Business & Strategy overview Solutions for power generators and distributors
November 2006
Agenda
1. Group’s overview 2. Market trends for electrical sector 3. Strategy and objectives 4. Outlook
2
> Group Overview – November 2006
AREVA provides technological solutions for CO2-free power generation and Transmission & Distribution 2005 Sales by business
€6,9bn
N°1 worldwide in Nuclear
68%
2004 market value: €23bn
Geographic sales Other
7%
Asia
France
12% 33%
Market share: 30% 18%
€3,2bn
N°3 worldwide in T&D
32%
2005 market value: €42bn
Americas
30%
Market share: 8~9% ( vs ABB: 18~19%, Siemens ~13%)
X Breakdown of AREVA sales in 2005 (€10,125M)
3
> Group Overview – November 2006
Europe (Excl. France)
AREVA is ranked first worldwide in nuclear
Sales in the nuclear business in millions of euros X No.1 worldwide; No.1 in Europe and the US X No.1 in Plants / Fuel X No.1 in the Back End
7000
6000 2019 5000
4000
3000
3 270
X No. 3 worldwide X No. 2 in Plants / Fuel
330
1 322 2000
1328
1000 1 386
1 652
1 317
T
W
1 160
1 143
1 135
798
689
0
Areva
FAAE
West + Westinghouse + Toshiba Tosh
Front end (excl. fuel) 4
> Group Overview – November 2006
MHI
HITACHI HITCHI
USEC
GE Nuclear
URENCO
Reactors & Services + Fuel
431
292
CAMECO
AECL
Back end
AREVA is present on each segment in its businesses
Energy
Investments
ENRICHMENT CHEMISTRY
X STMicroelectronics*
(11% via holdings)
FUEL FABRICATION
X Eramet*
MINING
(26%)
REACTORS X SAFRAN
(7.4%)
* Consolidated at xx% RECYCLING MOX FUEL FABRICATION
X
34% in AREVA NP SERVICES
USED FUEL MANAGEMENT
OTHER SOURCES OF ELECTRIC POWER
TRANSMISSION DISTRIBUTION
5
> Group Overview – November 2006
2005 Key data by division
Current operating income by division €746M
Sales by division €10,125M Transmission & Distribution
Front-End
32%
Transmission & Distribution
Front-End
13%
26%
47% Back-End
19% Back-End
6
> Group Overview – November 2006
28%
23% Reactors & Services
12% Reactors & Services
Key financial data Sales
€10,125M (+3.7% like-for-like*)
Strong organic growth Current operating income
€746M / 7.4% of sales (+1.5% vs. 2004**)
Stable overall – Improvement in T&D Consolidated net income
€1,049M**** (+133% vs. 2004*)
Up significantly, due in particular to sale of FCI Free operating cash flow
€783M (stable vs. 2004*)
Stable at exceptionally high level Net debt
€268M (vs. €566M at 01.01.05)
Financial structure remains very strong Dividend proposed to AGM*** of May 2, 2006 Dividend up 2.9% compared with 2004
€9.87
Comparable exchange rates and consolidated group. ** Adjusted for FCI disposal *** Annual General Meeting of Shareholders **** Includes net income from the disposal of FCI in 2005 representing €528M
7
> Group Overview – November 2006
A strong balance sheet In billions of euros At 6/30/2006
Goodwill
2.2
Shareholders’ equity
6.5
Fixed assets
4.4 0.2
Minority interests
End-of-life-cycle assets
4.9
4.6
Provisions for end-of-life-cycle obligations
Shares of associates
1.4
2.5
Other provisions
Financial assets
2.4
0.9
Assets
= 15.3 =
WCR
Liabilities
Net debt* 0.588 incl. 1.08 for Siemens
** put
(*): Net debt = financial debt including interest-bearing advances + minority interest holders’ puts - HFT securities - fin. current account assets ** : Siemens 34% share in AREVA NP
8
> Group Overview – November 2006
Capital structure
CDC
4% CEA + FRENCH STATE + ERAP
EDF
87%
2%
o/w 15% Total in a CEA decommissioning fund
1% Investment Certificate Holders (free float)
4% Employees
2% 9
> Group Overview – November 2006
Agenda
1. Group’s overview 2. Market trends for electrical sector 3. Strategy and objectives 4. Outlook
10
> Group Overview – November 2006
Worldwide demand for electricity to double by 2030 Worldwide electric power generation (in TWh) gross TWh 35 000 30 000
AFRICA / MIDDLE EAST
1971-2004 : + 3.7% /year
25 000
2004 - 2030 : + 2.3% /year
20 000
ASIA / OCEANIA
15 000 NORTH / SOUTH AMERICA
10 000 5 000 0 1990
EUROPE
1995
2000
X 2004 – Worldwide distribution of electric power mix
2005
2010
Nuclear 16% Coal 39%
Renew. 19% Nat. Gas 19%
Oil 7%
2015
2020
> Group Overview – November 2006
2030
X $10,000bn Investments expected in the electricity sector
$5,600bn in the T&D sector $4,400bn in generation capacities
Sources: IEA-Energy Information (2006), IEA-World Energy Outlook (2004), WNA 2005
11
2025
Global warming: a serious long term challenge
CO2 Concentration in Ice Core Samples and Projections for Next 100 Years CO2 concentration in ice core sample and projection until 2100
700 Projected (2100)
Projection for 2100
650 600
Unit: CO2 (ppm/v) Vostok Record
550
IPCC IS92a Scenario Law Dome Record Mauna Loa Record
500 450 400
2002
Current (2001)
350
1958 1900
300 250 200 150
400,000
300,000
200,000
Years before 1950 Years Before Present
12
> Group Overview – November 2006
100,000
0
Nuclear power: a necessary part of the solution for power generation for 4 main reasons 1. 2.
Nuclear doesn’t release CO2:
Nuclear MWh cost split
no greenhouse effect
Operations & Maintenance
27%
Low price of generation and virtually immune to uranium price fluctuations
14% Fuel
60%
3.
Fossil resources are limited
4.
Energy self-sufficiency:
and uranium conventional resources are 200 times 2005 demand
o/w 6% for uranium
Investment & Decommisioning / spent fuel management
uranium is present in stable countries
Average MWh cost CO2 emission / MWh generated (in kg) for new plants (Europe) Nuclear (uranium @ 40$/lbU3O8)
€ 30
6
Hydropower Combined cycle gas (@ 6$/Mbtu) Wind Coal (@ 50$/ton CIF) Oil Solar
€ 30 € 45 € 50 € 40 € 100 > € 450
4 427 3 to 22 978 891 60 to 150
Sources: AREVA based upon EDF, Ampere Commission, Study for Finnish parliament, UK Royal Academy
13
> Group Overview – November 2006
See appendix 1
Priorities in Nuclear for next decades 1. Improve performances of the existing reactors 2. Extend life duration: e.g 44 of the 103 US reactors already licensed for 60 y Construction needed before 2030
3. Replace existing reactors: 30% of WW capacity 4. Increase the installed capacity:
120 GWe 30 - 360 GWe
WW nuclear installed capacity forecasts (GWe) + 90 %
800
740 700
640
600 500
524
400
418
390
+7%
300 200
2004
2010
WNA 2005 - high WNA 2005 - central
14
> Group Overview – November 2006
2015
2020
IAEA - high IAEA - low
2025
2030
US DOE-EIA - high US DOE – EIA - central
150 - 470 GWe (i.e. ~120 - 400 reactors)
Constant T&D market growth
Market size evolution
42
(in billion euros) 40 36
35
35
36
Average growth ~3-5%
+5%
Average growth 00-05: ~3,7%
2000
15
2001
2002
> Group Overview – November 2006
2003
2004
2005
Mid term Forecast
Agenda
1. Group’s overview 2. Market trends for electrical sector 3. Strategy and objectives 4. Outlook
16
> Group Overview – November 2006
25%
25%
20%
G BNFL, URENCO shareholder
25%
30%
25%
20%
20%
10%
SWUs ***
Natural Uranium fuel (UO2)
30%
6,800 t
20%
30%
OT HE R
41m
Ele ctr ic
Enrichment
5%
Ge ne ral
25%
Ru ss ie)
5% (1)
E(
20%
FA A
66,000 tU
FL /B N
Conversion/ Chemistry
BN
20%
T We osh sti iba ng ho / us e
AR EV A
5% (1)
UR
US EC *
EN CO
*
20%
CA
67,000 t
Mining / Natural Uranium**
FRONT END
ME CO
20 05 Ma rke t
*
AREVA is the only fully integrated player on the Nuclear value chain
10%
10%
BACK END
(Hitachi, MHI)
Reactors & Services
â‚Ź 11 b
30%
Reprocessing
1,550 t
70%
*
Recycling & MOX fuel
17
25% (2)
5%
5%
30% JNFL in 2008 (3) 19% (4)
80%
185 t
Publicly traded company
** Compared to 2004, uranium market decreased in 2005 due to the diminution of tails assay which had implied an increase of the enrichment market ***
10%
25%
SWU : Separative Work Unit
> Group Overview – November 2006
(1) (2) (3) (4)
1%
(Belgonuclear)
JNFL in 2014 (3)
USEC sells natural uranium and conversion services but has no production capacities In April 2005, the BNFL reprocessing plant has been stopped. An assessment of restart and non-restart options is still on-going. The JNFL reprocessing plant (800 t) and the Mox plant (130 t) should be in service in 2008 and 2014 respectively. The shutdown of Belgonuclear Mox plant in Dessel (Belgium) is planned for 2006
AREVA installed 26% of the worldwide existing generating capacity
MWe installed (nr of reactors)
120,000
AREVA (91)
100,000
(1) SIE (6)
ABB (9)
(15)
80,000
ABB (14)
60,000 (79)
40,000
Westinghouse
FRA
GE FAAE VVER
(69) (50)
20,000 BW
0
(7)
(53)
Toshiba*
Mitsubishi* (18)
(17) PWR
BWR
AECL Hitachi* Doosan* (12)
(31) (8)
PHWR
* Licensed by: Westinghouse to Mitsubishi and Doosan G.E. to Hitachi/Toshiba ** Following Framatome's purchase of the commercial reactors business from B&W at the end of the 1990s, AREVA may be considered as the preferred service partner for these reactors in the United States, although it is not liable as a constructor Source: AREVA
18
> Group Overview – November 2006
Front End division Key issues and priorities Sales – 2005 split
Strengths & issues X Nr 1 worldwide in the overall front-end X Integrated player: possible one-stop shopping for utilities X Hightly recurrent sales - >3 years backlog X Positive trend on market prices except fuel X Increase in electricity price could penalize margin in Enrichment
Key financials 2003* 2004**
2005**
Sales revenues
2,683 2,524
2,631
Operating income
316
370
374
% Sales
11.8%
14.7%
14.2%
340
106
197
* French Gaap ** IFRS
19%
Fuel* (*
42%
11% Chemistry
34% in AREVA NP)
28%
Enrichment
Strategic priorities
in millions of euros
Op. FCF before tax
Mining
X Double uranium production after 2010 and increase resources X Take advantage of price increase in our new mining contracts X Switch to uranium enrichment by centrifuge: €2.5bn capex over 2006-2018 X Flexibility of our fuel plants X Increase market shares in fuel in the US and Asia
19
> Group Overview – November 2006
Mining: production and exploration set to grow X Finland
Exploration
X Kazakhstan
Permit to be issued
Production
before summer 2006
Production set to increase sharply in 2006
Exploration program continues
X Canada Cigar Lake startup in 2007 Encouraging results in exploration (Shea Creek and Millenium)
Production (metric tons of U) 10,000 / 12,000 X Niger Increase in production capacity
~ 6,000
Production 2005 20
> Group Overview – November 2006
Production 2010
Enrichment: the GB-II program X AREVA anticipated the sharp increase of electricity cost
Decision to move to the centrifuge technology
JV with Urenco into ETC (closing july 3rd 2006)
Cash-out H2 2006: €400 millions X Construction of the GB-II modular plant
Startup in 2009, to reach 7.5 MSWU/year by 2018
GB-II plant: ramp up schedule
100% 80% 60% 40% 20% 0% 2009 2010 2012 2014 2016 2018
X Ultimate capacity based on market conditions X Resources to meet 2006-2012 commitments have been secured
21
> Group Overview – November 2006
CAPEX growing faster in the Front End since 2004 in millions of euros
~ 2.6 billions over the period
239 196 93
2002
22
> Group Overview – November 2006
126
2003
2004
2005
2006-2010E
Reactors & Services division Key issues and priorities Strengths & issues
Sales – 2005 split
X ~100 GW installed capacity WW – 25% total X 85% sales are recurring and 15% concern projects (new reactors and plant modification) X The only company to have Gen.III reactors under construction (Finland, France) X Some growing areas not open to AREVA (Japan, Korea, India, …)
IS Technicatome
Equipment*
2003* 2004**
2005**
Sales revenues
2,124
2,146
2,348
52
95
87
2.4%
4.4%
3.7%
82
228
Op. FCF before tax 145 * French Gaap ** IFRS
23
> Group Overview – November 2006
33%
10%
Reactors*
31% (*
Services*
34% in AREVA NP)
Strategic priorities
in millions of euros
% Sales
6% 7% 13%
Key financials
Operating income
Nuclear measures
X
Be a long term partner for utilities to optimize reactor performance
X
Reinforce our position of N°1 reactor designer Support the life extension of existing reactors (US, Europe, …) Market our EPR reactor Increase margins in recurring business (first Gen III dilute margin)
X
Growth in recurring business, with a strong increase in market share in the United States Sales revenue from recurring business (Plants / Services / Equipment) (in â‚ŹM)
Sales revenue from recurring business in the United States (in $M)
1,600 600
1, 400 1,200
500
1,000
400
800 300
600 200
400 100
200 0
0
2001
2002
Plants (recurring)
24
2003 Services
> Group Overview – November 2006
2004
2005 Equipment
2001
2002
2003
2004
2005
Plants: current projects and tenders Turnkey plants / Consortiums
Nuclear island
NSSS
Primary coolant loop
Total Capex for the utility - $ (base 100)
~ 55
~ 30
~ 10
2003: Contract 2005: Certification & License 2005: Preliminary design End of public debate Planning 2006-2012 Partnership Partenariat with avecConstellation: Constelation «"UNISTAR" UNISTAR » Licensing Certification process lancée started Startup Démarrage scheduled prévu before avant 2010 2010
Tender submitted in February 2005 for 4 EPR reactors Official decision expected
25
> Group Overview – November 2006
Contracts for duplication of the Ling Ao nuclear plant (2nd Generation)
Update on performance of the OL3 contract X Background First Generation III reactor under construction worldwide Only reactor involving safety authorities during the design phase Contract sets tight cost and schedule terms Specific requirements of the Finnish approval process: technical
documentation approval (customer) and detailed design approval (Safety Authority) as the work progresses
X Financial impact: the group recorded a significant provision in H1 2006 X Steps taken New project teams director Coordination of dedicated group resources under the direct authority of the Chief Operating Officer
Ongoing discussions with the customers to remedy current difficulties Strengthened support so that the suppliers can more quickly achieve the level of quality required for nuclear projects
26
> Group Overview – November 2006
Outlook for future EPR sales
X OL3 construction gives the group unique experience in the worldwide market for Generation III reactors X The group will supply the nuclear island and instrumentation & control systems for the Flamanville EPR X Unistar deployment: Constellation Energy has reserved production capacities for heavy equipment for the first US-EPR reactor X AREVA is actively negotiating with several other customers
27
> Group Overview – November 2006
Back End division Key issues and priorities Strengths & issues
Sales – 2005 split
X Nr 1 worldwide with >75% market share X Highly recurrent sales due to long term contracts: backlog runs through 2015 X More than 8,000 mt of spent fuel in La Hague waiting for reprocessing (i.e 8 y of production) X Main investments completed X Technology transfer through long term partnership: e.g Japan (Rokkasho Mura)
Key financials
28
2003* 2004**
2005**
Sales revenues
2,023 1,946
1,921
Operating income
155
231
208
% Sales
7.7%
11.8%
10.8%
Op. FCF before tax 509
603
332
> Group Overview – November 2006
Cleanup
4% 6%
Logistics
9%
81% TreatmentRecycling
Strategic priorities
in millions of euros
* French Gaap ** IFRS
Engineering
X Renew reprocessing and recycling contracts X Optimize industrial efficiency of the two main plants (La Hague and Melox) X Market closed-cycle technologies WW Manage the end of technology transfer with Japan Participate in the new US back-end policy Promote our Gen 3 integrated processing-recyclng plant concept
New US policy orientation early 2006, regarding used fuel management X Global Nuclear Energy Partnership announced at the beginning of 2006
Recycling is recognized as a sustainable solution that uses uranium resources more efficiently
International system proposed to increase non-proliferation guarantees through z
Nuclear fuel supply
z
Recycling of used fuel
X AREVA (leader), Washington Group International (WGI) and BWX Technologies Inc. (BWXT) respond to the US-DOE’s request for Expressions of Interest regarding:
Development and deployment of an integrated Treatment/Recycling plant Construction of an Advanced Burner Reactor (ABR)
29
> Group Overview – November 2006
T&D division Key issues and priorities Sales – 2005 split
Strengths & issues X A full fledged player: products & solutions for high and medium voltage technologies X A global sales force in over 100 countries X Focus on electrical utilities: N°2 WW
Services Automation & information
15%
X Strong presence in Europe: N°2 Systems
Strategic priorities
Key financials in millions of euros
2004*
2005*
Sales revenues
3,186
3,211
% Sales
Op. income Op. FCF before tax
39
103
1.2%
3.2%
(103)
(61)
(12)
116
* IFRS
30
> Group Overview – November 2006
38%
32%
X Lost momentum before acquisition by Areva in 2004
Current Op. inc.
Products
15%
X
X
Restore profitability up to the peers in 2007 Change the industrial footprint Optimize and refocus the product portfolio Reduce costs and make productivity efforts Increase our presence in growing areas Boost internal profitable growth Selective external growth
2004-2007 optimization plan is successful X Refocusing on core business completed in 2005 X Industrial restructuring in Europe (France, Germany, UK) completed X ~290 million euros in cumulative restructuring expenses through 6/30/2006
3,708 New orders
3,317
(in millions of euros)
3,162 5.0%
5.9%
2,933
Current operating income
3.2%
(in % of sales revenue)
1.0%
2002
2003
1.2% 2004
January 2004: Acquisition by AREVA 31
> Group Overview – November 2006
2005
H1 2006
Internal and external growth strategy X Acquisition of RITZ high voltage: AREVA becomes the world leader in instrument transformers
Xiamen
U.S.
EUROPE
X
32
Investment in capacity Germany France Turkey
> Group Overview – November 2006
INDIA
X
Ongoing investment in high-growth countries (China, India)
CHINA
X Construction of a new AREVA Switchgear Company plant in Xiamen (China) X Establishment of AREVA Xiamen Vacuum Interrupter Company, a vacuum circuit breaker manufacturing JV
Agenda
1. Group’s overview 2. Market trends for electrical sector 3. Strategy and objectives 4. Outlook
33
> Group Overview – November 2006
2006 outlook XSales revenue growth XOperating income close to the level reached in 2005 Despite significant impact of OL3 project Thanks to contribution from other activities, expected to increase
XSharply negative free operating cash flow before tax due to: Sharp increase in Capex scheduled for H2 2006 Use of customer advances
34
> Group Overview – November 2006
5 year objectives
X Reach market share representing one third of the world’s nuclear market, with double-digit margin X Acquire a significant position in CO2-free power generation X Be one of the most profitable leaders on the T&D market X Take advantage of opportunities
35
> Group Overview – November 2006
Appendix 1 Nuclear: a necessary part of the solution
How to provide energy to growing population?
es s
as
us ua l”
X Energy situation in 1850-2000-2100 (WEC 98)
“B us in
rio a en c s e g ra e Av n& o i t a servty n o C dari Soli
Source: World Energy Council 1998
37
> Group Overview – November 2006
Primary Energy sources 1990-2050 according to the World Energy Council Gtoe 30
25 25
20 20
14
15
10
9
5
0
1990
a1
Coal
*
a2
Oil
*
a3
Gas
*a: strong growth & increase of wealth and productivity b: medium trend c: priority to ecology
38
> Group Overview – November 2006
*
Bb
2050
*
Nuclear
c1
*
c2
*
H+New Source: Scenarii WEC-IIASA 1998
Favorable position of nuclear is confirmed by the life cycle analysis of energy sources by the World Energy Council, sydney 2004 Important decision-making criteria
Type of fuel burned Nuclear
Hydro
Wind
Sun
Coal
Oil
Gas
Biomass
Comptetitiveness (linket to direct energy costs)
F
M
M
M
F
F
U
U
Energy availability (security and reliability of supply)
F
M
M
M
F
F
U
U
Acceptability of energy (impacts on external environment)
U
U
M
F
F
F
F
F
X Relative rank based on selected decision-making criteria F
Favorable energy source
Medium/neutral M energy source
Unfavorable U energy source
Source: AREVA based on World Energy Council report of July 2004 “Comparison of Energy Systems Using Life Cycle Analysis
39
> Group Overview – November 2006
Nuclear is being considered as the most competitive source of electricity in base load, in competition with coal OECD 2005 Study - Mean levelised cost of electricity in base load (5% discounting) $2003/MWh
70
Inv
O&M
Fuel
60 50 40 30 20 10 0 N
C
G
Canada
40
N
C USA
G
N
C G
Czech Republic
> Group Overview – November 2006
N
C
G
Finland
N
C
G
France
N
C
G
Germany
N
C
G
N
C
G
N
C
G
N
C
G
The Slovak Switzerland Romania Netherlands Republic
N C Japan
G
N
C
G
South Korea
Projected cost of nuclear electricity in Europe is competitive with other baseload technologies Levelized electricity generation costs in four recent European studies (€/MWh) 45
Fuel
Taxes
Invest.
O&M
39.2 €/MWh* 45.1 €/MWh* if if coal @ gas @6$/MBtu 45$/ton CIF 35.8 €/MWh* 36.9 €/MWh* if uranium @ if gas @ 6$/MBtu 40$/lbU3O8 29.8 €/MWh* if uranium @ 40$/lbU3O8
R&D
40 35 30 25 20 15 10 5
Belgium 2000***
Finland 2000**
France 2003
Coal
CCGT
Nuclear
Coal
CCGT
Nuclear
Coal
CCGT
Nuclear
Coal
CCGT
Nuclear
0
UK 2004
* AREVA adjustments asserting realistic / present fossile resources prices ** Most recent values as of April 2001 prices by Tarjanne & Rissanen *** For Belgium, O&M costs are not separate from capital investment See next slides for assumptions
41
> Group Overview – November 2006
Recent European studies A. Nuclear power generation data
Study data
Belgium
Finland
France
UK
Ampere Commission (2000)
Lappeenranta University (2000)
DGEMP study (2003)
Royal Academy of Engineering (2004)
PWR 1,300 MW
PWR 1,250 MW
EPR (LWR) 1,600MWe series of 10
1,000 MW
Reactor Efficiency Invest. Overnight
33%
35%
36.1%
n.a
€1,686/kWe incl. IDC
€1,749/kWe incl. IDC
€1,413/kWe without IDC
€1,730/kWe without IDC
Lead time
-
5 years
5 years
5 years
Load factor
85%
91%
90.3%
n.a
Service life
40 years
40 years
60 years
40 years
5%
7%
8%
7.5%
€9.40 (2010) to €11.50 (2030)/kWhe
€3/MWhe
€4.40/MWhe based on $20/lb U3O8
€5/MWhe
-
€26.20/kW/yr + €3.40/MWh
€5.09/kW/year + €0.61/MWh
€61.50/kW/year
Discount rate Fuel cost O&M 42
> Group Overview – November 2006
Recent European studies B. CCGT power generation data Belgium
Finland
France
UK
Ampere Commission (2000)
Lappeenranta University (2002)
DGEMP study (2003)
Royal Academy of Engineering (2004)
Capacity
460 MW
400 MW
900 MWe
786 MW
Efficiency Invest. Overnight
55-65%
55%
59.1%
60%
€496/kWe
€572/kWe incl. IDC
€505/kWe
€450/kWe
Study data
Lead time Load factor
-
-
2 years
2 years
85.5%
91%
94.9%
n.d.
Service life
20 years
25 years
25 years
25 years
5%
7%
8%
7.5%
€3.50 (2010) to €6/GJ (2030)
€3/GJ
€3.10 to 3.30 (long term)/GJ
-
€8.58/kW/year + €0.30/MWh
€3.30 (reference) to $3.60/MBtu €18.20/kW/year + €3.05/MWh
Discount rate Gas price O&M 43
> Group Overview – November 2006
37.5 €/kW/year
Recent European studies C. Pulverized coal power generation data Belgium
Finland
France
UK
Ampere Commission (2000)
Lappeenranta University (2002)
DGEMP study (2003)
Royal Academy of Engineering (2004)
300 MW
500 MW
2x900 MW
1,600 MW
43%
41%
46-47%
40%
€1,165/kWe
€814/kWe incl. IDC
€1,100/kWe
€1,290/kWe
-
-
3 years
4 years
Load factor
84%
91%
90.2%
n.d.
Service life
30 years
25 years
35 years
30 years
5%
7%
8%
7.5%
€1.80/GJ
€1.17/GJ
$30 to 35/MT CIF ARA
€2.10/GJ
-
€16.30/kW/yr + €5/MWh
€26/kW/year + €2.30/MWh
€36/kW/year
Study data
Capacity Efficiency Invest. Overnight Lead time
Discount rate Coal price O&M 44
> Group Overview – November 2006
Nuclear power is a recent source of energy Production increases faster than installed capacity Worldwide nuclear power generation (in TWh) Gross TWh SOUTH AFRICA
3 000
% of WW 2005 generation 0.5%
2 500
ASIA / OCEANIA
19.9%
2 000 1 500
N / S AMERICA
34.1%
1 000 500 0 1960
1965
1970
1975
∆ 89/05
1980
1985
Production
+42%
+2.2%
Capacity
+21%
+1.2%
> Group Overview – November 2006
1990
1989–2005 CAGR
Sources: IEA/OCDE (1990), Nucleonics Week (1995-2005)
45
45.6%
EUROPE
1995
2000
2005
15% of the world’s electricity generation in 2005 (~18,340 TWh)
Improve existing reactor performance X Capacity factor of main nuclear contries (in %) % 95
USA
85
WORLD
75
FRANCE
65
JAPAN
46
> Group Overview – November 2006
20 00 20 01 20 02 20 03 20 04 20 05
19 98
19 96
19 94
19 92
19 90
19 88
55
Improved security of supply with Uranium X Developed countries and China depend largely on oil & gas supplied from unstable areas Kazakhstan: 13% in 2025 Russia 11% 8%
North America 22% 8%
13% 30%
Ousbékistan
27%
Mexico
Algéria 5%
Vénézuela
3%
5%
Middle East
China 4%
5%
Niger 6% 21%
4%
Indonesia 3%
Other Namibia 15%
Australia
8%
40%
42% Sources: Areva, IEA
47
> Group Overview – November 2006
70% of oil reserves and 40% of gas reserves
20%
Key areas of production (in % of global production) Uranium Oil Gas
Conventional fissile resources represent more than 200 years of 2006 world demand CATEGORY of Uranium resources (million tons = Mt) Conventional Identified (deposits) Undiscovered Cost of recovery $/kgU
Reasonably Assured Resources
Inferred Resources 1
Prognosticated Resources 2
Speculative Resources 3
< 40
1.95
0.80
40 to 80
0.70
0.36
80 to 130
0.65
0.29
0.82
> 130
-
-
?
2.9
Subtotal
3.30
1.45
2.52
7.5
General total
1.7 4.6
4.75
10.0
14,750 000 t World demand in 2006: less than 70,000 t Resources: > 200 times 2006 demand
General total of conventional resources:
+ With Gen IV Fast Breeder Reactor, resources are virtually unlimited Source: Nuclear Energy Agency "Uranium 2005: Resources, Production and Demand"
48
> Group Overview – November 2006
1 Based on direct geological evidence 2 Based on indirect geological evidence 3 Extrapolated values
Unconventional 15 to 25
Nuclear saves about 20% CO2 emission in Power generation, and 10% of WW overall emissions CO2 emission by energy source (Source: WEC, July 2004)
tonnes CO2eq/GWhel
1200
1,062 766
1000
774 800 600
398
400 200
5
3
7 W in d
N uc le ar
hy dr o
G T C C
fu el
lig ni te
co al
0
Source: World Energy Council / entire life cycle analysis, Special report July 2004 (lowest values)
Electricity Mix
Nuc 16%
Worldwide CO2 emissions in 2004 (M t CO2) Other 2%
Hydro 16% Oil 7%
Coal 40%
Nat. Gas 20%
Source: IAE Key World Energy Statistics 2006
49
> Group Overview – November 2006
24% CO2 saving Source: IAE 2004 outlook & Key World Energy Statistics 2006
2,460 Avoided 10,363
Power Generation * including aviation CO2 emission & marine bunkers
2,460 Avoided
26,583* Total CO2 emissions
Nuclear has internalized most of its costs and generated few external costs for the environment Total cost in €/MWh*
100 90 80 70 60 50 40 30 20 10 0
Indirect external costs: ` Impact on climate (CO2)
87
` Impact on health ` Impact on the environment 55
51 1
50
47
19
14
4
50 32
Coal
Wind
31
33
Gas
Biomass
External costs * Production costs (source: Finnish study) * Source “EXTERNE” study, EC 2001, calculating the indirect costs (impact on climate, health or physical impact) of different power generation sources
50
> Group Overview – November 2006
28 24 Nuclear
Nuclear generating cost per MWh for the EPR
Generating cost per MWh of the EPR Operations and maintenance Front end 54%
* For a uranium concentrate price around $40 / lbU3O8
> Group Overview – November 2006
32%
Enrichment
13%
Amortization & depreciation
51
DesignFabrication
27% 6%
Back end
11%
Conversion
3%
49%
Natural uranium*
Appendix 2 Situation regarding nuclear in the various regions
The nuclear power fleet: 444 plants in operation in 2005 and several tens in construction or planned, mainly in Asia 134
70 1
1
0
5
16
5
Western Europe CEI & Eastern Europe 91 130
30 6 1
1
13
North & South America
17
10
29 2
Asia
29 2
0
1
India & Pakistan
Africa
In operation
53
> Group Overview – November 2006
Under construction
Planned
Considered
25
Installed capacity in main countries Gross capacity (GWe)
Gross generation (TWh)
2005
2004
2005
2004
France* Germany Russia United Kingdom** Ukraine Sweden Spain Belgium Finland Other
65.9 21.4 23.2 12.8 13.9 9.2 7.9 6.1 2.8 18.1
65.6 21.4 23.2 12.8 13.9 9.8 7.9 6.1 2.9 18.0
450.6 162.1 146.8 82.0 88.8 70.5 57.5 47.6 23.3 127.3
447.6 167.1 142.9 82.7 85.4 77.3 63.7 47.3 22.7 130.0
TOTAL
181.2
181.6
1,256.5
1,266.5
* Excluding Phoenix, considered a research reactor. ** 2005 data unavailable for British Energy. Data based on 2004 production. Source: Nucleonics Week, February 2006, restated by AREVA.
Gross capacity (GWe)
Canada United States Mexico Brazil Argentina TOTAL
Gross generation (TWh)
2005
2004
2005
2004
15.0 105.7 1.4 2.0 1.0
16.1 102.6 1.5 2.0 1.0
92.5 817.9 10.8 9.8 6.9
91 822.6 9.2 11.5 8.2
125
123.2
937.8
942.6
Source: Nucleonics Week, February 2006, restated by AREVA.
Gross capacity (GWe)
Gross generation (TWh)
2005
2004
2005
2004
Japan China India South Korea Taiwan Pakistan
48.9 7.0 3.3 17.7 5.1 0.5
47.4 7.0 2.7 17.7 5.1 0.5
287.9 53.1 17.6 145.6 40.0 2.6
282.0 49.6 16.9 129.6 39.5 2.1
TOTAL
83.5
80.4
546.8
519.6
Source: Nucleonics Week, February 2006, restated by AREVA.
54
> Group Overview – November 2006
Electricity prices increased by more than 100% over 3 years in Europe and US Evolution of electricity prices
Source : Platts
55
> Group Overview – November 2006
The generation capacities in developed countries will need to be replaced
Installed capcity (GWe)
X More than 500 GWe to be constructed before 2030 450
Shutdown profile of thermal capacities presently under operation in EU 15
400
Sources: EDF, EURELECTRIC
350
Other Oil Gas Coal Lignite Nuclear
300 250 200 150 100 50 0
2010
2020
2030
2040
Num ber of units
X An ageing coal based fleet in the USA 1000 800 600
Coal Gas Nuclear
20 y 38 y 28 y
400 200
13 y 28 y
19 y
0 100-499 MW
Source PowerDAT – June 2004
56
14 y 27 y
> Group Overview – November 2006
500-999 MW
Fleet's average age (per class of capacity)
>1000 MW
The nuclear market: 444 reactors under operation in 2005, i.e 392 GWe of installed capacity across 31 countries X 125 GWe – 130 reactors
X 181 GWe – 204 reactors
X 938 TWh by nuke in 2005
X 1,256 TWh by nuke in 2005
X % in the mix: 18%
X % in the mix: 25%
FSU & Eastern Europe Americas X
X
57
Western Europe
X 84 GWe – 108 reactors X 547 TWh by nuke in 2005
Canada: Ontario energy plan, June 2006 – Revamping of Pickering and Darlington – New reactor construction – Nuclear power must be the main component of the energy mix by 2025
X % in the mix: 9%
United States: 16 COL applications contemplated (or being prepared) to build at least 24 reactors. Back end of the cycle: GNEP program lauched
X
Argentina: The government provides details of its nuclear investment program: complete Atucha II, extend the operating life of Embaise and feasibility study for a 4th reactor
X
Mexico: the Deputy Secretary for Electricity announces that a call for tender for a new reactor could be issued in 2008
X
Brazil: The Minister of Science and Technology announces that Angra III would be completed and that the country will build up to 7 more reactors > Group Overview – November 2006
Asia-Pacific
Africa X 2 reactors in South Africa X % in the RSA mix: 6% X 5,000 to 10,000 MWe needed by 2010
Americans Are Becoming More Favorable to Nuclear Energy
Source: NEI
58
> Group Overview – November 2006
The nuclear market: 444 reactors under operation in 2005, i.e 392 GWe of installed capacity across 31 countries X 181 GWe – 204 reactors X 1,256 TWh by nuke in 2005 X % in the mix: 25%
FSU & Eastern Europe
Western Europe X UK: Energy Review is complete – Strategic role of nuclear power confirmed. Government proposals expected in November 2006 X France: EDF begins construction of Flamanville 3 EPR X Portugal: Prime Minister Jose Socrates requests a national debate on nuclear power X Russia: Rosatom Chairman S. Kirienko sets a goal of building 42 to 58 reactors by 2030. Rosenergoatom plans to start construction of 7 reactors in 2007 X Baltic States: Multilateral agreement in February to build a reactor in Lituania X Turkey: Declaration of intent for 3 reactors by 2011
59
> Group Overview – November 2006
The nuclear market: 444 reactors under operation in 2005, i.e 392 GWe of installed capacity across 31 countries X 125 GWe – 130 reactors
X 181 GWe – 204 reactors
X 938 TWh by nuke in 2005
X 1,256 TWh by nuke in 2005
X % in the mix: 18%
X % in the mix: 25%
FSU & Eastern Europe
Western Europe
X 84 GWe – 108 reactors X 547 TWh by nuke in 2005 X % in the mix: 9%
Americas Asia-Pacific X South Africa: Decision to build 5,000 to 10,000 MW of nuclear power capacity X China: project to duplicate two Ling Ao type Gen II reactors is launched X India: Signature of treaty with the United States / progress in bilateral discussions with France X Vietnam: Feasibility study expected in 2008 for later selection of a nuclear reactor supplier X Australia: Australian Nuclear Review is launched – Report expected by the end of 2006 60
> Group Overview – November 2006
Nuclear acceptability 2005 poll X Support to nuclear generation
No answer
None of following answers Use existing capacities but don’t build new ones
2% 12% 34% Nuclear is a safe technology: build new reactors
28% 25% Nuclear is dangerous, close all the plants
Source: AIEA, oct 2005, Global Public Opinion on nuclear issues
61
> Group Overview – November 2006
Appendix 3 Front End business details
Uranium: secondary resources will dwindle in the middle term X Consumption of Market Economy World World supply and demand
Supply: Demand:
63
> Group Overview – November 2006
Fresh production HEU
Recycling Inventory drawdown
Uranium: secondary resources will dwindle in the middle term X Consumption of Market Economy World World supply and demand Recent trend in uranium spot price indices (USD) 60
50
40
30
20
10 janv-03
juil-03
janv-04
juil-04
Spot USD Source: TradeTech.
64
> Group Overview – November 2006
janv-05
juil-05
LT USD
janv-06
juil-06
Uranium spot prices increasing, still low impact on our long term contracts revenues X Visible price pressures: + 78% in 2005 after + 42% in 2004
Highest: ~$40/lb U3O8 (1978) Lowest: ~$ 5/lb U3O8 (1971) End of September 2006: $ 53 lb U3O8 X Partial effects starting 2005 sales due to long term contracts X The Group’s total mineral resources in the ground thus come to nearly 330,000 MT of uranium. Reserves remained almost stable at approximately 140,500 MT. $120
US$/lb U3O8
$100 $80 $60 $40 $20 $0 69
71
73
75
77
79
81
83
85
87
89
91
93
95
So urce: 1969-1986 Nuexco Exchange Value, 1987-P resent Ux U3O8 P rice.
Source: The Ux Consulting Company, LLC.
65
> Group Overview – November 2006
97
99
01
03
05
Front end: in mining, the top three players represent 50% of world production X Worldwide natural uranium production in 2005 [in metric tons of uranium] 8,239
3,300
3,697
12,600 950
38
North America Uzbékistan
108
Kazakhstan
2,281
AREVA CAMECO
3,148
Niger
RIO TINTO BHP BILITON
Namibia
RTZ-CRA
KAZATOMPROM
33,550 510
5,006 4 290
Others: 5,930 t
Australia
NAVOI 5,930
TVEL OTHERS
6,019
3,300
Total: 42,000 MTU
2,600
8,347
4,100 3,148
66
4,100
Russia
> Group Overview – November 2006
3,550
5,006
Mining: sensivity to market price will be more significant after 2008 Backlog Total: 53 000 metric tons
X Backlog at 12/31/05: 5 years of sales X Sensitivity to market price (assuming no change in volume vs. 2005) Deliveries 2006-2008 Exposure to market price after 2005
< 40%
Deliveries after 2008
12 000 MT
2006
2007
2008
> 2009
> 60%
X Increase in the cost of resources is expected X Uranium provides significant marketing leverage
Growing cross-fertilization between the various components of the fuel cycle More than one third of all new orders in 2004-2005 involve at least two components 67
> Group Overview – November 2006
Front End: in uranium Enrichment, AREVA meets 25% of the worldwide growing demand Demand: ~40 million SWU Worldwide capacity: ~40 million SWU kSWU 45,000
+ ~5 million SWU
Other
40,000
Asia
35,000 30,000
North America
25,000
CEEC* - not eligible for EU
20,000
CEEC* eligible for EU memb.
15,000
Other Western Europe and South Africa
10,000 5,000
France
0 2000
2005 Start of production at GB II plant
2010
2015 Possible shut down of GB I plant
Average growth exceeds 0.5% / year 68
> Group Overview – November 2006
2020
* Central and Eastern European Countries
Enrichment Construction of Georges Besse II has begun ETC closing on July 3, 2006
BNFL 33%
NL Gov’t. 33%
URENCO
RWE +E.on 33%
50%
ETC (JV) R&D and Technology
50%
(Holding)
Centrifuge design and manufacturing UEC - URENCO Enrichment
SET - GBII Enrichment
Cash-out: ~€400M in H2 2006 (operating cash flow) 69
> Group Overview – November 2006
Enrichment: resources to meet 2006-2012 commitments have been secured Enrichment in 2005 (in millions of SWU)
For 50% of the sales (EDF, Suez)
To inventory Other export customers Production with pass-through power supply (EDF, Suez)
~5
X Processing contracts
~12
electricity is provided by the customer on a pass-through basis
X Other enrichment services
Negotiations under way regarding
~5
the price of energy after 2005
The Group has secured resources Sales
Resources
to meet delivery commitments in 2006-2012
X The GB-II plant is scheduled to begin production in 2009 X 40% of the world’s enrichment capacity uses the gaseous diffusion process, where electricity represent 60% of the production cost. Therefore, the SWU price could become more sensitive to electricity price 70
> Group Overview – November 2006
Georges Besse I Æ Georges Besse II A transparent transition for customers Transition Management Inventories constitution EURODIF (GB I) stopping Start and GBII production increase
GB I
2007 71
2008
GB II
2009
> Group Overview – November 2006
2010
2011
2012
2013
2014
2015
2016
Années
Fuel: in 2005, almost 45% of all PWR and BWR reactors in operation worldwide were fueled by AREVA
Number of reactors fueled by AREVA X Europe Decrease due to the opening of the French market 96
93
83
X North & South America Strong growth in the US
X Asia Gradual penetration
over a five-year period
Backlog for 2010 already covers 32 reactors 22
2001
2005
2010E
43
28
2005
2010E
2
2
2
2001
2005
2010E
Potential market: 108 reactors Potential market: 2 reactors
Sources: IAEA and WNA, as of December 2005
72
11
14
15
2001
2005
2010E
Potential market: 111 reactors
X Africa 2001
in Asia, where the market is protected
> Group Overview – November 2006
Potential market: 86 reactors
Appendix 4 Reactors & Services business details
Reactors and Services is mostly a recurring business % of 2005 sales X Servicing and operation of existing reactors Large equipment replacement (vessel inspections, steam generators, etc.)
On-site maintenance services Open-ended engineering services
Prospects f Service life extension
Recurring business > 85% of sales
Dismantling services
for installed baseload in the US f Business development in U.S.
and Asia f Strong European market share f Development of innovative
contracting mechanisms such as “allliancing”
f Near term: EPR construction
X Reactor life extension Design, safety analysis and construction of new reactors and first reload
Completion of reactor construction to western safety standards (e.g. Russian-designed VVER)
Uprating, upgrading and life extension
74
> Group Overview – November 2006
Non-recurring business < 15% of sales
in Finland (signed), first EPR in France, construction of Angra 3 in Brazil, involvement in Chinese nuclear power program f Long term (start of next
decade): new construction likely in US (Bush plan), possible in Europe (replacement reactors starting in 2015), others
NPPs O&M costs in the US and Europe amount at 1 – 1,3 c$ / kWh today
Operating cost (including fuel)
Operating Costs (O&M + Fuel) in France and the USA USc/kWh US
EDF
3,5 3,25 3 2,75 2,5 2,25 2 1,75 1,5 1,25 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002
Année Year
X Operating costs in 2002: 1.7 c$/kWh in the US and 1.4 c$/kWh in France, of which:
0.4 c$/kWh for fuel 1.3 c$/kWh in the US and 1.0 c$-c€/kWh in France for pure O&M Source: Nuclear Engineering International – december 2004 / AREVA – US dollar de 2001, 1 $ = 0,94 €
75
> Group Overview – November 2006
O&M recurring expenses should remain stable and high Annual expenses 1998-2007
9
Forecast Billion US$
US: around $8.5-9.0bn for a production in the range of 750 bn kWh / y
8
7
~0,4€ cents/kWh Operating Training Logisitcs ...
6 1998
Trend in O&M expenses By the US nuclear utlities
1999
2000
2001
2002
2003
2004
2005
2006
Year
40%
~0,6€ cents/kWh
Maintenance
76
60%
> Group Overview – November 2006
Europe: maintenance, repare, spare parts replacement, recurring engineering and upgrade Est. €40-45 M/y for a typical 1 000 MW PWR
2007
A significant share of O&M expenses are outsourced by the utilities Full Time Equivalent workforce internal + external for 1,000 MWe installed
900 800 700 600 500 400 300 200 100 0 EDF
US (Navigant Consult.)
FTE Internal
US (Duke estimate)
FTE External
The trend should amplify in the coming years Source: Nuclear Engineering International – december 2004 / AREVA
77
> Group Overview – November 2006
Main components of PWR coolant system
5 1 Reactor vessel
2 Control rod drive mechanisms 3 3 Steam generator 2 4 Reactor coolant pump
5 Pressurizer
4
1
78
> Group Overview – November 2006
PWR steam generator
Design
Commissioning
FUNCTIONS X to transfer heat and ensure leak-tightness
between the primary (P) and secondary (S) circuits DUTY X mechanical effects of the circulating P
and S flows X chemical effects of the P and S fluids X nominal and transient temperatures and pressures on P and S sides MATERIALS X nickel-based alloy (tubes),
low internal alloy carbon steel (structures) with a stainless steel layer the water chamber (P side) DIMENSIONS & WEIGHT: X height: 20 to 22 meters
Heat transfer surface: 4,700 to 7,000 square meters 79
> Group Overview – November 2006
X diameter: 3.5 to 5 meters X weight (empty): 300 to 420 metric tons
Chalon plant (Equipment): successful globalization Chalon plant - Total load baseline 100 in 2005
New capacity placed in service 120 100 100
80
60
40
20
0 2001
2002
2003
EDF 80
> Group Overview – November 2006
2004
Exports
2005 2005
2006E
The EPR: increased power and safety - extended life expectancy over the most recently built reactors
N4
Thermal Power
MW
4500
4250
Electrical Power
MW
1650
1450
%
36.8
34
Number of fuel assemblies
241
205
Limitation of severe accidents consequences
++
+
Redundancy factor
4
2
Thermal Efficiency
Average burnup of reloads
GWd/t
>60
45*
Service lifetime
years
60
40
* Maximum burnup rate currently allowed by the French safety authority 81
EPR
> Group Overview – November 2006
Plants: Call for Tenders – Who does what?
NUCLEAR ISLAND [~55% of the price] AREVA
CONVENTIONAL ISLAND
Incl. NSSS
[~20% of the price]
[30% of the price]
Alstom, GE, MHI, Siemens, Toshiba
Control systems [~ 3%] Æ Safety nuclear : AREVA Æ Operating systems: Alstom/Atos, MHI, Siemens, Westinghouse 82
> Group Overview – November 2006
ADDITIONAL CONSTRUCTION [ ~25% of the price]
More than 50,000 MWe installed is over 30 years More than 110,000 MWe is over 25 years
35 000
400 000
30 000
350 000 300 000
25 000
250 000 20 000 200 000 15 000 150 000 10 000
100 000
5 000
50 000
0
0 1
6
11
16
21
26
31
Age (in years)
A need for re-investments in the existing fleet Source: AIEA / PRIS – October 2006
83
> Group Overview – November 2006
36
41
Cumulated installed capacity (MWe)
Installed capacity (MWe)
Pyramid of ages – WW nuclear fleet (October 2006 update)
Heavy re-investments in existing US reactors Up to $300M for a typical 850 MWe PWR X Oconee 1, 2 & 3
PWR 850 MWe Commissioned: july 1973 Æ december 1974 Re-investment: $1bn over 2001-2006 z
Replacement of Vessel Heads and Steam Generators
z
Instrumentation & Control upgrade
X Calvert Cliffs 1&2
PWR 850 MWe Commissioned: may 1975 - april 1977 Re-investiment: $600M over 2001-2006
84
z
Replacement of Vessel Heads and Steam Generators
z
Instrumentation & Control upgrade
> Group Overview – November 2006
EDF nuclear plant scenario starting in 2020 Renewal over 30 years (2020-2050) Construction of about 2,000 MW/year MWe installed 70,000
60,000
Life extension past 40 years
50,000
40,000
Generation 4
30,000
Current Nuclear Fleet with 40-year service life
20,000
Generation 3 +
10,000
0 1975
Years 1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
Average plant life: 48 years Source: EDF
85
> Group Overview – November 2006
2030
2035
2040
2045
2050
2055
2060
Generation 3+: EPR
AREVA and Constellation have joined forces for a new US economic model in nuclear capacities construction
www.unistarnuclear.com
X May 2005: EPR licensing process launched in the US w/ customers support X August 2005: President Bush signs the Energy Bill: incentives for the first 6 nuclear GWe installed X September 2005: AREVA and Constellation form UniStar Nuclear to market at least 4 EPRs in the United States Marketing, technical and financial resources are pooled for the creation of JVs, which are open to other commercial and financial partners
JVs, operated by Constellation, will be in charge of licensing, constructing and operating the reactors
AREVA will supply the nuclear island, the control systems and the first reactor core to the JVs
Bechtel will support the project with its architect-engineer expertise X August 2006: AREVA signs an agreement with Constellation Energy to reserve capacity for the supply of heavy components for the first USEPR reactor 86
> Group Overview – November 2006
Gen IV - Towards a fully used nuclear system? Present Generation Of Nuclear Reactors
Next Generation Of Nuclear Systems - Gen IV
Enhancement of Nuclear Heat Utilization
Loss
Hydrogen Production
87
Light Water Reactor
High Temperature Gas-cooled Reactor
Steam Temperature:~300°C -Steam Cycle-
Gaz Temperature:~1000°C -Cogeneration-
> Group Overview – November 2006
Appendix 5 Back End business details
Back End market combines reprocessing, final disposal and “wait-and-see” solutions mt of heavy metal/year
X Difference in costs between closed and open cycles is impactless on the kWh cost
2,500
RUSSIA CHINA UK
OTHERS
X Back-end cost represent less than 6% of the overall nuclear kWh cost
2,000
JAPAN
1,500
USA (to date)
X When choosing the closed cycle:
96% of the materials
FORMER EASTERN BLOCK COUNTRIES
ASIA
1,000 SPAIN SWITZ.
can be recycled
wastes volumes are divided
FRANCE
BELGIUM
500
by a factor 4 to 5
Radio-toxicity of long term wastes is reduced by a factor 10
89
> Group Overview – November 2006
AREVA customers
GERMANY
0
SWEDEN FINLAND
Final Reprocessing Mixed solutions Disposal Recycling (closed cycle) (Open cycle)
The closed and open cycles are similar in price, in a back-end that represents less than 6% of the overall nuclear kWh cost Cost* (€ct/kWh)
Closed cycle
Spent Fuel Transp.
0.015
0.015 0.047
Spent Fuel Storage Reprocessing / Vitrif.
Open cycle
0.183
Spent Fuel condit..
0.106
Disposal of wastes
0.017
End-of –cycle Subtotal
0.215
0.168
Uranium credit
(0.027)
Plutonium credit
(0.011)
Materials Credit Subtotal
(0.038)
0
Total cost
0.177
0.168
% of a 3 €ct/kWh generation cost (typical nuclear)
5.9%
5.6%
X The rising cost of Uranium is in favour of the closed cycle * Source: OECD - April 1994 converted to € - discount rate 0%
90
> Group Overview – November 2006
120,000 mt of spent nuclear fuel are stored worldwide 7,200 mt are unloaded in addition yearly
US
EUROPE
Far East Annual discharge
2,500 mt/y
2,500 mt/y
2,200 mt/y
7,200 mt/y Stored quantity
50,000 mt
35,000 mt
35,000 mt
120,000 t as of 31/12/2003
Estimated global spent fuel management cost €0,5 to 1 M/mt
€1,615M €118M
91
> Group Overview – November 2006
inc. €1,104M in France
€187M
Back end division 2005 sales
In Back End, AREVA is the specialist of spent fuel management X Considerable barriers to entry for reprocessing-recycling:
Technical and technological know-how:
Areva is number one in terms of operating experience Regulations Capital requirements
X AREVA is Nr 1 worldwide in terms of effective production Effective reprocessing capacity for light water reactors spent fuel 1,700 mt / y
Cumulative effective production, as of dec. 2004 ~20,000 mt
900 mt / y 800 mt / y Max. 400 mt / y
5,800 mt 3,700 mt 1,600 mt
AREVA COGEMA - La Hague
BNFL / Sellafield
Minatom / Chelyabinsk
Japon / Rokkasho Mura (starting 2006)
Technology transfer Source: AREVA, World Nuclear Association
92
> Group Overview – November 2006
AREVA
BNFL
Minatom
Other
Up today, AREVA reprocessed 67% of the spent fuel worldwide, i.e 19,400 mt out of 28,900 mt
Key events in the Back End business (2005 & H1 2006) 1° The Boston Cinsulting Group confirms the sound economics of the closed cycle 2°Industrials respond to the US DOE’s request for E.O.I.
Success Success of of EUROFAB EUROFAB –– MOX MOX fuel fuel loaded loaded at at Catawba Catawba
Germany discontinues shipment of used fuel to Treatment-Recycling plants
Request for Tender in Italy to recycle 235 metric tons of used fuel
New law on radioactive waste management was adopted 1° Phase II of hot testing begins at the Rokkasho Mura fuel treatment plant 2° Two new contracts / L.O.I to supply MOX fuel for delivery until 2020 93
> Group Overview – November 2006
Appendix 6 T&D business details
AREVA T&D in the race Europe
12
23% ABB 19% Siemens 13% Areva T&D
Asia Pacific Americas
9
16% ABB 10% Siemens 5% Areva T&D
Africa M.East
7
15
13% ABB 9% Siemens 6% Areva T&D
23% ABB 16% Siemens 14% Areva T&D
X WW market share 2005 Areva: 9%
42
Siemens: 14%
Market size in 2005, €bn ABB: 19% Other: 58% Note: Regional Market share estimates based on orders repartition Sources: ABB, Siemens, Areva announcements; Strategic Marketing
95
> Group Overview – November 2006
Products and Systems keep the main T&D segments €42bn Gross market sizes (i.e. including pull-through)
X Automation
Automation
CAGR +4.2%* (2005-2008)
€4 bn
Boosted by Deregulation and Grid numeration
Services €7bn
X Services CAGR +0.8%
Systems €13bn
X Systems o/w €5bn product
CAGR +0.5% Market growth led Power Electronics. Products
Pull through Products to system
€23bn
X Products: CAGR +1.7% Market pulled by HV and MV Switchgears
T&D global market 2005 E Source: AREVA estimates
96
> Group Overview – November 2006
Global dynamic market trends mainly in Asia and Middle East Afr.&M.East 16%
Asia Pacific 35%
X Near & Middle is one of the most attractive market in the world X India is expected to be the fastest growing market for the coming years X China still shows good perspective
Americas 21%
X US: Energy Bill 2005 should drive major investments in the grid X Brazil: development and upgrade of the power grids X Russia and Central Europe: Strong market potential due to replacement and dynamic economic growth
Europe 28%
X Europe: interconnection development and Renewable Energies T&D global market 2005 E Source: AREVA estimates
97
> Group Overview – November 2006
AREVA T&D: a Utility focused company X Market breakdown by Customers AREVA T&D’s Customer base
Global T&D market 40% Industry Companies T D
60% Utilities
T
D
X Industry Companies Oil & Gas, Chemicals Mining & Metals Passenger Transportation Others X Utilities Integrated utilities Transcos Discos Generators
25% Industry Companies
75% Utilities
AREVA T&D is #2 in the utility market Source: AREVA estimates
98
> Group Overview – November 2006
Sourcing
X Sourcing represents 53% of our sales X Levers to improve sourcing costs
Globalisation
20%
Labor Low Cost Country sourcing 5%
45%
8%
Redesign to cost 22%
99
Make or buy
> Group Overview – November 2006
Other
Industrial footprint: too European but a new balance AREVA T&D Sales by Origin 2005
2003 Asia Pacific
2005 Market Volume
Americas
Asia Pacific
Americas
Asia Pacific
Americas
12% 12%
16%
20%
15%
35%
21%
19% 72%
46% Africa & Middle East
Europe
16% Africa & Middle East
Europe
46% of our 2005 sales manufactured in Europe vs 72% in 2003 Note: AREVA estimates
100
> Group Overview – November 2006
28% Europe
Reposition AREVA T&D in growing areas‌ in sync with the market Market growth estimate per year 2005 - mid-term + 12%
+ 9%
+ 9%
China
Russia
+ 2.4% + 0.9% - 1.1%
France
Germany
Note: AREVA estimates
101
> Group Overview – November 2006
U.K.
India
Increased CAPEX in targeted regions CHINA
Capex 2006-2007: ~ €200M WESTERN EUROPE
Shanghai MEXICO
Villeurbanne
Suzhou Xiamen
BRAZIL Gebze
Tizayuca
TURKEY Naini Canoas
Kolkata Bangalore INDIA
102
> Group Overview – November 2006
Chennai
Appendix 7 Financials
Income statement 2005
2004 adjusted for sale of the Connectors Division (excl. IAS 32 et 39)
10,125
9,821
7
7
(7,852)
(7,478)
2,280
2,350
In millions of euros Sales revenue Other income from operations Cost of sales Gross margin Research and development expenses
-328
-327
Marketing and sales expenses
-478
-500
General and administrative expenses
-724
-684
Other operating income and expenses
-4
-103
Current operating income
746
735
Restructuring and early retirement costs
-138
-205
Other non-current operating income and expenses
-56
29
Operating income
551
558
Income from cash and cash equivalents
59
54
Gross borrowing cost
-42
-27
Net borrowing cost
17
27
Other financial income and expenses
-30
-30
Net financial income
-13
-3
Income tax
-146
-124
Net income from consolidated businesses
393
431
Share in net income of equity affiliates
153
128
Minority interests
-95
-139
Net income from continued operations
451
420
Net income from discontinued operations
598
31
1,049
451
35,442,701
35,442,701
Earnings per share from continued operations
12.72
11.83
Earning per share
29.6
12.71
Earnings per diluted share (1)
29.6
12.71
Consolidated net income Average number of shares outstanding
(1) Areva has no diluting instrument in its share capital
104
> Group Overview – November 2006
Key figures by Division (1/3) X 2005 IFRS excluding amounts linked to end-of-life-cycle obligations
T&D
Holding and other operations and eliminations
Group Total
1,921
3,211
14
10,125
87
208
(61)
(58)
551
14.2%
3.7%
10.8%
-1.9%
n/a
5.4%
EBITDA (ex, end-cycle costs)
508
173
483
106
(53)
1,217
% of contribution to sales
19.3%
7.4%
25.1%
3.3%
n/a
12.0%
Net CAPEX
(236)
(170)
(53)
68
(4)
(395)
Change in operating WCR
(77)
226
(95)
(69)
(30)
(45)
Operating cash flow
197
228
332
116
(90)
783
Fixed assets
1 554
606
2 079
950
1 210
6 399
Capital employed
1 642
130
(737)
671
52
1 955
Employees
11 047
14 323
10 864
22 094
432
58 760
In millions of euros (exc. employees)
Contribution to sales revenue Results
Operating income % of sales
Cash
Other
105
> Group Overview – November 2006
Front End
Reactors & Services
Back End
2,631
2,348
374
Key figures by Division (2/3) X 2004 IFRS excluding amounts linked to end-of-life-cycle obligations and adjusted for disposal of FCI T&D
Holding and other operations and eliminations
Group Total
1,946
3,186
18
9,821
95
221
(103)
(35)
558
14.7%
4.4%
11.8%
-3.2%
n.s
5.7%
EBITDA (ex, end-cycle costs)
459
121
402
23
(14)
991
% of contribution to sales
18.2%
5.7%
20.7%
0.7%
n.s
10.1%
Net CAPEX
(196)
(71)
(97)
57
(66)
(354)
Change in operating WCR
(157)
11
299
22
(4)
(170)
Operating cash flow
106
82
603
(12)
2
782
Fixed assets
1,308
456
2,203
1,028
nc
nc
Capital employed
1,410
276
(456)
722
57
2,164
Employees
10,952
14,066
10,697
21,816
378
57,909
In millions of euros (exc. employees)
Contribution to sales revenue Results
Operating income % of sales
Cash
Other
106
> Group Overview – November 2006
Front End
Reactors & Services
Back End
2,524
2,146
370
Key figures by Division (3/3) X 2004 reported excluding amounts linked to end-of-life-cycle obligations
Connectors
Holding and other operations and eliminations
Group Total
3,186
1,289
18
11,109
177
31
80
(79)
613
4.2%
9.1%
1.0%
6.2%
n/a
5.5%
466
133
394
19
113
(77)
1,049
% of contribution to sales
18.5%
6.2%
20.0%
0.6%
10.3%
n/a
9.4%
Net CAPEX
(196)
(59)
(98)
(57)
(71)
(4)
(486)
Income on sales of of tangible and intangible assets
1
4
8
0
0
Change in operating WCR
(159)
11
298
27
12
(1)
187
Operating cash flow
112
88
603
(12)
54
(88)
763
Fixed assets
2,135
515
9 061
1,096
656
2,320
15,783
Capital employed
2,184
670
(132)
1,330
1,318
527
5,897
Employees
10,952
14,066
10,697
21,816
12,160
378
70,069
Front End
Reactors & Services
Back End
T&D
2,524
2,146
1,946
314
90
12.4%
EBITDA (ex. end-cycle costs)
In million of euros (ex. employees)
Contribution to sales revenue Results
Operating income % of sales revenue
Cash
Other
107
> Group Overview – November 2006
12
Free Operating Cash Flow in millions of euros
2004 R* IFRS
2005 IFRS - 45
+ 170 - 435
+ 92
+ 955
- 554 + 782
EBIDTA excl. Chg in end-of-lifeOp. cycle WCR obligations and gain on disposals
CAPEX
Disposals
FOCF
+ 159
+ 1,223
+ 783 EBIDTA excl. end-of-lifecycle obligations and gain on disposals
Change in op. WCR
CAPEX
Disposals
FOCF
X EBITDA up significantly in all businesses X Slight increase in WCR, with use of customer advances and prepayments X Increased CAPEX in Mining and Plants (licensing)
* Adjusted for disposal of FCI
108
> Group Overview – November 2006
End-of-life-cycle obligations: dedicated portfolio up +19.1% in 2005, consistent with the benchmark End-of-life-cycle obligations at June 30, 2006
Dedicated portfolio performance 450
404
400
350
322 300
2,786
250
2,457
200
150
Out-performance: +25 %
100
2,083
2,083
Assets
Provisions
50
0 93
94
95
96
97
98
99
00
01
02
03
04
AREVA Portfolio Composite index (FTSE, MSCI France and EUROPE)
109
> Group Overview – November 2006
05
AREVA Third party share