Annual Report strategy at a glance highlights operations key figures

Transcription

1 Annual Report 2014 strategy at a glance highlights operations key figures

2 contents AREVA STRATEGY 1 Message from Philippe Varin, Chairman of the Board of Directors 2 Message from Philippe Knoche, Chief Executive Officer 4 Simplified governance 6 Executive Committee 9 International presence 10 AREVA AT A GLANCE 11 Who are we? 13 What do we do? 14 How do we do it? 16 AREVA HIGHLIGHTS 23 AREVA OPERATIONS 33 Mining 34 Front End 38 Reactors & Services 42 Back End 48 AREVA Corporate Foundation 52 AREVA STRATEGY AREVA KEY FIGURES 53 Economic and financial data 54 CSR figures 56 Share information, financial communications 58 Summary data 60 This annual report and our 2014 reference document may be downloaded as PDF files from our website, Follow the group s latest news on Let s talk more about it; join us on 1

3 AREVA STRATEGY AREVA STRATEGY The group has devised a transformation plan equal to its challenges that is based on a new strategic roadmap and a competitiveness plan. Philippe Varin, Chairman of AREVA s Board of Directors A s Chairman of AREVA s Board of Directors, I see evidence of this company s industrial value and unique combination of skills every day. AREVA has the know-how needed for the safe, successful operation of France s nuclear power reactors and plays a central role the country s economy. AREVA has exported this knowhow by becoming a partner to the largest nuclear power companies on the planet. The paradox for AREVA today is that it is both a recognized world leader to its customers and a company in serious financial difficulty. In recent months, the group has analyzed the crisis and its origins in detail specifically, unfortunate past decisions, deficiencies in the management of large projects and insufficient adaptation to changing markets after the Fukushima accident. Building on this diagnosis, the group has devised a transformation plan equal to its challenges that is based on a new strategic roadmap and a competitiveness plan. First, the strategic roadmap defines a new vision for AREVA as an equipment manufacturer and materials supplier with a high technological added value. With his roadmap, the group will be able to harness its strengths based on three priorities: refocusing operations on its core business, redefining the long-standing partnership with EDF, and reinforcing development in China. This should culminate in a solid financing plan over the next three years. Secondly, AREVA has adopted an ambitious competitiveness plan aimed at sharply reducing costs and streng - thening the management of large projects, but which also gives free rein to the company s 44,000 employees to search for growth drivers. In France, AREVA must work with EDF today to prepare for the Major Refits Program and optimize new generation reactors. Internationally, with the vast majority of growth coming from emerging economies, the group must adapt further to market trends. AREVA s future has to be rebuilt along these lines. The Board will also be demanding that the transformation plan be implemented quickly and effectively. In particular, it will continue to monitor the quality of social dialogue and the unwavering preservation of safety. I would like all AREVA employees to know that they have my confidence and support. I am convinced that they will find their way out of the crisis, with the course they have set. 2 3

4 AREVA STRATEGY AREVA STRATEGY AREVA is going through a major crisis. The course set for the next three years is a demanding one equal to the challenges ahead. We must make AREVA a refocused, competitive group aligned with market realities. Diagnosis AREVA began a comprehensive, unflinching strategic review of its operations in November The scale of the net loss for 2014, at 4.8 billion euros, is a measure of the challenges confronting AREVA: stagnation of nuclear operations, lack of competitiveness, and difficulties managing certain large projects. The group is fully aware of the gravity of the situation. The transformation plan announced in March, along with its strategic roadmap and competitiveness plan, sets a demanding yet economically realistic course for all of our teams. A three-year financing plan will be laid out by the time the half-year financing statements are published. AREVA will return to the race by mastering key processes in the nuclear supply chain. Philippe Knoche, Chief Executive Officer Strategic refocusing First of all, AREVA will refocus on its core business: mastery of nuclear processes key to the operation of the world s reactors. While we must regain competitiveness, our skills and technologies across the entire nuclear value chain are recognized by customers all over the world. Strategic refocusing will prompt us to revise some goals, whether this is for leading new reactor projects or activities in renewable energy. Excellence in the supply for high added-value products and services is AREVA s goal. Redefining the partnership with EDF As a supplier, our role is to stand beside EDF in meeting the many challenges confronting the entire industry, especially competitiveness. We must successfully complete the EPR projects while drawing valuable lessons from the difficulties encountered, optimizing our reactor line and responding to the market shift toward emerging economies. AREVA s goals in China With 60% of the world s new capacity by 2030, China naturally plays a major role in this geographical shift. Close to 10% of our revenue already comes from here. To accelerate AREVA s development here, the group is counting on the subsidiaries and joint ventures it has created locally and on agreements with China s two major nuclear power companies: CNNC, to work on the full range of fuel cycle operations, and CGN, to capitalize on progress in the construction of the Taishan 1 and 2 reactors. Operating performance In the first decade of this century, AREVA s resources were proportionate to the rapid growth of nuclear power. Today, it must adapt to new market realities. The group is rolling out an ambitious competitiveness plan aiming to save 1 billion euros by 2017 through organizational streamlining, operational quality and a brand new approach to risk management for large projects. Safety Nuclear safety and occupational safety are part of our DNA and key to our performance. They are not negotiable and spending in this area will not be curtailed. In the period of change ahead, I will personally make sure that safety continues to receive our utmost attention. Nuclear safety data for 2014 show that the group s performance has improved in recent years. The number of INES events the relevant performance indicator for nuclear safety has declined since In occupational safety, the accident frequency rate per million hours worked (FR) was divided by 2.5 over that same period. We were nonetheless sad to report one fatal accident in 2014 a sign that we must redouble our efforts and continue to aim for zero accidents in the workplace. EPR reactor The EPR is an excellent reactor. It is the most advanced in terms of safety. Together with EDF, we must harvest all of the experience from the first projects to improve the reactor and offer an optimized, more competitive and even safer EPR to the market. From now through 2017, our commercial objective is the Hinkley Point project in the United Kingdom. Renewables Over the past two years, with the completion of the first large-scale projects in concentrated solar power and offshore wind, the Renewable Energies Business Group quickly shifted from a growth driver for the group to its second largest source of losses. AREVA s strategic roadmap calls for us to change our approach. From now on, our renewable operations will be developed through partnerships, particularly in offshore wind, where we are in the Adwen joint venture with Gamesa. AREVA s teams AREVA s employees have always been completely committed to serving the group s customers. Today this is more necessary than ever and will be the key to our success. We all have a challenge to meet: to implement the transformation plan, in all its aspects, to make AREVA a refocused, streamlined, competitive group within the French nuclear industry in a position to win back the market. 4 5

5 AREVA STRATEGY AREVA STRATEGY Simplified governance The ordinary and extraordinary general Shareholders Meeting of AREVA of January 8, 2015 approved the transition from governance with a Supervisory Board and an Executive Board to governance with a Board of Directors, and the corresponding articles of association. This reform seeks to establish the corporate governance most suited to AREVA s strategic challenges in terms of past experience and best corporate governance practices. The adopted form strengthens cooperation between Executive Management and the Board of Directors to ensure greater involvement by the Board of Directors under the leadership of its Chairman. Strategic choices will be ratified at a single level instead of two levels, as was previously the case. The new governance should also accelerate deployment of the group s strategy for recovery. FOUR SPECIALIZED COMMITTEES The Board of Directors, meeting for the first time after the General Meeting of January 8, 2015, decided to create four specialized committees to support its missions. STRATEGY AND INVESTMENTS COMMITTEE AUDIT AND ETHIC COMMITTEE PHILIPPE VARIN, Chairman of the Board of Directors MEMBER DESIGNATED BY THE FRENCH GOVERNMENT AND APPOINTED BY MINISTERIAL ORDER BERNARD BIGOT SOPHIE BOISSARD CLAUDE IMAUVEN THE BOARD OF DIRECTORS Composed of 12 members with four-year terms, the Board of Directors sets the directions for the company s operations and ensures that they are followed. It may take up any matter concerning the proper functioning of the company s management. It performs such checks and verifications as it deems necessary. The Board has special powers, including the approval of the financial statements and annual management report and the appointment of the Chairman and Chief Executive Officer. MEMBERS APPOINTED BY SHAREHOLDERS PHILIPPE KNOCHE CHRISTIAN MASSET (on the proposal of the French Government) MEMBERS REPRESENTING EMPLOYEES DENIS MORIN (on the proposal of the French Government) PASCALE SOURISSE ALEXIS ZAJDENWEBER FRANÇOISE PIERI JEAN-MICHEL LANG ODILE MATTE Chaired by Philippe Varin The Committee analyzes major foreseeable strategic directions for the group s development and assesses the soundness of the most important strategic decisions proposed by the Chief Executive Officer. It ensures application of the company s strategic policy and its implementation at the subsidiary level. NOMINATING AND COMPENSATION COMMITTEE Chaired by Claude Imauven The Committee s missions consist of submitting proposals for candidate directors to the Board of Directors and formulating recommendations concerning, among other things, executive compensation and pensions. Chaired by Sophie Boissard The Committee monitors the development and control of accounting and financial information, and ensures in particular the correct valuation of mineral resources and reserves, the execution of large projects, and the mapping of risks. END-OF-LIFE CYCLE OBLIGATIONS MONITORING COMMITTEE Chaired by Pascale Sourisse The role of this Committee is, in particular, to monitor the portfolio of assets earmarked for clean-up and dismantling expenses, to estimate the amount of the latter, to review fund management procedures, and to monitor the funds necessary to cover obligations. SCIENTIFIC ADVISORY COUNCIL Comprised of members both from outside the company and from AREVA, the board provides guidance for the group s consideration of major scientific challenges related to energy. It formulates recommendations to AREVA executives. In 2014, work focused on the following topics: IMPACT OF THE ENERGY TRANSITION: ASPECTS OF THE DEBATE PRECAUTION, INNOVATION AND PARTICIPATION INDUSTRIAL RECYCLING OF VERY LOW-LEVEL METAL WASTE 6 7

6 AREVA STRATEGY EXECUTIVE COMMITTEE PHILIPPE KNOCHE Chief Executive Officer OLIVIER WANTZ Senior Executive Vice President, Mining and Front End Business Groups PHILIPPE SAMAMA Senior Executive Vice President, Reactors & Services Business Group GUILLAUME DUREAU Senior Executive Vice President, Back End Business Group ÉRIC CHASSARD Senior Executive Vice President, Engineering & Projects RÉMY AUTEBERT Senior Executive Vice President, Asia Region, and Executive Director for reorganization of the international commercial function ANNE-MARIE CHOHO Senior Executive Vice President, Operations Support and STÉPHANE LHOPITEAU Chief Financial Officer FRANÇOIS NOGUÉ Senior Executive Vice President, Human Resources MAGALI SMETS Secretary of the Executive Committee 9

7 AREVA STRATEGY International presence Revenue: 19% Employees: 14% Revenue: 20% Employees: 11% Revenue: 43% Employees: 67% North & South America France Europe and CIS (excluding France) Africa Middle-East Asia-Pacific Revenue: 1% Employees: 4% AREVA AT A GLANCE Revenue: 16% Employees: 4% 10 11

8 AREVA AT A GLANCE AREVA AT A GLANCE 46.9 bn Backlog bn Revenue Who are we? AREVA supplies high added-value products and services to support the operation of the global nuclear fleet. The company is recognized by utilities around the world for its expertise, its skills in cutting-edge technologies and its dedication to the highest level of safety. AREVA s 44,000 employees are helping build tomorrow s energy model: supplying ever safer, cleaner and more economical energy to the greatest number of people. 44,000 Employees 12 13

9 AREVA AT A GLANCE MINING AREVA AT A GLANCE CHEMISTRY What do we do? ENRICHMENT FUEL FABRICATION AREVA is present throughout the entire nuclear cycle, from uranium mining to used fuel recycling, including nuclear reactor design and operations services. Uranium exploration, mining and concentration. Uranium conversion and enrichment. Nuclear fuel design and fabrication. Nuclear reactor design and fabrication. Products and services to maintain, modernize and extend the operating period of existing power plants. Used nuclear fuel recycling. Project management and support for work in radioactive environment. Nuclear site dismantling and value development. Nuclear materials transportation, storage and disposal. REACTOR DESIGN REACTOR MAINTENANCE AND MODERNIZATION USED FUEL RECYCLING NUCLEAR SITE DISMANTLING OUR CUSTOMERS / Operators of nuclear power plants, power reactors and nuclear sites

10 AREVA AT A GLANCE AREVA AT A GLANCE How do we do it? Nuclear safety: AREVA s DNA Nuclear safety is non-negotiable. It is a prerequisite that calls for heightened vigilance across all our operations, in all our businesses and on all continents. It begins by anticipating and preventing risks related to radioactive materials and by defining measures to protect people and the environment. It applies to facilities during their operations, transportation of nuclear materials and for services at customer sites. It is won by a strong commitment to transparency, by expertise and know-how. Occupational safety: The priority Occupational safety is an absolute priority. Our economic performance is not meaningful unless it comes with an unshakeable commitment to preserving the health and safety of our employees and our subcontractors. Our requirements go beyond the best international standards, and we always aim for the highest level of occupational safety in all our activities. Our accident frequency rate per million hours worked (FR) has been divided by 2.5 since More than ever, we are determined to achieve zero accidents in the workplace

11 AREVA AT A GLANCE AREVA AT A GLANCE Competitiveness: At the heart of recovery Customers: Supplying products and services with a high added value To return to sound financial health, we must achieve the highest standards of competitiveness. Regaining our productivity will come from streamlined operations, efficient processes, a flexible organization capable of adapting to market trends, cost reduction and the activation of a multitude of performance drivers, including the crucial one of quality. We aim to achieve 1 billion euros in savings by 2017 through this transformation and to be competitive once again. AREVA s objective is to achieve excellence as a supplier of products and services with a high added value in its core nuclear business cutting-edge technical processes, and offering the highest standards in safety, quality and competitiveness in every market. We seek to understand and anticipate our customers needs through a strong local presence and constructive dialogue and to meet those needs in a pertinent and innovative manner

12 AREVA AT A GLANCE AREVA AT A GLANCE Employees: Complete commitment Innovation: Expertise in cutting-edge technologies The expertise of the women and men at AREVA is recognized by our customers all over the world and contributes to the value and strength of our group. It is the key to the success of our recovery. We seek to preserve this asset by building talent, supporting career paths, fostering mobility, diversity and the spirit of initiative. AREVA is committed to supporting change, social dialogue and worklife quality for its employees. To support its development, AREVA is strengthening innovation by forging closer links between marketing and R&D and by being more selective in programs in order to differentiate its technologies and services. The group continues to promote open and collaborative innovation through idea platforms, incubators and innovation centers

13 AREVA AT A GLANCE Environment: Six major commitments Our proactive environmental policy is structured around six lines of action: AREVA HIGHLIGHTS 1 Maintaining and developing a shared culture of environmental risk prevention. 2 Improving facility design by taking the entire lifecycle into account. 3 Strengthening the prevention and management of technology-related risks. 4 Preventing risks related to facility aging and accidental spills. 5 Reinforcing the prevention and management of chronic health risks. 6 Controlling the environmental footprint of operations to prevent damage to biodiversity. 22 RAPPORT ANNUAL REPORT ANNUEL

14 AREVA HIGHLIGHTS AREVA HIGHLIGHTS 2014 FRONT END 2014, a year of commercial successes in fuel supply to Europe and the United States FEBRUARY BACK END AREVA confirms its leadership position in the used fuel management market FEBRUARY MINING The group celebrates 50 years of mining and nuclear operations in Canada AREVA and EDF sign an agreement to supply nuclear fuel to the French reactor fleet through In Sweden, AREVA will deliver fuel assemblies to four of Vattenfall s seven reactors. The German utility RWE also selected the group to supply fuel to its Emsland power plant. In Finland, AREVA will procure four ATRIUM reloads for TVO s Olkiluoto reactors. In Spain, ENUSA signed an agreement with the group for uranium enrichment services. Last but not least, in the United States, XCEL Energy and AREVA extended their fuel supply and services contract through AREVA TN signed two new contracts with two utilities in the United States to deliver used fuel storage casks and modules. EDF also recognized AREVA s expertise by extending through 2020 the partnership agreement between the two groups for the shipment, treatment and recycling of fuel at the end of operations. With 3 entities and close to 500 employees, AREVA is one of Canada s leading uranium producers. AREVA continues to invest in this country. With a half century of experience, particularly in capacity upgrades at the McClean Lake mill, which will process all of the uranium from the Cigar Lake mine operated by CAMECO

15 AREVA HIGHLIGHTS AREVA HIGHLIGHTS 2014 REACTORS & SERVICES Construction continues at the Flamanville 3, Olkiluoto 3, and Taishan 1 & 2 EPR reactors 2014 FRONT END CAST begins zirconium tube production in China APRIL REACTORS & SERVICES Angra 3: work continues on schedule; new contract signed with Brazilian utility ETN In Finland, leak tests of the OL3 reactor containment building were successfully completed, a world premiere which confirms the reliability of the reactor containment. A new milestone was reached at the Taishan site in China with the installation of the control room simulator. Delivered by CORYS, a subsidiary of AREVA and EDF, the simulator will be used to train reactor operators. The first steam generator was installed in Flamanville, France. AREVA also delivered all of the support documentation for the operating license application. The CAST joint venture between AREVA and China National Nuclear Corporation (CNNC) will manufacture and market zirconium tubing for nuclear fuel assembly fabrication. CAST manufactured a first batch of 8,500 tubes in June. A second batch will be manufactured for the 300 MW Qinshan I nuclear power plant. Work to complete the Angra 3 reactor moved forward with the delivery of safety systems and other components. Eletrobrás Termonuclear (ETN) signed a new agreement with the group for additional mechanical and electrical equipment, supplementing the initial contract of 1.25 billion euros. Cezus illustration, Paimbœuf plant, France

16 AREVA HIGHLIGHTS AREVA HIGHLIGHTS APRIL BACK END MAY MINING MAY RENEWABLE ENERGIES JUNE REACTORS & SERVICES Sellafield Ltd selects the proposal from AREVA and its partners for construction of a waste treatment plant in the United Kingdom AREVA and the State of Niger renew their strategic partnership The team consisting of GDF Suez, EDP Renewables, Neoen Marine and AREVA wins France s second call for proposals for offshore wind Inauguration of AREVA Creusot Forge s new hydraulic press The Silo Direct-encapsulation Plant (SDP) will be a custom-designed facility to package metal waste from the treatment of Magnox fuel. The AREVA-Mace-Atkins joint venture (AMA) will be responsible for engineering, procurement, construction and commissioning of the unit at the Sellafield site. The agreement signed in May 2014 extends the mining conventions signed by the SOMAÏR and COMINAK companies. It confirms Niger s major role in the global uranium industry and is an opportunity for AREVA to strengthen its financial support to local infrastructure and development projects. The partners were selected to install and operate two 500 MW wind farms near Le Tréport and the Yeu and Noirmoutier islands. The contract will generate more than 6,000 direct and indirect jobs. Manufacturing of AREVA s 8 MW wind turbines will begin in The two wind farms will deliver electricity from renewable sources starting in 2021, ultimately supplying power to 1.6 million people. In the North Sea, AREVA successfully completed the installation of the Trianel Borkum and Global Tech 1 wind farms. With a force of 9,000 metric tons, this advanced technology allows for faster and more accurate forging of heavy reactor components. It joins the existing suite of tools at AREVA Creusot Forge, including an 11,000-metric-ton hydraulic press and some of the world s most powerful smelters

17 AREVA HIGHLIGHTS AREVA HIGHLIGHTS JUNE MINING SEPTEMBER REACTORS & SERVICES OCTOBER RENEWABLE ENERGIES OCTOBER REACTORS & SERVICES AREVA Med produces the first lead-212 for use in cancer treatments AREVA signs 300-million-euro contract with South African utility Eskom Bolt Energias asks AREVA to build Brazil s largest biomass power plant The European Commission approves the launch of the Hinkley Point C EPR project in the United Kingdom The Maurice Tubiana Laboratory (LMT) produced the first nanograms of this radioelement at the Bessines-sur-Gartempe site in France. Analyses confirmed production quality; quantities will increase as AREVA Med and its partners develop the technology. The contract covers the design and manufacturing of six steam generators, their installation in the two reactors at the Koeberg power plant, which will boost capacity by 10%, and related engineering services. The agreement is a major coup for the Forward Alliance Program dedicated to nuclear power plant modernization. AREVA will provide engineering, procurement and construction services for the three 50-MWe modules of the Campo Grande plant, which will be connected to the grid in mid This commercial success follows on the heels of the inauguration of the Bio Golden Raand facility earlier in the year in the Netherlands, where it supplies electricity to more than 120,000 households. AREVA is pleased with this decision, which validates the construction of two EPR reactors and allows the French nuclear industry to consolidate its lead in the market for third-generation power plants. The Hinkley Point C units will be the fifth and sixth reactors using the EPR technology developed by AREVA

18 AREVA HIGHLIGHTS JANUARY 2015 RENEWABLE ENERGIES AREVA and Gamesa join forces to create a global leader in offshore wind AREVA OPERATIONS The partners have formed the Adwen joint venture in offshore wind. With a portfolio of projects representing 2.8 GWe, its objective is to win a European market share of close to 20% by The alliance combines the assets of both groups: technology and manufacturing expertise, and operating experience in the wind energy industry

19 AREVA OPERATIONS AREVA OPERATIONS OPERATIONS Exploration Mine development and construction Uranium ore mining and concentration Mining site rehabilitation 20 years (1) is how long it takes from the start of exploration to the first production from a mine deposit. 44% in OECD countries and 56% in the rest of the world: that s the distribution of uranium resources on the planet. 130 years of consumption are covered by identified uranium resources at the current rate of consumption (OECD 2011). 1 Preserve AREVA s presence in its traditional markets. MINING STRATEGIC PRIORITIES 2 Increase sources of supply, giving preference to competitiveness and profitability over volumes. KEY FIGURES 3 Maintain all of the skills of the Mining business bn bn 3,915 Backlog Revenue Employees (1) Indicative; the number of years can vary significantly, depending on circumstances. A s one of the four largest uranium producers in the world, AREVA is active in every aspect of the uranium mining cycle: exploration, mine development, mining and concentration, and mine rehabilitation. AREVA s diversified supply base and broad customer portfolio are differentiating factors in this highly concentrated market. AREVA s mining business is also known around the world for its commitment to performance, occupational health and safety, social responsibility and environmental protection. SECURING ACCESS TO URANIUM AREVA s diversified portfolio of mining assets and resources constitutes an important factor in security of supply for utilities seeking long-term guarantees of uranium supply. Present on five continents, AREVA develops large-scale mining projects and enters into strategic partnerships. Its operating uranium mines are currently located in Canada, Kazakhstan and Niger. The year 2014 marked the start of production at the Cigar Lake uranium mine operated by CAMECO Canada. All of the ore will be processed in the McClean mill operated by AREVA. The group is also present in Namibia, Gabon, Australia and Mongolia through mining projects or exploration sites. A BROAD CUSTOMER PORTFOLIO The diversity of its customer portfolio is another key factor in AREVA s success. The group has a significant backlog of eight to ten years of production and serves all of the world s major utilities. AT THE CUTTING EDGE OF TECHNOLOGY INNOVATION AREVA has innovative mineral exploration technologies such as in situ recovery (ISR), in which fluids are injected into the ground to extract uranium. This process is both cost-effective and respectful of the environment. The same is true of the jet boring mining method in which the ore is extracted with high-pressure water jets. This technology is currently used at the Cigar Lake deposit in Canada. AREVA has also launched a project to expand its Mining Innovation Center, which will become a unique facility for research and expertise on uranium ore. The center will be based in Bessines, France. DID YOU KNOW? AREVA MED, AN AREVA SUBSIDIARY, IS CONDUCTING INNOVATIVE RESEARCH TO COMBAT CANCER AREVA Med s scientific and industrial work focuses on the extraction and purification of lead-212, a rare isotope, for alpha-immunotherapy treatments to fight cancer. From 2012 to 2014, in a world first, Phase I clinical trials were carried out with 18 patients to demonstrate the injected medicine s non-toxicity. Today, this subsidiary of AREVA Mines continues efforts to optimize its production processes and to develop the use of lead-212 in nuclear medicine via partnerships

20 AREVA OPERATIONS The largest ISR mine in the world In situ recovery is a mining technique in which alkaline or acidic solutions are injected into the ground to dissolve uranium selectively. The uranium-rich solutions are pumped to the surface and sent to the recovery plant for processing. After the solutions have been stripped of uranium by processing, they are re-injected into the wells. Done in a closed cycle, in situ recovery is most suited to low-grade uranium deposits. This production technology is both cost-effective and respectful of the environment. In April 2014, KATCO celebrated its 20,000 th METRIC TON OF URANIUM produced since the start of mining operations. Kazakhstan, AREVA s premier uranium production site K ATCO is a mining company created in 1996 by AREVA (51%) and Kazatomprom (49%), the national natural uranium producer of Kazakhstan. It is developing the Muyunkum and Tortkuduk uranium deposits located 42 kilometers apart in southern Kazakhstan. With their synergistic areas of expertise, AREVA and Kazatomprom have developed unique mining know-how for in situ recovery of ore (ISR). The initial production target was 1,500 metric tons of uranium per year for both deposits combined. In 2008, with the KATCO 4,000 project, the company set a target of 4,000 metric tons of uranium per year from 2013 to KATCO s mining sites comply with highest standards for industrial and occupational safety. As such, they are a model for the country s mining industry and one of the greatest achievements in the world in the field of uranium. / With 1,200 employees, 98% of whom are Kazakhs, KATCO is one of the largest employers in the Sozak region of southern Kazakhstan

21 AREVA OPERATIONS AREVA OPERATIONS OPERATIONS Chemical conversion of uranium concentrates (U 3 O 8 ) into uranium hexafluoride (UF 6 ) Defluorination and denitration of uranium into U 3 O 8 FRONT END 1 Increase the profitability of conversion through the successful transition to Comurhex II while capitalizing on growth, particularly in the Chinese market. Enrichment of uranium hexafluoride in uranium-235 STRATEGIC PRIORITIES 2 Strengthen the return on investment in the enrichment plants. KEY FIGURES Nuclear fuel design and fabrication 3 Consolidate leadership position in nuclear fuel assembly fabrication bn bn 8,080 Backlog Revenue Employees AREVA has nearly 37 utility customers in the enrichment market, primarily in Europe, the United States and Asia, and supplies enrichment services to an average of 60 reactors each year worldwide. AREVA is the majority shareholder of the Georges Besse II enrichment plant and a 50% shareholder of the Enrichment Technology Company (ETC), together with URENCO, which manufactures the centrifuges used for uranium enrichment. A REVA is a leading player in the front end of the nuclear cycle, with operations in every aspect of the fuel supply business, i.e. uranium conversion and enrichment, and nuclear fuel design and fabrication. Its very high-technology industrial capabilities, made possible by significant capital expenditure in recent years, set AREVA apart. In 2014, more than 4.5 billion euros in new contracts raised the backlog of orders to 19 billion euros, conferring excellent long-term visibility on Front End operations. THE ADVANTAGES OF COMURHEX II AREVA is the only industrial player to have a new uranium concentrates conversion facility meeting the latest safety standards: Comurhex II, with new facilities at the Malvési site and a new plant at the Tricastin site. Comurhex II features innovations in energy conservation and environmental footprint reduction. For example, it reduced its annual water extraction by 90%, and it received the quartet of ISO certifications: ISO 9001, and 50001, and OHSAS The plant will have a total production capacity of 15,000 metric tons, with the possibility of increasing capacity to 21,000 metric tons in the coming decades, depending on market conditions. HIGH-TECH CENTRIFUGATION PROCESSES By using its centrifuge enrichment technology at the Georges Besse II plant, which had produced more than 6 million SWU by the end of 2014, AREVA strengthens its position in the strategically important uranium enrichment market. This technology meets increasingly demanding requirements for safety, environmental protection and competitiveness. The TC12+ will become the standard centrifuge for upcoming phases of the Georges Besse II program. This new-generation centrifuge further enhances separation performance for uranium enrichment. CONSOLIDATING OUR LEADERSHIP Ranked number two in global fuel fabrication, AREVA enjoys major advantages over its competitors: expertise in every area of the value chain, including zirconium products, and an offering encompassing all types of pressurized and boiling water reactors (PWR/BWR). This expertise is widely recognized by customers in Europe as well as in China and the United States, where new development prospects beckon. AREVA plans to consolidate its position as a frontrunner in fuel assembly fabrication by supplying 70% of EDF s long-term requirements, developing its presence in Asia and further securing its technology leadership. It continues to market the GAIA and ATRIUM 11 new-generation fuel assemblies. DID YOU KNOW? FUEL SUPPLY: MAJOR AGREEMENT BETWEEN AREVA AND EDF The agreement between AREVA and EDF covers the design and fabrication of fuel for EDF s French fleet over the period. It guarantees the delivery of several thousand metric tons of fuel, thus securing a significant share of French reactor fleet requirements. AREVA and EDF will also develop new products through strengthened technical cooperation

22 AREVA OPERATIONS AREVA OPERATIONS 6.1 MILLION SWU That s the quantity produced by the Georges Besse II plant as of year-end Start-up of the 100 th cascade The Georges Besse II plant continues to gear up as planned with the commissioning of the 100 th centrifuge cascade. This new milestone brings the plant s installed operating capacity to 90% of its nominal design capacity. Georges Besse II takes over T he Georges Besse II uranium enrichment complex at the AREVA Tricastin platform includes the north and south enrichment plants and the REC II facility for quality assurance and sampling of incoming and outgoing materials. This complex gives AREVA high-performance production facilities using centrifuge technology that puts them in a class of their own. This proven, efficient technology meets increasingly stringent requirements for safety, environmental protection and competitiveness. In fact, the plant consumes 50 times less electricity than earlier facilities based on gaseous diffusion and does not extract water from the environment. By comparison, the gaseous diffusion process consumed 26 million cubic meters of water per year. Another advantage is its modular construction, enabling rapid gear-up and adjustment of production capacity to market demand. Georges Besse II will reach its production target of 7.5 million SWU by the end of / SWU An enrichment plant s production is expressed in separative work units (SWU). This unit of measurement is the international standard for enrichment sales and services

23 AREVA OPERATIONS AREVA OPERATIONS OPERATIONS Nuclear reactor design and manufacturing Solutions and services for existing and future reactor fleets Propulsion & research reactors Nuclear measurements Almost 60% of the reactors under construction are in Asia, with 39% of them in China. AREVA provides services to more than 250 operating reactors worldwide. China is expected to become the largest installed base in the world by 2040, with 1/4 of installed capacity. REACTORS & SERVICES 1 Secure the profitability of the Large Projects business. 4 Develop innovative and differentiating solutions. KEY FIGURES bn bn 14,745 Backlog STRATEGIC PRIORITIES 2 Increase the profitability of services to the installed base. 5 Reinforce AREVA s industrial presence in China. Revenue 3 Play a major role in EDF reactor fleet ( Grand Carénage program of major refits). 6 Tailor our offer to our customers economic constraints. Employees A REVA designs and manufactures nuclear reactors for power generators, as well as reactors for naval propulsion and research. AREVA continues to optimize and enhance the competitiveness of the EPR, the first third-generation reactor, and to qualify the ATMEA 1 reactor. At the same time, the group is actively participating in the effort to enhance nuclear safety and to extend the operating period of reactors around the world by offering services for facility maintenance, modernization and control. AREVA plans to participate in the growth in Asia, especially in China, by building on its strategic partnerships with the largest Chinese operators. THE EPR: SAFER, MORE POWERFUL AND MORE COMPETITIVE At 1,650 MWe, the third-generation EPR reactor designed and developed by AREVA is the most advanced and powerful pressurized water reactor on the market. Its simplified operating systems bring significant advances in terms of safety and competitiveness, and fully meet the standards established in the aftermath of the Fukushima events. With its 15% reduction of long-lived radioactive waste, the EPR reactor also helps reduce the environmental footprint. It is designed to operate for a minimum of sixty years. Four EPR reactors are under construction in three countries: Finland (Olkiluoto 3), France (Flamanville 3) and China (Taishan 1 and 2). TWO EPR REACTORS IN THE UNITED KINGDOM With this technology breakthrough in the first Generation III reactors, AREVA has secured a position in all markets, most notably in the United Kingdom, where the group plans to contribute to the renewal of the British nuclear power program. As part of the project to build two EPR units at Hinkley Point, negotiations continue between AREVA and the Nuclear New Build Generation Company (NNB GenCo) to finalize contracts for the nuclear steam supply system, the instrumentation and control system, and fuel. These EPRs, the fifth and sixth, will reap the benefits of experience from the Finnish, French and Chinese projects. ATMEA 1: A PROMISING ALTERNATIVE The design process for the 1100-MWe ATMEA 1 reactor is ongoing under a joint venture with the Japanese firm Mitsubishi Heavy Industries (MHI). Designed to meet demand for mid-sized nuclear reactors, it features advanced PROJECTS NEW REACTOR CONSTRUCTION CONSIDERED In Asia, where the growth potential for nuclear programs is highest, AREVA is focusing its efforts on China, Japan, South Korea and India. Its reputation has earned it a position in major calls for tender, particularly in the United Kingdom (Hinkley Point and Sizewell), Saudi Arabia, India, South Africa and Poland. In France, AREVA wants to take the lead for the future replacement of units in the French fleet

24 AREVA OPERATIONS AREVA OPERATIONS safety and security systems, high heat efficiency and a flexible operating cycle of twelve to twenty four months. Under an intergovernmental agreement between Turkey and Japan signed in 2013, exclusive discussions continue for the construction of four ATMEA1 reactors at Sinop, Turkey. A major milestone was reached in 2015 when the Parliament of Turkey ratified the construction project. HEAVY COMPONENT MANUFACTURING KNOW-HOW In the nuclear reactor equipment market, AREVA maintains and replaces components and supplies equipment to new power plants. Its expertise covers the design and production of forgings and machined parts, heavy and mobile components, and safety instrumentation and control systems. In 2014, the Karlstein plant began manufacturing core instrumentation for the Taishan 1 and 2 EPR reactors, and delivered four reactor coolant pump sets for Taishan 1. AREVA also manufactured and delivered 10 reactor coolant pump sets for the CPR1000 reactors in China (Ningde 4, Yangjiang 4, Fangchenggang 1 and Fangchenggang 2). INSTALLED BASE SERVICES: OPPORTUNITIES FOR DEVELOPMENT Faced with the changing needs of operators in its traditional markets and strong installed base growth in new countries (especially in Asia), AREVA has some major advantages when it comes to helping utilities optimize their production costs, enhance safety and extend the operating period of their nuclear reactors. In particular, AREVA seeks to play a leading role in EDF s Grand Carénage program of major refits for its fleet in France and to be a preferred partner for utilities in Germany in end-of-life management of their power plants. A CATALOGUE OF INNOVATIVE PRODUCTS AND SERVICES Since its launch in 2011, the Safety Alliance Program to enhance the safety of nuclear facilities has generated 700 million euros of orders in 19 countries. AREVA helps operators meet three safety requirements through this program: to withstand external events, to ensure the reliability of the cooling system, and to prevent environmental impacts. Continuing on from the Safety Alliance Program is the group s Forward Alliance Program, which proposes solutions supporting long-term reactor operations with the highest level of safety. The program has generated 1.6 billion euros in orders from utilities worldwide since it was created in In addition, AREVA has recently launched a new initiative called Value Alliance, which proposes a range of products and services to address one of the utilities major issues: how to be e v e n m o r e c o m p e t i t i v e i n a n ever-changing world where sources of low-carbon renewable energy are becoming more and more important. Nuclear operators face a twofold challenge in this regard: increasing their revenue and controlling their operating costs so as to optimize capital and operational expenditure (CAPEX/OPEX) while ensuring the highest levels of safety in their facilities and a low level of radiation exposure for their employees. A UNIQUE ADVANCE IN TECHNOLOGY AREVA invests in technologies that allow it to make a difference, particularly in the design and manufacturing of heavy equipment, instrumentation and control systems, and primary coolant pumps, with a view to promoting them to the installed base and to all new construction projects. The success of its TELEPERM XS technology is a landmark in that respect. This cutting-edge safety system is suited to nuclear instrumentation and control applications requiring the best reliability guarantees. It is used in power plants for a range of applications: protection, reactor power control and limitation, neutron flux measurement, core monitoring, control and monitoring of the control rod bundle position, and management of the emergency diesel generators. TELEPERM XS instrumentation and control technology has been supplied to or is being installed in 81 nuclear reactors in 16 countries. RESEARCH REACTORS: RECOGNIZED EXPERTISE Through its Propulsion & Research Reactors business, AREVA supplies innovative low-power nuclear reactor solutions to the defense and civilian nuclear industries, including naval propulsion reactors, reactors for scientific research and nuclear medicine, and modular reactors. It is well known in the industry for its expertise in the design and development of innovative and reliable technology systems for complex environments. ENGINEERING & PROJECTS TEAMS COMMITTED TO PERFORMANCE The Engineering & Projects Department works in every aspect of the project value chain, from design and engineering to procurement, inspection, construction and start-up testing. Its 6,000 experts in 50 technical disciplines work at 11 sites around the world, bringing support, know-how and responsiveness to capital projects for the group and for AREVA s customers. The teams use best practices in project control based on standardized tools, methods and procedures benefitting from the experience gained in more than 3,000 projects led each year throughout the nuclear cycle. China: start-up of the full-scale simulator for the Taishan EPR reactors Created by CORYS, a joint venture between AREVA and EDF, this simulator is highly realistic. The simulator will be used to train 100 future operators for the commissioning and operation of the two EPRs under construction. Plant life extension: a major AREVA innovation A new maintenance technique called cavitation peening aims to reinforce the safety of nuclear components and extend the operating period of power plants. The technique will be used for the first time in the reactor vessels of the Byron and Braidwood reactors in Illinois under a contract with the US utility Exelon

25 AREVA OPERATIONS AREVA OPERATIONS AREVA has already replaced more than 120 steam generators at more than 50 power plants worldwide. The Koeberg power plant, safer and more competitive A steam generator IS: about 20 METERS HIGH Weighs between 400 and 600 METRIC TONS depending on the reactor model Has an upper diameter ranging from 3.40 TO 4.40 METERS Contains 122 KILOMETERS of steam-producing tubes in the internal circuit. A steam generator uses the heat produced by the nuclear fission reaction in the reactor vessel to produce steam that drives a turbine, which in turn drives a generator to produce electricity. An essential component of reactor safety Nuclear safety is anchored in the absolute need to guarantee the complete integrity of three reactor systems: the primary system, which passes through the vessel; the secondary system, which supplies steam to the turbine; and the cooling system. The steam generator, located inside the high-integrity reactor building, constitutes the boundary between the primary and secondary systems. A REVA signed a contract valued at some 300 million euros with the utility Eskom to replace the steam generators at the Koeberg nuclear power plant in South Africa. The contract calls for the design and manufacture of six steam generators, their assembly in the power plant s two reactors, and related engineering services. The technology solutions developed by AREVA will boost power by 10%, helping to optimize plant output. The teams at the Creusot Forge and Chalon/ Saint-Marcel plants and in the Installed Base France entity are managing the manufacturing of the steam generators, with installation scheduled for Our South African industrial partners are full participants in this project. The contract confirms AREVA s leadership in the global market for steam generator replacements and is a major reference for AREVA s Forward Alliance Program to modernize nuclear power plants. Thanks to this program, launched in 2012, utilities with nuclear power plants can be sure of operating them over the long term at the highest level of safety. / 46 47

26 AREVA OPERATIONS AREVA OPERATIONS OPERATIONS Used fuel treatment and recycling Nuclear logistics Dismantling and services International projects More than 75% of the light water reactor fuel which undergoes treatment is treated by AREVA. In France, more than 10% of all nuclear-generated electricity is produced by MOX fuel. 38 nuclear facilities in France (former production facilities, first-generation nuclear power plants, etc.) are in the process of being dismantled. BACK END 1 Restore competitiveness. 4 Reinforce AREVA s position in nuclear logistics markets. STRATEGIC PRIORITIES 2 Continue to innovate to optimize the plant operating period and develop new offers. KEY FIGURES 5 Be a global leader in dismantling operations. 3 Develop recycling operations in France and abroad bn bn 12,325 Backlog Revenue Employees A REVA offers high-performance solutions for the responsible management of nuclear materials and waste, in compliance with the highest safety standards. These solutions consist of recycling used fuel into new MOX or ERU fuel, packaging nuclear materials, providing storage systems and shipping services for nuclear materials and waste, and decontaminating and dismantling nuclear facilities for reuse. THE WORLD S NUMBER ONE RECYCLER AREVA taps into unique recycling expertise and experience from the operation of its two major industrial sites, la Hague and Melox. In France, the group delivered its 4,000 th MOX fuel assembly to EDF. Outside France, the group is assisting international customers for the development of treatment and recycling technologies. This is the case in Japan, through technical support for vitrification processes at the Rokkasho-Mura plant; in China, which has plans for a recycling plant; and in the United States, where AREVA is bringing its know-how for the construction of the MOX Fuel Fabrication Facility (MFFF), which will convert part of the US defense plutonium inventory into MOX fuel. CLOSE TO 6,000 SHIPMENTS PER YEAR The group is leading the way in making nuclear shipments safer, a major objective for the entire industry. AREVA s nuclear logistics subsidiary is based in Europe, the United States, Japan, Niger and China. It has both the means to manufacture shipping and storage casks, and its own fleet of transportation equipment. The group is able to respond to specific conditions in each country with customized products and services. For example, under its agreement with the Chinese power company CNNC, AREVA will contribute skills, know-how and experience to the deployment of a logistics plan for the shipment of used fuel in China. 45% MARKET SHARE IN NUCLEAR SITE DISMANTLING AND SERVICES Drawing on the experience it has acquired in the dismantling of its own sites and those of its customers (including projects at CEA facilities), AREVA is strengthening its position as a leader in the French dismantling market. The group stands out for its innovative solutions in projects involving high levels of radioactivity and for its competitive offer. It is backed by significant new contracts in France, including operation of the decontamination facility at the Marcoule site, dismantling of the Ulysse reactor at the Saclay site, and decontamination activities at all EDF reactors. AREVA intends to meet the growing challenges of this market by creating new international standards, as it is doing at the Sellafield site in the United Kingdom. THE NETHERLANDS GENERATING ELECTRICITY WITH MOX FUEL FOR THE FIRST TIME The Borssele nuclear power plant operated by the Dutch utility EPZ began generating electricity using MOX fuel supplied by AREVA, a first in that country. This makes the Netherlands the seventh country which uses or has used MOX fuel in its nuclear reactors, after Germany, Belgium, the United States, France, Japan and Switzerland

27 AREVA OPERATIONS AREVA OPERATIONS 1,217 METRIC TONS OF USED FUEL TREATED (vs. 1,154 metric tons planned) 1,100 CANISTERS OF VITRIFIED WASTE (vs. 819 canisters planned) 822 CONTAINERS OF COMPACTED WASTE (vs. 701 containers planned) Innovation: motivated employees As part of an internal, participatory innovation program, half of the site s employees shared close to 1,600 ideas for enhancing plant performance and for continuous improvement. Safety and security: absolute priorities Representatives of the French nuclear safety authority ASN regularly inspect the la Hague site, where 58 inspections were conducted in 2014, including 14 unannounced inspections. The site strives to eliminate the environmental impacts of its releases, which remain negligible at 100 times less than the region s natural radioactivity. Occupational safety is a non-negotiable priority for the site, which has a historically low accident frequency rate (FR of 0.19) Excellent production levels at the la Hague site REVA la Hague is the world s premier A recycling site. More than 30,000 metric tons of used fuel have been treated there to date. The teams surpassed plant production targets in 2014, and outages for scheduled maintenance one of the keys to the success of the production program ran smoothly. There were a number of maintenance firsts during the year, most notably the change-out of the shearing machine magazine in one of the facilities of the UP3 plant a difficult operation carried out in a nuclear zone. AREVA la Hague also confirmed its status as an international benchmark for the treatment of special fuels, as illustrated by the success of the Australian ANSTO contract and by the renewal of the contract for the Belgian BR2 reactor. The site continued to invest heavily in safety and plant life extension, at the level of 100 million euros. /

28 In 2014, the AREVA Corporate Foundation sponsored 44 projects and monitored their execution. The projects were of benefit to disadvantaged populations, with children as a priority, in three areas: healthcare, education and culture. In addition to the 2/3 of its annual budget devoted to France, the AREVA Corporate Foundation took action in countries in which the group is based, especially South Africa, India, Mongolia and Niger. Each year, the group s employees actively participate in programs designed specifically for them: 10 projects were led by employees, some 20 volunteer missions were carried out in India and Africa, and several thousand employees took part in a sports and solidarity challenge at the group s sites. AREVA KEY FIGURES 2014 The Apprenti Bus program strengthens reading and writing skills for children aged 7 to 12. A fully-equipped schoolroom bus goes to the association s recreation centers in disadvantaged neighborhoods. Two teaching assistants help a group of 12 young people several times a week. The AREVA Corporate Foundation is providing support to 160 youths in 13 districts of the Lyon area for the school year