Nuclear Power Industry

Home , Akademik Lomonosov, Atomenergomash, Atommash, OKB Gidropress, Rosatom, Rosenergoatom

JSC ATOMENERGOMASH RESULTS OF 20161

1 The brochure data are valid as of April 26, 2017. JSC ATOMENERGOMASH RESULTS OF 2016

The pilot fast neutron reactor After a long interruption, JSC Atomenergomash with primary sodium CEFR the nuclear industry equipment reinforces the key 3,668 developed under the order manufacture was resumed at business areas – nuclear from Chinese Nuclear Power “Atommash” plant. In particular, power industry, gas and Corporation. The developer the activities were commenced petrochemical industry, of the reactor plant was for the manufacture of the main shipbuilding and general 10 YEARS OF PROGRESS OJSC Afrikantov OKBM, the equipment of the reactor island industry. steam generator developer of the Power units 1 and 2 of was OJSC OKB GIDROPRESS. Belarusian NPP. THE HISTORY OF JSC ATOMENERGOMASH, THE mechanical ENGINEERING DIVISION OF ROSATOM STATE CORPORATION (THE «DIVISION») STARTED FROM TWO 2,947 OJSC Atomenergomash The complete cycle of steam COMPANIES. TODAY THE DIVISION IS ONE OF THE LEADING mechanical ENGINEERING COMPANIES IN RUSSIA. IT COMPRISES OVER 20 LEADING ENGINEERING manufactured a core catcher generators manufacture was at the Atommash plant in mastered – from semi-products JSC TsKBM completed the BUREAUS, MAJOR MACHINE BUILDERS, RESEARCH INSTITUTIONS. THE DIVISION IS INVOLVED IN THE KEY PROJECTS IMPLEMENTED BY ROSATOM, WIDENS unprecedentedly short time (PJSC Energomashspetsstal) to test of the new MCP design – and supplied it to the Baltic body manufacture (OJSC PZM), single-shaft configuration

2,414 Labor productivity per employee, thousand rubles THE COMPETENCES AND ACTIVELY MASTERS NEW MARKETS AND TECHNOLOGIES. 2,397 NPP. assembly of in-vessel components with water cooling of motor and shipment to client and bearing assemblies that (OJSC ZiO-Podolsk). Mastering the manufacture would allow increasing NPP of NPP equipment, and safety due to replacement of 2,395 developing the market oil lubricant with water. NUMBER OF AEM NPP Power unit 2 with VVER-1000 1,916 competition gave the eleven- was started at Tianwan NPP 1,866 2,122 figure effect. The price of (China). long-lead equipment set in SUPPLIED EQUIPMENT 2014 decreased by 11% in TO OVER THE Memorandums of current prices comparing to 420.2 1,566 Understanding was Complex program 2007. 1,789 signed with Alstom and 10 YEARS: was launched for Walchandnagar Industries Ltd. OJSC Atomenergomash companies efficiency increase 392.7 27 NPPs PJSC Energomashspetsstal in 2013–2018 within the was certified for the products Division. The unique equipment At the Power unit 1 of Temelin quality control for NPP for MOX fuel commercial NPP (Czech Republic) with equipment. production for fast neutron Order portfolio, billion rubles VVER-1000 the active zone on reactors was put into The agreement was signed the basis of NFA developed OJSC PZM mastered the flow operation, the major part of it for manufacture and supply by OJSC Afrikantov OKBM manufacture of NPP reactor was developed and supplied of steam generators was used. PGV-1000MK for Power plant equipment, steam by OJSC SverdNIIkhimmash Hungarian Ganz EEM LLC units 1 and 2 of Belene OJSC OKB GIDROPRESS generator bodies, main and JSC TsKBM. specialized in pumping 261 NPP (Bulgaria). completed the development circulation pump (MCP) bodies, equipment including those for Nuclear icebreaker “50 of reactor plant for typical and pipes for main circulation nuclear industry was included OJSC ZiO Podolsk declared 63.4 Let Pobedy” was put into optimized IT controlled VVER piping as per the state-of-the- into the Division. the completion of supply of operation. Developer of all power unit (VVER-TOI). art technology. reactors for icebreakers, the Power unit 1 equipment OJSC SverdNIIkhimmash for Leningrad NPP-2 (four submarines and naval ships is signed a contract to design OJSC Afrikantov OKBM. steam generators and 56.7 and supply equipment for embedded parts set). pilot demonstration facility – 227.5 test site for safe technologies 51.8 of fuel reprocessing. 50.9 CJSC Petrozavodskmash3, 46.3 Combined revenue, billion rubles having technological and Power unit 1 with VVER- production capabilities and 1000 was started at Tianwan competences for producing 48.6 (China). All VVER reactors key equipment for reactor were developed by OJSC OKB island, became the part of GIDROPRESS. Ivanovskaya combined cycle OJSC Atomenergomash. power plant was put into 27 operation, the equipment 150 OJSC ZiO-Podolsk for it was manufactured by and OJSC ZIOMAR EC OJSC ZiO-Podolsk. This was 91.6 99.1 (manufacturers of steam the first combined cycle 23 power plant in Russia erected 22 OJSC SverdNIIkhimmash, generators for NPP), and 78.9 with the domestic equipment the leading research and Arako spol. s.r.o., the Czech only. 20 development institute, company, became the part became the part of of OJSC Atomenergomash. 18 OJSC Atomenergomash. 38.9 20.1 19.2 26.6 15

16.7 16 Share in the Russian power % engineering industry, 11 10.3 14 The long-term strategy till 13 PJSC Energomashspetsstal, 2030 was approved; the aim having the unique of this strategy is to transform Steam generators manufacture The stage of power start-up 8 10.5 competences for producing OJSC ATOMENERGOMASH was restored at the premises and low power testing was 10 large special steel blanks into global diversified high- of JSC AEM-Technologies of commenced at Beloyarsk NPP for NPP equipment, tech holding company. Atommash, for which purpose Power unit 4 with BN-800 reactor 0.3 became the part of new production sectors were developed and supplied by the OJSC Atomenergomash. organized and new equipment main designer or fast neutron was purchased. reactor plants – JSC Afrikantov OKBM. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

On March 29, OJSC Atomenergomash Creation of target structure of The company continues its The establishment of process OJSC Atomenergomash extends The formation of production Restoring facilities of ATOMMASH, OJSC ATOMENERGOMASH companies For the first time in its history, After 30 years, the first reactor was established in the system of OJSC Atomenergomash. Formation activities in the field of complex for manufacturing the the international cooperation chain for long-lead equipment the Soviet biggest manufacturer successfully mastered the JSC ATOMENERGOMASH became the body manufactured at ATOMMASH the Federal Atomic Energy of industrial and engineering MECHANICAL ENGINEERING complete range of equipment for and forms the vertical integral manufacture was continued in of NPP equipment, was started complete cycle of manufacture supplier of complete nuclear (branch of JSC AEM-Technologies) Agency (Rosatom). The purpose competences, and corporate ASSETS consolidation both the reactor plant (NSSS2) has structure for manufacturing OJSC ATOMENERGOMASH companies. as well as mastering the of NPP long-lead equipment. steam supply systems and premises was supplied to of OJSC Atomenergomash was perimeter. in Russia and abroad. The been commenced. key equipment for NPP. manufacture of nuclear island turbine hall equipment. Belarusian NPP. Besides, that ensuring the sustainable Division structure includes equipment including reactor, was the first VVER reactor body development of nuclear 16 companies in total. steam generator, etc. manufactured by the Rosatom industry domestically and State Corporation company4. internationally as well as widening the process potential of power industry complex of 3 Petrozavodskmash is the branch 4 Earlier Rosatom State Corporation Russia. 2 Nuclear Steam Supply System. of JSC AEM-Technologies. used to purchase those products from an external source. 2 3 JSC ATOMENERGOMASH RESULTS OF 2016

10 Years of Progress...... 2 JSC Atomenergomash, is one of the biggest mechanical The Company In Brief...... 4 engineering holding companies in 2016 Performance Highlights...... 6 Russia that provides the complete range of equipment design, Key Events in 2016...... 7 manufacture and supply solutions for nuclear and thermal power Message from Company Management...... 8 industry, gas and petrochemical Key Performance Indicators of JSC ATOMENERGOMASH for 2016...... 12 industries, shipbuilding, and special steels market. Target Markets and Position of the Company...... 13 The Division comprises the The Company’s Development Strategy...... 14 major power industry businesses including manufacture, research, Sustainable Development of the Company...... 15 and engineering companies located in Russia, Ukraine, the Key Markets – Projects of 2016 and Key Assets of the Company...... 16 Czech Republic and Hungary. Public Business Model of the Division...... 18 The company fully controls Economic Performance...... 21 the production chain of the key nuclear island and turbine hall Commercial Activities...... 24 equipment, from research and detailed design development to Investment Activities...... 25 process design and equipment Results of Production Activities...... 26 manufacture. Quality and Industrial Safety...... 27 Optimization of Production Processes...... 28 Procurement Activities...... 29 Innovation Activities...... 31 Environmental Management...... 32 Personnel Composition...... 35 Labor Safety...... 38 Contacts...... 40 THE COMPANY JSC ATOMENERGOMASH IS ONE OF THE BIGGEST MECHANICAL ENGINEERING HOLDING COMPANIES IN BRIEF IN RUSSIA.

4 5 JSC ATOMENERGOMASH RESULTS OF 2016 2016 PERFORMANCE KEY EVENTS HIGHLIGHTS IN 2016 ECONOMIC PERFORMANCE NUCLEAR POWER • JSC Atomenergomash manufactured and shipped the body of VVER-1200 reactor Combined revenue – EBITDA – 6.7 billion rubles Share of revenue from new for Belarusian NPP Power unit 2. 63.4 billion rubles businesses – 44% • JSC SNIIP first obtained the certificate of management compliance to ISO 9001:2008. • JSC OKB GIDROPRESS concluded the contract for developing technical design documentation for VVER-1200 reactor plant for Hanhikivi-1 NPP (Finland). • The innovative Power unit 6 of 3+ generation was started up at Novovoronezh NPP; OPERATING PERFORMANCE the key equipment for it was supplied by JSC Atomenergomash companies. Timely supply of equipment under Products shipped existing contracts – 100% to 20 Nuclear Power Plants THERMAL POWER • PJSC ZiO-Podolsk and NEM Energy B.V. (the Netherlands), the part of Siemens AG conglomerate, signed the Agreement on extension of the Contract on cooperation COMMERCIAL ACTIVITIES in the area of engineering and manufacturing steam generating equipment with Total value of concluded Order portfolio at the year-end – Share of new product orders power under 50 MW. contracts – 135.1 billion rubles 420.2 billion rubles in the total order portfolio – 47% • At Kirovskaya TPP, the wastewater treatment plant was successfully put into operation; it was developed and supplied by JSC SverdNIIKhimmash within the framework of priority investment project for the power plant refurbishment. EFFICIENCY IMPROVEMENT Effect of the RPS introduction – Labor productivity growth – Income from sales GAS AND PETROCHEMICAL INDUSTRY 841 million rubles 25% of non-core assets – • JSC SverdNIIKhimmash won the tender for the supply of wastewater treatment 694 million rubles complex for the subsidiary of PJSC SIBUR Holding, the major gas and petrochemical holding company.

SKILL POOL DEVELOPMENT SPECIAL STEELS Share of specialists under Share of employees with the Company • PJSC Energomashspetsstal cast the unique steel ingot of 125 tons for manufacturing 35 years old – 34% for over 5 years – 71% the high-pressure steam generator shell for Kudankulam NPP (India). • JSC TsNIITMASH presented the first domestic industrial 3D printer for metal products that was developed jointly with JSC “Science and Innovation”. SCIENTIFIC ACTIVITIES 5 Floating Nuclear Power Plant. 5 81 patents and intellectual 301 scientific publications R&D investments – SHIPBUILDING AND FNPP property certificates 258 million rubles • JSC Atomenergomash completed manufacturing the state-of-the-art reactor plants RITM-200 for the new-generation icebreaker Arktika, and supplied it to the client. • PJSC Energomashspetsstal specialists developed and mastered the production of new products within the Shipbuilding and FNPP business area - Hall’s anchors for SOCIAL RESPONSIBILITY various vessels. Paid to the budget – Charity expenses – 5.8 billion rubles 258 million rubles 6 Equipment for small scale hydro power 6 generation (container type mini hydro MINI HYDRO POWER PLANTS power plants). • GANZ EEM LLC concluded the first formal contract for the supply of container type mini hydro power plants with International Energy Company, LTD (Georgia) what ENVIRONMENTAL RESPONSIBILITY develops hydro power area. Reduction of total Environmental protection waste mass – 9% costs – 151 million rubles

6 7 JSC ATOMENERGOMASH RESULTS OF 2016 MESSAGE FROM THE SHARE OF REVENUE FROM COMPANY MANAGEMENT NEW BUSINESSES AMOUNTED TO 43.7% Dear colleagues,

In the reporting year, JSC Atomenergomash celebrated its IN 2016 10-years anniversary. During those years, the enormous job was done by the management, and thanks to it the minor company turned into a diverse holding with neatly defined Yekaterina V. Lyakhova

specialization of enterprises, clear management structure and Chairperson of the Board explicit development strategy. of Directors of JSC Atomenergomash Director of Investment Management and Operational Efficiency at Rosatom State Corporation

Over the recent five years, in total. In general, thanks to Unit with BN-800 fast neutron construction in Tobolsk. In total, the order portfolio increased the measures taken to improve reactor was put into operation at the share of revenue from new more than fourfold – from the efficiency the EBITDA profit Beloyarsk NPP. The enterprises businesses amounted to 43.7% 99 to 420 billion rubles. margin grew by 7% to reach 11% within the Company took active in 2016. The combined revenue grew in 2016. part in the development of the substantially and amounted unique power units by designing The mainstay of the to 63.4 billion rubles in 2016. One of the important reactor plants and supplying main accomplishments of the Mechanical achievements of the Company and auxiliary equipment to the Engineering Division and the pillar The Company consistently works in 2016 was the timely shipment power plants. of the future achievements is our at increasing the efficiency and of reactor plants RITM-200 brilliant team joining the best decreasing the costs and duration for Arktika, the first-in-class I would also like to highlight the scientists, designers, engineers, of the operation processes. In new generation icebreaker. In success of JSC Atomenergomash and workers. On behalf of Rosatom particular, in 2016 the possibilities compliance with the client’s and its companies in the area of State Corporation, I thank the were found to shorten the lead request, the reactor body for new products development for the Company for the work done in time for nuclear steam supply the Belarusian NPP Power unit 2 non-nuclear industries. In particular, 2016, and the management and system by 20%, the days’ sales was manufactured and shipped the major gas and petrochemical employees for their commitment in inventory were reduced by ahead of the schedule. During tender was won for the design and professionalism. I am sure the manufacturing facilities. The the reporting year, the world’s and complete supply of water that whatever is achieved will Company has exceeded the targets first 3+ generation Power unit treatment plant for the refinery become the new good headstart on sales of non-core assets and was connected to the grid at works intended for processing for the further development of raised about 700 million rubles Novovoronezh NPP; and the crude hydrocarbons, now under JSC Atomenergomash as one of the world’s mechanical engineering leaders!

8 9 JSC ATOMENERGOMASH RESULTS OF 2016

Dear shareholders, clients, and colleagues,

The reporting year has become the anniversary for JSC Atomenergomash, and we can look at some results of the first decade. First of all, I would like to underline that we managed to build the really efficient and professional team, truly committed to the Company’s development and outcome-driven. Thanks largely to this, JSC Atomenergomash transformed from a disjointed assets set to the united structured holding company with explicit specialization of enterprises, and clear development strategy.

the remaining audit inspections commercially attractive product that Thanks to that, today the icebreaker Arktika. These were State Corporation but for the successfully, and to finally prove would be in demand at the Russian Company is the complete the first reactors of the new entire global nuclear power our competencies of equipment and international market. The second nuclear island and turbine hall generation and the first marine industry. The 3+ generation manufacturer and supplier to the project, “Clean Water”, foresees equipment supplier for NPP, plants completely – design Unit was connected to the grid client, and to proceed with the establishment of water desalination and one of the main players to shipment – manufactured at Novovoronezh NPP and manufacture. facilities integrated with high power NPP in the market of equipment within the Division perimeter. produced the first megawatts to as well as product solutions for water manufacture for thermal power, JSC Afrikantov OKBM as the the country’s power system. It Another important result and waste water treatment. gas and petrochemical industry, designer and complete scope has the improved performance is 100% fulfilment of the shipbuilding. This has the direct supplier, PJSC ZiO-Podolsk as the indicators, ensures the absolute government defense order In 2017, increasing the impact on the activity results. shell equipment manufacturer, operation safety and fully meets by all the enterprises within productivity, including that In just five recent years, the JSC TsNIITMASH with the materials the post-Fukushima requirements the Company. with the use of Rosatom order portfolio increased more engineering support, and other of IAEA. This is the great success Production System, fulfilling than fourfold and reached companies were involved in this of JSC OKB GIDROPRESS as The non-nuclear areas of all contractual obligations 420 billion rubles in 2016. project implementation. Several designer and developer, which has business were substantially on the timely basis, and The combined revenue grew new technologies and tools among other supported all start- advanced in the reporting year. increasing the revenue in substantially and amounted to were developed by specialists up operations, and that of all the In particular, JSC SverdNIIKhimmash all business areas, remain 63.4 billion rubles at the end of in the course of manufacturing Division companies, which supplied was awarded with a major our strategic priorities. In the reporting period. At the same operations. At present the the main and auxiliary equipment contract the supply of waste conclusion, I would like time, the revenue from the non- activities on equipment of the reactor island. water treatment complex for to thank our clients and nuclear industries – thermal power, manufacture for serial-built the refinery. Over 10 various partners for productive gas and petrochemical industry, icebreakers are in progress in There was a big breakthrough companies participated in the collaboration, and shipbuilding – was the maximum in accordance with the schedule. in the area of fast nuclear tender that offered, among all the team for the four years, and in total the share reactor. Fourth Power Unit with other items, European and professionalism. I am of the Division’s revenue from new Volgodonsk Atommash BN-800 reactor developed by American technologies of sure that being guided businesses amounted to 43.7%. confidently proves its competency JSC Afrikantov OKBM was put into waste water treatment. At the by the principles of of the NPP nuclear island operation at Beloyarsk NPP. This JSC AEM-Technologies facilities commitment and The measures taken over equipment manufacturer. In is a big step forward in nuclear the manufacture of column respect we will be the recent years to improve October 2016, the second body cycle closure and in creation equipment is ongoing for refinery able to ensure the the efficiency and to develop of the reactor for Belarusian of a commercial product for complexed in Moscow and other same dynamic enterprises within the Company. Nuclear Power Plant was shipped. international markets on the basis cities of Russia. The Hungarian development of In particular, JSC SNIIP gained In the course of manufacture, of fast neutron technology. company GANZ EEM Ltd. has JSC Atomenergomash the record-setting revenue of specialists carried out all tests that concluded the first contract for for the next 3.9 billion rubles in 2016, which confirmed the product quality All the enterprises within the the supply of their own mini hydro 10 years of the is 67% higher than that in 2015. and reliability. The manufacture of Company have carried out a lot power plant; the major contracts company’s life. Over five years, the revenue of steam generators for Belarusian of work for implementing the are implemented in the thermal this company increased by the NPP has been completed; the project on supply of complete set power industry. factor of 9, and the productivity equipment manufacture has been of the reactor island equipment by the factor of 11. At JSC TsKBM started for multi-purpose fast for Hanhikivi NPP in Finland. All Since 2016, the Company has the reconfiguration project was neutron research reactor project the client’s audits planned for become the head organization of Andrey V. Nikipelov successfully implemented. As (MBIR), the implementation of 2016 were a success, the positive the Rosatom State Corporation for Chief Executive Officer a result, since 2012 till 2016 its other major projects in Russia and result was achieved. Let me development and implementation of JSC Atomenergomash EBITDA grew by the factor of 11, abroad is ongoing. Besides, in remind that the power plant will of two new projects. The first one and the productivity increased 2016 JSC TsKBM shipped the last be constructed in compliance is on creation of an optimized almost by 130%. set of main circulation pumps for with the European norms and floating power unit that should Power unit 1 of Belarusian Nuclear requirements, and the Finland’s consider the entire experience of The reporting year was rich Power Plant. law regulating nuclear industry is FNPP Akademik Lomonosov and with events. The innovative reactor considered to be one of the most achieve the improved technical plants RITM-200 were supplied for In August, there was an event stringent in the world. That is why and economical parameters. This the first-in-class new generation important not only for Rosatom at this stage our task is to pass all would allow to create the new

10 11 JSC ATOMENERGOMASH RESULTS OF 2016 KEY PERFORMANCE TARGET MARKETS AND INDICATORS OF POSITION OF THE COMPANY

In 2016 the global power engi- It is evident that certain countries JSC ATOMENERGOMASH neering market has shown the minor and regions have their peculiar fea- growth and amounted to approximate- tures in terms of power industry de- ly 110 billion USD. The market struc- velopment, nevertheless, the trends at ture practically remained unchanged; the Russian power engineering market and the most of new power plant in- are mainly in line with the global trends: FOR 2016 vestments were made in thermal pow- 60% of investment is to equipment for er industry – about 60%. The share of thermal power industry, 29% – gas and petrochemical equipment was for gas and petrochemical industry, about 25%, and that of nuclear power and 11% – for nuclear power industry. Target Value industry equipment – 15%. The current Russian mechanical Target Level Upper Level Indicator Lower Level Actual value According to the Forecast of Global engineering market is evaluated as 12 The Division’s AFCF7, bln rubles 4.05 4.5 5.4 11.84 12 Institute for Energy Analysis of the Power Industry Development till 2040 350 billion rubles per year. Considering 7 Adjusted Free Cash Flow Russian Academy of Sciences, Analytical Center at the Government of the no drastic changes are expected in the the forecast of the national economy Russian Federation. Integral indicator of investment power consumption per types of fuel. development, the moderate decrease 80 100 108 108 performance, % Hydrocarbons will retain the dominat- of energy demand may be observed ing position by 2040, their share will be in the next few years as well as the 51.4% versus current 53%. The fore- reduction of energy consumption Timeliness of equipment supplies under 100 100 cast of nuclear power industry devel- growth in the country. Thus, in 2030 existing contracts, % opment is moderately optimistic: the perspective the average annual share of nuclear power industry will re- growth of the domestic mechanical Semi-fixed costs, bln rubles 23.85 22.7 16.95 19.98 main at the level of 6%, while the ab- engineering market will be within solute values will grow. The Forecast 1–2%, and the main expected trend data allows to mention keeping the is the increased competition of Labor productivity, bln rubles/pers. 3.7 4.1 5.35 3.7 market structure with prevailing share national manufacturers and reduced of thermal power generation equip- importation of both power industry Portfolio of overseas orders for ten years, 69 77 97 149 ment for the next few years. equipment and components for its mln USD manufacture.

Foreign revenue, mln USD 85 128 154 121

Share of the Russian 8 Characterizes development Integral indicator for new products8, % 95 100 125 150.43 and commercial success of new mechanical engineering JSC ATOMENERGOMASH products and business areas of strategic importance for industry, % Other 27 Rosatom State Corporation. Revenue on new products outside and inside the perimeter9, competitively, 24.6 25.9 32.4 27.7 32 bln rubles 9 Rosatom State Corporation perimeter. Rosatom State Corporation new products order portfolio for ten years, 100.1 105.4 131.65 204.2 bln rubles

10 Lost time injury frequency rate. LTIFR10, % 0.54 0.25

Non-availability of failures of INES11 level 2 No failures No failures PJSC OMZ 11 International Nuclear Event Scale. and more 6 PJSC POWER MACHINES 35 Fulfillment of the government orders, % 100 100

12 13 JSC ATOMENERGOMASH RESULTS OF 2016 THE COMPANY’S SUSTAINABLE DEVELOPMENT DEVELOPMENT STRATEGY OF THE COMPANY

MAIN NPP EQUIPMENT KEY ACTOR WITH EFFICIENT MANUFACTURER AND SUPPLIER GUARANTEED COMPLETE SUSTAINABLE POSITION OF COMPETITIVE SOLUTIONS The Company recognizes that following the con- The Company has developed its own agenda AEM VISION SUPPLY PROVIDER AT THE RELATED PRODUCTS cept of sustainable development is one of the most for sustainable development that takes into account MARKET important success factors in the medium and long both current and potential initiatives and projects. term. The principles of sustainable development are The agenda for sustainable development of PROVIDING SUPPLIES OF KEY GROWTH OF REVENUE IN ESTABLISHMENT EFFICIENCY deeply integrated into the Company’s operations and JSC Atomenergomash is based on the results of the EQUIPMENT FOR NEW UNITS RELATED SECTORS OF THE GLOBAL POWER INCREASE are reflected in the mission of JSC Atomenergomash United Nations Conference on Sustainable Devel- STRATEGIC CONSTRUCTION AT ROSATOM ENGINEERING COMPANY laid down in its corporate strategy. opment, Rio+20, and the similar agenda of Rosatom NPPS IN RUSSIA AND ABROAD Share of revenue EBITDA profit margin State Corporation. GOALS OF AEM outside Rosatom State Share of foreign no less than 20% Corporation perimeter Target equipment market operations revenue no (2030 PLANNING HORIZON) no less than 50% Labor productivity share no less than 50% less than 30% no lower than average of global power Rio+20 Rosatom State Corporation JSC Atomenergomash Results of 2016 engineering companies ROSATOM STATE THE DIVISION’S OBJECTIVE COMPLIANCE WITH ROSATOM STATE CORPORATION GOALS Health and population Ensuring nuclear radiation safety Ensuring industrial safety The Division’s LTIFR – 0.25 CORPORATION GOALS and security of nuclear facilities (the 2016 target value – 0.54) • Increase of international Disaster risk reduction market share Energy Ensuring energy security Implementing orders to provide Timeliness of equipment • Decrease of products the country with electricity supplies under existing cost price and processes contracts, 100% duration Sustainable consumption Minimizing the environmental Consuming resources and Energy consumption volume • Creation of new impact energy in a responsible manner decrease by 9% products for Russian and international markets Poverty eradication Providing positive economic and Implementing charitable and Charity expenses – Share of the Russian Share of revenue from Share of foreign EBITDA profit social impacts on a regional, social projects in the regions of 24 mln rubles national and international scale presence MECHANICAL ENGINEERING new businesses – 44% revenue – 12% margin – 11% Food security 2016 CONTRIBUTION market – 27% Labor productivity – Human rights and equality 3.7 mln rubles/pers. Sustainable development Making payments to the Payments made to the budgets financing budgets of all levels of all levels – 5.8 bln rubles 27 Share of the Russian mechanical 22 23 engineering industry, % Promoting employment and Providing stable jobs for the Social payments per one social protection population in the regions of employee – 19.2 thous. rubles presence 2014 2015 2016

Human development Improving the capital utilization Skill pool development Labor pool – 168 persons efficiency 46.9 Share of revenue from 30 30.5 43.7 new businesses, %

2014 2015 2016 2017 Education Forecast Technologies Innovation and R&D R&D costs - 6.8 bln rubles 12.8 11.7 Share of foreign revenue, % 8.9 9.7 Transparency Ensuring development of the The Company's communications Media mentioning: power industry in a publicly and public reporting Positive – 32% acceptable way Negative – 5% Neutral – 63% 2014 2015 2016 2017 Forecast

14 15 13

JSC ATOMENERGOMASH RESULTS OF 2016

RAW/SNF***

plants

Mini hydro power power hydro Mini

water purification water

treatment and and treatment

Desalination, water water Desalination, equipment

Dubna, Russia JSC IFTP Ukraine Kramatorsk, PJSC EMSS Budapest, Hungary Ganz EEM LLC the Czech Republic Opava, ARAKO spol. s.r.o. 6 General General

9 10 11 12 12

Special steels Special Industry

Petrochemical Petrochemical 7 Gas and and Gas 1

Assets of the Company Thermal power Thermal 2

6 TMES** 4 1 3

Podolsk, Russia JSC OKB GIDROPRESS PJSC ZiO-Podolsk JSC ZIOMAR EC Saint-Petersburg, Russia JSC TsKBM JSC AEM Technologies LLC AAEM Russia Moscow, JSC Atomenergomash JSC NPO TsNIITMASH JSC VNIIAM JSC ATM JSC SNIIP JSC OKTB IS JSC OZTMiTS

FNPP*

6 7 8 5 Shipbuilding and and Shipbuilding 6 2 10

5 Nuclear power Nuclear 2 3 4 5 6 4 8 9 10 3 1 9 1 8 7 ATM SNIIP EMSS 7 AAEM TsKBM 18 ARAKO 4 ZIOMAR 11 Ganz EEM 17 ZiO-Podolsk TsNIITMASH 3 GIDROPRESS 14 19 5 11 2 20 Afrikantov OKBM 16 AEM-Technologies SverdNIIKhimmash 12 Companies Petrozavodsk, Russia Petrozavodsk, Petrozavodskmash branch of JSC AEM-Technologies LLC PZM LZ Nizhny Novgorod, Russia JSC Afrikantov OKBM Russia Tura, Nizhnyaya OJSC Venta Russia Yekaterinburg, JSC SverdNIIKhimmash Russia Volgodonsk, of JSC AEM- Atommash branch Technologies 15 The Division * FNPP – Floating Nuclear Power Plant * FNPP – Floating Nuclear Power solutions and marine energy ** TMES – transport nuclear fuel waste/spent – radioactive *** RAW/SNF The Division Companies Specialization 1 2 3 4 5 KEY ASSETS OF THE COMPANY Gas and Petrochemical Industry TOTAL 73,263 621 2017 6,459 66,184 Forecast Temelin, Czech Republic Temelin, NPP Temelin Paks, Hungary Paks NPP Bulgaria Kozloduy, Kozloduy NPP Belene, Bulgaria Belene NPP Levice, Slovakia Mochovce NPP Slovakia Trnava, Bohunice NPP Kazakhstan Taraz, GRES Jambyl Kazakhstan Topar, GRES Topar Nizhnekamsk, Russia Nizhnekamsk Refinery Russia Astrakhan, Filanovsky Field 7 8 5 6 TOTAL 63,427 15 15 16 16 17 18 17 18 19 20 596 2016 6,835 55,996 Thermal Power Industry TOTAL 56,710 2015 476 6,696 49,538 Desnogorsk, Russia Smolensk NPP Udomlya, Russia Kalinin NPP Armenia Metsamor, Armenian NPP Belarus Ostrovets, Belarus (Ostrovets) NPP Kudankulam, India Kudankulam NPP Tianwan, China NPP Tianwan Pyh ä joki, Finland Hanhikivi NPP Russia Yaroslavl, TPP Yaroslavskaya Russia Kaliningrad, Pregolskaya TPP Russia Sharypovo, Berezovskaya GRES Russia Kaliningrad, LLC Varnitsa Russia Moscow, Moscow Refinery TOTAL 48,643 4 8 9 8 9 5 6 3 4 10 11 10 12 11 13 14 2014 886 3,448 44,309 Combined revenue by geographical area/country, mln rubles Nuclear Power Industry Russia Nuclear Power Industry Russia Kurchatov, Kursk NPP-2 Kursk NPP, Russia Balakovo, Balakovo NPP Russia Volgodonsk, Rostov NPP Russia Sosnovy Bor, NPP Leningrad NPP-2 Leningrad Russia Novovoronezh, Novovoronezh NPP Novovoronezh NPP-2 Region, Sverdlovsk Zarechny, Russia Beloyarsk NPP Polyarniye Zori, Russia Kola NPP Thermal Power Industry Russia Tagil, Verkhniy GRES Verkhnetagilskaya Russia Svetly, Primorskaya TPP Arkhangelsk, Russia Arkhangelskaya TPP Gas and Petrochemical Industry Omsk, Russia Omsk Refinery Russia Tobolsk, Complex Western-Siberian Crude Hydrocarbons for Deep Conversion Countries 1 2 3 4 5 6 7 1 2 3 1 2 KEY MARKETS – PROJECTS OF 2016 Far-Abroad Far-Abroad CIS Сountries 16 17 JSC ATOMENERGOMASH RESULTS OF 2016 MISSION: TO ESTABLISH AND DEVELOP GLOBALLY COMPETITIVE TECHNOLOGICAL SOLUTIONS PUBLIC BUSINESS MODEL FOR THE POWER INDUSTRY IN ORDER FOR PEOPLE TO MAINTAIN A COMFORTABLE LIFE AND OF THE DIVISION TO ACHIEVE GROWTH IN THE COMPANY’S BUSINESS RESULTS

SALES 01 RESOURCES 03 1. Equipment Design Personnel Composition Infrastructure TOTAL ORDER portfolio Human capital assets – over 18,000 Production capital – unique production 2. Equipment Manufacture skilled professionals facilities and state-of-the-art equipment fleet 3. Equipment Supply AMOUNT – 420.2 bln rubles 4. Installation and Commissioning Financial and Economic Technologies Position Innovative capital – balanced portfolio 5. Service and Upgrading EXCLUDING vAT Financial capital – growing revenue support- of actively developing conventional and ed by order portfolio extension and business advanced power engineering technologies efficiency increase Structure of contracts concluded in the reporting year per business areas: Nuclear Power Industry 119,930 88.8% 02 MAIN ACTIVITIES Thermal Power Industry 1,233 Special Steels 2,214 General Equipment 798 PRODUCTS IN BUSINESS AREAS 0.9% 2.5% 1.6% 2.3% 0.6% 0.4% 3%

Gas and Petrochemical Industry 3,328 Shipbuilding and FNPP/ RAW/SNF 511 Other 3,994 Nuclear Shipbuilding and FNPP Thermal TMES 3,110 Power Industry Various types of equipment for Power Industry Equipment for reactor shipbuilding and FNPP Boilers and auxiliary island and turbine hall, equipment for thermal auxiliary equipment for power industry TOTAL: 135,118 mln rubles NPP

Special Steels Gas and Special steel cast Petrochemical and forged items Industry 04 TMES Equipment for oil and gas Reactor plants for nuclear- processing at refineries and power icebreakers and CREATION OF VALUE FOR THE COMPANY: CREATION OF VALUE offshore platforms sea vessels, naval facilities General equipment Special machinery and heavy Personnel Composition Financial and Economic Position FOR STAKEHOLDERS: machinery components for Personnel efficiency increase Ensuring business cost-effectiveness Natural capital: defense industry Mini hydro and human resource development: and sustainability: · Reduction of total waste mass – 9% · Reduction of N O emissions – 32% power plants · Increase of share of employees with · Combined revenue growth – 12% 2 Clean Water Equipment for small scale higher education – 3% · Income from sales of non-core assets – Equipment for desalination, hydro power generation · Labor productivity increase – 24% 694 mln rubles Social capital: water treatment and water RAW/SNF (container type mini hydro · Payments to the budget (accrued) – purification for municipal Equipment for storage, power plants) 5.9 bln rubles and industrial use transportation and Infrastructure Technologies · Charity expenses – 24 mln rubles processing of RAW/SNF Increase of production facilities efficiency Ensuring products competitiveness and flexibility: and technological leadership: · Amount of investments – over 4.2 bln rubles · 81 patents and intellectual property certificates · Production plan fulfilment increase – 12% · 301 scientific publications

18 19 JSC ATOMENERGOMASH RESULTS OF 2016 PRODUCTION CHAIN ECONOMIC IN THE NUCLEAR POWER BUSINESS FIELD PERFORMANCE

Research and Development Design and Engineering 4,849 • Basic and applied research • Development of reactor equipment for all Russian design NPPs Combined revenue TOTAL • Development of new materials and processes • Reactor plants for nuclear-power icebreaker fleet per business areas, 73,263 • Prototypes and tests • Advanced research for manufacture of reactor plants for medium and minor power NPPs mln rubles --Afrikantov OKBM --TsNIITMASH --SNIIP TOTAL 3,358 --GIDROPRESS --TsKBM --SverdNIIKhimmash 4,838 63,427

--GIDROPRESS --ZIOMAR/ ZiO-Podolsk TOTAL --Afrikantov OKBM --AEM-Technologies 359 5,612 56,710 1 2 341 2,769 TOTAL 2 48,643 928 18,328 3,317 6,139 2,213

Other 2,164 17,157 2,658 Metal Semi-Products and Special Steels Equipment Manufacture Special steels 1,115 • Production of metal semi-products for nuclear, power and other • Manufacture of reactor and turbine islands equipment industries • Manufacture of NPP auxiliary equipment RAW/SNF 1,952 9,816 • Development of new structural materials • Unique process and production concepts • Design and manufacture of customized equipment 1,644 1,250 --GIDROPRESS -- Petrozavodskmash branch General equipment --EMSS - LLC PZM LZ --TsNIITMASH --GANZ EEM of AEM-Technologies 5,098 --Afrikantov OKBM --SNIIP Transport and marine 7,970 -- ZIOMAR/ ZiO-Podolsk --TsKBM energy solutions 409 --Atommash branch of --ATM 495 2,452 AEM-Technologies -- SverdNIIKhimmash 3,129 3 Shipbuilding and FNPP 1,447 3,146 Gas and petrochemical industry 939 943 33,729 4 31,800 1,730 29,943 Thermal power industry 26,005 Nuclear power industry

Complete Supply Client • NSSS equipment • Supply of equipment for units under construction • Turbine hall equipment and units put into operation • Marine reactor plants • Supply of equipment for research reactors • Support of supplied equipment throughout its life cycle --Atomenergomash • Supply of equipment for nuclear-powered fleet

--ASE Group (NPP abroad) --International power holding --Rosenergoatom Concern companies and corporations (NPP in Russia) --International partners and cli- --Atomflot ents for nuclear power industry 5 2014 2015 2016 2017 --Rusatom Service solutions Forecast

20 21 JSC ATOMENERGOMASH RESULTS OF 2016

Factor analysis of the change 6,646 706 -635 63,427 Loan book structure 40,675 TOTAL in combined revenue, 56,710 (as per combined revenue), 41,486 TOTAL 37,605 TOTAL 46,333 47,290 mln rubles mln rubles13 43,985

13 The debt portfolio structure is reflected as per the budget consolidation perimeter of the Power Engineering Division as of the reporting date. 33,866 TOTAL 36,007

2015 Volume Currency Other 2016 change exchange rate Overseas banks

Russian commercial banks 4,755 3,755 2,779 6,699 EBITDA, mln rubles Other (including 2,625 industry financing) 2,142 2,068 1,850 4,154 2,971 2,772 2014 2015 2016 2017 1,926 Forecast

2014 2015 Planned Actual 2017 Labor productivity for 2016 in 2016 Forecast 4,162 in the Division, 3,668 14 thousand rubles/pers. 2,947 2,395 14 The indicator shall be consolidated as per the budget perimeter. EBITDA profit margin, % 11 9 5 2014 2015 2016 2017 4 Forecast 3

2014 2015 Planned Actual in 2016 2017 for 2016 Forecast Government assistance in 2016, mln rubles

JSC AEM-Technologies Factor analysis of the change 414 6,699 160.3 706 in EBITDA, mln rubles 1,486 464 -214 1,919 TOTAL: 1,926 440.1 60 JSC Afrikantov OKBM 2015 2016 assets growth balance Effect of of Effect

structure JSC NPO TsNIITMASH Perimeter Perimeter Provisions Provisions 219.8 volume and volume and modification exchange rates exchange rates Change in sales Change in sales Sale of non-core Sale of non-core Change in prices

22 23 JSC ATOMENERGOMASH RESULTS OF 2016 Commercial INVESTMENT Activities ACTIVITIES

Other 15 The level of implementation shown by the indicator The purpose of the investment delivery of gas, petrochemical and Sectoral structure of the order is associated with the discontinuing of part of the 5,540 / 1.3% project activities due to the loss of relevance, as well program of the Division is the exe- thermal power equipment. portfolio as of December 31, 2016, as postponing the implementation of key projects cution of contracts for the supply RAW / SNF because of the suppliers’ failure to deliver the equipment In the reporting year, the vol- mln rubles 4,583 / 1.1% on time, and savings made during the procurement of equipment within the frame- procedures. ume of financing of the Compa- work of the implementation of the General equipment ny’s Investment Program amount- Road Map for the construction of 3,574 / 0.9% ed to 4.2 billion rubles. The nuclear power plants in Russia and TOTAL Nuclear Energy implementation level of the Invest- Shipbuilding and FNPP / TMES abroad, the production of State 357,606 / 85.1% ment Program for the Division in 41,904 / 10% 420,155 Defense Order products and the 2016 was about 70%15. Special steels fulfillment of obligations under the 1,029 / 0.2% Volume of investments 6,375 Gas and petrochemical industry by EMP16 and country, mln rubles 3,727 / 0.9% 4,010 3,665 4,222 16 Entities included in the Company’s management Thermal power perimeter.

2,192 / 0.5% 17 The main changes are related to the new decisions made by the investment committee, as well as the 17 exclusion of JSC GSPI Division from the consolidation 2014 2015 2016 2017 Structure of the order portfolio perimeter in 2016 as part of the transfer to another Forecast division of Rosatom State Corporation. by business type, mln rubles 2016

PJSC EMSS (Ukraine) 33

JSC OKB TOTAL JSC Afrikantov OKBM PJSC ZiO-Podolsk GIDROPRESS Traditional New 1,379 758 279 223,907 / 53% 420,155 196,248 / 47%

JSC TsKBM JSC AEM-Technologies 1,286 357 TOTAL: 4,189 TOTAL: 33 Other 130 EMP in Russia EMP abroad

Structure of contracts Other 3,994 / 3% concluded in the reporting year 2016 RAW / SNF Attracted investments by operating segments, 217 21 20 511 / 0.4% and capital on the part of R&D, mln rubles General equipment mln rubles 798 / 0.6% 922 TOTAL Nuclear Energy Shipbuilding and OFPU / TMES 119,930 / 88.8% 3,110 / 2.3% 135,118 JSC Afrikantov OKBM Special steels 363 258 2,214 / 1.6% JSC AEM-Technologies 184 Gas and petrochemical industry Other 2014 2015 2016 2017 3,328 / 2.5% Forecast Thermal power 24 1,233 / 0.9% 25 JSC ATOMENERGOMASH RESULTS OF 2016 Results Quality of Production and Industrial Activities Safety

One of the values that Rosatom State Corporation impose special obligations on all enterprises of Key performance results of production activities by business areas treasures most is the security. The main condition for the Division in regards of product quality, with in 2016: achieving safety in the operation of nuclear facilities is quality assessment becoming an integral part of the product quality control at the Division enterprises, manufacturing process of all types of products. because of that the safety of nuclear facilities is Nuclear Energy The high quality of products manufactured by directly related to the quality of products. • Supply of products to the following Nuclear Power Plants: Beloyarsk NPP (power units EMPs is provided by the certified proprietary quality No. 3 and No. 4), Kola NPP, Rostov NPP (power units No. 3 and No. 4), Kalinin NPP, The growing safety requirements for nuclear management system of the EMPs that meets the Smolensk NPP, Balakovo NPP, Novovoronezh NPP, Novovoronezh NPP-2, Kursk NPP, facilities both in operation and under construction requirements of ISO 9001. Leningrad NPP, Leningrad NPP-2, Belorusian NPP, Armenian NPP, Bohunice NPP, Mokhovce NPP, Kozloduy NPP, Tianwan NPP (power units No. 3 and No. 4), Temelin NPP (power units No. 1 and No.2), Paks NPP. Enterprises holding Name of certification system Name of the entity and certificate’s validity period ISO 9001 certificates for quality Thermal power ARAKO spol. s.r.o. TÜV SÜD, to September 14, 2018 management system Ganz EEM LLC T V S D, to September 14, 2018 • Supply of products to the production sites of Verkhnetagilskaya TPP, Berezovskaya Ü Ü JSC Atomenergomash IQNet (the Russian Register of St Petersburg), to December 28, 2019 TPP, Zhambyl TPP, Toparskaya TPP, Arkhangelsk CHPP, Yaroslavl CHPP, Pregolskaya TPP, JSC OKB GIDROPRESS BUREAU VERITAS Certification, to October 23, 2017 Primorskaya TPP, and others. JSC Afrikantov OKBM TÜV Thüringen, to September 14, 2018 JSC NPO TsNIITMASH BUREAU VERITAS Certification, to March 11, 2017 Gas and petrochemical industry JSC ATM AFNOR Certification, to September 14, 2018 JSC AEM-Technologies IQNet (the Russian Register of St Petersburg), to September 15, 2018 • Carrying out of JSC AEM-Technologies contracts for the supply of column and reactor OJSC Venta GOST R VCS, to December 24, 2017 equipment for: JSC VNIIAM Evro-Reestr VCS, to July 17, 2018 –– Orsk Refinery; PJSC ZiO-Podolsk Lloyd's Register Quality Assurance, to September 14, 2018 –– JSC Gazpromneft – Moscow Refinery; JSC SverdNIIkhimmash Management System Register VCS, to September 01, 2018 –– JSC Gazpromneft – Omsk Refinery. JSC SNIIP TÜV CERT, to September 15, 2018 JSC TsKBM IQNet (LLC Test – St Petersburg), to June 30, 2017 • Implementation of the agreement signed with JSC SverdNIIkhimmash for the design LLC AAEM IQNet (the Russian Register of St Petersburg), to September 14, 2018 and supply of a vacuum-evaporator installation for the production of “Extra” grade table PJSC EMSS TÜV Thüringen, to September 14, 2018 salt in the Kaliningrad Region. Special steels

• Shipment of products for the ArcelorMittal plants (Germany, Luxembourg, France, The percentage of products that 100% 100% Romania, Belgium, Poland, Spain), and the following companies: General Electric 82% International Inc. (USA), BHEL (India), Fabbrica Italiana Lamiera (Italy), Alstom Renewable passed consumer input control (Poland), Iron Acciai Speciali s.r.l. (Italy), Iron Acciai Speciali (Italy), Bhushan Power (India), on the first application18 ABB (Estonia, Poland, Finland), AH Industries (Denmark), Perfect Concept Trading (Russia, India), Aperam Stainless Belgium (Belgium), ThyssenKrupp Rothe Erde (Germany) and other 18 A low percentage of products that passed the consumer input control on the first application at leading European companies. the Nuclear Power Plant is associated with a lengthy processing procedure for the decision-making on the Shipbuilding and FNPP / TMES use of the imported equipment at LLC ARAKO. • Supply of equipment for the shipbuilding industry of the Russian Federation, including the Russian Navy.

• Mastering, manufacturing and shipping of the new generation RITM-200 reactor Nuclear Shipbuilding Thermal for the nuclear-powered icebreaker LK-60 (project 22220). Energy and FNPP power

26 27 JSC ATOMENERGOMASH RESULTS OF 2016

Economic effect of RPS projects, mln rubles 1,354.7 20 691.3 849.8 20 The reason for failure to comply with the plan is the 615.4 Optimization changes in the target indicator for unfinished production 354 in the RPS-streams due to changes in the production program, as well as the suspension of two large RPS- projects due to changes in contract terms. 2014 2015 Planned for Actual 2017 of Production 2016 in 2016 Forecast

Number of submitted 3,442 3,341 and implemented proposals 2,131 1,755 1,913 Processes 1,141

The implementation of the ROSATOM production managing complex optimization of production 2014 2015 2016 system is an industry project aimed at creating, and management processes of the Rosatom State in the light of the best examples of domestic Corporation enterprises. 2016 and foreign experience, of a universal system for 1,279 Number of RPS19 projects, pcs. 400 354 654 766 19 Rosatom Production System. 226 219 209 280 91 Submitted 153

Atommash branch PJSC ZiO-Podolsk JSC TsKBM PJSC EMSS JSC Afrikantov OKBM Other 2014 2015 Planned Actual 2017 of JSC AEM-Technologies for 2016 in 2016 Forecast Implemented 209 210 88 2016 actual 383 291 Other 950 46 JSC Afrikantov OKBM JSC SverdNIIkhimmash 126 24 Procurement Atommash branch of JSC AEM-Technologies 70 Activities

JSC TsKBM Procurement activities of JSC Atomenergomash Corporation, of customer functions in relation 88 are targeted at carrying out measures for the to conducting procurement procedures and the implementation by Atomenergomash JSC, being authorized body in respect to EMPs procurement. a machine building division of Rosatom State

The RPS project implementation 23.8 Total value of contracts TOTAL 65.4 costs, mln rubles 26.6 concluded in 2016, 11.9 12.6 bln rubles 13.6 7.4 5.7 7.5 5.6 5.1 6.8

JSC Atomen- JSC AEM- PJSC JSC JSC Other 2014 2015 Planned Actual 2017 ergomash Technologies ZiO-Podolsk TsKBM Afrikantov for 2016 in 2016 Forecast OKBM

28 29 JSC ATOMENERGOMASH RESULTS OF 2016

Share of purchases from 96% Russian suppliers, mln rubles 127,563.8 98% 96% 64,032.3 Innovation 45,028.9

2014 2015 2016

Share of purchases within Activities 69% the Division, mln rubles 91,581.5 One of the main factors of competitiveness JSC Atomenergomash set implementation of R&D in the field of power engineering is the investment projects as one of its priorities. 47% 44% into innovation, research, and development. Being aware of the importance of this field 20,760.9 30,663.6

2014 2015 2016

Share of purchases from small 40% Number of patents and noticeable and medium-sized businesses 26,155.6 results of intellectual activity, pcs. Other 6 (SMB), mln rubles JSC OKB GIDROPRESS JSC NPO TsNIITMASH 9 23 5% 1% 2,168.6 928.6 2014 2015 2016 TOTAL

JSC AEM-Technologies 81 Share of public procurement 93% 12

procedures, mln rubles 21 The reason for failure to comply with the plan 21 123,046.3 is the disruption of work with subcontractors JSC SverdNIIkhimmash 98% on the Proryv project. 7 92% 64,149.7 JSC Afrikantov OKBM 43,273.3 18

2014 2015 2016

Other The amount of funds saved JSC OKB GIDROPRESS 8 / R&D 0 JSC NPO TsNIITMASH by using public competitive Other Number of published scientific 23 / R&D 23 53 / R&D 53 procurement procedures, 167.6 papers and articles, including mln rubles subjects of R&D, pcs.

R&D JSC Afrikantov OKBM 399.7 TOTAL TOTAL 301 JSC AEM-Technologies 1,917.4 933.8 R&D 76

JSC TsKBM 233.9 JSC Afrikantov OKBM PJSC ZiO-Podolsk 217 / R&D 0 182.4 30 31 JSC ATOMENERGOMASH RESULTS OF 2016

Other Participation in scientific PJSC ZiO-Podolsk 18 / 22 Direct emissions of greenhouse 18 / 15 Carbon dioxide Nitrous oxide conferences, including gases, t (CO ) (N O) JSC NPO TsNIITMASH JSC Afrikantov OKBM 2 2 presentations, pcs. 266 / 163 24 / 23 112,448.1 89,223.71 88,650.25 90,157.54 87,980.6 13.66 13.04 13.04 8.84 6.74 Including presentations TOTAL 470 2014 2015 Planned Actual 2017 including for 2016 in 2016 Forecast presentations JSC OKB GIDROPRESS 254 144 / 31 64,331.1

25,574

248.54

Carbon dioxide (CO ) Environmental 2 2.5 1.4

JSC Afrikantov Petrozavodskmash branch PJSC EMSS JSC SNIIP Other OKBM of JSC AEM-Technologies

Nitrous oxide (N O) 0.04 Management 2 3.9 Environmental safety issues are an essential part energy solutions and in terms of environmental 4.9 of the positioning of the Division’s enterprises both protection in their business activities. in terms of operation in the market for advanced Emissions of ozone-depleting substances, t Enterprises holding Companies Availability of ISO 14001 certificate Company Substance type 2014 2015 2016 planned 2016 actual 2017 forecast ISO 14001 certificates22 PJSC ZiO-Podolsk Carbon tetrachloride 0.013 0.013 0.013 0.013 0.013 22 ISO 14001 is a series of international standards JSC SNIIP Yes on environmental management. Trifluorochloromethane 0.1 - - - - 23 Currently, PJSC ZiO-Podolsk is implementing PJSC Energomashspetsstal Yes an environmental management system in accordance JSC SverdNIIkhimmash Carbon tetrachloride 0.04 0.04 0.04 0.04 0.01 with the international standard ISO 14001:2015. The first stage of the audit is set for March 2017. PJSC ZiO-Podolsk23 Certification is planned in 2017 JSC Afrikantov OKBM Carbon tetrachloride 0.02 0.018 0.022 0.018 0.018

Expenses for the prevention 252.6 of impact on the environment Atmospheric emissions of NOx, SOx, and for the environmental 148.2 150.6 and other significant pollutants, t management system, mln rubles 88.8 Gas name 2014 2015 2016 planned 2016 actual 2017 forecast 2014 2015 2016 2017 2016 Forecast NOx 320.1 281.3 528.2 394.8 390.2 SOx 26.8 46.2 45.5 44.8 41.6 Petrozavodskmash branch of JSC AEM-Technologies PJSC ZiO-Podolsk JSC Afrikantov OKBM Persistent organic pollutants (POP) 0.1 0.1 0.1 0.1 0.1

Volatile organic compounds (VOC) 179.3 117.9 145.2 106.3 104.6 13.5 17.7 56.3 10.5 9.36 27.9 15.4 Hazardous air pollutants (HAP) 0.1 0.1 0.1 0.1 0.1

Atommash branch LLC PZM LZ JSC VNIIAM Other Solid particles (SP) 123.4 94.8 105.2 93.0 87.7 of JSC AEM-Technologies Other 281.2 198.1 197.3 160.6 161.1

32 33 JSC ATOMENERGOMASH RESULTS OF 2016

Waste volume by type of treatment, t Other Reuse 7,933.7 / 24% 9,705.3 / 28% Personnel Composition

Personnel management is based on the principles between the Atomenergomash strategic priorities TOTAL of the rule of law, safety culture, corporate and pro- and personal interests of every employee. fessional ethics, social responsibility, and the balance 33,603.5 Extraction of valuable Storing at company’s components facilities 20.5 / 1% Number of employees, pers. JSC Atomenergomash 287 4,578.9 / 14% Disposal at landfills LLC AAEM 96 11,365.1 / 33% ARAKO spol. s.r.o. 205

Total weight of waste JSC ATM 116 by category and type JSC AEM-Technologies 3,471 of treatment, t Hazardous Non-hazardous LLC PZM LZ 393 39,288.7 37,346 34,018.2 Ganz EEM LLC 119 30,348.9 30,959.8 JSC SNIIP 525

JSC REMKO 8

PJSC ZiO-Podolsk 3,003 3,949.2 2,793.6 4,157.62 3,260.52 3,374.91 TOTAL JSC ZIOMAR EC 22 2014 2015 Planned Actual 2017 for 2016 in 2016 Forecast 18,228 JSC IFTP 63

2016 actual JSC NPO TsNIITMASH 487

14,671 JSC VNIIAM 84

24 In 2016, employees changed over to part-time schedule 24 at their own discretion. JSC SverdNIIkhimmash 488

JSC TsKBM 1,011

JSC OZTMiTS 119 4,853.4 4,829.8 OJSC Venta 287 2,135.3 2,225.2 1,843.6 1,925.9 PJSC EMSS 1,647 675.9 23.9 63.6 7.2 354.6

Atommash branch Petrozavodskmash branch PJSC ZiO-Podolsk PJSC EMSS JSC Afrikantov OKBM Other JSC Afrikantov OKBM 4,256 of JSC AEM-Technologies of JSC AEM-Technologies JSC OKB GIDROPRESS 1,541

34 35 JSC ATOMENERGOMASH RESULTS OF 2016

Share of employees who have worked JSC Atomenergomash includes as its members specialists employed at the enterprises of the Division in the company less than 5 years, % some leading scientific institutes and design have scientific degrees and state awards for their TOTAL 29% bureaus that have unique experience in developing achievements. innovative solutions for the power industry. Many

63 61 61 58 Candidates of Science, pers. 49 45 40 40 34 30 34 TOTAL 296 21 25 27 22 26 25 22 17 13 92 77 5 60 14 14 Share of employees who have worked 6 4 0 7 2 3 2 11 4 in the company from 5 to 10 years, % TOTAL 30% 75 Doctors of Sciences, pers. 50 TOTAL 75 38 42 40 40 31 33 35 36 27 24 23 27 25 24 24 15 18 18 14 8 20

Share of employees who have worked 9 TOTAL 41% 3 4 in the company for more than 10 years, % 0 0 0 2 1 0 0 0 0 70 64 63 55 51 50 45 48 43 MBA degree, pers. 39 37 36 36 30 35 26 TOTAL 34 26 16 6 1 0 0

JSC IFTP 6 JSC ATM JSC SNIIP PJSC EMSS LLC AAEM JSC TsKBM LLC PZM LZ JSC REMKO JSC VNIIAM OJSC Venta 0 1 0 0 0 0 0 0 1 0 0 0 JSC OZTMiTS Ganz EEM LLC JSC ZIOMAR EC PJSC ZiO-Podolsk ARAKO spol. s.r.o. JSC Afrikantov OKBM JSC NPO TsNIITMASH JSC OKB GIDROPRESS JSC Atomenergomash JSC SverdNIIkhimmash JSC AEM-Technologies JSC IFTP JSC SNIIP PJSC EMSS LLC AAEM JSC TsKBM JSC VNIIAM Ganz EEM LLC PJSC ZiO-Podolsk JSC Afrikantov OKBM JSC NPO TsNIITMASH JSC OKB GIDROPRESS JSC Atomenergomash JSC SverdNIIkhimmash The average age of employees in the Division is 45 years JSC AEM-Technologies

Share of specialists 34 34 31 under 35 years old, % Academicians of the Russian Academicians Professors Academy of Sciences, professors, - JSC Atomenergomash 1 2014 2015 2016 pers. 1 JSC NPO TsNIITMASH 20 54 Share of employees with 51 51 1 JSC Afrikantov OKBM 6 higher education, % 2 JSC OKB GIDROPRESS 2

2014 2015 2016 4 TOTAL 29

36 37 JSC ATOMENERGOMASH RESULTS OF 2016

Company Indicator Male Female Petrozavodskmash branch Number of injuries 2 - of JSC AEM-Technologies Occupational safety Number of days lost as the result of injuries, total 128 Cases of occupational diseases - - The main objective of the Division enterprises is Code of the Russian Federation, the Federal Law Number of fatal accidents - - the compliance with all industrial and occupational No. 116-FZ “On industrial safety at hazardous LTIFR, total 0.51 safety and health requirements. production facilities”, the Decree of the Ministry of LLC PZM LZ Number of injuries 3 - Labor of the Russian Federation, as well as by relevant Within the scope of the presented activities, the Number of days lost as the result of injuries, total 34 GOST, SNIP, PB, RD, Occupational Safety Standards, Company is guided by applicable provisions of the Cases of occupational diseases 1 - and OHSAS 18001 requirements. current regulatory documents, including the Labor Number of fatal accidents 1 - LTIFR, total 5.06 PJSC ZiO-Podolsk Number of injuries 2 - Enterprises holding EMP Availability of OHSAS 18001 certificate Number of days lost as the result of injuries, total 138 OHSAS 18001 certificates Cases of occupational diseases - - PJSC ZiO-Podolsk / JSC ZIOMAR EC Yes Number of fatal accidents - - JSC SNIIP Yes LTIFR, total 0.38 JSC VNIIAM Yes PJSC EMSS Number of injuries 3 - Number of days lost as the result of injuries, total 242 Cases of occupational diseases - - Number of fatal accidents - - LTIFR total for the Division 0.54 LTIFR, total 0.85 Target value for 2016 0.42 Number of employees working 4.765 5.044 4.710 Target value under harmful conditions, pers. 0.25 for 2017 Result 2014 2015 2016 for 2016 2016

Frequency of occupational Atommash branch accidents and occupational of JSC AEM-Technologies 2014 2015 2016 928 diseases Indicator Male Female Male Female Male Female Other 830 Number of injuries 21 1 10 4 10 -

Number of days lost 1,614 1,073 542 Petrozavodskmash as the result of injuries, total JSC Afrikantov OKBM branch of JSC AEM- 538 Technologies Cases of occupational diseases 2 - 1 - 1 - 375

Number of fatal accidents 1 - - - 1 - PJSC EMSS LTIFR, total 0.49 0.44 0.25 583 PJSC ZiO-Podolsk 1,456

38 39 JSC ATOMENERGOMASH

The amount of occupational 253.6 283.5 safety costs, mln rubles 201.2 220.3

2014 2015 2016 2017 Forecast

2016

Atommash branch Other of JSC AEM-Technologies 38.5 48.8

JSC OKB GIDROPRESS 36.2 PJSC ZiO-Podolsk 32

JSC TsKBM JSC Afrikantov OKBM 52.3 94.6

Contact information

Fax + 7 (495) 668-20-95 Joint Stock Company «Nuclear and Power Phone +7 (495) 668-20-93 Engineering» (JSC Atomenergomash) E-mail [email protected] Principal State Registration Number (OGRN code): Website www.aem-group.ru 1067746426439, registered on March 29, 2006 by the Interdistrict Inspectorate No. 46 of the Federal Tax Service in Public annual reports www.aem-group.ru/about/reports/ the city of Moscow The official group at "Vkontakte" vk.com/atomenergomash Legal address: 119017, Moscow, ul. Bolshaya The official Facebook community www.facebook.com/aemgroup Ordynka, 24. Mailing address: 115184, Moscow, Ozerkovskaya Gryzunov Dmitry Alekseyevich Vavulina Inna Petrovna nab., 28, bldg. 3. Head of Corporate Press Secretary Communications Department [email protected] [email protected] +7(495) 668-20-93 (ext. 1350) +7 (495) 668-20-93 (ext. 1040)