Areva - Reference Document 2016

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RISK FACTORS

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.

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2016 AREVA REFERENCE DOCUMENT