The State Atomic Energy Corporation ROSATOM Joint-Stock Company Nuclear and Power Engineering (Atomenergomash)
Протокол №___ от «___» ______20_ г.
APPROVED BY: Director General OKB “GIDROPRESS” /signature/ V.V. Dzhangobegov 23.05.2017
Annual Report 2016
Joint Stock Company “Experimental and Design Organization “GIDROPRESS” awarded the Order of the Red Banner of Labour and CZSR Order of Labour (OKB “GIDROPRESS”)
Podolsk 2017
I. RECITALS
1. Key Performance Indicators ...... 4 2. Principal Developments ...... 5 3. Atomic Project Age-Mate ...... 6 4. Summary ...... 11 5. Address of the Chairman of the Board of Directors ...... 15 6. Address of the Company’s Director General ...... 16 7. Report of the Board of Directors ...... 18
II. GENERAL
1. Company’s Profile ...... 19 2. Core Business and Global Reach ...... 21 3. Role and Position of the Company in the Structure of the State Atomic Energy Corporation ROSATOM ...... 23 4. Financial and Economic Performance ...... 25
III. COMPANY’S DEVELOPMENT STRATEGY
1. Company’s Mission ...... 29 2. Role and Function of the Company in Implementation of ROSATOM Strategy ...... 29 3. Technological Development of WWER-type Reactors ...... 30 4. Investments and Upgrade ...... 32 5. Global Operations ...... 36 6. Competitive Environment ...... 38
IV. CORE BUSINESS RESULTS
1. Project Portfolio ...... 42 2. Research and Development ...... 43 3. Design Supervision ...... 56 4. Development of Design Technologies ...... 57 5. Production and Supply of NPP Equipment ...... 58 6. Scientific Activities and Intellectual Property ...... 61 7. Introduction of the Production Program by Rosatom ...... 63
V. MANAGEMENT
1. Corporate Governance ...... 67 2. Quality Management ...... 72 3. Procurement Management ...... 74 4. Financial Management ...... 76 5. Risk Management ...... 76 6. Information Technologies ...... 77
VI. SUSTAINABLE DEVELOPMENT
1. Human Resources Management...... 78 2. Social Policy ...... 88 3. Youth Policy ...... 90 4. Occupational Health and Safety ...... 91 5. Environmental Safety and Compliance ...... 95
2 VII. COMMUNICATIONS. STAKEHOLDER ENGAGEMENT
1. Communications ...... 98 2. Stakeholder Engagement ...... 100
VIII. EXHIBITS
EXHIBIT No. 1 Accounts and Financial Statements (2016) ...... 106 EXHIBIT No. 2 Audit Report attached to the Company’s accounts and financial statements for the period from January 1 to December 31, 2016 ...... 106 EXHIBIT No. 3 Major Transactions effected by the Company in the Reporting Year ...... 106 EXHIBIT No. 4 List of Abbreviations ...... 106 EXHIBIT No. 5 GRI Index ...... 108 EXHIBIT No. 6 Consideration of Concerns Raised by Stakeholders ...... 111
CONTACT DETAILS (FOR ALL QUERIES RELATED TO THIS REPORT): ...... 112
3 I. PREAMBLE
1. Key Financial and Economic Performance Indicators
In 2016 Joint Stock Company «Experimental and Design Organization «GIDROPRESS» awarded the Order of the Red Banner of Labour and CZSR Order of Labour (OKB “GIDROPRESS”) customarily showed good financial and economic performance. More specifically, in the reporting year the following results were achieved: • Sales proceeds totaled RUB 6,583.1 mln, thus showing an increase vs 2015 of RUB 2,386.7 mln or 53 percent; • EBITDA amounted to RUB 3,353.8 mln, thus showing an increase vs 2015 of RUB 1,894.2 mln or 129.8 percent; • Net profit totaled RUB 2,635.1 mln, thus showing an increase vs 2015 of RUB 1,256.6 mln or 91.2 percent; • Labor efficiency amounted to RUB 4.66 mln per person, thus showing an increase vs 2015 of RUB 1.68 mln per person or 56 percent; • Profit margin was equal to 48.8 percent, thus showing an increase of 66 percent vs 2015; • Output profitability was equal to 75.1 percent, thus showing an increase of 72 percent vs 2015; • Return on working capital totaled 32.7 percent; as such, efficiency of use thereof vs the previous year increased by 42 percent; • Return on equity totaled 43.6 percent; as such, efficiency of use thereof vs the previous year increased by 46 percent; • Return on total assets was equal to 28.8 percent; as such, efficiency of use thereof vs the previous year increased by 42 percent. The absolute liquidity ration totaled 1.36, thus being 84 percent higher than in 2015. The Company is able to pay its debts when due in full. The Company carried out its business without raising borrowed funds and was absolutely financially stable. As such, the Company managed its working capital properly and competently and its management could be characterized as highly professional.
Key Financial and Economic Performance Indicators
growth rate Indicators 2014 2015 2016 2016/ 2015, % Sales Proceeds, MM RUB 4 801.2 4 466.4 6 853.1 153.4 EBITDA, MM RUB 1 269.5 1 459.6 3 353.8 229.8 Net Profit, MM RUB 1 198.1 1 378.5 2 635.1 191.2 Sales Profit, MM RUB 1 322.2 1 315.5 3 345.7 254.3 Labour Efficiency, MM RUB/person 3.026 2.98 4.66 156.0 Employees under 35, % 31 30.27 28.83 95.24 Average Wages, RUB per mensem 104.8 100.5 114.6 114.0 Events rated as higher than Level 2 (INES scale), 0 0 0 - quantity Government Defense Order, progress in % 100 100 100 -
Profitability Performance Profile
growth rate Indicators 2015 2016 2016/ 2015, %
4 Return on sales ROS (%) 29.5 48.8 166 Cost to revenue rate (%) 43.7 75.1 172 Return on working capital (sales profit) (%) 23.0 32.7 142 Return on equity (ROE) (%) 29.8 43.6 146 Return on assets ROA (ROTA) (%) 20.3 28.8 142
2. Principal Developments
Key Events in 2016: Core Business − Novovoronezh NPP Unit 6 with a pioneer 3rd generation WWER-1200 reactor was integrated into the Russian national grid − Kursk NPP-2 Unit 1 construction was duly licensed − Kudankulam NPP Unit 2 was integrated into the national grid of India − Kalinin NPP Unit 2 was duly licensed for further operation − Another stage of power start-up of Beloyar NPP Unit 4 with BN-800 reactor and steam generator designed by OKB “GIDROPRESS” was completed − The State Defense Order was carried out in full
Key Events in 2016: Sustainable Development Our Values, Progress and Achievements in 2016 Thinking ahead − Innovative Leader of the Nuclear Industry 2016 Youth Contest, winner − BN-2016 Sodium Cooled Fast Reactor Technology Development, Youth Industry-Specific Research and Development Conference, Experimental Justification and Related Calculations Section, winner − Performance shown by OKB “GIDROPRESS” in terms of verification and validation of CFD codes was recognized as superior by OECD/NEA − For their contribution to implementation of 1C ERP ROSATOM Unified Enterprise Resource Management System Distribution Project as part of the IT Transformation Program OKB “GIDROPRESS” employees were awarded certificates of honor by ROSATOM State Corporation Accountability − OKB “GIDROPRESS” was awarded The Reliable Supplier 2015 badge. − OKB “GIDROPRESS” was declared the winner in The Deep Understanding of Sirius industry-specific contest and issued a diploma by ROSATOM State Corporation for active participation in the development of the Sirius Information System. Efficiency − The Company was declared the winner in the MAN OF THE YEAR 2015 Contest by ROSATOM (The Best Process Engineer of the Mechanical Engineering Division, OJSC “Atomenergomash”). − OKB “GIDROPRESS” received a transferable banner from Podolsk Municipality for the contribution to the science advancement in 2015. Team work − The team of authors of OKB “GIDROPRESS” was declared the winner in the contest of young researchers held as part of the Neutronic Issues of Atomic Energy (Neitronica-2016). Respect − The Governor of the Moscow Region thanked a representative of OKB “GIDROPRESS” in the Council of Young Researchers and Specialists of the Moscow Region for good research work and
5 material contribution to the implementation of the public research and technical policy. − “Our Moscow Region” Prize presented by the Governor of the Moscow Region to the team of singers of OKB “GIDROPRESS” for a socially important project (Atomic Flame in the Heart). − The veterans organization of OKB “GIDROPRESS” ranked first among other similar organizations of ROSATOM in 2015-2016. − A medal place taken by the team of singers during the 5th Festival of Creative Teams of Veterans Organizations of ROSATOM (Energy of Life). − Opening of an exhibition dedicated to the 70th anniversary of OKB “GIDROPRESS” (Podolsk Local History Museum). Safety − Medal places during the 11th Research and Engineering Conference (High-Tech Nuclear Energy. Youth in the Innovation Process, Nuclear Energy Safety Section).
3. Atomic Project Age-Mate
BEGINNING. IMMEDIATE INVOLVING IN 1946 - 1955 THE SOVIET NUCLEAR PROEJCT February 1946 - November 1947 Initial Project. Detailed design of a horizontal uranium-graphite channel-type heavy-water reactor was developed under academic supervision of I.V. Kurchatov. January - December 1947 Detailed design of a 500kW development vertical heavy-water (Dayton) reactor for the Institute of Theoretical and Experimental Physics. November 1947 - January 1949 Detailed design of a commercial vertical uranium-graphite channel-type heavy-water reactor for Plant No.817 (unit No.7). October 1949 - December 1950 Design of MR research reactor facility for the Instrumentation Laboratory of the Academy of Sciences of the USSR. April 1951 Commencement of design work (steam generators and equipment for the first NPP in the world). December 1952 Commissioning of MR reactor in the Instrumentation Laboratory of the Academy of Sciences of the USSR. April 1954 - January 1957 Detailed design of a steam generation plant for a nuclear-powered submarine (Project 645). June 27, 1954 Commissioning of the first NPP in the world in Obninsk. December 1954 First State Science Award
6 (B.M. Sholkovich, G.V. Ermakov, P.G. Volodin and A.A. Khokhlachev) August 8, 1955 Order of the Soviet Government for development of a pressurized water type reactor (WWER).
GAINING EXPERIENCE AND 1956 - 1965 COMPETENCES. HIGHER CREDIBILITY. REAL INDEPENDENCE October 1958 Liquid metal steam generation unit power ascension, 27/VT test facility for a nuclear- powered submarine (Institute of Physics and Power Engineering in Obninsk). December 1960 Detailed design of a development power unit with WWER-type boiling VK-50 reactor completed. April 1961 Lenin Prize for the work performed in relation to 27/VT test facility awarded to B.M. Sholkovich. April 1, 1962 Launching of K-27 nuclear-powered submarine (Project 645), JSC “PO “Sevmash”. April 1964 Lenin Prize for a nuclear-powered submarine (Project 645) with a liquid metal steam generation unit. Prize winners: V.I. Akimov, L.H. Parnev, G.A. Tachkov and V.A. Chistyakov. April - June 1964 The first cruise of K-27 nuclear-powered submarine. The longest submergence (51 days) was recorded. L.H. Parnev was on-board. September 30, 1964 The first power unit of Novovoronezh NPP was connected to the power grid. December 1964 Start-up of VK50 boiling reactor (Dimitrovgrad). January 1965 Detailed design of BOR-60 development sodium-cooled fast reactor was approved. June 1965 7 Detailed design of BM-40/A steam generation unit for a nuclear-powered submarine (Project 705K) was approved. 1966 - 1975 ERA OF GROWTH. October 11, 1966 Rheinsberg NPP was put into operation in East Germany. November 1968 Start-up of BOR-60 development reactor in Dimitrovgrad. September 16, 1971 The Soviet Government issued an order for appointment of OKB “GIDROPRESS” a leading organization responsible for WWER- type reactors. December 27, 1971 Start-up of the third power unit of Novovoronezh NPP. December 28, 1972 Start-up of the fourth power unit of Novovoronezh NPP. June 29, 1973 Start-up of the first power unit of Kola NPP. December 13, 1973 Start-up of the first power unit of Nord NPP (East Germany). June 17, 1974 Start-up of the first power unit of Kozloduy NPP (Bulgaria). November 1974 State Award winners: V.V. Stekolnikov and V.P. Denisov (WWER-440); V.I. Lukasevich (BOR-60). December 9, 1974 Start-up of the second power unit of Kola NPP. April 1974 Start-up of the second power unit of Nord NPP (East Germany). August 26, 1975 Start-up of the second power unit of Kozloduy NPP. December 1975 Start-up of BN-350 power unit in Shevchenko mounting steam generators designed by OKB “GIDROPRESS”.
1976 -
1985 ACKNOWLEDGEMENT
8 April 1976 Launch of a nuclear-powered submarine (Project 705K, hull number 105) with pioneer BM-40/A steam generation unit. November 1977 Launch of the second nuclear-powered submarine (project 705K, hull number 106) with BM-40/A steam generation unit (order “123”). November 30, 1977 The first power unit of Loviisa NPP was connected to the national grid of Finland. March 22, 1979 OKB “GIDROPRESS” trademark was registered. May 1980 Start-up of the fifth power unit of Novovoronezh NPP (with pioneer WWER-1000 power unit). December 1981 By orders of the Presidium of the Supreme Council of the USSR for the development of nuclear-powered submarines (Project 705 and 705K) OKB “GIDROPRESS” was awarded the Order of the Red Banner of Labor. V.V. Stekolnikov was conferred the title of the Hero of Socialist Labor. E.V. Kulikov was awarded the State Prize. March 12, 1982 The ceremony of awarding OKB “GIDROPRESS” with the Order of the Red Banner of Labor. Sixty employees of the Company were awarded various orders and medals. These were awarded by the Minister of Medium Machine-Building of the USSR E.P. Slavsky. April 15, 1982 V.F. Titov was awarded the Lenin Prize for his contribution to the development of a steam generator for BN-600 NPP. November 5, 1983 A.S. Sokolov was awarded the State Prize for the development of BN-600 NPP. April 10, 1985 OKB “GIDROPRESS” was awarded the CZSR Order of Labour. 1986-1998 PERESTROIKA’S CURVES
9 April 1986 Start-up of HP-8000 test facility with an intermediate sodium coolant designed to test a liquid metal single-module steam generation unit. January 30, 1988 The Council of Ministers of the USSR issued an order concerning principal designers in the medium machine-building industry. V.V. Stekolnikov was appointed to the office of the Company’s Principal Designer. July 1998 Start-up of the first power Unit of Mohovce NPP (Slovakia).
YEARS OF SEVERITIES AND REFORMS. 1999-2016 STABILIZATION AND DEVELOPMENT. TRANSITION TO THE POLICY OF SUSTAINABLE GROWTH December 1999 Start-up of the second power Unit of Mohovce NPP (Slovakia). December 2000 Start-up of the first power Unit of Temelin NPP (Czech Republic). March 2001 Start-up of the first power Unit of Volgodonsk NPP (currently Rostov NPP). May 2002 Start-up of the second power Unit of Temelin NPP (Czech Republic). August 2004 Start-up of the second power Unit of Khmelnitsky NPP. October 2004 Start-up of the fourth power Unit of Rivne NPP. December 2004 Start-up of the third power Unit of Kalinin NPP. May 2006 Start-up of the first power Unit of Tianwan NPP. October 2010 Start-up of the second power Unit of Rostov NPP September 2011 Start-up of Bushehr NPP.
10 November 2011 Start-up of the fourth power Unit of Kalinin NPP. September 2012 Start-up of the first power Unit of Kudankulam NPP. November 2014 Start-up of the third power Unit of Rostov NPP. March 2016 Start-up of the sixth power Unit of Novovoronezh NPP. May 2016 Start-up of the second power Unit of Kudankulam NPP. December 23, 2016 90-year anniversary of V.V. Stekolnikov.
Most employees of OKB “GIDROPRESS” were conferred titles of honor and awarded state prizes: − 119 employees received 139 government awards; − 562 employees received 899 industry awards; − 31 employees were awarded various prizes; − 31 employees were conferred titles of honor.
4. Report Summary
The principal purpose consists in fair representation of the Company’s performance broken down by its principal focus areas and activities carried out in terms of sustainable development.
Principal Report Parameters This publicly available report for 2016 (hereinafter referred to as the “Report”) is the first integrated Report executed by OKB “GIDROPRESS” which discloses its financial and other performance for the period from January 1, 2016 to December 31, 2016 and the Company’s development prospects. The Report shall be issued on an annual basis. G4-28, G4-29, G4-30 The Report is issued voluntarily and is publicly available. It combines a conventional annual report of a joint-stock company and a report which describes performance in terms of the Company’s sustainable development. It is made both in Russian and in English and is available in hard copy and in electronic format at the Company’s Web site.
Legal Framework This Report has been executed in accordance with applicable international and national standards and regulations regarding nonfinancial reports and cooperation with related parties, including but not limited to, regulations approved by ROSATOM. The following rules and regulations shall apply: − Integrated Industry-Specific Policy approved by ROSATOM concerning publicly available reports; − Integrated Reporting International Framework; − G4 Sustainability Reporting Standards by Global Reporting Initiative (GRI) (baseline conformity scenario); − AA1000 Standards by the Institute of Social and Ethical Account Ability; National standards and regulations for corporate reports and financial statements; regulations approved by OKB “GIDROPRESS” and related to publicly available reports.
GRI Guidelines Applicability
11 This Report was executed in compliance with the basic version of GRI G4 Guidelines.
Limitation of Liability This Report includes certain anticipated estimates as to financial standing, economic and social indicators and development prospects of the Company. The terms “intend”, “seek”, “expect”, “plan”, “estimate”, “believe”, “consider”, “suggest”, “may”, “will” and “continue” or any other similar term is usually used to indicate any anticipated result or value. The likelihood of actual implementation of any relevant statement or estimate depends on economic, social and legal environment which does exist irrespective of the Company in the State Atomic Energy Corporation ROSATOM, Russia and abroad. The actual results may differ from estimates available as of the date hereof. The Company neither acknowledges nor guarantees that its estimated performance will ever come true. Thus, the Company shall not be held liable for any damage which may be caused to any individual or legal entity operating in reliance upon those anticipated estimates disclosed by the Company.
Report Coverage G4-17 This Report shall cover activities carried out by JSC OKB “GIDROPRESS” in the Russian Federation and abroad. Due to specific nature of the Company’s business information related to its day-to-day operations to ensure the performance of state defense orders is not disclosed herein in view of applicable limitations related to non-disclosure of state and business secrets. JSC OKB “GIDROPRESS” has no subsidiaries or branch offices. The Report specifies the Company’s key indicators for the recent three years. The Company’s financial performance has been assessed with related details disclosed herein as provided by applicable accounting rules and regulations in full force and effect in the Russian Federation. The Report discloses the Company’s plans and goals for 2017 which have been specified prior to the date of approval hereof. G4-22, G4-23 The information is not restated, and the applicable coverage and extent to which those issues are disclosed also remain unchanged, since this is the first time the Report has been made in accordance with the international annual reporting requirements.
Target Audience This Report is designed to be used by various parties concerned, including but not limited to the Company’s employees, top management and shareholders, customers, suppliers, consumers, subcontractors, non-governmental organizations, educational establishments, public and local authorities, community, mass media and financial organizations.
Top Priority Topic For the purpose of determining the top priority topics covered by the Report an analysis of the events which occurred in the reporting period in relation to the Company has been performed, including but not limited to a 70-year anniversary as from the date of the Company ‘s incorporation, as well as of the impact these events have made on the corporate development strategy, efficiency and performance. All parties concerned actively participated in direct discussions and a questionnaire survey. THE FOLLOWING TWO TOP PRIORITY TOPICS HAVE BEEN SELECTED AND APPROVED: 1) Development of Nuclear Reactors for Nuclear Power Plants Built Both in Russia and Abroad; and 2) 70 years of Innovative Breakthroughs
Execution of the Report Prior to execution of the Company’s annual report a system of publicly available records and reports has been established by OKB “GIDROPRESS”. By order of the Company’ CEO the Committee for Publicly Available Reports and Records has been established and regulations
12 governing the Company’s business in this field approved. The Company’s performance in 2016 has been assessed and its recent annual report analyzed. The opinions expressed by all parties concerned and the Company’s top managers determined the way the top priority topics of the Report were to be selected. Moreover, rank maps for the parties concerned were made available and those specifying principal focus areas of the Company. Proposals for execution of publicly available reports and their content were duly considered in view of the aforesaid opinions as well. The best practices and publicly available annual reports of the companies operating in the industry worldwide were analyzed, too. The proposed approach to execution of the Report was developed in view of applicable rules and regulations. Considerations expressed by the parties concerned were properly reviewed during the development of the aforesaid approach. Technical specifications applicable to disclosures made in the Report and its execution schedule were approved by order of the Company’s CEO. Subsequently, respective information was delivered by the Company’s business units and cooperation with the parties concerned was arranged. The draft Report was executed and made subject to public discussion. The final version of the Report was approved by the Company’s Board of Directors and the General Meeting of the Company’s Shareholders. The approach to execution of the Report was decided to be discussed and related public consultations held without any physical meeting of the parties concerned. G4-18
Principal Performance Indicators G4-19
Map of Principal Performance Indicators
Performance Indicator GRI Value Page Economic efficiency G4-ЕС1 28 Market reach G4-ЕС5 85 G4-ЕС6 82,83 Procurement practices G4-ЕС9 78 Energy G4-ЕN3 99 Water G4-ЕN8 100 Emissions G4-ЕN21 101 Effluents and waste G4-ЕN23 100 Compliance (fines and nonfinancial penalties for violation of G4-ЕN29 101 environmental law) General (environmental expenditures) G4-ЕN31 102
Employment G4-LA1 84 Health and safety G4-LA6 96 G4-LA8 92 Education and training G4-LA9 90 G4-LA10 89 G4-LA11 91-92 Diversity and equal opportunities G4-LA12 83 Procedures for filing complaints having regard to labor G4-LA16 84 practices Anticorruption practices G4-SO3 79 G4-SO4 80 Performance 60-62 Design-basis and experimental justification of projects 56-57 Innovations 34 Risk management 79
13 Intellectual property management 63-64 Investment policy 32-34 Efficiency improvement 65-68 Human resource development 81-82 Youth policy 93-95
Generally, 29 material performance indicators were identified (20 GRI and 9 specific to OKB “GIDROPRESS”) with 81 subindicators disclosed (61 GRI and 20 specific to OKB “GIDROPRESS”). G4-20, G4-21 The boundaries of material performance indicators remained unchanged, since this was the first Report executed by the Company in compliance with applicable international integrated reporting standards. G4-23.
14 5. Address by the Chairman of the Company’s Board of Directors
Dear associates and friends,
This is the Annual Report 2016 of Joint Stock Company «Experimental and Design Organization «GIDROPRESS» awarded the Order of the Red Banner of Labour and CZSR Order of Labour» (OKB “GIDROPRESS”) of the Power Engineering Division of the State Atomic Energy Corporation ROSATOM (ROSATOM). I would like to emphasize that the targets set by ROSATOM have been met by the Company in full and highly efficiently. The Company’s personnel proved that it is able to perform any work within tight deadlines and performance shown allows us to face the future with confidence. As such, in 2016 the Company’s proceeds totaled RUB 6,853.1, thus being by 53% higher than in 2015. In the midterm the Company’s principal goals include active participation in the implementation of the strategic initiative pursued by ROSATOM which is aimed at boosting the market share internationally and taking part in further construction and ensuring higher reliability and safe operation of NPPs built by ROSATOM. It is reasonable to assume that joint efforts by the Company’s top managers and other employees shall enable it to preserve and enhance positions held by OKB “GIDROPRESS” and ROSATOM at the markets worldwide in terms of construction and operation of NPPs in 2017 and on.
OKB “GIDROPRESS” Chairman of the Board of Directors
A.V. Nikipelov
15 6. Address of the Company’s Director Chief Executive Officer
Dear associates,
Summarizing performance shown by Joint Stock Company «Experimental and Design Organization «GIDROPRESS» awarded the Order of the Red Banner of Labour and CZSR Order of Labour» (OKB “GIDROPRESS”), in 2016, I think it is necessary above all to give credit to all the Company’s employees for their responsible, good faith and highly efficient work and contribution to the achievement of targets set by the Company’s management. I proudly proclaim that due to teamwork and dedication of the Company’s employees the following principal targets of crucial significance in terms of further development and functioning of the national nuclear power engineering have been archived in 2016: - Novovoronezh NPP Unit 6 with a pioneer WWER-1200 reactor was integrated into the Russian national grid - Kursk NPP-2 Unit 1 construction was duly licensed - Kudankulam NPP Unit 2 was integrated into the national grid of India - Kalinin NPP Unit 2 was duly licensed for further operation - Another stage of power start-up of Beloyar NPP Unit 4 with BN-800 reactor and steam generator designed by OKB “GIDROPRESS” was completed - State defense order fulfilled in full. Performance shown in the top priority field (i.e. development of nuclear reactors for NPPs built in Russia and abroad) is of considerable importance for the Company’s future. A huge amount of work was performed in relation to consideration of various design concepts, verification of performance efficiency and reliability of units and equipment being designed at the research and development sites of OKB “GIDROPRESS” under the conditions similar to the actual environment. The Company’s management ensured extensive support of young researchers and used its best efforts to implement creative initiatives which contribute to innovative development of the Company. Moreover, collaboration of young researchers and veterans of OKB “GIDROPRESS” for the purpose of transferring proper skills and knowledge was arranged and promoted. The great history of the Company encountering advanced achievements and groundbreaking technologies allowed it to select The 70 Years of Innovations Breakthroughs as one of the topics for this annual Report. The Company managed to show good performance at the international markets in the reporting year. Various exhibitions and conferences were held, thus serving as a basis for sharing expertise and information and addressing issues which are of high importance for nuclear power engineering. In 2016 new contracts and addenda to the existing long-term agreements were made providing for development of engineering design documentation, building supervision, installation, commissioning and putting NPP Units into operation. Moreover, in 2016 various projects under the Production System of ROSATOM were implemented with the results thereof aimed at archiving the strategic target set by ROSATOM of reducing the cost of products and applicable deadlines. In view of good performance shown in 2016 and huge experience, scientific and technological potential and other opportunities available to the Company’s personnel being able to resolve challenging problems, it may be safely said that OKB “GIDROPRESS” is ready to undertake further missions in 2017. Further implementation of the policy pursued by ROSATOM and aimed at boosting its share at the international markets will continue in 2017. OKB “GIDROPRESS” will participate in new NPP construction projects implemented outside Russia. Finally, I would like to thank the Company’s Board of Directors and top management of the companies operating in the industry for their support, cooperation and productive collaboration which contributed greatly to our good performance in 2016. Moreover, I would like to emphasize that we highly appreciate hard and good faith work of the Company’s personnel.
16
OKB “GIDROPRESS” Chief Executive Officer
V.V. Dzhangobegov
17 7. Report of the Board of Directors
The Board of Directors held a number of scheduled meetings in the reporting period related to top priority lines of business of OKB “GIDROPRESS” as well as extraordinary meetings convened on an as needed basis in order to address any issue related to the current business and financial operations of the Company. 43 meetings of the Board of Directors of OKB “GIDROPRESS” were held in 2016. The agenda thereof included items falling within the competence of the Board of Directors as provided by Article 65 of the Federal Law “On Joint Stock Companies” and Article 13.2 of the Company’s Articles of Association, including but not limited to the following: − Preliminary approval of transactions involving work or services with the overall value thereof exceeding Five hundred million (RUB 500,000,000) roubles; − Approval of candidates to be included in the list used to elect members of the Board of Directors and Audit Commission of OKB “GIDROPRESS”; − Determination of the Company’s position as to the agenda of an extraordinary general meeting of shareholders of a subsidiary or affiliated company; − Other issues related to business and financial operations of OKB “GIDROPRESS”.
In 2016 the Company’s top priority lines of business were as follows: − Development of water cooled power reactor (WWER-type) integrated design with a wide power range for nuclear power plants. − Design supervision of operation of WWER-440 and WWER-1000 NPP Units. − Performing a set of operations aimed at rationalizing extension of the life cycle of Generation I and II WWER-440 and WWER-1000 reactor plants. Upon analysis of the Company’s performance in 2016 it could be concluded that OKB “GIDROPRESS” managed to achieve positive results in the field of corporate development by the top priority lines of business thereof. Substantially all work performed by top priority lines of business consisted in testing various design solutions, operational integrity and reliability of assemblies and hardware being performed at the research and development site of OKB “GIDROPRESS” in the environment close to the actual operating conditions. Commercial production of specific high tech equipment for NPPs at its own manufacturing site represents another top priority line of business of OKB “GIDROPRESS”. Moreover, this site is used to manufacture test-bench equipment, models, assemblies and items for subsequent testing as well as dedicated commissioning measurement and in-service monitoring systems designed by OKB “GIDROPRESS”. Due to specific nature of the Company’s business related to a considerable period of the reactor facility operating cycle (including design, commissioning, maintenance and decommissioning thereof) the top priority lines of business of OKB “GIDROPRESS” will be similar in 2017.
18 II. GENERAL
1. Company’s Profile
Full Name of the Company G4-3, G4-7 − The Company’s full name in Russian is as follows: акционерное общество «Ордена Трудового Красного Знамени и ордена труда ЧССР опытное конструкторское бюро «ГИДРОПРЕСС»” − The Company’s full name in English is as follows: Joint Stock Company «Experimental and Design Organization «GIDROPRESS» awarded the Order of the Red Banner of Labour and CZSR Order of Labour»
Abbreviated Name of the Company − The Company’s abbreviated name in Russian is as follows: АО ОКБ «ГИДРОПРЕСС» − The Company’s abbreviated name in English is as follows: JSC Experimental and Design Organization «GIDROPRESS»
Business Name of the Company − The Company’s business name in Russian is as follows: АO ОКБ «ГИДРОПРЕСС» − The Company’s business name in English is as follows: OKB «GIDROPRESS»
Principal Place of Business G4-5 21 Ul. Ordzhonikidze, Podolsk, Moscow Region 142103, Russian Federation
Web Site and E-mail: E-mail: [email protected] Web site: http://www.gidropress.podolsk.ru/ Web site used by the issuer to disclose information as appropriate: http://www.e- disclosure.ru/portal/company.aspx?id=14007 Contact telephone and fax: tel.: (4967) 54-25-16, fax: (4967)54-27-33
1.1. Auditor and Registrar
Company’s Auditor
Company name: Financial and Accounting Consultants Limited Liability Company. Principal place of business: Bld. 2AB, 44/1 Ul. Myasnitskaya, Moscow 101990. State registration details: Registered by the Moscow City Registration Chamber on November 15, 1993, Certificate of Registration YZ No.484.583RP. Entered in the Unified State Register of Legal Entities on July 24, 2002 (Primary State Registration Number 1027700058286). Membership in the self-regulatory organization of auditors: Self-Regulatory Organization of Auditors Association “Sodruzhestvo”. Registration number in the register of auditors maintained by the self-regulatory organization of auditors: Certificate of Membership in the Self-Regulatory Organization of Auditors Association “Sodruzhestvo” No.7198, Principal State Registration Number 11506030481.
Registrar of the Company
Company name: R.O.S.T. Registrar, Joint-Stock Company Data on the licensee to maintain registers of registered security holders:
19 No.10-000-1-00264 Date of issue: December 3, 2002 Term of validity: without limitation of the period of validity Licensing authority: Federal Securities Commission of Russia Principal place of business: Bld. 13, 18 Stromynka st., Moscow 107996 Contacts: tel. (+7 495) 771-73-36; fax (+7 495) 771-73-34.
1.2. Shareholders G4-9
An entry was made in the Register of Shareholders maintained by OKB “GIDROPRESS” on February 1, 2016 which certified that 2,024,102,254 shares in the Company’s authorized capital representing a 99.88 percent share were debited from the customer’s account opened in the name of JSC Atomenergoprom and credited to that of JSC Atomenergomash.
Company name: Joint Stock Company Atomic Energy Power Corporation (JSC Atomenergoprom)
State registration details: PSRN 1067746426439 issued on 29.03.2007 by Interdistrict Inspectorate of the Federal Tax Service of Russia for Moscow No.46. Principal place of business: 24 B. Ordynka st., Moscow 119017 Share in the authorized capital: 99.88% Authorized capital: Two billion twenty four million one hundred two thousand two hundred fifty four (RUB 2,024,102,254) roubles Number of ordinary shares: Two billion twenty four million one hundred two thousand two hundred fifty four (2,024,102,254) shares Par value per ordinary share: One (RUB 1.00) rouble State registration number of the issue of ordinary shares and date of state registration: No.1-01-55401-E
Company name: Russian Federation represented by the State Atomic Energy Corporation ROSATOM
State registration details: PSRN 1077799032926 issued on December 18, 2007 by the Moscow Department of the Ministry for Taxes and Levies of Russia. Principal place of business: 24 B. Ordynka st., Moscow 119017 Share in the authorized capital: 0.123% Authorized capital: Two million five hundred thousand (RUB 2,500,000) roubles Number of ordinary shares: Two million five hundred thousand (2,500,000) shares Par value per ordinary share: One (RUB 1.00) rouble State registration number of the issue of ordinary shares and date of state registration: No. 1-01-55401-Е
1.3. Shares held by OKB “GIDROPRESS” in the Authorized Capital of Other Legal Entities Name of the company: Rusatom Service, Joint-Stock Company
State registration details: Primary State Registration Number (PSRN) 1117746845523 assigned by Interdistrict Inspectorate of the Federal Tax Service of Russia for Moscow No.46 on October 24, 2011 Principal place of business: 15A Leninsky prospekt, Moscow 119071 Share in the authorized capital: 1.09676288 % Authorized capital: Nine million six hundred thousand (RUB 9,600,000) rubles Number of ordinary shares: Nine million six hundred thousand (9,600,000) shares Par value of an ordinary share: One (RUB 1.00) ruble
20 State registration number of the issue of ordinary shares and date of state registration: No.1-01-77762-N The share held by the Company remained unchanged in 2016.
1.4. Branch and Representative Offices
JSC OKB “GIDROPRESS” has neither branch nor representative offices.
Structure G4-9 Design bureaus Test facilities Production facilities
Headcount Headcount Headcount 613 107 258 Number of business areas Number of test benches and Number of equipment units 3 units Over 210 pcs Over 20 pcs
2. Core Business and Global Reach
A great number of various Units and equipment have been designed by OKB “GIDROPRESS” over recent 70 years. The Company is the only enterprise in the world which has designed five different types of power Units built and put into operations worldwide, in particular: − Heavy liquid metal lead-bismuth reactors − Heavy water reactors − Boiling water reactors (VK) − Sodium-cooled fast reactors (BN) − Water-cooled water-moderated power reactors (WWER) Thus, the Company designed reactors for commercial Units installed at the plants in Tomsk and Krasnoyarsk, the first NPP in the world in Obninsk, WWER-type reactors for NPPs of varying capacity, heat exchangers for sodium-cooled fast reactors, equipment for uranium- graphite channel-type reactors (RBMK), nuclear lead-bismuth power Units for nuclear-powered submarines, VK-50 boiling water reactor etc. The Company performs a wide range of design, theoretical computation, test, research and manufacturing work related to development of reactors of various types featuring higher safety, reliability and efficiency and being competitive both in Russia and abroad. OKB “GIDROPRESS” is also engaged in civilian production. G4-4 The following are the principal focus areas of OKB “GIDROPRESS”: − WWER-type reactor design and development; − Design and development of heavy liquid metal lead-bismuth reactors; − Design and development of steam generators for sodium-cooled fast reactors; − Experimental justification and research; − Manufacturing equipment for nuclear power plants (NPP); − Design supervision of WWER-type power Unit operation; − Upgrade of 1st and 2nd generation WWER-440 and 2nd generation WWER-1000 reactors (power up, life and turnaround interval extension and installation of monitoring and troubleshooting systems). The Company performs the following work throughout the entire life cycle of a reactor plant: Development of design documentation: − Issue of design and engineering documentation; 21 − Design-basis justification. Experimental justification: − Testing various designs and schemes; − Validating operational integrity and reliability of assemblies and equipment being designed; − Experimental investigation of thermohydraulic processes (reactor plants and related equipment); − Testing CPS drives ShEM-3 and fuel assemblies for seismic impact at various sites of NPPs under construction both in Russia and abroad; − Exploring vibration and dynamic properties of fuel assemblies and their component parts; − Analyzing hydraulic resistance of fuel assemblies of various types and their component parts; − Performing life thermohydraulic tests of fuel assemblies of various types; − Acceptance testing of equipment for NPPs manufactured by the Company, including CPS ShEM-3 drives. Construction: − Design supervision of construction and installation work; − Participation in commissioning and design supervision within NPP commissioning projects. Operation and upgrade of existing reactor plants (design supervision): − Design support; − Maintenance; − Justification of WWER-type reactor life cycle extension; − Justification of WWER-type reactor power increase; − Justification of WWER-type reactor turnaround time extension; − Introduction of operating staff support systems (troubleshooting and safety specifications reporting system). Production (the activity results are detailed in Section IV clause 5): − Production of equipment at the manufacturing site of the Company; − Design support of manufacturing processes at the plants. Decommissioning: − Development of documents related to reactor decommissioning. The Company’s top priority business is developing integrated projects of WWER-type reactor plants with a wide power range varying from 600MW to 1,800MW for NPPs. G4-6 73 WWER-type power Units were designed and built under the design supervision of OKB “GIDROPRESS”. Currently, 20 NPPS in 11 countries worldwide operate WWER-type reactors (Russia, Ukraine, Armenia, Finland, Bulgaria, Hungary, Czech Republic, Slovakia, China, India and Iran). These include 1st and 2nd generation WWER-440 (22 pcs), WWER-1000 (34 pcs) and WWER-1200 (1 pcs) power Units. A new generation of reactors is being designed and engineering design documentation developed for NPP projects which may be implemented worldwide.
22 Existing nuclear power plants and NPPs being built which mount WWER-type reactors designed by OKB “GIDROPRESS” Republic of Belarus Russia Belorussian NPP Balakovo NPP Finland Kalinin NPP Loviisa NPP Kola NPP Kursk NPP-2 Hanhikivi NPP Leningrad NPP-2 Slovakia Nizhny Novgorod NPP-2 Bogunitse NPP Novovoronezh NPP Mokhovitse NPP Rostov NPP Czech Republic Dukovany NPP Temelin NPP Hungary Paks NPP China Tianwan NPP Bulgaria Kozloduy NPP Vietnam Ukraine Ninh Thuan NPP Rivne NPP Zaporozhye NPP Bangladesh Khmelnitsky NPP Rooppur NPP South Ukraine NPP Turkey India Akkuyu NPP Kudankulam NPP Armenia Iran Armenian NPP Bushehr NPP
G4-8 Nowadays, ROSATOM’s business portfolio includes contracts for building 34 power units in 12 countries worldwide. All these Units will be equipped with reactors designed by OKB “GIDROPRESS”.
3. Role and Position of the Company in the Structure of the State Atomic Energy Corporation ROSATOM Function of OKB “GIDROPRESS” in the Nuclear Power and Weapons Divisions of the State Atomic Energy Corporation ROSATOM
ROSATOM
Nuclear Nuclear Research and Nuclear and Nuclear- Power Weapons Development Radiation Safety Powered Division Division Division Icebreaker and Engineering Division
Uranium Uranium Nuclear Fuel Mining Enrichment Production
NPP Design, NPP Power Nuclear and NPP Equipment Engineering and Generation Power Maintenance and Construction Engineering Servicing
OKB “GIDROPRESS”
23 The Company is a part of the control loop (i.e. it is a supervised company) operated by JSC Atomenergomash which is a power and engineering division of ROSATOM. The status, legal standing, mission and business profile, rights and discretions, competences and regulations governing activities of the Company’s management and supervisory authorities are specified in the Articles of Association of Joint Stock Company «Experimental and Design Organization «GIDROPRESS» awarded the Order of the Red Banner of Labour and CZSR Order of Labour» (OKB “GIDROPRESS”) (as amended as of January 11, 2017). The Company renders a wide range of services related to reactor plants of various modifications, in particular: − Design and engineering; − Supervision of construction, commissioning, operation and decommissioning; − Research and development; − Manufacturing equipment for NPPs. The Company is an age mate of the nuclear power industry and gained huge experience in developing reactor plants of various types. JSC OKB “GIDROPRESS” is the Chief Designer of WWER-type reactors. The Company has a dominant position in the nuclear power industry as a developer of reactors not only due to its 70-year experience, but primarily because the reactor plants designed by JSC OKB “GIDROPRESS” provide for high safety and competitiveness as evidenced by a long-term operation of reactors designed by the Company at NPPs and other facilities both in Russia and abroad. All NPPs built in Russia and abroad mount WWER-type reactors designed by OKB “GIDROPRESS”. Any design of construction sites and equipment related to reactor plants within the life cycle thereof by JSC OKB “GIDROPRESS” (i.e. construction, startup, commissioning and decommissioning, operation and upgrade) shall be performed subject to direct involvement of OKB “GIDROPRESS”. OKB “GIDROPRESS” manufactures equipment for NPPs.
Functions performed by OKB “GIDROPRESS” within NPP Life Cycle
The Company plays a critical role in the Nuclear Power Division of the State Atomic Energy Corporation ROSATOM. Working on orders within the defense procurement program the Company also engages in the activity of the Nuclear Weapons Division of the State Atomic Energy Corporation ROSATOM. Due to the nature of its business OKB “GIDROPRESS” participates in solving the problems which other ROSATOM divisions face (Research and Development, Nuclear and Radiation Safety and Nuclear-Powered Icebreaker and Engineering). JSC OKB “GIDROPRESS” has been closely collaborating with its committed partners in Russia for several decades now and most of them are working within the scope of ROSATOM.
The Company seeks to cooperate in the field of construction and operation of reactor plants of various types with other partners as well. JSC OKB “GIDROPRESS” is a reliable and sustainable partner due to the following: − Availability of highly qualified personnel; − Employment of best practices in design; − Design-bases and experimental justification of technical solutions, including but not limited to the ones based on unique proprietary calculation codes; − Availability of advance manufacturing facilities; − Availability of research and development facilities; − Reliable, durable and fail-safe operation of the equipment designed and supplied by the Company as well as high quality of design, engineering, research and development and experimental work.
24
Research and NPP Reactor Facility Design Production of Equipment Development Reactor Facility Chief Designer • Plants and Manufacturers − OKB • OKB “GIDROPRESS” • OKB “GIDROPRESS” “GIDROPRESS” − Research Supervisor • National Research Center “Kurchatov Institute” NPP Construction • State Scientific • General Designer • Construction and installation Center of the • OKB “GIDROPRESS” service providers Russian Federation • OKB “GIDROPRESS” – Institute for Physics and Power engineering named after A.I.Leypunsky
Installation and NPP Operation Decommissioning Commissioning − Rosenergoatom − Operators − Specialized − OKB “GIDROPRESS” − Research Supervisor organizations − OKB “GIDROPRESS” − OKB “GIDROPRESS”
Mandatory compliance with Russian and international safety standards is a distinctive feature of design and engineering documentation of reactor plants. IAEA recommendations are also taken into account.
4. Financial and Economic Performance Economic viability is one of the critical preconditions of success in terms of safety and competitiveness of products manufactured by OKB “GIDROPRESS” as a Chief Designer of reactor plants.
Financial Performance, OKB “GIDROPRESS” (RUB MM) growth rate Item 2014 2015 2016 2016/ 2015, % Proceeds from sales of goods, work and services 4 801.2 4 466.4 6 853.1 +53 Cost of goods, work and services sold 3 179.5 2 851.1 3 226.1 +13 Pre-tax profit 1 621.7 1 615.3 3 627.1 +125 Selling costs 1.9 1.2 0.7 -40 Administrative expenses 297.6 298.6 280.6 -6 Sales profit 1 322.2 1 315.5 3 345.7 +154 Income tax (after deduction of consolidated 351.6 296.6 429.1 +44 taxpayers group return) NOPLAT 1 201.2 1 424.6 2 615.5 +183 Net profit 1 198.1 1 378.5 2 635.1 +91
Along with concurrent increase of the cost of products sold in 2016 vs 2015 by 13% the Company managed to raise its sales proceeds by 53% (RUB, in thousands 4,466,389 in 2015 vs RUB, in thousands 6,853,141 in 2016) and reduce the share of costs in the proceeds by 17% (64% in 2015 vs 47% in 2016), thus improving its performance in 2016. Moreover, this certifies that the Company improved efficiency of use of its assets from the perspective of deriving profit. The Company ensured that the growth ratio of its proceeds doubled as compared with the growth ratio of the cost of products sold by the Company.
25 Administrative and selling costs decreased by 6% and amounted to 4.1% of the sales proceeds. The Company’s net profit totalled RUB MM 2,635,104 in the reporting year, thus showing an increase of 91.2% vs the previous year.
The following are the principal factors which contributed to profit improvement:
1) Higher labor efficiency triggering an increase of the volume of products (work or services) sold 2) Higher revenues with production costs remaining at the level typical of the previous year and selling and administrative costs reduced 3) Implementation of programs aimed at improving operational efficiency and reducing costs 4) Partial refund of income tax due to reallocation inside the consolidated group of taxpayers 5) Deriving extra profit from depositing temporarily available cash, thus pursuing a sound financial policy and ensuring highly efficient management of those funds.
Financial Highlights
Core balance indicators of the Company in 2014 - 2016 г.г. Assets Profile, RUB MM Assets profile, RUB MM 2014 2015 2016 Assets RUB MM Balance sheet value 6847.6 6749.4 11 546.4 Non-current assets: 1154.4 1028.6 1301.0 Fixed assets 940.6 891.0 1039.2 Intangible assets 17.2 33.6 86.5 Long-term financial investments 25.1 9.6 9.6 Deferred tax assets 49.7 5.5 25.7 Other 121.8 88.9 140.0 Current assets: 5 693.2 5 720.8 10 245.4 Inventory 888.2 1 221.9 1 565.2 VAT 2.6 0 1.1 Accounts receivable 3 511.0 3 216.9 4 002.9 Financial investments 300.0 0 1 500 Cash and cash equivalents 951.2 1 190.1 3 063.1 Other 40.2 91.90 113.1
Capital and reserves structure, RUB MM 2014 2015 2016 Item RUB MM Total: 4514.1 4726.1 7 376.2 Authorized capital 2 024.1 2 026.6 2 026.6 Add-on capital 2.4 4.9 4.9 Reserve fund 198.2 227.4 242.5 Retained earnings 2 284.4 2 467.2 5 102.2 Contributions made by the shareholders or members 5.0 - - of the Company to the authorized capital prior to registration of amendments made in the constituent documents thereof
Liability structure, RUB MM Item 2014 2015 2016
26 RUB MM Total: 2 333,5 2 023,3 4 170,2 Accounts payable 1 919,5 1 642,8 3 675,8 Provisions 414,0 380,5 494,4
Balance sheet structural analysis Item 2014 2015 2016 Current to non-current assets ratio 4.93 5.56 7.87 Share of accounts receivable in the balance sheet, % 51.27 47.66 34.67 Share of intangible assets in the balance sheet, % 0.25 0.5 0.75 No borrowings + + + Share of cash and cash equivalents in the balance 13.89 17.63 26.53 sheet, %
As of the end of 2016 the Company’s net assets totaled RUB MM 7,376.2, thus showing an increase of 56% vs end of 2015 (RUB MM 4,726.1).
Principal Financial and Economic Performance Indicators
Item 2014 2015 2016 Output Output, RUB MM/man 3.03 2.98 4.66 Value added/earnings (internal performance) 0.72 0.74 0.80 Cost to earnings ratio, % Fixed cost to earnings ratio 22.8 25.7 16.9 Solvency Indicators Debt/EBITDA 0 0 0 Ratio of borrowed and own funds 0.52 0.43 0.57 Financial stability index 0.80 0.76 0.71 Equity to total assets 0.72 0.76 0.68 Current assets coverage ratio 0.74 0.71 0.66 Liquidity Indicators Quick assets ratio 3.45 2.74 2.55 Working capital ratio 4.04 3.52 3.02 Absolute liquidity ratio 0.91 0.74 1.36 Quotient of general financial solvency 3.57 4.11 3.14 Coverage ratio 4.12 3.56 3.06 Profitability Indicators, % Return on assets (Return on Total Assets) ROA (ROTA) 17.66 20.28 28.81 Return on sales ROS 27.54 29.45 48.82 Return on equity ROE 27.20 29.84 43.55 Gross profit margin 33.78 36.17 52.93 Net margin 24.95 30.86 38.45 Cash Flow Indicators, RUB MM
2014 2015 2016 Item RUB MM Cash and cash equivalent balance as of the beginning of the 1234.9 950.9 1190.1 year -55.1 1 068.1 3 803.7 Net increase or decrease of cash flows (current operations)
-1061.4 -1217.6 -12.4 Net increase or decrease of cash flows (financial operations)
27 Net increase or decrease of cash flows (investments) 655.8 274.3 -1 554 Net increase or decrease of cash flows, total -460.7 124.8 2 237.3 Impact by foreign exchange/RUB rate fluctuations 176.7 114.4 -364.3 Cash and cash equivalent balance as of the year end 950.9 1190.1 3 063.1
G4-ЕС1 Generated and Distributed Direct Economic Value.
No. ITEM 2014 2015 2016 1 Generated economic value 5,276.00 5,081.00 7,083.05 2 Distributed economic value 3,628.68 4,848,07 3,936.00 3 Payables -188.53 1,024.43 770.35 Wages, other benefits and compensation payable to 4 the Company’s personnel 2,008.00 1,854.50 2,039.50 5 Payables to capital providers 1,032.30 1,195.70 0.00 6 Taxes 776.51 772.85 1,126.10 7 Investments in other companies 0.40 0.59 0.05 8 Non-distributed economic value 1,647.32 232.93 3,147.05 9 Depreciation 98.30 87.25 74.40 10 Industry provisions 44.52 41.58 27.30 11 Interest payable 0.00 0.00 0.00 12 Internal performance (added value) 0.72 0.74 0.80
28 Aleksey Likhachev, ROSATOM CEO: “We’ve made a good journey in the recent ten years from a group of isolated companies towards an integrated corporation with the shared strategy and management system...”
III. COMPANY’S DEVELOPMENT STRATEGY
Mission and Values
1. Company’s Mission
OKB “GIDROPRESS” seeks to design equipment for competitive nuclear power plants. The Company’s strategic objective consists in rendering ROSATOM assistance in pursuing its critical long-term goals, in particular: − Boosting its share at the international markets − Developing new products both for the national and international markets − Reducing the cost of its products and applicable deadlines.
The Company’s vision of sustainable development was generated based on the values of ROSATOM when executing this Report.
The Company carries out its business adhering to the following principles: − Ensuring safety and competitiveness of reactor plants either being designed, constructed or operated; − Strict compliance with applicable law of the Russian Federation, federal safety rules and regulations and industry best practices; − High quality of research, development, engineering and experimental work; − Reliability, durability and fail safe operation of equipment either being designed or supplied; − Cost efficiency.
Compliance of the Company’s core business with the aforesaid principles is ensured by the quality management system available therein.
The Company’s personnel are its critical assets.
The Company being the Chief Designer of WWER-type and heavy liquid metal lead- bismuth reactors takes full responsibility for proper quality and reliability of reactors and components parts thereof designed and manufactured by the Company.
2. Role and Contribution of the Company to Implementation ROSATOM’s Strategy
The strategy pursued by OKB “GIDROPRESS” is aimed at undertaking the Company’s mission as part of implementation of the program for innovative development and retrofitting of ROSATOM for the period until 2030. The principal objective of the Company is as follows: Self-presentation as a leading designer of reactor plants in the nuclear power industry participating extensively in implementation of its numerous major projects. The Company’s strategy is primarily aimed at ensuring safety and competitiveness of reactor plants either being designed, constructed or operated.
29 The Company’s action plan is a part of the Long-Term Business Plan of OKB “GIDROPRESS” which is amended and supplemented in line with modifications made in the corporate Strategy. The Company’s economic strategy is aimed solely at the use of the Company’s own investment project financing sources, as well as of government funding from the budget of the Russian Federation or funding obtained from non-budgetary funds with no borrowings.
Contribution of OKB “GIDROPRESS” to Pursuing ROSATOM’s Strategic Objectives
In 2016 ROSATOM continued to expand its portfolio of foreign customers. At year-end it included 34 NPP Units worldwide. The Company plays a critical role in the integrated services offered by ROSATOM at the international market of NPP construction. WWER-type reactors designed by OKB “GIDROPRESS” represent a material contribution to achievement of ROSATOM’s strategic goal for boosting its share at the international markets. The business portfolio currently available to ROSATOM is based on a proven WWER technology as all power units are expected to mount WWER-type reactors. In 2016 the Company designed reactors concurrently for the following sites located outside Russia: − Hanhikivi-1 NPP (Finland) − Akkuy NPP (Turkey) − Tianwan NPP (China), unit 3 and 4 − Kudankulam NPP (India), unit 3 and 4 − Bushehr NPP (Iran), unit 2 and 3 − Belorussian NPP (Belarus), unit 1 and 2 − Rooppur NPP (Bangladesh), unit 1 and 2 − El Dabaa NPP (Egypt)
In 2017 the Company will continue to contribute to pursuing ROSATOM’s strategic goal aimed at boosting its share at the international markets. OKB “GIDROPRESS” will participate in new NPP construction projects implemented outside Russia.
3. Technological Development of WWER-type Reactors Within the framework of implementation of ROSATOM’s strategic goal to develop new products both for the national and international markets, the Company set objectives aimed at developing WWER technology (with regard to reactor plants). OKB “GIDROPRESS” continues to implement the following promising projects: − Evolutionary improvement of WWER-type high-power reactors; − Exploration of medium and low-power reactors; − Improvement of nuclear fuel; − Development and experimental justification of methods designed to ensure commissioning and in-service control of vibration behaviour of core internals using external instruments; − Introduction of CFD methods to support engineering and justification of WWER-type reactors designed by the Company; − Development of innovative design concepts in relation to WWER-type medium-power reactors (600MW) allowing it to abandon large pipes used in the primary coolant circuit; − Development of a system integrated calculation code to support engineering and justification of safe performance of state-of-the-art and innovative reactor designs.
30 For the Company’s performance in 2016 and its plans as to contribution to pursuing the strategic objectives set by ROSATOM (i.e. boosting its share at the international markets and development of innovative products) see the Core Business section of the Report.
The following are the principal trends in evolutionary development of WWER-type reactors by OKB “GIDROPRESS”:
− Higher safety; − Lower cost of the Unit equipment; − Lower duration of installation work; − Reduced operation costs; − Compliance with the customer’s requirements as to the load-following mode (power management); − Availability of MOX and REMIX fuel; − Higher utilization factor; − Higher fuel breeding ratio (reduction of natural uranium consumption).
In view of the foregoing trends in process development the core plant configuration is being upgraded; new materials are used to construct reactor vessels; design of reactor vessel, core and steam generator is optimized and that of the main coolant pump adjusted etc. Any work as aforesaid is aimed at ensuring safety and competitiveness of the reactor facility.
In 2016 OKB “GIDROPRESS” continued its work commenced in 2014 and 2015 and related to development of proof-of-concept projects, including WWER-I (integrated water-cooled water-moderated power reactor). The design philosophy is based on the use of an integrated WWER-type reactor. This design solution ensures compactness of core internals and thus of the reactor itself. The containment may be made of steel and have a compact design, thus supporting a modular approach to NPP design and construction. An integrated reactor reduces the number and capacity of safety systems. As such, emergency water storage and various communications of the primary coolant circuit are minimized as well. The containment allows one to use passive systems designed to reject heat to the ultimate heat sink in an accident condition. Design Goals: This project has been triggered by demand for low-power NPPs being part of closed regional grids or installed in small town, designed to supply power to manufacturing facilities or even constructed as part of the national grids in certain developing countries. A power unit featuring an integrated reactor may compete with those offered by the leading foreign companies developing low-power reactors. These are primarily reactors being designed in the USA (45MW NuScale Power+Fluor). The aforesaid project is now undergoing a licensing process in NRC. It should be noted as well that the foregoing design is based on PWR technology which is similar to WWER technology. The project is now at the concept design stage.
In 2016 OKB “GIDROPRESS” continued to develop detailed design documentation for a reactor to be installed at Hanhikivi-1 NPP. This project and approach to its implementation is considered to be ahead of the curve in terms of the overall trend observed recently in relation to most projects implemented abroad. Due to a considerable penetration of information systems which are extensively used when designing and configuring a reactor and developing a design basis for various systems and equipment, thus implementing a requirements management system, currently a great emphasis is put on improvement of design management systems in the context of general development of reactor technologies. Availability of design management system, including: − Requirements management system; − Configuration management system; 31 − Management system of pending technical issues; − etc., allows it (notably in terms of Hanhikivi-1 NPP and similarly in relation to further projects) to promptly track changes required to be made in the design vs the reference project, monitor incorporation thereof, efficiently manage design activities inside the Company and effectively cooperate with the Customer. Thus, due to availability of the requirements management system at the initial stage of development of project documentation for Hanhikivi-1 NPP a number of important requirements have been identified which have direct impact on the reactor and power Unit configuration in general. Those concerns were described in the technical specifications for development of detailed design documentation which are deemed a principal document for development of the entire documentation package OKB “GIDROPRESS” is responsible for. A number of major features and changes having regard to design and approaches to justification thereof (either being part or expected to be included in the detailed design documentation) shall be cited as an example of prompt and highly efficient use of available management systems, in particular: − Design of certain reactor systems and equipment was modified to implement the defense-in-depth principle; − Setpoints of protection and normal operation systems were changed due to modification of criteria set for acceptance of safety analysis results; − New approaches to justifying calculations were applied pursuant to the requirements specified in the documentation made available by the supervisory authority; − Material of the reactor coolant pump set casing was changed in view of specific requirements imposed by the Customer to the extent having regard to metal mechanical properties; − Other modifications triggered by the requirements set by the Customer. Therefore, organizational arrangements duly made as part of Hanhikivi-1 NPP project resulted in implementation of highly efficient technical solutions and enabled the Company to develop an adaptive and optimal design of the reactor systems and equipment, thus ensuring availability of a configuration of the reactor and power unit in general which to the fullest extent complies with the best safety practices and is completely in line with the Customer’s requirements.
4. Investments and Upgrade
The principal objective pursued through investments is to ensure availability of the most efficient options of capital investments aimed at improving competitiveness and economic strength of a company. As such, the Company maintains and continuously improves its manufacturing facilities, so that these comply with the requirements of the quality assurance programs. In its investment business the Company adheres to the Regulations for Interaction of the Company’s Business Units and Investment-Related Functions approved by the Company which describe its investment planning process and procedures designed to monitor compliance and implementation of investment projects. Moreover, the Company carries out its investment business in view of the following: 1. Federal Law No.39-FZ On Investment Activity in the Russian Federation Pursued in the Form of Capital Investments of February 25, 1999; 2. Federal Law No.317-FZ On State Atomic Energy Corporation Rosatom of December 1, 2007; 3. State Program for the Development of the Nuclear Power Generation Complex of the Russian Federation approved by Resolution No.506-12 of the Russian Government of June 2, 2014; 4. Rosatom’s Strategy approved by Resolution No.65 of the Supervisory Board of Rosatom of October 31, 2014;
32 5. Rosatom’s Program for Innovative Development and Retrofitting 2020 (with regard to civilian production) approved by Resolution No.27 of the Supervisory Board of Rosatom of April 11, 2011; 6. Global Industry Investment Policy of Rosatom and its Affiliates approved by Resolution No.1/402-P of Rosatom of April 16, 2013; 7. Global industry-specific regulations (i.e. guidelines, instructions, rules, standards and etc.) developed by Rosatom for the purpose of centralizing management and supervisory functions in the context of development of investment activities in the industry. All investment decisions are made by the Company in strict compliance with the aforesaid documents and approved by the Company’s CEO. The Company’s funds are the principal source of financing the investment projects implemented by the same. In June 2016 an industry-wide system of investment portfolio management (Sirius) designed to automatically consolidate data with regard to implementation of projects being part of the portfolio was put into trial operation. It shall enable improvement of the planning system, reduction of the time frame required to generate reports, optimization of investment costs and higher efficiency of technical and economic analysis of investment projects and grant its users a wide range of opportunities to exercise control and analyze a project implementation process. It is a multi-user and multi-purpose system designed to support project planning and manage available resources. Sirius supports multilevel hierarchical structures and allows it to plan resources in view of applicable roles and qualifications, input actual information, configure data representation and handle user-defined data. This application represents an efficient tool designed to implement and monitor a considerable number of investment projects.
Upon deployment of Sirius Information System in all companies of the industry OKB “GIDROPRESS” was declared the winner in The Deep Understanding of Sirius industry-specific contest and awarded a diploma by ROSATOM State Corporation for active participation in the development of the Sirius Information System. The aforesaid diploma was granted by the project initiator Rosatom First Deputy CEO for Operations A.M. Lokshin. In 2016 ten investment projects or groups of investment activities were financed by the Company with the aggregate amount of investments totaling RUB MM 278.94. The overall amount of investments in 2016 vs 2015 increased five-fold due to stabilization of the economic environment domestically and to the need for unconditional performance of obligations assumed by OKB “GIDROPRESS” as a Chief Designer of reactors for NPPs built both in Russia and abroad under both existing and new contracts.
33 Investments in Innovations:
Launch of two innovative projects focused on the development of design and reactors safety justification methods with employment of state-of-the-art computer calculation codes and CFD simulation techniques represented the key event for the Company within its investment activity in 2016. Finally, this shall allow it to reduce the reactor design period and at the same time ensure compliance with licensing requirements applicable to any contractual work performed abroad. These are challenging projects as they are meant to ensure design and engineering support of the Company in pursuing one of the principal and long-term Rosatom’s goals, i.e. boosting its share at the international markets.
Introduction of State-of-the-Automation Techniques.
This category of investment activities represents a work package designed to ensure efficient maintenance and upgrade of existing manufacturing facilities operated by OKB “GIDROPRESS” with regard to computers. It means expansion of available computing capacities based on multiprocessor cluster systems designed to ensure design-basis justification using CFD codes and upgrade of related hardware (i.e. development, representation, processing and transfer of calculated data). These investment activities allow it to reduce the time frame required to perform any respective work or render any of the services offered by the Company and thus improve its competitiveness. Availability of these design-basis justification techniques shall enable a considerable reduction of time required to make multi-choice calculations in relation to design specifications and prompt delivery of calculation-related recommendations as to improvement of reactor design, schematics and modes of operation and operational support of experimental research and development processes. 3D models of specific reactor components are made using highly efficient CAD stations which enable preparation of input data for further processing by the Center for Automated Data Processing. The program for the upgrade of the Center for Automated Data Processing and documentation copying facilities developed using CAD systems is meant to ensure higher reliability of processing and printout of design documentation delivered to the customers and improve performance of existing reproducing engineering systems. Upgrade of the corporate computer network shall allow it to create a high-speed and fail- safe communication environment which guarantees proper quality of transfer of top priority engineering traffic (CFD codes, i.e. ANSYS CFX, STAR-CMM+ and other computer codes) with ultimate performance. Retrofitting of WWER-type NPP Technical Support Center and related communication equipment shall allow it to expand functional opportunities thereof when holding emergency response drills for dedicated teams responsible for emergency response at the nuclear power plants as well as related experts and upon any accident promptly simulate the existing environment on a case-by-case basis and transfer related information using the aforesaid hardware.
Investment in Maintenance of Fixed Assets and Development of the Company’s Infrastructure and Support Functions.
In 2016 OKB “GIDROPRESS” continued to implement investment projects aimed at developing and maintaining its infrastructure. Thus, the Company used its best efforts to upgrade the Company’s fixed assets and managed to replace its draw-in air systems, re-lay a high-voltage feeder cable and retrofit its hot water supply system. Moreover, the Company installed air conditioning systems and an automated utility metering system and designed a fire and physical antiterrorist protection system etc. In 2016 the Company continued to monitor the results of the investment project implemented in 2015 and aimed at retrofitting its manufacturing facilities (Retrofitting of
34 Manufacturing Facilities Operated by OKB “GIDROPRESS” designed to increase output of CPS ShEM-3 drives up to 270 pcs per annum). At year-end the Company manufactured 310 CPS ShEM-3 drives, thus certifying that the aforesaid investment project had been successfully implemented and its objectives achieved as appropriate.
Principal Objectives Pursued by the Company in 2016
− Production of 310 CPS ShEM-3 drives: - 135 CPS ShEM-3 drives for Tianwan NPP, Unit 4; - 80 CPS ShEM-3 drives for Belorus NPP, Unit 1; - 95 CPS ShEM-3 drives for Novovoronezh NPP, Unit 7. − Participation in physical and power start-up of Unit 6 of Novovoronezh NPP. − Participation in installation of the main circulation pipeline at Unit 4 of Rostov NPP. − Execution of a draft safety report for Rostov NPP, Unit 4. − Completion of justification for reactor equipment operation at Balakovo NPP, Unit 2. − Participation in the work aimed at terminating the extra operating life of 15 years of Unit 3 of Novovoronezh NPP which was added to its design life of 30 years as well as in the shutdown and decommissioning work performed thereat. − Unification of WWER-1000 neutron absorbing rods with those installed in WWER- 1200 reactors. − Design of fuel assemblies with improved thermomechanical properties for Unit 6 of Novovoronezh NPP. − Execution of the contract for the development of top-priority documents as part of detailed design of a Unit for Hanhikivi-1 NPP. − Execution of the contract for the development of detailed design documentation for Paks-2 NPP. − Execution of addenda to the contract for the development of documentation for V- 412M reactor, Units 3 and 4 of Kudankulam NPP under the agreement for performance of remaining work related to equipment and pipelines of the nuclear power plant reactor other than included in the scope of the underlying contract. − Execution of the contract for the assessment of technical condition and justification of the remaining operating life of equipment and piping of the reactor (within the Company’s design limits) in order to extend the operating life of Kozloduy NPP, Unit 6 up to 60 years. − Execution of the contract for the development of detailed design documentation for the reactor of Bushehr-2 NPP. − Execution of the contract for the development of detailed design documentation for the reactor of Rooppur NPP. − Execution of the contract for the assessment of technical condition and justification of extension of the operating life of equipment and pipelines of the reactor of Armenian NPP, Unit 2. − Termination of the design life (30 years) of Armenian NPP, Unit 2 (September 1, 2016) and commencement of extra operating life thereof (10 years). − Execution of the contract for the development of detailed design for the rector of El Dabaa NPP and mobilization. − Participation in physical start-up of Kudankulam NPP, Unit 2 (India). − Hydraulic testing of Tianwan NPP, Unit 3 (China). − Participation in installation of the reactor vessel, Belorus NPP, Unit 1; − Completion of justification for reactor equipment operation, Kozloduy NPP, Unit 5 (Bulgaria). − Commencement of work for justification of further operation of reactor equipment, Kozloduy NPP, Unit 6 (Bulgaria). − Development of technical documentation under the contract for supply of fuel for Hanhikivi-1 NPP. − Bringing the simulation area Tianwan NPP, Units 3 and 4 in compliance with applicable rules and regulations.
35 − Execution of state defense order contracts for the period ending in 2020.
5. Global Operations
History The Company has been cooperating extensively with foreign states in the field of nuclear power industry and engineering for 40 years now. OKB “GIDROPRESS” employees: − rendered technical assistance to their foreign associates during construction, operation and retrofitting of NPPs; − were engaged in training of personnel for the national nuclear power industry; − trained personnel in using the Company’s computer codes.
The principal foreign partners of the Company are as follows: − AREVA (France); − ELECTRICITE DE FRANCE International (EDF) (France); − Fortum Engineering Ltd and Fennovoima OY (Finland). Moreover, OKB “GIDROPRESS” took part and is currently engaged in projects implemented jointly with AEA TECHNOLOGY and SHEFFIELD FORGEMASTER Ltd in Great Britain; ANSALDO SPA in Italy; ABB, EPRI, WESTINGHOUSE and NRС in the USA; INETEC in Croatia; and SKODA in the Czech Republic. The Company’s employees are extensively involved as experts in various projects implemented by IAEA, in particular: − Extra-Budgetary Programme for Safety of NPPs mounting RMBK and WWER-type reactors. − Extra-Budgetary Programme on Safety Aspects of Long-Term Operation of Pressurized Water Reactors. − Project implemented by IAEA jointly with OKB “GIDROPRESS” (INPRO). This project provides for the use of an ultra-safe innovative nuclear technology of fast reactors in the nuclear power industry of the 21st century which as well is contributed by the Company, including liquid metal lead-bismuth fast and supercritical pressure reactors which are among the principal options for employment of reactors technologies. − Technical cooperation project by IAEA (Generating Potential for Development of Nuclear Infrastructure and Assessment of Safety of WWER Technologies with Improved Safety Specifications. WWER/PWR Scenario). − CFD Designed to Support Nuclear Power Unit Engineering implemented by IAEA. In addition to international projects delivered by IAEA the Company takes part in the project which is implemented by OECD and NEA (CFD Verification and Validation, Uncertainty Quantification and Benchmarking). Moreover, OKB “GIDROPRESS” continuously participates in international benchmarking tests by OECD and NEA, various CFD-related workshops and meetings held in Russia. − ATLAS Project by OECD and NEA. In aggregate eight tests were held within the framework of this project, including blackout, primary coolant leak, primary-to-secondary leak and complete loss of feed water. Testing data obtained upon the foregoing tests is actionable and may be used for verification of computer codes designed to assess safety of PWR and WWER reactors.
Year-Wise: 1980s: launch and operation of Tajura Nuclear Research and Development Center in Libya 2003: OKB “GIDROPRESS” becomes a member of the Atomic Energy Research International Scientific Cooperation 2004: OKB “GIDROPRESS” becomes an affiliated and authorized member of WANO. 2011: OKB “GIDROPRESS” is a 3rd category WANO member. OKB “GIDROPRESS” is the only member of WANO which is not directly involved in the operation of NPPs and
36 participates in the projects designed to ensure higher safety and proper supervision of NPP operation both in Russia and abroad. 2014: OKB “GIDROPRESS” acceded to the agreement related to ATLAS Project implemented by NEA and OECD. The Company considers development of international trade, scientific and technical cooperation one of its top priority missions.
Nowadays, Rosatom ranks first in the world in terms of NPP construction in other states. The Company implements projects which provide for construction of 34 power units in 12 countries worldwide (Europe, MENA, Asia and Pacific). All these Units will install reactors designed by OKB “GIDROPRESS”. Nowadays, WWER RP Units designed by OKB “GIDROPRESS” are being built in several countries (China, India, Iran, Belarus, Finland, Turkey and Bangladesh). The Company takes part in the projects which provide for execution of documentation for new NPPs expected to be built abroad. The Company’s employees render their foreign associates technical assistance in building, operating and upgrading NPPs and provided consulting services as to the use of computer codes developed by the Company. Long-term contracts made with foreign partners certify that the Company’s research and development competences are acknowledged worldwide. The Company’s personnel attends major international research and technical conferences and as recognized experts represents the Company and Russian nuclear power industry in various work teams, at the technical meetings and workshops held under the auspices of international organizations. For further development of international research and technical cooperation the Company is continuously engaged in activities aimed at developing and improving the internal export control system, quality of publicity in relation to the Company’s competences and capabilities and increasing the number of projects and publications implemented and made jointly with the leading foreign research centers and participating in international projects. International research and technical activities carried out by the Company allow it to boost its share at the international markets of high-tech knowledge-intensive services and innovative products, thus contributing to acknowledgement of Rosatom’s technological leadership worldwide.
Principal Results of International Cooperation Projects Undertaken in 2016
In 2016 international cooperation projects undertaken by OKB “GIDROPRESS” were aimed at performing the Company’s obligations under the contracts for NPP construction in Belarus, Iran, India, China, Finland, Hungary, Bangladesh and Turkey. The Company upgraded and refurbished Kozloduy NPP (Units 5 and 6) in Bulgaria, performed other work at the existing NPPs in the Czech Republic, China, Iran, India, Slovakia, Hungary, Bulgaria and Armenia under the contracts made therewith and executed documentation for construction of a nuclear power plant in Egypt. In addition to its contractual obligations the Company’s employees participated extensively in other international cooperation projects as well. They attended the meetings of technical committees and work teams established by IAEA as experts in nuclear safety and other issues connected with nuclear power industry, namely: − Meetings held as part of the Research of Thermohydraulic Processes Relevant to Supercritical Water Reactors (SCWR), an international coordination and research project implemented by IAEA; − Meetings of WWER work team held as part of the Multinational Design Evaluation Program (MDEP); − 20th meeting of IAEA work team for improvement of light water reactor technologies; − International conference held as part of the Coordination Research Project (CRP) by IAEA (CFD Employment in Nuclear Power Unit Design). The Company’s employees attended international conferences, workshops and meetings involving discussion of various problems and facilitating information exchange, in particular:
37 − International conference hosted by IAEA for promotion of global implementation of programs designed to decommission NPPs and restore the environment; − Meeting with the Secretariat of OECD NEA held on the occasion of a visit of newly appointed heads of departments thereof and related to technical issues and regulation of nuclear safety as well as the role of a human factor therein; − World Nuclear Exhibition, Paris Le Bourget; − Joint business meeting initiated by NEA OECD and dedicated to assessment of performance of international projects (PKL/OECD and ATLAS/OECD); − Business meeting of international teams involved in the development and benchmarking verification of CFD codes organized by OECD; − 26th International Workshop held as part of the Atomic Energy Research International Scientific Cooperation and related to physics and safety of WWER-reactors organized by Fortum, Fennovoima and the Technical Research Center of Finland; − Reactor Neutron Kinetics and Dynamics work group business meeting held as part of collaboration efforts in the international scientific cooperation; − International Topical Meeting on Reactor Thermal-Hydraulics, Operation, and Safety (NUTHOS-11); − 6th meeting under the auspices of ATLAS international project aimed at investigating accident management and safety of water cooled reactors to the extent of thermohydraulic design thereof with due regard to the results obtained upon tests held at a large- scale ATLAS research plant in South Korea; − WWER-2016 Regular International Scientific and Technical Conference (power increase, extension of operating life and construction of new power Units) hosted by the Czech Nuclear Society in cooperation with Rosatom; − 14th Open Conference on Simulation of Hydraulic Systems and Calculation Methods. The Company’s employees were invited as lecturers to participate in the training programs involving personnel from the states which expected to build nuclear power plants, including the following events: − Development of Approaches to Justification of Safety of State-of-the-Art Reactors, an international workshop held by IAEA in cooperation with CNCAN (Romania) which is engaged in nuclear power project management; − Generating Potential for Development of Nuclear Infrastructure and Assessment of Safety of WWER Technologies with Improved Safety Specifications, WWER/PWR Scenario, a regional training session held by as part of a technical cooperation project implemented by IAEA; − Development of Infrastructure and Assessment of Safety of WWER-type Reactors, a training session involving trainees from nuclear power industry enterprises and research centers operating in Russia, Hungary, Croatia, Belarus, Slovakia and other countries; − New Materials. Material Life Cycle. Material Ageing and Degradation during Operation of Nuclear Power Units, 13th International Conference held by MEPhI National Research Nuclear University; − Regular training sessions held by the European Nuclear Safety Training & Tutoring Institute and providing for training and developing competences of nuclear experts for the regulatory authorities of the Republic of Belarus. In 2017 the Research of Thermohydraulic Processes Relevant to Supercritical Water Reactors (SCWR), an international coordination and research project implemented by IAEA is expected to be completed.
6. Competitive Environment
The following shall be deemed the main competitors of OKB “GIDROPRESS”: − OJSC “Afrikantov OKBM”, JSC “NIKIET” in Russia and Toshiba-Westinghouse, Babcock & Wilcox (mPower), NuScale Power abroad in the field of designing reactor plants of low and medium power range;
38 − AREVA (EPR and ATMEA), Toshiba-Westinghouse (AP1000), Mitsubishi Heavy Industries (APWR and ATMEA) and KEPCO (APR 1400) in the field of designing reactor plants of high power ranges for WWER-type NPPs. The principal competitive advantage is that designs by OKB “GIDROPRESS” are unique and have a number of conceptual differences having an obvious advantage over those by its competitors. Moreover, the Company is experienced in the startup and commissioning of the most advanced units (Tianwan NPP in China, Kudankulam NPP in India, Novovoronezh NPP, Unit 6 in Russia) and building its equipment manufactured by OKB “GIDROPRESS” into units designed by foreign companies (Bushehr NPP in Iran). OKB “GIDROPRESS” acts as a Developer and Chief Designer of WWER-type reactor plants with the range thereof varying from 600MW to 1,800MW. The Company accumulated huge practical experience and necessary physical and human resources. The principal competitive advantages of OKB “GIDROPRESS” include high quality of design and engineering documentation and other products, competitive prices and compliance with international and European safety standards as well as applicable rules and regulations. Availability and use of unique proprietary software and own advanced research and development facilities with state-of-the-art test benches contribute to the Company’s benefits, thus allowing it to perform research work and ensure experimental and design-basis justification of design and development projects implemented by OKB “GIDROPRESS”. Competences obtained at the test facilities operated by OKB “GIDROPRESS” are successfully used to perform commissioning tests of WWER-type power Units being built both in Russia and abroad.
The principal competitive advantages of products and services provided by OKB “GIDROPRESS” by its major projects are as follows:
WWER-1000 reactor plant: − Comprehensive inherent safety; − Unit electrical power up to 1,100MW; − Life cycle of irreplaceable equipment of 60 years; − Higher efficiency of fuel utilization; − Average utilization factor (entire NPP life cycle) equal to 92%; − Refueling period varying from 12 to 24 months.
WWER-1200 reactor plant: − Comprehensive inherent and passive safety; − Unit electrical power of 1,200MW; − Gross efficiency of 35.9%; − Life cycle of irreplaceable equipment of at least 60 years; − Higher efficiency of fuel utilization; − Average utilization factor (entire NPP life cycle) equal to 92%; − Average installed capacity utilization factor (entire NPP life cycle) equal to 90%; − Use of advanced fuel cycles; − Refueling period varying from 12 to 18 months; − Specific capital investments in the industrial engineering of NPP-2006 reactor plants (WWER-1200) with due regard to its maximum operational compatibility not exceeding RUB 35,500/kW (measured in 2006 prices). This value is 20% lower as compared with WWER-1000 NPPs; − Cost of power supplied (net of taxes and similar deductions) equal to max RUB 0.45/kWh (measured in 2006 prices).
WWER-TOI reactor plant The principal differences from WWER-1200: − Mirror reactor configuration;
39 − Less reactor vessel weld joints; − Absence of reactor vessel weld joints facing the core; − Optimized core; − Steam generator without a steam header; − Motorized main circulation pump with water lubricated bearings.
SVBR-100 reactor facility: − Higher inherent and passive safety as compared with either existing reactor plants or those under construction; − Considerable reactor and NPP design simplification as compared with standard nuclear technologies; − Availability of different types of fuel and fuel cycles with an extended duration thereof of at least 7 years; − Engineering support in terms of compliance with fissile nonproliferation rules and regulations; − Conservative approach to design work; − Focusing on the existing engineering capabilities and construction materials; − Small size and maximum operational compatibility of reactor plants; − Applicability of standard design methods to NPPs of various power ranges and purposes; continuous flow of building and installation work.
Steam Generators for BN-800 and BN-1200 Fast Neutron Reactor Plants No peers are available at the international market.
40 IV. CORE BUSINESS RESULTS
G4-9 The Company manufactures and markets its products, work and services in the following three fields:
Research and Development. Natural and Engineering Sciences (OKVED 73.10). This includes research and development, design and engineering of WWER-type reactor plants and those with liquid metal coolant for NPPs; experimental work, development and seeking approval of working design documentation.
Production of Nuclear Reactors and Related Components (hereinafter “production of NPP equipment”; OKVED 28.30.2). This includes production of NPP equipment and systems mounting research reactor plants and supply of related spare parts. The products are supplied to NPPs either being operated or constructed.
NPP Performance Assurance (hereinafter “design supervision”). This includes design supervision of construction, commissioning, operation, extension of life cycle and decommissioning of reactor plants (see the Design Supervision Section of this Report).
In 2016 the following work was performed using designs developed by and under design supervision of OKB “GIDROPRESS”:
Construction Work
WWER-type Reactor Plants NPP-2006 with electrical capacity of 1,200MW: − Units 6 and 7 (Novovoronezh NPP); − Units 1 and 2 (Leningrad NPP-2); − Units 1 and 2 (Belorus NPP).
WWER-1000 Reactor plants: − Units 3 and 4 (Rostov NPP) − Units 3 and 4 (Tianwan NPP, China); − Units 1 and 2 (Kudankulam NPP, India).
BN-800 Reactor Steam Generator
Potential Projects
Typical Optimized and Computerized (TOC) WWER-type Reactor Design (Kursk NPP- 2) The Company’s employees managed to secure approval of detailed design documentation for TOC WWER-type Reactor Project by JSC Atomenergoproekt to ensure licensing of Units 1 and 2 of Kursk NPP-2, thus enabling proper modification of the documents and manufacturing of applicable reactor equipment.
41 Design and Engineering Documentation within Innovative Projects
− SVIR project. − BN-1200 reactor steam generator.
1. Project Portfolio
Project Implementation in 2016 by Activity Categories
Design and Engineering (including Research and Development)
2014 2015 2016 10-Year contracts as of the end of the reporting period, 3 396 4 455 9 931 RUB MM Share in the overall volume, % 60 57 67
The Company’s principal customers are Rosenergoatom Concern JSC, JSC IK “ASE”, JSC Atomenergoproekt, JSC Atomstroyexport, JSC TVEL and JSC OKBM Afrikantov. The major associate contractors involved in the Company’s projects are as follows: − National Research Center “Kurchatov Institute” acting as a Research Supervisor of WWER-type reactor plant designs; − JSC AEM in the field of material engineering (approval of reactor detailed design documentation); − Federal State Unitary Enterprise “Academician I.V. Gorynin Central Research Institute of Structural Materials “Prometey” in the field of material engineering (development of methods of determination of material properties through verification tests in site); − OJSC CKBM (design of the main circulation pump for WWER-1000 reactor plant).
NPP Equipment Production and Supply 10-Year Contracts
2014 2015 2016 Orders for manufacturing and supply of equipment for NPPs (nuclear reactors and related components parts), 3 331 3 614 2 956 MM RUB Orders for manufacturing of CPS ShEM-3 drives in percent of the overall volume of orders for 62 68 72 manufacturing of NPP equipment
The pool of principal customers of the Company with regard to manufacturing and supply of NPP equipment includes JSC Concern Rosenergoatom, JSC Atomstroyexport, JSC CEPD etc. The share of orders for manufacturing equipment for these customers amounted to 77% of the overall production volume in reporting 2016. TMK-INOX LLC (pipes), Soedinitel CJSC (plugs, outlets and covers for electromechanical units and CPS ShEM-3 drives), OJSC Pskov Cable Plant, JSC Metallurgical Plant “Electrostal” (stainless discs), OJSC NIIMT (high alloy steel martensitic and ferritic forgings, steel 09X17N-Sch) and PJSC Ruspolimet (stainless forgings) are the principal suppliers of metal and materials procured by the Company to manufacture its products.
42 Other Services
2014 2015 2016 10-Year contracts as of the end of the reporting period, 0,2 56 240 MM RUB Share in the business portfolio, % 0 1 3
Orders placed by foreign customers, RUB, in thousands
10-Year contracts as of the end of the reporting 2014 2015 2016 period, MM RUB Total, including 28,084.93 117,824.3 1,015,389 non-CIS states 25,706.41 87,736.92 560,261.5 CIS states 2,378.5 30,087.38 455,127.6 Share in the business portfolio, % 0.7 2.1 10
The aforementioned minor share of orders placed by foreign customers is explained by the fact that the major scope of work for the benefit of foreign customers is performed through JSC Atomstroyexport and JSC Rusatom Service.
Any project undertaken as part of the Company’s business portfolio is aimed at improving the safety, reliability and competitiveness of reactors being designed, built or operated.
2. Research and Development The following work is carried out within the framework of research and development efforts: − Development of design and engineering documentation related to WWER-type reactor plants of a wide power range; − Development of design and engineering documentation related to lead-bismuth reactor plants; − Calculations and theoretical work; − Commissioning and rendering support in operating NPPs; − Upgrade of existing NPPs, including but not limited to rationalization of reactor heat power increase above nominal values; − Development and supervision of production and operation of transport and handling equipment (fresh and spent fuel storage and handling systems; refueling systems); development of systems for identification of defective fuel assemblies and monitoring NPP fuel quality; − Development of cores and equipment designed to transport and monitor WWER core elements; − Management and rationalization of extension of equipment life cycle and turnaround time (WWER-type reactor plants); − Development of reactor process control systems; − Computer modeling of non-steady neutron and physical, thermo-hydraulic and hydro- dynamic processes; justification of WWER-type reactor designs; − Strength validation computer modeling; − Experimental study of thermo-hydraulic processes (equipment and systems); − Development and support of data bases, information and information analysis systems; statistical data processing and analysis; − Prevention and mitigation of accidents at active WWER NPPs as part of the industry system. − Accumulation and classification of data related to actual condition of NPP Units. See results of research and development in Clause 2.3 herein.
43 2.1. Design Work 2.1.1. Water-cooled Water-Moderated Reactor Plants (WWER)
Nowadays, the competitive advantages of WWER-type reactor plants are ensured by introducing innovations providing for high reliability and safety and acceptable technical and economic performance similar to that typical of the most advanced peers designed by foreign companies. WWER-type reactors designed recently employ best safety practices and approaches based on the defense-in-depth concept and providing for several safety levels with the optimum configuration of multi-channel passive and active safety systems. The distinctive feature of WWER-type reactor plants is a high utilization factor in terms of inherent safety which is embedded in systems and equipment in any design of WWER-type reactor by OKB “GIDROPRESS”. As a result, upon any emergency reactors can restrict initiating events and related consequences for a long time within design safety specifications primarily due to their passive safety system and design and built-in features thereof. Any WWER-type reactor plant designed by OKB “GIDROPRESS” is capable of withstanding earthquakes, floods, storms, aircraft crashes or any other external intensive event and resulting in damages and multiple failures of the equipment.
Reactor Plant Exposures
Exposures by other systems Normal operation and safety system
Aircraft crash Storm or tornado
Shock wave Snow load
Earthquake Flood In 2016 the following work was performed: − WWER-1200, WWER-1000, WWER-TOI projects; − Extension of life cycle of existing NPPs; − Improvement of existing industry specific rules and regulations.
Belorus NPP − Execution of topical reports having regard to nuclear fuel for licensing purposes. − Execution of a draft survey report for Unit 1 for operation licensing purposes.
Hanhikivi-1 NPP − Development of quality and project management procedures. − Execution of design documentation in relation to reactor equipment with a prolonged manufacturing cycle. − Execution of design documentation in relation to reactor main equipment. − Design-basis justification of the physical part of the project the Company is responsible for. − Design-basis justification of reactor safety specifications. − Assessment of hydrodynamic load on the equipment and pipelines of the reactor.
44 − Development of technical specifications for the automatic process control system (reactor side). − Seeking approval of the documentation by Fennovoima Oy which a requirement imposed by Fennovoima Oy for start-up of reactor vessel production. − Execution of a package of documents having regard to nuclear fuel under NFS contract to be delivered to STUK.
Paks-2 NPP
− Execution of detailed design documentation for start-up of production of the equipment with a prolonged manufacturing cycle. − Execution of supporting documentation for PSAR. − Execution of licensing documentation (PSAR, PSA, Basic Design). − Execution of topical reports supporting PSAR.
Rooppur NPP − Execution and seeking approval of technical specifications for the reactor unit. − Execution of PSAR sections and explanatory notes having regard to the nuclear power plant (Basic Design) (reactor Unit).
Bushehr-2 NPP − Development of technical specifications for the equipment with a prolonged manufacturing cycle for procurement purposes. − Making up a list of reactor equipment. − Execution of documents having regard to the equipment with a prolonged manufacturing cycle. − Development of a quality assurance program (QAP) (reactor Unit) − Execution of detailed design documentation covering specific equipment.
El Dabaa NPP − Development of PSA sections and chapters and supporting materials to be included in the explanatory notes with regard to the nuclear power plant and technical specifications for procurement of equipment with a prolonged manufacturing cycle
WWER-1000
Novovoronezh NPP − Amending operating manuals for power Novovoronezh NPP, Units 3 and 4. − Amending the in-depth safety assessment report Novovoronezh NPP, Units 3 and 4. − Execution of engineering design documentation having regard to extension of the operating life of Unit 4 above 45 years. − Execution of the in-depth safety assessment report for Unit 4 with justification of safe operation of the Unit throughout the extended operating life thereof; − Decommissioning of Unit 3.
Kola NPP − Amending operating manuals for Units 1 and 2, Kola NPP (B-230 reactor). − Amending operating manuals for Units 3 and 4, Kola NPP (B-213 reactor). − Amending the in-depth safety assessment report for Units 1, 2, 3 and 4 of Kola NPP (in view of actual changes in the condition of Unit systems and equipment pursuant to existing operating licenses). − Execution of design documentation for the purpose of extending the operating life of Units 1 and 2, Kola NPP (up to 60 years).
45 − Review and execution of an opinion as to availability of approval of severe accident management guidelines as amended with regard to development of related procedures for the shutdown reactor and the spent fuel pool Units 1, 2, 3 and 4 of Kola NPP.
Kudankulam NPP − R2 revision of Chapter 4 and 5 FSAR in view of the results of pre-commissioning operations (Unit 1).
Tianwan NPP The following documents were executed and approved as part of the development of packaged detailed design documentation for WWER-1000 reactor (B-428M), Units 3 and 4 (Tianwan NPP): − Installation drawings for reactor main equipment and pipelines, Unit 4 (Tianwan NPP); − Working materials for failure probability analysis with regard to the reactor Unit; − Extra package of technical specifications and requirements for procurement of equipment in Russia as per the Customer’s queries; − Detailed design documentation for the reactor equipment and pi pipelines ping (manufacturers). The working design documentation was approved under the contract with Izhorskiye Zavody PJSC for reactor vessel witness samples, Units 3 and 4 (Tianwan NPP). Installation work was completed and hydraulic strength tests successfully performed (Unit 3). Respective equipment is now being installed at the site of Unit 4.
Bushehr-1 NPP: − Amendments were made in FSAR (rev 2) sections and chapters upon approval by the Iranian Customer (NNSD). − Amendments were made in the calculations upon approval of related comments to ОСЕ/NPPD, NNSD/ВО Safety (rev 1). − Extra work was performed as to design-basis justification of FSAR (rev 2) Chapter 15, Section 6.2.1.4 (justification of brittle fracture resistance in relation to the reactor vessel of Bushehr-1 NPP, Unit 1). − Design supervision during operation of Unit 1 (Bushehr-1 NPP). − Execution of related documents and justification of safety of nuclear fuel to be used at NPPs with WWER-1000 reactors based on TVS-2 fuel assembly design (Technical support, consulting and participating in the work performed as part of design and preparation, Unit 1 (Bushehr NPP). − Execution of the refuelling safety assessment report, 4-th fuel loading, Unit 1 (Bushehr NPP).
Kursk NPP Assessment of the scope of amendments to be made in the detailed design of the Typical Optimized and Computerized (TOC) WWER-type Reactor Design (Kursk NPP-2)
Steam Generators for WWER reactors In 2016 OKB “GIDROPRESS” was engaged in the following work in relation to steam generators for WWER reactors: − Participation in preparation and holding tests at Unit 1 (Kalinin NPP) as part of the level gauging system upgrade project (steam generator 4); − Evaluation of the impact the collector stress reduction device has in terms of generation and development of defects at the welding joint of coolant collector and Dnom 1200 nozzle of PGV-1000 steam generator; − Justification of safe operation of the welding joint of coolant collector and Dnom 1200 nozzle of PGV-1000 steam generator;
46 − Execution of working design documentation for modification of PGV-1000M steam generators (upgrade of a separating scheme), Units 5 and 6 (Kozloduy NPP), thus ensuring availability of an increased capacity mode of operation (up to 104% of the rated capacity); − Health evaluation of critical component parts of steam generators being part of Unit 5 (Novovoronezh NPP); − Justification, execution and introduction of steam generator thermomechanical load monitoring regulations; − Execution of detailed design documentation in relation to steam generators of Paks NPP (Units 5 and 6); − Execution of detailed design documentation in relation to steam generators of Kudankulam NPP (Units 3 and 4); − Execution of detailed design documentation in relation to steam generators of Rooppur NPP (Units 1 and 2); − Execution of detailed design documentation in relation to steam generators of Bushehr-2 NPP (Units 2 and 3); − Execution of detailed design documentation in relation to steam generators of Hanhikivi-1 NPP; − Execution of working design documentation in relation to PGV-1000M steam generators of Kudankulam NPP (Units 3 and 4).
Extension of Existing NPP Life Cycle
Any work related to extension of any existing NPP life cycle is performed in two stages. Stage 1. Assessment of technical and economic feasibility and safety of any work aimed at extending NPP Unit life cycle. Stage 2. Preparing a NPP Unit for life cycle extension. Deliverables made available upon any work with regard to extension of the operating life shall be delivered by the operator to the supervisory authority for licensing purposes and approval of further operation of the nuclear power plant unit in excess of its initial operating life. In 2016 the Company performed the following work related to extension of the initial operating life: − The work related to extension of the initial operating life of Unit 5 (Kozloduy NPP) and scheduled as part of the second stage of this project was duly completed. Stress calculations were made and assessment of technical condition and remaining operating life of the reactor equipment and piping (Kozloduy NPP, Unit 5) performed as appropriate. The results of the aforesaid work were highly appreciated by the Ministry of Energy of Bulgaria − The work related to extension of the initial operating life of Unit 6 (Kozloduy NPP) and scheduled as part of the second stage of this project commenced as appropriate. The programs for assessment of technical condition and remaining operating life of the reactor equipment and pipelines (Kozloduy NPP, Unit 6) were developed and made available. During design and preparation work performed in 2016 the mechanical properties of the reactor equipment and pipelines were monitored and analyzed − The work related to extension of the initial operating life of Unit 2 (Balakovo NPP) and scheduled as part of the second stage of this project was duly completed. Related chapters were made available and the in-depth safety assessment report was executed (Balakovo NPP, Unit 2). A package of documents related to justification of the extension of the operating life was delivered to the Federal Environmental, Industrial and Nuclear Supervision Service for review and approval. − The work related to extension of the initial operating life of Unit 3 (Balakovo NPP) and scheduled as part of the second stage of this project was duly performed. Proper stress calculations were made in relation to the reactor equipment and pipelines. Execution of related chapters of the in-depth safety assessment report (Balakovo NPP, Unit 3) was continued. − In relation to Kalinin NPP, Unit 2 a review of the documents having regard to justification of the extension of the initial operating life was completed by the Federal
47 Environmental, Industrial and Nuclear Supervision Service. JSC Concern Rosenergoatom as an operator obtained a license for operation of the Unit up to 2017. − In relation to Unit 1 of Balakovo NPP for the reactor vessel annealing technique improvement purposes construction of the full-scale test bench commenced at the site operated by JSC AEM Technology (Atommash subdivision). OKB “GIDROPRESS” performed calculations for the temperature profile of the reactor vessel and reactor cavity equipment (annealing process) to support further stress calculations. − In relation to Unit 2 of Armenian NPP work for integrated assessment of pipelines was performed and that for justification of the extension of the operating life thereof continued.
Improvement of Industry-Specific Regulatory Framework
The project “Participation in the Development of Draft Federal Regulations (Base Metal, Welding Joints and Deposited Surfaces Monitoring Techniques Employed during Operation of the Equipment, Pipelines and Other Components of a Nuclear Power Plant)” was continued. As a result, the final version of the aforesaid regulations was developed which is expected to be enacted in 2017 with the Company’s employees involved in this process as well. As part of the project “Research and Development for Justification of BN-1200 Steam Generator and Modular Removable Thermal Isolation Detailed Design the Federal State Unitary Enterprise “Central Research Institute of Structural Materials “Prometey” named after I.V. Gorynin of National Research Centre “Kurchatov Institute” jointly with OKB “GIDROPRESS” developed the final versions of the Guidelines for Assessment of long-term static and cyclic strength for the life of 60 years of the creep and fatigue-affected equipment and the Guidelines for Strength Calculations in relation to tube sheets of steam generators and fixing of heat exchanging tubes. In 2016 the aforesaid guidelines developed by the Federal State Unitary Enterprise “Central Research Institute of Structural Materials “Prometey” named after I.V. Gorynin of National Research Centre “Kurchatov Institute” were approved by OKB “GIDROPRESS” and JSC Afrikantov OKBM, reviewed by the Scientific and Engineering Centre for Nuclear and Radiation Safety (Federal State-Funded Institution) and delivered to JSC Concern Rosenergoatom for enactment and introduction as operating company’s standards.
Design Supervision of WWER-type Reactors
In 2016 design supervision was ensured in relation to the following: − Emergency core cooling system vessels (Kola NPP, Units 1 and 2) by JSC Uralkhimmash; − Emergency core cooling system vessels (Novovoronezh NPP, Unit 4) by JSC Morshanskkhimmash; − Emergency core cooling system vessels (Kudankulam NPP, Units 3 and 4) by JSC Uralkhimmash; − Emergency core cooling system vessels (Leningrad NPP, Unit 2) by AEM Technology; − Emergency core cooling system vessels (Baltic NPP, Units 1 and 2) by AEM Technology; − Pressurizer (Rostov NPP, Unit 4) by AEM Technology; − Main coolant pipeline (Kudankulam NPP, Unit 4) by AEM Technology; − Emergency core cooling system and SCP pipeline and their fasteners (Leningrad NPP-2, Unit 2) by PJSC ZIO-Podolsk; − ECCS and PRZ system pipelines and related clamps (Unit 2, Novovoronezh NPP-2) by PJSC ZIO-Podolsk; − Main coolant pipeline tie-in section components of the emergency core cooling system pipeline (Novovoronezh NPP, Unit 4) by LLC Energomashcorporatsiya-Belgorod; − Separating bellows and thermal and biological protection in the pipeline area for WWER-1200 (V-491) reactor Unit (Baltic NPP, Unit 1) by JSC Tyazhmash; 48 − Dry protection for WWER-1200 (V-491) reactor Unit (Leningrad NPP-2, Unit 2) by JSC Tyazhmash; − Thermal isolation of the upper unit, separating bellows, biological protection, thermal isolation of the pipeline area, alignment devices and air duct for WWER-1000 (B-320) reactor Unit (Rostov NPP, Unit 4) by JSC Tyazhmash; − Measuring chamber for WWER-1200 (V-491) reactor Unit (Leningrad NPP-2, Units 1 and 2) by Atomspetsservice LLC; − Devices for hydraulic testing of CPS drive housings for WWER-1200 (V-392M) Unit (Novovoronezh NPP, Units 6 and 7,) by JSC VPO Tochmash; − Devices for disassembly of CPS drives for the Typical Optimized and Computerized (TOC) WWER-type Reactor Project (B-510K) (Kursk NPP-2, Units 1 and 2) by JSC Atommashexport; − Reactor main joint sealing components (Baltic NPP, Unit 2) by JSC ChMZ; − Surveillance specimens (Leningrad NPP-2, Unit 2) by PJSC Izhorskiye Zavody; − Wiring units (Rostov NPP Unit 4; Leningrad NPP Unit 1; Tianwan NPP, Unit 4) by RFNC-VNIIEF Federal State Unitary Enterprise (Sarov).
In 2016 the Company performed a wide range of design supervision work in relation to production of WWER-1200 (V-491) reactor equipment at the Manufacturer sites (Units 1 and 2 of Belorus NPP), in particular: − Emergency core cooling system accumulators by AEM Technology; − Decontamination pools for CPS drives at JSC SverdNIIkhimmash; − Devices for disassembly of reactor CPS drives by LLC Obyedinenniye Zavody; − Inspection well racks by Polesiye LLC; − Inspection well equipment and embedded components by PJSC Izhorskiye Zavody; − Refuelling monitoring system mechanical part by LLC Atomspetsservice; − Main coolant pipelines by PJSC Izhorskiye Zavody; − Main coolant pipelines by JSC AEM Technology; − Multi-purpose cross bar by LLC Atomspetsservice; − Equipment and tools for maintenance of a power Unit by LLC Atomspetsservice; − Devices for extraction of in-core instrumentation detectors by JSC Atommashexport; − Reactor main joint sealing components, baffle, core barrel and surveillance specimens by Atommash (Volgodonsk), a subdivision of JSV AEM Technology; − Protective tube unit, upper unit and devices for alignment of the upper unit by Atommash (Volgodonsk), a subdivision of JSV AEM Technology; − Fasteners and embedded parts of units designed to fix a reactor coolant pump set as well as biological shielding rings by JSC Atommashexport; − Relief tank by ZIO PJSC; − Devices designed to install detection units by JSC Atommashexport; − Devices designed to remove detection units by JSC Atommashexport; − Wiring units by RFNC-VNIIEF Federal State Unitary Enterprise (Sarov); − PGV-1000MKP steam generators by Atommash (Volgodonsk), a subdivision of JSV AEM Technology.
In reporting 2016 year as per the design and with design supervision of OKB “GIDROPRESS” work on construction and commissioning of respective power Units was implemented:
1200MW WWER NPP-2006 reactor: • Novovoronezh NPP, Units 6 and 7; • Leningrad NPP-2, Units 1 and 2 (reactor unit assembled and made ready for hydraulic testing and circulation flushing); • Belorus NPP, Units 1 and 2.
49 WWER-1000 NPP: • Rostov NPP, Unit 4; • Tianwan NPP (China), Units 3 and 4; • Kudankulam NPP (India), Unit 2.
As part of design supervision the Company modified PGV-1000M steam generators (a separating scheme upgraded) of Units 5 and 6 (Kozloduy NPP), thus ensuring availability of increased power operation (up to 104% of rated capacity). And: − The Company rendered consulting services in relation to operation of NPP Units and ensured technical support during maintenance of various systems and equipment; − The Company launched the Center for Technical Support of dedicated teams responsible for emergency response at the nuclear power plants. The Center’s personnel and the aforesaid teams took part in emergency response drills held at Kalinin NPP, Tianwan NPP, Rostov NPP, Balakovo NPP and Novovoronezh NPP (including exercises organized on-site). − OKB “GIDROPRESS” participated in the projects implemented under the auspices of WANO, namely: operations undertaken by the Board of Governors of WANO Moscow Center and regional workshops hosted by the same.
2.1.2. Heavy Liquid Metal Reactors
In 2016 OKB “GIDROPRESS” completed the work performed within the framework of the integrated lead-bismuth reactor (SVIR) design. This design included a work package providing for development of proof-of-concept design of RP and CPS for a submerged power unit designed to supply the sub-sea/sub-ice equipment which was used to develop Arctic offshore oil and gas fields. SVIR project is a part of work performed by JSC SPMBM Malachite under the government contract in the Technological Area No.3 “Marine Facility Blueprints” (New Look) of the Federal Target Program “Development of civil Marine Facilities” 2009-2016 (Clause 3.1.3 “Sub-sea/Sub-ice Deepwater Arctic Continental Shelf Oil and Gas Field Infrastructure Development Facilities”). The strategy of growth of the fuel and energy complex of Russia provides for advancement of deepwater Arctic continental shelf oil and gas fields development technologies. As such, submerged power Units are required to supply sub-sea/sub-ice drilling and hydrocarbon extraction facilities. The most efficient submerged power Unit may be developed using nuclear technologies with high safety, maximum automation of processes and long refueling periods subject to minimum dimensions. These requirements are met by fast neutron lead-bismuth reactor plants which may serve as a basis for development of power supply systems for the purpose of supporting Arctic continental shelf sub-sea/sub-ice oil and gas field development facilities and guarantee priority of the Russian Federation in development of this particular technology. Within the framework of SVIR project blueprints of two SVIR-type reactor plants with different power range were developed (SVIR-10 and SVIR-50).
2.1.3. Steam Generators for Sodium Cooled Fast Neutron Reactor Plants
In 2016 the Company continued to design steam generators for three different types of sodium-cooled reactors (BN-600, BN-800 and BN-1200).
Evolution of the Steam Generator for Units with pilot sodium-cooled fast neutron reactors in OKB “GIDROPRESS”: − Steam generator for the pilot sodium-cooled fast neutron reactor (BOR-60) has been in operation for over 45 years now; − Steam generator for BN-350 reactor Unit has been decommissioned; 50 − Steam generator for BN-600 reactor Unit has been in operation for over 33 years now; − Steam generator for BN-800 reactor Unit has undergone a power start-up stage; − Steam generator for BN-1200 reactor Unit is now being designed.
Steam Generator Design Modification Purposes: − Safe and reliable operation; − Lower Unit cost of the equipment; − Less installation time; − Reduction of operating costs; − Higher installed capacity utilization factor.
Steam Generator Design Modification Milestones: − Section and modular design; − Package design.
Steam Generator for BN-1200 RP Unit
In 2016 OKB “GIDROPRESS” continued its work commenced in 2015 and related to development of a steam generator for BN-1200 RP Unit under the agreement signed with JSC OKBM Afrikantov as part of the project “Research and Development for Justification of BN1200 Steam Generator”. The aforesaid work was performed in cooperation with the following companies: JSC ATOMPROEKT (power Unit designer); JSC State Research Center of the Russian Federation, Institute of Physics and Power Engineering (project supervisor); JSC OKBM Afrikantov (reactor Chief Designer); Federal State Unitary Enterprise “Central Research Institute of Structural Materials; “Prometey” named after I.V. Gorynin of National Research Centre “Kurchatov Institute” (leading material organization). OKB “GYDROPRESS” performed the work for development of the section for the specific technical specifications which provided for design and engineering aimed at improving technical and economic performance of BN-1200 RP Unit. The steam generator detailed design was modified. The detailed design documentation of BN-1200 reactor steam generator was modified in accordance with respective comments made available by the Customer (i.e. JSC OKBM Afrikantov) and co-contractors (JSC ATOMPROEKT, Federal State Unitary Enterprise “Central Research Institute of Structural Materials “Prometey” named after I.V. Gorynin of National Research Centre “Kurchatov Institute” and JSC State Research Center of the Russian Federation, Institute of Physics and Power Engineering) and recommendations made by the project expert committee in 2015. The Company performed the design and engineering survey aimed at improving technical and economic specifications of BN-1200 RP Unit. The goal pursued consisted in performing design and engineering survey for the purpose of reducing capital expenditures in relation to construction of BN-1200 RP Unit, thus ensuring competitiveness thereof vs upcoming power Units with thermal neutron reactors and alternative sources of power generation. The Company also performed structural and welding material surveys, including certification. Upon the aforesaid work the use of materials proposed for manufacturing a steam generator for BN-1200 reactor (heat exchanging equipment of a nuclear power plant) being in contact with water, steam and liquid sodium with operating life of max 240,000 hours was justified as appropriate. The work for assessing thermal and cyclic strength was also performed. As such, components designed to set heat exchanging tubes in the steam generator tube sheets were tested. The technology for setting heat exchanging tubes in the tube sheets which ensured leak-proof joints and guaranteed the operating life of the Unit so specified was proved to be reliable pursuant
51 to applicable technical specifications for assessment of components designed to set heat exchanging tubes in the tube sheets.
Design Supervision
In 2016 OKB “GIDROPRESS” was engaged in the following events in relation to BN- type reactor equipment: − Design supervision of operation, maintenance and repair of N-200M steam generator and its electric heating system (Beloyarsk NPP, Unit 3). As part of assessment of technical and economic feasibility and safety of extension of the operating life of Beloyarsk NPP, Unit 3 in excess of 45 years respective reports and records were reviewed and approved which were related to integrated evaluation of secondary circuit systems, steam generators and tertiary circuit heat removal systems designed by JSC VNIIAES; − Design supervision ensuring reliable and safe operation of N-272 steam generator equipment, automatic protection system and heating system components during pilot operation when putting Unit 4 of Beloyarsk NPP into commercial operation; − Participation of the Company’s personnel in the commissioning of equipment and pipelines of N-272 steam generator in the idle and power mode of operation during commissioning of Unit 4 of Beloyarsk NPP. Upon the aforesaid work the steam generator being part of Unit 4 (Beloyarsk NPP) was put into commercial operation in December 2016.
2.2. Calculations and Theoretical Work
The design-basis justification work performed with respect to the equipment being developed both in steady and emergency state modes as well as development and verification of calculation codes and integrated programs represent a considerable share in the overall scope of work carried out by OKB “GIDROPRESS”. The Company has its own calculation software covering all principal design-basis justifications and calculations related to the reactor plant safety. As such, along with its proprietary software the Company employs foreign tools and programs developed by other national manufacturers. Nowadays, the Company employs over 80 applications. The reactor facility design-basis justification is made by the following seven subject categories: − Thermo-hydraulic calculations (steady state); − Thermo-hydraulic calculations (emergency and transient state); − Neutron and physical calculations; − Strength validation; − Calculations related to control and management systems; − Calculations related to hydrodynamic impact; − Calculations with regard to temperature patterns and boundary conditions.
Among software used for design-basis justification special mention should be given to the following tools: ANSYS, ANSYS LS-DYNA, MSC MARC, dPIPE, ANISN, DOT III, PMSNSYS, AFPA, MICROSHIELD, TRIANA-4, TEMP-GP, ASTRA-AES, SOCRAT, SAPFIR&RC, CADR-97, “Prognoz_Р 1.0”, as well as to the following calculation codes of joint and proper design: REACTOR-GP, TRAP-KS, KORSAR, ROK2, TEMP, RADIUS-3 and TYAGA-1. In 2016 the Company continued to perform design-basis justification of the liquid metal reactor equipment being designed both in the steady-state and emergency mode of operation and to develop and verify respective computer codes and service programs. The design-basis justification in relation to the liquid metal reactor provided for the following: − Thermo-hydraulic calculations in relation to the reactor steady-state conditions; − Thermo-hydraulic calculations in relation to the reactor emergency and transition processes; 52 − Neutron and physical calculations related to the nuclear reactor core, radiological protection and safety; − Calculations having regard to the temperature profile and boundary conditions of the reactor equipment.
In 2016 OKB “GIDROPRESS” was also engaged in research and development, design and engineering projects.
As part of research and development work aimed at licensing construction of power Units 1 and 2 of Kursk NPP-2 (Standard Optimized WWER-type Reactor (TOI)) the Company performed the following work: 1. Justification of specifications for reactor equipment troubleshooting systems. The first stage of work was completed as provided by the agreement made with JSC State Research Center of the Russian Federation, Institute of Physics and Power Engineering as co-contractor and the Testing Methods and Program developed. 2. Verification of software packages and codes: TRAP-KS, DOTIII-ANISN, KORSAR/GP, RADIUS-3D. Verification reports were executed in relation to all software packages. TRAP-KS, KORSAR/GP, RADIUS-3D and DOTIII-ANISN were duly certified. The contractual work was performed as appropriate. 3. Verification and certification of ANSYS LS_DYNA software. A verification report was duly executed and a certificate issued. 4. Development of VAR-T software package designed to make calculations as to probability of fracture of the primary circuit tubes (WWER-type reactor). The work scheduled for stage 4-7 of the agreement was duly performed: development of VAR-T software modules or program codes; development of modules for assessment of probability of fracture as well as interface and user manuals for VAR-T software. The contractual work is expected to be completed in Q3 2017.
As part of research and development aimed at executing detailed design documentation for Akkuyu NPP reactor the following work was performed: 1) Stage 4. Justification of seismic strength and resistance of CPS drives and fuel assemblies at SSE with 9 intensity. The final report was accepted by the Customer. 2) Stage 5. Assessment of material corrosion resistance in relation to the tubes of the heat exchanger being part of the passive heat removal system in view of the conditions applicable to Akkuyu NPP. All scheduled work was completed and accepted by the Customer.
In 2016 research and development as part of the Investment Project “Development of the System Relative Computer Code for Support Purposes” commenced. As such, in 2016 the following principal work was performed: 1) Upgrade of the two-fluid multiple model of non-stationary fluid dynamics and heat transfer as part of WWER dynamics modelling with supercritical water coolant specifications; 2) Commencement of work related to development of a CFD module for assessment of hydrodynamics and heat and mass transfer in the flow path of WWER-type reactor based on a nested boundary method. A generator of adaptive Cartesian grids was developed. An implicit numerical conservation quotation solution scheme was developed and implemented into software as part of the nested boundary method. DLC interpreter software was modified to the extent having regard to a CFD module. 3) SAPFIR_95&RC_WWER.2 software was made available for calculation of group constants and burn-up range files for a given reactor state with mutigroup fuel rod-to-fuel rod approximation and justification of safety of state-of-the-art and innovative reactor designs. The project is expected to be implemented in 2020. The principal goals pursued are as follows: − Development of the design and experimental complex of the Company; − Ensuring compliance of calculations and engineering design documentation with requirements imposed by IAEA and national regulators in the prospective export regions;
53 − Providing for availability of a required safety level with abandonment of excessive conservatism which impedes the higher commercial performance of the projects by way of adhering to a more realistic approach, i.e. adjusted computation process and event modeling; − Guaranteed compliance of technical and economic specifications of the reactor and nuclear power plant with those made available in the contract; − Development of a basic national multi-purpose computer code with flexible topology applicable both to WWER-type and foreign PWR-type reactors with fuel assemblies supplied from Russia for the purpose of preventing any impact which may have foreign dedicated computer codes on the strategy pursued by Rosatom.
The research and development work was performed for installation of anti-debris filters on the domestic power Units (design-basis assessment of reliability of the reactor core cooling completely equipped with TVS-2M and TVSA-PLUS fuel assemblies featuring anti- debris filters in an 18-month operating fuel cycle with capacity equal to 104% of the rated value).
The following work was also performed in the reporting period: − Development of calculation models and descriptions of programs and further licensing of SOCRAT/B1 computer code by the Finnish Customer (Hanhikivi-1 NPP); − Execution of safety and topical reports to the extent having regard to assessment of specific processes and events occurring upon severe accidents (Hanhikivi-1 NPP, Paks-2 NPP and El Dabaa NPP); − Development of materials with regard to analysis of beyond design basis and severe accidents as part of The Adjusted Activities for Improving Safety at Design Basis and Severe Accidents” for Russian WWER RPs (Rostov NPP, Units 3 and 4) and collaboration with supervisory authorities to the extent of previously performed work (Unit 5 of Novovoronezh NPP, Units 2, 3 and 4 of Rostov NPP, Unit 2 of Balakovo NPP etc); − Development of materials for justification of selection of the instrumentation for WWER-1000 (Kalinin NPP and Rostov NPP) and WWER-1200 (Hanhikivi-1 NPP) reactors; − Collection of input data for general designers of nuclear power plants with regard to severe accident management systems (core catcher, passive heat removal system, containment, passive catalytic hydrogen recombiner and hydrogen concentration monitoring system).
2.3. Research and Development. Experimental Work
OKB “GIDROPRESS” has extensive research and development capabilities and unique thermo-physical and other test facilities (over 20 test facilities and pilot installations) in order to prove technical solutions used in the designs, research and experimental validation for operated and developed reactor plant by the following categories: − Thermo-hydraulic specifications of reactor equipment; − Corrosion and mass transfer under isothermal and non-isothermal conditions; − Seismic and vibration tests of fuels assemblies and CPS drives ShEM-3; − Studies and validation of full sized lead-bismuth reactor equipment. Due to the increasing volume of orders and requirement for implementing programs within the Corporate Strategy, new approaches to efficient research and development and experimental work were identified. The considerable part thereof is performed by the top priority lines such as validation of various designs, operability and reliability of units and equipment being designed. This work is performed within the territory of the research and development center of the Company in the environment close to the real conditions. During the recent three years starting from 2014, the experimental facilities of the Company have been upgraded and a new lead- bismuth test bench constructed. In 2016 research and development related to experimental validation of BN-1200 steam generator detailed design was continued. This work was performed using the test benches of the State Scientific Center of the Russian Federation – Institute for Physics and Power Engineering named after A.I.Leypunsky.
54
As part of the development of detailed design of WWER-type reactor for Akkuyu NPP (Turkey) the Company’s employees performed tests in 2015-2016 for assessment of seismic resistance of CPS drives ShEM-3 and fuel assemblies made subject to earthquake with 9 intensity (using seismic test benches operated by the Company and Federal State Unitary Enterprise CNIIMASH) and corrosion resistance in relation to the tubes of the heat exchangers being part of the passive heat removal systems (involving CNIITMASH personnel). Moreover, in 2016 tests of core reflooding and local parameters of the coolant in the fuel assemblies with mixing grids commenced at the Company’s test facilities. In 2016 a bench for condensation hydraulic shock testing was installed. The tests will be carried out in 2017. In 2015-2016 using the commissioning and measurement systems (CMS) the Company’s employees carried out tests of the reactor equipment when putting Unit 6 of Novovoronezh NPP into operation. Also in 2016 CMS was installed at Unit 3 of Tianwan NPP in China and tests commenced as soon as the Unit was put into operation.
In 2016 research and development work commenced within the framework of the project providing for the development of the design and experimental complex of the Company to justify the reactor Unit design (introduction of CFD methods to support engineering and justification of projects (hereinafter referred to as the “Project”). The project work is scheduled to be performed in 2016-2020. The principal goal of the project implementation consists in ensuring design and engineering support of the Company in pursuing Rosatom’s strategic target, i.e. boosting its share at the international markets. Secondary targets: − Ensuring compliance of calculations and engineering design documentation with requirements imposed by IAEA and national regulators in the prospective export regions − Abandonment of excessive conservatism which impedes higher commercial performance of the projects by way of employing adjusted computation process and event modeling − Guaranteed compliance of technical and economic specifications of the reactor and nuclear power plant with the reported targets − Verification of technical solutions used in the WWER-type reactor design at the current scientific and technical level − Improvement of technical and economic specifications of new and existing power Units which is necessary to ensure competitiveness thereof vs promising projects implemented abroad.
In 2016 the Company performed the work scheduled as part of research and development for 2015-2018 (“Introduction of a Full-Scale Test Bench and Performance of Work to Justify and Ensure Safety and Reliability of Applicable Techniques and Equipment Designed to Anneal Welds in WWER-1000 Reactor Vessel”) with the National Research Center “Kurchatov Institute” acting as a customer. The aforesaid test bench was made available at the site operated by ATOMMASH in Volgodonsk. Pre-test calculations were made using ANSYS code to analyze the temperature profile of the reactor vessel and reactor cavity components. The Company’s employees participated in the test bench design work and arrangement of temperature profiling for the purpose of ensuring representativeness of the test results and design supervision of installation work on-site.
As part of research and development aimed at incorporating comments having regard to licensing terms and conditions applicable to construction of Unit 6 of Novovoronezh NPP the following work was performed: 1. Experimental justification of applicability of the ‘leak before break’ concept to pipeline components made of austenitic steel. 2. Design and experimental assessment of condensation hydraulic shocks in relation to the reactor pipeline. Respective hardware and instrumentation of the Hydraulic Shock Test
55 Facility was installed. 12 pipe models were manufactured designed to test condensation hydraulic shocks. The work is expected to be completed in the middle of 2017. 3. Justification of fuel assembly performance upon accidental exposure to falling heavy objects. 4. Justification of safety control system emergency protection settings as to the increase of background gamma radiation at primary-to-secondary leak. As part of this research and development work performed by the Company’s employees the results of the design justification of the setpoint for actuation of emergency protection were obtained in relation to gamma radiation dosage rate next to the steam line required to introduce an automatic primary-to-secondary leak detection system with the extent thereof equivalent to rupture of a single heat exchanging tube of a steam generator for NPP-2006 (V-392M and V-491 reactor) and Standard Optimized (TOI) WWER-type Reactor Designs (V-510). A design basis justification was also performed using KORSAR and RELAP 5 codes in relation to the maximum time delay from steam generator leak origination to generation of scram signal by the selected setpoint required to be used in the safety analysis of conditions with leakage in the steam generator for AES-2006 (V-392M and V-491 reactor) and Standard Optimized (TOI) WWER-type Reactor Designs (V-510).
3. Design Supervision
The purpose of the design supervision is the prompt review of deviations and prevention of unauthorized modification of design and engineering documentation or other applicable rules and regulations and proposals as to introduction of design improvements arising at the production, building and installation, commissioning, upgrade or decommissioning stage in relation to reactor plants by OKB “GIDROPRESS” or supervising implementation of any solution duly approved. As part of its design supervision the Company renders the following services: − Support of operation with availability of the Company’s representative at the NPP site; − Consultancy services related to maintenance of the prime circuit equipment designed by OKB “GIDROPRESS”; − Participation in maintenance and repair of reactor equipment and performance discussions (including related decision-making process); − Development of documentation having regard to maintenance and repair, preservation of equipment and NPP decommissioning; − Rendering assistance in familiarizing personnel with applicable rules and regulations; − Reviewing proposals filed by the Customer operating any respective NPP in terms of: • Upgrade and improvement of specific reactor equipment; optimization of reactor operating modes with design-basis justification and experimental studies (if necessary), including but not limited to, TVS-2 and TVS-2M; • Power up of the existing reactor plants; • Extension of reactor life cycle; • Extension of reactor turnaround time; − Participation in the projects implemented by the Customer’s commissions dealing with reactor equipment failures and NPP malfunctions affecting reactor equipment; − Analysis of data made available by the Customer in relation to defects, failures and malfunctions identified and issuing recommendations as to prevention and remediation thereof; − Development of the system designed to assess the remaining life cycle of reactor equipment and ensure ageing management.
For details of design supervision results also see other subsections of this Section of the Report.
56 4. Development of Design Technologies SOCRAT/B1 code duly certified is a primary tool used by Rosatom and OKB “GIDROPRESS” to analyze severe accidents in relation to WWER reactors. It was developed in 2000-2010 in Russia and in 2010 the code was certified by the Federal Environmental, Industrial and Nuclear Supervision Service for a 10-year term. In view of the need for recertification of SOCRAT/B1 in 2020 and ensuring compliance with contractual requirements OKB “GIDROPRESS” performed work involving modification, upgrade, verification and improvement thereof. In principle, it was aimed at improving the quality and safety of the obtained results and lifting restrictions related to its use (as provided by the program certificate). In 2016 a wide range of work was performed providing for update of the verification matrix and modification of RATEG thermohydraulic module (this work was performed jointly with the Nuclear Safety Institute of the Russian Academy of Sciences). The Company’s employees in cooperation with experts of the Nuclear Safety Institute of the Russian Academy of Sciences take part in international projects implemented by NEA/OECD to expand the testing data base, improve adequacy of modelling and show the code performance to foreign states (including customers under projects which provide for construction of NPPs mounting WWER-type reactors). Considerable emphasis is put on the work performed by OKB “GIDROPRESS” in relation to development of methods and expansion of the range of processes and events being investigated. In 2016 the Company performed the following work (Hanhikivi-1 NPP, Paks-2 NPP and El Dabaa NPP) which previously was not typical of OKB “GIDROPRESS”: − Assessment of in-vessel interaction of the fuel containing mass and coolant − Analysis of the steam generator heat exchanging tube integrity upon severe accidents − Assessment of severe accidents to justify emergency instruments selected for the project − Analysis of sensitivity upon severe accidents Dedicated 3D codes (ANSYS and MSC.Marc) were employed to assess integrity of WWER-type reactor components. Any work related to assessment of severe accidents with respect to existing NPPs mounting WWER-1000 (both in Russia and abroad), Bushehr-2 NPP, Akkuyu NPP and other promising projects will be further performed using modified SOCRAT/B1 code and newly developed methods and techniques. Assessment of temperature distribution and heat flow in relation to air circulation in the Unit was made to reduce stress at welding joint 111 (between the coolant “hot” collector and steam generator Dnom1200 nozzle). As part of the aforesaid work calculations were made to analyze distribution of temperature at the steam generator and collector metal body at welding joint No.111 as well as heat flow and heat transition coefficient at the metal and air boundary. A thermohydraulic CFD model for the reactor flow path (WWER-1200) was developed. The modeling purpose consists in determination of coolant heating areas in the core fuel assemblies in view of non-uniform input flow and heat generation in the core (by fuel assemblies and depending on the varying height of the reactor core). The coolant heat transfer properties depend on the temperature. The computer-based system was upgraded with the number of kernels increased by 1,600 pcs. As such, design calculations using thermohydraulic CFD models (AES-2006 reactor Unit) may be made within an acceptable time limit (up to 1 bln cells). Upon the aforesaid upgrade the system performance was increased by app 300% and totaled 50 teraflop operations per second. Heat mass exchange in a 37-core fuel assembly simulator bundle was analyzed using CFD technologies. As such, the calculation area boundaries, sampling level of detail thereof and selected turbulence model were duly justified. Computational modelling of a test bench was performed and coolant temperature in the bundle cells calculated. The minor impact of the coolant temperature measuring system on the calculation results was proved. Work on certification in Rostehnadzor of software package OKBMIX developed by OKB “Gidropress” was completed in 2016. OKBMIX is intended to analyze mixing of coolant and boric solution supplied to the emergency core cooling system and determine local thermohydraulic
57 parameters and boundary heat exchange conditions in the primary circuit of WWER-type reactor in the modes with ECCS in operation. OKB MIX calculation data is used to analyze temperature profile when assessing cyclic strength, brittle fracture resistance and probability of fracture of the reactor vessel and primary circuit pipeline as part of WWER-type reactor design work and justification of the extension of the operating life of existing power units. The Company has a system which is meant to prevent design errors. Information having regard to identified inconsistencies is collected and reviewed and proper solutions are proposed to eliminate and record those discrepancies and prevent re-occurrence thereof in other projects implemented by the Company (including future designs) followed by input thereof in the data base of inconsistencies supported by the life cycle management system (Siemens PLM Teamcenter). Elimination of inconsistencies (including respective interaction with third party companies) is ensured in view of the Standard Regulations for Management of Inconsistencies identified when building NPPs approved by Rosatom’s Order No.1/1116-P of December 23, 2011.
In addition to development of reactor technologies, techniques of experimental justification of designs are improved as well. In 2016 a method of laser Doppler anemometry based on LAD-05 system was introduced in the experimental research practice. This system was used to measure the peripheral velocity field (TVS-2M with and without mixing grids) and determine the impact those grids had on the distribution of coolant flows along the cross-section of the fuel assembly bundle.
5. Production and Supply of NPP Equipment
Commercial production of specific high-tech NPP equipment at its own manufacturing sites is one of the principal lines of business of OKB “GIDROPRESS”. Moreover, the Company’s manufacturing facilities are used to produce test benches, models, units and assemblies for testing purposes as well as dedicated commissioning measurement and operating control devices designed by the Company. The CPS drive ShEM-3 for WWER-1000/1200/TOI reactor plants is the principal product manufactured commercially by the Company. Since 1999 in Russia it has been produced by OKB “GIDROPRESS” only. The Company continuously improves and upgrades its design for higher safety and competitiveness. As from 2010 CPS drives ShEM-3 have been produced for newly commissioned NPP with an upgraded housing.
Growth of Sales Proceeds in 2014-2016
SALE PROCEEDS, RUB mln Growth rate Business area 2014 2015 2016 2016/2015, % Research, development and engineering 187 266 343 129% Production of nuclear reactors and component 1,498 1,966 1,395 71% parts Design engineering 3,097 2,226 4,916 221% Other 20 9 199 2310% TOTAL: 4,801 4,466 6,853 153%
Share in the total proceeds in 2016 broken down by business areas
Sale Business area proceeds, Share in % RUB mln
58 Research, development and engineering 343 5 Production of nuclear reactors and component parts 1,395 20 Design engineering 4,916 72 Other 199 3 TOTAL: 6,853 100
The automatic remaining operating life monitoring system (AROLMS) was supplied, installed and adjusted under the Company’s supervision at both existing Units and those being built. NPP Equipment Manufactured Description 2014 2015 2016 CPS drives ShEM-3 225 272 310 (manufacture d 80 pcs. with planned delivery to the Customer in 2017) CPS drives ShEM-3 components: - Electromagnet unit 28 - - - LPI, LPI-M and PPI indicators 44 23 30 (manufacture d 24 pcs. with planned delivery to the Customer - Rod in 2017) - Housing 70 12 - 150 75 - Other products: - Measuring channel, a set - - - - NFMC/NTLMC housings and NFMC/ICID fittings 688 510 466 - Hold down device, a set - Elastic tubular component, a set 4 4 5 - CPS drive sealing units, a set - 2 6 - Air duct elbow - 4 - - Isolation device, a set 2 - - - Spare parts for Isolation device, a set 2 - 1 - - 4 Expanded graphite gaskets, a set 19945 17970 18998
In 2016 the Company fulfilled its production program for 2016 in full. In the reporting year the number of CPS drives ShEM-3 and related component parts manufactured by the Company increased vs 2015 by 14%. 95 CPS ShEM-3 drives were supplied to Unit 7 of Novovoronezh NPP and 135 pcs to Unit 4 of Tianwan NPP. 80 CPS drives ShEM-3 were manufactured for Unit 1 of Belorus NPP.
The Company plans output of CPS drives ShEM-3 for the short term (2017 and 2018) in view of the Customers needs for the relevant equipment (both existing plants and NPPs being built).
Fulfilment of the Company’s Production Plan (CPS drives ShEM-3)
59
Fulfilment/Year 2017 2018 2013 2014 2015 2016 (planned) (planned) Fulfilment of the production 199 225 272 310 303 210 plan, sets Fulfilment of the production 100 100 100 100 - - plan, %
350 300 250 200 150 Dynamics of the CPS ShEM‐3 100 drives Production Plan change 50 (pcs./year) 0 2013 2014 2015 2016 2017 2018 (actual) (actual) (actual) (actual) (planned) (planned)
Dedicated Commissioning Measurements
The dedicated commissioning measurements represent a package of work performed at WWER-type rector plants being commissioned which includes the following: − Development of design and working design documentation related to measurement devices; − Production and installation of measurement systems within the facilities being tested; − Measuring mechanical and thermo-hydraulic parameters of reactor equipment as part of its phased commissioning; − Issue of respective conclusions by the results of measurements. The dedicated commissioning measurements are carried out in order to validate compliance of parameters of the reactor equipment installed with design specifications. Thus, these measurements allow monitoring of accurateness of installation of reactor primary equipment and verify compliance thereof with design specifications at the stages preceding operation. The commissioning measurements are among the prerequisites ensuring safe operation of reactor plants and allow it at an early stage to identify and remedy abnormal conditions and factors of future operation of the facilities. The measurements performed upon commissioning of new WWER-type Units represent a unique troubleshooting tool applicable to reactor plants of this particular modification which is second to none worldwide. This factor enhances the positions held by the State Atomic Energy Corporation ROSATOM participating in tenders for construction of NPPs abroad.
Dedicated commissioning measurements (SPNI) performed by year: NPP unit 2014 2015 2016 Rostov NPP, Unit 2 Rostov NPP, Unit 3 + Rostov NPP, Unit 4 + Kalinin NPP, Unit 4, Kudankulam NPP, Unit 1 Bushehr NPP, Unit 1, Novovoronezh NPP, Unit 6 + +
60 Tianwan NPP, Unit 3 +
In 2017 the Company expects to supply CMS to Unit 4 of Tianwan NPP, Unit 1 of Leningrad NPP-2 and Unit 1 of Belorus NPP.
6. Research and Intellectual Property 6.1. Research
In 2016 the Company’s employees published 51 academic papers. These academic papers contain the results of work which was performed in relation to a wide range of issues related to NPP reactor design.
Number of academic and research papers, pcs 2014 2015 2016 28 30 51
In 2007 OKB “GIDROPRESS” obtained a license to carry out educational activities under the post-graduate vocational training programs. Moreover, a full-time postgraduate program was made available to the Company. Training is performed on such topics as “Nuclear Power Plants (including design, operation and decommissioning)” and “Nuclear reactor engineering, machinery, assemblies and engineering of the nuclear power industry materials”.
Number of theses defended, pcs 2014 2015 2016 Doctor Candidate Doctor Candidate Doctor Candidate 0 4 0 4 0 4
OKB “GIDROPRESS” as a designer of WWER-type reactors has been hosting Safety of NPPs with WWER-type Nuclear Reactors (a biyearly international research and development conference) for over 15 years now. This event allows one to review and summarize experience gained recently in design, operation and safety and put emphasis on the most challenging problems the industry faces. The results of research, development, design and engineering work reviewed in the conference papers are of material importance and contribute to the selection and justification of design which guarantees safety of WWER-type reactors as part of the programs providing for the upgrade and extension of the operating life of the existing Units and construction of new NPPs in Russia and abroad. In May 2017 OKB “GIDROPRESS” will host the 10th anniversary conference “Safety of NPPs with WWER-type Nuclear Reactors” which is expected to be attended by both Russian and foreign experts engaged in the nuclear power industry. The following issues related to safe operation of WWER-type reactors will be discussed: - Reliability and safety of NPP operation - Design-basis and theoretical justification of WWER-type reactors - Verification of software to validate safe operation - Improvement of reactor plants to improve safety - Justification of safe extension of the operating life of NPPs - Innovative reactor Units - Issues related to development, verification and use of CFD codes in the nuclear power industry.
61
6.2. Intellectual Property
Identification of protectable intellectual property obtained as a result of the Company’s business and registration of related rights as provided by applicable law of the Russian Federation is one of the top priority lines of business carried out by OKB “GIDROPRESS”. OKB “GIDROPRESS” has accumulated a considerable research, design and manufacturing potential which is based on invaluable experience gained by many generations of researchers, designers and engineers involved in the design work which covers reactors of various types successfully installed and operated both at Russian and foreign NPPs. For the purpose of highly efficient management of innovations OKB “GIDROPRESS” jointly with the Innovation Management Division of Rosatom developed strategies aimed at managing intellectual property, including capitalization and commercialization of rights thereto and moving assets to the international market. As part of international patent work the following application was filed by the Company in 2016 under the Patent Cooperation Treaty (PCT):
Type and description of Application or patent details intellectual property (in (date and ID) and expected Country of filing Russian) date of issue of the patent РСТ/RU2016/000333,02.06.20 Steam generator 16 (priority date 07.07.2015), Expected to be filed in 31 states 2021
In 2016 three applications for Russian invention patents, one utility application and three application for state registration of computer software was filed with the Federal Institute of Industrial Property. Moreover, OKB “GIDROPRESS” received three Russian invention patents, one utility patent and five certificates of state registration of computer software.
The number of patents and certificates issued to the Company in relation to its intellectual property (pcs):
Company name 2014 2015 2016
OKB 4 12 9 “GIDROPRESS”
As of December 31, 2016 the IP portfolio of OKB “GIDROPRESS” in addition to its trademark included 94 patents, namely: - 57 invention patents issued in Russia - 37 utility patents issued in Russia - 49 computer applications
12 intellectual property items were taken onto the Company’s books in 2016 as intangible assets with the aggregate initial value thereof amounting to RUB 12,101,219.
The aggregate initial value of intellectual property recognized on the Company’s balance sheet in 2014-2016 as intangible assets is as follows:
Aggregate initial value of intangible assets RUB 2014 2015 2016
11,654,353.76 19,581,788.58 22,010,814.34
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7. Introduction of the Production Program by Rosatom
Rosatom’s Production System (RPS) is a corporate strategic tool designed to create competitive advantages by OKB “GIDROPRESS” in its design and engineering activities and manufacturing of NPP equipment. It enables the following: − Identify and remove root causes which trigger loss of value in the value or product manufacturing chain − Improve the principal and ancillary production processes − Reduce the scope of construction work in progress and finished product inventories − Increase performance.
RPS allowed it to reduce the cost of the products manufactured by the Company and the lead time.
The active phase of introduction of Rosatom’s Production System in the Company commenced at the end of 2011 as soon as the project “Integrated Optimization of Production of CPS ShEM-3 Drives” was launched. Its successful implementation allowed it to engage the Company’s employees in the development of the continuous improvement system. As from 2012 OKB “GIDROPRESS” has extensively employed methods and approaches being part of Rosatom’s Production System when addressing complex manufacturing issues. The following are the projects implemented as part of RPS: − Improvement of performance in relation to production of CPS drives ShEM-3 − Development of an efficient system designed to organize and schedule production of CPS drives ShEM-3 − Optimization of storage facilities − Optimization of procurement activities − Optimized development of a 3D model as part of design work within the framework of the Typical Optimized and Computerized (TOC) WWER-type Reactor Design − Delivery of a preliminary safety analysis report and probability safety analysis report (revision 1) to the extent having regard to the reactor Unit to JSC SPII VNIPIET within the deadline specified in the Master Schedule − Just-in-time pilot supply.
In 2015 the Company’s manufacturing division implemented two major RPS projects designed to reduce non-production losses and improve performance in relation to production of CPS drives ShEM-3 (Application of RPS Methods Tested at the Enclosure Manufacturing Model Area to CPS Drives ShEM-3; Motion Unit and Electromagnet Unit). Upon implementation of the aforesaid projects the following results were obtained:
− Motion Unit:
Description 2014 Target value Actual value Results
Lead time, business days Reduced by 197 132 130 34% Equipment downtime due to delays in delivery of tools from the tool house, Reduced by 1458 1020 1020 hours per annum 30%
63 Equipment downtime due to delays in Reduced by maintenance, hours per week 35 5 0 100 %
− Electromagnet Unit:
Description H1 2015 Purpos Actual Results e Failure to produce the Electromagnet Unit Reduced by as scheduled when fulfilling the orders for 10 0 0 100% Balakovo NPP and Novovoronezh NPP, pcs
The following are the key figures having regard to implementation of RPS projects: − In 2015 the Company manufactured the following products in relation to CPS drives ShEM-3: • 135 drives for Tianwan NPP (Unit 3) • 11 SPTAs for Novovoronezh NPP-2 (Unit 1) • 11 SPTAs for Leningrad NPP-2 (Unit 1) • 75 drives for Balakovo NPP (Unit 3) • 40 drives for Novovoronezh NPP (Unit 6)
Description 2014 PurposeActual Results Production of CPS drives ShEM-3, pcs 225 270 272 Increased by 21%
Cost of production of a single CPS ShEM-3 4.138 3.941 3.151 Reduced by 23.9% drive with the annual production of 270 pcs in comparable prices vs the reference period, RUB mln
OKB “GIDROPRESS” ensured availability of practical evidence of output which allowed it to produce at least 270 CPS drives ShEM-3 per annum. Upon implementation of RPS projects the Company archived its targets in relation to reduction of cost of production (CPS drives ShEM-3) by 23.9%. The overall economic benefit from project implementation (including that from filing of improvement proposals) totaled RUB 206.99 mln. In 2016 the Company’s manufacturing division continued to introduce Rosatom’s Production System. Six RPS projects were implemented by the manufacturing division of the Company with the emphasis put on increased output of CPS drives ShEM-3 through reduction of the lead time and construction in progress in the value chain. For the results of implementation of RPS projects in 2016 see the table below:
Project/target name As of the Target Actual value Results commencement value date Increase of output of CPS drives ShEM-3 in 2016 Ensure production of 290 pcs of CPS 272 pcs 290 pcs 310 pcs 14.8% drives ShEM-3 Reduction of work in progress in relation to production of CPS drives ShEM-3 Reduction of work in progress (semi- 137 116 116 15% finished products, component parts and assembly units available in the value chain in relation to production of CPS drives ShEM-3 from
64 manufacturing start-up to acceptance testing by 20% Reduction of the scope of production (components parts and assembly units) in relation to manufacturing of CPS drives ShEM-3 Reduction of the scope of on-machine 45 30 30 33% production (components parts and assembly units) by at least 20% Reduction of the scope of mechanical labeling work Reduction of the time of punch 455 319 319 30% marking work (electromagnet unit) from 455 to 319 labour hours (marking of 290 sets takes 455 labour hours) Reduction of the lead time in relation to production of CPS drives ShEM-3 Reduction of the lead time from 188 175 175 7% manufacturing start-up from 188 to 175 days
The overall economic benefit derived by the Company from RPS project implemented in 2016 totalled RUB 86 mln. As from 2012 introduction of RPS allowed the Company’s manufacturing division to achieve the following results:
CPS ShEM‐3 drives, pcs. CPS ShEM‐3 drives, pcs.
272 310 199 225 150
2012 2013 2014 2015 2016
Production department headcount, persons Production department headcount, persons
306 280 272 259 260
2012 2013 2014 2015 2016
65 RPS Projects Implemented in 2016 in Other Business Areas.
1) Reduction of time required to perform design-basis calculations in relation to WWER and BN reactor equipment (i.e. reduction of the time required to build a finite element pattern and make finite element calculations as part of design-basis justification of reactor design). This RPS project showed that upon introduction of ANSYS 17.0 in the process of computer-based design-basis justification of strength of a standard reactor Unit the time required to build a finite element pattern and make computer-based finite element calculations may be reduced twice. Upon the aforesaid calculations ANSYS 17.0 allowed one to reduce the time required to build a finite element pattern at least by 65% (with the target value of at least 10%) and the time required to make respective calculations at least by 60% (with the target value of at least 15%). 2) Reduction of time required to review claims (RPS project). Upon implementation of the aforesaid project the claim and action filing time was reduced from 15 to 5 business days and from 25 to 7 business days (respectively) as from the date of receipt of any respective application due to the higher quality and relevance of the information made available therein and no need to require delivery of additional information. 3) Reduction of time required to execute the documents related to consideration payable to the holders of copyright for the development and use of intellectual property (RPS project). Upon implementation of the foregoing project the time required to prepare, execute and deliver a request to the labour and wages department for payment of the consideration payable to the holders of copyright for the development and use of intellectual property (i.e. inventions, utility models, software, data bases, know how etc) was reduced from 40 to 24 hours (by 16 hours in aggregate). Moreover, the time required to execute and deliver to the department of patent research and intellectual property rights respective calculations having regard to the consideration payable to the holders of copyright for the development of intellectual property was reduced from 80 to 40 hours (by 40 hours in aggregate). 4) Temporary storage of non-confidential information. The work space was optimized with the area designed to store documents reduced from 40 sq m to 36 sq m. Moreover, the time required to execute and deliver related files by the subdivisions was reduced from 70 min to 52 min per volume.
In 2016 OKB “GIDROPRESS” was selected as a nominee to the role of a RPS company. As such, the Company developed a RPS deployment program which once implemented would allow it to achieve more significant economic targets.
66 V. MANAGEMENT
1. Corporate Governance
Management Structure G4-34
Pursuant to Article 11 of the Company’s Articles of Association its management bodies shall be represented by the following: − General Meeting of the Company’s shareholders; − Board of Directors; − Director General (sole executive authority). Pursuant to Article 14.2.4 of the Company’s Articles of Association this annual report shall be approved by the Company’s Board of Directors. G4-48
G4-38 Details of Members of the Company’s Board of Directors:
The Company’s Board of Directors as of June 28, 2016 with members thereof elected by Resolution No.06/15-GOSA of June 29, 2015 of the General Meeting of Shareholders of Joint Stock Company “Experimental and Design Organization “GIDROPRESS” awarded the Order of the Red Banner of Labour and CZSR Order of Labour” is as follows:
Andrey V. Nickipelov, Chairman of the Board of Directors and CEO of JSC Atomenergomash; Victor V. Dzhangobegov, member of the Board of Directors and Director General of OKB “GIDROPRESS”; Vladimir A. Angelov, member of the Board of Directors and Director of JSC Atomenergomash for Nuclear Power Engineering; Vladimir A. Piminov, member of the Board of Directors and OKB “GIDROPRESS” Designer General; Ksenia A. Sukhotina, member of the Board of Directors and First Deputy CEO for Strategy and Organizational Development of JSC Atomenergomash.
On June 28, 2016 by Resolution No.01/16-GOSA of June 28, 2016 of the General Meeting of Shareholders of Joint Stock Company “Experimental and Design Organization “GIDROPRESS” awarded the Order of the Red Banner of Labour and CZSR Order of Labour” the following were elected to the Company’s Board of Directors:
Andrey V. Nickipelov, Chairman of the Board of Directors and CEO of JSC Atomenergomash; Victor V. Dzhangobegov, member of the Board of Directors and Director General of OKB “GIDROPRESS”; Vladimir P. Razin, member of the Board of Directors and Deputy CEO for Operations of JSC Atomenergomash; Vladimir A. Piminov, member of the Board of Directors and OKB “GIDROPRESS” Designer General; Ksenia A. Sukhotina, member of the Board of Directors and First Deputy CEO for Strategy and Organizational Development of JSC Atomenergomash.
G4-39 Andrey V. Nickipelov
Position in the issuing joint stock company: member of the Board of Directors; Chairman of the Board of Directors as from August 24, 2012. Brief CV: Date of birth: March 7, 1968. Education: higher, Lomonosov Moscow State University (1992). 67 Major discipline: Political Economy. Academic title or degree: n/a. Working career (at least a 5-year period): Period Place of employment Position 05.2008-04.2012 JSC TVEL Senior Vice-President for Economy, Finance and Development 10.2012- to date ROSATOM Member of the Management Board
06.2012- to date ROSATOM Head of Division
04.2012- to date JSC Atomenergomash CEO
Share in the issuer’s authorized capital: 0%. Ordinary shares in the issuer’s authorized capital held by the member of the Board of Directors: 0%. The member of the Board of Directors held no shares in the Company in the reporting period.
Victor V. Dzhangobegov
Occupied position in the Joint-Stock Company - issuer: Director General, member of board of directors. Brief CV: Date of birth: October 4, 1956. Education: higher, Moscow Engineering Physics Institute (MEPhI), Obninsk branch (1980). Major discipline: Nuclear Power Plants and Units. Academic title or degree: n/a Working career (at least a 5-year period): Period Place of employment Position 01.2000 – to date OKB “GIDROPRESS” Planning Engineer; Head of Procurement Department; Deputy Head of Operations; Deputy Chief Engineer, Head of Operations; Chief Engineer – Head of Branch; Acting Director and Designer General; Director General Share in the issuer’s authorized capital: 0%. Ordinary shares in the issuer’s authorized capital held by the member of the Board of Directors: 0%. The member of the Board of Directors held no shares in the Company in the reporting period.
Vladimir P. Razin
Position in the issuing joint stock company: member of the Board of Directors. Brief CV: Date of birth: October 12, 1955. Education: higher, Bauman Moscow State Technical University awarded the Order of Lenin and the Order of the Red Banner of Labour (1979). Major discipline: Power Plants and Units. Academic title or degree: n/a. Working career (at least a 5-year period): Period Place of employment Position 12.2009 – Energopromservice OJSC Director for Business Development 06.2012
68 06.2012 – JSC Atomenergomash Director for Manufacturing Unit 08.2013 Management 08.2013. – JSC Atomenergomash Deputy CEO for Operations 02.2014 02.2014-12.2015 JSC Atomenergomash Deputy CEO for Business Operations 12.2015- to date JSC Atomenergomash First Deputy CEO for Business Operations Share in the issuer’s authorized capital: 0%. Ordinary shares in the issuer’s authorized capital held by the member of the Board of Directors: 0%. The member of the Board of Directors held no shares in the Company in the reporting period. V. P. Razin did not participate in the company’s shares acquisition and carve-out transactions.
Vladimir A. Angelov
Position in the issuing joint stock company: member of the Board of Directors. Brief CV: Date of birth: May 2, 1977. Education: higher, Moscow Engineering Physics Institute (2000). Major discipline: Nuclear Plants and Units. Academic title or degree: n/a. Working career (at least a 5-year period): Period Place of employment Position 10.2005-11.2011 Atomstroyexport CJSC Head of Department; Deputy Head of Procurement Directorate; First Deputy Head of Directorate 11.2011 - 01.2014 JSC Atomenergoproekt Head of Directorate; Director for Equipment Procurement 01.2014 - 02.2016 JSC Atomenergomash Director for Nuclear Power Industry 02.2016 - to date JSC IK ASE Project Director in India
Share in the issuer’s authorized capital in %: 0. Ordinary shares held by the member of the Board of Directors in the issuer’s authorized capital in %: 0. The aforesaid member of the Board of Directors held no shares in the Company in the reporting period. V.A. Angelov made no transactions providing for acquisition or disposal of the Company’s shares.
Vladimir A. Piminov
Position held in the issuer’s structure (joint stock company): member of the Board of Directors. Brief CV: Date of birth: August 7, 1957 Education: higher, graduated from the Bauman Moscow State Technical University in 1980. Major discipline: Process System Design. Academic title or degree: n/a. Professional experience for the recent 5 or more years:
69 Period Place of employment Position 09.1979 – to date Joint Stock Company “Experimental Design Engineer of 1st category, Deputy and Design Organization Head of Section, Head of Section and “GIDROPRESS” awarded the Order Designer General of the Red Banner of Labour and CZSR Order of Labour Share in the issuer’s authorized capital in %: 0. Ordinary shares held by the member of the Board of Directors in the issuer’s authorized capital in %: 0. The aforesaid member of the Board of Directors held no shares in the Company in the reporting period. V.A. Piminov made no transactions providing for acquisition or disposal of the Company’s shares.
Ksenia A. Sukhotina
Position held in the issuer’s structure (joint stock company): member of the Board of Directors. Brief CV: Date of birth: June 22, 1971 Education: higher, graduated from the Lomonosov Moscow State University in 1993 Major discipline: Sociology Academic title or degree: n/a. Professional experience for the recent 5 or more years: Period Place of employment Position 2010г. – 07.2013 JSC Atomenergomash Director for Human Resources
07.2013 – JSC Atomenergomash Deputy CEO for Human Resources and 12.2015 Organizational Development 12.2015 – to date JSC Atomenergomash First Deputy CEO for Strategy and Organizational Development Share in the issuer’s authorized capital in %: 0. Ordinary shares held by the member of the Board of Directors in the issuer’s authorized capital in %: 0. The aforesaid member of the Board of Directors held no shares in the Company in the reporting period. K.A. Sukhotina made no transactions providing for acquisition or disposal of the Company’s shares.
In 2016 members of the Company’s Board of Directors failed to approve any transaction involving the Company’s shares.
Sole Executive Authority
By resolution of the extraordinary General Meeting of shareholders of Joint Stock Company “Experimental and Design Organization “GIDROPRESS” awarded the Order of the Red Banner of Labour and CZSR Order of Labour of June (Minutes No.3 of December 21, 2012) the following individual was elected to the office of the Company’s Director General:
Victor V. Dzhangobegov
Brief CV: Date of birth: October 4, 1956. Education: higher, Moscow Engineering Physics Institute (MEPhI), Obninsk branch (1980).
70 Major discipline: Nuclear Power Plants and Units Academic title or degree: n/a. Working career (at least a 5-year period):
Period Place of employment Position 01.2000 – to date OKB “GIDROPRESS” Planning Engineer; Head of Procurement Department; Deputy Head of Operations; Deputy Chief Engineer, Head of Operations; Chief Engineer – Head of Branch; acting Director and Chief Designer; Director General Share in the issuer’s authorized capital in %: 0. Ordinary shares held in the issuer’s authorized capital in %: 0. The aforesaid member of the Board of Directors held no shares in the Company in the reporting period. V.V. Dzhangobegov made no transactions providing for acquisition or disposal of the Company’s shares.
G4-51 Principal Provisions of the Company’s Policy for Remuneration and Reimbursement of Expenses. Procedure for Payment and Determination of the Amount of Remuneration or Reimbursement Payable to Members of the Company’s Executive Authorities in 2016
Neither resolution for payment of remuneration and/or reimbursement of expenses nor any related payment for the benefit of any of the members of the Company’s Board of Directors was made in the reporting period. The Company’s Articles of Association do not provide for availability of an executive board. V.V. Dzhangobegov performed the functions of the Company’s sole executive authority. Remuneration payable to the sole executive authority is specified in the employment agreement duly made with the same. G4-52
Audit Committee The Company’s Articles of Association do not provide for establishment of the Company’s Audit Committee.
G4-56 Compliance with the Corporate Code of Conduct Respective provisions of the Code of Corporate Conduct pursuant to recommendations made available in Letter No.06-52/2463 of April 10, 2014 of the Bank of Russia are adhered to by the Company in view of the specific legal status of Rosatom provided by the existing regulations of the Russian Federation which ensure centralized management of the companies operating in the nuclear power industry.
Report on Distribution of Declared and Accrued Dividends on the Company’s Shares By Resolution No.01/2016-GOSA of June 28, 2016 of the Annual General Meeting of the Company’s Shareholders the Company resolved to neither declare nor pay dividends on issued registered ordinary shares in the Company for 2015 financial year. No resolution on declaration or payment of dividends upon expiry of the first quarter, half year or nine months of 2016 was made.
Major Transactions effected by the Company in the Reporting Year
A list of transactions which pursuant to the Federal Law “On Joint Stock Companies” are deemed major transactions effected by the Company in the reporting year is attached hereto in Exhibit 3. 71
Interested Party Transactions effected by the Company in the Reporting Year
The Company failed to make any transaction in the reporting year which pursuant to the Federal Law “On Joint-Stock Companies” is deemed Interested Party Transaction and is subject to prior approval.
2. Quality Management
The Company seeks to issue high quality warranties and ensure reliability, safety and competitiveness of its products and services as well as meet the requirements and expectations of its end users or customers to the fullest extent possible, including Russian and international safety standards applicable to nuclear power facilities. The reliability, durability and fail safe operation of the equipment designed and supplied by the Company and high quality of design, engineering, research and development and experimental work performed by the Company is ensured through its certified quality management system. In 2016 the Certificate of Compliance of the Company’s Quality Management System with ISO 9001:2008 international standard was re-issued and validated (No. RU228632Q-U issued by the Bureau Veritas Certification, a dedicated certifying authority). Scope of application: NPP Units and related equipment design and engineering. As provided by ISO 9001:2008 international standard, applicable safety GS-R-3 safety regulations by IAEA and federal rules and regulations governing use of nuclear power the Company has developed and ensures compliance with quality guidelines, quality management programs and standards and other applicable rules and regulations. The Company’s priority goals consist in ensuring nuclear and radiation safety, competitiveness, quality and reliability of nuclear power plants designed by the same as well as related equipment either developed or manufactured by the Company. The Company carries out its business pursuant to the licenses issued by the Federal Service for Environmental, Technological and Nuclear Supervision, in particular: − License No.GN-10-101-2670 of November 1, 2012 for design and engineering of nuclear power plants, Units and assemblies; − License No.GN-11-101-2728 of May 20, 2013 for design of equipment mounted on nuclear power plants, Units or research facilities; − License No.GN-11-115-3008 of April 01, 2015 for design of nuclear power plant equipment (fuel assemblies, absorbing safety rods and burnable poison rod bundles); − License No.GN-1-101-2732 of June 3, 2013 for production of nuclear power plant (Unit) equipment; − License No.CO-03-110-6977 of December 19, 2012 for operation of the subcritical 7- assembly high pressure test bench (7VD); − No. CO-04-110-8951 оf September 16, 2015 entitling the Company to decommission NPP Unit (subcritical 7-cassette low pressure test bench (7ND)). The high quality of manufactured products is ensured by taking measures aimed at developing and updating applicable corporate standards and guidelines governing any respective work and assigning responsible executives. As part of the Company’s Quality Management System the following measures are taken: − Revision, update and familiarization of each employee of the Company with the Corporate Quality Policy duly modified; − Setting and monitoring achievement of targets in terms of quality management;
72 Targets achieved in the field of quality management in per cent 2014 2015 2016 86.0% 91.2% 89.2% − Defining, measurement and improving quality management processes by way of analyzing the same by the Company’s management and developing and implementing measures aimed at improving the Company’s quality management system; Efficiency 1 of the quality management system 2014 2015 2016 71.6% 68.4% 75.2%
− Ensuring design documentation supervision and control at all levels; − Incoming inspection and assessment of compliance of the equipment, spare parts, materials and semi-finished products acquired with applicable standards; − Various controls and compliance assessment procedures as part of the equipment manufacturing process; − Update of existing quality management system documentation; − Development and update of quality management programs; − Self-assessment of performance by the Company’s management (performed by questioning); Assessment of efficiency by the heads respective business units (self-assessment) 2014 2015 2016 4.25 points 3.96 points 4.24 points Table 3
− Assessment of the customer’s satisfaction (major purchasers); − Planning and holding internal audits of the quality management system; development and implementation of correction and prevention measures based on the results thereof. The quality management system analysis and assessment are performed as part of internal and external audits. In 2016 two internal and four external audits of the Company’s quality management system were performed by its customers Fennovoima Oy (Finland), JSC ATOMPROJECT, RAOS Project Oy (Finland), MVM Paks II (Hungary) as well as a re- certification audit by certifying authority Bureau Veritas Certification. Upon both internal and external audit performed in 2016 generally a high degree of compliance of the Company’s quality management system with applicable rules and regulations and customers’ requirements has been acknowledged. Respective inconsistencies and defects have promptly been or are being eliminated and remedied. The Company is continuously involved in the work providing for harmonization both at the corporate level and at the level of Rosatom, including the following: − Review and execution of reports with comments (over 90 reports in 2016) in relation to respective rules and regulations submitted to the Company (i.e. federal rules and regulations, by-laws issued by Rosatom, customer and operating companies etc) − Development and update of the Company’s standards − Development of the first revision of Federal Rules and Regulations “General Technical Specifications for Application of the ‘Leak before Break’ Concept” The following activities are scheduled for 2017 to support the Company’s business: − Receipt of a license issued by the Federal Environmental, Industrial and Nuclear Supervision Service for the Company to be able to design and engineer NPP Unit; − Receipt of a license issued by the Federal Environmental, Industrial and Nuclear Supervision Service for the Company to be able to decommission an subrcritical 7-assembly high pressure test facility
1 “Efficiency” means an extent to which scheduled activities have been carried out and respective targets achieved (ISO 9000). 73 − Execution and delivery to Rostehnadzor of a package of documents required to obtain license entitling the Company to design nuclear power plant equipment to the extent having regard to fuel assemblies, CPS neutron absorbing rods and burnable absorber rod bundles − Execution and delivery to FTO SAFETY of a package of documents required to obtain an opinion entitling the Company to carry out its business (designing products for Bushehr-1 NPP, Islamic Republic of Iran) − Execution and delivery to FTO SAFETY of a package of documents required to obtain an opinion entitling the Company to carry out its business (manufacturing products for Bushehr-1 NPP, Islamic Republic of Iran) − Development of quality assurance programs having regard to the Company’s business (designing a reactor plant for Rooppur NPP and reactor core for Paks-2 NPP) − Certification as to compliance with ISO 9001:2015 international standard No single inconsistency with applicable rules and regulations having regard to information and labels with product and service properties or impact these may have in terms of health and safety has been identified. No licenses entitling the Company to carry out its business in the field of nuclear power use have been revoked in the reporting period. Currently, there is no reasonable basis for any of the aforesaid to occur. G4-PR1
3. Procurement Management
OKB “GIDROPRESS” carries out its procurement activities pursuant to the General Industry-Specific Procurement Regulations (the “Procurement Regulations”) approved by Rosatom and other regulations of Rosatom issued in addition thereto or rules and guidelines or resolutions approved by Rosatom’s executive boards and enacted under the Procurement Regulations and applicable to all companies operating in the nuclear power industry. For the purpose of the higher transparency and publicity of the Company’s procurement business e-procurement procedures used by the Company are performed in strict compliance with the Procurement Regulations. These procedures are held online through the following e-commerce marketplaces: JSC Economy Development Center (https://www.b2b-center.ru), OJSC United Electronic Market Place (http://www.etp.roseltorg.ru), LLC Fabrikant.ru (https://www.fabrikant.ru). These were selected by the Department for Methodology and Procurement Organization of Rosatom for procurement of products and services by the companies operating in the nuclear power industry. The Annual Procurement Program of the Company and information related to tenders held by the same, applications filed and accepted or rejected as well as respective resolutions adopted before March 2016 were posted to www.zakupki.gov.ru and Rosatom’s corporate Web site http://zakupki.rosatom.ru. Pursuant to Corporate Order No.146 of March 25, 2016 “On Approval of the Procurement Regulations” Federal Law No.223-FZ “On Procurement of Products, Work and Services by Specific Legal Entities” of July 18, 2011 shall not apply to OKB “GIDROPRESS”. As such, from March 2016 the Annual Procurement Program of the Company and information related to tenders held by the same, applications filed and accepted or rejected as well as respective resolutions are posted to Rosatom’s Web site at http://zakupki.rosatom.ru. The Company continues to seek reduction of the initial (maximum) contract prices by employing dedicated price regulating tools (re-bidding and pre-contractual negotiations with suppliers). As provided by the Regulations for Disposal of Unclaimed Movable Property of Subsidiaries, Affiliated and Supervised Companies of JSC Atomenergomash approved by Corporate Order No.277 of August 12, 2013 and Minutes No.54/13/2015 of the meeting of the Work Group for Optimization of Disposal of Unclaimed Movable Property of JSC Atomenergomash of December 28, 20155 and in view of Corporate Order No.1 of January 1, 2016 On Disposal of Unclaimed Movable Property the Company continued its work related to disposal of its unclaimed movable property through public offering. As such, the following three machines were disposed of: − Threading lathe (1K62D model)
74 − Knee-and-column vertical CNC milling center (6R13FZ-37 model) − Lathe machine (16A20FZS39 model) Upon an open tender for execution of a purchase and sale agreement in relation to unclaimed movable property (Ford Mondeo) a Ford Mondeo vehicle was disposed of on September 7, 2016. Pursuant to the Regulations for Restructuring of Non-Core Real Property and Authorized Capital approved by Rosatom’s Order No.1/571-P of June 3, 2013, Order No.33/193-P of JSC Atomenergomash of June 18, 2013 and binding Corporate Order No.218 of June 24, 2013 and in view of Resolution No.4/2016/36 of April 14, 2016 adopted by the Committee for Restructuring of Non-Core and Redundant Property of Companies managed by JSC Atomenergomash the Company disposed of its non-core real property (i.e. two land plots owned by OKB “GIDROPRESS”). In 2016 22 category strategies were developed and approved by the principal focus areas in relation to materials and equipment acquired by the Company, including the following: − metals, tools, IT assets and POZh cable (in aggregate RUB 625,638,272 VAT included). The aforesaid strategies allowed the Company to derive economic benefit of RUB 59,373,072 VAT included).
Procurement (over RUB 100,000), pcs. Method 2014 2015 2016 Sole supplier 117 264 284 Tenders 118 102 126 Total 295 366 295
Procurement (over RUB 100,000), pcs Method 2014 2015 2016 Sole supplier 231,357.89 472,243.83 1,167,446.54 Tenders 1,226,786.93 818,616.13 1,469,821.31 Total 1,458,144.82 1,290,859.96 2,637,267.85
In 2017 the Company shall: − Continue to dispose of its unclaimed movable property as provided by the Regulations for Disposal of Unclaimed Movable Property of Subsidiaries, Affiliated and Supervised Companies of JSC Atomenergomash approved by Corporate Order No.277 of August 12, 2013 and Minutes No.37/9/2014 of the meeting of the Work Group for Optimization of Disposal of Unclaimed Movable Property of JSC Atomenergomash of September 30, 2014 − Continue to dispose of its non-core real property (two land plots owned by OKB “GIDROPRESS”) as provided by respective resolution of the Committee for Restructuring of Non-Core and Redundant Property of Companies managed by JSC Atomenergomash (see extract from Minutes No.4/2016/36 of the meeting of the aforesaid Committee held on April 14, 2016).
G4-12, G4-EC9 “Supply chain” shall mean efforts used by all the Company’s employees engaged in the interaction with suppliers and vendors which are aimed at achieving its targets in terms of the Company’s economic performance. The supply chain shall cover the Company in general and all its business operations from assessment of the need for procurement of respective products, work or services to delivery of finished products to either internal or external customers as well as related information flows. The supply chain is regulated by existing corporate standards based on compliance with applicable federal laws and Procurement Regulations approved by Rosatom. The supply chain efficiency is ensured by way of performing annual audits of the Company’s business units which are meant to identify bottlenecks followed by the development and implementation of a program aimed at eliminating the same. The aforesaid measures taken on a continuous basis allowed the Company to satisfy its needs for products, work and services promptly and in full in 2016 with proper prices, quality and reliability and ensure efficient use of the Company’s funds.
75 OKB “GIDROPRESS” engages a great number of suppliers to satisfy the needs of its customers for respective products, work and services. Any individual or legal entity complying with the requirements listed in the procurement documentation may become the Company’s supplier subject to the higher number of scores gained upon evaluation of any relevant application filed as part of a public and competitive procurement procedure. Due to the nature of the Company’s business and need for compliance with procurement rules and regulations which prevents any monopoly practice the Company cannot engage suppliers based on the location or any other ground whatsoever. However, as a rule all suppliers carry out their business in the Central Federal District. This is due to the fact that most manufacturers opened their representative offices in the aforesaid region. Thus, the Company’s procurement business providing for investments in the regional suppliers has positive impact on the local economic environment.
4. Finance Management
The Company’s finance is managed as provided by the industry-specific financial policy of Rosatom in view of applicable industry practices and tools designed to ensure financial viability and higher efficiency of the Company’s business. The Company’s finance is managed by information systems of the Corporate Processing Center (CPC) and Distributed Planning and Budgeting System (DPBS). CPC is designed to support financial operations. CPC has specific functions designed to manage accounts, non-financial transaction payments, intragroup loans, financial transactions and settlements. DPBS is a planning and budgeting system which incorporates a distributed financial and economic planning and performance assessment system as well as consolidation and reporting subsystems. As part of the analytical reporting system dedicated documents and tools were made available designed to compare target and actual data and a package of analytical reports enabling system users to generate optional reports with the relevant analytical sequences. Dedicated tools are available which can be used to compare intragroup sales as well as specific algorithms and reports designed to consolidate data in the trial balance format broken down by the companies. In 2016 the financial and economic division of the Company was reorganized followed by a split of functions related to financial resource management and cost control and assessment. G4-13 As a result, the foregoing measures contributed to the Company’s financial stability and liquidity.
5. Risk Management
The existing risk management system of the Company is integrated into the general management system and is part of the operations performed by the Company’s business units. The system provides for assignment of risk owners, i.e. top managers, each of them being responsible for any specific business area where any respective risk may arise as well as for the development and implementation of a risk management program and further monitoring activities. The existing risk management system has been introduced pursuant to Rosatom’s regulatory documents and guidelines having regard to establishment of a corporate risk management system introduced in compliance with GOST R ISO 31000-2010 (Risk Management. Principles and Guidelines) and is designed to: − Contribute to implementation of the Corporate Strategy − Promptly identify available risks which have impact on the process of pursuing the corporate goals − Assess and mitigate exposures − Contribute to development of a stable financial environment in the Company in view of available risks − Define risk owners and responsibilities thereof
76 − Ensure higher efficiency of management decisions by way of bringing risks and profitability into proper balance − Monitor compliance with existing programs aimed at mitigating risks and related consequences thereof G4-2 A list of risks and tools designed to manage the same is not subject to disclosure herein.
Corruption Risks In 2016 measures to prevent and fight corruption were taken pursuant to the Anticorruption Program approved by the State Atomic Energy Corporation Rosatom for 2016- 2017 and Anticorruption Program 2016-2017 introduced by OKB “GIDROPRESS”. The Company’s department responsible for protection of business processes assets assessed corruption risks in 15 business units of the Company (100% of the G4-SO3 Company’s structure) to define specific business processes and business operations of the Company where there is the highest risk of corruption offences which may be committed by the Company’s employees. As a result, the most critical business process segments exposed to the highest risk of corruption were identified and the Map of Corruption Risks and Business Processes delivered with description of eventual corruption schemes and measures which could be taken to either prevent or mitigate corruption risks typical of the Company. G4-2 Specific emphasis was put on training the Company’s personnel in prevention and fighting corruption as a tool designed to prevent corruption and generate among the Company’s employees bias against corruption. Thus, in 2016 the Company’s department for protection of assets trained personnel in 59 business units of the Company (G4-SO4) in preventing corruption and conflicts of interest. Moreover, specific emphasis is put on proficiency enhancement of the Company’s employees who are directly involved in anticorruption activities. In 2016 one employee of the department for protection of assets took part in the training program in Rosatom’s training center. Information having regard to existing documents and other relevant data related to anticorruption activities is posted to the corporate Web site of the Company (Anticorruption Section) to ensure transparency of measures which are meant to prevent and fight corruption. No corruption offences were recorded by the Company’s department for protection of assets in 2016. G4-SO5.
6. Information Technologies
OKB “GIDROPRESS” has an advanced information and process infrastructure which includes a data network comprising all processing facilities and work stations of the Company and supports proper software and hardware used for Internet access purposes. Moreover, a network providing for high performance computations has been introduced (GRID). High availability of technical equipment within the working environment is characterized by the following: − Advanced hardware; − Automate design systems and calculation hardware; − Corporate design development as part of the unified information space.
77 VI. SUSTAINABLE DEVELOPMENT
“Sustainable development” shall mean a system of consistent and interrelated measures related to economical, environmental and human resources management activities based on the values and aimed at achieving strategic objectives of the Company subject to compliance with applicable concepts of safety and competitiveness of its products, conservation of resources and development of competences of the Company’s personnel.
1. Human Resources Management
Any up-to-date and ambitious company, in particular operating in the nuclear power industry, shall consider personnel its core assets. These are highly qualified and motivated employees seeking to generate and efficiently implement innovations. Availability of such human resources shall allow the Company to be confident about its decent future.
OKB “GIDROPRESS” management considers preservation and enhancement of its talent pool and in particular those possessing critical knowledge and skills its primary strategic goal in terms of implementation of the Company's and ROSATOM strategy. For the purpose of achieving its primary goal (ensuring competitiveness and safety of the Company's products) the following shall be the principal objectives to be pursued by OKB “GIDROPRESS” in the field of human resources management: − Ensuring availability of highly qualified employees, including but not limited to, retention thereof; − Establishing a proper talent pool training and development system; − Efficient training and development of personnel (first and foremost, providing for proper conditions for transferring knowledge and skills to a new generation of the Company's experts); − Developing and encouraging creative initiatives of the Company's personnel and meeting their research and development needs; − Increase in labor productivity; − Higher efficiency of OKB “GIDROPRESS” in terms of human resources management.
The key problems typical of high tech industries which the Company's management faces permanently when addressing the challenges related to human resources management are as follows: − Shortage of experts and workers of proper qualification at the labor market; − Non-popularity of engineers and technicians; − Poor training provided by the relevant higher education establishments; − Impact by the Moscow City labor market; − Impact by the demographic crisis in the late 1990s and early 2000s. In view of the negative impact of the foregoing factors the Company's management upholds the following position for the purpose of achieving its strategic goals in terms of human resources management: − Developing its own human resources; − Ensuring higher efficiency of its business by way of increasing labor productivity; − Intensifying its relations with scholars, students and graduates of the higher education establishments; − Promoting a positive image of OKB “GIDROPRESS” at the regional market.
The human resources management initiatives are based on the following principal strategies: − Compliance with applicable law of the Russian Federation;
78 − High level of safety culture; − Compliance with the corporate and professional code of ethics; − Higher social security.
The human resources management system is regulated by the Company's local rules and regulations (15 pcs). The overall personnel costs totaled RUB 2,576 MM in 2016, thus by 10% higher vs 2015 (RUB 2,334 MM), in 2014 – RUB 2,433 MM. The amount of costs per employee in 2016 totaled RUB 1.7 MM, thus by 13% higher vs 2015 (RUB 1.5 MM), RUB 1.5 MM in 2014. However, labor efficiency of the Company's personnel amounted to RUB 4.659 MM per employee, thus by 56% higher as compared with 2015 (RUB 2.981 MM), RUB 2.758 MM in 2014.
Principal Personnel Specifications
G4-10 The average headcount of the Company’s personnel amounted to 1,474 employees in 2016, where: − Management - 245 (17%); − Experts and officers - 875 (59%); − Workers - 354 (24%). Average Headcount of the Company’s Personnel by categories, persons. Category 2014 2015 2016 Management 293 238 245 Experts and officers 888 881 875 Workers 408 383 354
Average Headcount of the Company’s Personnel by activity types, persons. Activity type 2014 2015 2016 Research and development 716 698 684 Design supervision 137 137 138 Production 479 447 441
The Company’s personnel are engaged in a single region at the registered office thereof. G4-EC6 The portion of managers hired in the local population is 98%. Due to the requirement for design supervision of construction, upgrade and operation of reactor plants designed by OKB “GIDROPRESS” at least 10 employees annually live and work at the sites. The Company's employees are engaged under employment contracts. Over 97% of the Company's employees have made employment contracts which are effective perpetually. Fixed- term employment contracts are primarily needed when engaging and adapting talented full-time students.
Headcount by Employment Contracts and Patterns G4-10 Perpetual Fixed-term Year Overall headcount persons % persons % 2014 1554 1514 97,4 40 2,6 2015 1533 1494 97,5 39 2,5 2016 1540 1500 97,5 40 2,5
Share of women in the overall number of the Company’s managers in per cent 2014 2015 2016 14.5 14.4 13.4
G4-LA12 Staff Structure classified by Sex and Age, persons
79 under 30 30-50 over 50 Manage Worke Managem Worker Managem Experts Experts Year ment rs ent s ent wome wom wome wom wome wom wom wome wome men men men men men n en n en n en en n n 2014 1 4 73 144 2 21 23 125 144 193 44 126 14 95 162 174 57 152 2015 0 4 63 132 2 29 21 121 147 219 22 120 16 95 170 174 40 158 2016 1 4 52 116 0 24 23 123 163 237 20 117 13 90 180 171 40 166
The share of employees graduated from the higher professional educational establishments totals 76%. Recently, as a result of the policy pursued by ROSATOM and activities carried out by the Company's human resources the foregoing share increased.
Share of Employees Graduated from Specialized Higher Educational Establishments, % 2014 2015 2016 50 51 51
Some employees hold the degree of D.Sc. or Ph.D. in Technical or Economic Sciences.
Number of Employees holding Academic Degrees, persons. Degree 2014 2015 2016 Ph.D. 54 58 60 D.Sc. 11 9 9
A negligible trend towards reduction of the average age of the Company's employees has been observed in the recent three years. Such a slow renewal is primarily due to low turnover resulting from strict requirements to qualification of engineers and technicians and operating staff, restrictions in employment and high degree of security of the Company’s personnel.
Average Age by Staff Categories, years Staff category 2014 2015 2016 Overall 46 46 46 Workers 49 49 48 Experts 44 45 45 Management 45,4 47,16 47,22
The Company's management is renewed most considerably primarily due to the requirement of using up-to-date technologies when performing the relevant duties and ensuring high technical and management mobility and increasingly restrictive requirements to operating efficiency of all business processes. As a rule, rotation of the Company’s managers is supported by its own talent pool. G4-EC6 – The share of managers appointed from the Company’s talent pool is equal to 97%. In 2016 the Company’s headcount increased by 7 employees and as of January 1, 2017 totalled 1,540 employees (vs 1,533 employees as of January 1, 2016). In 2016 the Company employed 52 new officers (3.38%) whereof 16 newcomers just graduated from the higher educational institutions. In general, the Company’s headcount increased by 32 newcomers (under 35 years of age). G4-LA1
In 2016 67 employees were discharged from employment net of optimization, whereof: − 23 employees resigned − 9 officers retired − 35 employees were dismissed for other legal grounds The staff turnover (i.e. employees who resigned or retired) was equal to 4.35% in 2016.
80 Manpower Turnover by Age and Sex net of Headcount Optimization G4-LA1 2014 2015 2016 Turnover, Number of Turnover, Number of Turnover, Number of Category % employees % employees % employees dismissed, dismissed, dismissed, persons persons persons Overall, 2.6 45 5.4 81 4.35 67 Where: Men 1.3 23 3.2 34 3.70 57 Women 1.3 22 2.2 47 0.64 10 Breach of workplace - - 0.1 2 0.06 1 discipline Under 30, 0.8 14 1.41 21 0.51 8 Where: Men 0.35 6 1.01 15 0.45 7 Women 0.45 8 0.40 6 0.06 1 30-50, 1.3 23 2.96 44 1.29 20 Where: Men 0.7 12 0.67 10 1.10 17 Women 0.6 11 2.29 34 0.19 3 Over 50, 0.4 8 1.07 16 2.53 39 Where: Men 0.23 5 0.60 9 1.88 29 Women 0.17 3 0.47 7 0.64 10 Breach of workplace - - 0.06 1 0.06 1 discipline
G4-LA16 No complaints were filed, processed or settled using dedicated corporate procedures in the reporting period in relation to existing labour practices.
Remuneration
The Company’s remuneration plan complies with the Corporate Regulations for Remuneration (the “Regulations”). The aforesaid Regulations were developed in view of the Unified Remuneration Scheme approved by ROSATOM and introduced for the purpose of harmonizing the existing remuneration plans available in ROSATOM companies. The main purpose of the Unified Remuneration Scheme consists in providing interdependence of remuneration and employee's performance (KPIs). The existing remuneration scheme despite the impact of the Moscow City labor market guarantees suitable wages in the region. The average remuneration of the Company's employee (RUB 114.8 K) is the highest one in Podolsk and Podolsk District. The average remuneration payable by the Company is 3.17 times higher than the average remuneration in Russia (RUB 36.2 K per mensem in 2016 according to the Federal State Statistics Service) and 8.4 times higher than the poverty level in the town and in the vicinity thereof (RUB 12.592 K per mensem). G4-EC5 Pursuant to the industry, nuclear power and research and development sectoral agreement for 2015-2017 the Company fixed the minimum monthly salary of the 1st grade worker.
The average salary payable to any employee shall include the following: − Basic salary or pay; − Indexation payment; − Integrated commercial incentive; − operating bonus; − Annual bonus payable upon assessment of KPIs;
81 − One-time bonuses payable for specific achievements, extra pays and charges as provided by applicable labor law. The basic salary is determined depending on the position held (grade) as provided by the remuneration matrix. The integrated commercial incentives are fixed in view of the qualification, performance and potential of any respective employee. Any operating bonus is accrued for achievement of targets set with due regard to the actual scope of work completed and adherence to applicable timeframes.
Average Remuneration by Employee Categories, RUB K Category 2014 2015 2016 Workers 65.9 75.6 78.6 Experts 108.8 94.1 96.9 Management 177.3 162.0 163.6 Average remuneration 104.8 100.7 114.8
Correlation of the Company’s Performance with Remuneration payable to the Management
As from 2010 annual bonuses payable to the Company's management are based on KPI assessment. KPIs of the Company’s CEO are assessed through KPIs of managers of various levels, thus allowing it to pursue the Company's and ROSATOM strategic objectives. KPIs are set in the relevant KPI maps. The main purposes of KPIs are as follows: − Establishing the system of targets and assessment thereof; − Ensuring higher efficiency of strategic objective pursue; − Setting targets and remuneration of each key employee of the Company; − Ensuring higher efficiency of production collaboration of the Company's personnel in order to achieve the KPIs set; − Providing for higher efficiency of the existing management system of the Company. In 2016 KPIs were set for all managers of the Company up to the Head of the Department (90 employees). In addition to financial, economic and production KPIs certain targets were set in order to assess performance in terms of sustainable development. In particular, these included the lost time injury frequency rate (LTIFR) compared vs the previous 3-year period, involvement. The procedure used to set and assess KPIs is based on the Unified Industry Regulations (Managing Performance of ROSATOM Employees and its Companies) enacted by the Company in 2013. The KPI assessment procedure includes execution of all the relevant reports and holding discussion with the immediate manager as to the achievement of KPIs set and his or her feedback. The Company's CEO KPIs are assessed by the CEO of the Supervisor and approved by the Head of the Directorate for Nuclear Power Industry of the State Atomic Energy Corporation ROSATOM. The Company's Deputy CEO KPIs are assessed by functional executives and approved by the Supervisor’s CEO.
Number of Managers with KPIs set, persons. 2014 2015 2016 127 93 90
The amount of bonuses paid for the achievement of KPIs set in 2016 totaled RUB 257.593 MM. KPI Bonuses, RUB MM. 2014 2015 2016 215.969 213.2 257.593
82 As a result of introduction of KPIs the Company's managers became more focused and improved their performance when pursuing primarily strategic objectives set by the Company and ROSATOM due to availability of interrelated targets set for the managers and key employees and incentives applied to the managers with KPIs set as appropriate.
Moral Incentives The Company has always applied moral incentives based on government and industry awards and badges as well as regional and municipal awards and incentives enjoyed by the Company. Employees making considerable contributions to the Company’s development are entered annually into its Book of Honor. The State Atomic Energy Corporation ROSATOM continues to keep with this tradition by introducing various corporate badges, certificates of merit, acknowledgements and recognition letters. Recently, a four-level system of moral incentives was introduced, in particular: − Government and state awards and titles of honor; − Corporate badges, certificates of honor, acknowledgements and recognition letters; − Municipal awards; − Certificates of honor and acknowledgments by OKB “GIDROPRESS”. The prompt incentives which correspond to the employee's performance and his or her title promote involvement in the achievement of corporate objectives and enhance interest in the higher personal performance and that of the Company and ROSATOM. In 2016 OKB “GIDROPRESS” human resources prepared proper materials and awarded the following:
Awarded, By the State Atomic Energy Corporation Rosatom persons Badge “Nuclear Power and Industry Veteran” 5 1st class award pin “For Merit to the Nuclear Power Industry” 1 2nd class award pin “For Merit to the Nuclear Power Industry” 2 3rd class award pin “For Merit to the Nuclear Power Industry” 3 Anniversary medal “70-Year Anniversary of the Russian Nuclear Power 2 Industry” Certificate of honor 11 Certificate of acknowledgement 7 Recognition letter executed by S.V. Kirienko 15 Diploma “Man of the Year in Rosatom”, industry nomination prize winner 3 Diploma “For Participation in the Industry Contest”, bonus payment 1
Awarded, By JSC Atomenergomash persons Certificate of honor issued by JSC Atomenergomash 20 Certificate of acknowledgement issued by JSC Atomenergomash 17 Awarded, By the Governor of the Moscow Region (Podolsk Urban District) persons
Certificate of acknowledgement 1
By Podolsk Administration, 2016 Certificate of acknowledgement executed by the Head of Administration 1
By FNPC NIIIS named after Y.E. Sedakov, Federal State Unitary Enterprise Diploma issued to attendees of the Research and Development Conference of Young Professionals 2
83
By JSC Concern Rosenergoatom, 2016 Gold Medal of JSC Concern Rosenergoatom “For the Contribution to the Safety of Nuclear Power Plants” 8
Awarded, By the Company persons Anniversary badge “70-Year Anniversary of OKB “GIDROPRESS” 233 Entry in the Book of Honor 6 Certificate of acknowledgement issued by OKB “GIDROPRESS” 442 Certificate of honor issued by OKB “GIDROPRESS” 48 Bonus payment for participation in the contest 6
At present the Company has 6 employees awarded the Merited Designer of the Russian Federation Title of Honor and 18 employees holding various state awards.
Talent Pool
The Company annually generates a talent pool comprising those who may be appointed to the executive officers and act as senior or mid-level managers (the “Talent Pool”). Related activities include the following: − Selecting employees (or candidates) with high qualification and leadership skills; − Candidate career planning; − Developing the candidate development program; − Implementing the candidate development and career plan. Availability of at least one qualified candidate per each office in the Company’s management is deemed critical for assessing efficiency of the Talent Pool development. For practical training purposes to the extent of skills and knowledge any respective candidate has to possess in order to be appointed to any respective office the following forms and methods are employed: − Acting as a manager for the duration of his or her unavailability; − Practical management training programs by dedicated courses at the industry training centers; − Participating in arranging and holding meetings and conferences at the national and international level; − Attending business meetings, negotiations and discussions. Training of the Company’s talent pool under industry-specific programs (Rosatom’s Heritage, Rosatom’s Capital and Rosatom’s Talents) is deemed an important phase in training the Company’s managers of various levels. Number of employees included in the industry talent pool (persons) Level 2014 2015 2016 Rosatom’s Heritage 0 0 0 Rosatom’s Capital 4 2 4 Rosatom’s Talents 1 2 2
Share of employees appointed to vacant offices from the Company’s talent pool in % 2014 2015 2016 35 50 50
84 Personnel Training
The Company has been continuously cooperating with professional higher educational institution (MPEI, Bauman Moscow State Technical University, MEPhI) as follows: − Participating in the Doors Open Day and more recently Vacancy Fairs held by the higher educational establishments; − Involving students under practical training and externship programs; − Employing senior students for one year with an individual schedule; − Participating in the Career Day event held by ROSATOM.
Number of Students involved under Practical Training Programs, persons 2014 2015 2016 6 14 31
The Company employs experts for the benefit of its principal business units primarily from those graduating from MPEI, Bauman Moscow State Technical University and MEPhI. In average, the share of such graduates amounts to 70% of the overall number of newcomers. In 2016 the Company employed 12 graduates thereof.
Number of Graduates of Professional Higher Educational Institutions employed by the Company, persons 2014 2015 2016 20 15 12
Share of Design Engineers graduated from Professional Higher Educational Institutions and employed by the Company, % 2014 2015 2016 74 74 75
A differentiated salary which depends on the qualification level (bachelor, specialist or master) and working experience any respective employee holds his or her office in the Company or any other entity operating in the nuclear power industry is one of the most efficient tools used by the Company to engage talented newcomers. The Company’s management promotes upward move in the career of any efficient newcomer for the purpose of retaining and involving the same in the self-guided work with the higher level of responsibility. Thus, in 2016 99 employees under 35 years of age enjoyed career promotion.
Number of employees under 35 who enjoyed career promotion, persons. 2014 2015 2016 68 103 99
The personnel training and development system operated by OKB “GIDROPRESS” provides for an integrated approach to the permanent development of workforce for the purpose of achieving and maintaining high performance in terms of manufacturing troubleproof and competitive products. Training is organized with due regard to the objectives and in compliance with the Company's and ROSATOM strategy, state of the art, management technologies and arrangements. The Company considers investments in personnel training as a precondition of sustainable development in the long term, establishment of a common set of values and higher value of workforce. Generally, in 2016 the Company spent RUB 7.295 mln for training and development of its personnel. In 2014 and 2015 respective expenses totaled RUB 8.549 mln and RUB 8.31306 mln (accordingly). The foregoing reduction in expenditures related to personnel training and development was due to implementation of the industry PORA program with flexible training 85 format which provided for the use of free-of-charge remote programs developed on the basis of industry training centers. G4-LA10 Training is provided using the following approaches: − External training; − Internal training. External training involves industry advanced training institutes and other establishments rendering educational services. Internal training provides for the following: − Annual training at the Company's premises as provided by the existing technical training programs; − Training sessions by teams held at the Company's premises in accordance with previously approved training programs. For the purpose of developing professional and technical skills and corporate competences the Company renders assistance in and promotes the following: − Attending international, industry and local research and development conferences, workshops, round tables and consultations; − Undergoing training at the higher educational institutions and obtaining a second university degree as an off-campus student; − Attending the Company’s externship and working on PhD as a postgraduate degree seeker; − Sharing best practices related to technical issues at the meetings of research and development committees or subcommittees or briefing sessions; − Self-education. Personnel training and development is regulated by the following principal rules and regulations of the Company: − Corporate Regulations for Personnel Training; − Corporate Regulations for Certification of Managers and Specialists in Nuclear Power Safety; − Corporate Regulations for Quality Management System and Certification of Welders; − Corporate Regulations for Quality Management System and Certification of Supervisors. Pursuant to the foregoing documents the following is made available: − Technical training plans developed per business unit; − Occupational health training programs per each category of employees; − Arc welder training and certification programs approved by the umbrella material organization; − Supervisor training and certification programs (various inspection methods) approved by the umbrella material organization. In 2016 training was provided by various fields, personnel categories and lines of the Company's business. As such, the Company cooperated with specialized training centers (CICE&T, MEPhI, ROSATOM Corporate Academy, JSC NIKIMT-Atomstroy, AEM etc), advanced training institutes, academies and other organizations and held training sessions using its proprietary internal training programs. In 2016 354 workers and 561 managers and specialists attended the training sessions arranged by the Company. 183 employees attended various courses, workshops and training sessions at the industry educational centers. 43 managers and specialists have passed pre- certification training and certification under the rules of Rostechnadzor. 135 employees engaged in operation and maintenance of hazardous manufacturing facilities were made subject to regular knowledge assessment. Number of employees trained throughout the year, persons. Personnel category 2014 2015 2016 Workers 446 329 354
86 Managers 182 194 224 Specialists 341 359 337
The Company’s business units regularly conduct training sessions using their own training programs.
Number of employees trained throughout the year under internal training programs, persons 2014 2015 2016 1094 1139 1146
Average number of hours per employee trained per annum by personnel categories G4-LA9 Personnel category 2014 2015 2016 Total Total Total (hours) (hours) (hours) Workers 73.96 71.61 45.14 Managers 83.67 95.77 43.19 Specialists 79.50 61.40 37.02
134 employees of the Company were trained under remote training programs (State-of- the-Art Knowledge Management Technologies employed by Rosatom, RPS Base Training Session, Methods for RPS Project Implementation etc) to implement the industry PORA program to the extent having regard to personnel training. 75 managers and specialists were engaged in the full-time training program “Rosatom’s Values” which was implemented jointly with JSC Atomenergomash as part of introduction of those values in the corporate environment. A HR project for young specialists related to Rosatom’s values (My Way. One Hour with the Company’s Manager) was implemented in 2016 to ensure integration of Rosatom’s values into the critical processes having regard to human resource management and improvement of the corporate culture where five top managers of the Company included in the TOP-1000 narrated their stories “Route to Success”. In 2016 OKB “GIDROPRESS” commenced training sessions for the students of the Department “Nuclear Reactors and Units” of the Bauman Moscow State Technical University. These are trained under the agreement made by and between the Bauman Moscow State Technical University and JSC Atomenergomash and providing for strategic partnership of the aforesaid two organizations to the extent having regard to training researchers and engineers and performing joint research work in the field of power and dedicated nuclear units and reactors.
The Company’s experts participated as lecturers in the training sessions attended by specialists from the states seeking to introduce nuclear power into their economies based on CICE&T in Obninsk (Bangladesh, Vietnam and Turkey) and advanced training courses at the Bauman Moscow State Technical University (Nuclear Power Plants).
Personnel Assessment As from July 2010 OKB “GIDROPRESS” has participated in the project implemented by the State Atomic Energy Corporation ROSATOM and related to annual assessment of performance of its employees. The Company applies the Unified Industry Regulations for Managing Personnel Performance of ROSATOM and its Group Companies. In 2010 Record performance assessment covered 68 managers of the Company. In 2016 90 managers (head of the department and lower levels) were made subject to the annual Record performance assessment. G4-LA11 Number of managers involved in the Record annual performance assessment, persons
87 2014 2015 2016 120 (Deputy Heads of Section 87 (head of the department 90 (head of the department and lower levels) and lower levels) and lower levels)
The employee’s professional competences are also assessed through certification procedures (i.e. evaluation of performance of any relevant employee by applying standards applicable to any respective office). Certification is regulated by the local standards of the Company and Labor Code of the Russian Federation. Certification results shall be supported by any relevant document issued by a standing certification committee attaching recommendations as to reasonableness of qualification or category modification or appointment to another office in the Company. For the purpose of ensuring annual assessment of professional status of its personnel the Company developed applicable Evaluation Regulations. Upon such an assessment a certificate is issued specifying the final level of efficiency of any relevant employee.
2. Social Policy In 2016 the Company continued to grant social benefits to its employees and retirees in addition to those provided by applicable law of the Russian Federation as part of implementation of Rosatom’s Global Social Welfare Policy. The aforesaid policy pursues the following objectives: − Providing convenient working conditions and proper environment for generating the Talent Pool; − Enhancing the position of OKB “GIDROPRESS” at the labor market for the purpose of involving talented specialists and newcomers; − Providing for extra social benefits and safeguards for employees, their family members and retirees; − Promoting proper and healthy living among employees of OKB “GIDROPRESS”. G4-11 The existing Bargaining Agreement expands the range of guarantees and benefits available to the Company’s employees pursuant to applicable law of the Russian Federation and applies to all employees. G4-LA8 The employer’s and shop-floor union organisation’s obligations related to health and safety are described in Section 5 of the Bargaining Agreement (Health and Safety Section). The measures for improvement of the working environment are listed in the Health and Safety Agreement attached to the Bargaining Agreement in Exhibit 2 which was made upon certification of work places in terms of the existing working environment. The Company established the Health and Safety Committee which included the Company’s managers, employees of the shop-floor union organisation and the Company’s personnel. The shop-floor union organisation’s employees and authorized representatives or agents responsible for health and safety shall be granted time and an opportunity to take part in the development, supervision and improvement of the occupational health and safety management system.
The Company lays specific emphasis on mass sporting events which are meant to promote a healthy lifestyle among its employees. The Company’s personnel is engaged in various sporting events at the sites leased by the Company and may use the pool, tennis courts, gym and skating rink on favourable terms. There are three fitness groups available at the corporate territory by the following sports: recreative gymnastics, pilates, aerobics and cheerleading. Over 50 employees are granted an opportunity to be involved regularly in the aforesaid activities. Annually from May to November the Company’s employees who prefer team sports play at the field available within the corporate territory. Tours are organized for the families and children of the Company’s employees and retirees. As part of mass cultural work 12 tours were organized in 2016, including trips to the theatres, exhibitions and circuses which involved over 550 people (Company’s employees and their family members).
88 Topical events for children were organized as well being one of the focus areas in the mass cultural work performed by the Company which resonated with children and their parents. And these continue to grow in popularity. Drawing competitions, master classes and children’s parties are held as well dedicated to the Children’s Day and Farewell to Winter holidays. The chorus festival hosted by Rosenergoatom became a traditional event. The Singing Hearts chorus of the Company ranked second in the contest. In September 2016 the 2nd Division Festival of the Club of the Funny and Inventive (KVN) was held among the companies of the nuclear power industry which involved teams of Atomenergomash division. The Company’s team “Nuclear Kettle” took the prize in the Most Creative Team nomination. In 2016 over 340 employees and their family members received health resort treatment at various spa resorts. 42 children spent their holidays in the children’s health camps. Over 300 employees were paid social benefits as provided by the Assistance Program implemented by OKB “GIDROPRESS”.
Number of employees, their family members, children and retirees enjoying benefits provided by the corporate welfare programs, persons Program 2014 2015 2016 Recreation and health resort treatment received by the Company’s employees and their family members, 330 245 340 including: - Children’s health camps 45 35 42 - Spa resorts for retirees 21 23 14 Number of retirees who have been paid quarterly benefits, 535 600 580 persons
Outpatient Clinic No.4 of Hospital No.85 of FMBA of Russia operates within the Company’s territory for the benefit of its employees and retirees. The Company annually wishes its employees’ children a happy New Year. It purchases New Year’s gifts and offers its best wishes at home with Santa and the Snow Maiden. Presents are given annually to all women employed by the Company on International Women’s Day. The Company actively supports retirees. There is a Council of Veterans operating in OKB “GIDROPRESS”. In addition to quarterly social benefits retirees are granted access to the corporate outpatient clinic, issued subsidized vouchers for treatment and recreation and take part in mass cultural events. Retirees awarded the honorary title of a veteran of the nuclear power industry are rendered assistance in admission to hospitals of FMBA of Russia in Moscow. The Hero of the Day is held on a quarterly basis within the territory of OKB “GIDROPRESS” for retirees with congratulations and a tea party. In accordance with the Industry Agreement the Company transfers funds on a monthly basis for respective arrangements and holding of mass cultural and sporting events.
Funds allocated for mass cultural and sporting events, RUB mln Description 2014 2015 2016 Funds transferred to the account of the trade union organization for health and fitness and mass cultural events, including: 7.2 8.9 13.2 - Health and fitness 2.4 2.4 5.3 - Mass cultural events 4.8 6.6 7.9
The trade union organization continuously organizes tours for the Company’s personnel and retirees. For social welfare expenditures see the table below. Social welfare expenditures, RUB mln. Description 2014 2015 2016 Amount Amount Amount Persons
89 Voluntary medical insurance 10.6 10.5 10.5 1,440 Insurance against industrial accidents and 0.03 0.6 0.6 1,440 occupational diseases Health resort treatment and recreation for 10.1 8.4 10.7 340 the benefit of employees’ children Mass cultural and sporting events 9.7 11.3 13.5 440 Veteran and retiree support 7.3 8.5 7.3 565 Social benefits 5 5.2 3.2 300 Other 5.57 9.6 7.6 - Total 48.3 54.1 53.4
In 2017 the budget of the Company’s social welfare programs is expected total app RUB 53 mln.
3. Youth Policy
One of the top priority goals pursued by the Company consists in employment and training of young professionals within the framework of the corporate program of Rosatom which provides for efficient alternation of generations using various methods of engagement of newcomers. These include system work with high schoolers and students based on career guidance, cooperation with dedicated higher educational establishments and reservation of young professionals by the Company. The work with high schoolers includes the following: − Doors Open Days for the high schoolers − Issuing referrals to the dedicated higher educational establishments for the purpose of targeted enrolment In 2016 the Doors Open Day was attended by 70 high schoolers.
Number and share of employees under 35 years of age in the overall headcount Year Headcount Share in headcount, % 2014 439 28.2 2015 464 30.3 2016 444 28.8
Share of employees under 35 years of age by categories, % Category 2016 Workers 12.4 Specialists 77.0 Managers 10.6
For the purpose of pursuing the objective of development and promotion of creative work by the Company's personnel and meeting their research and development needs OKB “GIDROPRESS” annually holds a conference attended by young professionals making their presentations and answering the questions of both experienced and qualified experts of the Company and the best technicians and researchers representing other entities of the industry. Thus, in 2016 OKB “GIDROPRESS” held the 18th annual industry scientific and technical conference for young professionals specializing in nuclear power plants. The Company has its own externship where young professionals may develop their skills and maintain their theses. For the purpose of ensuring professional and psychological adaptation and retention of young professionals the following approaches are used: − One year practical training under the supervision of a tutor; − Certification with availability of higher remuneration and assignment of the next grade; − Participation in an annual conference for young professionals;
90 − Externship of OKB “GIDROPRESS”. In report year 16 newcomers attended practical training sessions under the supervision of highly qualified tutors.
Number of young professionals working as trainees with tutors, persons 2014 2015 2016 17 22 16
Training and certification of young professionals is provided pursuant to applicable rules and regulations approved by the Company. For the purpose of accomplishing large-scale nuclear industry development projects and as part of programs providing for training of specialists of majors needed the Company takes part in implementation of The Establishment and Development of the National Nuclear Research University (MEPhI) Corporate Program. In 2017 the Company's employees were engaged as lecturers by MEPhI. The Company’s young professionals extensively participate in trade union and sports activities thereof.
4. Occupational Health and Safety
As provided by the sectoral agreement the Company has been investing in projects aimed at improving working conditions and safety at least 0.5% of its manufacturing costs for three years now. In 2016 these projects amounted to RUB 29.6 MM or 0.9%.
Health and safety related expenses, RUB mln 2014 2015 2016 Forecasted, 2017 20.9 20.4 29.6 35.0
The Company’s management considers its principal objective in terms of occupational health and safety mitigation of negative impact which manufacturing processes have on its personnel health.
Health and Safety Arrangements
The Company’s business having regard to health and safety is governed by applicable laws and regulations, rules and standards approved by OKB “GIDROPRESS” and specifying requirements to health, safety and industrial hygiene.
The Company as well has its own occupational health subdivision carrying out its business as provided by the Regulations for the Occupational Health Service. This Service performs the following work: − Managing work aimed at ensuring compliance with occupational health rules and regulations by the Company’s employees; − Supervising compliance in departments with applicable occupational health laws and regulations, Collective Bargaining Agreement, occupational health contract and other local regulations approved by the Company; − Taking measures aimed at preventing on-the-job injuries, occupational diseases and those triggered by workplace factors and improving working conditions; − Managing and participating in investigations of workplace accidents; − Notifying and consulting the Company’s employees, including but not limited to, its CEO in relation to any issue having regard to occupational health; − Considering and distributing best occupational health practices and holding related promotions; − Pursuing technical policies aimed at ensuring proper functioning of the quality management system in Occupational Health Service; 91 − Pursuing technical polices aimed at developing physical infrastructure making it possible to perform all measurements required by the Occupational Health Service.
The Company’s Occupational Safety and Health Division has been granted Certificate of Validation of Laboratory Instruments No.95.0243-2015 of October 29, 2015 (according to the register of laboratories of Rosatom’s companies which passed successfully instrument validation tests).
The Company performs audits and inspections of plant, machinery and tool technical condition as well as applicable production processes in order to evaluate compliance with applicable occupational health rules and regulations, efficiency of ventilation systems, condition of sanitary engineering installations, welfare facilities, collective and individual protection equipment. Upon any respective audit or inspection certificates are executed and action plans (if any) issued providing for remediation of defects so identified.
Pursuant to applicable rules and regulations the Company’s personnel is provided with working clothing, shoes and other individual protection accessories as well as flushing and/or decontaminating materials. Employees operating in the harmful work environment are served with milk. The prospective candidates seeking jobs in the Company have to undergo preliminary medical examination. Those employees who operate in the harmful or hazardous work environment (i.e. being subject to physical and chemical agents) undergo annual medical examinations as provided by the applicable list of personnel categories involved in this process. No occupational diseases have been ever registered by the Company. Employees who upon any respective medical examination are not allowed to continue to do their jobs in the harmful or hazardous work environment will be prevented from performing any respective work.
The Company continuously improves its working and occupational health conditions.
G4-LA6 On-The-Job Injuries
In 2016 no workplace accidents were registered by the Company.
Injury rate = Number of Workplace Accidents/Headcount = 0 / 1502 х 1000 = 0
Accident frequency rate = Number of Days of Disability/Number of Accidents = 0
In 2016 the lost time injury frequency rate was equal to zero:
Number of injured in 2016 – 0. Aggregate work hours in 2016 – 2,632,926.
LTIFR = (0 х 1000000) / 2632926 = 0
In 2016 the aggregate time lost as a result of occupational accidents totaled 0.
Occupational Diseases and Disability In 2016 (like in 2014 and 2015) no occupational diseases were registered by the Company. Employees who upon medical examination are not any more allowed to perform any work related to exposure to hazardous or harmful workplace factors shall be discharged from the relevant obligations.
Occupational disease rate
92 2014 2015 2016 0 0 0
Personnel Radiation Exposure
The Company uses enclosed ionizing radiation sources only. The individual contamination control of the Company’s personnel is provided pursuant to Program of In-Process Radiation Safety Supervision in the Company’s business units No.5.06-001 by employing DTU personal radiation monitors and DVG-02T unit as well as DVGI-8D individual dosimeters. There are no employees subject to personal radiation risk of at least 10-3. The Company does not use ARMIR unit due to immaterial headcount (max 100 employees) of Team A being subject to contamination control procedures. The individual radiation risk is assessed using procedures described at http://armir.nrer.ru.
Personnel Radiation Risk Specifications Item 2014 2015 2016 Average annual effective radiation dose 0.1 mSv 0.17 mSv 0.10 mSv Number of accidents with radiation doses exceeding the 0 pcs. 0 pcs. 0 pcs. limits set by applicable rules and regulations Max allowable individual external body radiation dose 0.3 mSv 0.46 mSv 0.18 mSv Share of the employees being subject to individual 0 % 0 % 0 % contamination control and registered in ARMIR system Share of employees being subject to negligibly minor risk 100 % 100 % 100 % Share of employees being subject to lifetime risk 0 % 0 % 0 %
In 2016 the Company’s Occupational Health Service performed 2,445 measurements of gamma and X-ray radiation levels. No accidents involving excess of the max allowable radiation dose were registered in 2016.
Occupational Safety
The Company is a business entity operating hazardous facilities registered by the Central Department of the Federal Service for Environmental, Technological and Nuclear Supervision (Registration Certificate No.P01-00058). These facilities include the following: − Gas supply network operated by OKB “GIDROPRESS”; − Workshop 5.01 site. The Company has been issued License No.VH-02-025711 of June 26, 2015 entitling it to operate fire and explosion dangerous and chemically hazardous manufacturing facilities (hazard class I, II and III). Moreover, there are technical facilities used by the Company which are part of experimental and research test benches due to their specifications regulated by Federal Law No.116-FZ. The Company pursues the following principal objectives in terms of occupational safety: − Maintaining and increasing the available level of occupational safety at the Company’s hazardous facilities; − Coordinating activities aimed at preventing accidents at the hazardous facilities and ensuring availability of localization and mitigation of related consequences; − State registration of the Company’s hazardous facilities and entering the same in the industry ledger of the state register of hazardous facilities; − Issuing applicable guidelines and regulations for occupational safety and carrying out work aimed at improving the industry occupational safety management system;
93 − Supervising compliance with applicable rules and regulations and occupation safety at the Company’s hazardous facilities; − Information support of the Company’s business in terms of occupational safety complying with confidential information non-disclosure guidelines. The Company’s in-process occupational safety supervisory service performs the following work: − Ensuring compliance with the Unified Industry Regulations (Registration of Facilities regulated by ROSATOM and Maintenance of the Industry Ledger in the State Register of Hazardous Facilities); − Maintaining a data base of hazardous facilities of the Company and related plant, buildings and structures based thereon; − Supervising the following: а) Compliance with licensing terms and conditions related to occupational safety; b) Construction, renovation, overhaul, refurbishment, preservation and liquidation of hazardous facilities as well as repairs of technical facilities used by the same; c) Elimination of hazardous facility accident and emergency sources; d) Prompt testing and certification of devices and units used at the hazardous facilities as well as repairs and calibration of measurement equipment; e) Availability of documents evidencing evaluation duly performed and compliance of such devices and units used at the hazardous facilities with applicable rules and regulations; f) Compliance with orders issued by the local authorities of the Federal Service for Environmental, Technological and Nuclear Supervision and remediation of defects identified by the industry internal audit bodies; − Auditing occupational safety at the hazardous facilities, including but not limited to, by visiting and inspecting the sane; − Managing development of and approving occupational safety programs and action plans and other rules, regulations and guidelines issued by OKB “GIDROPRESS” and related to occupational safety; ensuring compliance with and implementation of the aforesaid documents; − Suspending operations at the hazardous facilities as soon as any life or health hazard arises or upon any accident occurring thereat; − Supervising prompt certification of the Company’s personnel to the extent of occupational safety and participating in the work performed by certification panels; − Participating in and managing investigations of accidents and emergencies at the hazardous facilities and analysis of eventual causes; − Notifying the Company’s business units of any amendment made in the occupational safety laws and regulations; − Developing the Company’s occupational safety policy, regulations for the occupational safety management system and in-process occupational safety control and supervision at the hazardous facilities or any other corporate guideline related thereto; − Participating in execution of reports related to compliance with the corporate occupational safety action plan and delivering the same to the Company’s management for approval; − Filing with the Federal Service for Environmental, Technological and Nuclear Supervision and JSC Atomenergomash documents and materials related to occupational safety as appropriate.
Number of industrial accidents and emergencies 2014 2015 2016 0 0 0
Non-compliance with safety requirements identified upon external audit and status of respective remedial work: State supervisory 2014 2015 2016 authority
94 Identified Remedied Identified Remedied Identified Remedied Federal - - 0 0 - - Environmental, Industrial and Nuclear Supervision Service
5. Environmental Safety and Compliance
Designing reactor plants is the principal business of OKB “GIDROPRESS”. As such, the Company’s business has minor impact on the environment within and adjacent to its premises. Pursuant to the applicable law of the Russian Federation the Company developed, made all the necessary filings and obtained all required environmental permits issued by the regulating authorities, including but not limited to, a buffer area project where all hazards (i.e. noise, electromagnetic radiation, effluents) having impact on the residential development were described. Pursuant to the schedule duly approved, the relevant hazard level of exposure supervision activities are performed. In 2016 measurements designed to identify the content of nitrogen, dust, lead, chrome and manganese oxides in the air were made at the boundaries of the buffer area. No excess of the threshold level value acute exposure upon those pollution measurements results was identified. OKB “GIDROPRESS” promptly pays for the negative impact it has on the environment and has no outstanding debt as to statutory payments related to environmental protection and safety.
G4-EN3 Power Consumption Target: reduction of utility consumption by 3% under similar conditions vs actual consumption in 2015 (status: failed) Power supply expenditures, RUB mln 2014 2015 2016 Forecasted, 2017 44.17 41.803 50.414 54.447
Power consumption, GJ/RUB mln: 2014 2015 2016 Forecasted, 2017 Total Total Heat Electric Gas Total Total power 94208/ 84071/ 20570/ 31431/ 44564/ 96536/ 93639/54.447 44.17 41.803 7.944 34.010 8.46 50.414
Savings, GJ/RUB mln: 2014 2015 2016 Forecasted, 2017 Total Total Heat Electric Gas Total Total power 247/ 10137/ -4605/ -1884/ -2182/ -11094/ 2896/4.033 3.51 2.367 -2.407 -5.015 -1.189 -8.611 No other utilities were consumed in 2016.
G4-EN8 Water Consumption The Company pursues the policy of sustainable use of natural resources, including but not limited to, efficient consumption of water supplied for production and business purposes. The public water supply of Podolsk city is its principal source of potable water supply. Process water is supplied by the adjacent company (JSC ZiO Podolsk). No water supply sources are located in the protected areas or represent any hazard in terms of biodiversity preservation.
95 Water consumption, k m3/RUB mln: Source 2014 2015 2016 Public water supply 25.90/ 21.68/ 23.14/ 0.423 0.376 0.431 Effluents - - - Underground water - - - Surface water 1.29/ 0.04/ 0.76/ 0.0066 0.0002 0.0012
Total effluents, k m3/RUB mln: Receiving facilities 2014 2015 2016 Sewage system operated by Vodokanal 27.19/ 21.72/ 23.9/ Municipal Unitary Enterprise 0.2 0.239 0.277
Waste Disposal Pursuant to the applicable law of the Russian Federation the Company developed draft regulations for waste generation and applicable disposal limits and obtained Permit No.56/642 of April 8, 2014 authorizing it to generate and dispose of waste within the limits prescribed. Dedicated companies duly licensed to perform this kind of work are involved to remove and dispose of the waste generated as a result of the Company’s business. These contractors render the Company their services under respective agreements made therewith. The calculations made available hereinbelow were performed based on the acceptance certificates delivered by the contractors.
Waste Weight by Type and Disposal Method, t G4-EN23 2017 2014 2015 2016 Waste type/disposal method estimate Share of waste processed using this method Hazardous 224.807 29.84 39.30 36.00 Non-hazardous 374.5 592.9 657.1 620.0 Reusable 347.151 359.4 407.6 400.0 Composting 0 0 0 0 Extraction of valuable components 0 0 0 0 Burning 0 0 0 0 Deep ground discharge 0 0 0 0 Landfills 226.92 233.49 244.4 240.0 Storage at the Company’s sites 0 0 0 0 Other 0 0 0 0
Air Emissions Pursuant to applicable law of the Russian Federation the Company developed draft regulations for max permissible air emissions and obtained Permit No. 54/515МО of July 17, 2015 authorizing the same to discharge harmful substances in the air valid till May 12, 2020. Data regarding air emissions is made available based on instrumental measurements made by dedicated companies at the specific sites of the Company. The Company’s office premises have no fixed sources of air emissions. The stationary sources of air emissions include hot water boiler, main and auxiliary equipment maintenance sites, welding areas, machine pool of the manufacturing site, metal thermal treatment spaces, gas cutting areas, carpenter shop, painting area, test benches and labs. The non-stationary sources of air emissions are represented by parkings. The calculations made available hereinbelow were performed based on data obtained with respect to specific sites.
96 NOx, SOх and other material contaminant air emissions, t: G4-EN21 Газ 2014 2015 2016 2016 Forecasted, (target) (actual) 2017
NO2 2.749 3.926 3.50 3.044 3.50
SO2 0.003 0.005 0.003 0.005 0.005 Persistent organic ------pollutants (POP) Volatile organic 1.736 1.578 1.60 1.413 1.45 compounds (VOC) Hazardous air pollutants ------(HAP) Solid particles (SP) 0.622 0.429 0.60 0.509 0.50 Other 0.427 0.323 0.4 0.323 0.35
Environmental Protection Costs The environmental protection costs are incurred as provided by Federal Law No.7-FZ of January 10, 2002 “Environmental Protection” by the following environmental activities: air protection and prevention of climate changes; waste water collection and treatment; waste removal and disposal; environmental protection from noise, vibrations and other physical hazards; laboratory environmental control of impact the Company has on the environment; payments for negative impact on the environment. In 2016 no penalties were applied to the Company for violation of environmental laws of the Russian Federation or any damage caused to the environment. Fines and nonfinancial penalties for violation of environmental laws G4-EN29 Description 2014 2015 2016 Penalties, RUB MM 0.16 0 0 Non-financial sanctions (number of incidents) 0 0 0
Costs related to prevention of pollution and operation of environmental protection management system, RUB MM: G4-EN31 2014 2015 2016 2017 estimate 0.57 1.8 2.07 2.2
97 VII. COMMUNICATIONS. STAKEHOLDER ENGAGEMENT
1. Communications External Communications (2016) Press releases and 1,167 publications Online communications Corporate Web site: www.gidropress.podolsk.ru • Number of the corporate Web site sessions: 2016 – 123,500 2014 – 111,000 2015 – 124,000 • Web site users from over 120 countries worldwide • The corporate Web site is continuously visited by representatives of principal competitors of OKB “GIDROPRESS” and a great number of other companies operating in the nuclear power industry. Exhibitions The Company took part in 6 exhibitions (3 exhibitions held abroad): • NDExpo 2016 • ATOMEXPO 2016 • ATOMEX 2016 • Nuclear Industry China 2016 • International Conference on Advancing the Global Implementation of Decommissioning and Environmental Remediation Programmes (Madrid, Spain) • World Nuclear Exhibition (Paris, France) Conferences 99 employees of the Company attended 22 off-site conferences in Russia 19 employees of the Company attended 23 off-site conferences outside Russia In March 2016 OKB “GIDROPRESS” hosted the International Research and Development Conference for Young Professionals Specializing in Nuclear Power Units. It was attended by over 100 experts representing various organizations. Visits Organized visits: • Over 100 foreign specialists from 7 countries worldwide visited the premises of OKB “GIDROPRESS” • 359 employees of the Company visited 21 countries Local collaboration The exhibition dedicated to the 70th anniversary of OKB “GIDROPRESS” being the leading company in the town was opened in the Podolsk Local History Museum. The Company’s business is closely related to the urban life. It plays an important role in its social and economic development. Interaction having regard to Interaction with stakeholders in relation to execution of publicly execution of the public available reports of the Company and its first public annual report annual report Museum The Company’s exhibition was restored in 2015. It is available in the presentation room which is next to the conference hall. Such a location allows the Company’s visitors to have a tour of the exhibition during various events hosted by OKB “GIDROPRESS”. Company’s Outstanding Information support of the project. Leader Memorial Project. On December 21, 2016 a monument to Vasily V. Stekolnikov,
98 90 Birthday Anniversary of one of the Company’s top managers who was its leader for 30 V.V. Stekolnikov years (1962-1992) and contributed greatly to its achievements and performance, was unveiled in the center of Podolsk Urban District.
Internal Communications (2016) Industry publications: Over 111 publications Rosatom’s Country AEM News Infoscreens Project Over 10 news breaks related to production and social welfare Rosatom’s Country Program 6 videos Rosatom’s Country Radio Program 5 on-air references Information Day 2 Information Days held Over 600 visitors each Management feedback (Q&A session); over 70 queries were reviewed Non-financial recognition Congratulatory posters, certificates of honor and acknowledgement and greetings were produced, issued and posted to the Company’s intranet for the achievements and success in professional activities, welfare work and sports shown by the Company’s personnel. Moreover, accomplishments of the entire team were highlighted. 70-Anniversary of OKB “GIDROPRESS” Anniversary-dedicated brand marks were developed. A scientific and technical meeting was held with managers of industry companies involved. A topical video was made with congratulations of third party companies. Over 150 employees were awarded anniversary badges. Meetings of young professionals with the Five My Way. One Hour with the Company’s Company’s top managers Manager meetings were held. Employer’s HR Brand Project A package of visual materials for The Rosatom’s Career Day was developed.
In 2017 OKB “GIDROPRESS” will continue to develop its external and internal communication channels. Principal goals which will be pursued in 2017: holding of the 19th International Research and Development Conference for Young Professionals Specializing in Nuclear Power Units and 10th WWER-type NPP Safety International Research and Development Conference.
99 2. Stakeholder Engagement
Public Policy: Sustainable Development and Stakeholder Engagement. Implementation Procedures A process providing for efficient stakeholder engagement includes identification of public expectations and feedback by OKB “GIDROPRESS” and (whenever necessary) incorporation thereof in the corporate policy, development strategy and current business operations of the Company. The Company recognizes its responsibility for establishment of mutually beneficial partnership and public relations based on regular and meaningful dialogue and in its business operations seeks to engage stakeholders subject to availability of those partnership and mutually beneficial relations. OKB “GIDROPRESS” in cooperation with its stakeholders adheres to the following fundamental principles: − Respect and consideration of others’ interests, opinions and preferences, including respect for history, culture and traditions − Transparency and openness − Confidence and sincerity − Unconditional compliance with applicable law − Adherence to Russian and international standards − Responsible performance of obligations assumed by the Company
Public Reporting System Building In 2016 the Company commenced building the public reporting system to ensure higher transparency of its business and intentions in its relationship with stakeholders. The Public Reporting Committee was established. OKB “GIDROPRESS” started to develop rules and regulations applicable to the Company’s public reporting system.
The following are rules and regulations applicable to the Company’s public reporting system: 1. Corporate Standard STP 193-2016 Public Integrated Annual Report. Execution and Content 2. Corporate Standard STP 194-2016 Public Reporting Committee. Establishment and Operating Procedures
In 2017 the Company will continue to develop its public reporting system. • Improvement of regulatory and methodological framework update of previously approved standards; establishment of a commission with involvement of stakeholders and further approval of a local regulation specifying the composition, objectives and functions thereof. • Development of the Company’s personnel: analysis of best practices employed in execution of annual reports both in Russia and abroad; participation in the workshop and webinars hosted by Rosatom and related to public reporting. • Execution of the report: ensuring higher involvement of representatives of stakeholders in the execution of the report; improvement of quality of information collected pursuant to applicable international standards for integrated reporting; introduction of new reporting forms (short presentation reports, electronic format development etc). • Stakeholder engagement: identifying new stakeholders (including from abroad) through questionnaire surveys; establishment of long-term partnership relations with principal stakeholders. • Surveys and enquiries: involving stakeholders in questionnaire surveys to identify material business aspects to be disclosed in the report and mutual influence of the Company and its stakeholders; interviewing top managers to determine material business aspects being subject to disclosure in the report and mutual influence of the Company and its stakeholders; defining top priority topics of the report.
100 • Promotion: distribution of the report among main groups of stakeholders (addressed mailing, forums, exhibitions, meetings with business partners, World Wide Web etc)
Engagement G4-27
Key Stakeholders Points of Interest
Shareholders: Efficiency, risks and responsibility. Compliance with JSC Atomenergomash Rosatom’s development strategy. Corporate management Management Company Efficiency. Compliance with Rosatom’s Public Reporting JSC Atomenergomash Policy.
Customers: Promising and innovative projects. JSC Concern Rosenergoatom High tech engineering and production. Quality of project JSC TVEL management. Meeting of deadlines and budget targets. ASE Group
Suppliers and subcontractors New orders placed in view of the Company’s growth prospects; construction sites; supplier selection criteria; financial standing of the Company
Foreign partners Medium and long-term sustainability and development of the Company; technological development and partnership stability
Personnel of OKB Performance and achievements. Development of the “GIDROPRESS” Company. Human resources and social welfare policy. Career advancement prospects.
Local authorities: Environmental and radiological safety. Infrastructural Council of Deputies of Podolsk development. Taxes and employment. Urban District Administration of Podolsk Urban District Management of OKB Efficiency of principal business areas of the Company. “GIDROPRESS”
Community (including Availability of employment and positive impact of the prospective employees). Company on living standards.
Higher educational Availability of employment. Human resources, social establishments welfare and youth policy. Career advancement prospects. Mass media Development prospects, environmental safety and key events.
Stakeholder Rank Map generated upon interviewing of respective representatives and mid and top tier managers of OKB “GIDROPRESS”
101
Customers Shareholders Personnel
Supervisory bodies Competitors Sub-Contractors JSC OKB “GIDROPRESS” management
Foreign partners Suppkiers Local population Expert community Higher Educational local self-government Institutions authorities
Mass media Non-governmental Index of Stakeholders influence to the Company influence Index of Stakeholders organizations
Index of Stakeholders dependence on the Company
Company’s Feedback to Proposals and Recommendations of its Stakeholders OKB “GIDROPRESS” delivered evidence certifying that it used its best efforts to introduce a public reporting system and establish highly efficient interaction with its stakeholders. We do believe it is a good practice that interaction commenced prior to executtion of the Report. Considerations of the Company’s partners as to identifying more stakeholders were accounted for at the initial stage when proper arrangements were made to introduce a public reporting system. Stakeholders were involved in the development of a concept and determination of material topics. As such, the top priority topics were defined and updated. As part of the Report execution process the Company’s stakeholders were granted an opportunity to deliver their proposals and recommendations as to disclosures made in the Report and development of the public reporting system in general. The Company’s feedback in relation to considerations expressed by the Company’s stakeholders made itself evident in the fact that the final version of the Report specified some data which was updated and added as appropriate in view of the aforesaid considerations (see Exhibit 6 hereto, Consideration of Stakeholders’ Opinion). Moreover, OKB “GIDROPRESS” assumed an obligation to ensure further improvement of its public reporting system. As part of execution of the Report the Company proved to be ready to consider proposals and concerns of its stakeholders. OKB “GIDROPRESS” will continue to introduce consistently responsible corporate behaviour principles in its business through development of its public reporting system and interaction with the Company’s stakeholders.G
G4-33 PUBLIC ACKNOWDLEGEMENT
OKB “GIDROPRESS” (the “Company”) proposed us to review the Company’s integrated report 2016 (the “Report”) in terms of its completeness and materiality of disclosures made therein to the extent having regard to the most significant issues from the point of view of the Company’s stakeholders.
102 As such, we and our representatives were delivered respective materials and information (the draft Report). We do comply with ethic requirements as to the independent and unbiased judgement and hereby express our own expert opinion and not that of any of the companies we represent. We hereby certify and guarantee that no reward has been paid to us by OKB “GIDROPRESS” for our involvement in the public acknowledgement process. This public acknowledgement procedure involves assessment of the format, structure and content of the Report as well as materiality and completeness of disclosures made herein and the Company’s feedback to proposals and comments made available by its stakeholders. We all give similar positive estimate of the format and scope of disclosures made in the Report. OKB “GIDROPRESS” has executed an information-bearing and well-structured document which is consistent with our expectations. It is especially important that the Report has been executed voluntarily and represents a good example of implementation of transparency and openness principles by OKB “GIDROPRESS”. Notwithstanding that a detailed Report has been executed by the Company for the first time, it shows a high level of information disclosure and the Company’s readiness to conduct an open dialogue with its stakeholders in relation to any issue having regard to its focus areas, including NPP Unit design and safe operation thereof. We have to note that OKB “GIDROPRESS” seeks to interact meaningfully with its stakeholders. We are not aware of any fact which may challenge faithful representation of details made available herein. We do believe that the Report specifies all the necessary information as to the Company’s strategic goals and development benchmarks, performance in the reporting period and participation in the urban life and covers all business areas the Company is engaged in. It is evident that the Report has been executed in compliance with international standards (Sustainability Reporting Standards by Global Reporting Initiative (GRI, G4 version) and standards issued by АА1000 Institute of Social and Ethical Accountability). Due to its integrated nature the Report covers all the principal focus areas of the Company as of 2016 and specifies all the necessary information related thereto, including sustainable development, strategy and future plans. We highly appreciate that the Company’s management decided to publish the Report both in Russian and in English. The disclosures made by the Company in the Report are deemed sufficient both in terms of compliance with international public reporting standards and consideration of comments given by the Company’s stakeholders as part of collaboration maintained during execution of the Report. We believe that the integrated Report shall be deemed an official opinion of the Company’s management in relation to all material and worthy issues and focus areas of OKB “GIDROPRESS”. In view of the foregoing and assessment performed as appropriate we may hereby summarize as follows.
Materiality of Information We believe that OKB “GIDROPRESS” adhered to all applicable international standards having regard to assessment of materiality. Having interviewed its top managers and representatives of its stakeholders and identified all material business areas OKB “GIDROPRESS” managed to disclose related information in the Report in proper detail and in full. The information disclosed herein is material both for the Company and its stakeholders. The following are considered its top priority topics: “Development of Nuclear Reactors for Nuclear Power Plants Built Both in Russia and Abroad” and “70 years of Innovative Breakthroughs”. The Company has been consistently delivering good performance as from the date of its incorporation. A process of generation and development of intellectual capital and establishment of a consolidated team is observed in the Company. All material details have been disclosed. The most important information for understanding of the Company’s outlook is made available in the sections dedicated to its strategic development, unique competitive advantages and growth prospects, higher efficiency of finance management, risks, personnel, impact on the economic and social environment, safety and environmental protection when implementing its numerous projects.
103 Completeness of Disclosures We believe that information made available in the Report is complete to the extent required to understand the current standing and the Company’s prospects by its stakeholders. All material information has been disclosed in accordance with applicable international reporting practices and affords an opportunity to build a complete picture as to the Company’s business.
G4-24 Deputy Head of the Department for Strategy and Development, JSC Atomenergomash K.Y.Tolstov
Head of the Department of Reactor Units BKP-1, S.V.Gureev Nizhny Novgorod Design Institute, JSC IK ASE
Chairman of the Council of Deputies of Podolsk N.P.Moskalev Urban District Deputy Head of the Administration of Podolsk Urban District for Economy and Finance E.N.Schepetev
Chairman of the Chamber of Commerce and V.I.Balabukh Industry of Podolsk Urban District
Deputy Chief Editor, Podolsky Rabochiy Newspaper N.F.Rzhevskaya
JSC ATOMPROEKT Chief Expert S.A.Petrov
Chairman of the Trade Union Committee OKB “GIDROPRESS” O.N.Bahus
First Deputy CEO of JSC Concern Rosenergoatom and director of its business unit A.G.Zhukov responsible for implementation of capital projects
104 VIII. EXHIBITS
Exhibit 1 Accounts and Financial Statements (2016) The relevant information as available at http://www.e- disclosure.ru/portal/company.aspx?id=14007.
Exhibit 2 Audit Report attached to the Company’s accounts and financial statements for the period from January 1 to December 31, 2016. The relevant information as available at http://www.e- disclosure.ru/portal/company.aspx?id=14007.
Exhibit 3 Major Transactions effected by the Company in the Reporting Year The relevant information as available at http://www.e- disclosure.ru/portal/company.aspx?id=14007
105 Exhibit 4 List of Abbreviations
AA1000SES − Stakeholder Engagement Standard ADF − Antidebris filter AROLMS − Automatic Remaining Operating Life Monitoring System BOR-60 − 60MW development fast sodium-cooled reactor BREST-OD-300 − 300MW inherent safety fast reactor CFD − Computer Fluid Dynamics CGT − Consolidated group of taxpayers CMS − Commissioning measurement system CPC − Corporate Processing Center CPS − Control and protection system CS − Corporate Standard CZSR − Czechoslovak Socialist Republic DPBS − Distributed Planning and Budgeting System EBITDA − Earnings before Interest, Taxes, Depreciation and Amortization FA − Fuel assembly FEI − Institute of Physics and Power Engineering FMBA − Federal Bio-Medical Agency FR − Fast sodium-cooled reactor FZ − Federal Law GDR − German Democratic Republic GRI − Sustainability Reporting Standards by Global Reporting Initiative GRI − Sustainability Reporting Standards by Global Reporting Initiative GURS − Global Unified Remuneration System HEE − Higher educational establishment HLMC − Heavy liquid metal coolant HMF − Hazardous manufacturing facilities IAEA − International Atomic Energy Agency ICI − Integrated commercial incentive IPR − Industry-Specific Procurement Regulations IR − International Framework, an international integrated reporting standard ISO − International Organization for Standardization IT − Information Technologies ITEP − Institute of Theoretical and Experimental Physics JSC − Joint-Stock Company JSC IK ASE − Joint-Stock Engineering Company Atomstroyexport JSC TVEL − Joint-Stock Company TVEL KPI − Key performance indicator KVN − Club of the Funny and Inventive LIP AN USSR − Instrumentation Laboratory of the Academy of Sciences of the USSR LLC − Limited liability company LMF − Liquid metal fuel LTIFR − Lost time injury frequency rates MCP − Main circulation pump Media − Mass media MEI − Moscow Energy Institute
106 MGTU − Moscow State Technical University MIFI − Moscow Engineering Physics Institute MSRU − Manifold stress relief unit NC − Numerical control NNRU MIFI − National Nuclear Research University (Moscow Engineering Physics Institute) NPC − Nuclear Power Complex NPP − Nuclear Power Plant NPS − Nuclear-powered submarine NPU − Nuclear Power Unit NVNPP − Novovoronezh Nuclear Power Plant NWC − Nuclear Weapons Complex OECD NEA − Nuclear Energy Agency of the Organization for Economic Co- operation & Development OECD/NEA − Organisation for Economic Co-operation & Development OKB “GIDROPRESS” − Joint Stock Company “Experimental and Design Organization “GIDROPRESS” awarded the Order of the Red Banner of Labour and CZSR Order of Labour OSHD − Occupational Safety and Health Division PAR − Public annual report QMS − Quality Management System RDE − Research, development and engineering RF − Russian Federation RPS − Rosatom’s Production System RU − Reactor Unit SCWR − Supercritical Water Reactor SDO − State Defense Order SGU − Steam generation unit SMS − Safety management system State Corporation − State Atomic Energy Corporation Rosatom Rosatom, Corporation or ROSATOM WWER − Water cooled reactor WWER-TOI − Typical Optimized and Computerized (TOC) WWER-1300 Reactor Project (NPP with two power units) АА1000 − Standards issued by the Institute of Social and Ethical Account Ability
107 Exhibit 5 GRI Index
GRI Index Table (as per basic version of GRI G4 Guidelines)
Standard reporting items to be disclosed in the Company’s Report 2016
o. GRI item Standard item Section, page
STRATEGY AND ANALYSIS 1. G4-1 Statement by a top manager as to importance of sustainable Preamble, page 15, 16 development for the Company and its strategy designed to address issues related thereto 2. G4-2 Description of key implications , risks and opportunities Section V, subsection 4, page 79 Section V, subsection 5, page 80 COMPANY’S PROFILE 3. G4-3 Name of the Company Section II, subsection 1, page 19 4. G4-4 Products and services Section II, subsection 2, page 21 5. G4-5 Headquarters location Section II, subsection 1, page 19 6. G4-6 Countries where the Company carries out its business Section II, subsection 2, page 22 7. G4-7 Form of incorporation and type of ownership Section II, subsection 1, page 19 8. G4-8 Principal markets Section II, subsection 2, page 23 9. G4-9 Company’s size Section II, subsection 1, page 20 and 21 Section IV, page 42 10. G4-10 Headcount Section VI, subsection 1, page 82 11. G4-11 Employees covered by the Bargaining Agreement 12. G4-12 Supply chain Section V, subsection 3, page 78 13. G4-13 Modification of size, structure or ownership Section V, subsection 4, page 79 14. G4-14 Precautionary principle “Precautionary principle” shall apply to avoid any damage which may be caused to the environment, even if any information evidencing any respective damage caused by any business whatsoever is not available. MATERIAL ASPECTS AND BOUNDARIES IDENTIFIED BY THE COMPANY 15. G4-17 Boundaries of the Report (i.e. all legal entities with accounts Section I, subsection 4, page 12 thereof included in the consolidated financial statements or similar records) 16. G4-18 Methods which are used to define content of the Report and Section I, subsection 4, page 13 boundaries of aspects 17. G4-19 List of all material aspects identified when defining content of Section I, subsection 4, page 13 the Report 18. G4-20 Boundaries of material aspects inside the Company Section I, subsection 4, page 14 19. G4-21 Boundaries of material aspects outside the Company Section I, subsection 4, page 14 20. G4-22 Restatements vs the previous Report Section I, subsection 4, page 12 21. G4-23 Modification of the coverage and boundaries of aspects Section I, subsection 4, page 12 and 14 STAKEHOLDER ENGAGEMENT 22. G4-24 List of stakeholders Section VII, subsection 2, page 109 23. G4-25 Approach to identification and selection of stakeholders Section VII, subsection 1, page 103 24. G4-26 Approach to interaction with stakeholders Section VII, subsection 1, page 103 25. G4-27 Key concerns raised by the Company’s stakeholders Section VII, subsection 2, page 106 REPORT SUMMARY 26. G4-28 Reporting period Section I, subsection 4, page 11 27. G4-29 Date of issue of the previous Report Section I, subsection 4, page 11 28. G4-30 Reporting cycle Section I, subsection 4, page 11 29. G4-31 Contact person Page 204
108 30. G4-32 GRI Index Table Exhibit 5, page 200 31. G4-33 Public acknowledgement of the Report Section VII, subsection 2, page 108 CORPORATE MANAGEMENT 32. G4-34 Structure of corporate management Section V, subsection 1, page 69 33. G4-38 Members of the Company’s superior management authority Section V, subsection 1, page 69 34. G4-39 Performing concurrently the functions of the Company’s CEO Section V, subsection 1, page 69 and Chairman of the Board of Directors 35. G4-48 Approval of the Report (i.e. superior committee or officer Section V, subsection 1, page 69 having reviewed and approved the report to the extent having regard to sustainable development and coverage of all material aspects) 36. G4-51 Rules for payment of remuneration to members of the Section V, subsection 1, page 73 superior management authority of the Company 37. G4-52 Rules for determination of remuneration payable to members Section V, subsection 1, page 73 of the superior management authority of the Company ETHICS AND GOOD BUSINESS PRACTICES 38. G4-56 Values, principles, standards and code of conduct Section V, subsection 1, page 73 SPECIFIC STANDARD ITEMS OF THE REPORT ECONOMIC 39. G4-EC1 Generated and distributed direct economic value Section II, subsection 4, page 28 40. G4-EC5 Ratio of the standard wage of the lower level employees (both Section VI, subsection 1, page 85 male and female) and the minimum allowable wage in the relevant region 41. G4-EC6 Share of top managers in the regions where the Company Section VI, subsection 1, page 82 carries out its business appointed from among representatives Section VI, subsection 1, page 83 of the local community 42. G4-EC9 Share of investments in the local suppliers in the regions Section V, subsection 3, page 78 where the Company carries put its business ENVIRONMENTAL 43. G4-EN3 Power consumption inside the Company Section VI, subsection 5, page 99 44. G4-EN8 Overall water consumption by sources Section VI, subsection 5, page 100 45. G4-EN21 Air emissions (NOX, SOX and other material pollutants) Section VI, subsection 5, page 101 46. G4-EN23 Overall amount of waste by type and disposal methods Section VI, subsection 5, page 100 47. G4-EN29 Material penalties and non-financial sanctions applied to the Section VI, subsection 5, page 101 Company for a failure to comply with environmental laws and regulations (monetary value) 48. G4-EN31 Overall expenses and investments in environmental protection Section VI, subsection 5, page 102 by types SOCIAL WELFARE 49. G4-LA1 Overall number and share in % of newcomers and staff Section VI, subsection 1, page 84 turnover by age groups, sex and regions 50. G4-LA6 Accident frequency rate and types; occupational disease rate; Section VI, subsection 4, page 96 lost day rate and absentee rate; overall number of deaths resulting from business operations by regions and sex 51. G4-LA8 Health and safety issues addressed in the official agreements Section VI, subsection 2, page 92 made with the trade unions 52. G4-LA9 Annual average training time in hours per employee by sex Section VI, subsection 1, page 90 and personnel category 53. G4-LA10 Programs for development of skills and lifelong training Section VI, subsection 1, page 89 programs designed to enable the Company’s employees to be employed and support the same upon retirement 54. G4-LA11 Share of employees regularly involved in performance Section VI, subsection 1, page 91 assessment and career advancement programs by sex and Section VI, subsection 2, page 92 personnel category 55. G4-LA12 List of members of the Company’s management authorities Section VI, subsection 1, page 83 and principal categories of personnel by sex, age groups, minorities and other features 56. G4-LA16 Number of complaints filed, processed or settled using Section VI, subsection 1, page 84 dedicated corporate procedures in relation to existing labour practices 57. G4-SO3 Overall number and share in % of business units involved in Section V, subsection 5, page 79 the corruption risk assessment programs and material risks so identified
109 58. G4-SO4 Availability of information having regard to anticorruption Section V, subsection 5, page 80 policies and procedures and related training programs 59. G4-SO5 Proved corruption offences and related actions Section V, subsection 5, page 80
APPROACHES TO MANAGAMENT OF MATERIAL ASPECTS IDENTIFIED BY THE COMPANY MATERIAL ASPECTS RELATED TO G4 GUIDELINES 60. Economic efficiency Preamble, page 4 Section II, subsection 4, page 25-28 61. Regional representative offices Section II, subsection 1, page 23 62. Procurement practices Section V, subsection 3, page 76-78 63. Energy Section VI, subsection 5, page 99 64. Compliance with environmental law Section VI, subsection 5, page 99 65. Overall investments in environmental protection Section VI, subsection 5, page 101 66. Employment Section VI, subsection 1, page 82- 84 67. Top management and employee relationship Section VI, subsection 1, page 82 and 91 68. Health and safety Section VI, subsection 4, page 95- 97 Section VI, subsection 1, page 92 and 93 69. Training and creating awareness Section V, subsection 5, page 79-80 70. Anticorruption practices SPECIFIC ASPECTS TYPICAL OF OKB “GIDROPRESS” 71. Performance Section IV, subsection 5, page 60- 62 72. Design-basis and experimental justification of projects Section IV, subsection 2, page 56- 57 73. Innovations Section III, subsection 4, page 34 74. Risk management Section V, subsection 5, page 79 75. Intellectual property management Section IV, subsection 6, page 63- 64 76. Investment policy Section III, subsection 4, page 32- 34 77. Efficiency improvement Section IV, subsection 7, page 65- 68 78. Human resource development Section VI, subsection 1, page 81- 82 79. Youth Policy Section V, subsection 3, page 93-95
110 Exhibit 6 Consideration of Concerns Raised by Stakeholders
Table. Consideration of Concerns Raised by Stakeholders
No. Proposal/recommendation Feedback by the Company 1. Adjust the top priority topic of the Report (“70 Years of Topic adjusted (“70 years of Labor Success”) Innovative Breakthroughs”) 2. In view of the experience gained in the field of Taken into consideration. development of power Units and installation thereof at the NPPs as well as expected participation of the Company in the projects which provide for building NPPs abroad it is recommended to specify in the Report methods which are employed to prevent design-related errors. 3. Ensure availability of regular publications having regard This proposal will be to the Company’s business in Podolsky Rabochiy considered in the further Newspaper (Podolsk News Agency, Moscow Region). reports. 4. Specify the names of all companies mentioned in the Taken into consideration. report in accordance with their constituent documents. 5. Replace: “Local authorities. Administration of Podolsk Taken into consideration. Urban District” by “Local authorities. Council of Deputies of Podolsk Urban District. Administration of Podolsk Urban District”.
111 CONTACT DETAILS (FOR ALL QUERIES RELATED TO THIS REPORT) Joint Stock Company “Experimental and Design Organization “GIDROPRESS” awarded the Order of the Red Banner of Labour and CZSR Order of Labour (OKB “GIDROPRESS”)
21 Ul. Ordzhonikidze, Podolsk 142103, Moscow Region, Russian Federation
Corporate Web site and e-mail: E-mail: [email protected] www.gidropress.podolsk.ru
Tel. (495) 502-79-10 Tel/Fax: (4967) 54-25-16 Fax (4967)54-27-33
■■ Deputy CEO for Quality Assurance and Chairman of the Public Reporting Committee Alexander V. Ignatov – (4967) 65-26-06 ■■ Secretary of the Public Reporting Committee Elena V. Proselkova – (4967) 65-26-59
FEEDBACK FORM WE VALUE YOUR OPINION! 1. Please specify your stakeholder group: State Corporation Rosatom JSC Atomenergomash Management of OKB “GIDROPRESS” Personnel of OKB “GIDROPRESS” Customers Consumers Contracting companies Foreign partners Public authorities Regulatory, supervisory or audit authorities Financial institutions Non-governmental organizations Educational institutions Local community Mass media Other (please specify) 2. Does this Report contain any and all information having regard to the Company you seek? ◊ Yes ◊ No Comments: ______
3. Which section of the Report is the most information-bearing one from your point of view? Comments: ______
112 4. Please evaluate truthfulness and fairness of presentation. ◊ Excellent ◊ Satisfactory ◊ Unsatisfactory ◊ No value
5. Please evaluate completeness and thoroughness of the Report. ◊ Excellent ◊ Satisfactory ◊ Unsatisfactory ◊ No value
6. Please evaluate the narrative style. ◊ Excellent ◊ Satisfactory ◊ Unsatisfactory ◊ No value
7. Please evaluate the Report design. ◊ Excellent ◊ Satisfactory ◊ Unsatisfactory ◊ No value
8. Please specify modifications you’ll be seeking in the further reports. Comments: ______
9. Other comments and suggestions: ______
THANK YOU FOR YOUR TIME AND INTEREST IN THE COMPANY’S BUSINESS!
Please send this form duly completed at the address specified in the Contact Details Section.
113