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RISK FACTORS
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4.8 Other risk
THE GROUP CONDUCTS OPERATIONS ON INTERNATIONAL
MARKETS CHARACTERIZED BY STRONG COMPETITIVE
PRESSURES THAT COULD LEAD TO A CONSEQUENTIAL DROP IN
DEMAND FOR THE GROUP’S PRODUCTS AND SERVICES.
The group’s products and services are sold on international markets characterized
by intense competition on price, financial terms, product/service quality and
the capacity for innovation. In some of its businesses, the group has powerful
competitors that are much larger than the group or have access to more resources.
Moreover, these competitors may sometimes make decisions that are influenced
by extraneous considerations other than profitability or have access to financing
at advantageous terms.
In addition, competitive pressures have increased as a result of the deregulation of
the electricity market, which opened the door to new competitors for the group’s
main customers and in particular resulted in increased price volatility. Deregulation
may lead to changes in prices for electricity and for products and services related to
the generation, transmission and distribution of electricity and/or to lower investment
in the nuclear power sector.
Nuclear power and renewable energies developed by the group are also competing
with other sources of energy, in particular oil, natural gas, shale gas, coal and
hydroelectricity. These other energy sources could become more attractive than
the energy sources developed by the group.
Certain risks have been identified as being inherent to the Renewable Energies
Business Group:
p
the risks associated with the order intake process and the confirmation of key
sales opportunities;
p
the risks associated with the ramp-up of the supply chain and assembly lines, of
internal / supplier quality control, and of the execution of first-of-a-kind projects
from a technology standpoint in many countries;
p
the risks related to the ability of the technologies sold to achieve the level of
performance required and the impact this may have on existing contracts and
on the market, in particular with the lack of a representative installed base to
support planning and the establishment of the necessary provisions for defects
and malfunctions over the medium and long term;
p
the risks related to the safety of operations in new environments and with rising
volumes; and
p
the risks associated with the loss of key technical skills.
Since 2010, the group has set up a certain number of risk mitigation action plans
with the objective of securing project completion and the full operational cycle of the
group’s products, ensuring the strength and quality of the group’s value chain, and
implementing all of the group’s operational performance optimization processes.
4.8.2.
RISKS RELATED TO THE GROUP’S STRUCTURE
THE GROUP CANNOT ENSURE THAT ITS STRATEGIC ALLIANCES,
RESTRUCTURING OR REORGANIZATION, MERGERS AND
ACQUISITIONS, ASSET DISPOSALS AND CONSOLIDATION WILL
BE PERFORMED AS INITIALLY CONTEMPLATED OR THAT THESE
OPERATIONS WILL GENERATE THE ANTICIPATED SYNERGIES
AND COST REDUCTIONS.
The conclusion of certain asset disposal transactions may depend on conditions
precedent over which in some cases AREVA has no control, such as approval by
competition authorities in the relevant countries or opinions issued by certain bodies
representing the group’s employees. A lack or delay of approval could result in the
termination of these transactions and thus have a material impact on the group’s
anticipated financial position and performance.
The group is involved in a variety of acquisitions, strategic alliances and joint ventures
with partner companies. Although the group believes that its acquisitions, strategic
alliances and joint ventures will be beneficial, a certain level of risk is inherent
in these transactions, particularly the risk of overvalued acquisitions; insufficient
vendor warranties; underestimated operating costs and other costs; disagreements
with partners (particularly in joint ventures); potential integration difficulties with
personnel, operations, technologies or products; lack of performance on initial
objectives; or third-party challenges to these strategic alliances or mergers and
acquisitions, based on their impact on those parties’ competitive positions.
In addition, minority shareholders in certain AREVA subsidiaries, such as Eurodif
(see Section 25.2.2.
Main shareholders’ agreements concerning AREVA’s equity
interests
), could restrict the group’s decision-making ability.
Until it was amended on January 14, 2016, decree no. 83-1116 of December 21,
1983, as amended, relating to the Société des participations du CEA (AREVA)
stipulated that the CEA was obliged to hold more than half of AREVA’s capital.
Since January 14, 2016, that decree requires that the French State, or the
Commissariat à l’énergie atomique et aux énergies alternatives, or the other public
institutions of the State, or the companies in which they hold a majority share,
directly or indirectly, singly or jointly, are required to hold more than half the capital
of the company.
At December 31, 2016, the CEA held 54.37% of AREVA’s capital, representing
57.02% of the voting rights. It has the power to make most of the decisions during
General Meetings of shareholders, including those relating to the appointment of
members of the Board of Directors and those relating to the distribution of dividends.
2016 AREVA
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