MOSCOW - The National Depository Center (NDC), Russia’s only settlement depository servicing the full range of Russian securities, announced today that its Board of Directors, meeting 27 April, approved NDC Director’s report on operational results for 2006, accounting report and the auditing committee’s conclusions and recommended approval of these reports by the General Meeting of NDC members. The auditor’s report and opinion with regard to the NDC financial results according to Russian Accounting Standards and the profits and losses report for 2006 were taken into consideration. The auditor is Deloitte & Touche CIS CJSC. NDC Board also approved new membership of NDC Committees and considered the issue of possible conversion of NDC from the present not-for-profit partnership to joint stock company. Deloitte & Touche was approved again as NDC’s auditor. The Board approved the amount of the auditor’s fee. The Board took into consideration information on NDC’s technological platform modernization process and entrusted NDC management to continue work on this issue.
Nikolai Egorov, Director, NDC, said: “After 10 years of operations, NDC’s development has come to a stage where the level of contradictions between NDC’s legal status and its operations have reached the breaking point. These contradictions can influence the strategy for NDC’s development. In particular NDC’s activities are becoming more commercial, and this complicates the realization of NDC’s tax and accounting policies in the form of non-for-profit partnership. NDC’s legal status is becoming a deterrent for development of the MICEX Group as a public holding company using unified principles and mechanisms of corporate governance. Legislation related to joint stock companies is better in comparison with the legislation regulating the activities of non-commercial organizations and provides more standardized, transparent and correct mechanisms for corporate building of NDC as a central depository, including issues of participation in NDC’s capital and management. Therefore it is appropriate to consider the issue of transformation of NDC as a not-for-profit partnership into a joint stock company. In accordance with the decision of the General Meeting of the Members of the Partnership of 10 February, 2005 NDC management submitted research into the procedure of reorganization to a meeting of NDC’s Board of Directors on 15 March 2007.”
After discussion NDC’s Board agreed that reorganization is the appropriate direction and entrusted NDC’s Director to prepare a plan of reorganization and to submit it to the General Meeting of Members of Partnership not later than in December 2007.
Total NDC revenue for 2006 was RUR936.66 million. This is 22% more than originally projected. Sales growth led to increases in some items of expenses in comparison to the projected expenditures, but in general NDC costs were RUR482.62 million or 4% less than projected. Operating profit for 2006 according to RAS reached RUR454.4 million, profit tax and deferred tax payments reached RUR122.62 million, and net profit amounted to RUR331.42 million. According to the 2006 RAS results, NDC’s own capital reached RUR973.41 million (in early 2006 it was RUR643.6 million). As of 31 December, 2006, NDC’s internal funds was up more than 39% and amounted to RUR867.955 million. This is in compliance with the current standard for capital adequacy (and exceeds the standard by 1,930%).
The Board elected 24 representatives to the Committee for Depository Servicing, eight persons to the Risk Management Committee, 11 to the Technical Committee and nine to the Budget Committee. The NDC Board has been informed of an Addendum to the Regulations on the Committee for Depository Servicing which provides for rotation in the Committee from 2008, limitation of the number of its members to 20 people and the possibility of absentee voting. Key committees are deliberative bodies of the Board of Directors, they include a wide circle of participants and are designed for the development of opinions for further discussion by the Board of Directors.
Among committees’ members are:
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