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RISK FACTORS
04
4.7 Liquidity and market risks
4.6.1.
NEW REACTOR CONSTRUCTION CONTRACTS
As for any new project, the construction of a new reactor model involves risks
relating to its technical implementation, the manufacturing of new components,
achievement of quality and performance levels, and startup schedule compliance.
Such risk could have a short-term negative impact on the group’s operations and
financial position.
Events related to the construction of the Olkiluoto 3 EPR power plant (OL3) illustrate
this risk. A project management department is in charge of managing the risk
related to the OL3 project and is in regular contact with AREVA’s management.
Several specialized teams manage the various aspects of the project, whether in
terms of delays, disruptions, disputes or risk. In addition to operational meetings, the
different teams share regular updates to ensure coherence in project management.
Work is being carried out within the group to harvest operating experience and
thus improve project management in the future. For additional information on the
OL3 project, see Section 4.3.3.1.
Olkiluoto 3 EPR power plant (OL3);
Section 20.2.
Notes to the consolidated financial statements
, note 24; and Section 20.8.
Legal
and arbitration proceedings
.
4.6.2.
AREVA’S INDUSTRIAL PROJECTS
THE GROUP CANNOT ENSURE THAT INDUSTRIAL PROJECTS
OR MINING PROJECTS CAN BE IMPLEMENTED WITHIN THE
PLANNED BUDGETS AND SCHEDULES AND CONSISTENT WITH
THE OPERATING REQUIREMENTS OF THE SITES INVOLVED
As for any new project, the development of new mining or industrial capacities
involves risks relating to its technical implementation and to start-up schedule
compliance.
The group cannot guarantee that the income frommining or industrial projects will
enable it to cover its operating, depreciation and amortization expenses or give the
expected return on investment, particular if the competitive situation in the target
market changes.
Similarly, in the case of transitions between two industrial plants, the group cannot
guarantee that facility shut-down and start-up schedules will be optimized to
minimize the financial and social impacts.
In addition, the group cannot guarantee that suppliers associated with the different
projects will provide their products or services on time and as required in the
contracts.
Such risk could have a negative impact on the group’s operations and financial
position.
4.7.
LIQUIDITY AND MARKET RISKS
The group has an organization dedicated to implementingmarket riskmanagement
policies approved by Executive Management for centralized management of
exposure to foreign exchange, commodity, rate and liquidity risks.
In the Finance Department, the Financial Operations and Treasury Management
Department (DOFT) engages in transactions on financial markets and acts as a
central desk that provides services and manages the group’s financial exposure.
The organization of this department ensures the separation of functions and the
necessary human, technical, and information system resources. Transactions
handled by DOFT cover foreign exchange and commodities trading, interest rates,
centralized cash management, internal and external financing, borrowings and
investments, and asset management.
The reporting system also includes weekly reports submitted to the group’s Chief
Financial Officer, including a valuation of all positions and their market value.
Together, these reports and reviews are used to monitor the group’s counterparty
risk.
4.7.1.
LIQUIDITY RISK
The liquidity risk is the risk that the group may be unable to meet its immediate or
short-term financial commitments.
Management of the liquidity risk is provided by the Financial Operations and
Treasury Management Department (DOFT), which ensures that it has sufficient
financial resources available at all times to fund current operations and the
investments needed for future growth and to cope with any exceptional event. The
goal of liquidity management is to seek resources at the best cost and to ensure
that they may be secured at any time.
In addition, the group’s liquidity risk, including stress scenarios, is regularly
monitored.
On December 31, 2016, AREVA received a B+ rating from Standard & Poor’s for
long credit with a developing outlook. On January 18, 2017, Standard & Poor’s
lowered that rating to B.
2016 AREVA
REFERENCE DOCUMENT
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