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Integrated Annual Report 2015 Integrated Annual Report JSC Atomenergomash 2015 ar2015.aem-group.ru JSC Atomenergomash provides access to the integrated interactive version of the annual report for 2015 for its stakeholders. This product allows easy information presentation of the main annual results of the Company, as well as the access to additional data, which was not included in the print version in a analysis-friendly format. —00 Contents page 2 page 22 — — THE COMPANY IN BRIEF COMMERCIAL ACTIVITIES page 2 page 23 — — 2015 PERFORMANCE HIGHLIGHTS INVESTMENT ACTIVITIES page 4 page 24 — — KEY EVENTS IN 2015 RESULTS OF PRODUCTION ACTIVITIES page 6 page 25 — — MESSAGE FROM THE COMPANY QUALITY AND INDUSTRIAL SAFETY MANAGEMENT page 25 page 12 — — OPTIMIZATION OF PRODUCTION PROCESSES BUSINESS MODEL OF THE COMPANY page 28 page 14 — — INNOVATION DEVELOPMENT SPECIALIZATION OF THE DIVISION’S ENTERPRISES page 29 — page 15 ENVIRONMENTAL MANAGEMENT AND — ENVIRONMENTAL IMPACT BUSINESS GEORGRAPHY page 32 page 16 — — PERSONNEL COMPOSITION KEY MARKET PROJECTS page 35 page 18 — — OCCUPATIONAL SAFETY AND HEALTH STRATEGIC VISION AND OBJECTIVES page 38 page 19 — — SOCIAL RESPONSIBILITY ECONOMIC PERFORMANCE 01 — COMMERCIAL ACTIVITIES — The Company in brief Market share in the Russian power Total value of concluded JSC Atomenergomash (the Company, AEM) engineering industry contracts bln is a Mechanical Engineering Division of the Rosatom 23% 172 rubles State Corporation (the Division) and is one of the largest Order book at power engineering the year-end bln Share of orders in the rubles portfolio of new holdings in Russia, that offers a full range of solu- 392.7 products 33% tions in the areas of design, manu- The Division is comprised of largest power-engineering businesses, facture, and supply of equipment including research, engineering, manufacturing, construction and in- for nuclear and thermal energy, stallation companies. Production capacities are located in the Russian gas and petrochemical, shipbuild- Federation, Ukraine, the Czech Republic, and Hungary. ing industries, and the market of EFFICIENCY IMPROVEMENT special steels. — The Company has full control over the production chain of key Effect of the RPS Energy Transferred Labor productivity introduction savings mln to outsourcing growth equipment for the nuclear island mln 1 GJ and the power island – from Research & Development and development of technical doc- 691 rubles >500 23% umentation to the design of industrial processes and the manufac- persons ture of equipment. In addition, the Division is developing new lines of business, the key of which are thermal energy, gas and petro- chemical industry, shipbuilding industry, and special steel. STAFF CAPACITY Equipment manufactured by the Division — has been installed in more than 20 countries; 14% of the nuclear power plants in Share of specialists Engagement Share of employees with seniority operation worldwide and 40% of the under 35 level of more than 5 years thermal power plants in the Russian years old Federation and FSU countries use the 33% 75% 57% —02 Company’s equipment. SCIENTIFIC ACTIVITIES 2015 Performance — patents and intellectual scientific Highlights 77 property certificates 256 publications ECONOMIC PERFORMANCE — Combined AEM 1.3 EBITDA revenue bln bln SOCIAL RESPONSIBILITY 56.2 rubles 1.98 rubles — Paid to bln Charity mln the budget 6.5 rubles expenses13.6 rubles OPERATING PERFORMANCE — Products shipped nuclear power plants Fulfillment of contractual ENVIRONMENTAL RESPONSIBILITY to 11 under construction obligations 97% — Reduction of greenhouse Environmental impact The share of production for existing nuclear power gas emissions mitigation costs plants that has passed incoming inspection mln rubles from the moment of first presentation 99% 12% 93 2 — — 3 —03 Key Events in 2015 Commercial Activities Staff capacity ã The first reactor vessel manufactured at the production site of the ã JSC Atomenergomash graduated succession candidate as part of Atommash plant (branch of AEM-Technology JSC) was supplied to a project for the development of engineering and scientific per- the Belarusian Nuclear Power Plant after a thirty-years’ interrup- sonnel at the enterprises of the Division called “I AM AN AEM tion. In addition, this is the first WWER reactor vessel manufac- ENGINEER.” tured by Rosatom State Corporation1. ã The team of JSC TsKBM won the branch Event Young Profession- ã PJSC ZiO-Podolsk successfully completed contracts for the supply of als «Temp-2015» - a large-scale project of the Rosatom State Cor- steam generators to the Leningrad NPP-2 and to the second stage poration and the Rosatom Corporate Academy for attraction of of the Tianwan Nuclear Power Plant (power units No. 3 and No. 4). young professionals to work in the nuclear industry. ã The stage of power start-up and development of the power unit ã Atommash (a branch of AEM-Technology JSC) held a ceremony of No. 4 with a BN-800 reactor at Beloyarsk NPP, which was devel- award of diplomas to the first graduates of the Production Fore- oped and delivered by the chief designer of fast-neutron reactor man School project, the concept of which was to create a com- units JSC Afrinkantov OKBM, was started. prehensive system of training managers under a program for in- dustrial engineers. ã The enterprises of JSC Atomenergomash have assembled the ves- sels of two reactors of the RITM-200 power plant for the Arctic, the world’s largest Russian new-generation nuclear icebreaker, which is currently under construction. Scientific Activities Efficiency improvement ã Commissioning of unique equipment for the industrial pro - ã A project of restoration of the Atommash production complex duction of MOX fuel for fast-neutron reactors, which has been (branch of AEM-Technology JSC), which was accompanied by the largely developed and delivered by JSC SverdNIIkhimmash and renewal of equipment, the training of members of the personnel, JSC TsKBM. and the introduction of new processing technologies, was imple- mented. The project featured participation from the following ã JSC TsKBM has successfully completed the resource testing of a enterprises: JSC NPO TsNIITMASH, JSC OKB GIDROPRESS, and new design of the GTsNA-1753 main circulation pump featuring PJSC ZiO-Podolsk; Rosatom State Corporation acted as a curator. a single-shaft arrangement with a water-cooled motor and wa- ter-cooled bearing units, which will increase the safety of nucle- ã The industry RPS project of JSC Afrinkantov OKBM named «As- ar power plants. sembly, Testing, and Manufacturing of NSO 250/15 and NSO 250/30 Pump Components on the Critical Path» allowed reducing ã Employees of JSC NPO TsNIITMASH received science and tech- the time of manufacture of the products in comparison with the nology awards from the Russian Government for their develop- previous year by 32%. ments in 2015. ã JSC SNIIP successfully passed the first supervisory audit of the en- ergy management system based on ISO 9001:2008, which was conducted by the official representative of the Certification Body for Management Systems and Personnel of TÜV Thüringen. ã JSC NPO TsNIITMASH developed and implemented a new tech- nology for sectional forging of bottoms of steam generators that will save up to 40% of the metal and reduce the complexity and power consumption. 1 – Earlier, Rosatom State Corporation acquired these products from an external supplier. 4 — — 5 —04 Message from the « Labor productivity growth has been provided for, and the overall economic effect of the introduction of the Rosatom Production Company Management System is almost twice the figures of 2014 and amounts to approximately 700 mln rubles.» Dear colleagues and partners, I am pleased to present to you the Integrated Annual Report of JSC Atomenergomash for 2015. The report focuses particularly on production, financial, social and environmental issues related to the activities of the Mechanical Engineering Division of Rosatom State Corporation. In 2015, the Division continued its dy - 2015, one may note a significant growth in the Lyakhova namic development. Despite macroeconom- volume of orders of thermal power, gas and Ekaterina ic difficulties, the Company demonstrates oil industry, and general engineering. The Di- — stable growth of financial and economic per- vision has also intensified its efforts to increase formance indicators while remaining one export earnings and consolidates the neces - Chairwoman of the Board of Directors of the leaders of the Russian power engi - sary resources for more active operation on of JSC Atomenergomash Director of Investment Management neering industry. foreign markets. and Operational Efficiency An important step towards sustainable de- In the context of strategic objectives at Rosatom State Corporation velopment was the final positioning of the Di- posed before Rosatom State Corporation, it vision as a complete supplier of equipment for is necessary to pay attention to the system- the nuclear industry. A significant milestone atic work of the management team of the Di- and a bright page in 2015 was the shipment vision, which is aimed at reducing the costs of a reactor for the Belarusian NPP, which was and improving the efficiency. Labor produc- the first reactor manufactured by entities of tivity growth has been provided for, and the the Rosatom State Corporation circuit. Thanks overall economic effect of the introduction to the restoration of the work of the engi - of the Rosatom Production System is almost neering giant, the Atommash,