DEAR COLLEAGUES,

Continuous improvement of nuclear fuel, development and introduction of new designs and modifications allow offering the fuel with advanced technical and economic characteristics to our traditional customers. In 2018, the Company signed an agreement on new modified fuel introduction at Loviisa NPP for VVER-440 reactors, supplied the fourth generation TVSA-Т. mod.2 fuel for loading into Temelin NPP, and completed resource testing of the new fuel assemblies for the customers in Finland and Hungary.

TVEL develops innovative nuclear fuels that will help to achieve a new level of NPPs operation safety, and ensure economically efficient use of raw materials. It stands to mention manufacturing of the first experimental fuel assemblies with accident-tolerant nuclear fuel for VVER and PWR.

The Company managed to achieve obvious results in the implementation of the Proryv (the “Breakthrough”) project – one of the most important and promising projects of the Russian nuclear industry, which is included in the national Atomic Science, Engineering and Technology project. At the end of 2018, the Main State Expert Review Board issued a positive decision regarding the project documentation on power unit with BREST-OD-300 reactor facility. All main process equipment has already been delivered to the site in order to start the installation work in 2019.

An important achievement is also launching the world’s first batch production of mixed uranium-and-plutonium MOXfuel for BN-800 fast neutron reactor. These technology and production floor were developed under the coordination and scientific supervision of TVEL Fuel Company. This milestone is also of strategic importance for closing nuclear fuel cycle.

Signing of the contract for production and delivery of nuclear fuel for CFR-600, China’s flagship project in fast reactors, will be another contribution of TVEL Fuel Company in development of the dual-component nuclear power.

In 2018, the Company gave a fresh impetus to support the development of non-nuclear businesses. The newly formed nuclear industry integrators, incorporated within the Fuel Division, started full-scale operations in such new areas as additive manufacturing and power storage. The two new companies have already formed a portfolio of orders and launched the first commercial projects. Total revenues from non-nuclear businesses amounted to RUB 13.5 billion in 2018.

Development of new ideas is facilitated and promoted by the business accelerator launched in 2018, which can help to develop a project from the idea stage to industrial implementation just within nine months. According to the results of the first round of acceleration, three projects on additive manufacturing and equipment for the energy complex have received funding in 2018. The decision has already been made to replicate this experience within the whole Russian nuclear industry.

In the regions of operation TVEL successfully launched the business partnership program together with regional authorities. Working in close cooperation with the regional administrations, the Company prepared and approved five road maps for the development of business partnerships, started collaborative engagement with 77 new partners, 26 projects under review are assessed as promising. All these projects will give a start to promising high-tech businesses and create new jobs.

TVEL Fuel Company gives priority attention to the sustainable development of the cities and the regions of its presence. In 2018, the investment in environmental protection amounted more than RUB 2.2 billion. The problem of mitigation the environmental impact is solved not only through the use of resource-saving technologies. Over the past year, we succeeded in reducing the total amount of production and consumption waste by more than 23%. The Company’s contribution to the environment preservation is not limited to the use of resource-saving technologies. Major efforts are applied for tackling the “nuclear legacy” issues. The Company is engaged in the rehabilitation of industrial sites to their original state.

Developing its operations TVEL Fuel Company adheres to socially oriented policies that meet the needs of residents of the cities of presence. It is important for us to create comfortable and safe urban environment, provide favourable conditions for the life and work of our employees and their families, improve the conditions and quality of life of people in Russian regions. In 2018, the cities of presence of the Company’s enterprises received RUB 1.8 billion to support important social projects.

Regarding the year 2019, we plan to continue the development and introduction of new types of fuel, strengthen our positions in foreign markets and develop all numerous areas of our diversified business. The Company’s efforts will be focused on minimizing the time for development and commercialization of new products. We are not afraid of large-scale and promising projects. Because only the most daring undertakings become the engine of business development.