Capacity building 2014 INTEGRATED ANNUAL REPORT Short version 2014 INTEGRATED ANNUAL REPORT JSC CAPACITY BUILDING

THE COMPANY IN BRIEF ...... 2 2014 PERFORMANCE HIGHLIGHTS ...... 3 KEY EVENTS IN 2014 ...... 4 MESSAGE FROM COMPANY MANAGEMENT ...... 6 BUSINESS MODEL ...... 12 BUSINESS GEOGRAPHY ...... 16 KEY PROJECTS ...... 18 STRATEGIC VISION AND OBJECTIVES ...... 19 ECONOMIC PERFORMANCE ...... 20 COMMERCIAL ACTIVITIES ...... 22 INNOVATION ACTIVITIES ...... 23 ar2014.aem-group.ru RESULTS OF PRODUCTION ACTIVITIES ...... 24 OPTIMIZATION OF PRODUCTION PROCESSES ...... 25 JSC Atomenergomash provides access to the integrated interactive ENVIRONMENTAL IMPACT ...... 26 version of the annual report for 2014 for its stakeholders. This product PERSONNEL COMPOSITION ...... 28 allows easy information presentation of the main annual results of the Company, as well as the access to additional data, which was not OCCUPATIONAL SAFETY ...... 30 included in the print version in a analysis-friendly format. SOCIAL RESPONSIBILITY ...... 31 CONTACT INFORMATION ...... 32 2014 PERFORMANCE HIGHLIGHTS THE COMPANY IN BRIEF Economic Operating performance performance JSC Atomenergomash (the «Company»), the Power Engineering Division Combined revenue 48.6 billion Products shipped to 13 nuclear power plants of State Corporation (the «Division»), is one of the leading power EBITDA 4.1 rubles engineering companies in the Russian Federation and a provider of efficient Fulfillment of contractual obligations 97.1% integrated solutions for nuclear, thermal energy, gas and petrochemical industries, shipbuilding, and the market for special steels. Commercial activities Efficiency improvement

The Division was formed to bring together the largest power engineering Market share in the Russian power Income from sales companies that possess unique technology and manufacturing expertise as well engineering industry 22% of non-core assets 2.4 billion rubles as a wealth of professional experience in order to address the need to reduce Share of revenue from new businesses 30% Effect of the RPS introduction 354 million rubles dependence on monopoly suppliers. Share of foreign orders in the total order book 24.3% Energy savings 1 million GJ Total value of concluded contracts 133.7 billion Transferred The Division is comprised of 30 businesses, including research, engineering, to outsourcing > 1,300 people Order book at the year-end 227.5 rubles manufacturing, construction and installation companies located in the Russian Labor productivity growth 12% Federation, Ukraine, the Czech Republic and Hungary. Equipment manufactured by the Division has been installed in more than Scientific Staff capacity 20 countries; 13% of the nuclear power plants in operation worldwide and 40% activities of the thermal power plants in the Russian Federation and FSU countries use Share of specialists under 32% 75 patents and intellectual property the Company’s equipment. 35 years old certificates 75% Engagement level 269 scientific publications

Environmental Social responsibility responsibility Paid to the budget 3.8 billion rubles Environmental impact 190 million rubles mitigation costs Charity expenses 21.7 million rubles Reduction of CO2 emissions 10%

2 3 KEY EVENTS IN 2014

Commercial activities Staff capacity • JSC Atomenergomash concluded the first contract for complete delivery of • The A team of from the branch of OJSC AEM Technologies won in reactor island equipment - nuclear steam supply systems (NSSS) for 4 units the TeMP-2014 tournament for young professionals TeMP-2014 organized by at Akkuyu NPP. Rosatom State Corporation and Rosatom Corporate Academy as part of work done to attract young professionals to work at the industry’s enterprises. • Following successful contract performance for the naval reactor for the new-generation icebreaker Arktika, two more contracts were concluded to • Two projects implemented by JSC Atomenergomash – the children’s energy supply two sets of RITM-200 reactor units to the Baltic Works for the other science and entertainment camp named NRJ-Camp and the knowledge new series icebreakers. continuity project tilted «The Generation Bridge» -– were awarded diplomas of the 1st All-Russian contest of employers’ best practices relating to work with • OJSC SverdNIIkhimmash signed a contract to design, manufacture and children, youth young people and the talent pool named called “Creating the supply equipment for production lines within the fuel fabrication module Future”, which was organized by the Ministry of Education and Science of the and refabrication facility under the Proryv Project undertaken to develop Russian Federation. technology for closing the nuclear fuel cycle loop. • The first Masters’ graduation ceremony was held at Department No. 76 “Power Engineering” of the Moscow Physics and Engineering Institute, at which diplomas were received by 10 employees of OJSC ZiO-Podolsk, JSC ZIOMAR EC and OJSC PZM.

Scientific activities Efficiency improvement • The largest research center in the Russian power engineering industry • Manufacture of steam generators at the Volgodonsk branch of OJSC AEM is being created within the Division with a view to formatting a unified Technologies was restored, for which purpose – new production sites were technical policy in the industry and developing competitive import- set up and modern equipment was purchased. substituting power equipment through R&D. • PJSC EMSS successfully passed the first supervisory audit of the energy • JSC TsKBM has developed a new design of the main circulation pump management system based on ISO 50001:2011, which was conducted by the featuring a single-shaft arrangement with a water-cooled motor and official representative of the Certification Body for Management Systems water-cooled bearing units, which will increase the safety of nuclear power and Personnel of TUV-Turingen (Germany) in Ukraine. plants by replacing oil-based lubricants with water-based lubricants. • The RPS Industry Project “Creating a model workflow at the SUZ-ShEM-3 • Two teams of contributors from JSC NPO TsNIITMASH received drive case production site” enabled JSC OKB GIDROPRESS to increase the science and technology awards from the Russian Government for their quantity of manufactured products by 87% compared to the previous year. developments in 2013.

4 5 MESSAGE FROM COMPANY MANAGEMENT

Dear colleagues and partners, I am pleased to present to you the Integrated Annual I would also like to acknowledge the excellent work done In recent years, Report of JSC Atomenergomash for 2014. The report by Atomenergomash and its enterprises in a number of focuses particularly on production, financial, social and strategic non-nuclear sectors. In particular, we received Atomenergomash has environmental issues related to the activities of the Power new contracts for the manufacture of reactor units for achieved sound operational Engineering Division of Rosatom State Corporation. the Russian icebreaking fleet. The Division is continuing to significantly expand its competencies in this market, results, acquired a In recent years, AEM has achieved sound operational results, including in the manufacture of non-power plant reputation as a reliable acquired a reputation as a reliable supplier of equipment, equipment. In the thermal power sector, two units with and integrated solutions for the nuclear and thermal power, equipment manufactured at the Division’s enterprises supplier of equipment, and shipbuilding, and gas and petrochemical industries. Among were successfully started at Yuzhnouralsk TPP in 2014. integrated solutions for the the major achievements of the Division in the year under Deliveries of equipment to Verkhnetagilskaya TPP review was the signing of the first contract for a set supply proceeded ahead of schedule. nuclear and thermal power, of reactor and turbine island equipment to Akkuyu NPP and shipbuilding, and gas and Hanhikivi NPP, which will allow us to deploy the production In terms of international relations, in 2014 an agreement chain designed within the Division. On the one hand, this is a was reached between an ALSTOM and Atomenergomash petrochemical industries. development of the capacities, but on the other hand - a high joint venture and a French partner concerning significant level of responsibility. In addition, in 2014, equipment was amendments to the terms of the previously signed supplied for power plants under construction, including the agreement. These amendments will significantly increase The results achieved by the Power Engineering Division new power generating units of Rostov NPP. localization and broaden the scope of deliveries by the and the foundations that have been laid for future Russian partner. success are all due to the team of top professionals Ekaterina Lyakhova The manufacture of reactor island equipment resumed at of Atomenergomash. On behalf of Rosatom State Chairwoman of the Board of Directors the Volgodonsk branch of OJSC AEM Technologies after a I would like to draw particular attention to the systematic Corporation, I would like to thank the Company for the of JSC Atomenergomash long period of inactivity. The plant is currently manufacturing work carried out by the Division’s management team to work done in 2014, and its management and employees - Director of Investment Management and Operational Efficiency at Rosatom State Corporation a reactor for the Belarusian NPP and has already delivered reduce costs and improve efficiency. For example, last for their commitment and professionalism. two core catchers to the plant. The manufacture of other year labor productivity in the Company was 2.395 million key equipment for nuclear power plants, namely, steam rubles per person, up 12% from 2013. Total savings from I am confident that all our achievements will provide a generators, has also been launched. For this purpose, the implementation of the Rosatom Production System in firm base for JSC Atomenergomash to establish itself as new sites have been set up, modern equipment has been 2014 amounted to more than 354 million rubles. a leader in the global power engineering industry! purchased, and personnel has been trained.

6 7 Dear colleagues and partners,

I present to you the 2014 Annual Report of the Power For a few years, we have been consistently building an Engineering Division of Rosatom State Corporation - entire chain chain for production of NPP equipment within JSC Atomenergomash. the Division, acquiring new competencies and implementing new Last year was a real breakthrough for our Company. technologies. Last year, we saw the first key results of that work. As the famous saying goes: there’s “a time to cast away stones, and a time to gather stones together”. For a For the first time in its history, JSC Atomenergomash became few years, we have been consistently building an entire a single-source supplier of the entire reactor for a nuclear chain chain for production of NPP equipment within the Division, acquiring new competencies and implementing power plant and turbine equipment. new technologies. Last year, we saw the first key results of that work. For the first time in its history, JSC Atomenergomash became a single-source supplier In 2014, JSC Atomenergomash amended updated its power plants under construction, including the new unit of the entire reactor for a and development strategy. One of the key issues outlined in No. 3 of Rostov NPP. Ownership of was granted for productive turbine equipment. Akkuyu NPP in and Hanhikivi the paper report is to achieve a significant increase in assets at the Volgodonsk site of OJSC AEM Technologies NPP in Finland will be the first such endeavourendeavor the revenue share from related non-nuclear industries, was obtained. Through implementation of the technical for us. Development of project design documentation, which should be at least 50% of total revenue, with at least revamping and personnel training program, the Company Andrey Nikipelov manufacture of work pieces and the bulk of key 30% to be generatedearned by foreign operations. In this regained its original functions as a manufacturer of key Chief Executive Officer of JSC Atomenergomash equipment will be carried out by our enterprises. This connectionregard, certain changes have occurred in the equipment for the nuclear power industry and today is is an important milestone in the history of our Company organizational structure of the parent company: nuclear engaged in the production of reactor equipment for nuclear and a significant responsibility increase in terms of the power engineering, gas and petrochemical engineering, power plants under construction. The Petrozavodsk branch responsibility towardsto our customers and partners for shipbuilding, and general engineering were segregated of OJSC AEM Technologies received a certificate for serial the timely fulfillment of contract contractual obligations’ into into separate directorates. The new structure allows production of transport packaging for spent nuclear fuel. It enforcement . enforcement. to secureprovides a systematic approach to our Companyin also successfully completed a project to set up a pipeline the development of our Company both in the above valve section for nuclear power plants and started to Despite negative macroeconomic phenomenaconditions, previously mentioned andareas mentioned above and also produce finished products. the Division has experienced growth in both in other business areassectors. contracting and revenue. In 2014, the order book of Development of nuclear power engineering industry JSC Atomenergomash grew by 71 billion rubles to Last year brought many operational achievements, of which is based on the work of engineers and designers is 227.7 billion rubles. The consolidated revenue increased here, I will highlight the key onessuccesses. Enterprises fundamental forkey to the development of nuclear power by 2.5 billion rubles to 49 billion rubles. of JSC Atomenergomash supplied equipment for . I would like to note a the great contribution

8 9 made by JSC OKB GDROPRESS GIDROPRESS to the In 2014, the Division’s enterprises fully completed the annual KPIs set for the Chief Executive Officer of JSC Atomenergomash in 2014 projects of Rosatom State Corporation in Russia, state defense procurement order. The volume of equipment Turkey, Finland, China, and India. Specialists from supplied under the SDPO increased compared with 2013. Target value JSC SverdNIIkhimmash and JSC TsKBM have completed New licenses were receivedobtained; and delivery of new Actual Indicator Minimum Target Maximum value a very complexperformed a highly complex task of types of products began to be delivered. manufacturing a set of equipment for the production AEM’s adjusted free cash flow, bln rubles 57.089 58.806 70.567 58.904 line of fuel pellets to be used in BN-800-type fast- Despite the challenging situation, our subsidiary Labor productivity, bln rubles/person 2.5 2.6 2.86 2.395 neutron reactors. Major R&D projects and projects in PJSC Energomashspetsstal fully met complied with all Index of implementation of the REA Concern Investment other areas were implemented by our other research contractual obligations. New orders from major top Russian 95 100 105 100 Program as it pertains to AEM, % and design institutes: JSC NPO TsNIITMASH, OJSC GSPI, and international companies such as OJSC Magnitogorsk OJSC VNIIAM, JSC SNIIP, and JSC IFTP. Iron and Steel Works, ArcelorMittal and General Electric were Integral indicator for new products, % 95 100 105 107 received. Based on the previously implemented previous Integral indicator of investment performance, % 80 100 120 120 The manufacture of a reactor unit plant for the new- investment program, Czech ARAKO developed new products generation lead icebreaker Arktika proceeded in for nuclear and other industries. Pumping equipment EBITDA margin, % 4.38 4.86 5.83 8.48 strict compliance with our contractual obligations. deliveries were carried out by Hungarian Ganz EEM Ltd in Semi-fixed costs, mln rubles 15,266 13,878 11,102 13,688 The designer and single-source supplier of the plant accordance with the schedules. Reduction of process times 0.7 1.0 1.2 1.03 is JSC Afrikantov OKBM with a significant part of production work being done by OJSC ZiO-Podolsk. The Enhancing production efficiency, including through further LTIFR, % 0.84 0.51 availability of aan entire production chain in the Division implementation of the Rosatom Production System, fulfilling Fulfillment of the State Defense Procurement Order (SDPO), % 100 100 allowed us to conclude a new contract for complete all contractual obligations in a timely manner, increasing the delivery of reactor plants units in 2014, this time for the revenue across all business lines ,lines, and participating Engagement level, % 70 74 75 serial icebreakers. Overall, owing to the work done by actively in the import substitution programs will remain our JSC Afrikantov OKBM, JSC SNIIP and other institutions strategic priorities in 2015. and enterprises of the Division, the order book for shipbuilding increased by almost 19 billion rubles for In conclusion, I would like to thank our customers and partners for the year to approximately 59 billion rubles. their trust and constructive cooperation, and to thank the entire 1 Information regarding these indicators (except the SDPO) is available in the relevant sections. The KPIs for 2015 were not yet approved at the time the text of the Report was prepared. team for professionalism and involvement in the achievement In the thermal power sector, Yuzhnouralsk GRESTPP-2 achieving of the Company’s objectives. I am confident that by was commissioned, which received recovery boilers following the values of Rosatom State Corporation and the manufactured by OJSC ZiO-Podolsk ahead of schedule. In principles of responsibility and mutual trust, convinced that we the near future, we plan to expand the geography of delivery will be able to ensure the long-term successful and sustainable of our equipment for thermal power plants, actively expand development of JSC Atomenergomash guided by the values of to foreign markets, and especially the CIS market, which is Rosatom State Corporation, principles of responsibility and historically traditional for our enterprises. mutual trustin the long term.

10 11 Business Model

Strategic objective 2014 results Personnel composition Personnel composition

Increase in engagement 5% Enhancement of employee Human capital Over 21,000 qualified employees efficiency and development Increase in productivity 12% of employee potential Growth of personnel share with higher education 3.1% Infrastructure Infrastructure

Growth of share of goods manufactured Enhancement of at the Group’s manufacturing capacities 5% Manufacturing Exclusive manufacturing capacities efficiency and flexibility of capital and modern equipment manufacturing capacities Volume of realized investment RUB 3.9 billion

Financial and economic performance Financial and economic performance AEM resources Revenue growth driven by Financial and Economic efficiency Increase in combined revenue 5% an expansion of the order and sustainability economic portfolio and an enhancement Revenue from capital of operational efficiency secondary assets RUB 2.4 billion Creation of value for the company for Creation of value Technologies Technologies

Patents and intellectual activity A balanced portfolio of actively Innovation Product competitiveness results certificates granted 85 capital developing traditional and potentially and technological innovative power technologies leadership Research papers and works published 269

Mission Natural capital Social capital Creation and development of internationally competitive technological solutions for the power industry in order to maintain a high standard of living and boost the Decrease in waste volume 17.6% Deductions for budgets RUB 4.8 billion company’s performance. Reduction in СО2 emissions 9.1% Spending on charity RUB 21.7 million Creation of value Creation of value stakeholders for

12 13 Products by business area

Transport and marine Nuclear power energy solutions Contracts signed in 2014 Reactor compartment, Reactors for icebreaker by business area (%) turbine plant and and marine fleets, floating auxiliary NPP nuclear plants and the equipment Russian Navy fleet Nuclear power Special steels RU MCS Thermal power 5.2 Thermal power 1.3 1 Sales 64 Gas and petrochemical industry Reactor plant monitoring Reactor plant monitoring Shipbuilding and control system for and control system for 1.5 VVER designs VVER designs Transport and marine energy 1.5 solutions 2 General equipment RAW/SNF Gas and petrochemical industry 19 4.3 RAW/SNF Oil and gas processing RAW/SNF storage, equipment for oil Other transportation and refineries and marine Core activities Core processing equipment and ship-based plants Total order portfolio Special steels General equipment

Special equipment and heavy Castings and forgings machinery components for the from special steel military–industrial complex Shipbuilding Wind power 75.7% 24.3%

Various types of equipment Wind power facilities 227.5 for shipbuilding equipment RUB billion (excl. VAT) Equipment Equipment Equipment Equipment installation Maintenance and design production supply and commissioning modernization

Geographical structure of the 2014 order portfolio (%)

14 15 Business Georgraphy

Moscow Petrozavodsk Nizhny Novgorod Nizhnyaya Tura HOLDING’S Russia Russia Russia Russia ENTERPRISES JSC Atomenergomash OJSC PZM - the Petrozavodsk branch JSC Afrikantov OKBM OJSC Venta of OJSC AEM Technologies AEM Technologies ZiO Podolsk ZIOMAR TsKBM GIDROPRESS OKBM AFRIKANTOV ARAKO NGSS SverdNIIkhimmash GSPI SNIIP AAEM EMSS VetroOGK JSC NPO TsNIITMASH AEM Technologies Petrozavodskmash OJSC GSPI LLC PZM LZ OJSC VNIIAM NUCLEAR POWER CJSC ATM VVER RUMCS * JSC SNIIP

OJSC OKTB IS RAW/SNF** OJSC OZTMiTS

LLC NGSS TMES*** LLC EMKO SHIPBUILDING

SPECIAL STEELS St -Petersburg Russia THERMAL POWER

JSC TsKBM GAS AND OJSC AEM Technologies PETROCHEMICAL INDUSTRY LLC AAEM GENERAL EQUIPMENT

WIND POWER Dubna Russia JSC IFTP

Opava the Czech Republic * RUMCS — Reactor unit monitoring and control system ARAKO spol. s.r.o. ** RAW/SNF — / spent nuclear fuel

Budapest *** TMES — Transport and marine energy solutions Hungary Ganz EEM LLC Podolsk Russia Volgodonsk Kramatorsk JSC OKB GIDROPRESS Russia Yekaterinburg Russia Ukraine OJSC ZiO-Podolsk Volgodonsk branch PJSC EMSS JSC ZIOMAR EC of OJSC AEM Technologies OJSC SverdNIIkhimmash 16 17 Key Projects Strategic Vision and Objectives

AEM’s strategic objectives

Become a single-source supplier of key equipment for nuclear power plants (nuclear and turbine island) BUSINESS BUSINESS AREA CITY, COUNTRY PROJECT BUSINESS BUSINESS AREA CITY, COUNTRY PROJECT

Kurchatov, Nizhnekamsk, Nizhnekamsk Refinery Russia Kursk NPP Russia Long-term objectives (2030 horizon) Balakovo, Kogalym, Kogalymneftegaz Refinery Russia Balakovo NPP Russia Become one of the major players in related At least 50% of revenue Ryazan, non-nuclear markets from related markets Volgodonsk, Rostov NPP Ryazan Refinery Company Russia Russia Доля в российскойДоля в Доляроссийской отраслив российскойДоля отрасли в российской отрасли отрасли Sindor, Novosindorskaya Compressor Sosnovy Bor, Leningrad NPP-2 Becomeэнергетического one of theэнергетического majorэнергетического players машиностроения in theэнергетического машиностроения global машиностроения power машиностроенияAt least 30% of revenue Russia Leningrad NPP-1 Russia Station engineering market from overseas operations Novovoronezh NPP Pisarevka, Novovoronezh, Russia Pisarevka Compressor Station Russia Novovoronezh NPP-2 At least average for the global Novy Urengoy, Novy Urengoy Gas Chemical Increase profitability (EBITDA) and productivity Zarechny, Russia Complex power engineering industry Russia Beloyarsk NPP Novokuibyshevsk, Polyarniye Zori, Russia Novokuibyshevsk Refinery Medium-term objectives (2019 horizon) Russia Kola NPP Uvat, Urnenskoe field Udomlya, Kalinin NPP Russia Ust-Tegusskoye field Reduce fixed costs By 30% Russia INDUSTRY PETROCHEMICAL AND GAS 23.5 23.5 23.5 23.5 Smolensk NPP-2 Surgut, Desnogorsk, Russia Druzhnoye field Increase revenue By more than 2 times Russia Smolensk NPP Zheleznogorsk, Bilibino, Russia Zheleznogorsk CHPP Russia Bilibino NPP Share of the RussianShare power of the RussianReduce thepower length of the production cycle time By 30% Sharypovo, Ostrovets, Russia Berezovskaya GRESTPP engineering industryengineering industry Belarus Belarus (Ostrovets) NPP Share of the RussianShare power of the Russian power Reftinskiy, Reftinskaya GRESTPP Market share in the Russian Share of revenue from non-nuclear Share of revenue from NUCLEAR POWER NUCLEAR Kudankulam, Russia engineering industryengineering industryShare ofShare revenue ofShare revenuefrom of non-nuclear revenue Sharefrom non-nuclear offrom revenue non-nuclear from non-nuclearShare ofShare revenue ofShare revenuefrom of revenue Sharefrom offrom revenue from India Kudankulam NPP 2 Saint-Petersburg, power engineering industry,sectors (newsectors % businesses)sectors (new businesses) sectors(newsectors businesses) (new (new businesses) businesses)foreign operationsforeignforeignforeign operations operations, operationsforeign % operations Tianwan, Russia Tsentralnaya CHPP China Tianwan NPP 50 50 Yakutsk, Yakutskaya GRESTPP-2 2030 2030 2030 2030 Pyhäjoki, Russia 2030 2030 2030 2030 Finland Hanhikivi NPP target target target target Nizhnyaya Tura, 50 39.3039.3050 39.30 39.30 target target target target Dukovany, Russia Nizhneturinskaya GRESTPP Czech Republic Dukovany NPP 23,5 23,5 Verkhniy Tagil, 30.2330.2330.23 30.23 Temelin, POWER THERMAL Russia Verkhnetagilskaya GRESTPP 22 22 Czech Republic Temelin NPP 23,5 22.7322.7323,522.73 22.73 15.7015.7015.70 15.70 Izluchinsk, 20 20 20 20 13.9913.9913.99 13.99 Mersin, Russia Nizhnevartovsk GRESTPP 22 22 Turkey Akkuyu NPP 6.02 6.026.02 6.02 Yuzhnouralsk, 8.91 8.918.91 8.91 Paks, Russia Yuzhnouralsk20 GRESTPP-2 20 20 20 Hungary Paks NPP Svetlogorsk, Kozloduy, Belarus Svetlogorskaya CHPP Kozloduy NPP 2012 2013 2012 2014 2013 Прогноз на 20152014 2030 Прогнозtarget на 2015 2030 target Bushehr, Bushehr NPP Russia CIS 2012Non-CIS 2013 2012 2014 20132 InformationПрогноз on 2014на 2015 and2014 2015 is provided2030 without Прогнозtarget regard на to projects 2015 carried out2030 for Akkuyu target NPP (Akkuyu Nuclear JSC) and Hanhikivi NPP (Rusatom Overseas JSC) (according to the methodology of Rosatom State Corporation for calculating foreign revenue of the Power Engineering Division).

18 19 Combined revenue by geographical area/country, mln RUB Economic Performance Combined revenue by geographical 63,063 Combined revenue by operating Combined revenue forecast area/country, mln RUB 8 Combined revenue forecast Combinedsector , mln revenue rubles by for 2015, mln RUB 3,089 operatingsector, mln RUB3 for 2015, mln RUB 51,773 48,643 63,063 704 51,773 3,1313,131 4,383 46,272 3,7983,798 3,089 48,643 51,773 2,862 3,448 5,650 46,272 48,643 19,473 886 704 17,999 2,4232,423 4,383 46,272 1,615 21,630 2,0122,012 2,862 3,448 4,914 5,650 1,700 44,528 1,712 917 886 44,309 2,143 12,49812,498 32,72632,726 1,61539,007 59,270 1,054 28,027 25,674 3,924 44,528 3,924 44,309 21,444 2,104 39,007 59,270 446 2,104 446

Nuclear power General equipment forecast ThermalNuclear powerpower RAW/SNFGeneral equipment Russia CIS Non-CIS Equipment for GPI Equipment for nuclear GasThermal and petrochemical power SpecialRAW/SNF steels power industr industryGas and petrochemical OtherSpecial steels Equipment for thermal Other products, EBITDA,EBITDA,EBITDA,EBITDA,EBITDA, mlnEBITDA, mln RUBmln mlnmln RUB RUB mln RUBRUB RUB Shipbuilding forecast power industry work and services industry Other Transport and marine Russia NetNet NetOperatingNetNet Operating Operating Net OperatingOperatingCIS Operating Profit Profit Profit ProfitAfterProfit AfterProfit After Non-CISAfterTaxAfter Tax AfterTax TaxTax Tax Shipbuilding (NOPAT),(NOPAT),(NOPAT),(NOPAT),(NOPAT),(NOPAT), mln mln RUBmln mlnmln RUB RUB mln RUBRUB RUB 4,7574,7574,7574,7574,7574,757 EBITDA,EBITDA,EBITDA, mlnEBITDA, mlnRUB mlnRUB mlnRUB RUB energyTransport solutions and marine EBITDA, mln RUB 4,4814,4814,4814,4814,4814,481 NetNet OperatingNet OperatingNet Operating Operating Profit Profit AfterProfit AfterProfit Tax After Tax After Tax Tax energy solutions 4,1424,1424,1424,1424,1424,142 Net(NOPAT), Operating(NOPAT),(NOPAT), (NOPAT),mln Profit mlnRUB mlnRUB After mlnRUB RUBTax 4,7574,7574,7574,757 3,9023,9023,9023,9023,9023,902 (NOPAT), mln RUB 4,4814,4814,4814,481 4,757 2,7562,7562,7562,7562,7562,756 4,481 4,1424,1424,1424,142 2,7562,7562,7562,756 3,9023,9023,9023,902 4,142 Income from the sale 2,756 3,902 of non-core assets 2.4 in 2014 billion rubles EBITDA 201220122012201220122012201320132013201320132013201420142014201420142014201520152015201520152015 201220122012201220122012201320132013201320132013201420142014201420142014201520152015201520152015 margin forecastforecastforecastforecastforecastforecast forecastforecastforecastforecastforecastforecast 2012201220122013201220132013201420132014201420142015201520152015 2012201220122013201220132013201420132014201420142015201520152015 in 2014 8.48% forecastforecastforecastforecast forecastforecastforecastforecast 2012 2013 2014 2015 2012 2013 2014 2015 forecast forecast

-4,334-4,334-4,334-4,334-4,334-4,334 3 Taking into account a retrospective adjustment for consolidation. -4,334-4,334-4,334-4,334 -4,334 20 21 Структура заключенных в отчетном году Секторальная структура портфеля договоров по операционным сегментам, % заказов на конец года, млн руб.мм 5.21 0.03 3,063 55 1.28 798 1.45 0.97 Секторальная структура1,213 портфеля Структура заключенных в отчетном году 162 договоров по операционным1.53 сегментам, % заказов на конец года, млн руб.мм Commercial Activities 1,804 5.21 2.04 3,063 Innovation Activities 0.03 64 55 155,316 798 2,539 1.28 4.31 1,213 Structure1.45 of contracts0.97 concluded in the Sectoral structure162 of the order book 6,164 19.18 Секторальная структура портфеля R&D expenditures, mln RUB Number of patents and intellectual Структураreporting заключенны1.53 yearх в отчетномby operating году segment, % at1,804 the year-end, mln RUB R&D expenditures, mln RUB Number of patents and intellectual заказов на конец года, млн руб.мм 56,356 property certificates договоров по операционным2.04 сегментам, % 155,316 property certificates 64 2,539 366.381 5.21 3,063 0.03 4.31 55 Nuclear power Thermal power798 1.28 6,164 Nuclear power Gas and petrochemical Transport and marine Gas and1,213 petrochemical industry 1.45 19.18 162 TMES industry 0.97 energy solutions General equipment 56,356 3 3 RAW/SNF Special steels 1,575.4 3 1.53 RAW/SNF Complete1,804 supply of RUMCS Special steels VVER equipment Shipbuilding General equipment 5 Thermal power VVER RUMCS 4,105.8 2.04 Shipbuilding Other 155,316 861.75 5 29 64 Nuclear power Thermal power 2,539 Nuclear power Gas and petrochemical Other 4.31 Transport and marine Gas and petrochemical industry TMES industry energy solutions General equipment 6,164 RAW/SNF Special steels 10 RAW/SNF19.18 Complete supply of RUMCS Shipbuilding General equipment 56,356 3,853.00 Special steels VVER equipment Thermal power VVER RUMCS 13 14 Shipbuilding Other Other

Nuclear power Thermal power Nuclear power Gas and petrochemical Transport and marine Gas and petrochemical industry TMES industry JSC Afrikantov OKBM OJSC SverdNIIkhimmash energy solutions General equipment RAW/SNF Special steels OJSC ZiO-Podolsk OJSC SverdNIIkhimmash RAW/SNF Complete supply of RUMCS Other Shipbuilding General equipment JSC OKB GIDROPRESS JSC ZIOMAR EC JSC SNIIP Special steels VVER equipment Investment Activities JSC NPO TsNIITMASH Shipbuilding Other Thermal power VVER RUMCS JSC Afrikantov OKBM JSC TsKBM Other JSC OKB GIDROPRESS OJSC AEM Technologies VolumeОбъем of investments инвестиций по by ОКУ EMP и странам, and country, млн руб. mln RUB Published scientific papers and articles JSC NPO TsNIITMASH Количество полученных патентов и свидетельств EMPsОбъем in the инвестиций по ОКУ и странам, млн руб. Total COMPANY 2012 2013 2014 результатов интеллектуальной деятельности Russian Federation 3,685 OJSC ZiO-Podolsk 8 8 10 EMPs in the Total Russian Federation 774 746 290 550 3,685 988 173 164 JSC Afrikantov OKBM 86 146 155 774 746 290 550 988 173 164 JSC OKB GIDROPRESS 17 9 7 EMPs abroad Total OJSC SverdNIIkhimmash 30 30 20 Total 96 EMPs abroad 207 JSC SNIIP 21 10 14 207 85 2 205 JSC NPO TsNIITMASH 66 59 56 2 205 Volume OJSC VNIIAM 2 3 2 60

JSC OKB of investments JSC Atomenergomash JSC AtomenergomashOJSC AEM Technologies OJSC AEM Technologies 3.9JSC OKB JSC IFTP 4 4 5 GIDROPRESS billionGIDROPRESS rubles OJSC ZiO-Podolsk JSC Afrikantov OKBM JSC TsKBM in 2014 OJSC ZiO-Podolsk JSC Afrikantov OKBM JSC TsKBM TOTAL: 234 269 269 2012 2013 2014 PJSC EMSS Other ARAKO (Czech Republic) (Ukraine) PJSC EMSS Other ARAKO (Czech Republic) (Ukraine)

22 23 Results of Production Activities Optimization of Production Processes

The key results of production activities in 2014 by business area were as follows: Gas and Petrochemical Industry Effect from RPS In 2014, the number • supply of equipment manufactured by OJSC ZiO-Podolsk by 2.2 and the Volgodonsk branch of OJSC AEM Technologies to implementation of RPS projects 354 times major Russian oil and gas companies: in 2014 mln rubles increased Nuclear Power –– OJSC Gazprom (for the Usinsk compressor station); supply of products for the following NPPs: Beloyarsk • –– OJSC Lukoil (for the construction of the offshore oil NPP, Rostov NPP (power units 3, 4), Kalinin NPP, production platform LSP-2 at the Filanovsky oil and gas ЗатратыRPS costs на and реализаци economicю effect и экономический from RPS projects, эффект mln RUB Balakovo NPP, Novovoronezh NPP, Novovoronezh condensate field in the ; for the reconstruction NPP-2, Kursk NPP, Kozloduy NPP, Leningrad NPP, от проектов ПСР, млн руб. of the Kogalymneftegaz Refinery); Leningrad NPP-2, Tianwan NPP-2, Belarusian NPP, Kudankulam NPP, and Paks NPP; –– OJSC Rosneft Oil Company (for OJSC Verkhnechonskneftegaz); 354.03 • supply of productsКоличество for the following прое facilities:ктов ПСР FSUE Затраты на реализацию и экономический эффект EKhP Kombinat, FSUE Eleron SNPO, FSUE VNIIA, –– OJSC Tatneft (for the large refinery complex under 109 227.69 68.97 FSUE UEMZ, FSUE PO, OJSC Izotop, FSUE construction in Nizhnekamsk, the Republic94 of Tatarstan); ЗатратыЗатраты на на реализаци реализациюю и и экономический экономический эффект эффект от проектов ПСР, млн руб. Tekhnomash, FSUE NITI, FSUE VNIIKHT, OJCS Dedal 91 2015 от проектов ПСР, млн руб. • certification of mainline pumps manufactured2014 by от281.03 проектов ПСР, млн руб. NPK, OJSC Severstal, OJSC Norilsk Nickel GMK, forecast 55.22 354.03 Ganz EEM Ltd (Hungary) for OJSC Transneft;plan 2014 Количество проектов ПСР 137.17 FSUE RosRAO, and FSUE GKhK. actual 35.34 14 109 354.03354.03 227.69 68.97 19 КоличествоКоличество •прое проеsupplyктовктов of ПСР equipmentПСР manufactured by JSC Afrikantov OKBM 94 91 2015 68.9768.97 281.03 2 for the ethylene plant of PJSC Nizhnekamskneftekhim. 109109 2014 227.69227.69 forecast 91.1 9494 2014 55.22 3 20152015 43.85 plan45 137.17 9191 281.03281.03 actual 35.34 94.05 41 20142014 14forecastforecast 24.05 19 55.2255.22 4 planplan 20142014 1.43 137.17137.17 11.88 2013 actual 35.34 91.1 1414 actual2 35.34 4.52 14.8 43.85 4 1919 3 12.6 2.3345 15 5.4241 24.0541 94.05 2 4 91.191.1 1.43 11.88 2 24 43.8543.85 2013 11.66 5 33 4545 94.05 12.6 4.52 14.8 4141 4 24.0524.05 66.5794.05 5.42 7.3 2.33 Thermal Power 44 Special Steels 15 1.43 11.88 41 2012 2013 1.4324 37 188.09 11.88 11.66 2013 5 4.524.52 14.814.8 7.88 12.85 5 4 12.612.6 66.57 7.3 4 5.425.422012 2.332.33 37 2.25 • commissioning of facilities that use products11 developed • shipment1515 of castings& and forgings for the Belarusian NPP; 4141 188.09 7.88 12.85 9 2424 5 11.6611.66 2.25 55 11 7.3 9 Costs Effect 66.57Costs66.57 7.3Effect Costs Effect by JSC ZIOMAR EC and supplied by OJSC ZiO-Podolsk: 20122012 3737 188.09 55 • completion of the production of castings& and forgings for 188.09 7.887.88 12.8512.85 Costs Effect Costs Effect Costs Effect 11 2012 2013 2.252.25 2014 –– two CCGT-420 units for Yuzhnouralsk TPP-2; 99 11 2012 2013 2014 the reactor shell core under the VVER-TOI project; CostsCosts EffectEffect CostsCosts EffectEffect CostsCosts EffectEffect –– CHPP-9 of JSC Mosenergo; АО «ОКБМ Африкантов» ОАО «ПЗМ» 20122012 PJSC EMSS 20132013 OJSC ZiO-Podolsk20142014 PJSCJSC EMSS OKB GIDROPRESSOJSC ZiO-Podolsk JSC OKB GIDROPRESS АО «ОКБМ Африкантов» ОАО «ПЗМ» • shipment of castings& and forgings for the RITM-200 АО ОКБ «ГИДРОПРЕСС» ОАО «ЗиО-Подольск» PJSC EMSS OJSC ZiO-Podolsk JSC OKB GIDROPRESS JSC Afrikantov OKBM Other –– CCGT-400 of Nizhnevartovsk TPP. АОАО «ОКБМ «ОКБМ Афри Африкакнатов»нтов» ОАОАОО «ПЗМ» «ПЗМ» PJSC EMSS OJSC ZiO-Podolsk JSC OKB GIDROPRESS АО ОКБ «ГИДРОПРЕСС» ОАО «ЗиО-Подоreactorльск» shell for the nuclear icebreaker LK-60; АО «ЦКБМ» Волгодонский филиал JSC Afrikantov OKBM АО ОКБ «ГИДРОПРЕСС» ОАО «ЗиО-Подольск» Other АО ОКБ «ГИДРОПРЕСС» ОАО «ЗиО-Подольск» ПАО «ЭМСС» ОАО «АЭМ-технологии»JSCJSC Afrikantov Afrikantov OKBM OKBM OtherOther • supply of productsАО «ЦКБМ» for Verkhnetagilskaya GRESTPP,Волгод онский филиал Волгодонский филиал АОАО «ЦКБМ» «ЦКБМ» • shipment ofВо productsлгодонский forфилиал ArcelorMittal plants in Belgium АО «СНИИП» АРАКО Iriklinskaya GRESTPP, Yaroslavl CHPP, etc. ОАО «АЭМ-технологии» ПАО «ЭМСС» ОАППАООА О ««ЭМСС» «ЭМСС»АЭМ-технandологии» Poland,ОА toО « Alstom,АЭМ-техн оThyssenKruppMaterialsлогии» France ОАО «СвердНИИхиммаш» Количество поданных и АО «СНИИП» АРАОАО «СНИИП»К «СНИИП»О (France), АVoestAlpineРААРКАОКО (Austria), EuskalForgingSA (Spain), Прочие доля реализованных предложений ОАОАОО «С «СвевредНИИхиммаш»рдНИИхиммаш» КоличествоКоличество поданных поданных и и and BHILAISTEELPLANT (India). 16 12 1 ОАО «СвердНИИхиммаш»ПрПрочиеочие долядоля реализованных реализованныхКоличество предложений предложений поданных и 1212 Прочие доля1616 реализованных11 предложений 4 5816 12 63 24 16 44 16 1 25 63 610 585816 63 63 103 6363 610610 4 103103 5816 114 63 114 114 63 610 146 443 158 146146 103 443443 158158 114 ОАО «ЗиО-Подольск» АО «ЦКБМ» АО «ОКБМ Африкантов» ОАО «ЗиО-Подольск» АО «ЦКБМ» ОАО «ЗиО-Подольск»146 АО «ЦКБМ» Волгодонский филиал ОАО «СвердНИИхиммаш» АОАО «ОКБМ «ОКБМ Афри Африкакнатов»нтов» 443 ОАО «АЭМ-технологии» ОАО «ВНИИАМ» ВВологлогдоонскийдонский филиал филиал 158ООАОАО «С «СвевредНИИхиммаш»рдНИИхиммаш» ПАО «ЭМСС» АО «СНИИП» ООАОАО « А«ЭМАЭМ-т-етхнехнологии»ологии» ООАОАО «ВНИИАМ» «ВНИИАМ» ОАО «ПЗМ» АРАКО ППАОАО «ЭМСС» «ЭМСС» АОАО «СНИИП» «СНИИП» АО ОКБ «ГИДРОПРЕСС» ЗАО «АТМ» АРАКО ООАОАО «ПЗМ» «ПЗМ» АРАКО ОАО «Вента» АО «НПО «ЦНИИТМАШ» АОАО ОКБ ОКБ «ГИДРОПРЕСС» «ГИДРОПРЕСС» ЗАЗОАО « А«ТМ»АТМ» ООАОАО «Ве «Вентнта»а»ОАО «ЗиО-ПАоОАдО «НПОо «НПОльск» «ЦНИИТМ «ЦНИИТМАШ»АШ»АО «ЦКБМ» АО «ОКБМ Африкантов» Волгодонский филиал ОАО «СвердНИИхиммаш» ОАО «АЭМ-технологии» ОАО «ВНИИАМ» ПАО «ЭМСС» АО «СНИИП» ОАО «ПЗМ» АРАКО АО ОКБ «ГИДРОПРЕСС» ЗАО «АТМ» ОАО «Вента» АО «НПО «ЦНИИТМАШ» Emissions of ozone-depleting EnergyПотребление Consumption, энергии thousand (тыс. гДж) GJ substances, tons Environmental Impact 55 44.5 COMPANY SUBSTANCE TYPE 2012 2013 2014 67 35.9 56 Costs of preventing environmental Direct emissions of greenhouse gases, tons OJSC Sverd- carbon tetrachloride 0.04 0.04 0.04 1,612.9 impacts and the environmental carbon dioxide (CO2) NIIKhimmash 99.2 Затраты на предотвращение воздействия 3.9 106.4 management system, mln RUB 2.1 JSC Afrikantov на окружающую среду и систему экологического carbon tetrachloride 0.07 0.07 0.02 OKBM 178.6 менеджмент. млн руб. 0.6 34.2 trifluorotrichloroethane 0.5 0.5 756.6 3.74 267.9 275.3 3.4 trichloromethane 0.006 0.006 70.3 OJSC 733.6 99 ZiO-Podolsk 115 carbon tetrachloride 0.003 0.003

9.6 70.8 trifluorochloromethane 0.1 0.1 12.4 77.9 OJSC ZiO-Podolsk JSC OKB GIDROPRESS 10.1 3.4 Atmospheric emissions of NOХ, OJSC PZM JSC NPO TsNIITMASH 11.7 Volgodonsk branch OJSC GSPI 76 27.1 OJSC ZiO-Podolsk JSC Afrikantov OKBM ВыбросыSOХ and в атмосферуother significant NOХ, SOХ of OJSC AEM Technologies OJSC SverdNIIkhimmash 31.2 PJSC EMSS JSC SNIIP JSC Afrikantov OKBM JSC SNIIP 17.7 OJSC AEM Technologies LLC PZM LZ и других значимыхpollutants, загрязняющих tons веществ, тонн OJSC Venta Other 35.9 OJSC PZM Other JSC TSKBM 38 16.5

2012 2013 2014 294.03 237.34 Direct emissions of greenhouse gases, tons 229.04 Energy savings, thousand GJ4 nitrous oxide (N O) 2 189.5 188.45 EMSS OKBM AEM-T () 171.591

168.61 1,082.4 143.81 2014 0.2 92.38 PZM ZIO Other 0.6 927.8 Total 66.55 2012 892.3 48.92 57.9 785.5 Gas 6.0 26.89 2013 31.9 20.3 22.87 Reduction in the 19.73 268.5 18.72 Electricity weight of wastes 15.78 compared 17.6% OJSC PZM LLC PZM LZ 2012 2013 2014 -78 to 2013 JSC SNIIP Other NOx SOx Heat

Persistent organic Hazardous air pollutants (POPs) pollutants (HAPs) 4 Calculated in relation to the base year (2009). Volatile organic Solid particles compounds (VOCs) 26 27 Personnel Composition

Number of employees, persons Candidates of Science RAS Academicians RASRAS professorsprofessors

23,161 22,458 1 20,326 22 1 Average personnel 67 1 1 5 30% 9,897 88 5 7,860 turnover in 2014 7,276 13 20 4,404 20 4,358 17 4,232 1 3,992 78 3,845 63 Share of employees 3,607 approximately JSC Afrikantov OKBM who have worked 2,893 JSC Afrikantov OKBM JSC OKBAfrikantov GIDROPRESS OKBM 2,780 JSC OKB GIDROPRESS JSC NPOOKB TsNIITMASH GIDROPRESS more than 5 years 2,464 JSC NPO TsNIITMASH OJSCJSC NPO VNIIAM TsNIITMASH at the enterprises 50% OJSC VNIIAM JSC NPO TsNIITMASH JSC SNIIP 2,444 2,088 2,080 JSC Afrikantov OKBM OJSC SverdNIIkhimmash JSC OKB GIDROPRESS Other 2012 2013 2014 Doctors of Science OJSC AEM Technologies OJSC EMSS Labor productivity within the Division, Number of employees Labor productivity within the Division,5 Количество работников, OJSC ZiO-Podolsk JSC Afrikantov OKBM thousand rubles/person per year in the skill pool thousand rubles/person per year состоящих в кадровом резерве Other 6 1 3,265 39 2015 Доля работниковShare с of высшим employees образованием, % with higher education, % 7 target 2,395 168 2,298 2014 53.5 2012 2014 2,131 90 90 50.5 50.4 11 16 2013 2012 2013 29

JSC NPO TsNIITMASH JSC SNIIP 2012 2013 2014 Plan JSC Afrikantov OKBM OJSC SverdNIIkhimmash 2015 JSC OKB GIDROPRESS Other 5 This indicator is consolidated for the budget perimeter.

28 29 Occupational Safety Social Responsibility Enterprises holding Occupational safety and health OHSAS 18001 certificates6 Объем expenditures,затрат на охрануmln rubles труда, млн руб. Payments to the budgets EMPs Availability of OHSAS 18001 certificate of different levels, thousand RUB JSC ZIOMAR EC Certification is planned for 2015 Charity expenses 21.7 OJSC ZiO-Podolsk Certification is planned for 2015 28.11 2014 in 2014 5.3 62.6 mln rubles JSC SNIIP YES 14.27 ASSESSED PAID LLC NGSS YES BUDGET TYPE (THOUSAND RUB) (THOUSAND RUB) OJSC Venta Certification is planned for 2015 19.3 TOTAL 4,823,044 3,758,340 OJSC AEM Certification is planned for 2015 Technologies 20.9 31.0331,03 including: OJSC VNIIAM YES Federal budget — total 4,369,673 3,365,050 PJSC EMSS Certification is planned for 2015 26.4 28.50 VAT 2,684,925 1,642,261 Charity expenses,

Profit tax 30,742 18,806 Расходыthousand на благотворительность RUB LTIFRLTIFR в forцелом the поDivision Дивизиону as a whole (тыс. руб.) Personal income tax 1,647,296 1,696,651 JSC Afrikantov OKBM JSC TsKBM 21 Baseline PJSC EMSS OJSC GSPI 7 other 6,710 7,332 0,72 value 0.98 OJSC ZiO-Podolsk OJSC Venta 2,608 400 0,72 1.26 Budgets of the constituent entities OJSC AEM Technologies Other 338,394 287,735 1.15 0,72 of the Russian Federation — total 0.73 0,51 JSC OKB GIDROPRES 0,72 0.72 Profit tax 208,894 167,605 0.54 2,650 9,841 0.53 0.51 269.95 Property tax 118,839 116,801 Target Transport tax 3,069 3,046 2015 6,161 236.409 other 7,744 282 201.261 2014 178.21 2013 Local budgets — total 114,978 105,556 2010 2011 2012 2013 Target Result Target 2012 PJSC EMSS JSC Atomenergomash value for 2014 value Land tax 103,235 93,252 JSC Afrikantov OKBM JSC OKB GIDROPRESS for 2014 for 2015 OJSC ZiO-Podolsk Other other 11,743 12,304

6 OHSAS 18000 is a series of standards containing requirements and guidelines for the development and implementation ofimplementation of occupational safety and health management systems, which enables organizations to manage the risks integrated in their management system and improve its functioning.

7 The baseline value: the average value for 3 years.

30 31 Joint-Stock Company Nuclear and Power Engineering

JSC Atomenergomash

Principal State Registration Number (OGRN): 1067746426439, registered on March 29, 2006 by the Interdistrict Inspectorate No. 46 of the Federal Tax Service in the city of Moscow

Legal address: 119017, Moscow, Bolshaya Ordynka st., 24.

Mailing address: 115184, Moscow, Ozerkovskaya emb., 28, bldg. 3.

Phone: +7 (495) 668-20-93 Fax: +7 (495) 668-20-95 E-mail: [email protected] Website: www.aem-group.ru

INNA VAVULINA Press Secretary [email protected] +7(495) 668-20-93 (ext. 1040)

32 www.downstream.ru33