AREVA, business & strategy overview - January 2009 - Appendix 7

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


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


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


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


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%


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


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.)


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


China: nuclear civilian sites11 reactors in operation – 6 under construction


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


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


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


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


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


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%


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


India: strong growth of nuclear generated power is expected over the 25 next years

17 TWh

375 TWh


Nuclear generated electricity should multiply

by 20 by 2032

439 TWh

Francein 20072004 2032


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


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


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


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.


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


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


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)


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


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


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


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)


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


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)


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


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


(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


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


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


2007 sales revenue by BU (1/2)

Front End division

Mining23%

Chemistry8%

Enrichment34%

Fuel36%


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%


2006 sales revenue by BU (2/2)

Front End division

Mining20%

Chemistry8%

Enrichment29%

Fuel43%


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%

Economy & Finance

AREVA, business & strategy overview - January 2009 - Appendix 7