Financial Capital
04.Performance Results
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Financial Capital

Financial Capital is the most vital in the activity of TVEL Fuel Company. Capital gains ensure current operations and promote investments thereby generating growth of other capitals used by the Fuel Company.

FINANCIAL POLICY

Financial management is maintained in accordance with the approved Financial Policy of TVEL Fuel Company subject to agreement with ROSATOM.

Main provisions of the Financial Policy of TVEL Fuel Company:

  • TVEL JSC provides overall guidance of relationship between its subsidiaries and financial institutions (base banks, partner banks) regarding the matters of consolidated debt portfolio management, placement of available cash assets, subsidiaries liquidity management, management of payment and cash services for trade finance and currency exchange transactions, hedging and other financial transactions;
  • TVEL JSC approves transactions of the subsidiaries regarding attraction and placement of temporary funds. Conclusion of financial transactions (borrowing, except for borrowing from ROSATOM), execution of bank guarantees on the part of the principal, issuing and placement of securities, disposal of derivative financial instruments (under contracts that are concluded outside the exchange business, and that provide for liabilities on products supplies), unsecured letters of credits are executed in accordance with the requirements of the Uniform Industrial Procurement Standard.

The system of borrowings is being implemented with the purpose to optimize the consolidated credit portfolio of TVEL Fuel Company and expenses on attraction of external funding, as well as for central funding of operating activity of subsidiaries of the Fuel Company and current liquidity management.

Basic principles in Financial policy of TVEL Fuel Company:

  • conservative approach in selecting financial institutions;
  • diversification of funding sources, subject to an acceptable level of financial risks;
  • single treasurer’s office;
  • full disclosure.

Budgeting in the subsidiaries of TVEL JSC is set in accordance with Unified budgeting procedure and standards of ROSATOM.

Budgets of the subsidiaries of TVEL FC are approved at the meetings of the Board of Directors of SC based on the results of consideration of the consolidated budget of the Company by the budget committees of TVEL JSC and ROSATOM.

TVEL Fuel Company received no state financial backing in the reporting and the previous periods.


INVESTMENT MANAGEMENT

TVEL Fuel Company carries out its investment activities in line with the Uniform Industry-Specific Policy of ROSATOM and its organizations. Investment management system of TVEL Fuel Company is based on the principle of efficiency.

The Investment Committee (further “the Committee”) is a permanent collegiate advisory board that acts under the guidance of the Chairman of the Committee and follows the principles of the investment policy of ROSATOM and its organizations.

Structure of the investment committee of TVEL JSC in 2016

Name, title
Chairman Yu.A. Olenin – President of TVEL JSC
Deputy Chairman N.V. Nikipelova – Senior Vice-President of TVEL JSC for Finance, Economy and Corporate Management
Secretary S.A. Lazarev – Director of Investment Department of TVEL JSC
Members V.R. Kalk – Senior Vice-President for Production of TVEL JSC
P.I. Lavrenyuk – Senior Vice-President for Science, Engineering, Technology and Quality of TVEL JSC
Yu.A. Kudryavtsev – Senior Vice-President for New Business Development of TVEL JSC
K.K. Sokolov - Vice-President for Communications, Administration and Energy Efficiency
E.V. Lyakhova – Director for Investments and Operations Efficiency ROSATOM
V.I. Korogodin — Director for Lifecycle Management of Nuclear Fuel Cycle and NPP of ROSATOM
N.S. Khlebnikova – Director of Department of Investment Management ROSATOM
S.V. Komova – Head of Investment Control Department of ROSATOM

Investment control mechanisms:


  • Collective investment decisions making by the Committee or, depending on the Portfolio yield and its strategic importance, by the Investment Committee of ROSATOM concerning the component of Portfolio of new businesses development at the meeting of the Council for Development and Globalization of ROSATOM within the yearly investment limit set by the Strategic Council of ROSATOM (unless otherwise required by the decision of the Strategic Council of ROSATOM);
  • Optimal Portfolio budgeting, annual preparation and updating of the Company's business-plan to define the mid- and long-term prospects of investment activities of subsidiary companies of TVEL FC, with subsequent approval by the Investment Committee of TVEL JSC;
  • "Phase gate" approach in Portfolio components management;
  • Certification of the Portfolio components, including elaboration and description of the current state, feasibility studies and implementation plans;
  • Technical and economical audit of the marketable Portfolio components of TVEL Fuel Company.

Annual Results 2016

Amount of financing of the Portfolio components of TVEL Fuel Company made RUB 26,514 million (in 2015 — RUB 29,125 million). Amount of financing tends to yearly fluctuations, as it depends on combination of different stages of life cycle of the Portfolio components available (more than 178) at the same time.

Funding of industrial and technological base of primary production accounts for the biggest share in overall investment outlay.


Amount of financing for TVEL FC investment projects by directions, RUB mln

Direction 2014 2015 2016 (plan) 2016 (actual) 2017 (plan)
Nuclear industry 17,295 18,553 19,036 16,347 17,321
Development of general industrial activities 536 1,070 879 529 813
Development of infrastructure 1,245 1,212 2,489 1,987 3,925
Safety and encumbrances 2,645 7,982 7,151 6,520 3,718
Other 7,745 309 1,269 1,131 698
Total for TVEL FC 29,466 29,125 30,824 26,514 26,475

FINANCIAL RESULTS

In 2016 generally all KPI and target production indicators applied to evaluate performance of TVEL Fuel Company were achieved.

Achievement of major KPI and production indicators of TVEL FC in 2016[i]

Indicator Target Actual Deviation, %
AFCF of TVEL FC, RUB bln[i] 71.3 83.9 +17.67%
Investment activity integrated efficiency indicator[i], % 100%

88.65%

-11.35%
Semi-fixed costs, RUB bln 40.2

36.88

-8.26%
Labor efficiency, RUB mln/person 8.1

8.25

+1.85%
Foreign orders portfolio for 10 years, USD mln 9,787 10,088 +3.08%
Foreign proceeds, USD mln 1,383 1,415 +2.3%
Integral indicator for new products[i], % 100%

108.82%

8.82 pct
Proceeds on new products beyond and within the profile on a competitive basis, RUB bln 6.8 7.17 +5.44%
New products portfolio of FC for 10 years, RUB bln 18.6

20.86

+12.15%

Reduction of stock of FE NFC, RUB bln 12.3

15.8

+28.46%
LTIFR[i] 0.34

0.09

-73.5%
No INES events level 2 and above No events No events No events
Completion of state orders, including State Defense Orders from other governmental customers and organizations, % 100% 100% 0.0%

Key profitability indices

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Revenue (net) from sales, RUB mln

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Gross profit, RUB mln

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Net income, RUB mln

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EBITDA, RUB mln.

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Change in the volume of revenue (-4.7%), gross and net income, EBITDA in the reporting year as compared to the previous year is stipulated by yearly fluctuations of volumes of refuelling of NPP and continuing downward trends of nuclear materials and components prices, as well as by influence of factors beyond control, in particular by foreign exchange losses.

Distribution of consolidated revenue by types of products, RUB mln

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Key profitability indices

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In 2016 the export products were sold to the total amount USD 1,347 million. Sales of nuclear fuel and its components amount to 94.5% — the largest share in the export revenue.

Distribution of export revenue by types of products, USD mln

Types of products
Volume of sales
2014 2015[i] 2016[i] Δ 2016/2015, %
Nuclear fuel and components 1,452 1,447 1,273 12.0%
Engineering services 12 8 9 10.2%
Lithium products 13 18 22 23.7%
Calcium, titanium, zirconium 15 11 11 0.0%
Isotope products 10 11 14 34.5%
Other products 22 37 18 -52.5%
Total 1,523 1,532 1,347 -12.1%

Revenue from FA sales, RUB mln

Indicator 2014 2015 2016 Δ 2016/2015, %
Revenue from FA sales 81,055 109,299 104,906 -4.0%

In 2016 share of revenue received from FA sales made 58% in total consolidated revenue. For the period from 2014 till 2016 the revenue from FA sales increased 1.3 times (including all categories of consumers) and made RUB 104,906 million.

Distribution of revenue from nuclear fuel sales by consumers’ geography,%

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Structure of revenue from sales of nuclear fuel (by geography) remains unchanged, main consumers are Russian NPPs and NPPs of Europe, number of consumers from Asian countries is growing.

Following the results 2016, volume of sales from general industrial activities increased by 21% and achieved RUB 10,189 million, which is equal to 12.3% of the consolidated revenue of TVEL Fuel Company.

Revenue from general industrial activities[i], RUB mln.

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Structure of revenue from general industrial activities in 2016, %

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Net assets of TVEL Fuel Company, RUB mln

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Financial soundness and liquidity indicators of the Company are at high level. In 2016 the current liquidity ratio improved considerably, positive dynamics was observed with turnover ratio.

Financial soundness and liquidity indicators of TVEL Fuel Company

Indicator 2014 2015 2016 Δ 2016/2015, %
Ratio of borrowed and own funds 0.15 0.14 0.10 30.4%
Current liquidity ratio 2.95 3.15 4.02 27.8%
Return on basic production capacity 0.98 1.31 1.15 -12.1%
Receivables turnover period, days 91 80 79 -1.7%
Stock turnover period, days 264 188 168 -11.0%

Core financial indicators of TVEL FC for 2016, RUB mln

Indicator Revenue (net) from sales Net profit
Separation-Sublimation Complex АО AECC JSC 5,288 1,860
PA ECP JSC 13,320 3,446
SGChE JSC 14,981 1,650
UEIP JSC 22,908 6,431
Total for SSC 56,497 13,387
Nuclear Fuel Fabrication Complex MSZ PJSC 22,770 4,598
NCCP JSC 7,089 1,306
ChMP JSC 13,922 2,574
MZP PJSC 191 -250
Total for NFFC 43,972 8,228
Gas Centrifuge Complex KMP JSC 2,658 17
Total for GCC 2,658 17
UGCMP LLC 1,392 -246
Research Complex VNIINM JSC 3,520 76
Tochmash VPA JSC 1,984 -292
TOTAL for Research Complex 5,504 -216

Dividend payout, RUB mln

Indicator 2014 2015 2016 Δ 2016/2015, %
Dividends paid to Atomenergoprom JSC 16,257 15,296 28,233 84.6%
Dividends paid to TVEL JSC from subsidiaries 3,036[i] 1,930 2,820 46.1%

Dividend policy of TVEL JSC with regard to subsidiary companies is set with account of need for investment in production, its reconstruction and improvement of technical facilities.

Cost reduction

Share of general and administration costs in revenue in 2016 made 1.7%. Implementation of the Non-Investment Activities Plan resulted in reduction of costs in 2016 by RUB 1,667 million. The most progress was made in the following activities of TVEL JSC subsidiaries:

  • decommissioning of main equipment;
  • elaboration of target regulations on the Inventory storage and consumption rates;
  • optimization of materials and equipment used for technical maintenance and current repair;
  • conservation of the process equipment;
  • reduction of costs on warehousing;
  • stock optimization (sale of unclaimed inventory);
  • optimization of the routes and number of personnel transportation trips.

Commercial expenses of TVEL FC, RUB mln

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Administrative expenses of TVEL FC, RUB mln

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1.
Москва
АО «ТВЭЛ», АО «ВНИИНМ»,
АО «МЗП», АО «ЦПТИ»

2.

Московская область

АО «МСЗ» (электросталь)

3.

Санкт-Петербург

Филиал ООО «НПО «Ценротех»

4.

Владимирская область

АО «ВПО «Точмаш» (Владимир),
ПАО «КМЗ» (Ковров)

5.

Удмуртская республика

АО ЧМЗ (Глазов)

6.

Свердловская область

АО «УЭХК»,
ООО «НПО «Центротех» (Новоуральск)

7.

Новосибирская область

ПАО «НЗХК» (Новосибирск)

8.

Красноярский край

АО «ПО «ЭХЗ» (Зеленогорск)

9.

Томская область

АО «СХК» (Северск)

10.

Иркутская область

АО «АЭХК» (Ангарск)