agreement signed with Mr. Giuseppe Artizzu and EPS Elvi Energy S.r.l.;

– the directorship agreement signed with Mr. Nicola Vaninetti and EPS Elvi Energy S.r.l.;

– the directorship agreement signed with Mr. Daniele Rosati and EPS Elvi Energy S.r.l.

REMUNERATION AND BENEFITS

15.1 Remuneration and benefits paid to the members of the management of the Company The Company has not paid any direct compensation to the members of the management (dirigeants mandataires sociaux)26. The compensation of directors and corporate officers is set by the Board which allocates attendance fees to its members and sets the compensation of the Managing Director. With the exception of Mr. Carlalberto Guglielminotti, who signed an employment contract with EPS Elvi on 26 June 2018, no other member of the Board of Directors has entered into any employment contract with any member of the ENGIE EPS Group.

The table below summarizes the remuneration, shares and options granted to each executive officer:

Summary table of the remuneration and options granted to each executive director

2018 2017 2016

Carlalberto Guglielminotti (CEO)

Remuneration due annually 178,077 (1) 190,570 (2) 151,371

Pluri-annual variable compensation decided during the financial year 1,271,134 * 0 0

Valorisation of stock options/warrants granted during the financial year 0 0 0

Valorisation of benefits granted during the financial year 8,400 8,400 0

26 The executive corporate officers are considered those who have been formally empowered by the shareholders to manage the company

through power of attorneys and/or delegated powers. With regards to ENGIE EPS they are identified only with the Chairman of ENGIE EPS Group, Jean Rappe, and the Chief Executive Officer, Carlalberto Guglielminotti. On the other hand, simple directors are appointed by the Board of Directors and may or may not have an active role and the directors are all persons who are related to the Company by a contract of employment.

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Summary table of the remuneration and options granted to each executive director

2018 2017 2016

TOTAL 186,477 198,970 151,371

Jean Rappe (Chairman since 7 March 2018)

Remuneration due annually 0 0 0

Pluri-annual variable compensation decided during the financial year 0 0 0

Valorisation of stock options/warrants granted during the financial year 0 0 0

Valorisation of benefits granted during the financial year 0 0

TOTAL 0 0 0

Massimo Prelz Oltramonti (Chairman since 8 April 2016 to 7 March 2018)

Remuneration due annually 41,857 50,000 50,000

Pluri-annual variable compensation decided during the financial year 0 0 0

Valorisation of stock options/warrants granted during the financial year 0 0 86,775

Valorisation of benefits granted during the financial year 0 0 0

TOTAL 41,875 50,000 136,775

* Valorisation at the fair value as of 31 December 2018 of the SARS allocated during the year. (1) 155,577 of fixed remuneration and 22,500 of variable remuneration. (2) 140,000 of fixed remuneration and 50,570 of exceptional remuneration.

The table below presents a summary of the remuneration paid by the ENGIE EPS Group to Mr. Carlalberto Guglielminotti, CEO of the Company since 22 December 2014 and of EPS Manufacturing since 14 November 2014. He also held operating and executive functions within all ENGIE EPS Group companies. The variable compensation represents 25% of the fixed compensation of the CEO subject to the vote of the shareholders at the upcoming annual general meeting called to rule on the accounts for the financial year ended on 31 December 2018.

(€) 2018 2017 2016

Carlalberto Guglielminotti (CEO) Due Paid Due Paid Due Paid

Fixed remuneration 155,577 155,577 130,000 130,000 130,000 130,000

Variable remuneration 22,500 0 0 0 0 0

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Multi-year variable remuneration 0 0 0 0 0 0

Exceptional remuneration (1) 0 50,750 50,750 0 0 0

Attendance fees 0 0 10,000 10,000 10,000 10,000

Benefits in kind (2) 8,400 8,400 8,400 8,400 11,371 11,371

TOTAL 186,477 214,727 198,970 148,400 151,371 151,371

(1) Following the ENGIE Acquisition, on 24 March 2018 the Board of Directors has decided to allocate an exceptional compensation to Mr. Carlaberto Guglieminotti in consideration of its contribution to the success of the strategic alliance with ENGIE.(2) Car

The table below presents a summary of the remuneration paid by the Company to Mr. Jean Rappe, Chairman of the Board of Directors of the Company from 7 March 2018.

(€) 2018 2017 2016

Jean Rappe (Chairman since 7 March 2018) Due Paid Due Paid Due Paid

Fixed remuneration 0 0 0 0 0 0

Variable remuneration 0 0 0 0 0 0


Exceptional remuneration 0 0 0 0 0 0

Attendance fees 0 0 0 0 0 0

Benefits in kind 0 0 0 0 0 0

TOTAL 0 0 0 0 0 0

The table below presents a summary of the remuneration paid by the Company to Mr. Prelz Oltramonti, chairman of the Board of Directors of the Company from 8 April 2016 to 7 March 2018.

(€) 2018 2017 2016

Massimo Prelz Oltramonti (Chairman up to 7 March 2018) Due Paid Due Paid Due Paid

Fixed remuneration 0 0 0 0 0 0

Variable remuneration 0 0 0 0 0 0


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Exceptional remuneration 0 0 0 0 0 0

Attendance fees 41,875 41,875 50,000 0 50,000 50,000

Benefits in kind 0 0 0 0 0 0

TOTAL 41,875 41,875 0 0 50,000 50,000

15.2 Fees and other remuneration paid to the members of the Board of Directors

Table on directors’ fees and other remuneration received by non-executive corporate officers, members of the Board of Directors:

Mandataires sociaux non dirigeants Paid on 2018 Paid on 2017 Paid on 2016

Davide Peiretti(1)

Attendance fees 1,875 10,000 10,000

Other remunerations 0 0 0

Emanuela Banfi(1)



Giuseppe Artizzu


Other remunerations 611.623 (2) 135,611 110,000

Sonia Levy Odier(1)

Attendance fees 22,314 10,000 10,000


Cesare Maifredi(1)



Michela Costa(1)

Attendance fees 1,875 8,000 0

Other remunerations 120,000 116,338 0

Anne Harvengt

Attendance fees 7,500 0 0


Sophie Mertens-Stobbaerts



Audrey Robat



Sabrina Maggio


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Alexander Katon



TOTAL 322,522 309,949 160,000 (1) They are no longer member of the Board of Directors at the date of the Registration Document. (2) €140,000 paid in relation with its duties within the ENGIE EPS Group and €471,623 corresponding to the valorisation, at the fair value as of 31 December 2018, of the SARS allocated during the year.

The shareholders during the Annual General meeting held on 26 June 2018 resolved upon the allocation of a maximum amount of €120,000 attendance fees for the benefit of members of the Board of Directors for the 2018 financial year. The total amount of attendance fees proposed by the Board and approved by the Annual General Meeting has remained unchanged in comparison to the amount approved in the previous financial year.

Allocation of SARs to the mandataires sociaux is mentioned in paragraph 15.5 of the Registration Document.

15.3 Compensation of the CEO and the Chairman of the Board of Directors

15.3.1 Principles and criteria for determining the compensation of the CEO and the Chairman of the Board of Directors for 2019 (vote ex ante)

The Company’s principles and criteria for determining, allocating and granting the fixed, variable and extraordinary components of overall compensation and benefits of all kind that may be granted to the Chief Executive Officer and the Chairman of the Board of Directors for the financial year ending 31 December 2019 have been submitted to the vote of the shareholders at the upcoming annual general meeting called to rule on the accounts for the financial year ended on 31 December 2018.

15.3.1.1 CEO’s compensation

Fixed compensation

The amount of the fixed compensation of the CEO, on which shareholders will be asked to vote in the context of the ex ante vote, will be included in the Board of Directors Report to the annual general meeting that will be convened by the end of June 2019. This fixed compensation has been paid in 13 monthly instalments.

The fixed compensation of the CEO may be reviewed on the long-term, outside of any overall salary review that could be applied to all the other Company's employees and except for exceptional events

Variable compensation

The CEO is eligible to a bonus based on his performance, as appreciated by the Board at the end of the fiscal year (or the beginning of the next) and with a cap of 50% of the fixed compensation.

The Board of Directors, that will convene the annual general meeting, will determine the criteria that will be adopted and included in the Board of Directors Report to the annual general meeting, being understanding that the full details

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of the targets for each criterion and sub-criteria and the details of their assessment cannot be fully disclosed for reasons of confidentiality.

Benefits

For the whole duration of his agreement, the CEO will be granted the following benefits:

• a company car is allocated to the CEO;

• a private medical, health & care insurance;

• a private insurance policy for all the potential liabilities arising from and/or in connection to the office and to the exercise of the relating powers (D&O - Directors’& Officers’ Liability);

Attendance fees (jetons de présence)

For the financial year 2019, the CEO will not receive attendance fees.

Non-compete indemnity post-employment

Pursuant to his employment agreement, Mr. Carlalberto Guglielminotti is entitled to an indemnity equal to 60% of the fixed compensation for the prohibition to perform any competitive activities during the two years following the termination of his employment agreement.

15.3.1.2 Chairman’s compensation

Mr. Jean Rappe was appointed as Chairman of the Board of Directors by co-optation on 7 March 2018, succeeding Mr. Massimo Prelz Oltramonti, Chairman of the Board of Directors since 8 April 2016.

Mr. Jean Rappe has no employment contract (contrat de travail) with the Company.

Fixed and variable compensation

For the financial year 2019, the Chairman of the Board of Directors will not receive any fixed or variable compensation.

Attendance fees (jetons de présence)

For the financial year 2019, the Chairman of the Board of Directors will not receive attendance fees.

15.3.2 Compensation of the CEO and the Chairman of the Board of Directors for 2018 (vote ex post)

15.3.2.1 CEO’s compensation

For the financial year 2018, the CEO has received:

– a fixed compensation of 155,577 euros;

– SARs in exchange of his vested Stock-Options (options de subscription d’actions) and Additionnal SARs;

At the general meeting of 26 June 2018, the shareholders approved (vote ex ante) a fixed compensation of EUR 180,000 for the CEO. It was finally decided that this compensation would only be paid after this general meeting and the

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amount of EUR 155,577 above-mentioned therefore corresponds to the average amount paid over the 2018 year.

He will receive a variable compensation of 22,500 euros of his fixed compensation euros after the vote ex post of the shareholders at the upcoming annual general meeting called to rule on the accounts for the financial year ended on 31 December 2018 (vote ex post).

15.3.2.2 Chairman’s compensation

For the financial year 2018, Mr. Jean Rappe, Chairman of the Board of Directors since 7 march 2018, has not received any fixed or variable compensation. Therefore, there will be no “ex post” resolution concerning him at the 2019 general meeting.

15.4 Provisional amounts reported by the ENGIE EPS Group and its subsidiaries for the purposes of payment of pensions, retirement or other benefits

The ENGIE EPS Group has not provisioned amounts for the purposes of payment of pensions, retirement or other benefits for Company representatives. The ENGIE EPS Group did not pay any arrival or departure bonus to its directors.

15.5 Allocation of Stock Appreciation Rights to the corporate officers in 2018

On 6 March 2018,in the context of the ENGIE SPA, a new incentive plan was adopted by the Board of Directors (the “New Incentive Plan”), that replaced the existing Stock-Options (options de subscription d’actions) and warrants (bons de souscription d’actions) that have been granted to Directors, managers and employees since the IPO, by a “cash” instrument, i.e. SARs, which reproduces the economic profile of a stock option or a warrant.

Following this new plan:

– the existing vested stock options and warrants shall be exercised or waived by their beneficiaries, except for 200,000 vested stock options granted to the CEO and which were exercisable but which were replaced by SARs (107,970 of the stock options from Plan n.1 with an original strike price of 0,2€/share and 92,030 vested stock-options from Plan n.2 with an original strike price of 5,11€/share);

– the unvested stock options and warrants were replaced by SARs on a one-to-one basis – different SARs having strike prices matching the strike prices of the different existing stock options or warrants;

– the SARs are not subject to any performance conditions and are only linked to the condition of presence within ENGIE EPS Group;

– in addition, “Additional SARs” with special characteristics, including performance conditions, linked to the achievement of revenue and EBITDA levels consistent with the 2020 Strategic Plan and the Company's retention rates for 2018 to 2020 (the “Additional SARs”), were distributed to the CEO and other managers.

All beneficiaries have the right (but not the obligation) to exercise the SARs or Additional SARs after the vesting period associated to each plan. Additional SARs’ strike price has been set by the Board of Directors at 3.66 euros. Following the exercise of a SAR, ENGIE EPS will recognise to the beneficiary the exercise value in a cash amount equal

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to the number of SARs exercised, multiplied by the difference between the strike price and the VWAP price of ENGIE EPS share published on the close of Euronext Paris Exchange the day of exercise.

The SARs and the Additional SARs benefit from a floor price of €9.50 adjusted to 8.87€ as a result of the price adjustment following the capital increase occurred in August 2018.

On 28 September 2018, the Board of Directors resolved upon the adjustment of the strike price and of the floor price following the capital increase that have occurred on August 201827. The adjustment amounts to 0.63€ with respect to the strike price and the original floor price.

The Board of Directors of ENGIE EPS during the meeting held on 28 September 2018 resolved upon the adjustment of the strike price and of the floor price following the capital increase that have occurred and its dilutive effects. The adjustment amounts to 0.63€ with respect to the original strike price and the original floor price.

The table below summarises the allocation of SARs decided by the Board of Directors on 6 March 2018 to the Chief Executive Officer, the Chairman of the Board of Directors and the other members of the Board of Directors, in replacement of the existing unvested stock-options or warrants.

Allocation of Stock Appreciation Rights to Carlalberto Guglielminotti (CEO)

N° of plan and strike price

Number of allocated

SO

Number of vested SO

Number of unvested SO

Number of SARs

allocated

Exercise terms

Plan n°1 March 2015 Initial strike price: € 0,20

319,476 319,476 0 107,970 30% of SARs from 6 December 2019, 70% of SARs per quarterly tranches

of 17,5% in the following two fiscal

years Plan n°2 21 April 2015Initial strike price: € 5,11

131,472 92,030 39,442 108,693

TOTAL 450,948 411,506 39,442 216,663

Number of Additional SARs allocated: 291,096 Initial strike price: €3.66 Exercise terms: Subject to the completion of the condition of presence within ENGIE EPS Group, 100% from 7 September 2021 * In accordance with the Annex 10 of the SPA ENGIE, 22,779 SARs were transferred from Carlalberto Guglielminotti to Giuseppe Artizzu

Allocation of Stock Appreciation Rights to Massimo Prelz Oltramonti (Chairman of the Board of Directors at the date of allocation)

27 If the VWAP price of ENGIE EPS share published on the close of Euronext Paris Exchange the day of exercise is lower than the floor

price, the exercise value of the SARs will be equal to the number of SARs exercised, multiplied by the difference between the strike price and the floor price.

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Number of allocated

BSA

Number of vested BSA

Number of unvested

BSA

Number of SARs

allocated

Exercise terms

Plan n°2 21 April 2015 Initial strike price: € 5,11

32,868 23,008 9,860 9,860 Same as for the original

BSA plans(i.e.

quarterly tranches of the 6,5% starting

from April 2018)

Plan n°5 9 September 2016 Initial strike price: € 3,66

40,000 0 40,000 40,000 Same as for the original

BSA plan (i.e. first

tranche of 37,5% as at

8/3/2018 and


from June 2018)

TOTAL 72,868 23,008 49,860 49,860*

* Pursuant to their terms 29,209 SARs (6,409 related to Plan n°1 and 22,800 related to Plan n°2) have been exercised by Massimo Prelz Oltramonti during 2018. The number of SARs held by Massimo Prelz Oltramonti is now amounting to 20,651.

Allocation of Stock Appreciation Rights to the Directors (excluding the CEO and the Chairman of the Board of Directors)

Directors

(at the date of allocation)


Number of allocated SO/BSA

Number of vested

SO/BSA

Number of unvested SO/BSA

Number of SARs

Exercise terms

Giuseppe Artizzu


98,604 69,022 29,582 29,582 30% of SARs from

7 March 2020, 70% of SARs per half yearly

tranches of 17,5% in

the following two fiscal

years

Plan n°3 26 November 2015 Initial strike price: € 5,81

45,236 25,785 19,451 19,451

Plan n°6 20 December 2016

30,000 0 30,000 30,000

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Directors




Number of vested

SO/BSA


Number of SARs

Exercise terms

Initial strike price: € 4,56


0 0 0 11,933

Plan n°2 21 April 2015 Initial strike price: € 5,11(*)

0 0 0 22,779

TOTAL 173,840 94,807 79,033 113,745

(*) SARs transferred by Carlalberto Guglielminotti to Giuseppe Artizzu according to the Annex 10 of the SPA ENGIE.

Number of Additional SARs allocated: 42,808 Initial strike price: €3.66 Exercise terms: Subject to the completion of the condition of presence within ENGIE EPS Group, 20% from 7 March 2020, 30% of SARs per two tranches of 15% in the following fiscal year

Michela Costa

Plan n° 5 9 September 2016 Initial strike price: € 3,66

60,000 0 60,000 60,000 Same as for the

original SO or BSA

plan (i.e. first

tranche of 37,5% as

at 8/3/2018 and


from June 2018)

Plan n° 8 15 May 2017 Initial strike price: € 5,43

11,802 0 11,802 11,802 Same as for the

original SO or BSA

plan (i.e.

quarterly tranches of

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Directors




Number of vested

SO/BSA


Number of SARs

Exercise terms

the 767 starting

from May 2018)

TOTAL 71,802 0 71,802 71,802

15.6 Free shares

No free shares were assigned to any member of the management. Consequently, the table n° 6, 7 and 10 provided in the AMF recommendation n° 2014-14 are not applicable.

15.7 Employment contract and additional information

With the exception of Mr. Carlalberto Guglielminotti entered, who signed an employment contract with EPS Elvi on 26 June 2018, no other member of the Board of Director has entered into any employment contract with any member of the ENGIE EPS Group and none of them benefits from any pension scheme, indemnities or benefits due because of termination or change of function or any contractual non competition clause.

Executive Directors

Yes No Yes No Yes No Yes NoJean Rappe, Chairman of the Board of Directors

X X X X

Carlalberto Guglielminotti, Managing Director

X X X X

Massimo Prelz Oltramonti, Chairman of the Board of Directors until 7th

Marchl

X X X X

Employment contract Supplementary pension plan

Indemnities or benefits due or likely to be due

because of termination or change of function

Indemnities relating to a non-competition clause

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FUNCTIONING OF ADMINISTRATIVE AND EXECUTIVE BODIES

16.1 Management of the Company (members of the management and of the Board of Directors)

The composition and information relating to the members of the Board of Directors are presented in chapter 14 “Administrative and executive bodies” of this Registration Document.

16.2 Information on the agreements binding on the directors and the Company

To the best of the Company’s knowledge, there are no agreements binding one of the members of the Board of Directors (including the managing director) and the Company or one of its subsidiaries.

16.3 Specialised committees

On 6 March 2015, pursuant to article 15 and to article 11 of the Internal Rules, the Board of Directors created two committees: the Audit Committee and the Remuneration and Nomination Committee, the composition, attributions and operating rules of which are described below.

16.3.1 Audit Committee

16.3.1.1 Membership

According to the Internal Rules, the Audit Committee is composed of at least three members. The members of the Audit Committee are designated from among the members of the Board and, as far as possible, two thirds of them are independent Directors.

The Audit Committee was chaired by Massimo Prelz Oltramonti and as of 31 December 2018 was composed of three members as follows:

• Massimo Prelz Oltramonti;

• Sabrina Maggio; and

• Audrey Robat.

All members of the Audit Committee had remarkable expertise in financial and/or accounting matters necessary for carrying out their duties and at least one of them have specific expertise in financial or accounting matters.

The duration of the mandates of the members of the Audit Committee coincided with that of their mandate as member of the Board of Directors. Therefore it may be renewed at the same time as this latter mandate.

On 7 March 2018 Davide Peiretti resigned from his office as Board and Audit Committee member. The Board of Directors, on 15 March 2018, appointed Jean Rappe as new member of the Audit Committee.

16.3.1.2 Role and functioning

The Audit Committee assists the Board with its mission regarding the monitoring and preparation of the annual company and consolidated financial statements and of the information submitted to the shareholders. It is also responsible for

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ensuring the monitoring of issues relating to the preparation for auditing of the accounting and financial information, as well as of the legal audit of the accounts.

The Audit Committee shall notably carry out the following tasks:

(a) monitoring the elaboration process for financial information;

(b) monitoring the effectiveness of internal controls, internal audits and risk management systems relating to financial and accounting information;

(c) monitoring the legal control of the Company and consolidated accounts by the statutory auditors of the Company; and

(d) monitoring the independence of the statutory auditors.

In order to carry out its mission, the Audit Committee may consult the statutory auditors other than the Company’s representatives, the other Directors or the members of the finance department. The Audit Committee may also invite the statutory auditors to attend its meetings.

It may also consult the employees of ENGIE EPS Group responsible for drawing up the accounts and internal controls, notably the Administrative Director, ENGIE EPS Group Internal Controller and the CFO. The Audit Committee shall be able to consult external experts as required.

The Audit Committee, under the same conditions provided for the Board of Directors, may take valid decisions during its meetings, either physically or by means of teleconference or videoconference, provided that each meeting should be attended by at least half of the Committee’s members. Notices of calling shall include an agenda and may be transmitted either verbally or by any other means.

The Audit Committee shall take its decisions with a majority of members having voting rights and taking part in the meeting, with each member holding one vote.

The Audit Committee shall meet as often as it is deemed necessary and, in any event, at least twice a year on the occasion of the preparation of the Company’s annual and half-yearly accounts. As far as it is possible, these meetings shall be held before the meetings of the Board of Directors called to approve the accounts and at least two days before these Board meetings.

The Audit Committee shall submit its conclusions, recommendations, proposals or opinions to the Board on a regular basis, in order to support the Board in taking its decisions.

In the event the Audit Committee, performing its duties, detects a significant risk, which have not been dealt with adequately, it shall alert the Board immediately.

16.3.1.3 Major accomplishment in 2018

The work of this committee is based on the recommendations of the AMF Audit Committee Working Group of June 14, 2010.

In 2018, the Audit Committee met 5 times (with a participation rate of 93,3%) and, in addition, single Audit Committee Members heard ENGIE EPS Group’s

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Managing Director, Chief Financial Officer, ENGIE EPS Group General Counsel, and the Statutory Auditors in dedicated meetings.

The following topics were discussed at these various meetings:

– financial statements: review of the financial statements and of the consolidated financial statements for the financial year ended on 31 December 2017 (this examination was performed with sufficient time before the relevant meetings of the Board of Directors) and review of the related press releases;

– review of the financial statements for first and third quarter 2018 and of the related press releases;

– review of the financial statements for the 2018 first half and of the related press release; and

– new approach on internal audit and internal control: review of all the data from the corporate governance report and internal control and risk management procedures and the 2018 budget.

16.3.2 Remuneration and Nomination Committee

16.3.2.1 Membership

According to the Internal Rules, the Remuneration and Nomination Committee is composed of at least three members. The members of the Remuneration and Nomination Committee are designated from among the members of the Board and, as far as possible, two thirds of them are independent Directors.

The Remuneration and Nomination Committee was chaired by Jean Rappe and as of 31 December 2018 was composed of three members (two of which were independent), as follows:

• Jean Rappe;

• Massimo Prelz Oltramonti; and

• Alexander Katon.

The Remuneration and Nomination Committee members have been appointed in consideration of their independence and competences regarding selection and remuneration of listed companies’ representatives.

The mandate of the Remuneration and Nomination Committee members has the same duration of the mandate as Board members and may be renewed contextually.

On 7 March 2018 Cesare Maifredi resigned from his office as Board and Remuneration and Nomination Committee member. The Board of Directors, on 28 March 2018, appointed Jean Rappe as new member of the Remuneration and Nomination Committee.

16.3.2.2 Role and functioning

The Remuneration and Nomination Committee, in its capacity as “nomination committee” has the following mission: examination and proposal to the Board of Directors concerning candidates for the position of Directors, of Managing

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Director, of deputy Managing Director, of Chairman of the Board of Directors, of members and of chairman of the Audit Committee.

In that respect, the Committee shall assess that the candidates have the competence, knowledge and experience required to be appointed for each position, considering the interests of the shareholders. The Committee shall establish and update a succession plan for the members of the Board of Directors, the Managing Director and the principal Directors of ENGIE EPS Group, in order to propose a prompt succession solution to the Board of Directors in the event of an unforeseen vacancy.

With regard to the appointment of the Board members, the Committee shall notably consider the following criteria:

(i) desirable balance in the composition of the Board of Directors with a view to the composition and evolution of the shareholding structure of the Company;

(ii) desirable number of independent Directors;

(iii) proportion of men and women required by current regulations;

(iv) opportunity for renewing mandate; and

(v) integrity, competence, experience and independence of each candidate.

The Remuneration and Nomination Committee shall also organise a meeting intended to select the future independent Directors and carry out its evaluation on the potential candidates before any selection.

When the Remuneration and Nomination Committee issues its recommendations, it shall insist on:

(i) the minimum number of independent Directors of the Board and of the specialised committees, in compliance with the principles of governance adopted by the Company.

(ii) Annual assessment, on a case-by-case basis, of each Director situation with regard to the independence criteria listed in the internal regulations and submission of related opinions to the Board of Directors.

The Remuneration and Nomination Committee, in its capacity of “remuneration committee” shall notably carry out the missions summarised below:

(a) examination and proposal to the Board of Directors concerning the remuneration of the Directors, the Managing Director and deputy Managing Director of ENGIE EPS Group.

(b) Provision of recommendations on the remuneration of the Directors. These recommendations on remuneration shall include fixed and variable remuneration, but also, as appropriate, the share purchase or subscription of warrants, the attributions of actions of performance, the pension and social security regimes, departure indemnities, benefits in kind or particular benefits and any other element of direct or indirect remuneration (also in the long term) which may constitute

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remuneration of the Directors. The Committee shall be informed of the principal ENGIE EPS Group executives remuneration and of the remuneration policies implemented within ENGIE EPS Group.

When the Remuneration and Nomination Committee issues its recommendations, it shall consider the principles of MiddleNext Code to which ENGIE EPS Group adheres.

(a) Assessment of the amount of attendance fees and of their system of allocation among the Board members, as well as the reimbursement conditions related to any costs in which they have incurred.

(b) Ensuring the observance by the Company of its obligations regarding the remuneration transparency. On this point, it shall prepare an annual report on the remuneration, to the attention of the Board of Directors, and shall review the Company’s draft annual report on the remuneration of the Directors.

The Remuneration and Nomination Committee, under the same conditions provided for the Board of Directors, may take valid decisions both during a meeting and by telephone or videoconference, provided that each meeting should be attended by at least half of the Remuneration and Committee’s members.

Notices of calling shall include an agenda and may be transmitted verbally or by any other means.

The Remuneration and Nomination Committee takes its decisions with a majority of members having voting rights and attending the meetings, which take place at least twice a year. These meetings are preferably held before the meetings of the Board of Directors convened to set the Directors’ remuneration and to allocate the attendance fees.

The Remuneration and Nomination Committee shall submit its conclusions, recommendations, proposals or opinions to the Board on a regular basis, in order to support the Board in taking its decisions.

16.3.2.3 Major accomplishment in 2018

In 2018 the Remuneration and Nomination Committee met 5 times (with a participation rate of 100%), and the single members had a series of individual meetings with the Managing Director and the Executive Directors.

The following topics were discussed at these various meetings:

(a) proposal to the Board of Directors held on 6 March 2018 to allocate SARs to Board members and key employees, in accordance with Schedule 10 of the ENGIE SPA;

(b) review of the CEO’s compensation package and of the Say on Pay Report;

(c) proposal for a Talent Strategic Program to be implemented within the ENGIE EPS Group;

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(d) proposal of the amount of attendance fees and of their system of allocation among the Board members, as well as the reimbursement conditions related to any costs in which they have incurred;

(e) annual assessment of the Board of Directors, performed on a case-by-case basis, through a questionnaire fulfilled by the non-executive Directors. The Committee reviewed the answers given by the Board members, taking note of the overall positive feedback and focusing on the negative comments or evaluations and made recommendations to the Board about the areas of improvement.

16.4 Transactions by members of the Management or of the Board of Directors on the shares of the Company (or persons related to them)

Pursuant to article L. 621-18-2 of the French Monetary and Financial Code and article 223-26 of the AMF Regulation, the transactions on the shares of the Company detailled below have been disclosed by members of the management or of the Board of Directors or persons related to them for the past financial year:

DECLARATION NO.

DATE OF THE TRANSACTION NAME NATURE OF THE

TRANSACTION PRICE VOLUME

2018DD535319 26/01/2018 Massimo Prelz Oltramonti Share disposal 11.000000 23,005

2018DD535320 26/01/2018 Massimo Prelz Oltramonti Share subscription 5.110000 23,005

2018DD535638 26/01/2018 Massimo Prelz Oltramonti Share purchase 11.211400 21,319

2018DD564191 08/06/2018 Massimo Prelz Oltramonti Share disposal 9.500000 191,945



2018DD539170 23/02/2018 Giuseppe Artizzu Stock-Options exercise 5.110000 1,034

2018DD539172 23/02/2018 Giuseppe Artizzu Share disposal 10.400000 1,034














2018DD548071 26/04/2018 Giuseppe Artizzu Stock-Options exercise 5.110000 25

2018DD548073 26/04/2018 Giuseppe Artizzu Share disposal 11.350000 25









2018DD535180 25/01/2018 Carlalberto Guglielminotti Stock-Options exercise 0.200000 23,000

2018DD535183 25/01/2018 Carlalberto Guglielminotti Share disposal 10.82370 23,000




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DECLARATION NO.










2018DD536853 07/02/2018 Carlalberto Guglielminotti Stock-Options exercise 0.200000 787


2018DD536859 07/02/2018 Carlalberto Guglielminotti Share disposal 10.600000 787
































2018DD539233 16/02/2018 Bonetti Poalo Share disposal 10.200000 14,382


2018DD539233 22/02/2018 Bonetti Poalo Option exercise (shares) 4.370000 107,196


2018DD540753 19/02/2018 Bonetti Poalo Share disposal 10.20000 986

2018DD540753 22/02/2018 Bonetti Poalo Option exercise (shares) 4.370000 24,530










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DECLARATION NO.












2018DD539409 26/02/2018 Andrea Rossi Share disposal 10.800000 2,301

2018DD540633 07/03/2018 Andrea Rossi Share disposal 9.500000 10






2018DD545970 09/04/2018 Andrea Rossi Share disposal 9.860000 405




2018DD546706 16/04/2018 Emiliano Novo Share disposal 9.980000 2,000








2018DD560084 07/05/2018 Emiliano Novo Share disposal 11.150000 375

2018DD560084 08/05/2018 Emiliano Novo Share disposal 11.150000 625


2018DD540775 07/03/2018 Ilaria Rosso Share disposal 9.500000 11,420






2018DD546901 19/04/2018 Ilaria Rosso Share disposal 11.000000 586







2018DD540844 07/03/2018 Luisa Frosio Share disposal 9.500000 2,392

2018DD546955 13/04/2018 Luisa Frosio Exercice (shares) 9.980000 50





2018DD539684 06/02/2018 Sonia Levy-Odier Exercice (warrants) 5.110000 9,202

2018DD539685 06/02/2018 Sonia Levy-Odier Share disposal 10.334747 9,202

2018DD540840 07/03/2018 Sonia Levy-Odier Share disposal 9.500000 5

2018DD541171 12/03/2018 Sonia Levy-Odier Share disposal 10.050000 5

2018DD564234 06/06/2018 Francesca Cocco Share disposal 12.850000 200

2018DD564231 07/06/2018 Francesca Cocco Share disposal 12.817500 1,002

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DECLARATION NO.



2018DD564235 08/06/2018 Francesca Cocco Share disposal 12.600000 1,648

2018DD540849 07/03/2018 Daniele Rosati Share disposal 9.500000 4,784

2018DD547040 13/04/2018 Daniele Rosati Exercice (shares) 9.983850 15,392

2018DD540780 07/03/2018 Nicola Vaninetti Share disposal 9.500000 47,761

2018DD540781 07/03/2018 Paolo Morandi Share disposal 9.500000 31,807

2018DD540782 07/03/2018 Irino Mazzucco Share disposal 9.500000 4,784

2018DD540848 07/03/2018 Davide Peiretti Share disposal 9.500000 5

2018DD540850 07/03/2018 Gabriele Marchegiani Share disposal 9.500000 36,995

2018DD540854 07/03/2018 Michela Costa Share disposal 9.500000 10,000

2018DD540819 07/03/2018 Emmanuela Banfi Share disposal 9.500000 109,154

2018DD561593 22/05/2018 Marta Foroni Share disposal 12.900000 964

16.5 Corporate governance

In order to comply with the relevant governance and transparency principles applicable to a company whose shares are listed on a regulated market, and with the applicable obligations in terms of information of the public, the Company has decided to refer to and comply with the MiddleNext Code. Copies of such code have been made available to the members of the Board of Directors.

The Company complies with the recommendations set forth in the MiddleNext Code and the table below explains the way that the Company applies recommendations R 3 and R 15:

MiddleNext Recommendations EPS’ Practice and explanations

Recommendation R 3: Composition of the Board – Independent directors

According to recommendation R 3 of the Middlenext Code, the directors’ independence criteria are:

- not to have been, during the five past years, and not to be an employee or corporate officer of the company or a subsidiary of it;

- not to have been, during the two past years, and not to be in a business relationship (customer, supplier, competitor, service provider, creditor, bank etc.) with the company or any of its subsidiaries;

- not to be a reference shareholder of the company or own a significant voting right percentage;

- not to have a personal or close familial family tie with a corporate officer or a reference shareholder;

- not to have been, during the six past years, an auditor for the company.

In footnote n°24, under the table of remuneration of corporate officers (Recommendation R 19), the Middlenext Code provides that the table should cover the chairman of the board, the CEO, executive officers (for Companies managed by a Board of Directors), members of the supervisory board (for Companies with an executive board appointed by the supervisory board) and the managers (for partnerships limited by shares).

According to this definition, the chairman of the board is a “managing corporate officer” (mandataire social dirigeant) and may not respect the first of the five criteria hereabove.

Meanwhile, recommendation R 3 of the Middlenext Code provides that:

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“Independence is also a state of mind, which is embodied in a person who is fully capable of using his own freedom of judgment and, if necessary, to resisting or dismissing. Independence is a way to understand and approach responsibilities, so it is a question of personal ethics and a question of loyalty vis-à-vis the company and the other directors. That is why it falls to the board of directors to analyse, case per case, the situation of each of its members regarding the criteria hereabove. The independence is judged, at the first appointment of a director, and each year at the review and approval of the CEO’s report. If it justifies its position, the board can even consider that one of its members who does fit all the criteria is independent; on the contrary, the board can also consider that one of its members who does fit all the criteria is not independent.”

As mentioned in the Government Report of 2018 adopted by the Board, M. Prelz-Oltramonti has been considered as independent. He fits four of the five criteria hereabove stated. Regarding the first criteria – that he does not fit because at the time he was CEO— the Board used the ad hoc judgment ability hereabove described to determine that he was nevertheless independent. This judgment is founded on the criteria below:

– experience and standing of Mr. Prelz-Oltramonti;

– his age (64 years old – senior member of the Board) and the independence of his personal situation; and

– the way, since his appointment to the Board in 2015 and as Chairman of the Board since 2016, he accomplished his director’s duties – and in particular his freedom of speech.

Furthermore, the Board of Directors considered that Mr. Alexander Katon, who was Head of Communication and Strategy of GDF Suez Energy International prior to the ENGIE Acquisition and who has no business relationships with ENGIE EPS, meets the independence criteria.

Recommendation R 15: Concurrent terms of office between an employment agreement and a corporate office

According to Recommendation R 15 of the Middlenext Code, the board of directors, in accordance with the law, should review and authorize or not the concurrent terms of office of the employment agreements of the chairman of the board, the CEO, executive officers (for Companies managed by a Board of Directors), members of the supervisory board (for Companies with a managing body appointed by the supervisory board) and the managers (for partnerships limited by shares) and justify its decision in a detailed way.

In respect of the decision of the Board of managers date on 24 April 2018, an employment agreement was signed on 26 June 2018 with EPS Elvi.

Carlalberto Guglielminotti, concurrently with his responsibilities as CEO, has some executive and operational functions in each of the subsidiaries of ENGIE EPS Group, in particular the Italian subsidiaries:

-chief executive officer of EPS Manufacturing – historical operational subsidiary of ENGIE EPS Group;

-chief executive officer of EPS Elvi;

-chief executive officer of MCM Energy Lab S.r.l;

-director of Electro Power Systems Inc.; and

-director of Electro Power Systems India Pvt Ltd.

Considering his operational functions, distinguished from his responsibilities as CEO of the Company, the board of directors judged that it was justified that he signed an employment agreement, concurrently with his corporate office.

This element has been approved by the shareholders at the general meeting held on 26 June 2018, through the “say-on-pay” vote.

With such new employment agreement, Carlalberto Guglielminotti shall be entitled to receive compensation equal to 60% of his fixed pay, justified by the

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prohibition in his contract of engaging in any competing activity during the two next years after the end of his employment agreement.

16.6 Information on control and risk management procedures

Between the end of 2018 and February 2019, EPS implemented its internal control device for the application of anti-corruption best practices taken from the organizational models provided by the relevant national (i.r. law 231/2001 or Loi Sapin II) and international (UNI ISO 37001:2016) regulations. In particular, the process for obtaining certification for the prevention of corruption’s management system, currently underway, together with compliance with national regulations, have led to an update of the assessment of the main corporate processes in charge of risk management of corruption, carried out through the assessment of a preliminary level of risk, based on the appreciation of the probability of happening of the single event and on the potential impact of the same, the identification of mitigating factors and the tools available for prevention and control of the risk itself. The risk assessment aim to define, in addition to the governance and monitoring activities for the purpose of preventing the risk of corruption from the management, targeted audits carried out with the support of external consultants. These audit activities concerned the company procedures integrated within the anti-corruption management system, with reference to the processes related to the following areas: commercial process, purchase procedure, personnel selection process, donations and sponsorships, reports with the Public Administration, information flows to the Supervisory Body, administration, finance and control procedures. The activities are planned for the financial year 2019 and partially carried out on the date of this Management Report.

About anti-corruption, during the first half of 2019, pre-audit activities and technical audits on company processes are also planned, which will be carried out by a certifying body and aimed at obtaining, from the Company, the UNI ISO 37001 certification.

The Company has implemented internal control and risk management procedures mainly based on the guidelines established by the Italian Legislative Decree No. 231 of 8th June 2001, as amended from time to time (“Decree 231”), considering that the major operational subsidiary of the ENGIE EPS Group, EPS Elvi Energy S.r.l., is based in Italy.

The Company’s aims are:

• To create and to preserve values, activities and reputation of the Company;

• To assure that the decision-making processes and the operational processes contribute to the achievement of the Company’s goals;

• To promote actions compliant with the Company’s values;

• To engage employees with the main risks and raise them awareness of the specific risks of their activities.

To face internal and external risks the Company has established an organization and implemented policies intended to identify, evaluate and prevent these risks in order to limit any adverse impact, which are intended to ensure:

• The compliance with laws and regulations;

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• An honest behaviour and the promotion of a culture of integrity;

• The application of ENGIE EPS Group policies;

• The effectiveness of the ENGIE EPS Company’s internal processes, especially those concerning the safeguarding of its assets;

• Reliability of the financial information.

Generally, internal control and risk management procedures contributes to the control of the Company’s business, the effectiveness of its operations and the efficient use of its resources.

Since most of the activities of the ENGIE EPS Group are performed in Italy, in compliance with Decree 231, EPS Elvi Energy S.r.l. adopted a new Organizational, Management and Control Model (the “Model”), approved on 8 February 2017 by the Board of Directors. The Model integrates the new ENGIE EPS Group business model and procedures, in order to comply with the AMF Risk Management Guidelines and the specific aspects of the ENGIE EPS Group business model.

The Model will be subject to further updates and integrations considering the legislative and regulatory changes or Company’s developments.

The ENGIE EPS Group Companies adopted also an Ethical Code, which is an integral and substantial part of the Model (the “Ethic Code” or “Ethical, Anti-Fraud and Corruption Code of Conduct”).

Both the Model and the Ethical Code are published on EPS website, in the section “Media & Investors” > “corporate governance”, under sub-section “Organizational and Management Model”.

The Company and all the ENGIE EPS Group Companies are compliant with all the principles and guidelines set forth in the Model and the Ethical Code, which can be considered the basis of the ENGIE EPS Group’s conduct.

In view of the ENGIE EPS Group's structure, it seemed more relevant and significant to mention here the information on this point at the ENGIE EPS Group level, and not only at the level of the Company.

During the last quarter of 2018, the ENGIE EPS Group adopted the ENGIE Code of Ethics and Practical Guide to Ethics, which replaced the ENGIE EPS Code of Ethics and will be incorporated into the updated model. ENGIE EPS has also adopted the anti-corruption guidelines.

The Model, which is compliant with the guidelines drawn up by trade associations and with the corporate governance best practices, is composed by a “General Part”, including a comprehensive framework for the organization, management and control of the Company, and a “Special Part”, attaining to different kinds of breaches, violations and potential criminal offences and misbehaviours to be prevented.

The purpose of the Model, in addition to the design of a comprehensive framework for the organization, management and control of the Company, is to prevent the commission – in the interest or to the benefit of the ENGIE EPS Group – from committing certain offences, by individuals who are:

• representatives, Directors or managers of the Company or of one of its organizational units that have financial and functional independence, or by

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individuals who are responsible for managing or controlling the Company (individuals in top management positions or "apical");

• managed or supervised by an individual in an apical position (individuals under the management and control of others).

The general part of the Model is divided into the following chapters:

• "The Legislative Decree 8 June 2001, n. 231", a general overview of the regulation;

• “The Company EPS Elvi Energy S.r.l.”, describing the Company’s structure;

• “Adoption of the Model by EPS”, concerning the aims, methodology and structure of the Model, as well as the recipients and the implementation and updating program;

• “The Supervisory Body”, describing its functions and powers as well as the information flows to and from the structure itself;

• “Disciplinary system and measures in case of breach of the Model”, which contains the definition of sanctions imposed in case of violation of Model;

• “Diffusion of the Model and training”, with the identification of the recipients of the Model, the definition of the principles and rules for the extension of it and the communication of the same to the staff and the market, including the adoption of contractual clauses for any relations with third parties.

The special part covers the risk analysis, the control system and the specific procedures and illustrates in detail all the crimes to be prevented by the Company.

Risk analysis and Internal Control’s system

The identification of business activities which may entail the risk of committing breaches underlying corporate liability pursuant to Decree 231 (hereinafter, the "Sensitive Activities") is achieved through the detailed analysis of business processes and the possible ways of commission illustrated in the special part of the Model.

Each Sensitive Activity is associated with a specific reference person for any individual corporate process (Key Officer), as well as existing operational and management conditions, and existing control factors.

A comparative analysis is then carried out between the existing internal control system and the principles and contents of the Model (in particular control tools).

The internal control system implemented by the Company is a set of rules, procedures and instruments prepared and/or implemented by the management to ensure the achievement of efficiency of business operations, reliability of financial information, compliance with laws and regulations and protection of the Company’s assets.

The main elements of the risk analysis carried out regularly within the framework of the internal control system implemented by the Company are:

(a) Control of the management attitudes:

It reflects the attitudes and actions of top management with reference to internal control within the organization. Such control includes the following elements:

• integrity and ethical values;

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• management philosophy and style;

• organizational structure;

• assignment of authorities and responsibilities;

• personnel policies and practices;

• personnel’s skills.

(b) Risk Assessment:

Definition of processes aimed at identifying and managing the most relevant risks that may prevent the achievement of corporate goals.

(c) Information and communication:

Definition of an information system (computer system, reporting flow, system of process/activity indicators) enabling both upper management and operational staff to perform the tasks assigned to them.

(d) Control activity:

Definition of corporate regulations ensuring an organized management of risks and corporate processes and allowing to achieve set objectives.

(e) Monitoring:

Such process checks the quality and results of the internal controls over time.

The above-mentioned components of the system of internal control are considered for the analysis of the risks outlined under Decree 231.

In particular, the analysis activity is focused on identifying the Sensitive Activities of the Company which may potentially lead to the commission of the violations provided for by Decree 231 and whose potential methods of commission have been previously identified, detecting appropriate control standards to prevent the commission.

For ethics and compliance, evaluation the implementation of measures is part of a continuous improvement process. In this context, ENGIE EPS determines and promotes the necessary compliance controls. It ensures that ethical audits are conducted, reporting the results to the Compliance Committee and, if necessary, to the ENGIE EPS Group’s Executive Committee.

The aim of such activity is to ensure the maintenance and the updating of the identification of risk area, as well as the mapping and classification of significant business activities subject to risk, even for the purposes of supervisory activities.

Supervisory Body

EPS Elvi Energy S.r.l. appointed a Supervisory Body, which defines and carries out its duties in accordance with the rule of collective operating process and is entrusted with "independent powers of initiatives and control", pursuant to article 6, paragraph 1, letter b) of Decree 231 (“Supervisory Body” or “Surveillance Committee”). The Supervisory Body performs its duties under its set of rules.

The Supervisory Body’s autonomy and independence are guaranteed by its position within the organizational structure of the Company, as well as by the necessary requisites of independence, good reputation and professionalism of its members.

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The Supervisory Body is supported by and liaise regularly with the Human Resources department and the management team, as well as with the Audit Committee and Statutory Auditors.

Non-operational geographic entities (India and the United States) are not included in this illustration.

The Supervisory Body was appointed exclusively for EPS Elvi Energy Elvi, while statutory auditors were appointed for EPS Elvi Energy S.r.l., EPS Manufacturing S.r.l., MCM Energy Lab S.r.l., although this is not provided for by law.

Recipients of the Model and diffusion thereof

The principles and contents of the Model are publicized both inside and outside the ENGIE EPS Group. The Supervisory Body monitors the initiatives aimed at promoting communication and training regarding the Model, whose principles and contents concern the members of corporate bodies and management, the employees as well as the business partners who work in Italy or abroad for the achievement of the Company’s objectives.

Communication and staff training are important requirements for the effectiveness of the Model. The Company undertakes to facilitate and promote the knowledge of the Model to the management and the employees, with trainings shaped on the different positions and roles, encouraging the active participation in them for the diffusion of the Model principles and contents.

Each member of the Board of Directors is also personally committed to comply with the provisions contained in the Model, adopted or updated by means of a Board resolution.

The Directors that have not participated in the decision concerning the adoption or update of the Model sign a declaration of knowledge and adherence to its principles and contents. Such declaration is filed and kept by the Supervisory Body.

The Model is communicated to all the executives and the heads of organizational units, but also to employees and blue collars workers.

ENGIE EPS expects its employees and ENGIE EPS Group entities to act in accordance with the ENGIE EPS Group’s ethical principles, in all circumstances, and whatever their jobs, level responsibility and contacts. A healthy working environment contributes to the successful operation of the ENGIE EPS Group and to employee well-being.

The ENGIE EPS Group therefore pays great attention to quality of life at work. Respect and trust must guide relationships between employees and dialogue with social partners. Everyone, from board members to employees has the responsibility never to act in any way which might raise the slightest doubt about the ENGIE EPS Group’s ethics.

It is important to point out that ENGIE EPS promotes all the ethical principles among all of its stakeholders and, regarding customers, the ENGIE EPS Group pays utmost attention to their satisfaction, based on quality products and services, an open dialogue, procedural transparency, honouring commitments and respecting rules of competition.

The principles and contents of Decree 231, AMF Risk Management Guidelines and Model are also explained in training courses and dedicated EPS Academy sessions (please see Environmental and Social Responsibility Report). Attendance to the courses is mandatory.

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Structure of the training courses is approved by the Supervisory Body upon proposal of the relevant Company departments.

(i) Training and communication for managers, employees and blue-collar workers (including heads of units, line and staff functions)

The Model is published on EPS website and notified to each employee. Dedicated training initiatives are also organized for managers, employees and blue-collar workers (including heads of units, line and staff functions), subject in each case to the mandatory participation in training initiatives related to the Code of Ethics.

(ii) Training and communication by mean of Information Technology tools

The Model is available to all employees on the Company’s Intranet site and it is also available to all users - even non-employees - on the website of EPS. The dedicated training and information initiatives may also be performed remotely and using IT resources. In 2017 the Company will set most of the training courses via dedicated webinars.

(iii) Communication to third parties and the market

In accordance with the regulations contained in the ENGIE EPS Group Code of Ethics, the principles and contents of the Model are brought to the attention of all those with whom EPS maintains contractual relationships. The commitment to the observance of the law and principles of the Model by the third parties that have a contractual relationship with the ENGIE EPS Group is provided by a clause in the relevant contract and it is subject to its acceptance by the third-party contractor.

The standard clause which is mandatorily inserted in any contract or agreement with any counterparty of the ENGIE EPS Group is reported below:

The Company is committed to the highest standards of ethics, honesty, openness and accountability. It is crucial that the Company takes all necessary steps to protect the reputation of the Company and the value of the Company brand. As an organization, the Company takes a zero-tolerance approach to any form of corruption: in the course of business activities the Company does not endorse any form of fraud or corruption from either its own staff or those acting on its behalf.

The Company fully endorses all applicable anti-bribery, fraud, corruption, and money-laundering legislation. The Company and its Supervisory Committee (Organismo di Vigilanza) provide ongoing bribery awareness training to employees and have developed proportionate procedures across all its areas of operations to ensure that bribery and corruption risks are minimized and eliminated where possible.

This commitment is reflected in the key principles contained within the Ethical, Anti-Fraud and Corruption Code of Conduct approved by the Company, which the Company expects all its staff and those acting on its behalf to understand and comply with.

In this respect, the Partner agrees to – and undertakes to fulfil any provision of – the Ethical, Anti-Fraud and Corruption Code of Conduct approved by the Company and therefore agree, inter alia, to perform its activities under this

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agreement in the full respect of business, corporate and professional ethics, preventing the Company from any relationship, agreement or role that may negatively affect its reputation, values and commitment to the highest standards of ethics, honesty, openness and accountability.

In that respect, and without prejudice to the above, any payment to be made by EPS to the Partner or any of its affiliated companies shall be made in compliance with any applicable anti-money laundering regulation from time to time.

Furthermore, the shares of Electro Power Systems S.A. are listed on the regulated market of Euronext in Paris. In this context, compliance by the Partner with rules applicable to stock transactions and the holding and use of material non-public information it may receive in the course of its activities under this Agreement is crucial for the Company. Such rules mainly stem from Articles 621-2 to 622-2 of the General Regulation of the “French Autorité des Marchés Financiers” (AMF) and Articles L. 465-1 et seq. of the French Monetary and Financial Code.

The Company aims at respecting and enforcing the applicable legislation in terms of securities law and the principles and applicable regulations and the recommendations of the market authorities on to the holding, the disclosure or the use of material non-public information.

It should be noted that the Partner may also be concerned by similar rules and/or those applicable in the countries it is present, or it conducts its activities. In any event, it is the responsibility of each Partner to ensure compliance with the different laws that could apply to its situation”.

In this regard, internal regulations define standard clauses that, depending on the activity governed by the contract, bind the counter-parties to comply with the Model, also providing appropriate contractual remedies (such as the right to early terminate and/or suspend performance of the contract and/or penalty clauses) in case of non-compliance.

(iv) Functions, powers and budget of the Supervisory Body

The tasks of the Supervisory Body are defined as follows:

• supervision on effectiveness of the Model (including the Ethical Code) and monitoring of the Model implementation and updating activities;

• review of the adequacy of the Model, i.e. its real (and not merely formal) effectiveness in preventing unlawful conduct pursuant to Decree 231;

• analysis of the maintenance, over time, of the accuracy and functionality of the Model;

• promotion of the necessary updating of the Model, based on a dynamic approach;

• approval of the annual schedule of supervisory activities within the Company’s structures and departments (the "Audit Plan"), in compliance with the principles and contents of the Model as well as with the internal control system plan;

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• coordination between the implementation of the Audit Plan and of the scheduled or unscheduled control inspections; examination of the results of the activities carried out and relevant reports; drawing up of directives and guidelines for Company departments;

• assurance of relevant information flows to the Company departments;

• any other task assigned according to the law or to the Model.

In carrying out its duties, the Supervisory Body has unrestricted access to corporate information for their own investigations, analysis and monitoring which are performed directly, through competent units of the internal audit function, other internal corporate functions or professionals/third-party companies. Any Company department, employee and/or member of the Company’s bodies is subject to the obligation to disclose any information to the Supervisory Body upon request or in case of relevant events or circumstances.

The Supervisory Body can arrange meetings, even on a periodical basis, with the heads of the departments of the Company, for purposes of being informed on issues, events or circumstances that are relevant for carrying out its activities and exchange related data and assessments.

The Supervisory Body is granted with:

• the faculty – with autonomous representation powers - to enter into, modify and/or terminate professional engagements - by means of the relevant business units - with third parties having the specific expertise necessary for the best execution of the task concerned; and

• the availability of the financial resources necessary for the performance of the activities falling within the field of competence of the Supervisory Body, with the obligation to inform the Board of Directors.

(v) Risk analysis and system of internal control: information flows from the Supervisory Body towards the upper management

The Supervisory Body reports on the implementation of the Model and on possible critical aspects emerged and communicates the result of the activities carried out while performing its tasks. The lines of reporting are the following:

(a) continuous reporting line, towards the Managing Director, who informs the Board of Directors through the information notes regarding the implementation of the delegations granted;

(b) yearly, to the Chairman, the Audit Committee and the Statutory Auditors; in this regard there is a semi-annual meeting on the activities carried out, illustrating the outcome of the supervisory activities carried out and the eventual legislative amendments related to administrative liability of entities; in such event, meetings may be organized with the Chairman, the Audit Committee and the Statutory Auditors to discuss the topics covered in the report and any additional issues of common interest;

(c) yearly, to the attention of the Board of Directors; the Supervisory Body prepares an annual report, signed by all its members, disclosing the following elements:

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• a description of the main activities carried out during the previous year;

• the Board’s overall assessment of the implementation and effectiveness of the Model, including any suggestions for its integration, correction, or amendment;

• any problems regarding the implementation of the Model; and

• any action plans implemented and that will be implement;

(d) immediate reporting line, in case of ascertained facts of special importance and significance, towards the Audit Committee and the Statutory Auditors, after informing the Chairman and the Managing Director.

(vi) Information flows towards and for the benefit of the Supervisory Body: required information

The Supervisory Body shall be informed by the parties that are required to comply with the Model about any events that may entail a responsibility of the Company pursuant to Decree 231.

Each ENGIE EPS Group Company is subject to the information flow towards the Supervisory Body. In this regard:

• the Executive Vice President or head of business unit shall provide to the Supervisory Body a report in case of breach of the Model or of the Ethical Code;

• the manager in charge of drawing up the Company’s accounting documents shall inform the Supervisory Body on the results of the audits carried out on the management of financial resources;

• each manager or employee shall report any behaviours which are not in line with the principles and contents of the Model, contacting the Supervisory Body;

• consultants, collaborators and business partners shall report on their activity carried out for the Company directly to the Supervisory Body upon request.

The Supervisory Body shall evaluate the reports received and the actions to be taken.

The reporting parties in good faith are protected against any form of retaliation, discrimination or penalization. In any case confidentiality on their identity shall be ensured, without prejudice to the obligations under the law applicable and the protection of the rights of the ENGIE EPS Group or of the individuals wrongly accused/accused in bad faith.

“Dedicated Information Channels” are established in order to facilitate the communication and information flow. Each information flow may be addressed to: [email protected].

It is anyhow possible for the Supervisory Body to establish at any time, even on a periodical basis, information channels dedicated to the discussion of important

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issues with the heads of the relevant functions and business units.

Function of the disciplinary’s system

The sanctions (which shall be proportional to the violation committed), that are applicable in case of violation of the Model, are designed to contribute mainly to the effectiveness of the Model, and to the effectiveness of the control process carried out by the Supervisory Body.

For this purpose, it is established a disciplinary system in order to punish the non-compliant to the prescriptions contained in the Model, applicable both to individuals in apical positions and individuals subject to the management and control of the former. The disciplinary system is applied independently from the development and results of any possible criminal procedure carried out by the relevant judicial authorities.

The Supervisory Body reports any violation of the Model to the relevant departments, and monitors, along with the General Counsel and the management, the application of the disciplinary measures.

Structure of control’s tools

The tools aimed at preventing the risk referred to in Decree 231 and supporting compliance with the Ethical Code, are structured on two control levels:

• general standards of transparency of the activities, which must always be present in all Sensitive Activities illustrated in the Model;

• specific control standards, which contain special provisions designed to regulate specific aspects of Sensitive Activities and that must be contained in the Company applicable regulatory instruments. Such instruments include the reference to the Model, as standard reference.

Rules for updating the Model

Because of the complexity of the organizational structure of the ENGIE EPS Group and of the Model, its update is based on an innovation implementation program proposed by the Supervisory Committee and approved by the Board of Directors.

General standards of transparency and activities carried out

General standards of transparency of Sensitive Activities pursuant to the Model are:

• Segregation of duties: there must be segregation of duties between executing parties, controlling parties and authorizing parties. In that respect, (i) the role of the Chairman has been separated from the role of the Managing Director and CEO, (ii) two technical committees have been created within the Board of the Company and (iii) independent Statutory Auditors have been appointed for each Company of the ENGIE EPS Group;

• Regulations: Company regulations should provide at least general reference principles to monitor the Sensitive Activities. In this respect, the Model and the Ethical Code, along with the Market Ethics Charter are parts of such regulations. The Ethics charter contains the fundamental ethical principles which must be applied in professional practices and in behaviour towards the ENGIE EPS Group’s contacts. The Ethics charter, along with the Practical guide to ethics, is the foundation for all the referential, internal policies and codes of conduct adopted by the ENGIE EPS Group, and which each and everyone involved

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must promote and protect, whatever its position in hierarchy, its entity, or its geographical sphere of intervention.

• Powers of signature and authorization: formal rules should be implemented to exercise powers of signature and internal powers of authorization and to ensure that the assignment of the powers is in line with the organizational responsibilities assigned;

• Protection of whistle-blowers: people receiving an ethics incident report inform the ethics & compliance officer of the entity concerned. In all circumstances, these people and the ethics & compliance officer will keep the information received confidential. A person expressing in good faith and selflessly their ethical or compliance concerns cannot have any measures brought against them for expressing this concern.

• Traceability: the parties or departments concerned and/or the information system used should ensure the identification and traceability of sources, of information and of the checks carried out supporting the adoption and implementation of Company’s decisions, as well as financial resources management modalities. In that respect, a new ERP (Enterprise Resource Planning) has been implemented in 2016 and updated in 2018.

General standards of transparency are introduced by the competent functions within the internal regulatory instruments relating to Sensitive Activities. These regulatory instruments are communicated and diffused by the relevant functions in accordance with the laws together with the contracts and bind the management and employees to their observance.

Internal control procedures relating to the preparation and processing of accounting and financial information

The accounting and financial function is managed in-house by a team of seven persons, including an Administrative and Financial Director. General and local accounting, along with consolidated accounting, is done in-house and reviewed by locally qualified chartered accountants. The tax review and payroll management are conducted by external qualified consultants in each jurisdiction.

The scope of consolidation comprises the French Company and its subsidiaries. The consolidation of the accounts is carried out by the Administrative and Finance Department on a half-year basis. The Company is formalizing further accounting procedures, which thanks to the new ERP (please see 5.7(d) above) will be based on a monthly reporting (a light reporting, consisting of commercial and projects data) and a quarterly reporting format (a more completed economic and financial reporting).

The aims of consolidation procedures are to:

• Guarantee compliance with the applicable rules (group policies, AMF Risk Management Guidelines, etc.) through the implementation of general procedures and the issuance of specific consolidation instructions to the various entities;

• Provide assurance concerning the reliability of financial information, through the execution of controls provided for by the system;

• Guarantee data integrity through high level security systems (please see a

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detailed description of the new system security implemented in the Registration Document).

Each ENGIE EPS Group Company will have an annual budget. The budgeting process and consolidation procedures will enable the Company to constantly monitor the performance of the various units and to swiftly identify any variances from the budget in order to carry out immediate corrective actions.

Notwithstanding the fact that the ENGIE EPS Group Companies’ accounting is currently done in-house, each subsidiary can consider the opportunity to outsource some functions to optimize financial information flows.

The Auditors of the ENGIE EPS Group at the end of the first half conduct a limited review of the interim financial statements and at the end of the fiscal year certify the reliability of the year financial statements. The accounts of EPS Elvi Energy S.r.l., EPS Manufacturing S.r.l., MCM Energy Lab S.r.l. will be audited by independent Auditors.

A review of the quarterly, half and year results is also conducted by the Audit Committee before their submittal to the Board for their approval.

Statutory Auditors

ENGIE EPS Group’s half and full year financial statements are certified by the Auditors with a specific report.

The Auditors can identify, during their mandate, either risks or lacks that could have an impact on the financial accounts and monitor:

• The administrative and accounting system and the reliability of the latter in accurately representing operations;

• Full compliance with legal reporting requirements;

• That the annual financial statements show a true and fair view of the Company’s financial situation.

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EMPLOYEES

17.1 Number and allocation of employees by position As of 31 December 2018, the ENGIE EPS Group has a total of 100 resources, including 94 employees under an employment contract and 6 with an alternative employment status.

Most employees work in Italy. They have had multidisciplinary careers and have skills in the sectors targeted by ENGIE EPS. The headcount of the ENGIE EPS Group’s employees by degree is presented in the table below:

Headcount by degree 31.12.2016 31.12.2017 31.12.2018

University Degree, of which: 60 73 80

- Engineers 39 45 54

- PHD or MBA 15 20 24

Technical Degree 26 19 20

TOTAL HEADCOUNT 86 92 100

The headcount of the ENGIE EPS Group’s employees by function is presented in the table below:

Headcount by function 31.12.2016 31.12.2017 31.12.2018

Management 12 13 7

Staff: Administration & Finance, IR, Legal and Communication 13

15 22

Business Development and International Projects 7 6 11

R&D 19 22 22

Innovation 1 1 3

Engineering 19 17 18

Production 8 9 10

Project Management 5 8 6

Customer Value Management 2 1 1

Total 86 92 100

The Company’s key executives have major experience in their respective fields. These experiences are summarised in chapter 14 “Administrative and Executive Bodies” of this Registration Document.

17.2 Holdings and stock options held by ENGIE EPS executives and employees The Company's corporate officers, members of management and employees do not hold any shareholding in the Company's share capital.

As of the date of the Registration Document, there are no outstanding securities entitling the holders of which to access the capital of the Company. In accordance with the New Incentive Plan:

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• the previously existing share options and warrants were all exercised by their beneficiaries, with the exception of 200,000 stock options granted to the CEO, which were replaced by SARs;

• the previously stock options and the unvested warrants were replaced by individually allocated SARs - corresponding to the exercise prices of the different stock options or warrants for existing shares;

• in addition, the CEO and other members of the ENGIE EPS Group’s management received Additional SARs.

The allocations of the SARs to the CEO, the Chairman of the Board of Directors and other members of ENGIE EPS’s management decided by the Board of Directors on 6 March 2018 to replace unvested stock is described in chapter 15.2 of the Registration Document.

17.2.1 Overview of the current shareholding of the ENGIE EPS Group executives, mandataires sociaux and officers

The following table indicates the number of shares held by ENGIE EPS Group executives, mandataires sociaux and officers as of 31 December 2018, 31 December 2017 and 31 December 2016.

Names

Updated information

(*) % of the share

capital

2018 % of the share

capital

2017 % of the share

capital

2016 % of the share

capital Number of shares held

Number of shares

held

Number of shares

held

Number of shares

held Massimo Prelz Oltramonti (administrateur) - 0,0000% - 0,0000% 191,945 2.2743% 81,945 1.0400%

Ilaria Rosso (Directrice du département innovation) - 0,0000% - 0,0000% 10,000 0.1185% - 0.0000%

Emanuela Banfi (administrateur non dirigeant) - 0,0000% - 0,0000% 109,159 1.2934% 2,667 0.0300%

Cesare Maifredi - 0,0000% - 0,0000% 6,000 0.0711% 3,126 0.0400%

Carlalberto Guglielminotti (Directeur Général) - 0,0000% - 0,0000% 17,135 0.2030% 17,135 0.2200%

Davide Peiretti (administrateur) - 0,0000% - 0,0000% 5 0.0001% 5 0.0001%

Trough dpCube S.r.l. - 0,0000% - 0,0000% 146,492 1.7358% - 0.0000%

Giuseppe Artizzu (administrateur) - 0,0000% - 0,0000% 5 0.0001% 5 0.0030%

Sonia Levy Odier (administrateur) - 0,0000% - 0,0000% 5 0.0001% 5 0.0030%

Total - 0,0000% - 0,0000% 480,746 5.70% 104,888 1.34%

17.3 Profit sharing and participation agreements The Company has no current profit sharing or participation agreements.

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PRINCIPAL SHAREHOLDERS

18.1 Ownership of the share capital

As at the date of the report, the main shareholders of the Company were:

To the Company’s knowledge, there is no other shareholder holding directly or indirectly, more than 5% of the share capital or the voting rights of the Company. No shareholder has declared to the stock-exchange authorities that they are acting in concert with another.

18.2 Voting rights of the principal shareholders

Each share confers a right to one voting right in the Company. The article n.11 of the Company’s bylaws, that rejects the implementation of double voting rights, has been approved on 22 May 2015.

18.3 Control of the Company

ENGIE (through its subsidiary GDF International) holds 60.48% of the Company's share capital and voting rights.The position of chairman of the Board of Directors and managing director have been separated since 2015.

Because of its geographic reach and breadth, ENGIE is both a client and a business partner and provider for the ENGIE EPS Group. This was the rationale behind the acquisition since ENGIE acquired the Company in order to boost its storage-based business. The current backlog includes a large part (67%) of projects for which ENGIE EPS will deliver for ENGIE group companies. In the pipeline, this part amounts to 79%. In these situations, ENGIE group companies will contract ENGIE EPS Group’s services and products, the final client being either a government owned or private “off-taker”. For instance, in the case of the ongoing project in Mexico, the entity purchasing the system is ENGIE Mexico (an organizational unit of ENGIE), the general contractor will be ENGIE Solar and EPS will be a sub-contractor of ENGIE Solar. The final client of the project will be the CFE, the Mexican state-owned utility, which will enter into a long term power purchase agreement with ENGIE Mexico. In other situations, the ENGIE EPS Group will directly contract with a third-party client, and subcontract certain execution activities to ENGIE group entities. For example, for the Palau microgrid project (which is currently being retendered by the local utility), the ENGIE EPS Group is the main proposed contractor, but is relying on ENGIE Solar to support the construction efforts and on ENGIE Asia Pacific Business Unit as an anchor investor in the project.

The contractual relationships with the ENGIE group are carried out at arms’ length. Within the context of its review of the general conduct of the ENGIE EPS Group’s business, the Board of Directors, which includes two independent board members, is kept informed of the contractual relationships with the ENGIE group.

Furthermore, any agreement entered into directly between the Company and ENGIE or

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a controlled subsidiary of ENGIE is subject to the regulated agreements framework pursuant to articles L. 225-38 et seq. of the French Commercial Code. As of now, no other procedure to examine the contractual relationships with the ENGIE group is contemplated.

As of the date of the Registration Document, the following agreements have been entered into between the ENGIE EPS Group and the ENGIE group:

– Agreement subject to the regulated agreements framework:

o Agreement with ENGIE SOLAR S.a.S. (a company belonging to the ENGIE group, the majority shareholder of the Company): since the 1st January 2019 a sublease agreement with ENGIE EPS, for a duration of two years, has been entered for the sublease of its registered office at 115, rue Réaumur, 75002 Paris. The annual rent (excluding taxes) is equal to € 2,400.

– Agreements that are not subject to the regulated agreements framework:

o Agreement with ENGIE Lab Singapore (a company belonging to the ENGIE group, the majority shareholder of the Company): On 21 September 2017, EPS Elvi entered into an agreement with ENGIE Lab Singapore for the supply of a P2P hydrogen system (its articles, materials, equipment, design and drawings, data and other materials) on the island of Semakau (Singapore). The value of the agreement is € 663,458.

o Agreement with ENGIE EEC (a company belonging to the ENGIE group, the majority shareholder of the Company): Engie EEC, as electricity grid operator on Lifou island (New Caledonia), entered into agreements with local government to install and operate an Energy Storage System (ESS) in the framework of the Renewable Energy strategy “Lifou 100% in 2020”. On 5 December 2018, EPS Elvi signed into an agreement as a contractor for the engineering, procurement and construction of 4.8 MW / 5.06 MWh battery energy storage system. The contract price is € 2,478,232.

o Agreement with ENGIE Storage (a company belonging to the ENGIE group, the majority shareholder of the Company): EPS Elvi concluded on 17th of December 2018 sales agreement for the supply of 144 Samsung Mega E2 Battery modules, 16 Mega E2 Switchgear, Associated Accessories for usage of the assets. The contract price is $ 330,000.

o Agreement with ENGIE Electrabel (a company belonging to the ENGIE group, the majority shareholder of the Company): EPS Elvi concluded on 9 October 2018 an engineering contract for ENGIE Electrabel. The contract price is € 25,000.

o Agreement with ENGIE ENERGIE SERVICES (a company belonging to the ENGIE group, the majority shareholder of the Company): EPS Elvi concluded on 1 January 2019 an engineering contract for ENGIE ENERGIE SERVICES. The contract price is approximately € 200,000.

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Finally, ENGIE has a long successful track record in managing controlled listed entities (the largest ones being ENGIE Brazil, which is listed on the Brazilian stock exchange, ENGIE Energia Chile, which is listed in Chile, and ENGIE Energia Peru, which is listed in Peru).

18.4 Agreements likely to entail a change of control

To the best of the Company’s knowledge, as of the date of this Registration Document, there is no agreement the implementation of which could entail a change of control of the Company.

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RELATED PARTY TRANSACTIONS

19.1 Intra-group Operations ENGIE EPS, as parent company of the ENGIE EPS Group, may, as appropriate, form the object of financial flows with the ENGIE EPS Group subsidiaries.

On 10 December 2015, the Company granted an interest free line of credit facility to EPS Inc. in the amount up to 1,000 K€ in order to fund the start-up activities of the ENGIE EPS Group in the United States. Total draw down in 2018 has been 5 K€ in addition to 10 K€ in 2017 and 105 K€ in 2016).

On 4 January 2016 the Company granted to EPS Manufacturing a debt revolving loan facility for a maximum amount of 10,000 K€. The revolving facility bore interest at Euribor 3 months plus 230 bps.

The draw downs in 2018 and 2017 have been nil while in 2016 has been 4,650 K€. EPS Manufacturing refunded 110 K€ in 2018, 2,200 K€ in 2017 and 2,500 K€ in 2016. At the end of 2018 the amount of the debt inclusive of interests was nil.

On 4 January 2016 the Company granted to EPS Elvi a debt revolving loan facility for a maximum amount of 5,000 K€. The revolving facility bore interest at Euribor 3 months plus 215 bps. Total draw down in 2018 has been 17,200 k€ of which 8,000 k€ for future capital increase.

A cash pooling agreement may be established within the ENGIE EPS Group.

In 2016 the ENGIE EPS Group companies entered into a cost sharing agreement based on a direct splitting of costs related to the support functions. The reallocation of the costs resulting from the transfer pricing policy was made in compliance with market conditions and French and Italian regulations. The corporate functions assigned to the benefit of the various ENGIE EPS Group companies (Business Development, Business Intelligence, Administration & Finance, Communication, Legal, Compliance and HR) are assigned to specific cost centres and can be supported by ENGIE EPS or by its subsidiaries. In the latter case, the share of the support functions supported by the subsidiaries is first billed back to EPS without any margin and allocated to the specific cost centres to be included in the total cost of the common functions.

The total cost of the shared functions is then distributed among ENGIE EPS Group companies according to a consistent and homogeneous criteria, at market conditions. The allocation criteria chosen are objective and measurable. Allocation keys are applied consistently to all entities and allow correlation of allocated costs and revenues. In compliance with the French and Italian tax regulations, as well as the arm's length principle, ENGIE EPS re-invoices the expenses of the common functions to ENGIE EPS Group companies by applying a margin of 5%.

19.2 Significant agreements concluded with related parties The ENGIE EPS Group associated parties to notably include the shareholders of the Company, its consolidated and unconsolidated subsidiaries, companies under joint control, associated companies and the entities over which the various directors of the ENGIE EPS Group exercise at least a notable influence.

Quantitative data specifying the relations with these related parties appear in paragraph 4.29 of the Consolidated Financial Statements of the ENGIE EPS Group,

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and are presented in chapter 20 “Financial information concerning the ENGIE EPS Group’s assets, financial situation and results” of this Registration Document.

The principal operations with associated parties are:

Agreement with 360 Capital Partners (shareholder until 7 March 2018): on 1 January 2017 the Company renewed the sublease agreement with 360 Capital Partners for the occupation of its registered office in Paris (1st Arrondissement), 13, avenue de l’Opéra, for a monthly rent of one thousand (1,000) € excluding taxes and for the duration of one year renewable for the same additional period. The annual rent for 2017 was 12 K€ (please refer to paragraph 8.1.2 “Property, plants and equipment” of this Registration Document). Such agreement terminated on 28 May 2018, as per termination notice sent by the Company to 360. On 28 May 2018, the agreement has been renewed at the same terms and conditions, for the duration of 7 months, and had expired on 31 December 2018.

Agreement with Elvi Fin S.p.A. (sole shareholder of Elvi Elettrotecnica Vitali, shareholder of the ENGIE EPS Group until 7 March 2018): EPS Elvi concluded a sublease agreement with Elvi Fin S.p.A. for the occupation of its Manufacturing & Systems R&D offices in Delebio, Sondrio (Italy) for a duration of 6 years (starting from 1st January 2016), to be tacitly renewed for another 6 years (please refer to paragraph 8.1.2 of this Registration Document). In 2017 the amount referred to this agreement was 55 K€. In 2018 the parties terminated the agreement as the production and manufacturing have been moved to the Cosio plant. In 2018 the rent paid for the lease has been equal to 95 K€.

Agreement with Elvi Elettrotecnica Vitali (shareholder of the ENGIE EPS Group as part of the reserved capital increase of 1.4 million euros announced on 14 December 2015 and implemented on 4 August 2017, until 7 March 2018): The agreement with Elvi Elettrotecnica Vitali (once composed by Elvi Automation and EPS Elvi) reflects in its total the two service agreements in force between EPS Manufacturing and Elvi Automation on the one hand and between EPS Elvi and Elvi Automation on the other hand. The ENGIE EPS Group can count on highly-qualified workforce, skills and equipment, activating in outsourcing the following services: technical office, warehouse, workshop, project management and logistics, procurement.

The manufacturing process is handled as follows. The arrangement (wiring and balance of systems) of the container where our power-to-power systems are housed takes place in Cosio. The container is then shipped to Rivoli where the mechanical and electrical completion is carried out and we perform the Factory Acceptance Test (“FAT”) in accordance with the clients approved test plans and specifications to show that system is at a point to be installed and tested on site. Once the FAT is completed, the container is then shipped to the client. In 2018 the costs borne by the ENGIE EPS Group related to the agreement was 564 K€.

Agreements with the company Prima Electro S.p.A. (shareholder of the ENGIE EPS Group until 7 March 2018): Prima Electro S.p.A. is one of the ENGIE EPS Group’s principal shareholders and the preferential supplier of electronic components for electricity and control, specially developed for the ENGIE EPS Group’s products. EPS Manufacturing has established various agreements with Prima Electro S.p.A., relating to supply, R&D and a leasing agreement for commercial use (please make reference to note 4.28 of the Consolidated Financial Statements of the ENGIE EPS Group).

A strategic partnership agreement entered into on 24 September 2015 (and approved

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by the Board of Directors on July 2015) in order to set out the arrangements for the development, manufacturing and supply by Prima Electro of certain products which EPS Manufacturing agrees to purchase. This agreement supplants and extends a previous supply and cooperation agreement entered into on 16 October 2009.

With the new agreement, EPS Manufacturing, in continuity with the past, confirmed Prima Electro as strategic and preferred partner for the co-development of power and control electronics related to both energy storage and back-up applications and, the manufacturing of the products by utilising manufacturing expertise, facilities and know-how of Prima Electro. This agreement shall be effective for an initial period of 7 years, being excluded the possibility of an early termination during the first 7 years, unless by mutual agreement or for default. The amount related to this agreement in 2017 was 104 K€. The amount related to this agreement in 2018 was 65 K€.

Agreement with ENGIE SOLAR S.a.S. (a company belonging to the ENGIE group, the majority shareholder of the Company): since the 1st January 2019 a sublease agreement with ENGIE EPS, for a duration of two years, has been entered for the sublease of its registered office at 115, rue Réaumur, 75002 Paris. The annual rent (excluding taxes) is equal to € 2,400.

Agreement with Cautha S.r.l. (a company for which Giuseppe Artizzu, Executive Director of the ENGIE EPS Group as of 7 March 2018, is a director): EPS Manufacturing concluded on 10th of July 2015 a one-year sublease agreement with Cautha S.r.l., renewed for an additional year and expiring on July 2018, for the occupation of its registered office in Piazza del Tricolore 4 Milan (Italy). The annual rent (excluding taxes) is € 17,642.89 (please refer to paragraph 8.1.2 “Property, plants and equipment” of this Registration Document).

Agreement with ENGIE Lab Singapore (a company belonging to the ENGIE group, the majority shareholder of the Company): On 21 September 2017, EPS Elvi entered into an agreement with ENGIE Lab Singapore for the supply of a P2P hydrogen system (its articles, materials, equipment, design and drawings, data and other materials) on the island of Semakau (Singapore). The value of the agreement is € 663,458.

Agreement with ENGIE EEC (a company belonging to the ENGIE group, the majority shareholder of the Company): Engie EEC, as electricity grid operator on Lifou island (New Caledonia), entered into agreements with local government to install and operate an Energy Storage System (ESS) in the framework of the Renewable Energy strategy “Lifou 100% in 2020”. On 5 December 2018, EPS Elvi signed into an agreement as a contractor for the engineering, procurement and construction of 4.8 MW / 5.06 MWh battery energy storage system. The contract price is € 2,478,232.

Agreement with ENGIE Storage (a company belonging to the ENGIE group, the majority shareholder of the Company): EPS Elvi concluded on 17th of December 2018 sales agreement for the supply of 144 Samsung Mega E2 Battery modules, 16 Mega E2 Switchgear, Associated Accessories for usage of the assets. The contract price is $ 330,000.

Agreement with ENGIE Electrabel (a company belonging to the ENGIE group, the majority shareholder of the Company): EPS Elvi concluded on 9 October 2018 an engineering contract for ENGIE Electrabel. The contract price is € 25,000.

Agreement with ENGIE ENERGIE SERVICES (a company belonging to the ENGIE group, the majority shareholder of the Company): EPS Elvi concluded on 1 January

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2019 an engineering contract for ENGIE ENERGIE SERVICES. The contract price is approximately € 200,000.

19.3 Special report by the statutory auditors on regulated agreements and commitments Please refer to Annex 5 of this Registration Document.

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FINANCIAL INFORMATION CONCERNING THE ISSUER’S ASSETS, FINANCIAL SITUATION AND RESULTS

20.1 Consolidated Financial Statements of the ENGIE EPS Group for the financial year ended 31 December 2018 20.1.1 Consolidated Financial Statements of the ENGIE EPS Group for the

financial year ended 31 December 2018

Please refer to Annex 1 “Consolidated Financial Statements of the ENGIE EPS Group for the financial year 2018 ended 31 December 2018” of this Registration Document.

20.1.2 Report of the statutory auditor of the ENGIE EPS Group on the Consolidated Financial Statements for the financial year ended 31 December 2018

Please refer to Annex 2 “Report of the statutory auditor on the Consolidated Financial Statements of the ENGIE EPS Group for the financial year 2018 ended on 31 December 2018” of this Registration Document.

20.2 Company’s accounts for the financial year ended 31 December 2018 20.2.1 Company’s accounts for the financial year ended 31 December 2018

Please refer to Annex 3 “Company’s accounts for the financial year ended on 31 December 2018” of this Registration Document.

20.2.2 Report of the statutory auditors on the Company’s Accounts for the financial year ended 31 December 2018

Please refer to Annex 4 “Report of the statutory auditors on the Company’s Accounts for the financial year ended on 31 December 2018”.

20.3 Date of the last financial information

The date of the last financial information is 31 December 2018 (please refer to chapters 9 and 10 of this Registration Document).

20.4 Dividend distribution policy 20.4.1 Dividends and reserves distributed by the Company over the last three

financial years

No dividends or reserves have been distributed by the Company since its incorporation.

20.4.2 Dividend distribution policy

There are no plans to initiate a policy of dividend payments in the short term in view of the Company’s stage of development.

20.5 Judicial proceedings and arbitration The ENGIE EPS Group may be involved in judicial, administrative or arbitration proceedings during the normal course of its activities, and shall constitute a provision when there is a sufficient probability that such proceedings are likely to entail costs for the ENGIE EPS Group, which may be reliably estimated.

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There are no governmental, judicial or arbitration proceedings, including any proceedings of which the Company is aware, suspended or threatened, likely to have or which, over the last three financial years, have had significant effects on the ENGIE EPS Group’s financial situation or profitability.

20.6 Significant change in the financial or commercial situation To the Company’s knowledge, since 31 December 2018, there have been no significant changes in the financial or commercial situation of the ENGIE EPS Group, which have not been already described in this Registration Document (please refer to paragraphs 9.2 and 9.3).

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SUPPLEMENTARY INFORMATION

21.1 Share capital 21.1.1 Amount of the share capital

As of the date of the Registration Document, the share capital of the Company amounted to € 2,553,372 divided in 12,766,860 shares, with a nominal value of € 0.20 each, entirely subscribed and paid up and in the same category.

No shares issued by the Company have been pledged.

21.1.2 Securities not representing the share capital

On the registration date of this Registration Document, the Company had not issued any security not representing the share capital.

21.1.3 Control, treasury stock and acquisition by the Company of its own shares

On the registration date of this Registration Document, the Company holds none of its own shares and no share of the Company is held by one of its subsidiaries or by a third party on its behalf.

The shareholders meeting of 26 June 2018 renewed via the 31st resolution the authorization for the Board of Directors for the purchase by the Company its own shares, in the context of a share buyback program. This resolution has a validity of 18 months starting on the date of the shareholders meeting of 26 June 2018.

21.1.4 Securities granting access to the share capital

As of the date of the Registration Document, there is no security entitling the holder to access the capital of the Company (see paragraph 15.5 “Allocation of Stock Appreciation Rights to the corporate officers in 2018” of this Registration Document).

21.1.5 Share capital authorised but not issued

The issuance resolutions approved by the general meetings of shareholders of 26 June 2018, ruling in an extraordinary capacity, are summarised below:

Delegations granted by the General Meeting of June 26 June 2018 to the Board of Directors

Duration of

validity / expiry

Ceiling in nominal value

terms

Use Price

determination procedures

Delegation of authority granted to the Board of Directors for the purchase by the Company of its own shares (resolution No. 31)

18 months

€ 1,000,000

- € 9.90

Delegation of authority to the Board of Directors for the purpose of reducing the share capital through share cancellation as part of the authorization to purchase its own shares (resolution No. 32)

18 months

up to the limit of 10% of the actual share

capital as of the cancellation

date

- -

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Duration of

validity / expiry


terms

Use Price


Delegation of authority granted to the Board of Directors to increase the share capital by issuing ordinary shares and/or securities giving access to the share capital with preferential subscription rights (Resolution No. 33)

26 months

€ 800,000 - (1)

Delegation of authority granted to the Board of Directors with a view to increasing the share capital by issuance of ordinary shares or securities granting access to the share capital, without preferential subscription rights (Resolution No. 34)

26 months

€ 800,000 up to 20% of the

share capital on a 12 months

period

- (1)

Delegation of authority granted to the Board of Directors with a view to increasing the share capital by issuance of ordinary shares or securities granting access to the share capital, without preferential subscription, rights through a private placement (Resolution No. 35)

26 months

€ 800,000 - -

Delegation of competence to the Board of Directors in the event of issuance of ordinary shares or securities granting access to the share capital, without preferential subscription with a view to setting the issue price, up to the limit of 10% of the share capital (Resolution No. 36)

26 months

up to the limit of 10% of the share capital

per year

- (2)

Authorization to the Board of Directors to increase the number of securities issued, with the maintenance or suppression of the pre-emptive subscription right in the event of excess demands (Resolution No. 37)

26 months

up to the limit of 15% of the initial issue

- Same price as the initial issue

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Duration of

validity / expiry


terms

Use Price


Delegation of authority granted to the Board of Directors with a view to increasing the capital by issuance of ordinary shares or of securities granting access to the share capital, up to the limit of 10% of the share capital, for communicating contributions in kind granted to the Company outside of a public exchange offer (Resolution No. 38)

26 months

up to the limit of 10% of the actual share

capital as of the cancellation

date

- -

Delegation of authority granted to the Board of Directors with a view to increasing the share capital by the issuance of ordinary shares or of securities granting access to the share capital, in the event of a public exchange offer initiated by the Company (Resolution No. 39)

26 months

€ 800,000

- -

Delegation of authority granted to the Board of Directors with a view to a capital increase through the incorporation of reserves, profits or issue premiums, of merger or contribution, or any other amount for which the capitalization would be accepted (Resolution No. 40)

26 months

€ 800,000

- -

Delegation of authority granted to the Board of Directors with a view to a capital increase reserved for employees who are members of the company savings plan, without preferential subscription rights (Resolution No. 42)

26 months

€ 10,000

- (3)

(1) The issue price of the shares issued under this delegation shall be at least equal to the minimum authorized by the legislation (i.e. to the weighted average of listed prices over the last three stock exchange sessions preceding its fixing and, when appropriate, reduced by a maximum discount of 5%).

(2) The issue price shall be at least equal to the average weighted by volumes (in the central order book and excluding off-market blocks) of closing price of the Company’s share on Euronext Paris for the last three stock exchange sessions preceding its fixing and, when appropriate, adjusted to take into account enjoyment date differences and reduced by a maximum discount of 20% with the understanding that in any case it

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will not be inferior to the nominal value of the Company’s shares at the issue date of such issued shares

(3) The exercise price must be obtained from the weighted average of the last twenty days of stock price before the allocation date reduced by the discount authorized be the legislation (currently 20% when the period stipulated by the savings plan is less than 10 years, and 30% when this duration is equal to or greater than 10 years).

21.1.6 The share capital of any ENGIE EPS Group Company forming the object of an option or agreement providing for such options.

To the Company’s knowledge, there are no options or any conditional or unconditional agreements providing for the implementation of such an option on the share capital of the Company.

21.1.7 History of the share capital

21.2 Articles of incorporation and articles of association The information provided below derives from the bylaws of the Company, up to date on 1st January 2019.

21.2.1 Company object (article 2 of the articles of association)

The Company has as its object, in France and outside it:

• the research, design, creation, realisation, development, production, integration, marketing and supply of products for generation of electrical energy, of hydrogen, storage technologies, sources of renewable energies, heating or cooling of all or part of these products;

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• the research, design, creation, realisation, development, production, integration, marketing, granting of licences, freely or against payment, of new technologies and of applications in the fields of energy and the environment and in particular, concerning hydrogen generators, hydrogen fuel cells, natural gas, propane or any other type of liquid and/or gaseous fuels or renewable energy sources;

• the design, development and management of technological research projects in the fields of energy, energy storage, renewable sources of energy and the environment, independently or in collaboration with public or private institutions, energy sector companies, universities, foundations, local, national and international entities and in general, any other public or private person concerned by the development of new technologies and applications in the fields of energy, energy storage, renewable energy sources and the environment;

• retail and wholesale sales, by post and electronically of technologies aiming at production and energy storage in general;

• the management of agreements signed with private and public entities and involving activities associated with domains of energy, energy storage, renewable energy sources and the environment;

• the installation, maintenance, modification and construction of the following civil, industrial and agricultural infrastructure:

• systems aiming at the production, treatment, transport, storage, distribution and use of electrical energy, protection systems against thunder, as well as the installations of automatic systems for any technology infrastructure for the communication of information, notably doors, gateways and barriers;

• storage and emergency supply infrastructure, notably, diffusion installations, antennas and electronic systems in general;

• storage and emergency supply infrastructure, including heating, air conditioning and refrigeration systems of any kind and type, and notably, evacuation systems relating to products for combustion, ventilation and aeration of the premises;

• infrastructure for natural gas networks, storage and emergency supply, notably, water installations and sanitary infrastructure of any nature and type;

• systems for the distribution and use of gas, of any kind and type, notably evacuation systems relating to products for combustion, ventilation and aeration of the premises;

• lifting devices for persons or objects by lifts, freight lifts, escalators and their equivalents;

• energy storage and safety systems, notably fire protection systems;

• any taking of a direct or indirect stake in any commercial, industrial, financial or other operation, in France or outside it, regardless of the

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legal nature or the object of such commitments, by all means, and particularly by the creation, contribution, subscription, exchange or purchase of shares or securities, or through a merger, undeclared partnership or group or by any other means, with regard to the above;

• the management of its participations;

• all services and advice to its subsidiaries and to the companies which it controls (the “Group”) regarding human resources, IT, management, communication, finance, legal, marketing, and sourcing;

• the acquisition of any trademarks belonging to the Group or to third parties, the development of the ENGIE EPS Group’s brands and more extensively, the management of the portfolio of trademarks of the ENGIE EPS Group and of the intellectual property rights of the Company, as well as those of its subsidiaries and Holdings and any services to the ENGIE EPS Group companies regarding these intellectual property rights;

• the activities of a Group financing company, and as such, the provision of any type of financial assistance to the companies forming part of the Group;

• and in general, all operations, whether financial, commercial, industrial, civil, property or securities operations, which may relate directly or indirectly to the above Company and to all similar or associated objects, as well as ones of a nature to favour directly or indirectly the objective pursued by the Company, its extension, its development and its asset base.

21.2.2 Rights and obligations attached to the shares (article 11 of the articles of association)

Subject to the rights that would be granted to other categories of shares if established, each share entitles the holder to a share in profits and corporate assets proportional to the portion of the capital that it represents. In addition, it gives the right to vote and representation in general meetings, in accordance with law and statute. It does not carry a double voting right.

Shareholders will bear losses only up to the amount of their contributions.

The rights and obligations attached to the action follow the title in whatever hand it passes. Ownership of a share automatically entails acceptance of the articles and decisions of the general meeting of shareholders of the Company.

Whenever it is necessary to have several shares to exercise a certain right, the isolated shares less than the amount required to exercise the right do not give any right to their owners against the Company. In such case, the affected shareholders are responsible for group the required number of shares to exercise the right.

The extraordinary general meeting may decide to proceed with stock-splits and reverse stock-splits.

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21.2.3 Deputy Chief Executive Officers (article 19 of the articles of association)

On the proposal of the Chief Executive Officer, the Board of Directors may, to assist him, appoint a maximum of five (5) Deputy Chief Executive Officers. The Deputy Chief Executive Officers must always be natural persons. They may be chosen from among the current management or outside.

In agreement with the Chief Executive Officer, the Board of Directors determines the scope and duration of the powers granted to the Deputy Chief Executive Officers, which may not exceed the powers of the Chief Executive Officer. The Deputy Chief Executive Officers have the same powers with respect to third parties as the Chief Executive Officer.

The term of office of the Deputy Chief Executive Officers is determined at the time of their appointment, but this term may not exceed, if applicable, that of their term of their directorships. In the event of the termination of the duties of the Chief Executive Officer, the Deputy Chief Executive Officer, unless otherwise decided by the Board, will remain in office until the appointment of the new Chief Executive Officer.

The Deputy Chief Executive Officers may be dismissed at any time by the Board of Directors on the proposal of the Chief Executive Officer. If the revocation is decided without just cause, it may give rise to damages, except when such officer also assumes the duties of Chairman.

The Board of Directors determines the remuneration of the Deputy Chief Executive Officers.

21.2.4 Amendment of the rights of shareholders (article 22 of the articles of association)

The rights of shareholders, as these appear in the Company’s articles of association, may only be amended by the extraordinary general meeting of shareholders. It nevertheless may not increase the commitments of the shareholders, subject to the operations resulting from a regrouping of shares carried out in regular fashion, or infringe the equality of their rights, except with the unanimous agreement of the shareholders.

21.2.5 General meetings (article 21 of the articles of association)

The general meetings are called and held under the conditions, in the form and within the deadlines provided by the law, at the registered office or in any other place in France or outside it, indicated in the calling of the meeting.

(i) Access and voting at the general meetings

Every shareholder shall have the right to attend the general meetings and to participate in its decisions, whether in person or through a representative.

The right to participate in the meetings is subject to the entry of the shareholder in the into a security account, on the second business day preceding the meeting in midnight, Paris time, either in the registered securities accounts held by the Company to the shareholders owning registered shares, or in the bearer securities accounts held by the authorized bank or financial intermediary, for shareholders who own bearer shares.

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If the Board of Directors takes a decision, published in the notice of meeting or notice of calling, to use such telecommunications resources, for the calculation of the quorum and majority, shareholders shall be considered to be present who participate in the general meeting by video conference or by telecommunication or remote transmission resources, including internet, permitting their identification under the conditions provided by the regulations in effect.

Any shareholder may vote remotely or issue a power of attorney pursuant to the regulations in effect, through a form drawn up by the Company and addressed to the Company under the conditions foreseen by the regulations in effect, including by electronic or remote transmission resources, by decision of the Board of Directors. This form shall be received by the Company under the regulatory conditions, so that it is taken of the same into account.

(ii) Holding of the general meetings

The agenda of the general meeting shall appear on the notices and letters of calling of the meeting; it shall be drawn up by the author of the calling of the meeting.

The meeting may only decide on issues appearing on its agenda; it may nevertheless dismiss one or several directors under any circumstances and proceed with their replacement.

One or several shareholders representing at least the proportion of the share capital provided by law, and acting under the conditions and within the legal deadlines, shall have the right to request the entry on the agenda of draft resolutions.

An attendance sheet shall be kept at each meeting, containing the indications provided by law.

The meetings shall be chaired by the chairman of the Board of Directors, or, where he fails to act, by the board member specially delegated for this purpose by the board. Failing this, the general meeting shall itself elect its chairman.

The duties of scrutineers shall be performed by the two members of the general meeting, being present and accepting these duties, with the largest number of votes, in their own right or as representatives.

The bureau shall appoint the secretary, who may be chosen from outside the shareholders.

The members of the bureau shall have the mission of verifying, certifying and signing the attendance sheet, of ensuring the proper conduct of the discussions, of settling incidents during the session, of monitoring votes cast, of ensuring their regularity and of ensuring that the minutes are drawn up.

The minutes of the meeting shall be drawn up and copies or extracts of them shall be certified and issued pursuant to current regulations.

21.2.6 Clauses of the articles of association or internal regulations likely to have an impact on the occurrence of a change of control

No stipulation of the articles of association or of the internal regulations shall have the effect of delaying, deferring or presenting a change in the control of the Company.

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21.2.7 Identification of shareholders and crossing of thresholds

(i) Procedure for identifying the shareholders (article 12 of the articles of association)

The Company shall keep itself informed of the composition of its shareholding structure, under the conditions provided by law. In this capacity, the Company may ask the central depository, which maintains the issuance account for its shares, for the name or, if it is a legal person, the Company name, nationality and address of the holders of securities conferring voting rights immediately or in the future at its own meetings of shareholders, as well as the number of securities held by each of them and as appropriate, the restrictions attached to these shares.

(ii) Crossing of thresholds (article 13 of the articles of association)

In addition to the legal obligation to inform informer the Company of the holding of certain fractions of the share capital or voting rights, every natural or legal person or shareholder who may hold, whether directly or indirectly, solely or jointly, pursuant to articles L.233-10 et seq. of the Commercial Code, a number of shares in the Company equal to or greater than 3% of the total number of shares or voting rights, shall, before the end of the fifth day of trading following the crossing of this participation threshold, inform the Company of the same by registered letter of notice of receipt. This declaration shall be renewed under the same conditions, whenever a new threshold of a multiple of 1% of the total number of shares or voting rights is crossed. Any shareholder whose participation in the share capital or the voting rights falls below one of the aforementioned statutory thresholds shall also be required to inform the Company of the same within the same five-day deadline, according to the same procedures.

For the determination of these thresholds, account shall also be taken of the securities comparable to the held shares, as defined by the legislative and regulatory provisions of articles L.233-7 et seq. of the Commercial Code.

The shareholder shall provide certain information in this declaration.

In the event of failure to observe the above provisions, under the conditions and within the limits defined by the law, the shareholder shall be deprived of the voting right relating to the shares exceeding the thresholds subject to declaration, at the demand of one or several shareholders holding a fraction of the capital or of the voting rights at least equal to 3%.

21.2.8 Particular clauses governing modifications to the share capital

There is no particular stipulation in the articles of association of the Company governing the modifications of its share capital. Article 7 of the articles of association merely provides that the share capital may be increased, reduced or written down under the conditions provided by the articles of association.

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SIGNIFICANT AGREEMENTS

22.1 Summary of significant agreements None.

22.2 Summary of agreements concluded under extraordinary conditions None.

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THIRD PARTY INFORMATION AND STATEMENT BY EXPERTS AND DECLARATION OF ANY INTEREST

Certain market data contained in chapter 6 “Business Overview” of this Registration Document derive from third-party sources. The ENGIE EPS Group certifies that when information derives from third-party sources, they have been faithfully reproduced and as far as the Company is aware and is capable of guaranteeing in light of the data published by this third party company, no fact has been omitted which would render the reproduced information inaccurate or misleading.

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DOCUMENTS ACCESSIBLE TO THE PUBLIC

Copies of this Registration Document are available free of charge from the registered office of the Company: 115, rue Réaumur, 75002 Paris, France, as well as in its offices in Milan, at via Anton Francesco Grazzini, 14, 20158 Italy.

This Registration Document may also be consulted on the website of the Company (www.electropowersystems.com) and on the website of the AMF (www.amf-france.org).

The articles of association of the Company, as well as the historic financial information included in this Registration Document and all reports, letters and other documents, historic financial information, assessments and declarations established by an expert at the request of the Company, a part of which is included in or cited in this Registration Document, may be consulted, free of charge, at the Company’s registered office for the duration of validity of this Registration Document.

This information, the calendar for publication of financial information of the Company as well as the regulated information pursuant to the provisions of the General regulations of the AMF will also be available on the Company’s website (www.electropowersystems.com).

The ENGIE EPS Group attributes strategic importance to financial and corporate communication as a key instrument to build a relationship of trust with the financial community, one of its main stakeholders. In this respect, the ENGIE EPS Group maintains an ongoing dialogue, through the Investor Relations department and the ENGIE EPS Group’s top management, with analysts as well as institutional and individual investors, promoting fair, transparent, timely and accurate communication. The ENGIE EPS Group, has decided and accomplished during 2018 to:

• publish its quarterly results, although the French law of 30 December 2014 (n ° 2014-1662) removed this obligation;

• organize conference calls with its investors on all the quarterly results and its strategy presentation in order to better outline its achievements, and publish the transcript of the entire call on its website;

• regularly upload all investors and analyst presentations, news and materials on its website under section “Investors/Financial Information/ Presentation & webcast”;

• steadily disclose all analyst instant reactions on its website under section “Investors/ENGIE EPS Share/Analyst Coverage”;

• constantly share with the financial community (that has subscribed to our newsletter) all major news and press releases published on the Company’s website and broadcasted; and

• broadly share all its news-flow always through Business Wire and Actus News Wire, broadcasters authorized and regulated by the AMF (Diffuseur Professionnel De l’Information Réglementée autorisés par l’AMF), in order to ensure a wide coverage in France and Europe.

In 2019, ENGIE EPS will no longer publish quarterly information. The company will continue to provide regular updates on its business and financial developments on an ad hoc basis, at the time of the next annual general shareholders’ meeting and for the half-year and annual results.

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INFORMATION ON HOLDINGS

The information concerning the companies in which the Company holds a fraction of the share capital likely to have a significant impact on the assessment of its asset base, financial situation or results appears in chapter 7– “Organisational Structure” of this Registration Document.

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ENVIRONMENTAL AND SOCIAL INFORMATION

Not applicable

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COMPARISON TABLES

COMPARISON TABLE WITH COMMISSION REGULATION (EC) 809/2004

This Registration Document includes all the items required by Annex I of the Commission Regulation (EC) 809/2004 dated 29 April 2004, adopted pursuant to the “Prospectus Directive”, as presented in the table below:

Information required under Appendix 1 of Regulation (EC) 809/2004 Section

Parties responsible 1

Statutory Auditors 2

Selected financial information 3

Risk factors 4

Information about the issuer 5

History and evolution of the Company 5.1

Investments 5.2

Business overview 6

Principal activities 6.1

Main markets 6.4

Organizational structure 7

Property, plants and equipments 8

Operating and financial review 9

Financial position 9.4

Operating income 9.5

Cash flow and share capital 10

Research and development, patents and licenses 11

Information about trends 12

Earnings forecasts or estimates 13

Administrative, management, and general management 14

Compensation and benefits 15

Board practices 16

Employees 17

Major shareholders 18

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Related party transactions 19

Financial information concerning the issuer’s assets, financial situation and results

20

Additional information 21

Material contracts 22

Third party information, statements by experts and declarations of interest 23

Documents accessible to the public 24

Information on holdings 25

Environnemental and social information N/A

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INFORMATION RELATING TO THE ANNUAL FINANCIAL REPORT

This Registration Document includes all items of the annual financial report required by applicable legal provisions and regulations (article L. 451-1-2 of the French monetary and financial code and Article 222-3 of the AMF’s General Regulations), as shown in the table below:

Items required Section(s)

Parent company financial statements 20.2.1

ENGIE EPS Group consolidated financial statements 3 / 20.1.1

Management report

• Information relating to business trends, results and financial situation of the Company and the ENGIE EPS Group (particularly debt situation)

9 / 10

• Key indicators of financial and non-financial natures 3

• Description of the main risks and uncertainties and indications as to the use of financial instruments, for the Company and the ENGIE EPS Group

4

• Purchase and sale by the Company of its own shares 21.1.3

• Information on control and risk management procedures 16.6

• Financial risks related to the consequences of climate change and measures taken by the Company to control such risks by implementing a low-carbon strategy in every component of its activity

6.10

Declaration by the parties responsible for the Annual Financial Report 1.2

Statutory Auditors’ report on the parent company financial statements 20.2.2

Statutory Auditors’ report on the consolidated financial statements 20.1.2

Statutory Auditors’ fees 2.4

Corporate Governance Report 14/15/16

Statutory Auditors’ report, prepared in accordance with Article L. 225-235 of the French Commercial Code, on the report prepared by ENGIE EPS’s Board of Directors

20.2.2

ANNEX 1 Consolidated Financial Statements FY 2018

Consolidated Financial Statements of the ENGIE EPS Group for the financial year 2018 ended 31 December 2018

ANNEX 2 Report of the statutory auditors on FY 2018

Report of the statutory auditors on the Consolidated Financial Statements of the ENGIE EPS Group for the financial year ended on 31 December 2018

ANNEX 3 Statutory Accounts FY 2018

Company’s accounts for the financial year ended on 31 December 2018

ANNEX 4 Report of the statutory auditors on Statutory FY 2018

Report of the statutory auditors on the Company’s Accounts for the financial year ended on 31 December 2018

ANNEX 5 Special Report on Regulated Agreements

Special report by the statutory auditors on regulated agreements and commitments for FY 2018

2018 REGISTRATION DOCUMENT - Engie EPS

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