On 14 May 2009 an ALROSA Supervisory Board meeting took place in Moscow.
The Board approved ALROSA’s tentative economic and financial figures for 2008, including its P&L statement.
It was resolved to recommend to the Annual Shareholders’ Meeting that net profit distribution based on the 2008 performance be made as follows:
of RUB 1 573.5 m net profit, total, to allocate for
- capital expenditures — RUB 1 475.3 m;
- long-term financial investments — RUB 19.5 m;
- financial provisions — RUB 78.7 m.
Because of sharp shrinkage in net profit the Supervisory Board recommended to the Annual Shareholders’ Meeting to refrain from payment to the shareholders of dividends for 2008, amending the Charter of ALROSA Co. Ltd. as appropriate.
Also the Board considered adjustment of ALROSA tentative targets for 2009 that would account for additional measures to overcome payment budget deficit in 2009.
With regard to a number of factors materially affecting production and financial performance of ALROSA Group, it was recommended by the Board to amend the plan for 2009 as follows, with possible further adjustments based on the results of H1 of 2009:
- diamond production including production by «ALROSA-Nyurba» — USD 2 103.7 m;
- diamond production by ALROSA Co. Ltd. — USD 1 655.0 m;
- diamond sales by ALROSA Group, total — USD 2 631.4 m, this including:
- rough diamond sales — USD 2 531.4 m;
- polished diamond sales — USD 100 m;
- proceeds from sales of products (works and services) for ALROSA Group — RUB 81 125.8 m;
- profit from sales of products (works and services) before taxation for ALROSA Co. Ltd. — RUB 1 801.2 m;
- ALROSA Co. Ltd. net profit — RUB 454.4 m;
- logistics and supplies acquisition — RUB 13 199.3 m;
- capital assets construction — RUB 12 730.6 m;
- exploration budget — RUB 2 606.1 m.
Additional measures to overcome ALROSA’s payment budget deficit were approved in accordance with the recommendations of the Company’s crisis management group of March 3, 2009. In particular, it was decided to freeze employees’ wages and salaries and not to pay any bonuses based on 2008 results. By July 1, 2009 the number of managerial staff will be reduced by 130 employees. Also until the end of this year mining will be stopped at unprofitable mines of «Irelyakh Placer», «Vodorazdelny Galechniki», «Levoberezhnaya», «Gornoye» within the Mirny Mining Division, and Zarnitsa within the Udachny Mining Division. The scope of mining operations will also be reduced in the Jubilee Open Pit of the Aikhal Mining Division and International Mine of the Mirny Mining Division. For the entire exploitation season ore treatment plants at uneconomical seasonal operations, namely Plant No.15 of the Nyurba Mining Division, dry processing plant of the Aikhal Mining Division, Dredge No. 202, automatic sorting complex of the Mirny Mining Division, will be inoperative. The regimes of outage or part-time work will be in effect for their workforce.
It was resolved to convene an Annual General Meeting of ALROSA Co. Ltd. Shareholders on 20th June 2009.
The Board endorsed the decision of the ALROSA tender committee and recommended that OOO FBK as the winner in the tender be appointed the Company’s statutory auditor by the Annual Shareholders’ Meeting.
The Supervisory Board relieved of their duties as members of the Executive Board Gustav A. Yakovlev, upon his retirement, and Peter M. Glagolev, upon termination of his employment with ALROSA. The appointment of ALROSA Vice President — Director of Representative Office in Yakutsk Valery Kolodesnikov as a new member of the Executive Board was endorsed.
The Board endorsed its work schedule for 2009.
The day before, on May 13, a meeting of the Company’s Executive Board had taken place in Moscow.
In compliance with the instruction of Chairman of the Supervisory Board Alexey Kudrin the Board considered possibilities to increase purchases of Russian-made industrial equipment for ALROSA. The Board instructed the Engineering Service and the Capital Construction Division to ensure preferential selection of domestically manufactured products — for the entire range of products and in maximum possible volumes — in the course of implementation of the Company’s capital construction programs, technical modernization and re-equipment in 2009 — 2010.