Areva - Reference Document 2016

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BUSINESS OVERVIEW

6.3 Overview and strategy of the group

6.3.2. STRATEGY

Since the Fukushima accident in 2011, the group is facing a deteriorated market situation due to: p the shutdown of reactors in Germany and the slow restart of reactors in Japan; p excess capacity in the uranium, conversion and enrichment markets; p the reduction in the maintenance budgets of power generating companies. Energy demand fundamentals confirm the growth prospects for the nuclear market. According to available estimates, if the objectives of COP 21 are to be met, world nuclear generating capacity will have to double by 2040, led by the Asian market in particular. The fundamentals of the nuclear market have changed in recent years: p in mature nuclear markets (Europe and the United States), AREVA’s traditional customers are under heightened economic pressure, which is passed on to suppliers. Profitability requirements and power plant aging are creating new demand in the utilities market; p markets in the front end of the cycle (mining, chemistry, enrichment) have faced significant price reductions since 2011. Prices are expected to rise as supply and demand readjust and in response to the need to attract investment in new capacity; p the management of environmental and financial issues in the back end of the cycle may open new growth opportunities for industrial companies over the medium term. For all countries with a significant nuclear power program, sustainable management of the back end of the cycle is becoming a priority and requires decisions on capital expenditure (whether in recycling, logistics or cleanup); p in the new builds market, competition is becomingmore pronounced, with some competitors benefitting from the growth of their essentially captive domestic markets (in particular South Korea and Russia) and from financial support for their projects. In addition, the redefinition of the French nuclear industry was undertaken because AREVA no longer has a sufficient capital base to carry the risk of a new reactor construction project alone, and because the operations of AREVA NP and EDF have overlapping skills in the nuclear island. Given this situation, it has been decided to: p sell AREVA NP’s operations to EDF (except for the OL3 contract) and to third- party investors. These activities, combined with New NP, should optimize the performance of the French nuclear industry and its global reach; p launch a plan to create a joint entity between New NP and EDF devoted to the design and construction of nuclear islands for new reactors. This business combination will underpin an ambitious export policy and the future replacement of the French nuclear fleet. NEWCO In the next ten years, NewCo wants to be a leading player in the production and recycling of nuclear materials, in waste management, and in dismantling. NewCo will offer its customers innovative solutions and technologies in response to their challenges. It will become a competitive, profitable group across all of its businesses. p combine the nuclear fuel cycle operations within NewCo;

NewCo will remain an internationally positioned group servicing the French nuclear industry and its international customers, and will develop in the most dynamic regions of the nuclear markets, such as Asia. These goals are expressed through three major priorities: p create value for our customers by offering them competitive products, technologies and services that meet their current and future needs; p put operational excellence at the heart of our daily management, relying on: ○ a simple organization and a short decision-making process, ○ management methods anchored in respect for standards, accountability, teamwork and presence in the field; p foster innovation in every field (industrial, technological, commercial and organizational), in existing markets as well as new markets calling for nuclear materials and isotopes. To meet these challenges, NewCo has real assets: p benchmark technologies and expertise that is unique in the world; p men and women recognized for their skills, their commitment and their ability to meet challenges. NEW NP In the next ten years, New NP’s goal is to be a leading supplier of the nuclear steam supply system, equipment, services and fuel, with high levels of safety and performance. New NP’s future development will have three major thrusts: p offering innovative solutions and value-adding technologies contributing to safety enhancement and the achievement of its customers’ economic and societal objectives; p being a leader in commercial and operational excellence, both for manufacturing and for project execution, ensuring a high level of safety; p ensuring the professional skills of its employees andmaintaining their commitment in a demanding and rewarding work environment. This development will occur within the context of the sale of a majority interest in New NP’s operations to EDF and the plan to create a joint entity devoted to the completion of nuclear islands for new reactor projects. This plan should enable the development of industrial synergies with EDF while complying with applicable regulations on competition, and would preserve the integrity of New NP’s skills in nuclear steam supply systems. p an uncompromising culture of safety; p a unique customer portfolio in the nuclear field; p recognized industrial expertise and renewed facilities;

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2016 AREVA REFERENCE DOCUMENT