On August 31st, 2010, RusHydro's (LSE, RTS, MICEX: HYDR; OTCQX: RSHYY) Board of Directors voted by proxy.
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The Board of Directors has taken note of a report on the intermediate performance of RusHydro's 2010 Business Plan, taking into account actual performance in 1Q 2010.
The Board of Directors has also noted a report on the implementation of the Company's Investment Program for 1Q 2010.
RusHydro's 2010 Investment Program was approved by the Company's Board of Directors (Minutes No.93 from 04.03.2010) in the amount of RUR 97.057 billion and provided for an additional capacity of 1,124 MW to be put into operation.
In accordance with internal procedures, reports on the intermediate performance of RusHydro's Business Plan must be reviewed on a quarterly basis by the Company's Board of Directors.
The report on the intermediate performance of RusHydro's 2010 Business Plan, taking into account actual performance in 1Q 2010 (including the report on the implementation of the Investment Program for 1Q 2010), was considered by RusHydro's Management Board on 19.07.2010 and was recommended for review by RusHydro's Board of Directors.
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The Board of Directors has taken note of the report on the completion of the financing and investment outlay plan for projects being constructed under RusHydro's 2010 Investment Program, for 1H 2010.
During 1H 2010, financing for projects under construction amounted to RUR 38,382 million (incl.VAT), including:
1Q - RUR 23,270 million, incl.VAT;
2Q - RUR 15,112 million, incl.VAT.
During 1H 2010, investment outlay for projects under construction stood at RUR 14,521 million (incl.VAT), including:
1Q - RUR 5,205 million, not including VAT;
2Q - RUR 9,316 million, not including VAT.
The variation from planned levels can primarily be attributed to:
- Protracted negotiations on reducing contract work due to a sharp fall in the regional index for transitioning from basic prices to prices for 2Q 2010. As a result of this, contracts have not been signed for design work and restoration of a building according to the Sayano-Shushenskaya HPP restoration plan.
- Delayed equipment installation at the Sayano-Shushenskaya HPP, which is the result of the contractor's efforts being focused on drilling and explosion work due to the necessity of preparing the high water spillway.
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RusHydro's Board of Directors has approved the Company's KPI performance report for 2Q 2010.
The values for the Company's 2010 annual and quarterly KPIs contained in the Company's 2010 Business Plan were approved by a resolution of the Board of Directors on May 11th, 2010 (Minutes No.97).
KPI performance calculation and assessment are carried out in accordance with RusHydro's Procedure for KPI Performance Calculation and Assessment approved by a resolution of RusHydro's Board of Directors on 26.09.2008 (Minutes No.62) with subsequent amendments (resolutions by RusHydro's Board of Directors on 24.12.2008 (Minutes No.69) and on 11.05.2010 (Minutes No.97).
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The Board of Directors has approved RusHydro's participation in the Dagestan Small HPP (SHPP) JSC, the Fiagdonskaya SHPP LLC, the Verkhnebalkarskaya SHPP LLC and the SHPP KCR (Karachai-Cherkessia Republic) LLC by acquiring the companies' shares from the Novaya Energia Fund.
In 2006, RusHydro initiated a Program for Developing Small-Scale Hydro-power Engineering to help implement small HPP projects. The Program provided for implementing cost effective projects for constructing small HPPs, with an installed unit capacity of up to 25 MW. In 2007, the Novaya Energia Fund for developing renewable power sources was set up to function as the Program operator. RusHydro was one of the Fund's founders. However, as RusHydro cut its Investment Program for the Program for Developing Small-Scale Hydro-power Engineering, in 4Q 2008 it was decided to suspend small HPP projects implemented by the Novaya Energia Fund and to capitalize on RusHydro's financial investments in the Novaya Energia Fund.
RusHydro's Committee for the expert review of current asset status and the performance of the Novaya Energia Fund (Minutes No.02 from 30.01.2009) has found the following projects to be promising for further implementation:
- The Verkhnebalkarskaya SHPP (the Verkhnebalkarskaya SHPP LLC);
- The Fiagdonskaya SHPP (the Fiagdonskaya SHPP LLC);
- The B.Zelenchuk SHPP (SHPP KCR LLC);
- The Amsarskaya, Arakulskaya and Shinazskaya SHPPs (the Dagestan SHPP JSC).
The Board of Directors has approved RusHydro's participation in the Altai Small HPP JSC through its founding. Forming the Altai Small HPP JSC in Gorno-Altaisk (a 100%-owned subsidiary of JSC RusHydro) is required to implement the Chibit SHPP project.
Following assessment of the Altai's potential for constructing small-scale HPP projects, RusHydro was encouraged to elaborate on a Program for the Development of Small-Scale Hydro-power Engineering in the Republic of Altai, the pilot project being the Chibit SHPP. RusHydro and the Republic of Altai entered into an Agreement on developing small-scale hydro-power engineering in the Republic on 12.07.2010, whereby RusHydro must analyze and select promising small river stations and small HPP projects for inclusion in the Program and must implement the pilot Chibit SHPP project. The latter provides for the 24 MW Chibit SHPP to be erected on the Chuya River in the Ust-Ulagan Area, the Republic of Altai.
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The Board of Directors has approved a revised version of the Procedure for RusHydro's interaction with entities in which the Company is a shareholder.
Approval of the revised version of the Procedure is necessary to bring it into line with the new version of the Company's Charter and to introduce technical and qualifying corrections to the Interaction Procedure.
The new version of the Company's Charter was approved by a resolution of RusHydro's Annual General Meeting of shareholders (Minutes No.5 from 30.06.2010) and stipulates a change in the terms of reference for RusHydro's Board of Directors and Management Board, including a change in the list of items on the agenda of meetings for subsidiaries' management bodies, the position on which is determined by RusHydro.
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The Board of Directors has approved a revised version of the Regulations on the procedure for RusHydro's non-core asset management.
Approving the revised version of the Procedure enables development (a type of management) to be used for individual non-core assets to increase their value and achieve the maximum positive economic effect for RusHydro in future asset management.
The Board of Directors has assigned the Company's Management Board Chairman to ensure elaboration on the standard Regulations on the procedure for managing non-core assets owned by RusHydro's subsidiaries and dependent companies, based on Regulations for the procedure of the Company's non-core asset management and its approval by the Board of Directors of RusHydro's subsidiaries and dependent companies prior to 01.03.2011.
Regulations on the procedure for RusHydro's non-core asset management have been approved by a resolution of the Company's Board of Directors (Minutes No.92 from 11.02.2010).
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The Board of Directors has approved a revised version of Regulations for RusHydro's Board of Directors Audit Committee.
The need to develop and approve the revised version of the Regulations results from earlier revisions to the Company's internal documents, including: RusHydro's Corporate Governance Code, Insider Information Regulations, etc.
The revised draft version of the Regulations meets recommendations for organizing the work of the Audit Committee, given in the following documents: FCSM (FSFM) Code of Corporate Conduct, the UK Corporate Governance Code and Guidance for
Audit Committees prepared by the UK Financial Reporting Council.
The new version of Regulations will help RusHydro's Board of Directors upgrade efficiency and supervision over the Company's financial and economic activities, improving the Company's corporate governance and ensuring that it meets best practices.
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The Board of Directors has taken note of the Report on the performance of the Company's Management Board in 1H 2010.
During the reporting period, the Company's Management Board passed resolutions on 192 items, recorded in 75 Minutes, including 15 physical meetings that considered 33 items and 60 Minutes drawn up by absentee voting, with resolutions passed on 159 items. The most critical items reviewed include, in particular: RusHydro's Investment Program, updating the Holding Company's production programs with regard to measures aimed at enhancing reliability and safety following the investigation of the accident at the P.S.Neporozhny Sayano-Shushenskaya (SS) HPP, the Company's priority lines of activity, the 2010-2013 Energy-Saving and Energy Efficiency Enhancement Program and the 2010-2012 Environmental Policy Program.
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The Board of Directors determined the cost of services provided by the Company's Auditor (CJSC PricewaterhouseCoopers Audit) in 2010 for auditing RusHydro's accounting statements to Russian Accounting Standards (RAS) - RUR 9,500,000 (not including VAT).
CJSC PricewaterhouseCoopers Audit was approved as the Company's 2010 Auditor by a resolution of RusHydro's 2009 Annual General Meeting (Minutes No.5 from 30.06.2010).
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The Board of Directors has cancelled resolutions by RusHydro's Board of Directors on Item 3 "On the hydro-power engineering control center" (Minutes No.41 from 19.11.2007) and those specified in Paragraphs 2 and 3 of Item 3 "On implementing the Board of Directors' resolution of 19.11.2007" (Minutes No.44 from 14.12.2007).
By a resolution on 16.11.2007 (Paragraph 3, Item 3), the Board of Directors approved setting up the Hydro-power Engineering Control Center. This resolution also approved the acquisition concept for a land plot for constructing a multi-functional business center to accommodate the staff of the RusHydro Company Group. The program for setting up the Hydro-power Engineering Control Center was suspended because of a deficit in RusHydro's Investment Program and the 2008-2009 financial crisis.
Now that the Company has purchased an office building (located at: 7 Malaya Dmitrovka St., Moscow, Russia) to accommodate RusHydro's staff, in accordance with the Board of Directors' resolution (Minutes No.79 from 11.05.2010), the above resolutions by the Board of Directors are no longer relevant.
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The Board of Directors has approved a list of priority measures under the Program for the integrated development of the Cheremushki Town's infrastructure, the Financing Procedure and Procedure for transferring the completed work package in the form of charity. Furthermore, the Board of Directors has taken note of the General List of arrangements recommended for inclusion in the 2011-2014 Program for the integrated development of the Cheremushki Town's infrastructure.
The Program provides, in particular, for the partial renovation of Secondary School No. 1, the renovation and fitting out of Secondary School No. 2, the renovation of the Sports Complex building owned by CSO SS HPP JSC, the repair of drives and motor roads, including the repair of the roadbed for the bridge over the Yenisei River, the premises of the Mudrost Veterans' Club Non-Governmental Association and the Sayano-Shushenskaya Branch of the Siberian Federal University, the installation of playgrounds in residential building yards and other measures.
The total amount of funding for priority arrangements under the 2010 Program for integrated development of the Cheremushki Town's infrastructure will be RUR 268.4 million.
The Program was devised in accordance with Minutes of the meeting of the Government Committee for the response to the accident at RusHydro's subsidiary, the P.S.Neporozhny Sayano-Shushenskaya HPP and for the arrangement of work to ensure steady power supply for the Siberian Integrated Power System (No.5 on August 2nd, 2010). Item 2 of Section II of the Minutes assigns the Government of the Khakassia Republic responsibility to implement, jointly with RusHydro, the 2010-2014 Program for integrated development of the Cheremushki Town's infrastructure.
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The Board of Directors has resolved that the amount, procedure and payment terms for fees to members of the Board of Directors will be determined under Regulations on the payment of fees to members of the Board of Directors approved by RusHydro's Annual General Meeting of shareholders (Minutes No.5 from 30.06.2010). The fee paid to each member of the Board of Directors may not exceed RUR 1,000,000.
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The Board of Directors has approved the conclusion of contracts between members of the Board of Directors elected by RusHydro's Annual General Meeting of shareholders (Minutes No.5 from 30.06.2010) and RusHydro, which are related party transactions.
Under provisions of Article 81 of the Federal Law on Joint Stock Companies, transactions in which a member of RusHydro's Board of Directors are interested must be conducted by the Company pursuant to provisions of Part 11 of the Federal Law. Members of the Board of Directors are considered to be interested parties in conducting a transaction if they are a party to, beneficiary of, agent or representative in such a transaction.
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The Board of Directors has approved a contract for transferring property without compensation between RusHydro and the Khakassia Republic's State Committee for public asset management, the subject of which is the transfer of property (property rights) to third parties without compensation.
The contract provides for the transfer of the SSHPP - ATC-2 Highway with the following parameters: length - 3.0774 km. At present, the highway is owned by RusHydro.
The transfer of the asset without compensation is subject to Item 14 of Minutes No.9 dated 22.03.2010 from the meeting of the Russian Ministry of Energy crisis center for accident response, recovery of the Sayano-Shushenskaya HPP and repair of the roadbed through the highway section Sayanogorsk - Mainskaya HPP - Cheremushki to the HPP installation site, using funds allocated from the Republic's budget.
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The Board of Directors has approved a contract for transferring property without compensation between RusHydro and the Municipal Institution Committee for Municipal Property Management of the Bureisky Area, the subject of which is transferring immovable and movable assets (property rights) to third parties without compensation. Under the contract, RusHydro will transfer sewage treatment facilities with a capacity of 60 m3/day and water intake facility to the Committee for Municipal Property Management of the Bureisky Area.
This makes it unnecessary to continue the construction of and commissioning of the STF and the water intake for the needs of the Bureiskaya HPP.
Transferring the STF and water intake for compensation is impossible since it is required for the needs of the Bureisky Area's municipal authorities and is not in demand.
Transferring the STF and water intake without compensation reduces maintenance costs for non-core assets of RusHydro.
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The Board of Directors has approved a contract for transferring property without compensation between RusHydro and the Municipal Educational Institution of Continuing Professional Education (skill development) for the Resource Center's personnel, the Balakovo Municipal Area, the subject of which is the transfer of property (property rights) to third parties without compensation.
The Board of Directors has approved a contract for transferring property without compensation between RusHydro and the Municipal Educational Institution of Continuing Education for Children "ROSTO Children and Youth Sports and Technical School," the subject of which is the transfer of property (property rights) to third parties without compensation.
The Board of Directors has approved a contract for transferring property without compensation between RusHydro and the Municipal Educational Institution "Secondary General School No.15," Balakovo, the Saratov Region, the subject of which is the transfer of property (property rights) to third parties without compensation.
The Board of Directors has approved a contract for transferring property without compensation between RusHydro and the State Health Care Institution "Balakovo TB Dispensary," the subject of which is the transfer of property (property rights) to third parties without compensation.
Under the contracts described above, used system blocks and monitors (fully depreciated and having zero residual value) will be transferred without compensation to municipal educational institutions and the TB dispensary.
Movable assets will be transferred under RusHydro's 2010 Program for Charitable and Sponsorship Activities, in addition to 2010 charitable contributions approved by RusHydro's Board of Directors.
RusHydro's 2010 Program for Charitable and Sponsorship Activities has been approved by a resolution of the Company's Board of Directors (Minutes No.94 from 05.04.2010). At present, the Saratovskaya HPP (a RusHydro subsidiary) is entering into contracts for donations for goals defined in the Program (implementing educational and sports projects at sponsored institutions) with non-profit educational and sports institutions.
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