REPORT SHORT VERSION Table of Contents

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ANNUAL REPORT SHORT VERSION Table of contents

Message from Company management...... 4

1. General information about the Company...... 8

1.1. General information...... 8

1.2. Holding structure...... 8

1.3. Key products...... 8

1.4. Holding business model...... 10

2. Overview of key achievements in 2012...... 11

3. The Company’s position in the Russian power engineering industry...... 12

3.1. NPP equipment...... 12

3.2. TPP equipment...... 12

3.3. Petrochemical equipment...... 12

3.4. Castings and forgings made from special steel...... 12

4. Core activities...... 14

4.1. Economic activities...... 14

4.2. Commercial activities...... 15

4.3. Investment activities...... 15

4.4. Innovative activities...... 15

4.5. Improvement of performance efficiency...... 16

5. Corporate governance...... 17

5.1. Management structure and bodies...... 17

5.2. Risk management system...... 18

5.3. Equity capital...... 18

6. Personnel and environmental policy...... 19 6.1. Personnel policy...... 19 6.2. Environmental responsibility...... 20

Contacts...... 21 Message

from Company The main purpose of establishing OJSC Atom- energomash was to de-monopolize the market and to develop globally competitive technology management solutions for the power industry. As competition has evolved, prices for nuclear equipment have declined in recent years, which enabled Rosatom State Corporation to save more than 22 billion rubles in 2007-2011.

From this standpoint, 2012 was a turning point: from the time the Volgodonsk branch of CJSC AEM Technologies was established, Atom- energomash became an integrated supplier of key equipment for both nuclear and turbine islands as it set up a complete production chain to manufacture equipment for nuclear power plants.

The Company is capable of finding solutions to Message from the Chairman the main challenges facing Rosatom: provid- of the Board of Directors of ing programs to develop nuclear energy in Russia, increasing the volume of nuclear power OJSC Atomenergomash plants built abroad using the Russian design, providing programs to develop nuclear energy on foreign markets and improving the safety Yekaterina V. Lyakhova of nuclear power plants.

It is equally important that the power engineer- Chairman of the Board of Directors ing holding is not focusing solely on nuclear of OJSC Atomenergomash, orders, but also seeking to diversify its activi- Director of Investment Management ties. The Company takes into account global and Operational Efficiency market trends, particularly the risk of a decline at Rosatom State Corporation in demand for nuclear engineering products in several key regions following the events at Fukushima. The Company’s strategy calls for an increase in the proportion of related segments, in particular expanding its presence on the Dear Colleagues, heating market and developing its wind energy business. In 2012, OJSC Atomenergomash In summing up the results of 2012, I would and OJSC Turboatom signed an agreement on like to point out that the past year was truly a cooperation to implement projects involving the breakthrough year for OJSC Atomenergomash, construction and modernization of thermal power the power engineering division of the Rosatom plants. The Company is actively developing coop- State Nuclear Energy Corporation. Over its eration with NEM, a leading global company that history, this young and ambitious company has handles the engineering of boiler equipment. The taken major leaps forward in its development to program to modernize one of the Holding’s key become one of the key players on the Russian assets, OJSC ZiO-Podolsk, is primarily focused on power engineering market. the heating sector. There will also be major devel- opments in the Company’s ability to manufacture products for the gas and petrochemical industry.

The Company intensified work last year to comply with global standards for sustainable development: effective personnel development and occupational safety and environmental protection have been successfully implemented.

The Board of Directors of OJSC Atomenergo- mash highly values the results achieved by Company management in 2012. The results of this work not only made it possible to ensure impressive production results but also strength- ened the Company’s reputation as a reliable and responsible supplier.

4 OJSC Atomenergomash Annual report 2012: Short version

The establishment of the branch in Volgodonsk We also intend to strengthen our presence in is intended to ensure growth in the Compa- such related sectors as the thermal energy ny’s production capacity both in the nuclear sector as well as the gas and petrochemical segment as well as the gas and petrochemi- industry. The share of the nuclear segment cal industry. More than half a billion rubles remains high in the structure of our products are to be invested in the branch’s development at around 65%. Over the next five years, the in 2013 alone. Company plans to balance out its portfolio and increase the proportion of related segments in We met all our obligations for equipment supplies revenue. We will fully enter the market for gas to our customers on time in 2012 and are already and petrochemical industry equipment taking ahead of schedule for several projects in 2013. into account the capabilities of our enterprises This was mainly possible due to the integration Energomashspetsstal, Petrozavodskmash and program implemented by the Holding in 2012, the Volgodonsk branch of AEM Technologies. which included measures to improve cooperation among enterprises, reduce excessive administra- Aspiring to be a leader, we strive to be an inno- tion and forge team-building. vative company: the supply of equipment and components for the world’s first FN-800 reac- The Atomenergomash Group of Companies tor was completed in 2012 and now Atomener- had consolidated revenue of approximately 52 gomash is the only company in the world that billion rubles in 2012. The Company’s order has fast-neutron reactor technology. We are portfolio was up to 100 billion rubles at the working on building the promising FN-1200 Message from the CEO end of the year. Winning a tender to supply reactor and our enterprise OJSC Afrikantov of OJSC Atomenergomash turbine plant equipment for two power units OKBM has been designated as the responsibil- of the Baltic Nuclear Power Plant brought us ity center for this project. a major contribution to the growth in the order portfolio (over 30 billion rubles). The reporting year was also successful for us Andrey V. Nikipelov in terms of international activities. In addition A seven-year program to modernize to highly important agreements on turbine CEO of OJSC Atomenergomash OJSC Energomashspetsstal was completed in equipment production with Alstom, we signed the reporting year and resulted in this enter- and began implementing an agreement on prise becoming one of the world’s leading cooperation with Turboatom, enabling us suppliers of castings and forgings for various to jointly take part in projects to modernize Dear Colleagues, Partners and Shareholders, engineering sectors. thermal power plants in Ukraine, Russia and other countries. We also adopted a funda- The year 2012 proved to be a successful one The first stage of the modernization of mental decision to extend cooperation with for the Atomenergomash Holding. CJSC Petrozavodskmash was completed with NEM Energy in the supply of high-capacity the establishment of steam generator shell heat recovery steam generators using the This was the year that we became a company production for nuclear power plants. Taking into most advanced technologies. with a full technology cycle capable of manu- account the plans to develop the Volgodonsk facturing any power engineering equipment branch, the enterprise will continue to special- Improved efficiency is a priority for our for the power industry from design to delivery ize in the production of the usual range of equip- Company’s activities. In 2012, we achieved to the customer on a turnkey basis. We also ment for the nuclear power industry as well as positive results in the introduction at Atom- became one of the few nuclear power engi- equipment for the petrochemical sector. energomash enterprises of the Rosatom neering companies in the world that is able Production System (RPS), a key tool to to offer the integrated supply of both nuclear In 2012, the management of the companies improving competitiveness. The RPS is power plant islands: reactor and turbine. ZiO-Podolsk and ZIOMAR was consolidated now being introduced at 14 of the Hold- within the Holding and a five-year program ing’s enterprises and this number is set to This was largely possible due to the resump- was launched to modernize the Podolsk facil- increase. With the support of Rosatom State tion of the production of Russian equip- ity. In the coming years this major enterprise Corporation, we have also developed and are ment for nuclear power plants at one of should considerably strengthen its positions implementing a comprehensive efficiency the country’s best production facilities in on the market for thermal power equipment. improvement program in the period of 2013- the city of Volgodonsk. Production began 2018 that is designed to boost the Holding’s in 2012 at the newly opened branch of Some of our other enterprises such as competitiveness in the long term. CJSC AEM Technologies in Volgodonsk on TsKBM, ARAKO and Ganz continue to undergo the first ready-assembled reactor for the modernization, which enables them not only I would like to thank the Company’s manage- Baltic Nuclear Power Plant, and the same to ensure the development of a unique engi- ment and staff for the good work they facility is to resume production of the entire neering and production base, but also to performed that enabled us to achieve these range of reactor compartment equipment substantially expand the product line for our results in the reporting year. The implemen- over the next two years. customers, including in the segment of pump tation of the strategic goals for the develop- equipment for nuclear power plants, thermal ment of nuclear power engineering faced by The decision we adopted together with our power plants and hydropower plants. Rosatom State Corporation, as well as the partner Alstom to set up turbine equipment continued prosperity of our Company, are production in Volgodonsk will enable us to In 2013, we plan to develop new types of prod- dependent on your attentive approach to our produce the first turbine using Arabelle low- ucts such as reactor plant equipment for a partners and clients, as well as ongoing work speed technology by 2016. nuclear-powered icebreaker. to improve the quality of our products.

5 Moscow

OJSC Atomenergomash OJSC NPO TsNIITMASh OJSC GSPI OJSC VNIIAM CJSC ATM OJSC SNIIP Petrozavodsk OJSC OKTB IS Petrozavodskmash OJSC OZTMiTS OJSC Neftegazspetsstroy LLC Energomashkompleks Nizhny Novgorod OJSC Afrikantov OKBM Mosenergo GES-1

SMG Bovanenkovo-Ukhta Nizhnevartovsk AEM Group key subsidiaries ((Khanty-Mansiysk Autonomous District) Key projects Dubna Nizhnevatarovsk TPP (GRES) (Moscow Region) Nizhnyaya Tura OJSC IFTP (Sverdlovsk Region) OJSC Venta St. Petersburg OJSC TsKBM CJSC AEM Technologies Zarechny (Sverdlovsk Region) Nazarovo LLC ALSTOM Atomenergomash (Krasnoyarsk Region) Beloyarsk NPP Nazarovo TPP (GRES)

Sosnovy Bor (Leningrad Region) Leningrad NPP-2, Unit 1

Neman (Kaliningrad Region) Baltic NPP, Unit 1 Baltic NPP, Unit 2 Yekaterinburg OJSC SverdNIIkhimmash Opava (Czech Republic) ARAKO spol s.r.o.

Prague (Czech Republic) Chladici veze Praha a.s.

Novovoronezh Voronezh Region) Novomoskovsk Elektrostal Yuzhnouralsk Budapest Novovoronezh NPP-2, Unit 1 (Tula Region) (Chelyabinsk Region), Novovoronezh NPP-2, Unit 2 (Moscow Region) (Hungary) Novomoskovsk TPP Yuzhnouralsk TPP (GRES), LLC Stalenergoproekt Ganz EEM (GRES) Unit 1

Podolsk Belene Volgodonsk (Moscow Region) (Bulgaria) (Rostov Region) OJSC ZiO-Podolsk Belene NPP Branch of CJSC AEM Technologies — OJSC OKB GIDROPRESS Atommash OJSC ZIOMAR EC Rostov NPP, Unit 3

Kramatorsk Schastye (Donetsk Region, Ukraine) (Luhansk Region, Ukraine) OJSC Energomashspetsstal Luhansk TPP Geography of operations and key projects 1. General information about the Company

Data on 2012 revenue with a breakdown by operating segments, mln RUB 2011 2012

2,307 Thermal power equipment 4,914

27,022 Nuclear energy equipment 25,674

2,023 Gas and petrochemical 1,712 industry equipment

19,587 Other products, 19,527 work and services

1.1. General information 1.3. Key products

The Atomenergomash Group of Companies Equipment for the nuclear Equipment for the thermal (presently known as the power engineering power industry power industry division of Rosatom State Nuclear Energy Corporation) was established in 2006 • Reactor compartment equipment: • Power boilers for units with capacity as a part of the Federal Atomic Energy –– reactors for NPPs (VVER, FN, etc.); ranging from 50 to 800 MW. Agency and is one of the leading power –– marine nuclear reactors • Heat recovery steam generators for units engineering holdings in Russia. The and units (RITM, etc.); with capacity ranging from 2.5 to 450 MW. Holding’s core specialization is the design, –– steam generators; • Auxiliary boiler equipment, manufacturing, supply, installation and –– main circulation pumps including LPH and HPH. subsequent maintenance of equipment and pump equipment; • Steam and water heaters for nuclear and thermal power plants –– main circulation piping; from spiral-finned tubes. as well as for enterprises in the gas and –– pressurizer systems; • Hot water boilers. petrochemicals industry. –– emergency core cooling system • Hot water heat recovery steam and passive core flooding system generators for gas turbines with capacity (ECCS and PCFS); ranging from 6 to 45 MW. 1.2. Holding structure –– reactor cavity equipment • Air heaters. and transport gateways; • Capacitive equipment The structure of the Atomenergomash –– core melt localization device; operating under pressure. Group of Companies includes research –– passive heat removal system (PHRS); • Large welded structures. and design organizations, manufacturing –– piping and valves. • Pump equipment. and construction companies as well as • Turbine plant equipment: • Water-water and steam-water heaters. engineering, trade and sales companies, –– turbine and generator equipment; • Radial and axial fans. with more than 50 companies in Russia, –– steam heater separators; • Filters. Ukraine, the Czech Republic and Hungary. –– low and high pressure heaters • Power valves. The equipment produced at these companies (LPH and HPH); • Piping components and assembly units. is used in more than 20 countries. –– piping and valves; • Distillation and desalination units. –– pump equipment. • Deaerators. • Cooling towers. • Auxiliary NPP equipment: –– transport and process equipment; –– refueling machines; –– diesel generator units; –– cooling towers.

8 OJSC Atomenergomash Annual report 2012: Short version

Equipment for the gas and petrochemicals industries Segments, geography of business and Holding structure • Air coolers of all modifications. • Tower, capacitive Main power equipment, design and engineering unit and heat exchange vessels.

• Tubular, vertical and horizontal Steel, castings, forgings regenerative air heaters. Design and engineering unit, R&D Energomashspetsstal • Direct heat tube furnaces (Kramatorsk, Ukraine) and product coils. TsNIITMASh (Moscow) GIDROPRESS (Podolsk) • Separator filters. Reactor equipment, • Reactor equipment. GSPI (Moscow) shell equipment VNIIAM (Moscow) • Boilers and steam generators for thermal Branch of AEM Technologies — Atommash (Volgodonsk) influence on oil reservoirs. ZIOMAR (Podolsk) Petrozavodskmash (Petrozavodsk) • Dust collector units of the CPU. Afrikantov OKBM (Nizhny Novgorod) ZiO-Podolsk (Podolsk) • Piping connection components. AEM Technologies • Valves. (St.Petersburg) Turbine equipment • Flare units of all types. TsKBM (St.Petersburg) ALSTOM-Atomenergomash • Auxiliary equipment. (St.Petersburg)

Control and measurement equipment and automation • Reactor plant monitoring and control Auxiliary power equipment systems (RU MCS) for VVER designs.

• Control systems for the process units Valves and pipes Ventilation of the reactor compartment and auxiliary equipment NPP equipment. Stalenergoproekt (Elektrostal) ATM (Moscow) Venta (Nizhnyaya Tura, • Special reactor compartment systems. Sverdlovsk Region) ARAKO (Opava, Czech Republic) • Nuclear and radiation safety systems and hardware for the nuclear power industry. Equipment for nuclear • Control and measurement equipment and Pump, transport fuel cycle automation (CMEA): sensors for pressure, and process equipment SverdNIIkhimmash temperature, flow, strain, etc. TsKBM (St. Petersburg) (Yekaterinburg) • CMEA valves. GANZ EEM (Budapest, Hungary) • Entire range of radiation Equipment from special monitoring devices. Instrumentation engineering materials • Broad range of solutions for the radiation SNIIP (Moscow) OKTB IS (Moscow) treatment of products (convenience foods, OZTMiTS (Moscow) polymers, etc.). IFTP (Dubna) • Diesel generator control systems. • Control systems and hardware for the automation of thermal power, gas and Construction and installation work Organization of integrated supplies petrochemical facilities. • Control and metering systems for energy Neftegazspetsstroy efficiency objectives. (Moscow) Energomashkompleks Chladici veze Praha (EMKO, Moscow) (Prague, Czech Republic)

9 1.4. Holding business model

Marketing and Main partners Main processes Product positioning development Consumers of relations

Design, production, • Entering the foreign delivery and market installation of • Installing new equipment for production capacity NPP, TPP and GPI • Suppliers of raw enterprises Production of key • Asset diversification commodities equipment and and materials provision of services • NIAEP, MosAEP, • Universities and the over the entire life SPbAEP labor market cycle for segments Main resources of NPP, TPP and Sales channel • Thermal power and • Industrial enterprises GPI enterprises with oil and gas industry • Russian and the required quality, enterprises international • Production capacity on schedule and at partners of the Holding’s a competitive cost. enterprises Direct participation in tenders for projects to • Over 25,000 build and modernize employees power facilities • Raw commodities and materials

Expenses Revenue Results of activities D 37.7%

D 13% • Implementation C 3.3% of nuclear energy C 1% E 76% 51.83 A 49.5% development bln RUB program B 8% • Diversification of revenue A 2% sources for AEM and Rosatom SC • Reduction in the B 9.5% level of monopoly A selling expenses in the industry from B management expenses 85% to 0% A equipment for nuclear power C profit tax B equipment for thermal power D other C equipment for oil and gas industry E cost of goods sold D other

The basic requirements for the business model are set forth in the Company’s strategy adopted in 2011 and include the following:

• First-tier supplier Client/Product focus • Offers technology for a backbone product • Offers integrated solutions on the basis of the backbone product (basis for revenue growth)

• Technological leader for the backbone product Competitive basis • Well-developed supply management chain

Manufacturability Technological leader in the industry

Globalization Export exceeds domestic market revenue, competes on the global market

Investments Substantial (in R&D and maintaining technological leadership)

10 2. Overview of key achievements in 2012

Order book structure by market segments in 2012, bln RUB

Total: 99.1

TPP equipment: 2.6 NPP equipment: 73.6 Other types of equipment: 22.7

Petrochemical equipment: 0.2

Contracts • A branch of AEM Technologies was estab- Globalization lished in Volgodonsk at facilities leased by • OJSC Atomenergomash fulfilled its the Atommash plant in order to expand the • In November 2012, OJSC Atomenergomash obligations to deliver equipment for Company’s ability to manufacture basic tech- and OJSC Turboatom (Ukraine) concluded nuclear power plants under construction, nological equipment for NPPs in addition to an agreement on cooperation in equipment in particular supplies of key equipment for the gas and petrochemicals industry. Reactor supplies for TPPs. This agreement will the nuclear island of the Novovoronezh, production was quickly restored at the Volgo- enable the two companies to make Leningrad, Rostov, Beloyarsk donsk site last year for the first time in a quar- package proposals for participation and Baltic NPPs. ter of a century. OJSC Atomenergomash also in projects to build and modernize TPPs produced and delivered in record time the first in Russia, Ukraine and third countries. • A contract was concluded for the supply molten core catcher for the Baltic NPP, which of a turbine plant (turbines and auxiliary was manufactured in Volgodonsk. • The order book of Ganz EEM grew seven- equipment for more than RUB 30 billion) fold thanks to orders in Russia (high- for two units of the Baltic NPP in the • In late 2012, the Company decided to set capacity pumps for NPPs). Kaliningrad Region. up turbine plant production in Volgodonsk using Arabelle technology jointly with • The Holding’s Eastern European Alstom Power. This decision will enable the companies concluded contracts for the Production Company to become a leading player on the supply of more than EUR 40 million in high-capacity turbine equipment market. equipment in October 2012 during the • The first stage of production modernization The production of turbine plant equipment Atomex-Europe international exhibition was completed at CJSC Petrozavodskmash for the first unit of the Baltic NPP is slated in the Czech Republic. with the launch of the manufacturing of to begin in 2013. steam generator shells and valves for NPPs. CJSC Petrozavodskmash is a unique Efficiency example of how new key production equip- Diversification ment may be built for the nuclear industry • In late 2012, OJSC Atomenergomash in Russia in a very short time span. • Among the key supplies for TPP in 2012, OJSC prepared and approved the main focuses of Atomenergomash fully completed a project to the Comprehensive Efficiency Improvement • OJSC Energomashspetsstal completed a modernize the boiler at the oldest active TPP in Program of OJSC Atomenergomash Enter- seven-year plant modernization program Russia – Mosenergo HPP-1 and also delivered prises for the Period of 2013-2018 with (for USD 300 million) and established boiler equipment for the Nizhnevartovsk TPP the support of Rosatom State Corpora- modern energy efficient production. The (also known in Soviet times as state district tion. The program includes three modules company is capable of manufacturing power plants, or SDPP), Nazarovo TPP, South that will result in the development of an the entire range of key castings and Urals TPP-1 and Luhansk CHP in Ukraine. organizational model for the Holding, the forgings for NPPs, including shells specialization of key production facilities, for VVER reactors, the MCP shell and • Among new businesses, the Company formed the identification of performance targets turbine plant equipment using Arabelle a wind energy business on the core of the for the Holding’s enterprises and measures technology. For the first time in its history, recently established company VetroOGK. to achieve these results. the company developed the production Cooperation that began in 2012 between of unique ingots weighing up to 415 tons, OJSC Atomenergomash and the Republic of • The effect from measures to implement which opens the door for the development Adygea calls for conducting wind monitoring in the Rosatom Production System totaled of new types of products for the the region for the construction of the first wind RUB 368 million in 2012. nuclear, steel, petrochemical and other farm with total capacity of 30 MW. In addition, industries. Today Energomashspetsstal OJSC Atomenergomash launched the client is a certified supplier of a broad range wind power systems (CWPS) project under of products for major global companies, which potential clients in regions experiencing including Alstom, Rolls-Royce, Toshiba, energy shortages will be given the opportunity BHEL and General Electric. to set up a wind farm or wind turbines. 11 3. The Company’s position in the Russian power engineering industry

OJSC Power Machines, OJSC Atomenergomash Other including EMAlliance OJSC NPO Saturn LLC Belenergomash 3% 3%

26% 20% 23%

OJSC OMZ OJSC Tyazhmash CJSC UTZ OJSC Elektrozavod 14% 3% 2% 6%

3.1. TPP equipment 3.3. Petrochemical equipment Rosatom State Corporation currently ranks as number one in the world in terms OJSC Atomenergomash takes part in joint of the number of NPPs in the construction stage or in preparation for construction. projects with major national companies in the The Atomenergomash Holding is the sole producer of numerous equipment items for NPPs oil and gas sector (OJSC Gazprom, OJSC Lukoil, built using the Russian design: OJSC Rosneft OC and others) to build and modernize their production facilities. Sole Russian producer of steam generators Shell equipment With the opening of the branch of CJSC AEM for Russian types of NPPs Technologies in Volgodonsk in 2012, it should be Sole Russian producer of main circulation pumps Pump equipment noted that its traditional product range includes for Russian types of NPPs large-capacity reactor and tower equipment Has the ability to manufacture more than 70% for the oil refining, gas and petrochemical Valves of the entire range of valves for NPPs industries. While the share of the Holding’s companies in this segment (in terms of Piping One of the largest producers of high-pressure pipes in Russia contracted tonnage) does not currently exceed 4-5%, taking into account the projected volume Chief designer and single-source supplier of fast of new capacity for secondary generation and Fast neutron reactor plants neutron reactor plants (supervised company petrochemical production, it is promising and OJSC Afrikantov OKBM) has the potential to boost the Holding’s market share to at least 10% in the medium-term.

3.2. TPP equipment 3.4. Castings and forgings made from special steel The core competence of the Atomenergomash The Holding’s key products in the thermal power Group of Companies in this area is the packaged segment include boiler units and heat recovery In 2010, the production profile of OJSC supply of boiler islands consisting of a boiler and steam generators (under the license of the Dutch Atomenergomash expanded with the different types of auxiliary equipment: engineering company NEM Energy) for TPP acquisition of the Ukrainian company OJSC power units with capacities ranging from 50 to Energomashspetsstal. The company is able to 800 MW. In 2011-2012, OJSC Atomenergomash manufacture the entire range of key castings had an 8-9% share of the market for heat recov- and forgings for NPPs, including shells for the ery steam generators (in terms of contracted VVER and VVER-TOI reactors, the MCP shell Boiler island Packaged delivery capacity). The goal over the next five years is to and turbine plant equipment. In terms of its (system) of system increase the share in this segment to at least 30% combined features, in particular its production scale, OJSC Energomashspetsstal is among the five to six largest global producers with a market Backbone share of 4-5%. Boiler product The acquisition and inclusion of OJSC Energomashspetsstal in the Holding enabled the OJSC Atomenergomash Group of Companies not only to establish a nuclear island supplier within the structure of Rosatom State Corporation that is capable of meeting the industry’s needs Auxiliary in the required volume but also to become equipment Auxiliary a key link in the global chain of castings and systems forgings supplies for the world’s leading power engineering companies, including Alstom, Rolls- Royce, Toshiba, BHEL and General Electric.

12 OJSC Atomenergomash Annual report 2012: Short version

Key projects of OJSC Atomenergomash in 2012

АтомнаяNuclear энергетика energy

Plant name Equipment manufactured/supplied

Set of PGV-1000M steam generators, SHS and HPH, Rostov NPP, unit 3 high-pressure pipes

Novovoronezh NPP-2, unit 1 Set of SHS and HPH, main circulating pump unit

Set of PGV-1000MKP steam generators, Novovoronezh NPP-2, unit 2 SHS and HPH, MCP components

Leningrad NPP-2, unit 1 Set of SHS and HPH, main circulating pump unit, MCP components

Belene NPP Set of PGV-1000MKP steam generators (6 units)

Equipment for Fast Neutron Reactor Plant-600 Beloyarsk NPP and 800 and turbine plant

Baltic NPP, unit 1 Core melt localization device

ТепловаяThermal энергетика energy

Plant name Equipment manufactured/supplied

Nizhnevartovsk TPP (SDPP) Heat recovery steam generator

Novomoskovsk TPP (SDPP) Heat recovery steam generator

Yuzhnouralsk TPP (SDPP), unit 1 Heat recovery steam generator

Mosenergo GES-1 Boiler unit

PetrochemicalГазонефтехимия industry

Date Project description

Strategic partnership agreement concluded between April 2012 Rosatom SC and OJSC Lukoil

Completion of equipment supplies for major capital May 2012 construction projects of OJSC Gazprom

Signing of a cooperation agreement with LLC TNK-Uvat June 2012 (TNK-BP) for the implementation of investment projects

Conclusion of agreement with LLC Gazkomplektservis – July 2012 an operator of OJSC Gazprom – for the manufacturing and supply of equipment

Accreditation as an oil refinery equipment supplier August 2012 to OJSC Rosneft OC

Orders received for the supply of 48 sets of CPU-11.8 dust collectors for the construction of compressor stations September 2012 on the Bovanenkovo-Ukhta gas transmission network by CJSC Yamalgazinvest

Castings and forgings from special steel

Date Project description

April 2012 Casting of a unique ingot weighing 415 tons

Turbine wheel shell work pieces built for Dnieper HPP May 2012 using new technology

Contract signed with OJSC Tyazmash November 2012 for the supply of castings and forgings

Completion of reactor shell component manufacturing December 2012 for VVER-TOI project

13 4. Core activities

Effect from the introduction of the Rosatom Production System (RPS)

368,358 13

Number of subsidiaries +44% 251,075

2011 2012 Economic effect from the implementation of RPS projects, ‘000 RUB Number +30% of RPS projects +53%

19 2011 2012 Expenses on the implementation of RPS projects, ‘000 RUB 43,582 –17% 50,860 29

4.1. Economic activities

Financial results Data on the revenue of the Atomenergomash Group of ПоказательIndicator 2011 2012 Companies for 2012 in terms of geographical segments Combined revenue of the Atomenergomash 50,188,231 51,827,135 Group of Companies, ‘000 RUB Наименование Комбинированная Name of geographical Combined revenue of Combined revenue structure by sector, географического выручка сегмента, segment segment, ‘000 RUB ‘000 RUB, including: сегмента тыс. руб.

- Equipment for the nuclear power industry 27,022,152 25,673,820 Export, including 7,244,546 - Equipment for the thermal power industry 2,307,429 4,914,139 CIS 2,861,875 - Equipment for the gas and petrochemical 2,022,852 1,712,227 non CIS 4,382,671 industries Domestic market 44,582,589 - Other products, work and services 18,835,797 19,526,949 Total: 51,827,135 Including design work 9,273,057 11,198,724 Labor productivity, ‘000 RUB/person 2,397 2,417 EBITDA , ‘000 RUB 4,546,423 4,674,723 Gross profit , ‘000 RUB 9,448,640 8,650,015 Net profit , ‘000 RUB 1,763,111 979,010 Gross profit margin, % 19 17 EBITDA margin, % 9 9

14 OJSC Atomenergomash Annual report 2012: Short version

4.2. Commercial activities

As of the end of 2012, the consolidated order book In the nuclear power segment, the bulk of work (190%), valves (870%), shell equipment of the Atomenergomash Group of Companies had orders were for heat exchange equip- (80%) and pump equipment (30%). increased 8% over the year and stood at approxi- ment with orders at roughly the same mately RUB 99.1 billion. Most of the orders were level as in 2011 – approximately RUB 29 for NPP equipment whose share grew from 73% to billion. At the same time, a significant 87% in the overall order book. increase was seen in orders for design

Sectoral and product structure of the order book Geographical distribution as of December 31, 2012 of the order book I 0.6% J 2.8% H 2.1% 23% 2.6 73.6 5,9 67,1 G 8.8% A 29.2% 22.7 0.2 17.4 1.2 F 1.9%

E 18.0% 77%

2011 D 9.1% 18%

C 11.3% B 16.1% A Heat exchange equipment B Other C Pump equipment D Piping 2012 2011 E Design work Equipment for NPP F Boiler equipment G Shell equipment Equipment for TPP 82% H Castings and forgings Equipment for GPI I Spare parts, tools and accessories 2012 Other types of equipment J Valves Export Russia

4.3. Investment activities 4.4. Innovative activities Investment management in 2012: The main focuses of the innovative • an increase in capacity for the production (technological) development strategy of nuclear and thermal products • Introduction of the investment of OJSC Atomenergomash: (OJSC ZiO-Podolsk) management regulation. • the development of new products; • the modernization of the • Synchronization and harmonization of production and technological base planning processes with the processes for • the efficient use and development of existing of OJSC Energomashspetsstal building the project portfolio of Rosatom production potential (through the introduction State Corporation. of advanced production processes) and the • the acquisition of wind turbine establishment of new types of production with production technologies. Main investment focuses the commissioning of advanced equipment. on the horizon for 2013-2017: Key development projects • maintaining the current production process for the period of 2012-2017: that aims to meet the needs of both the nuclear industry and external high-margin • the development of heavy equipment pro- markets on which OJSC Atomenergomash duction for the VVER reactor plant (CJSC enterprises already operate; Petrozavodskmash and the Volgodonsk branch of CJSC AEM Technologies) • optimizing the product specialization between the Holding’s production sites; • the establishment of a production and engineering base to manufacture turbine • entering new markets with high margins; plant equipment for the Arabelle project (Alstom Atomenergomash joint venture) • developing new high-tech products/technologies that meet • the construction of a workshop to the latest requirements manufacture special heavy valves for efficiency and safety. (CJSC Petrozavodskmash)

15 4.5. Improvement of performance efficiency

The quality of the manufactured products In 2012, a total of 29 RPS projects were OJSC ZiO-Podolsk is one of the main parameters of carried out at 13 enterprises of the division, competition in the power engineering OJSC SverdNIIkhimmash including: OJSC ZiO-Podolsk, OJSC Afri- industry. OJSC Atomenergomash OJSC TsKBM kantov OKBM, OJSC OKB GIDROPRESS, implements quality management activities CJSC Petrozavodskmash OJSC TsKBM, OJSC NPO TsNIITMASh, with two main focuses: ARAKO spol s.r.o., OJSC SNIIP, OJSC SverdNIIkhimmash, OJSC Venta, ARAKO spol s.r.o., OJSC VNIIAM, OJSC Venta • certification of subsidiaries and affiliates CJSC Petrozavodskmash, LLC Stalenergoproekt for compliance with ISO 9000:2001; OJSC IFTP and CJSC ATM. OJSC SNIIP • large-scale investment programs for RPS results in 2012 technical upgrades aimed at improving the RPS program performance efficiency of enterprises and Growth in productivity for certain projects: the quality of equipment. OJSC Atomenergomash enterprises utilize the concept of lean production known as the • Production of steam generators – 33%; Rosatom Production System (RPS). The goal of the RPS is to improve the performance • Production of MCPU pumps - 50%; efficiency of enterprises in the industry • Production of control and protection by continuously improving workplaces, system for Solenoid Stepper Drive-3 - 60%; technologies, production and business processes. • Production of MCP pipe components - 50%.

16 5. Corporate governance

Company personnel structure

Women Under 30 38% 20%

From 30 to 50 Men 41% 62%

Over 50 39%

5.1. Management structure and bodies

General Meeting of Shareholders

Audit Committee Independent Auditor

Board of Directors

CEO

Group of Advisors to the CEO Advisory Bodies under the CEO

Economics Procurement Commercial Corporate Governance Strategy and Finance and Integration Department Department Department Department Department

Production Facilities Economic Security Internal Audit HR Department Management Department Department Department

17 Board of Directors 5.2 Risk management system (as of 2013) Main objectives of the CRMS: • to integrate the risk management Yekaterina Lyakhova • to support the implementation of Rosatom process into the management decision- Chairman of the Board of Directors, Director State Corporation’s strategy by managing risks; making process in order to better utilize of Investment Management and Operational • to promptly identify emerging risks, as resources through managing the balance Efficiency at Rosatom State Corporation well as assess and minimize risks that of risk and return; could affect the activities of Rosatom State Andrey Nikipelov Corporation and its organizations; • to provide information support to the Member of the Board of Directors, management and employees of the • to introduce continuous monitoring and CEO of OJSC Atomenergomash Corporation and its organizations for the risk communication procedures; adoption of management decisions and Yevgenia Gorbunova • to identify risk owners and their to identify opportunities to optimize risk Member of the Board of Directors , Director responsibilities; management processes.. of the Development and Restructuring of the Development and International Business Unit CRMS target model of Rosatom State Corporation

Alexey Kalinin Corporate Risk Strategic (CEO) Member of the Board of Directors, Director Management System of the International Business Department at Rosatom State Corporation Tactical (Risk Committee) Igor Shpagin Risk Management Member of the Board of Directors, Deputy Operational (risk owners) Department of Rosatom Director of the Legal and Corporate State Corporation Operations Department and Head of the Division for Corporate Work with JSC, Operational risks FSUE and FSE Rosatom State Nuclear Organizational and Energy Corporation methodological Financial risks support for risk management Industrial safety and processes

Company management environmental risks Risk management/ insurance (as of 2013)

Andrey Nikipelov CEO Risk management takes place depending on where the risk occurs and the degree of the risk’s impact on the Company’s activities. The decision on which risk management method to take is Vladimir Razin made either by the Company’s senior management (for political, financial, market and strategic Production Director risks at the project initiation stage) or by the management of the relevant divisions (operational and other insignificant risks). Denis Tarlo Commercial Director 5.3. Equity capital Vadim Pesochinsky OJSC Atomenergomash had charter capital of RUB 738,149 as of December 31, 2012. As part of Economics and Finance Director the state registration of amendments to the Charter of OJSC Atomenergomash, the Company’s charter capital was increased over the reporting period through the placement of common Ksenia Sukhotina registered shares in a private offering. The decision was adopted at an extraordinary meeting HR Director of OJSC Atomenergomash shareholders held on November 26, 2012 to make a fourth additional share issue. The additional shares underwent state registration in late December 2012. Konstantin Tulupov Strategy Director Structure of OJSC Atomenergomash equity capital Sergey Kuleshov as of December 31, 2012 Corporate Governance Director Shareholder Number of shares Proportion, % Alexander Levenshtein Internal Audit Director Open Joint-Stock Company Atomenergoprom 490,386 66.43 Yevgeny Pakermanov Open Joint-Stock Company TVEL 51,000 6.91 Project Director Open Foreign Economic Joint-Stock Company 28,935 3.92 Techsnabexport Vladimir Ushakov Advisor to the CEO Limited Liability Company Energomashkompleks 460 0.06

Anatoly Ogurtsov Closed Joint-Stock Company AEM Invest 24,050 3.26 Advisor Closed Joint-Stock Company AEM Finance 50,974 6.91 Natalia Shirokovskikh INTERNEXCO GMBH 92,344 12.51 Chief Accountant TOTAL 738,149 100

18 6. Personnel and environmental policy

Environmental protection expenses, ths RUB

207 1,017 1,517 1,674 3 1,159 7,438 14,356 1,851 1,557 5,387 4,525 2,702 15,858

OJSC OZTMiTS OJSC Venta OJSC SverdNIIKhimmash OJSC TsKBM OJSC Afrikantov OKBM

OJSC SNIIP OJSC OKB Gidropress OJSC ZiO-Podolsk LLC STEP

Expenses to prevent environmental impact Expenses associated with waste thandling

6.1. Personnel policy OJSC Atomenergomash is one of the largest divisions within Rosatom reporting year, the headcount of the Holding’s key subsidiary State Corporation in terms of the size of its assets, the scale of its and supervised companies stood at 22,505 people (based on regional presence and its number of employees. As of the end of the 2012 the data consolidation profile except ARAKO and LLC STEP).

Total number of employees by enterprise

Men Women

38 821 1,537 589 1,033 540 79 174 196 430 214 42 1,492 17 367 180 1,497 4 147 20 585 2,840 1,111 1,747 1,020 132 392 450 786 291 73 584 19 300 185 2,495 9 148 OJSC DEZ OJSC GSPI OJSC Afrikantov OKBM OJSC OKB GIDROPRESS OJSC Energomashspetsstal CJSC PZM OJSC OZTMiTS OJSC SNIIP OJSC TsNIITMASh OJSC TsKBM OJSC Venta CJSC ATM CJSC AEM Technologies LLC EMKO OJSC SverdNIIkhimmash OJSC ZIOMAR EC OJSC ZiO-Podolsk CJSC REMKO OJSC AEM

19 Regional breakdown 6.2. Environmental responsibility of HR numbers Moscow Environmental safety issues are an essential part of Atomenergomash Group’s 1,388 | 885 positioning both in terms of the market for Moscow Region advanced energy solutions and in terms of environmental protection within the 3,606 | 2,086 framework of business activities. St. Petersburg It should be noted that waste of low hazard 730 | 424 classes – 4 and 5 – accounted for the vast Leningrad Region majority of production waste from the Holding’s enterprises, or more than 99%. 127 | 71 OJSC Energomashspetsstal produced the Rostov Region largest amount of waste in the group due to the specific features if its operations – 1,421 | 519 manufacturing large castings and forgings Sverdlovsk Region from special steel for equipment production. The vast majority of waste is deposited in 591 | 581 a landfill or recycled. Ozersk Total waste volume in 2012 amounted to 124 | 279 39,266 tons (versus 63,983 tons a year earlier). Zheleznogorsk 122 | 189 Novosibirsk 99 | 104 Kramatorsk, Ukraine 18,859 A 1,747 | 1,033 Republic of Karelia 1,020 | 540 Tver Region 8,783 B 47 | 17 Orenburg

9 | 5 6,420 C Nizhny Novgorod 2,840 | 1,537 5,778 D Men Women

2,831 E

Age breakdown 1,742 F of employees 1,040 G B 41% 785 H 183 I 37 J 14 K

A OJSC Energomashspetsstal A 20% B OJSC ZiO-Podolsk C OJSC Afrikantov OKBM D OJSC Venta E CJSC Petrozavodskmash F OJSC SNIIP G OJSC OKB GIDROPRESS C 39% H OJSC TsKBM I OJSC SverdNIIkhimmash J LLC STEP A Under 30 B From 30–50 C Over 50 K OJSC OZTMiTS

20 OJSC Atomenergomash Annual report 2012: Short version Contacts

Atomenergomash OJSC Nuclear and Power Machine Building Company Address: Ozerkovskaya naberezhnaya 28, bldg. 3, 115184 Moscow, Russia Telephone: +7-495-668-20-93 Fax: +7-495-668-20-95 Web-site: www.aem-group.ru/wps/wcm/connect/aem/siteeng/ E-mail: [email protected]

Commercial Department Address: Ulitsa Schipok 5/7, bldg. 2, 3, 115054 Moscow, Russia Telephone: +7 (495) 668-20-93, ext. 1279 E-mail: [email protected]

AEM Companies

JSC TsNIITMASh JSC Afrikantov OKBM JSC SNIIP Address: 115088, Address: 603074, Burnakovsky proezd, Address: 123060, Raspletina St., 5, Sharikopodshipnikovskaya St., 4, 15, Nizhny Novgorod, Russia Moscow, Russia Moscow, Russia Phone: +7-831-241-87-72 Phone: +7-499-198-97-64 Phone: +7-495-675-83-02 Fax: +7-831-241-87-72 Fax: +7-499-943-00-63 Fax: +7-495-674-21-96 Website: www.okbm.nnov.ru Website: www.sniip.ru Website: www.cniitmash.ru E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] JSC Venta JSC SverdNIIkhimmash JSC Energomashspetsstal Address: 624222, Malysheva St., 2a, Address: 620010, Griboedova St., 32, Address: 84306, Kramatorsk, Donetsk Nizhnaya Tura, Sverdlovsk Region, Ekaterinburg, Russia Region, Ukraine Russia Phone: +7-343-263-90-91 Phone: +38-06264-60132 Phone: +7-34342-2-30-20 Fax: +7-343-258-55-05 Fax: +38-06264-65567 Fax: +7-34342-2-31-44 Website: www.sverd.ru Website: www.emss.ua Website: www.venta-nt.ru E-mail: [email protected] E-mail: [email protected] JSC OKB GIDROPRESS JSC GSPI Address: 142103, Ordzhonikidze St. 21, JSC TsKBM Address: 107078, Novoryazanskaya St., Podolsk, Moscow Region, Russia Address: 195112, Krasnogvardeiskaya 8a, Moscow, Russia Phone: +7-495-502-79-10 Sq., 3, St. Petersburg, Russia Phone: +7-495-988-80-50 Fax: +7-4967-54-27-33 Phone: +7-812-676-63-63 Fax: +7-499-261-72-64 Website: www.gidropress.podolsk.ru Fax: +7-812-676-64-16 Website: www.oaogspi.ru E-mail: [email protected] Website: www.ckbm.ru E-mail: [email protected] E-mail: [email protected]

21 JSC ZiO-Podolsk JSC Petrozavodskmash CJSC Atomtruboprovodmontazh Address: 142103, Address: 185031, Zaytseva Address: 125362, Stroitelniy proezd, Zheleznodorozhnaya St., 2, Podolsk, St., 65, Petrozavodsk, 7A/10, Moscow, Russia Moscow Region, Russia Republic of Karelia, Russia Phone: +7-495-540-10-86 Phone: +7-495-747-10-25 Phone: +7-8142-71-69-20 Fax: +7-495-497-56-00 Fax: +7-495-747-10-25 Fax: +7-8142-70-30-42 Website: www.atom-tm.ru Website: www.aozio.ru Website: www.pzm.su E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Stalenergoproekt Ltd. JSC Engineering Company ZIOMAR Chladici veze Praha, a.s. Address: 144001, Karl Marx St., 12/74, Address: 142103, Address: 11000, Political prisoners Moscow Region, Elektrostal, Russia Zheleznodorozhnaya St., 2, Podolsk, 912/10, Prague-New Town, Phone: +7-496-557-50-55 Moscow Region, Russia Czech Republic Fax: +7-496-557-50-55 Phone: +7-495-747-10-17 Phone: +420-222-350-700 Website: www.stepel.ru Fax: +7-495-747-10-17 Fax: +420-244-098-241 Website: www.aozio.ru Website: www.chv-praha.cz Atommash E-mail: [email protected] E-mail: [email protected] (Branch of CJSC AEM Technologies) Address: 347360, Zhukovskoe shosse, Neftegazspetsstroy Ltd. Arako spol. s r.o. 10, Volgodonsk, Russia Address: 127273, Novoryazanskaya St., Address: 746 01, Hviezdoslavova 18, Phone: +7-8639-29-20-79 8a, Moscow, Russia Opava, Czech Republic Fax: +7-8639-29-22-20 Phone: +7-495-971-98-91 Phone: +420-553-694-111 Website: www.atommash.ru Website: www.ngss-ltd.ru Fax: +420-553-694-777 E-mail: [email protected] E-mail: [email protected] Website: www.arako.cz E-mail: [email protected] JSC IFTP ALSTOM Atomenergomash Address: 141980, Kurchatova St., 4, Address: 195197, Polustrovskiy proezd, Ganz EEM Dubna, Moscow region, Russia 43A, St. Petersburg, Russia Address: 1087, Quarries Road 21, Phone: +7-49621-6-27-89 Phone: +7-812-635-81-19 Budapest, Hungary Fax: +7-49621-6-50-82 Website: www.alstom.com/russia Phone: +36-1-872-58-00 Website: www.iftp.ru Fax: +36-1-872-58-01 E-mail: [email protected] CJSC AEM Technologies Website: www.ganz-eem.com Address: 196650, Finlyandskaya St., 7, E-mail: [email protected] EMKO Ltd. Kolpino, St. Petersburg, Russia Address: 115035, Sadovnicheskaya St., Phone/Fax: +7-812-457-05-88 JSC VNIIAM 20/1-301, Moscow, Russia Website: www.aemtech.ru Address: 125171, Kosmonavta Volkova Phone: +7-495-789-97-15 E-mail: [email protected] St., 6A, Moscow, Russia Fax: +7-495-951-79-53 Phone: +7-495-748-86-54 E-mail: [email protected] Fax: +7-495-748-79-68 Website: www.vniiam.ru CJSC VetroOGK E-mail: [email protected] Address: 197227, Gekkelevskaya St., 21A, St. Petersburg, Russia Phone: +7-812-386-00-31 Fax: +7-812-386-00-34 Website: www.vetroogk.ru

22 www.aem-group.ru