areva, business & strategy overview - january 2009

AREVABusiness & Strategy overview

January 2009

> Overview – January 20093

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.


Agenda

1. Group’s overview: financial performance and strategy

2. Performances and objectives by division

3. Financials

4


AREVA provides solutions for CO2 free electricity generation, transmission and distribution

Nuclear

Transmission& Distribution

5

71,000 people100 countries

€11,923M sales(2007)


AREVA is Nr 1 in Nuclear and Nr 3 in T&D

€7,6bn64%

No. 1 worldwide in Nuclear

No. 3 worldwide in T&D

2007 market size:€25bn

2007 market size:€53bn

Market share: 25-30%

Market share: 8-10%( vs ABB: 24%, Siemens 18%)

No.1 in Europe and the USNo.1 in Plants / FuelNo.1 in the Back End

France

Europe(excl. France)

Asia-Pacific

Americas

Africa & Middle East

17%

28% 19%

29%

7%

€4,3bn36%

Geographic sales2007 Sales by business


Key figures

26.2%6.1%30.1%Debt / equity ratio**

(1.985)(513)(521)Free operating cash flow*

+€2.64 €20.95+€13.14€8.31€21.45Earnings per share

+14.5%743+€465m295760Consolidated net income

+2.6 pts6.3%+4.8 pts3.9%8.7%% of revenue

+84.6%751+€332m207539Operating income

+9.8%11.923+14.8%5.3736.168Revenue

+55.4%39.834+13.6%33.55338.123Backlog

∆ FY 07/062007∆ 08/07H1 2007H1 2008In millions of euros

H1 2008 vs H1 2007 FY 2007 vs FY 2006

* EBITDA +/- change in Operating WCR – Operating CAPEX net of disposals

** including minority interests but excluding minority put options


20-25% 25-30%

5-10%

5-10%

65-70%

70-75%

20-25%

30-35%

20-25%

25-30%

20-25%

15-20%

20-25%

1-5%

10-15%

*

*

*

*

10-15%

5-10%

10-15%

20-25%

25-30%

20-25%

10-15%

15-20%

20-25%

15-20%

25-30% (Belgonuclear)

JNFL2,260 t2Recycling(MOX fuel)

JNFL31,150 t2

Treatment

Back End

35-40%€15 bnReactors & Services

10-15%6,800tNatural Uranium

fuel (UO2)

5-10%45m

SWUs 1Enrichment

20-25%60,000 tConversion/Chemistry

25-30%65,000 tMining / Natural

Uranium

Front End

AREVA is the only fully integrated playeron the Nuclear value chain

Recent strategic moves

2007

Mar

ket

CAMEC

O

UREN

CO

USEC

AREV

A

Tosh

iba

NDA

/ BNG

3

AEP

4

GE /

Hita

chi

MHI

Othe

rs

1 Separative Work Units2 Cumulated, worldwide – AREVA Estimate3 Nuclear Decommissioning Authority (Uk)4 AtomEnergoProm (Russia)

* Figures unidentified or not disclosed


Electricity will require $ 14 trillion investments

Total 26,3 Trillion $

AIE – World Energy Outlook 2008

Estimated energy market investments 2007 – 2030 (cumulated)

Power generation and T&D are the key pillars of AREVA’s growth

24 % Oil$13,600Bn

Electricity 52 %

Production 6 600 Md $

T&D 7 000 Md $

21 % Gas

3 %Coal

< 1 % Biofuels


AREVA’s 2030 scenario: construction or lifeextension of more than 500 GWe of nuclear power

2006 2030

International institutions

GWe net installed

Theoretical end of life

Life extensions

Newbuild

267

186

635

372

344

Scenario

AREVA nuclear projection is in line with international institutions forecasts

824: WEO1- 2008- 450 ppm Policy Scenario

731: WNA2 - 2007- High Estimate748: IAEA - 2008 – High Estimate

529: WNA - 2007 - Reference

473: IAEA - 2008 – Low Estimate

433: WEO - 2008 – Reference Scenario

498: DOE3 EIA4 - 2008 Reference Case

AREVA’s target

684: WEO- 2008- 550 ppm Policy Scenario


New construction should affect all regionsof the world

Source: AREVA’s estimates

New installed nuclear generating capacity after 2006by geographic area (2007 - 2030)

0

50

100

150

200

250

300

350

400

2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

GWe Net

0

50

100

150

200

250

300

350

400

Europe 27 + CIS N. & S. America Asia Africa WORLD


In €Bn

64

9

3

12

7

128

6

12

7

19

9

15

Europe NME China India N. & S.America

Eurasia EAP

25%

29%

58%

133%

33%

50%33%

Growth 07-12

2007

2012

Strong structural trendsModernization of grids and interconnectionsNew generating capacities and related transmission lines Renewable energies and energy efficiency

The Transmission & Distribution market should continue to grow

Note: Market Assessment 2007, pre crisisSource: AREVA’s estimates


AREVA’s strategy: to set the standardin CO2-free power generation and electricity

transmission and distribution

Capitalize on our integrated business model to spearheadthe 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

Expand our renewable energies offering

...while remaining the leader in safety and security

1

2

3

* of the accessible market


AREVA heavily invests for securing the future of its customers

2006 2007 H1 2008

669*813**

459

TechnologyR&D spending, in millions of euros

2006 2007 H1 20082006 2007 H1 2008

8,6006,000

Human capitalNew hires

11,500Workforce

61,10065,500 71,000

* excluding the acquisition of the ultra-centrifugation technology** excluding R&D projects acquired through UraMin

Mining and conversion New generations of fuelAdditional reactor typesGeneration III treatment and recycling plantT&D: ultra high voltage, new productsFuel cells and improved wind technologies


The investment program is being carried out Strategic objectives and profitability requirements

2004-2007

Net capital expenditure

€1.5 - €2.5 Bn / year (**) 2008-2012 (e)(**) excl. acquisition

~ €1.4 Bn / year (*)

(*) incl. acquisitions

Mining projects: Namibia, Canada, Niger Centrifugation technology, front-end industrial capacities(GB II, Comurhex II)EPR certification and ATMEA and SWR developmentT&D acquisitions (Ritz, Nokian Capacitors, Passoni & Villa, etc.)Development in Renewable Energies: Multibrid, Koblitz, AdageCapacity extension in R&S and T&D


An open-ended business model Appropriate strategic partnerships at our customers’ request

2008 Forgings -Creusot

Strategic agreementin T&D

International Recycling Alliance: closing the cycle in the US

2007

2006 - 2007

2005 Construction of EPRs in the US

: development of a 1100 MW Generation III + reactor2006

2002 & 2006 50/50 ownership of centrifuge technology with URENCO

2004Development and operation of minesin Canada

Engineering agreement

Development and operation of minesin Kazakhstan

Excerpts

Large forged part procurement

Facility to manufacture heavy components in the US


Outlook

Consolidated sales revenue > €20 billion

Double-digit operating margin

Free cash flow once again significantly positive

By the end of the current strategic plan (2012)


Agenda


2. Performance and objectives by division

3. Financials

18


Front End division -AREVA invests in Mines and Enrichment

in millions of euros 2006 2007 H1 2008

Order book 11,335 20,960 19,108

Sales revenues 2,919 3,140 1,488

Operating income 456 496 400% Sales 15.6% 15.8% 26.9%

Op. FCF before tax (186) (1,672) (46)

Nr 1 worldwide in the overall front-endIntegrated player: ability to secure clients’access to front endStrategic partnership with clients through commercial agreements and/or equity dealsStrong position in fuel assembliesChallenge : impact of commodities & production costs increase

Strengths & issues

Double uranium production by 2012 and increase resources

Production ramp up : Trekkopje, Katco, Imouraren, etc.

Succeed in the construction of enrichment facilities in France and in the US

Strategic priorities

Sales – 2007 split

34%

8%

23%36%

Mining

Chemistry

Enrichment

Fuel*(* 34%

in AREVA NP)

Key financials


AREVA develops a uniquely diversified portfolio to make the fuel cycle secured for its customers

AustraliaExploration since 1969

MongoliaExploration

KazakhstanMining & global fuel agreement signedKatco production ramp-up / licensefor 4,000 tU obtainedExploration

CanadaDevelopment (Shea Creek, Millennium, etc.)Exploration since 1964

MoroccoAgreement signed with Office Chérifien des Phosphates

NigerImouraren mining permit obtained Exploration since 1950

UraMinNamibia - Trekkopje: mining permit obtained / 1st productionin 2009Central African Republic -Bakouma: agreement on deposit mining conditions Exploration

Production(metric tons of U)

~ 6,000

~12,000

2007 20121

JordanExploration JV to be created with the Jordan Atomic Energy Commission


Making the fuel cycle secure for our customersAdapting our production facilities and customers partnerships

ConversionFrance: Comurhex II project

• Capital investment of €610M launched in 2007• New plants at the Tricastin and Malvési sites

EnrichmentFrance: GB II

Investment of close to €3BCapacity of 7.5 million SWUModularity enabling production to start in 2009

United States (Bonneville, Idaho): “Eagle Rock”Investment of close to €2BCapacity of 3.0 million SWUProduction to start in 2014-2015

Strategic agreements and partnerships with utilities to secure their accessto the fuel cycle

Suez acquired a 5% equity interest in GBII enrichment facility

ProductivityCapacityInnovation

GB2 - Construction site

Eagle Rock, Idaho


Increase margins in recurring business (first Gen III+ dilute margin)

Deliver on OL3, Flamanville and Taishan

Complete the design the ATMEA PWR/SWR BWR reactor through JV with MHI and E.ON

Strengthen heavy components fabrication capacities on growing markets

Develop Renewable Energies Business Unit

Optimise cost structure

Reactors & Services division -Still mostly recurring, but new built is there

~100 GW installed capacity WW – 26% total80% sales are recurring and 20% concern projects (new reactors and plant modification) The first company to have Gen.III+ reactors under construction (Finland, France, China)Fleet of reactors developed/under development to address market needs (EPR, ATMEA, SWR)Ability to anticipate the nuclear renaissance (industrial capacity and human resources)

Strengths & issues


Order book 4,413 7,640 7,633


Operating income (420) (179) (258)% Sales (18.2% (6.6%) (17.6%)

Op. FCF before tax (350) (528) (407)


1%

6%6%11%

8%

29%

39%

Nuclear measures

Reactors*

Nuclear services*

Equipment*

AREVA TA

CIS

(* 34%in AREVA NP)

Renewable Energies

Key financials Strategic priorities


Reactors and Services is mostly a recurring business

Servicing and operation of existing reactors

Large equipment replacement(vessel inspections, steam generators, etc.)

On-site maintenance services

Open-ended engineering services

Dismantling services

Uprating, upgrading and life extension

Reactor new buildsDesign, safety analysis and construction of new reactors and first reload

Recurring

business

> 80%

of sales

% of 2007 sales Prospects

Service life extension for installed baseload in the US

Business development in U.S. and Asia

Strong European market share

Development of innovative contracting mechanisms such as “alliancing”

Non-recurring

business

< 20%

of sales

Contracts in progress: EPR construction in Finland, in France and in China

Long term opportunities: new construction, likely in UK, in Italy, in India, in South Africa and in the US


AREVA is present on the key battlefields Main nuclear programs announced worldwide

CanadaTarget* : more than 8 GWe from 2014 Call for tender in progress

UKTarget* : 10 GWe by 2020EPR selected by EDF and E.ON for their UK projects

FranceFlamanville 3 (EPR) under constructionFrance announces a 2nd

EPR by 2017

FinlandOlkiluoto 3 (EPR) under construction

EmiratesPreparationof the EPR project with SUEZ and TOTAL

China23 reactors under construction o/w 2 EPRsTarget* : 60 GWe by 2020

India6 reactors under constructionTarget* : 60 GWe by 2030Discussion between AREVA and local utilities

US32 COL** applications in progressEPR selectedby 5 utilities

ItalyTarget* : 8 to 10 new large reactors by 2030

(*) : Nuclear generation capacity announced by countries(**) : Construction and Operating License

Countries where EPR are under constructionCountries where big nuclear programs are announced

1


Continuous deliveries of quality products and process improvements for existing plants and new build projects

We’re not just building a plant, we’re building an industry

Chalon Saint Marcel30 years of operationsWorkshop: 39 000 m²Reactor Pressure Vessels,Steam Generators, Pressurizers,Safety Injection Accumulators

Newport NewsStart of operation: 2012Workshop: 300,000 ft²Reactor Vessels, Steam Generators, and Pressurizers

Sfarsteel (Creusot Forge)Heavy forging and machiningWorkshops: 85 000 m² (4 sites)

2900m²extensionin 2006

AREVAsince2006

Bridging the Gap: Supply Chain Certainty An integrated manufacturing approach

$363M announced2008


Expand our renewable energies offering

51% of Multibrid in Germany5 MW off-shore specific designSelected for 3 major wind parks

Wind power

Become a major playerin offshore wind energy

Helion, FranceStrong R&D capability(PEM technology)

Hydrogen power

Supply energyfor transportation

and manufacturing

Bioenergies

Design & deliver biomass fired power plants world

wide

Presence in Brazil, Western Europe and IndiaJV Adage with Duke Energy

in the US98 power plants in operation; 2,430 MWe


Back End division -An unchallenged leadership

Nr 1 worldwideHighly recurrent sales due to long term contracts: backlog runs through 2015Main investments completed Technology transfer through long term partnership: e.g Japan (Rokkasho Mura)

Renew reprocessing and recycling contracts

Optimize industrial efficiency of the two main plants (La Hague and Melox)

Market closed-cycle technologies in the new US (GNEP) and China back-end policies

Capitalize on AREVA trade mark to win management contracts

Strengths & issues Sales – 2007 split


Order book 6,375 6,202 5,591

Sales revenues 1,908 1,738 930


Op. FCF before tax 156 172 73

Logistics

CleanupEngineering

Treatment-Recycling

6%3%

13%

78%

Strategic prioritiesKey financials


Back End market combines reprocessing, final disposal and “wait-and-see” solutions

RUSSIA

FORMEREASTERN

BLOCK COUNTRIES

0

500

1,000

1,500

2,000

2,500

FRANCESWITZ.

UK

USA(to date)

GERMANY

BELGIUM

SPAIN

ASIA

JAPAN

SWEDEN FINLAND

Final Disposal

(Open cycle)

ReprocessingRecycling

(closed cycle)

mt of heavy metal/year

CHINA

AREVAcustomers

OTHERS

Mixed solutions

Difference in costs between closed and open cycles is impactless on the kWh cost

Back-end cost represent less than 6% of the overall nuclear kWh cost

When choosing the closed cycle:

96% of the materials can be recycled

wastes volumes are divided by a factor 4 to 5

Radio-toxicity of long term wastes is reduced by a factor 10

?


International recognition for AREVA’s leadership

Sellafield site: AREVA and partners selected

Management and operation of the Cumbria siteas part of the UK Nuclear Waste Management consortium (low-level radioactive waste)

5 contracts awarded by the DOE Savannah River: construction of a MOX plantfor the disposition of U.S. defense plutoniumSavannah River : treatment and disposal of radioactive liquid wastes at the DOE Savannah River Site in South CarolinaHanford Tanks: participation in site cleanupand dismantlingGlobal Nuclear Energy Partnership: contract extension for feasibility studies on the closed cycleYucca Mountain: management of the used nuclear fuel depository project

CNNC – China: progress on feasibility studies for an 800 MT recycling plant

Hot testing at RokkashoMura (sister plant of La Hague)AREVA signs another series of contracts to deliver MOX fuel through 2020


T&D division -Long term outlooks still positive

A full fledged player: products & solutionsfor high and medium voltage technologies

A global sales force in over 100 countries

Strong position in the electrical utilities segment

Now Nr 2 in terms of profitability

Cyclicality exposure, especially with industry customers

Strengths & issues


Order book 3,503 4,906 5,791



Op. FCF before tax 94 233 (45)


Products

Systems

Automation

Services

8%11% 49%

32%

Ensure profitable growth

Be the benchmark for utilities

Increase market share in selected industry markets

Grow faster than the market by building up presence in growth regions and segments

Be a key player in Ultra High Voltage

Adapt industrial footprint to the market

Be Chinese in China

Invest in R&D as much as the industry leader

Strategic prioritiesKey financials


T&D: Vitality and solidity of orders booked

2,637

3,166

1,687 1,630 1,676

2,033 2,125 2,228

3,184Orders booked in €M *

* Before inter-divisional eliminations** Exchange rate at 12/31/2007

1,495 1,535 1,596 1,7131,949 2,104 2,205 2,251

2,678

192

320176

124

432 433

488500

95 80

H1 04 H2 04 H1 05 H2 05 H1 06 H2 06 H1 07 H2 07 H1 08

Current operations "Elephant" contracts Qatar (**)


72

119

175

230253

H1 06 H2 06 H1 07 H2 07 H1 08

T&D: objective of double-digit operating margin achieved 18 months early

2006 2007 2008

4.2%

5.9%

8.7%

9.9%11.1%


Profitable growth

0

1 000

2 000

3 000

4 000

5 000

2005 2007

Sales revenue Operating WCR

3,212

339 400

4,327

+ 34.7%

+18.0%

422

3,724

2006- 10%

0%

10%

20%

30%

50%

40%

- 9%

19%

35%

ROACE

In millions of euros


Speeding up the profitable growth dynamic

Profitability(operational excellence)

Market share(strategic position)

15%

15%10%

10%

0%

5%

1%

2006

2004

H1 2008

Competitiveness

Profitable growth

3 YP 3 YP2

Differentiation

4 YP

2012

11% €2.3 Bn

€4.3 Bn

€3.7 Bn

€3.2 Bn

2007


Agenda


2. Performance and objectives by division

3. Financials at 12/31/2007

35


2007 key data by division

Operating income by division€751M

Sales by division€11,923M

Transmission & Distribution

Reactors & Services

Front-End

15%

36% 26%

23%

Back-EndFront- end

3,1402,717

1,738

4,327

496-179

203 397

R&S Back- end

T&D

Sales Operating income


Operating cash flow

Increase in EBITDAChange in WCR: use of advances/provisions (Back End/Reactors)Acceleration of Capex program (UraMin)

2007

Gain/(loss)on disposals

EbitdaChangein WCR Capex Operating

cash flow

2006

Gain/(loss)on disposals

EbitdaChangein WCR Capex

Operating cash flow

1,292 1,335

(1,985)

(432)

(2,889)

+1

(358)

(352)

(1,248)

(50)

In millions of euros

(1,295*)

(*) excluding Uramin acquisition

(391*)


Simplified balance sheet at December 31, 2007

Goodwill

PPE and intangible assets

Assets earmarked for end-of-life-cycle operations

Non-current financial assets

Equity

Provisions for end-of-life-cycleoperations

Other provisions

WCR

Net debt excluding value of Siemens' put option* : €1.954 Bn(and €2.385 Bn at 6/30/08)

Investments in associates

= 20.8 =

(*) Net cash excluding put options = cash + cash equivalents + current account assets – borrowings including interest bearing advances

Siemens' put option

In billions of euros

2.62.00.5

5.4 3.8

6.9

4.47.5

1.6

5.1

Assets(simplified)

Liabilities & equity(simplified)


Capital structure

CEA + FRENCH STATE + ERAP

87%

Investment CertificateHolders (free float)

4%

Total

1%

Employees

2%

EDF

2%

CDC

4%

o/w 15%

in a CEA decommissioningfund

areva, business & strategy overview - january 2009

Economy & Finance