AREVA, Business & strategy overview - January 2009

2. AREVA
Business & Strategy overview
January 2009

3. Disclaimer
Forward-looking statements
This document contains forward-looking statements and information. These
statements include financial forecasts and estimates as well as the
assumptions on which they are based, statements related to projects,
objectives and expectations concerning future operations, products and
services or future performance. Although AREVA’s management believes
that these forward-looking statements are reasonable, AREVA’s investors
and investment certificate holders are hereby advised that these forward-
looking statements are subject to numerous risks and uncertainties that are
difficult to foresee and generally beyond AREVA’s control, which may mean
that the expected results and developments differ significantly from those
expressed, induced or forecast in the forward-looking statements and
information. These risks include those developed or identified in the public
documents filed by AREVA with the AMF, including those listed in the “Risk
Factors” section of the Reference Document registered with the AMF on
April 15, 2008 (which may be read online on AREVA’s website,
www.areva.com). AREVA makes no commitment to update the forward-
looking statements and information, except as required by applicable laws
and regulations.
> Overview – January 2009
3

4. Agenda
1. Group’s overview: financial performance and
strategy
2. Performances and objectives by division
3. Financials
> Overview – January 2009
4

5. AREVA provides solutions for CO2 free electricity
generation, transmission and distribution
€11,923M sales
(2007)
Nuclear
71,000 people
100 countries
Transmission
& Distribution
> Overview – January 2009
5

6. AREVA is Nr 1 in Nuclear and Nr 3 in T&D
Geographic sales
2007 Sales by business
No. 1 worldwide in Nuclear
Africa & Middle
2007 market size: Europe
East
€25bn (excl. France)
€7,6bn
7%
Americas
64% Market share: 25-30%
29%
No.1 in Europe and the US
17%
No.1 in Plants / Fuel
No.1 in the Back End
19%
No. 3 worldwide in T&D 28%
Asia-Pacific
€4,3bn 2007 market size:
France
€53bn
36%
Market share: 8-10%
( vs ABB: 24%, Siemens 18%)
> Overview – January 2009
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7. Key figures
H1 2008 vs H1 2007 FY 2007 vs FY 2006
∆ FY
∆ 08/07
H1 2008 H1 2007 2007
In millions of euros
07/06
Backlog 38.123 33.553 +13.6% 39.834 +55.4%
Revenue 6.168 5.373 +14.8% 11.923 +9.8%
Operating income 539 207 +€332m 751 +84.6%
% of revenue 8.7% 3.9% +4.8 pts 6.3% +2.6 pts
Consolidated net income 760 295 +€465m 743 +14.5%
Earnings per share €21.45 €8.31 +€13.14 €20.95 +€2.64
Free operating cash
(521) (513) (1.985)
flow*
Debt / equity ratio** 30.1% 6.1% 26.2%
* EBITDA +/- change in Operating WCR – Operating CAPEX net of disposals
** including minority interests but excluding minority put options
> Overview – January 2009
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8. AREVA is the only fully integrated player
on the Nuclear value chain
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Mining / Natural
20-25%
65,000 t 15-20% 5-10% 20-25% 25-30%
Uranium
Conversion/
Front End
25-30%
60,000 t 20-25% 5-10% 25-30% 20-25%
Chemistry
45m
Enrichment 20-25% 20-25%
20-25% 25-30% 5-10%
SWUs 1
*
Natural Uranium
30-35% 10-15% 15-20% 10-15%
6,800t 20-25%
fuel (UO2)
*
10-15% 35-40%
€15 bn
Reactors & Services 20-25% 15-20% 5-10%
31,150 t2 *
Back End
10-15%
Treatment 70-75% 10-15% JNFL
* 25-30%
Recycling
2,260 t2 1-5% (Belgonuclear)
65-70%
(MOX fuel) JNFL
1 Separative Work Units
2 Cumulated,
Recent strategic moves
worldwide – AREVA Estimate
3 Nuclear Decommissioning Authority (Uk)
* Figures unidentified or not disclosed
4 AtomEnergoProm (Russia)
> Overview – January 2009
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9. Electricity will require $ 14 trillion investments
Estimated energy market investments 2007 – 2030 (cumulated)
Total 26,3 Trillion $
Coal 3 %
52 %
Electricity
Gas
21 %
Production 6 600 Md $
T&D 7 000 Md $
24 % Oil
$13,600Bn
< 1 % Biofuels
Power generation and T&D are the key
pillars of AREVA’s growth
AIE – World Energy Outlook 2008
> Overview – January 2009
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10. AREVA’s 2030 scenario: construction or life
extension of more than 500 GWe of nuclear power
AREVA nuclear projection is in line with international institutions forecasts
International institutions
Scenario
824: WEO1- 2008- 450 ppm Policy Scenario
748: IAEA - 2008 – High Estimate
731: WNA2 - 2007- High Estimate
New
build
684: WEO- 2008- 550 ppm Policy Scenario
635
344
Life extensions
AREVA’s target
Theoretical end of life 529: WNA - 2007 - Reference
498: DOE3 EIA4 - 2008 Reference Case
473: IAEA - 2008 – Low Estimate
372 267
186 433: WEO - 2008 – Reference Scenario
2006 2030
GWe net installed
> Overview – January 2009
10

11. New construction should affect all regions
of the world
New installed nuclear generating capacity after 2006
by geographic area (2007 - 2030)
GWe Net
400 400
350 350
300 300
250 250
200 200
150 150
100 100
50 50
0 0
2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029
Europe 27 + CIS Asia Africa WORLD
N. & S. America
Source: AREVA’s estimates
> Overview – January 2009
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12. The Transmission & Distribution market should
continue to grow
In €Bn
58% Growth 07-12
2007
25%
2012
33%
29%
33%
19
133%
50%
15
12
12 12
9 9 8
7
7 6 6
4
3
Europe NME China India N. & S. Eurasia EAP
America
Strong structural trends
Modernization of grids and interconnections
New generating capacities and related transmission lines
Renewable energies and energy efficiency
Note: Market Assessment 2007, pre crisis
Source: AREVA’s estimates
> Overview – January 2009
12

13. AREVA’s strategy: to set the standard
in CO2-free power generation and electricity
transmission and distribution
Capitalize on our integrated business model to spearhead
1
the nuclear revival
Maintain the existing fleets’ safety and performance levels
Build 1/3 of new nuclear generating capacities*
Make the fuel cycle secure for our current and future customers
Ensure strong, profitable growth in T&D
2
Expand our renewable energies offering
3
...while remaining the leader in safety and security
* of the accessible market
> Overview – January 2009
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14. AREVA heavily invests for securing
the future of its customers
Technology
R&D spending, in millions of euros
Mining and conversion
813**
New generations of fuel
669*
459 Additional reactor types
Generation III treatment and recycling plant
T&D: ultra high voltage, new products
Fuel cells and improved wind technologies
* excluding the acquisition of the ultra-centrifugation technology
** excluding R&D projects acquired through UraMin
H1 2008
2006 2007
Human capital
Workforce
New hires
11,500 71,000
65,500
8,600
6,000 61,100
H1 2008 H1 2008
2006 2007 2006 2007
> Overview – January 2009
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15. The investment program is being carried out
Strategic objectives and profitability requirements
Net capital expenditure
~ €1.4 Bn / year (*) €1.5 - €2.5 Bn / year (**)
2004-2007 2008-2012 (e)
(*) incl. acquisitions (**) excl. acquisition
Mining projects: Namibia, Canada, Niger
Centrifugation technology, front-end industrial capacities
(GB II, Comurhex II)
EPR certification and ATMEA and SWR development
T&D acquisitions (Ritz, Nokian Capacitors, Passoni & Villa, etc.)
Development in Renewable Energies: Multibrid, Koblitz, Adage
Capacity extension in R&S and T&D
> Overview – January 2009
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16. An open-ended business model
Appropriate strategic partnerships at our customers’ request
Excerpts
Forgings -
2008
Large forged part
Facility to manufacture heavy
Creusot
procurement
components in the US
Strategic
2007 Engineering agreement
agreement
in T&D
2006 - 2007 International Recycling Alliance: closing the cycle in the US
2006 : development of a 1100 MW Generation III + reactor
2005 Construction of EPRs in the US
50/50 ownership of centrifuge
2002 & 2006
technology with URENCO
Development and Development and
2004 operation of mines operation of mines
in Canada in Kazakhstan
> Overview – January 2009
16

17. Outlook
By the end of the current strategic plan (2012)
Consolidated sales revenue > €20 billion
Double-digit operating margin
Free cash flow once again significantly positive
> Overview – January 2009
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18. Agenda
1. Group’s overview: financial performance and
strategy
2. Performance and objectives by division
3. Financials
> Overview – January 2009
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19. Front End division -
AREVA invests in Mines and Enrichment
Strengths & issues Sales – 2007 split
Nr 1 worldwide in the overall front-end Mining
Integrated player: ability to secure clients’
23%
access to front end
Fuel* 36%
Chemistry
Strategic partnership with clients through 8%
(* 34%
commercial agreements and/or equity in AREVA NP)
deals
34%
Strong position in fuel assemblies
Enrichment
Challenge : impact of commodities &
production costs increase
Key financials Strategic priorities
in millions of euros 2006 2007 H1 2008
Double uranium production by 2012 and
Order book 11,335 20,960 19,108 increase resources
Sales revenues 2,919 3,140 1,488 Production ramp up : Trekkopje, Katco,
Imouraren, etc.
Operating income 456 496 400
% Sales 15.6% 15.8% 26.9%
Succeed in the construction of enrichment
Op. FCF before tax (186) (1,672) (46) facilities in France and in the US
> Overview – January 2009
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20. AREVA develops a uniquely diversified portfolio
to make the fuel cycle secured for its customers
Kazakhstan
Canada
Mining & global fuel
Development (Shea
agreement signed
Creek, Millennium, etc.)
Katco production
Exploration since 1964
ramp-up / license
Mongolia
for 4,000 tU obtained
Exploration Exploration
Morocco
Agreement signed
with Office
Jordan
Chérifien des
Exploration JV to be
Phosphates
created with the
Jordan Atomic Energy
Niger Commission
Imouraren mining
permit obtained
Exploration since 1950 Australia
Exploration
UraMin since 1969
Namibia - Trekkopje: mining
permit obtained / 1st production ~12,000
in 2009
~ 6,000
Production
Central African Republic -
(metric tons of U)
Bakouma: agreement on deposit
1 mining conditions
2007 2012
Exploration
> Overview – January 2009
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21. Making the fuel cycle secure for our customers
Adapting our production facilities and customers partnerships
Conversion
GB2 - Construction site
France: Comurhex II project
• Capital investment of €610M launched in 2007
• New plants at the Tricastin and Malvési sites
Enrichment
France: GB II
Investment of close to €3B
Capacity of 7.5 million SWU
Modularity enabling production to start in 2009
United States (Bonneville, Idaho): “Eagle Rock”
Investment of close to €2B
Capacity of 3.0 million SWU
Production to start in 2014-2015
Strategic agreements and partnerships with utilities to secure Eagle Rock, Idaho
their access
to the fuel cycle
Suez acquired a 5% equity interest in GBII enrichment facility
Innovation Capacity Productivity
> Overview – January 2009
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22. Reactors & Services division -
Still mostly recurring, but new built is there
Strengths & issues Sales – 2007 split
Renewable Energies
~100 GW installed capacity WW – 26% total 1%
CIS Nuclear measures
80% sales are recurring and 20% concern projects AREVA TA
6% 6%
(new reactors and plant modification)
11%
The first company to have Gen.III+ reactors under
Reactors*
construction (Finland, France, China) 8%
Equipment* 39%
Fleet of reactors developed/under development to
address market needs (EPR, ATMEA, SWR)
29%
Ability to anticipate the nuclear renaissance
(* 34%
(industrial capacity and human resources) in AREVA NP)
Nuclear services*
Strategic priorities
Key financials
Increase margins in recurring business (first
in millions of euros 2006 2007 H1 2008 Gen III+ dilute margin)
Order book 4,413 7,640 7,633 Deliver on OL3, Flamanville and Taishan
Complete the design the ATMEA PWR/SWR
Sales revenues 2,312 2,717 1,466
BWR reactor through JV with MHI and E.ON
Operating income (420) (179) (258) Strengthen heavy components fabrication
% Sales (18.2% (6.6%) (17.6%)
capacities on growing markets
Op. FCF before tax (350) (528) (407) Develop Renewable Energies Business Unit
Optimise cost structure
> Overview – January 2009
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23. Reactors and Services is mostly
a recurring business
Prospects
% of 2007 sales
Service life extension
Servicing and operation of
for installed baseload in the US
existing reactors Recurring
Business development in U.S.
Large equipment replacement business and Asia
(vessel inspections, steam
> 80%
generators, etc.) Strong European market share
On-site maintenance services of sales Development of innovative
contracting mechanisms such
Open-ended engineering services
as “alliancing”
Dismantling services
Uprating, upgrading and life
extension
Non-recurring
Reactor new builds Contracts in progress: EPR
construction in Finland, in
Design, safety analysis business France and in China
and construction of new reactors
< 20% Long term opportunities: new
and first reload
construction, likely in UK, in
of sales Italy, in India, in South Africa
and in the US
> Overview – January 2009
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24. AREVA is present on the key battlefields
Main nuclear programs announced worldwide
France
UK
Flamanville 3 (EPR) under
Finland
construction Target* : 10 GWe by 2020
Olkiluoto 3 (EPR) under
France announces a 2nd EPR selected by EDF and E.ON construction
EPR by 2017 for their UK projects
Canada
Target* : more
than 8 GWe
from 2014
China
Call for tender
23 reactors under
in progress
construction o/w 2 EPRs
Target* : 60 GWe by 2020
US
32 COL** applications
in progress
EPR selected India
by 5 utilities
6 reactors under
construction
Target* : 60 GWe by 2030
Discussion between
Italy AREVA and local utilities
Target* : 8 to 10
new large reactors Emirates
by 2030
Preparation
of the EPR project with
1 SUEZ and TOTAL
Countries where EPR are under construction
(*) : Nuclear generation capacity announced by countries
Countries where big nuclear programs are announced
(**) : Construction and Operating License
> Overview – January 2009
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25. Bridging the Gap: Supply Chain Certainty
An integrated manufacturing approach
Continuous deliveries of quality products and process improvements
for existing plants and new build projects
Chalon Saint Marcel
2900m²
30 years of operations extension
in 2006
Workshop: 39 000 m²
Reactor Pressure Vessels,
Steam Generators, Pressurizers,
Safety Injection Accumulators
Sfarsteel (Creusot Forge) AREVA
Heavy forging and machining since
2006
Workshops: 85 000 m² (4 sites)
Newport News
Start of operation: 2012
Workshop: 300,000 ft² $363M
Reactor Vessels, Steam announced
Generators, and Pressurizers 2008
We’re not just building a plant, we’re building an industry
> Overview – January 2009
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26. Expand our renewable energies offering
Bioenergies
Wind power Hydrogen power
Design & deliver biomass Supply energy
Become a major player
fired power plants world for transportation
in offshore wind energy
wide and manufacturing
51% of Multibrid in Germany Presence in Brazil, Western Helion, France
Europe and India
5 MW off-shore specific Strong R&D capability
JV Adage with Duke Energy
design (PEM technology)
in the US
Selected for 3 major wind
98 power plants in operation;
parks
2,430 MWe
> Overview – January 2009
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27. Back End division -
An unchallenged leadership
Strengths & issues Sales – 2007 split
Cleanup
Engineering
3% 6%
Nr 1 worldwide
Logistics
Highly recurrent sales due to long term
13%
contracts: backlog runs through 2015
Main investments completed
Technology transfer through long term 78%
partnership: e.g Japan (Rokkasho Mura) Treatment-
Recycling
Key financials Strategic priorities
Renew reprocessing and recycling
in millions of euros 2006 2007 H1 2008 contracts
Order book 6,375 6,202 5,591 Optimize industrial efficiency
of the two main plants (La Hague and Melox)
Sales revenues 1,908 1,738 930
Market closed-cycle technologies in
Operating income 273 203 175 the new US (GNEP) and China back-
% Sales 14.3% 11.7% 18.8%
end policies
Op. FCF before tax 156 172 73
Capitalize on AREVA trade mark to win
management contracts
> Overview – January 2009
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28. Back End market combines reprocessing, final
disposal and “wait-and-see” solutions
mt of heavy metal/year
?
Difference in costs between RUSSIA
2,500
closed and open cycles is CHINA
impactless on the kWh cost UK
OTHERS
Back-end cost represent less 2,000 FORMER
EASTERN
than 6% of the overall BLOCK
COUNTRIES
nuclear kWh cost JAPAN
1,500 USA
(to date)
When choosing the closed
ASIA
cycle:
1,000
96% of the materials
SPAIN
can be recycled SWITZ.
FRANCE BELGIUM AREVA
wastes volumes are divided 500 customers
by a factor 4 to 5
GERMANY
SWEDEN
Radio-toxicity of long term FINLAND
0
wastes is reduced
Reprocessing Final Mixed solutions
by a factor 10
Recycling Disposal
(closed cycle) (Open cycle)
> Overview – January 2009
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29. International recognition for AREVA’s leadership
5 contracts awarded by the DOE
Savannah River: construction of a MOX plant
for the disposition of U.S. defense plutonium
Savannah River : treatment and disposal of
Hot testing at Rokkasho
radioactive liquid wastes at the DOE
Mura (sister plant of La
Savannah River Site in South Carolina
Hague)
Hanford Tanks: participation in site cleanup
and dismantling AREVA signs another series
of contracts to deliver MOX
Global Nuclear Energy Partnership: contract
extension for feasibility studies on the closed fuel through 2020
cycle
Yucca Mountain: management of the used
nuclear fuel depository project
Sellafield site: AREVA and partners selected
CNNC – China:
progress on feasibility
Management and operation of the Cumbria site
studies for an 800 MT
as part of the UK Nuclear Waste Management
recycling plant
consortium (low-level radioactive waste)
> Overview – January 2009
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30. T&D division -
Long term outlooks still positive
Strengths & issues Sales – 2007 split
Services
Products
A full fledged player: products & solutions
8%
for high and medium voltage technologies Automation
11% 49%
A global sales force in over 100 countries
Strong position in the electrical utilities segment
32%
Now Nr 2 in terms of profitability
Cyclicality exposure, especially with industry Systems
customers
Key financials Strategic priorities
2006 2007 H1 2008 Ensure profitable growth
in millions of euros
Be the benchmark for utilities
Order book 3,503 4,906 5,791
Increase market share in selected industry
Sales revenues 3,724 4,327 2,284 markets
Grow faster than the market by building up
Operating income 191 397 253 presence in growth regions and segments
% Sales 5.1% 9.2% 11.1%
Be a key player in Ultra High Voltage
Op. FCF before tax 94 233 (45) Adapt industrial footprint to the market
Be Chinese in China
Invest in R&D as much as the industry leader
> Overview – January 2009
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31. T&D: Vitality and solidity
of orders booked
Orders booked in €M *
3,184 3,166
500 488
2,637
433
2,228 432
2,125
2,033 124
176
1,687 1,630 320
1,676
80
192 95
2,678
2,251
2,205
2,104
1,949
1,713
1,596
1,535
1,495
H1 04 H2 04 H1 05 H2 05 H1 06 H2 06 H1 07 H2 07 H1 08
Current operations quot;Elephantquot; contracts Qatar (**)
* Before inter-divisional eliminations
** Exchange rate at 12/31/2007
> Overview – January 2009
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32. T&D: objective of double-digit operating margin
achieved 18 months early
11.1%
9.9%
8.7%
253
230
5.9%
175
4.2%
119
72
H1 06 H2 06 H1 07 H2 07 H1 08
2006 2007 2008
> Overview – January 2009
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33. Profitable growth
In millions of euros +18.0%
5 000
+ 34.7%
4 000
50%
4,327
3 000 40%
35%
3,724 30%
2 000
3,212 20%
19%
1 000
10%
400
422
339 0%
0
2005 2006 2007
- 10%
- 9%
ROACE
Sales revenue Operating WCR
> Overview – January 2009
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34. Speeding up the profitable growth dynamic
Profitability
(operational excellence)
15%
2012
H1 2008
11% €2.3 Bn
2007
Differentiation
€4.3 Bn
10% 2006
Profitable growth
€3.7 Bn
5%
2004
Competitiveness
€3.2 Bn
1% Market share
(strategic position)
15%
0% 10%
3 YP2
3 YP 4 YP
> Overview – January 2009
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35. Agenda
1. Group’s overview: financial performance and
strategy
2. Performance and objectives by division
3. Financials at 12/31/2007
> Overview – January 2009
35

36. 2007 key data by division
Sales by division Operating income by division
€11,923M €751M
Transmission
& Distribution 4,327
Front-End
3,140
26% 2,717
36%
1,738
496 397
203
-179
23%
15%
Front R&S Back T&D
Reactors & - end - end
Back-End Services
Sales Operating income
> Overview – January 2009
36

37. Operating cash flow
In millions of euros
2007
2006
+1
1,335
1,292
(50)
(432)
(352)
(1,295*) (391*)
(1,248) (358)
(2,889) (1,985)
Gain/(loss) Gain/(loss)
on disposals Change on disposals Change
Operating Operating
Ebitda Capex Ebitda Capex
in WCR
in WCR cash flow cash flow
(*) excluding Uramin acquisition
Increase in EBITDA
Change in WCR: use of advances/provisions (Back End/Reactors)
Acceleration of Capex program (UraMin)
> Overview – January 2009
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38. Simplified balance sheet at December 31, 2007
In billions of euros
4.4
Goodwill
7.5 Equity
6.9
PPE and intangible assets
Provisions for
5.1 end-of-life-cycle
operations
Assets earmarked for 5.4 3.8 Other provisions
end-of-life-cycle operations
0.5 WCR
1.6
Investments in associates 2.0 Siemens' put option
2.6
Non-current financial assets
Assets Liabilities & equity
= 20.8 =
(simplified) (simplified)
Net debt excluding value of Siemens' put option* : €1.954 Bn
(and €2.385 Bn at 6/30/08)
(*) Net cash excluding put options = cash + cash equivalents + current account assets – borrowings including interest bearing advances
> Overview – January 2009
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39. Capital structure
CDC
4%
CEA + FRENCH
EDF
STATE + ERAP
2%
87%
o/w 15%
Total
in a CEA
1%
decommissioning
fund
Investment Certificate
Holders (free float)
4%
Employees
2%
> Overview – January 2009
39