Appendix 7Outlooks China and India
> Overview – January 20092
Electricity consumption 1995-2020
1 0021 347 1 463 1 633
1 9112 187
2 4702 670
2 8803110
33603631
5622
12.94%14.44%
17.02%
11.62%
8.61% 8.10% 7.87% 7.99% 8.04% 8.07%
8.60%
1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2020
Annual consumption (in TWh) Annual growth
Source: “11th Five-Year” Power Grid Development Planning of SGCC and Perspective Target in 2020
China: strong growth in power consumption
> Overview – January 20093
China: the energy challenges
Secure economic growth
Minimize energy dependency
Ensure sustainable development
Ensure social stability by reducing disparities: electricity for all at an affordable price
Take action on environmental issues, both for existing pollution and global warming
Expand the interconnection market (HVDC) for electricity transmission to densely populated, developed areas
80% of hydraulic resources
70% of coal reserves
Better developed Regions
Nuclear power and advanced T&D technologieshave a major role to play
> Overview – January 20094
China: overview of the energy sector
Per capita consumption is still low and very disparate
Insufficient installed capacity600 GW installed as of the end of 2006, with a target of 1000 GW by 2020
A promising marketChina’s capital spending on new generating capacity and in the transmission and distribution sector is expected to rise to 50 billion dollars per year from 2006 to 2010
China’s electricity transmission and distribution market represents 24% of the world market
Renewable energies law adopted in 2005 to fight CO2 emissions
Renewable energies’ share is expected to rise from 3% in 2003 to 10-12% by 2020
China is already the biggest market for biomass power generation
> Overview – January 20095
China: AREVA’s positions
More than 2,600 employees: 2000 employees for T&D
More than 780 million euros sales in 20071
1 Sales by destination in 2007 (not including the products manufactured in China and exported overseas)
JV AREVA-DONGFANG
(DEC) Reactor Coolant Pumps Company Ltd
SNE (Shenzhen Nuclear Engineering)
Nuclear services
> Overview – January 20096
China: AREVA T&D’soperations in China
1) Sales by destination in 2007 (not including products manufactured in China and exported overseas)
China’s T&D market represents 24% of the world market
Substantial capital expenditure is required in light of the country’s rising energy consumption
More than 322 million euros in sales in 20071
Breakdown of the Chinese T&D market in 2007:
Local players = 70% of the market
ShenGao1%
PingGao2%
TWBB2%
TBEA4%
Nari 3%
XJ Group2%
Japan-Korea4%
Other MNCs2%
XD Group9%
Others49%
ABB12%
SIEMENS7%
AREVA3%
> Overview – January 20097
China: T&D Market Growth
T&D Market Drivers
Fast industrialization (2007 Industrial production growth: +17%)Urbanization and improved living standards
Need for infrastructures and appliances
Need to efficiently connect distant power generation and main consumption centers (UHV and HVDC opportunities)
2007 annual capacity increase = 90 GW (~ UK installed capacity)
40,5%41,8%
43%44%
45%47%
48%50,0% 50,4% 51,0%
40%
42%
44%
46%
48%
50%
52%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Urbanization rate
> Overview – January 20098
China: AREVA T&D’s goals
Develop new partnerships with Chinese companies and institutes
Seize opportunities that could lead to manufacturing capacity increases, whether through internal or external growth
Increase localization in China in research and manufacturing, and continue to improve related service quality in China
Develop solutions to meet the challenge of electricity transmission over very long distances (HVDC, etc.)
> Overview – January 20099
Nuclear1.5%
Thermic75.7%
Hydraulic22.8%
China: nuclear power’s share is expectedto quadruple by 2020
Total installed capacity in 2006: 600 GW, mostly thermal
Nuclear power’s share is still limited in China: 9 GW, corresponding to 1.5% of total installed generating capacity in China
Objective: 6% by 2020, i.e. 60 GW
> Overview – January 200910
China: nuclear civilian sites11 reactors in operation – 6 under construction
> Overview – January 200911
China: AREVA role in the developmentof the nuclear fleet
Daya Bay - 1994
Qinshan I - 1991
Qinshan II phase 1 – 2002; 2004
Qinshan III – 2002; 2003
Ling Ao I – 2003
Tianwan – 2007?
Ling Ao II – 2010; 2011
Qinshan II phase 2 – 2011; 2012
Other project Gen 2 & 3
Built by AREVA
Significant Participation (Supply, assistance, …)
Projects to come
A wide offerof services, equipments
and fuelfor the whole fleet
A strong presence in the newly built plants
200x Commissioning date
2015201020001990
Hongyanhe – 2012; 2013
Taishan – 2013; 2014
> Overview – January 200912
China: the largest contractever signed
in the nuclear business
Material and Servicesfor 15 years of operation
Constructionof 2 EPR
nuclear islands
Discussions to start on cooperation for
treatment and recycling
€8 Bn
> Overview – January 200913
China: renewable energies outlooks
AREVA Bioenergy
600 to 900 MW to be installed yearly to reach 20 000 MW installed capacity by 2020
Annual market turnover related to boiler island expectedto exceed 200 M€ by 2012
No market saturation foreseen before 2012.AREVA’s technology, based on its operating feedback,is an asset in the stiff competition with local boiler manufacturers
AREVA aims at:
Developing local boiler engineering and sourcing competences, combining AREVA mastered technology and low cost manufacturing,
Booking a first boiler order in 2008
Reaching 10% share of the domestic biomass boiler market by 2012
> Overview – January 200914
India: to sustain the growth in consumption, capacities need to be multiplied by 5
This scenario is based on 6 to 8 GWof additional LWR imports in the next 10 years
It is also assumed that capitalexpenditure is shared with private sector
Capex requirement
2007 2012 2022 2032
Thermal Hydro Renewables Nuclear
778 GW
153 GW
Source: Government of India -Planning Commission August 2006
CAGR 7% p.a.
Source: Planning Commission of India – August 2006
2004 2007 2012 2022 2032
Thermal Hydroelectric Renewables Nuclear
590 TWh
Population growth (x 1.5 from 2000to 2050)
GDP growth (8% per year in this scenario)
Increase in electricity access (57% of therural households and 12% of the urbanhouseholds had no access to electricityin 2000)
Power consumption should growby 7% p.a. from 2004 to 2032
3,630 TWh
Key drivers
> Overview – January 200915
India: T&D investments are expected to reach €31Bn between 2007 and 2012
Market drivers T&D planned investment*(€Bn, 2007-2012)
31.5
12.2+21%
8.8+13%
10.5+50%
* T&D investment including cables and OH lines Source: Indian Planning Commission, Aug2006
Distribution Network
Transmission Network
Rural Electrification
Total investment Planned
> Overview – January 200916
T&D India Market share 2007
India: AREVA T&D has a strong competitive position
Major land marks:
70% market share in the EMS segment for Transmission networks
Supplied and commissioned India’s first 765 kV substation in 2007 for NTPC Sipat plant
20% of HVDC inter-regional linkages
Largest number of GIS referencesin India
Network Consultancy contract for Reliance Energy’s Delhi & Mumbai networks ; 1st of its kind in India
Modernization of Bhutan’s electrical network for 2 cities
Source: AREVA. Market share calculation based on 2007 orders
ABB20%
Siemens12%
BHEL5%
CGL6%
Others40%
AREVA15%
L&T2%
> Overview – January 200917
India: AREVA benefits from an historical presence in India since 1950s’
8 manufacturing sites3,500 employees
Full fledge local player covering UHV, HV, MV, Systems and Automation
Dehli, Noida
Naini
Kolkata
BangaloreChennaiPondicherry
Baroda
New Power transformer
Greenfield plant
NAINI
CHENNAI
BANGALORE
KOLKATA
NOIDA, DELHI
CHENNAI
PONDY
KOLKATA
> Overview – January 200918
India: strong growth of nuclear generated power is expected over the 25 next years
17 TWh
375 TWh
Source: Planning Commission of India – August 2006
Nuclear generated electricity should multiply
by 20 by 2032
439 TWh
Francein 20072004 2032
Source: Planning Commission of India – August 2006
84%
13%
3%
1%
Nuclear percentage should rise from 3% to 10%of the power mix
11%
78%
1%
10%
Thermal
Hydro
Renewables
Nuclear
2004
2032
> Overview – January 200919
India: the country has developed a strong nuclear industry
India has developed a strong domestic nuclear industry, drawing on the benefits of earlier cooperation with Canada, France, the United States,…
NPCIL is the specialized nuclear utility in India, architect-engineer and operator of 17 reactors (+ 6 under construction)
Operating reactors are derivatives of Candu (14) and BWRs (2), but are rather small (160 to 500 MW range)
India is developing fast neutron reactors, proof of its technological capability and forward-looking approach
Nuclear supply chain in India is dominated by several large public and private industrial groups, like BHEL, Larsen & Toubro, Tata,etc.
NPCIL plans to build 16,000 MWe in new nuclear capacity from 2007 to 2012
> Overview – January 200920
India: 17 reactors in operation and 6 under construction
PHWR (3.760 MW)BWR (320 MW)
PHWR (660 MW)VVER (2.000 MW)
RAWATBHATA 1, 2, 3 & 4740 MW
440 MW (5 & 6)
KAKRAPAR 1&2440 MW
TARAPUR 1, 2, 3 & 41400 MW
KAIGA 1, 2 & 3620 MW220 MW
Plants in operation
Plants under construction
NARORA 1&2440 MW
KALPAKKAM 1&2440 MW500 MW (Fast breeder reactor)
KUDANKULAM 1&22000 MW
FBR (500 MW)fast breeder reactor
> Overview – January 200921
India: recent evolution of the specific country situation relating to non-proliferation commitments
India did not sign the Nuclear Non-Proliferation Treaty (NPT)and conducted its first nuclear test in 1974
From that time, on-going cooperation between India and other countries was interrupted, and supplier states put in place the NSG (Nuclear Suppliers Group, 45 countries today) to regulate nuclear exports
Since adoption of Full-Scope Safeguards in 1992, NSG member states do not allow themselves to export nuclear technology, equipmentand fissile material to any country not complying with Full-Scope Safeguards
Since 2005, discussions between India and several NSG member states are taking place, for an agreement on safeguarding civilian nuclear facilities and fissile material paving the way for a new consensus within NSG
Summer 2008: India has obtained a green light from AEIA and the NSG has validated an exceptional arrangement to permit its members to deal with. Some countries has already signed MOU with India to put in place framework agreement of cooperation.
> Overview – January 200922
V. Poutine visit: February 2007
Nuclear cooperation agreements with US
India: success of the discussions with NSG members
American Congress vote: December 2006
India/USA statement: July 2005
G. Bush visit: March 2006
Bilateral cooperation:India / Canada (PHWR)India / France (FBR)India / USA (BWR)
1974 2006 20072005
1st Indian nuclear test
AREVAFeasibility report
for 6 GW
AREVAFeasibility
report for EPR
February 2006:
President Chirac visit
July 2006: AREVA visit
Nuclear cooperation agreements with France
India / France statement: September 2005
July 2008: AEIA green
light
2008
> Overview – January 200923
India: key challenges for AREVA
For Nuclear:
Successfully license the EPR with the Indian nuclear regulatory authority within a reasonable timeframe
For T&D: grasp market growth
Increase capacity: Greenfield, lean manufacturing
Cover all market segments by localization of technologyand specific developments to address market needs
Overall, leverage India to support AREVA strategy worldwide
Recruit and retain talents
Manufacturing base for other units
Engineering resources and R&D centers of excellence
Strong supplier base
Appendix 8Financials
> Overview – January 200925
Share in net income of associates
The negative results of ST Microelectronics (-161% compared with 2006) are offset in part by Eramet's positive performance
ChangeIn millions of euros 2006 2007 07/06
ST Microelectronics 98 (25) (124)
Eramet group 106 153 47
Other 15 20 5
TOTAL 220 148 (72)
> Overview – January 200926
Minority interests in subsidiaries' earnings
Increase in the EURODIF profit (AREVA NC)
Reduction of AREVA NP losses
ChangeIn millions of euros 2006 2007 07/06
AREVA NP (57) (17) 41
AREVA NC 62 129 67
AREVA T&D 15 23 8
AREVA TA 4 3 (1)
TOTAL 24 139 115
> Overview – January 200927
Change in sales revenue2007/2006 like-for-like
In millions of euros
2007 2006
Salesrevenue
Salesrevenue
like-for-like
Change in exchange
rates
Change in consolidation
scope
Change in valuation method
Salesrevenue
(reported)
Front End division 3,140 2,838 (78) (32) 29 2,919
Reactors &Services division 2,717 2,359 (39) 86 0 2,312
Back End division 1,738 1,896 (6) 0 (5) 1,908
Nuclear 7,595 7,093 (123) 54 24 7,138
T&D division 4,327 3,708 (41) 25 0 3,724
Corporate and Other 1 1 0 0 0 1
Consolidated 11,923 10,801 (164) 79 24 10,863
> Overview – January 200928
Income statement
20.95
20.95
35 442 701
743
(139)
-
882
148
734
(81)
64
138
(73)
(110)
37
(57)
751
(123)
808
(881)
(529)
(421)
2,762
(9,183)
21
11,923
2007
-Net income from discontinued operations
18.31Diluted earning per share (1)
18.31Basic earnings per share
35 442 701Average number of shares outstanding
649Net income attributable to equity holders of the parent
24Less minority interests
672Net income from continuing operations
220Share in net income of associates
453Net income of consolidated businesses
(51)Income tax
97Net financial income
126Other financial income and expenses
(29)Net borrowing costs
(78)Gross borrowing costs
50Income from cash and cash equivalents
(131)
407
Restructuring and early retirement costs
Operating income
(56)
538
Other operating income and expenses
Operating income before restructuring expenses
(778)General and administrative expenses
(493)Marketing and sales expenses
(355)Research and development expenses
2,220Gross margin
(8,698)Cost of sales
55Other income from operations
10,863Sales revenue
2006In millions of euros
(1) Adjusted for net income of discontinued operations
> Overview – January 200929
Balance Sheet (1/2)
30,676
-
279
634
141
94
1,402
3,884
2,817
9,251
604
2,588
1,558
2,873
2,491
174
4,204
2,729
4,377
21,425
12/31/07
-Assets of operations held for sale
25,893Total assets
292Other current financial assets
962Cash and cash equivalents
142Other non-operating receivables
116Current tax assets
1,121Other operating receivables
3,604Trade accounts receivable and related accounts
2,306Inventories and work-in-process
8,543Current assets
873Deferred tax assets
2,376Other non-current financial assets
1,521Investments in associates
2,986Assets earmarked for end-of-life-cycle operations
2,091End-of-life-cycle asset (third party share)
198Including: End-of-life-cycle asset (AREVA share)
3,814Property, plant and equipment
1,175Other intangible assets
2,515Goodwill on consolidated companies
17,350Non-current assets
12/31/06ASSETS(In millions of euros)
> Overview – January 200930
Balance sheet (2/2)
LIABILITIES AND EQUITY(In millions of euros)
30,676
-
41
127
1,921
2,565
4,172
613
1,823
11,261
1,277
4,302
121
5,075
1,175
11,951
470
743
(138)
1,117
3,925
1,347
7,464
12/31/07
1,122Employee benefits
8,351Non-current liabilities
25,893Total liabilities and equity
-Liabilities of operations held for sale
23Other non-operating liabilities
74Current tax liabilities
1,650Other operating liabilities
2,093Trade accounts payable and related accounts
4,185Advances and prepayments received
712Short-term borrowings
1,788Current provisions
10,526Current liabilities
1,124Deferred tax liabilities
1,407Long-term borrowings
113Other non-current provisions
4,585Provisions pour end-of-life-cycle operations
294Minority interests
649Net income attributable to equity holders of the parent
(25)Currency translation reserves
1,131Deferred unrealized gains and losses
3,619Consolidated premiums and reserves
1,347Share capital
7,016Equity and minority interests
12/31/06
> Overview – January 200931
Cash flow statement and net debt
In millions of euros 2006 2007
Ebitda (excluding end-of-life-cycle expenses)* 1,292 1,335% of sales revenue 11.9% 11.2%
Gain (loss) on disposal of operating assets (50) 1
Change in operating WCR (352) (432)
Net operating Capex (1,248) (2,889)
Free operating cash-flow before tax (358) (1,985)End-of-life-cycle obligations 72 171
Net financial Capex 170 (131)
Dividends paid (429) (345)
Net reclassifications (mutual funds) 0 0
Revaluation of minority put options (liability) (41) (932)
Other (income tax, non-operating WCR, etc.) (10) 85
Change in net cash position (597) (3,137)
Net debt at December 31 (865) (4,003)
> Overview – January 200932
Consolidated
6.3%
751
11,923
(1,985)
(432)
(2,889)
11.2%
1,335
Segment reporting (1/2)
% of sales revenue
Operating income
Contribution to consolidated sales revenue
Income items
In millions of euros (except number of employees)
Free operating cash flow
Change in operating WCR
Net Capex
% of consolidated revenue
Ebitda (ex. end-of-life-cycle)
Cash flow items
Number of employees
Capital employed*
PPE and intangible assets
Other
2007
65,583
5,826
Corporate, Other and
Eliminations
immaterial
(166)
1
(190)
(20)
(33)
immaterial
(137)
620
344
2,325
T&D
9.2%
397
4,327
233
(5)
(193)
9.8%
426
25,248
816
1,053
Back End
11.7%
203
1,738
172
(186)
(81)
25.3%
440
10,638
(646)
1,897
Reactors and Services
(6.6%)
(179)
2,717
(528)
(81)
(322)
- 4.6%
(125)
16,500
178
1,141
Front End
15.8%
496
3,140
(1,672)
(139)
(2,260)
23.3%
731
12,577
5,134
4,894 11,310
* Capital employed at the end of the period
> Overview – January 200933
Consolidated
3.7%
407
10,863
(358)
(352)
(1,248)
11.9%
1,293
Segment reporting (2/2)
% of sales revenue
Operating income
Contribution to consolidated sales revenue
Income items
In millions of euros(except number of employees)
Free operating cash flow
Change in operating WCR
Net Capex
% of consolidated revenue
Ebitda (ex. end-of-life-cycle)
Cash flow items
Number of employees
Capital employed*
PPE and intangible assets
Other
2006
61,111
2,701
Corporate, Other and
Eliminations
immaterial
(94)
0
(72)
(29)
14
immaterial
(46)
495
318
1,341
T&D
5.1%
191
3,724
94
(67)
(95)
6.9%
258
22,988
705
961
Back End
14.3%
273
1,908
156
(205)
(77)
23.2%
443
10,697
(719)
1,954
Reactors and Services
(18.2%)
(420)
2,312
(350)
(21)
(341)
0.3
7
14,936
(67)
918
Front End
15.6%
456
2,919
(186)
(28)
(750)
21.6%
630
11,995
2,464
2,321 7,502
* Capital employed at the end of the period
> Overview – January 200934
In millions of euros 2006 2007 2006 2007 2006 2007
Nuclear 1,602 3,172 247 429 15.4% 13.5%
T&D 661 761 127 265 19.3% 34.8%
Other 52 331 (67) (111) Immat. Immat.
Consolidated 2,315 4,264 308 583 13.3% 13.7%
ROACE = Operating income / average capital employed (beginning - end of period)
Capital employed = Net PPE and intangible assets + operating WCR– Provisions for contingencies and losses
Net operating income = Operating income less pro forma income tax
Pro forma income tax = tax calculated based on the average income tax rate applicableto all group entities, except those subject to a specific tax rate (Eurodif in particular)
ROACE (1/2)
Average capital employed
Net operating income ROACE
> Overview – January 200935
2007
308 583
Net intangible assets 1,175 2,729
Goodwill used in ROACE calculation 1,614 2,520
Property, plant and equipment 3,814 4,204
Customer prepayments on assets (978) (907)
Operating WCR 85 368
Provisions for contingencies and losses (3,007) (3,088)
Capital employed 2,701 5,826
Average capital employed 2,315 4,264
ROACE 13.3% 13.7%
ROACE (2/2)
CONSOLIDATED
2006
Net operating incomeIn millions of euros
> Overview – January 200936
2007 sales revenue by BU (1/2)
Front End division
Mining23%
Chemistry8%
Enrichment34%
Fuel36%
Reactors and Services
Back End division
Logistics13%
Cleanup6% Engineering
3%
Treatment-Recycling
81%
Transmission & Distribution
Products49%
Systems32%
Automation11%
Services8%
Nuclear services29%
Plants39%
Nuclear measurement
6%
Equipment8%
AREVA TA11%
Consulting/Information Systems6%
Renewable energies
1%
> Overview – January 200937
2006 sales revenue by BU (2/2)
Front End division
Mining20%
Chemistry8%
Enrichment29%
Fuel43%
Reactors and Services
Back End division
Logistics9%
Cleanup6% Engineering
4%
Treatment-Recycling
78%
Transmission & Distribution
Products45%
Systems32%
Automation12%
Services11%
Nuclear services28%
Plants32%
Nuclear measurement
8%
Equipment11%
AREVA TA14%
Consulting/Information Systems7%
Renewable energies
1%