Areva - Reference Document 2016

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20.4 Notes to the annual financial statements FINANCIAL INFORMATION CONCERNING ASSETS, FINANCIAL POSITION AND FINANCIAL PERFORMANCE

To report on financial risk and exposure limits, DOFT prepares a monthly report presenting the group’s positions and the performance of its financial transactions. The report is sent to the senior management of the AREVA group and to the Finance, Legal and Strategy departments. The reporting system includes weekly reports submitted to the Chief Financial Officer, including a valuation of all positions at their market value. Together, these reports and reviews are used to monitor the counterparty risk. Foreign exchange risk management The volatility of exchange rates may impact AREVA SA’s currency translation adjustments, equity and income. Balance sheet risk: Loans and borrowings granted by AREVA SA to its subsidiaries are systematically converted into euros through currency swaps. To limit the currency risk for long-term investments generating future cash flows in foreign currencies, AREVA SA uses a liability in the same currency to offset the asset. Trade exposure: AREVA SA’s policy, which was approved by the Executive Committee, is to systematically hedge foreign exchange risk generated by its

operations; it recommends hedging potential risks during the proposal phase, to the extent possible, tominimize the impact of exchange rate fluctuations on net income. AREVA SA acquires derivatives (principally currency futures) or special insurance contracts issued by Coface to hedge its foreign exchange exposure from trade, including accounts receivable and payable, confirmed off-balance sheet commitments (orders received from customers or placed with suppliers), highly probable future cash flows (budgeted sales or purchases, anticipated margins on contracts) and proposals made in foreign currencies. These hedges are backed by underlying transactions for identical amounts and maturities and, generally, are documented and eligible for hedge accounting (except for hedges of proposals submitted in foreign currencies). The Financial Operations and Treasury Management Department covers its exposures directly with its banking counterparties. A system of strict limits, particularly concerning results, marked to market, and foreign exchange positions that may be taken by the trading desk, is monitored daily by specialized teams that are also charged with valuation of the transactions. In addition, analyses of sensitivity to changes in exchange rates are periodically performed.

At December 31, 2016, derivatives used by AREVA SA to manage foreign exchange risk were as follows:

(Notional amounts by maturity date at December 31, 2016)

2017

2018

2019

2020

2021 > 5 years

Total Market value

Forward exchange transactions and currency swaps

999

135

55

33

- -

- - - -

1,221

-6

Currency options

- -

- -

- -

- -

-

-

Cross-currency swaps

389 389

389

-88 -93

TOTAL

999

135

55

33

1,610

Interest rate risk management AREVA SA is exposed to the fluctuations of interest rates on its floating rate borrowings and on its financial investments. The Financial Operations and Treasury Management Department manages all interest rate risks. AREVA SA uses several types of derivative instruments, as required by market conditions, to allocate its borrowings between fixed rates and floating rates and to manage its investment portfolio, with the goal being mainly to reduce its borrowing costs while optimizing the management of its cash surpluses.

At December 31, 2016, the financial instruments used were: p cross-currency swaps covering loans to subsidiaries in USD;

p rate swaps and inflation swaps negotiated with banks to cover New AREVA Holding. The amount of the commitments and the sensitivity of the positions taken by the trading desk in connection with rate management are subject to limits based on the type of transaction involved. At December 31, 2016, the following financial instruments were used to hedge interest rate exposure:

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2016 AREVA REFERENCE DOCUMENT