2 TVEL JSC. KEY RESULTS 2016 3 TVEL JSC. KEY RESULTS 2016

MESSAGE OF THE PRESIDENT OF TVEL JSC

On 12 September 2016 ’s TVEL Fuel Company celebrated its 20th anniversary. The anniversary year was especially eventful and productive for the Company.

2016 was the year of strengthening our position in the international market. We made considerable progress in internationally promoting the Russian TVS-K nuclear fuel for Western-type PWR reactors.

In the recent 5 years the revenue from the sales of key products of the Fuel Company’s non-nuclear businesses has increased manifold to over RUB 10 bln.

At 2016 year-end, the Company as always managed to perfectly meet all of its obligations under the existing contracts with Russian and foreign customers. 20th anniversary of ROSATOM’s TVEL Fuel Company Yury A. Olenin, was celebrated in 2016 President of TVEL JSC 4 TVEL JSC. KEY RESULTS 2016 5 TVEL JSC. KEY RESULTS 2016 Key events 2016

FEBRUARY AUGUST NOVEMBER TVEL Fuel Company acceptance commission has accepted and rec- In framework of implementation Joint Contract for the supply of fuel for the The first lot of modified fuel TVSA-12 ommended for the serial production Comprehensive Plan of Action (JCPOA) Czech Republic’s research reactor was loaded in unit 6 of Kozloduy NPP the more efficient new generation gas endorsed by UN resolution #2231 Iran en- was concluded. Delivery was com- (Bulgaria). centrifuge. riched nuclear products were imported in pleted in November 2016. Russia. Execution of this project allowed to drop sanctions, imposed due to nuclear First silicon chip enriched in isotope DECEMBER 2016 program of Iran. silicon-28 was developed and deliv- ered for the international project on Five-year contract with major Euro- TVEL Fuel Company and INVAP S.E. creating standard of mass “Kilo- pean metal trading company Hermith (Argentina) signed a number of con- MAY gramm-3”. GmbH (Germany) for the supply of tracts for the supply of uranium com- more than 1,000 tons of titanium mill ponents of nuclear fuel for research TVEL Fuel Company and Global Nuclear products worth a total of more than reactors. Fuel-Americas (GNF-A) signed an agree- SEPTEMBER RUB 2 bln was concluded. ment to work together toward the licensing, Cooperation perspective of TVEL marketing and fabrication of TVS-K fuel for Memorandum of intent with inter- TVEL JSC and Vattenfall Nuclear Fuel Company subsidiary — MSZ U.S. customers operating Pressurized Wa- national scientific research group Fuel AB signed a contract for the PJSC — and French nuclear compa- ter Reactors (PWRs). GERDA on production and supply of supply of TVS-K fuel for the Ringhals ny AREVA on production of fuel and germanium enriched in stable isotope NPP (Sweden). its components made of reprocessed At the VIII International Forum ATOMEXPO 76Ge was signed. uranium on Russian plants was ex- 2016 in Moscow, TVEL Fuel Company and tended through to 2030. the National Atomic Energy Agency of Indonesia (BATAN) have signed the Roadmap for the development of the bilat- eral cooperation in the nuclear fuel cycle which defines specific interaction steps of the two organizations, including work on the possibilities of Russian nuclear fuel de- liveries for research reactors in Indonesia. JANUARY

UEIP JSC became industrial partner of JULY consortium of Russian head research in- stitutes, including ROSATOM companies TVEL JSC and one of the USA nuclear op- GIREDMET JSC and RPA “CNIITMASH” erators signed the first contract for Russian JSC, in the project on development of Rus- fuel TVS-K pilot operation. sian metal polipowder 3D printing tech- nology. Consortium participants started Contract documents for the reserve supply working on engineering and production of of nuclear fuel for NPP Paks (Hungary) the trial model. were signed. 6 TVEL JSC. KEY RESULTS 2016 7 TVEL JSC. KEY RESULTS 2016

ENTERPRISES OF TVEL FUEL COMPANY: OPERATING REGIONS

MSZ PJSC (Elektrostal) VPA Tochmash JSC (Vladimir) • Production of nuclear fuel for power reactors of Production of components for plants Russian design • Production of nuclear fuel made of RepU KMP PJSC (Kovrov) reprocessed uranium for PWR and BWR Western GC Production reactors in cooperation with AREVA • Production of nuclear fuel and components for ChMP JSC (Glazov) research reactors Conversion (UF4). Zr-components

10regions of Russia 13enterprises of TVEL Fuel Company

VNIINM JSC, TsPTI SC (Moscow) R&D

TVEL JSC (Moscow) Management Company

MZP JSC (Moscow) GIA NCCP PJSC (Novosibirsk) TVEL Fuel Company • Production of nuclear fuel for power reactors of Russian design • Production of nuclear fuel for PWR reactors of Western design (TVS-K) includes Russia’s major RME Centrotech LLC (Novouralsk) • Production of nuclear fuel and components for research reactors enterprises specializing in R&D, development and production of gas centrifuges, GIA the production and supplies SGCHE JSC (Seversk) UEIP JSC (Novouralsk) Uranium Enrichment & Conversion (UF6) of nuclear fuel, as well as Uranium Enrichment scientific and technical sup- PA ECP JSC (Zelenogorsk) Uranium Enrichment port in relation to nuclear fuel at nuclear power plants AECC JSC (Angarsk) Uranium Enrichment in Russia, Former Soviet Union and beyond.

Uranium conversion plants Fabrication plants General Industrial Activities (GIA)

Enrichment plants Assets for manufacture of gas centrifuges (GC) R&D 8 TVEL JSC. KEY RESULTS 2016 9 TVEL JSC. KEY RESULTS 2016

MAIN PRODUCTS AND SERVICES

TVEL Fuel Company is one of the leading players in the global market of the front end of nuclear fuel cycle and the only nuclear fuel supplier for Russian NPPs.

It provides nuclear fuel for 75 power re- associated equipment; design, manufac- actors in Russia, countries of Europe and ture and sales (including export) of nuclear Asia, as well as for research reactors of fuel and associated non-nuclear products. Russian and Western design and propul- sion reactors of the Russian Nuclear Navy. TVEL Fuel Company manufactures fuel At present every sixth reactor in the world assemblies for all types of operating Rus- operates on the fuel produced by TVEL sian power reactors (VVER, RBMK, EGP, Fuel Company. BN), research and propulsion reactors, PWR and BWR reactors in Western Eu- The main business directions of the Com- rope in cooperation with AREVA, as well pany include uranium enrichment; design as proprietary TVS-K fuel for PWR reac- and manufacture of gas centrifuges and tors of Western design. 75 It provides nuclear fuel for 75 power reactors in Russia, countries of Europe and Asia 10 TVEL JSC. KEY RESULTS 2016 11 TVEL JSC. KEY RESULTS 2016

GLOBAL MARKET PRESENCE

The main priority Share of NPPs running on Russian-made fuel, % TVEL Fuel Company is a world leader in of TVEL Fuel Company nuclear fuel manufacture. The company’s

is to satisfy its clients. Armenia 100 share in the global fuel production market in 2016 was 17%. TVEL Fuel Company Bulgaria 100 together with JSC “” occupies over one third of the global Hungary 100 uranium enrichment market.

Iran 100

Russia 100

Finland (2) Slovakia 100

Czech Rep. 100 Russia (36)

Ukraine 85

Finland 36

Ukraine (13) India 31 Western Europe (3) Czech Republic (6) Slovakia (4) China 3 Hungary (4) Bulgaria (2) Armenia (1)

China (1)

Competitive •• powerful scientific cluster and its con- •• flexible bid and complete deliveries advantages of TVEL tinuous evolvement; under long-term contracts; •• use of high technologies and leading •• high delivery reliability, guaranteed (1) Units Iran (1) Fuel company: scientific research results; by availability of several plants in Ongoing supplies of nuclear fuel •• fuel technical and economic specifi- each process cycle of nuclear fuel for units of Russian design India (2) cation improvement; fabrication. Ongoing supplies in cooperation with AREVA

1 0 .1 1.4 *As of the end of 2016 according to the IAIE 3 72 PRIS database, given that unit #3 of the Export orders portfolio for products Export revenue of Novovoronezh NPP was brought to stop only Number of reactors of Number of reactors and services of FE NFC for TVEL Fuel Company on 25.12.2016 it is considered as operating Western design running on Russian- of Russian design running a 10 year period, $ bln in 2016, $ bln in 2016. made fuel, (in cooperation with AREVA) on Russian-made fuel* 12 TVEL JSC. KEY RESULTS 2016 13 TVEL JSC. KEY RESULTS 2016

GENERAL INDUSTRIAL PRODUCTION

Besides the main products, the TVEL Fuel company Revenue from general industrial supplies the Russian and global market with non- operations* in 2016 was RUB 10.2 mln, nuclear products in four main fields: metallurgy, 21% higher than in 2015 machine-building, chemistry and new energy. +21% Increase in the revenue from general Structure of revenue from purpose industrial activities vs 2015 industrial activities in 2016, %

16 19

13 20 MZP JSC VNIINM JSC MSZ PJSC VPA Tochmash JSC

ChMP JSC

32 ZEP

New energy Machine-building RME Centrotech LLC Metallurgy Other products, works and services Chemistry SGCHE JSC

NCCP PJSC PA ECP JSC

AECC JSC

R&D

METALLURGY CHEMISTRY •• Calcium and calcium wire •• Fluoride compound •• Titanium full-cycle production •• Isotopes •• Special metallurgy •• Zeolitic catalysts •• Special tube rolls •• Catalysts (automotive and industrial) •• Nanometallurgy

NEW ENERGY MACHINE-BUILDING 10,2 •• Lithium and lithium materials •• Instrument engineering •• Materials for lithium-ion batteries •• Nuclear fuel cycle equipment million RUB — revenue from general *Revenue from general industrial operations (without energy services, purpose industrial activities in 2016, including subsidiaries outside perimeter of consolidation, product line of •• Energy storage systems and generators, fuel cells •• Equipment for oil and gas industry which is 21% more than in 2015 which is included in the range of ROSATOM new products). 14 TVEL JSC. KEY RESULTS 2016 15 TVEL JSC. KEY RESULTS 2016

STRATEGY FINANCIAL PERFORMANCE

Mission — тo cater to the needs of its customers In 2016, all KPI and target Distribution of consolidated revenues by products, RUB mln in the sphere of nuclear fuel cycle and in performance indicators used for the related sectors in strict compliance with assessment of TVEL Fuel Company requirements of reliability, safety, environmental performance were achieved. and social awareness. 26,243 115,567

3,222 4 Nuclear fuel and components TVEL FUEL COMPANY STRATEGY FOCUSES ON ACHIEVEMENT Services on conver- OF THE FOLLOWING INDICATORS BY 2030: 35,037 sion and enrichment

•• Growth of the share in the global market of enrichment services by up to 42% Gas centrifuge products (including 20% of supplies via JSC “Techsnabexport”), in the nuclear fuel market by up to 22% due to manufacture of conventional products with high customer R&D appeal and entry into new nuclear markets; Other products •• Growth of revenue to about twice in conditions matching 2014; •• Growth of revenue in non-nuclear sector (including newly created businesses) by 10 times in conditions matching 2014; •• Growth of labour efficiency by almost three times in conditions matching 2014. Adjusted free cash flow, billion RUB 83.9 Strategic goals of ologic TVEL Fuel Company ec al ac nd ce l a p Net sales, billion RUB a ta i b c i o li S ty FE NFC on m th a 180.1 w rk o e r ts G EBITDA, billion RUB

Enhancement 7 7. 4 of efficiency

S t e n Net profit, billion RUB c e o n m d p C lo o e re ev 46.2 d Business EBITDA profitability, % 43.0% 16 TVEL JSC. KEY RESULTS 2016 17 TVEL JSC. KEY RESULTS 2016

RESEARCH & DEVELOPMENT HUMAN CAPITAL

As of the end of 2016 TVEL Fuel TVEL Fuel Company’s team was Company is the owner of 1,838 number one at the team rating in the intellectual property items. In 2016 I Industry AtomSkills 2016 ROSATOM a total of 104 intellectual property Championship designed by the items were registered. procedure of WorldSkills.

TRACK RECORD OF FUEL PROCESSING FEATURE •• Statement-letter from FSUE VO “Safety” on TVEL JSC •• The number of personnel at the end of 2016 — AND TECHNOLOGY IMPROVEMENTS IN 2016: readiness to carry out declared activities on delivering fuel 22,328 employees. and rendering related services for Bushehr NPP (Iran) was •• Labour efficiency — 8.25 mln per person. Development and implementation of nuclear fuel and nu- received. •• Average age of personnel — 43 years old. clear core of Russian reactors: •• The share of employees under 35 years of age — 24%. •• First of a kind power unit of VVER-1200 Project — unit 6 of Development of nuclear fuel for reactors of Western design: •• Amount spent on social programs RUB 1,346 mln, 60.8 thou- Novovoronezh NPP — was set to work and started operat- •• In 2016 agreements on engineering assistance for the pro- sand rubles per employee. ing at full power. gram of pilot and field testing of fuel assemblies TVS-K in •• Regulatory project evaluation of implementing TVSA-12 for USA were concluded with American companies. LABOUR REMUNERATION Kozloduy NPP (Bulgaria) was finished. In 2016 new fuel •• Average salary at TVEL Fuel Company without TVEL JSC — was set to work on unit 6. Development of nuclear fuel for small NPP, research reac- RUB 74,648, 6.6% more, than in the previous year. •• Improved design of TVSA-T.mod.1 was set to work on Te- tors, nuclear icebreakers: •• Expenditure on salary raises and indexation — more than melin NPP (Czech Republic) (spring cartridge, support grid •• Acceptance tests of lead reactor core 14-15-1 for universal RUB 1 bln. and first support grid were enhanced). nuclear icebreaker project 22220 with RU RITM-2000 were •• Pilot operation of TVS-2M with antidebris filter was com- conducted. EDUCATION pleted. Full-scale commercial operation was enacted. •• Technical projects of fuel elements and fuel assemblies MR •• 559 students from higher and specialized secondary educational •• Lot of Fuel Assembly of the third-generation (FA-3) was with low enriched fuel for research reactor MARIA (Poland). institutions participated in TVEL Fuel Company internships. produced and delivered to Kola NPP for the purpose of pi- Acceptance tests of FA MR pilot lot were conducted. •• Number of graduates of higher and specialized education institu- lot operation expansion. •• Experimental fuel assemblies IRT-3M with high-density low tions hired at the Company — 95 employees. •• Acceptance tests for REMIX fuel pellets, fuel cells and enriched uranium-molybdenum fuel for research reactors •• Amount of investments in staff training — RUB 101 mln. combined experimental fuel assemblies intended for pilot were produced. Endurance reactor tests on MIR research operation on Balakovo NPP were carried out. Combined reactor at the Research Institute of Atomic Reactors were OCCUPATIONAL SAFETY experimental fuel assemblies were set to work as part of conducted. •• LTIFR* indicator in TVEL Fuel Company in 2016 decreased by nuclear core. 35.7% compared to 2015 and was 0.09. •• Technical project of neutron-absorbing rods for VVER-1000 Uranium enrichment technological development: •• The total expenses of the Company on occupational safety were harmonized with neutron-absorbing rods for VVER-1200 •• Acceptance tests of new generation gas centrifuge design RUB 1.97 bln or RUB 56,000 per one employee. with extended specified operational life up to 15 years was were successfully conducted. Recommendations were giv- released. en to start serial production and commercial operation of •• Three patents in the field of equipment for separation oper- the new gas centrifuge. ations and construction of fuel assemblies for VVER-1000 were obtained. 74,648 *The number of lost time injuries occurring RUB — Average salary across TVEL Fuel in a workplace per 1 mln man-hours worked. Company (excl. TVEL JSC) in 2016 18 TVEL JSC. KEY RESULTS 2016 19 TVEL JSC. KEY RESULTS 2016

REGIONS OF PRESENCE ENVIRONMENTAL PROTECTION

At TVEL Fuel Company enterprises there were no INES violations, 2 26.1 emergency situations Financing of charity and social initiatives in 2016, or incidents which had RUB mln negative impact on the environment.

TVEL Fuel Company The Program of socio-econom- enterprises are located. Financ- supports socially ic development in the cities where ing of charity and social initiatives important projects TVEL Fuel Company operates was in 2016 was RUB 226.1 mln, of financed within the current agree- which out of the TVEL JSC funds — in the cultural, ments for repayment of regional tax RUB 106.4 mln. educational and sport mark-up to municipal budgets was sectors of the cities RUB 729.56 mln. In 2016 in eight cities of Company’s where the Company’s presence block and building sur- enterprises are located. TVEL Fuel Company supports so- rounding grounds improvement was cially important projects in the cul- carried out: 247 workout complexes tural, educational and sport sectors consisting of outdoor fitness equip- of the cities where the Company’s ment were installed.

In 2016 concepts of creating priority •• The total amount of waste generated •• The total volume of work on FTP development areas (PDA) in Closed from production and consumption by NRS-2 operations was RUB 1.23 bln, Administrative-Territorial Formations the Company’s enterprises was re- including RUB 1.21 bln from the fed- of Seversk, Novouralsk ans Zelenog- duced by 16% compared to 2015 and eral budget and RUB 0.02 bln from orsk were examined at the state level amounted to 176,600 tons. other sources. in the Russian Federation and for- •• Water intake by the enterprises of •• Two nuclear and radiation hazard warded to Ministry of Economic De- TVEL Fuel Company decreased by facilities were liquidated. velopment and Ministry of Finance of 4% compared with the previous year •• Electricity consumption at the enter- the Russian Federation. Concept of and was 416 mln m3. prises of the Company was reduced PDA in Glazov was approved at the •• Emissions were reduced by 13% by 3.9% (118.4 mln kWh), heat con- state level in the Russian Federation. compared to 2015 levels. sumption — by 8.8% 206,900 Gcal) •• Expenses on environmental protec- compared to the 2015 base in match- PDA will allow to create new work- tion were RUB 2,106 mln. ing conditions. places and raise investments in the regions, which will have positive influ- ence on economic and social stability in the Company’s cities of presence. 13% 2 ,1 0 6 Reduction as compared мillion RUB — Environmental to the preceding year spending by the Company in 2016 TVEL JSC 49 Kashirskoe Shosse, Moscow, 115409 Phone: +7 (495) 988-82-82 Fax: +7 (495) 988-83-83 (ext. 6956) E-mail: [email protected] www.tvel.ru

Public relations department Head of Department: Uzhanov Alexander Phone: +7 (495) 988-82-82 (ext. 6290) E-mail: [email protected]