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The corporate system of foreign production asset management applied in 2008 is the result of consistent introduction, starting from 2004, of complex measures for development and practical implementation of unified corporate standards used in the process of management of foreign SAC. They are applied taking into account the specific character and requirements of national legislation in the sphere of corporate law and tax and currency legislation as well as accounting and reporting legislation. The corporate methods applied by JSC INTER RAO UES in the process of foreign production asset management take into account this specific character, but nevertheless set for all subsidiaries and affiliates uniform rules, requirements, principles, forms and modes of actions in the sphere of production, economic and financial planning, regulation, control and reporting.
FIVE-YEAR INDICATIVE PLANS
Medium-term five-year indicative plans were first developed by all foreign production enterprises in 2008 for the period 2009 – 2013. The plans were formed using scenario conditions set by JSC INTER RAO UES individually for each company in a standard corporate format.
YEARLY BUSINESS PLANS
Yearly business plans have been applied in the process of foreign production asset management since 2005 and are main instruments for managing their activities. Plans are formed in a standard corporate format, coordinated with JSC INTER RAO UES and approved with decisions of boards of directors (supervisory councils) of foreign subsidiaries and affiliates. Adjustment of yearly business plans is allowed once a year in accordance with the results of activity of companies in the first quarter of the current planned year.
In order to fulfill yearly business plans operating teams of JSC INTER RAO UES are provided with necessary administrative and functional authority for efficient regulation of activities of foreign enterprises. The internal audit service and main technical inspection of JSC INTER RAO UES use scheduled and unplanned inspections of activity of foreign subsidiaries and affiliates. Special attention is paid to regular inspections of readiness of foreign enterprises to work in the autumn and winter period, and the issue of corporate passports of readiness to foreign enterprises by JSC INTER RAO UES, summarizing results of operations of enterprises in the autumn and winter period.
In 2008 JSC INTER RAO UES continued work started in 2007 and envisaging automation of processes of five-year indicative and annual planning of foreign companies and INTER RAO UES Group as a whole. The main goal is transfer to formation of prospective and annual aggregated (consolidated) plans of development and activity of the Group using IFRS principles. Completion of this work is scheduled for 2009.
QUARTERLY BUDGETS
Quarterly budgets have been applied in the process of foreign production asset management since 2006 and are main instruments of efficient management of movement, receipt and expenditure of funds. Quarterly budgets are formed on the basis of approved yearly business plans of foreign enterprises. Adjustment of quarterly budgets is allowed once a quarter in accordance with the results of activity of companies in the first month of the corresponding quarter.
In the process of coordination, approval and control of fulfillment of quarterly budgets special attention is paid to ensuring the necessary level of liquidity of companies, fulfillment of indicators of receipt and expenditures of funds within the limits set by JSC INTER RAO UES, the balance of cash flows of JSC INTER RAO UES, and various foreign enterprises with mutual production, economic and financial ties.
In the process of budget planning and management of foreign production assets special attention is paid to credit and loan operations. Receipt of bank loans as well as issue or receipt of corporate loans by foreign companies including all material conditions of such transactions in each particular case are considered in detail by corresponding teams of JSC INTER RAO UES taking into account corporate criteria. Receipt and repayment of bank credits and corporate loans, payment and receipt of corresponding interest are planned in budgets of companies in separate lines and are controlled in a special manner.
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