Areva - Reference Document 2016

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20.2 Notes to the consolidated financial statements for the year ended December 31, 2016 FINANCIAL INFORMATION CONCERNING ASSETS, FINANCIAL POSITION AND FINANCIAL PERFORMANCE

Other provisions

New firm sales contracts have been signed since December 31, 2015 and will be served by these purchases. Consequently, the provision calculated for these purchases was completely reversed at December 31, 2016. The counterpart is the establishment of additional provisions for losses at completion, inasmuch as the sales prices expected from these new contracts are lower than the purchase prices for these supply contracts. These provisions were charged in the amount of 77 million euros. Koeberg contract (New NP) A loss at completion in the total amount of 41 million euros was recognized at December 31, 2015 for an export contract in the Reactors and Services field. At December 31, 2016, this loss at completion was recognized in the total amount of 67 million euros, including 46 million euros as a provision for loss at completion. The change in the loss at completion reflects the delay in the project’s completion date due in particular to quality problems; to the decision to subcontract the manufacturing of parts; and to the expectation of the completion of negotiations with the customer for redefinition of the contractual calendar. EDF contracts (New NP) The discovery of high carbon concentrations on the channel heads manufactured at le Creusot for RP3 steam generators and the obligation for compliance resulting from the treatment of anomalies detected during review of the RP2 manufacturing file (“unmarked files” of le Creusot) showing non-compliant mechanical strength characteristics on the upper shell of the GV385, have led to plans to replace those channels and parts with new compliant components. All of the corresponding work was assessed and included in the costs at completion of the projects involved, and led to the recognition of a provision for losses at completion of 19 million euros at December 31, 2016. Contracts for the design and construction of an experimental reactor (AREVA TA) The year of 2016 was impacted by the reindustrialization and recontractualization of two important projects following the amicable withdrawal of one of the CEA’s contractors. A new delay in the program steering schedule, which was sudden and left no room to maneuver, had to be granted, delaying reactor startup to September 2021 at the earliest. Application of the provisions of the tripartite memorandum of understanding signed in July 2015 and the signature of an amendment to the project management contract with the customer ensured that the funding of the excess costs associated with this schedule day were shared, with no additional negative impact for AREVA. Provisions for contract completion (NewCo) The provisions for remaining work cover a set of future services to be carried out at the la Hague and MELOX sites (Recycling Business Unit) and the Tricastin and Malvési sites (Chemistry-Enrichment Business Unit) in connection with contracts for which obligations to the customers have been met, revenue was recognized and the corresponding costs were expensed in offset to that provision. For the Recycling Business Unit, the services mainly concern work to retrieve, process, package, ship and dispose of technological waste related to MOX fabrication or to the pool storage of used fuel; for the Chemistry-Enrichment Business Unit, they concern work involving nitrate effluent and dust treatment. At December 31, 2016, these future services amounted to 693 million euros for the Recycling Business Unit and 473 million euros for the Chemistry-Enrichment Business Unit (compared with 593 million euros and 434 million euros respectively at December 31, 2015).

Industrial equipment supply contract (NewCo) At December 31, 2015, a provision of 40 million euros was set up for a supply contract concerning industrial equipment whose use in the current market situation is still under review. No tangible item calls into question this provision at December 31, 2016.

Creusot quality initiative (New NP)

QUALITY ACTION PLAN CONCERNING AREVA NP The quality audit of the Creusot plant launched at the end of 2015 continued in 2016. In connection with the audit, all of the quality processes were reviewed and improvement measures are being implemented. Concerning the Creusot plant, the quality audit was supplemented by exhaustive analysis of one category of manufacturing files of forged parts (marked files), with the objective of identifying potential anomalies. Files presenting practices which are not in compliance with Creusot’s quality assurance rules were identified. The anomalies found were the subject of a technical characterization submitted to a technical committee. This work was carried out with the operators and customers concerned. The objective of this work is to validate the characterization performed and to deal with the anomalies by providing customers and the safety authorities appropriate technical justification in terms of the contractual and regulatory requirements ensuring the operability of the parts. An information and discussion process has been implemented in which the nuclear safety authorities in particular are involved. All of the customers concerned by the anomalies identified have been informed by AREVA. To date, the analyses have found that no reported anomaly compromises the mechanical integrity of the parts concerned. Additional tests and analyses are in progress, in particular on an equipment item delivered to the Fessenheim 2 power plant, in order to respond to requests from the nuclear safety authority ASN following the suspension of the test certificate of one of the steam generators. A more extensive analysis of the manufacturing files (unmarked files) is in progress and concerns more than 6,000 files. Additional identified anomalies are being dealt with in the same way. In this regard, an anomaly on a steam generator delivered to the Flamanville 3 site was the subject of characterization for purposes of responding to requests from the safety authority. The financial statements for the period ended December 31, 2016 were closed: p taking into account the obligation to deal with all of the marked and unmarked manufacturing files. In this regard, a provision was set up for the estimated external costs of all actions needed to deal with the identified anomalies, including the review of unmarked files; p it is believed that the results of these actions will lead to a positive conclusion of the discussions with customers and their safety authorities. In addition, since May 2016, the analysis has been extended to the St-Marcel and Jeumont sites. No similar anomalies have been identified at those two sites as of the date of these financial statements. TENSILE TESTS PERFORMED AT THE CREUSOT LABORATORY Following the deficiencies found in April 2015 concerning tensile test protocols at the Creusot laboratory, systematic verification was undertaken to justify the parts concerned through analyses or by retesting on test specimens. The identified anomalies are being dealt with in coordination with the customers. The costs of retesting were assessed and a provision was set up for them (6,000 tests). More specifically, an anomaly was identified on an equipment item in the

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2016 AREVA REFERENCE DOCUMENT