ANNUAL PUBLIC REPORT 2014 ROSATOM ROSATOM REPORT ANNUAL 2 About the Report The Annual Public Report of the State Atomic Energy Corporation Rosatom (hereinafter referred to as “ROSATOM” or “the Corporation”) for 2014 is the sixth report voluntarily published for a broad range of stakeholders. ROSATOM The top management and representatives of the stakeholders defined the priority topic of the Report as: “Improvement of ROSATOM’s positions in the world market of nuclear technologies and services”. ANNUAL Standards and regulatory requirements PUBLIC The Report was drafted in compliance with the requirements of • Policy in the field of public reporting and standards of annual public REPORT reporting of ROSATOM and its organisations, • <IR> International Framework, • Sustainability Reporting Guidelines of the Global Reporting Initiative (GRI G4, Core ‘in accordance’ option), 2014 • AA 1000 Standards of AccountAbility, • The RSPP Recommendations for use in the practice of management and corporate nonfinancial reporting (key performance indicators). Stakeholder involvement The drafting of the Report was carried out with the input of stakeholders as per the International Standard AA1000SES to enhance the transparency, accountability, and materiality of the disclosed information. A study was conducted to determine the material aspects disclosed in the report, and two dialogues were held with stakeholders, including public consultations and discussions concerning the draft report in the Public Chamber of the Russian Federation. The Report takes into account all the main recommendations given by the representatives of stakeholders during these dialogues. See more information about the report and the process of determining the content of the Report in Appendix 1. PERFORMANCE RESULTS OF THE STATE ATOMIC ENERGY CORPORATION “ROSATOM” 2 ROSATOM ANNUAL PUBLIC REPORT 3 TABLE OF CONTENTS 1. STRATEGIC REVIEW 004 5. WORKING IN ONE TEAM 176 1.1. Rosatom today 006 5.1. Human Capital Development 178 1.2. Main results of activities in 2014 009 5.2. Contribution to the development of the territories of presence 193 1.3. The mission and strategy of ROSATOM 018 5.3. Interaction with Stakeholders 201 1.4. Business model, value-creation process and markets of presence 023 5.4. The Public Council of ROSATOM 212 2. ONE STEP AHEAD IN 2014 034 6. PLEDGING OF SECURITY 214 2.1. International Business 040 6.1. Provision of Nuclear and Radiation Safety 216 2.2. International Cooperation 059 6.2. “Nuclear legacy” Problem Solving 228 2.3. Innovative Development 069 6.3. Environmental Protection 234 2.4. Business Diversification 076 7. STAKEHOLDER ENGAGEMENT IN THE REPORT’S PREPARATION 256 3. KEY RESULTS 082 7.1. Public Reporting System 258 3.1. Financial and Economic Results 084 7.2. Dialogues with stakeholders and taking into 264 3.2. Mining Division 092 account stakeholder proposals 3.3. Fuel Division 096 7.3. Report’s Stakeholder Assurance Statement 268 3.4. Machine-Building Division 100 Abbreviations 272 3.5. Engineering Division 103 3.6. Power Generation Division 107 Glossary 274 3.7. Performance of Public Functions 111 Appendix 1. Information about the Report and about the process 278 3.8. Nuclear Weapons Division 119 for determining the content of the Report 3.9. Nuclear-Powered Icebreaker Fleet 125 Appendix 2. Tables of GRI (G4) standard disclosures and RSPP’s 282 key performance indicators 4. MANAGEMENT EFFICIENCY 128 Appendix 3. Opinion of the Audit Commission on the financial 288 4.1. Corporate Governance 131 and business activities of ROSATOM and its organisations for 2014 4.2. Risk Management 138 Appendix 4. Opinion of the auditing procedures office of ROSATOM’s 295 4.3. Management of Financial and Investment Activity 145 Internal Control and Audit Department 4.4. ROSATOM Production System 158 Appendix 5. Report on results of independent assurance of the public annual 297 4.5. Management of Procurement Activity 164 report of the State Atomic Energy Corporation “Rosatom” for 2014 4.6. Internal Control System 171 Feedback form 299 4.7. Corruption and other legal offences countering systems 174 4 ROSATOM ANNUAL PUBLIC REPORT 5 STRATEGIC REVIEW 1.1. Rosatom today 006 1.2. Main results of activities in 2014 009 1.3. The mission and strategy of ROSATOM 018 1.4. Business model, value-creation process and markets of presence 023 6 ROSATOM ANNUAL PUBLIC REPORT 7 No. 1 in the world NO. 2 uranium enrichment In terms of the world’s (36% of the market) uranium reserves (13% of world ROSATOM production) TODAY 1 million euros per day Spent on research and 1 development billion rubles 1.1.1. investment Annual expenditure on social ROSATOM is one of the largest utilities in Russia and charity programs and one of the leading companies in the global nuclear technology market GENERAL INFORMATION State Atomic Energy Corporation "Rosatom" was ABOUT THE established on December, 18, 2007 (ROSATOM, ~ 17 % corporation). The status, purpose of creation and Share in the power CORPORATION its operations, functions and powers of the State generation in Russia Corporation "Rosatom" are defined in the Federal Law of December, 01, 2007 No. 317-FZ "On the 258,000 State Atomic Energy Corporation "Rosatom". Employees No. 1 in the number of simultaneously 33.2 ~ 350 constructed nuclear power plants billion rubles Organisations and enterprises abroad (29 blocks are already in are part of the Corporation Expenses on environmental our portfolio, 11 blocks are in the protection construction phase) The world's only Nuclear-Powered Icebreaker Fleet 8 ROSATOM ANNUAL PUBLIC REPORT 9 The Corporation is authorised on behalf of the • a global company that owns assets in all stages Russian Federation to fulfil the international of the nuclear power and industry production 1.2. obligations of Russia in the field of peaceful uses chain, including: the exploration of uranium of atomic energy and the observance of nuclear and its production, designing and building weapons in a non-proliferation regime. NPP, machine-building, generation of heat and electricity, uranium conversion and enrichment, ROSATOM is the fabrication of nuclear, and the management MAIN RESULTS OF of spent nuclear fuel (SNF) and radioactive • responsible for the implementation of national waste (RAW). ACTIVITIES IN 2014 policy concerning the use of atomic energy, Key areas of activity of Rosatom Main results table* Nuclear Power Complex Indicator 2014 2013 2012 2014/2013, %** FRONT END OF NUCLEAR FUEL CYCLE Geological Mineral Mining Nuclear Icebreaker Revenues according to International Financial 618.3 529.2 474.8 116.8 exploration processing Fleet Reporting Standards, billion rubles Mining division EBITDA, billion rubles*** 200.5 155.2 140.8 129.2 Designing New businesses Conversion Enrichment Fuel fabrication And engineering Net assets according to International Financial 1722.2 1550.1 1458.2 111.1 Reporting Standards, billion rubles Fuel division Intangible assets, billion rubles 48.0 48.3 44.8 99.4 NPP construction Portfolio of overseas orders for 10 years, billion US 101.4 72.7 66.5 139.5 POWER MACHINE BUILDING dollars Generation Engineering of electricity NPP service Machinery Machinery Number of power units in portfolio of overseas orders, 29 19 19 152.6 division On the NPP designing production units Mounting And Power Generation Machinery Implementation of state defence order, % 100 100 100 100.0 starting-up and Division staging adjustment Number of level “2” events and above, according to 0 0 0 – Service INES scale and modernisation Amount of NPP power generation in Russia, 180.5 172.2 177.3 104.8 Machine-Building Division billions of kilowatts per hour NPP Installed capacity utilisation factor, % 81.6 77.9 80.9 104.8 BACK END OF NUCLEAR FUEL CYCLE Mineral feedstock of natural uranium (Russian assets), 524.7 541.9 550.5 – thousands of tonnes**** +224.1 +229.45 +155.0 SNF treatment Decommissioning RAW treatment Natural uranium mining, thousands of tonnes 7.85 8.3 7.6 94.6 Creation of innovations Lifecycle Back-end Division Environmental protection expenses, billion rubles 33.2 19.6 15.7 169.4 Consolidated labour productivity growth by 2011 37.5 28.5 17.7 131.6 The transition to the closed nuclear fuel cycle (return of the fuel into the cycle) the fuel into (return of the closed nuclear fuel cycle The transition to (in current prices without Nuclear Weapons Division), % Share of specialists under 35 years old, % 32.6 29.7 29.2 109.8 As of 31 December 2014, ROSATOM has is given in the Corporation’s annual web report. * The indicators established by the Supervisory Council for 2014 in the table are marked with colour. ** Calculating the indicators in the column “2014/2013, %” the figures for 2013 are assumed to be 100%. incorporated more than 350 different corporate *** Data is given in accordance with the fiscal consolidation perimeter. entities. A list of the organisations and enterprises **** The bottom line with a “+” shows the data of Uranium One Holding NV mineral resources base. Due to changes in the calculating methodology used in 2012, the data is given separately for Russian assets and for the Uranium One Holding NV mineral resource base. 10 ROSATOM ANNUAL PUBLIC REPORT 11 Key events table September • Signing of the Agreement concerning the development of the construction project of the first Jordanian nuclear power plant between JSC “Rosatom Overseas” and the January • Signing of the Agreement between the Government of the Russian Federation and Atomic Energy Commission of the Jordan Hashemite Kingdom the Government