Energia s. P. Korolev Rocket and Space Corporation Energia

Appendix 12 / Information about actual results of executing
the Russian Federation President and Government orders and instructions

In accordance with the Decree No. 874 by the President of the Russian Federation dated December 2, 2013 «On the Rocket and Space Industry Management System» in order to improve the system of management of organizations in the rocket and space industry – the Corporation’s stock owned by the Russian Federation (38.22 %), was contributed as the share of the Russian Federation in the Charter capital of the open joint-stock company ”United Rocket-Space Corporation” (OAO URSC). As a result, after September 23, 2014, only those orders are applicable to the Corporation, which deal with the companies that have an indirect share of the Russian Federation in their charter capital.

Information about execution of the RF President and Government orders is made available in accordance with the data placed on the Interdepartmental portal devoted to public property management (further called the «ID-portal») created on Federal State Property Management Agency site which is used (among other things) to monitor progress in execution of the Russian Federation President and Government orders, as well as Federal State Property Management Agency («Rosimuschestvo») up to September 23, 2014 representing the interests of the Russian Federation, the largest shareholder of the Corporation.

List of major orders and instructions of the Russian Federation President and Government

Posted on the web site of the Federal Property Management Agency (http://rosim.ru/activities/corp/control)

Order	Document/action	Comments, additional conditions	Information about execution of the orders
1. NON-CORE/CORE ASSETS ALIENATION
1.1.Core assets alienation program
Subparagraph «v» Item 1 of the Order of RF President dated 27.04.2012 N Pr-1092	Core assets alienation program	The Board of Directors is to consider advisability of approving the Core Asset Alienation Program in the sectors with the sufficient level of competition and approve it if advisable. The Program must reflect: 1. Information about documents establishing the title to these assets, together with their copies; 2. Information about encombrances. 3. Information about encumbrances. 4. Initial price of the property to be sold equal to the market price, calculated on the basis of a property assessment report from an independent assessor, prepared in accordance with the Russian Federation law on the valuation activities; 5. The method and procedure for selling the core assets; 6. Due dates for selling the core assets.	In pursuance of subparagraphs «b» and «v» of Item 1 in the List of the Russian Federation President Orders No. Pr-1092 of 27.04.2012 which concern development of competition and business, as well as the Russian Federation Government Order No. ISh-P13-2638 dated May 2, 2012, the Corporation Board of Directors (Minutes No. 3 of 21.11.2012) reviewed the matter of advisability of alienating RSC Energia-owned core assets (including stock (shares) in economic entities which are in possession (directly or indirectly) of the Corporation) in sectors of the economy exhibiting adequate level of competition with the aim (among other things) to ensure maximum possible involvement of small and medium-sized enterprises in the process (RF Government Directive No. 4965p-P13 of 17.09.2012). At the Board of Directors it was resolved that alienation of RSC Energia core assets is not advisable.
		Review at the Board of Directors the need to approve/inadvisability of approval of the Program
1.2. Non-Core assets alienation program
Subparagraph «k» Item 1 of the Order of RF President dated Dec 6, 2011 No. Pr-3668	Non-Core assets alienation program	The Board of Directors is to: 1) analyze the assets of the JSC to justifiably identify non-core assets, 2)provide review and make a resolution on the program of Non-core Assets Alienation Program (to approve)	In order to carry into effect subparagraph «v» of item 2 of the Russian Federation President’s Decree dated 07/05/201 No.596 «On Long-Term State Economic Policy» concerning alienation of non-core assets of the companies with state participation, the Corporation Board of Directors approved the Program of alienation (sale) of non-core assets owned by RSC Energia on 14.07.2011 (Minutes No.1) and on 20.06.2012 (Minutes No.9) the Board of Directors approved addendum to the program of alienation (sale) of non-core assets of the Corporation and extended the dates for taking action in support of the Program implementation. In the course of the above Program implementation, on the instructions given by the Russian Federation Government No.VP-P13-1770 of 29.03.2012 with respect to looking into the issues of reduced participation of major public companies in capital of other economic entities, as well as separation of non-core business from them, the Corporation Board of Directors (Minutes No 1 of 05.10.2012) considered the issue on termination of the Corporation participation in OOO Experiment within the framework of implementing the Program of alienation (sale) of RSC Energia non-core assets. In accordance with subparagrap 28, item 1, Art. 28 of the Corporation Articles of Association, the Board of Directors approved the transaction on selling the Corporation share in OOO Experiment Charter capital to the extent of 49,48% and at the price determined by independent appraiser in compliance with the Russian Federation legislation. Cash from sales of RSC Energia’s share in OOO Experiment were received by the Corporation. The Corporate Board of Directors on 11.06.2014 (Minutes of the meeting No. 12) reviewed and approved alienation (selling) by the Corporation of 49.5% (99 pcs)of shares of AO RSC Baikonur (formerly – AO KRISP Aelita) owned by RSC Energia at a price no lower than the market price determined on the basis of an assessment report prepared by an independent assessor. The sale of the stock of shares of AO RSC Baikonur at the market price was completed, the receipts from the sale have come in. On the subject of alienation (sale) of OAO Consortium Space Regata there are no parties interested in buying the shares at the market price. With respect to ZAO Astrasystems (the share of the Corporation in the managing company – 25.2 %): by the Resolution of Inter-District Inspectorate of Federal Tax Service No.46 of Moscow, ZAO «Astrasystems» was stricken off the Official Single Register of Legal Entities per paragraph 2 of Article 21.1 of the Federal Law No. 129-ФЗ of 08.08.2001 as a result of cessation of business ( the date of the entry – 17.11.2014). The Corporation posted on a quarterly basis on the ID Portal of FPMA information on the optimization of the structure of non-core assets (updated information about decisions adopted by the Board of Directors on the subject of alienation of non-core assets together with the alienation program, as well as data on the already sold assets specifying the amount of money received from their sale).
		Additionally: Non-core assets must not only be alienated, they must be removed from the sphere of influence of the JSC
Subparagraph «v» Item 2 of the Order of RF President V.V. Putin No. 596 of 07.05.2012 “About long-term economic policy of the government Letter from the Ministry of Economic Development of Russia dated 25.02.2014 No. D08i-314 Fax message from FPMA dated 19.03.2014 No.11/11136		Also classified as non-core assets can be shares in subsidiaries and affiliates that are not involved in the core activities. Post on ID Portal information regarding non-core assets.
2. PROCUREMENT OF GOODS, WORKS AND SERVICES
2.1. Approval of Procurement Policy, improving procurement transparency
Federal Law 223-FZ "On procurement of goods, works and services by particular legal entities"	Approve Procurement Policy	Procurement Policy - contains procedures for preparing and conducting procurement processes and conditions for their application; - procedure for concluding and executing contracts.	When conducting its procurement activity, the Corporation follows fundamental principles of Federal Law No.223-FZ «On Procurement of Goods, Work, Services by Particular Legal Entities» and focuses on execution of the orders indicated in the RF Government instructions No.6362p-P13 of 24.10.2013. Since Federal Law No. 223-FZ «On Procurement of Goods, Work, Services by Particular Legal Entities» is not applicable to RSC Energia, considering that the Corporation does not meet requirements, specified in Paragraph 2 of the law (the total share of the Russian Federation in the charter capital is less than fifty percent), it is not required to post procurement information and the “Corporation Procurement Policy” in the common information system and on the official web site (www.zakupki.gov.ru). In accordance with the Russian Federation Government instructions «On Ensuring Transparency of JSC Procurement Activity»: - the report on the Corporation procurement activity results was posted on the ID-portal of FPMA on a quarterly basis; - posted on the Corporation official site is information about placement of orders in an electronic form (procurement activity). Also developed and adopted were new «Provision on RSC Energia Procurement Activity» (Corporation President Order No.35 dated Feb 04, 2013) and «RSC Energia Procurement Activity Policy» (Corporation President Order No.514 dated Dec 23, 2011). Screening procedures are performed electronically using electronic trading platforms. On 08.04.2014 the Corporation Board of Directors: (Minutes of the Meeting No. 9) approved the Report on the Results of Corporate Procurement Activities for 2013, including on the procurements/tenders carried out in the field of financial (consulting, audit, insurance) services. During its session on 29.04.2014 (Minutes of the Meeting No.10) the Corporate Board of Directors also reviewed the progress made by the Working Group set up by the decision of the Corporate Board of Directors dated November 11, 2013 (Minutes of the Meeting No..3) to analyze the Corporate procurement activities and took note of Working Group’s findings. It made the decision to: recommend that Corporate management take into account the Working Group findings in its work to improve the procurement activities and develop changes/updates to the relevant documents governing the Corporate procurement activities. The updated “Procurement Policies” and “Screening Procedure Policies” that were approved by the Corporate Board (extract from the Minutes of the Meeting No. 9/2014 dated 24.06.2014), have not been put in force. On 19.06.2014 (Minutes of the Meeting No. 13) the Board of Directors reviewed and approved the report on the results of the Corporate procurement activities for the 1^st quarter of 2014. On 12.12.2014 (Minutes of the Meeting No. 10) the Board of Directors reviewed and took note of the Report on the Results of Corporate Procurement Activities for the 3^rd quarter of 2014 (FPMA letter GN-13/1416 dated 25.01.2011), including on the procurements/tenders carried out in the field of financial (consulting, audit, insurance) services and information about changes in the procedures governing procurement activities. The decision was made to: instruct the Corporate management that in the preparation of the report on the procurement activities they should take into account the comments made at the meeting of the Corporate Board of Directors, including provision of information over the entire 2014 (broken down by quarters), a comparative analysis against similar periods of the previous year and target figures (if any) for 2014, information about the effectiveness of the procurements, competitive and non-competitive methods of procurement (citing the rationale for using non-competitive methods of procurement). The report on the results of procurement activities for 2014 was reviewed and taken note of by the Corporate Board of Directors (Minutes of the Meeting No.15 dated 10.04.2015).
Order of the RF Government No.ISh-P13-8685 dated 17.12.2012	Review at the BOD meetings the issue of making decisions aimed at assuring procurement transparency, including approval of the procurement policy	Consider the feasibility of switching to electronic procurement
2.2. Reducing costs per production unit during procurement
Subparagraph«e» Item 1 of the Order of RF President dated 02.04.2011 No. Pr846 Order of the RF Government of 15.08.2011 No.ISh-P13-5809	Include into the KPI system an indicator of the reduction of costs per production unit	Approve/update Provisions on the Payments to Managers of State Companies, to tie in the payments with this KPI indicator. Introduce changes into employment contract of state company managers (to provide the possibility of unilaterally dissolving the contract in case of a failure to meet KPI). Develop a procedure for calculating the cost reduction indicator.	In accordance with the orders of the President of the Russian Federation, as well as the Federal Property Management Agency (subparagraph «e» of Item 1 of the List of Orders of RG President dated 02.04.2011 No..Pr-846) (fax message from FPMA dated 16.01.2012 No.GN-15/479, FPMA letter dated 17.02.2012 No. GN-15/4637)) the Corporation made a decision to reduce the procurement costs for goods (works, services) per production unit by no less than 10 percent per year for three years in real terms. On 26.12.2011 the Corporation Board of Directors (Minutes of the meeting No..3) approved key performance indicators (KPI) of the Corporation operation (proceeds; trading profit; net profit; amount of finance – cash flow, index of costs reduction per unit of output) and the Procedure to calculate index of reduced costs for purchasing goods (work, services) per unit of output. To update and supplement the approved Procedure for reducing procurement costs for goods (works, services) per production unit, comments from Roscosmos (letter dated 30.03.2012 No.UGI-1935) were adopted. Within the framework of quarterly progress reports on the Corporate Programs reviewed at the meeting of the Board of Directors on 23.10.2014 (Minutes of the meeting No. 6), the indicator of reducing procurement costs for goods (works, services) per production unit was calculated in accordance with the Procedure for Reducing Procurement Costs for Goods (Works, Services) per Production Unit adopted at the Corporation. 2012 saw changes in the procedure for remuneration payment to the Corporation managerial personnel concerning linkage between size of remuneration and achieved index of reduced costs of purchasing goods (work, services) per unit of output of no less than 10% per year within three year in real terms, as well as imposing sanctions for failure to achieve the above index. Annual General Shareholders’ Meeting held on 06.07.1013 (Minutes of the Meeting No. 25) approved the Provisions on Remuneration and Compensations to be paid to the members of RSC Energia Board of Directors and Auditing Committee which had been worked out with due regard for the recommendations given by the Ministry of Economic Development No GN-13/25630 of 13.10.2009. The Board of Directors meeting held on 29.04.2014 (Minutes of the Meeting No. 10) reviewed Progress Report on Corporate Program for 2013, including the results of the work on reducing the procurement cost for goods (works, services) per production unit and made the decision: To take note of the fact that reduction of procurement costs for goods (works, services) per production unit at the end of 2013 was 10.4%.
		Additionally: the feasibility of publishing information about planned procurements needs to be considered	The information about planned procurements is published on the official web site of the Corporation in the “Procurements” section.
2.3. Assuring the efficiency of purchases from small and medium business, in particular with respect to procurement of innovative and high-technology products
Directives of the Russian Federation Government dated 24.10.2013 No. 6362p-P13 FPMA letter dated 26.06.2014 No. 11/27214	Assure that the single-member execute body makes decisions with respect to the efficiency of purchases from small and medium business, in particular with respect to procurement of innovative and high-technology products	Assuring the efficiency of interactions between the customer and Small and Medium Business (SMB), in particular with respect to procurement of innovative and high-technology products Establish a Consultative Body, responsible for public audit of the efficiency of the purchases (draw up the Consultative Body Statute, make sure its activities are transparent). Form a section in the Annual Report of the company. Approve Regulations on the Procedure and Rules for Introducing innovative Solutions into the Customer Activities. Ensure the efficiency of the Customer’s “one-stop shop” system for introduction of innovative products and results of research and development efforts of small and medium business, as well as the mutual technology transfer Introduce changes into procurement policy or other administrative documents of the customer, in which only SMB participate in the procurement Develop and introduce KPI for the customer management: share of purchases from SMB, including innovative products Introduce changes into customer documents about generating the relevant statistical data to include into efficiency criteria for the customer’s top management the mandatory parameters characterizing the innovation-driven growth of the company	The Corporation Board of Directors held on 19.02.2014 (Minutes of the meeting No. 6) considered expanding the access of the small and medium businesses to the procurements (FPMA letter No.11/57827 dated 10.12.2013, directive of the Russian Federation Government No. 7377p-P13 dated 07.12.2013) and made the decision: - the President of the Corporation is instructed to perform the required actions and assure the adoption of decisions related to: 1) increasing the share of purchases in electronic format in the overall annual amount of open competitive purchases to the extent and on schedule provided for in Paragraph 7 of the Plan of Measures («the roadmap») «Expanding access of small and medium business to procurements of infrastructural monopolies and companies with government ownership», approved by the order of the Russian Federation Government dated May 29, 2013 No. 867-r (hereinafter referred to as the Plan). 2) introducing changes into procurement policy or other administrative documents of the Corporation when approving special aspects of purchases from small and medium businesses with adoption of separate documents on accepting a commitment to annually allocate lots in the procurement structure for purchasing innovative products in stead of traditional products in the amount of at least 20 percent of the annual amount of the purchases of the type of standard products, which can be replaced with innovative products developed by small and medium businesses that have passed safety and reliability compliance assessment in accordance with the provisions on the procedure and rules of introducing innovative solutions, and also subject to the following conditions: in case innovative offers are absent, within the framework of procurement procedures the standard products are procured, which is to be stated in the procurement documentation; information about plans to form lots for purchasing innovative products instead of traditional products is posted for free access on the web site of the Corporation and on the Federal web site for support of small and medium businesses in the Russian Federation. 3) development of proposals on simplifying for the small and medium businesses the procedures for purchasing from the customers through reducing, simplifying and standardizing the documentation required for participation of small and medium businesses in procurements, development of procedure for determining the life cycle of the products, works, services, that are being purchased. 4) development and introduction into procurement procedures of the criterion for evaluating and comparing proposals "life cycle cost of a product or an object resulting from work" with the possibility of concluding, based on the procurement results, a life-cycle contract based on the procedure developed for procurement of innovation products (including those replacing traditional products), as well as for procurements of high-technology and (or) advanced products. 5) support for procurement of innovation products (including those replacing traditional products), as well as advanced, high-technology products using the criterion "life cycle cost of a product or an object resulting from work" with the possibility of concluding a life-cycle contract.
Directives of the Russian Federation Government dated 07.10.2013 No.7377p-P13	Assure that the single-member execute body makes decisions with respect to the efficiency of purchases from small and medium business, in particular with respect to procurement of innovative and high-technology products	Assuring the efficiency of interactions between the customer and Small and Medium Business (SMB), in particular with respect to procurement of innovative and high-technology products Increase the share of purchases made in electronic form. Into procurement policy or other administrative documents of the customer, when approving special aspects of procurements from small and medium businesses, through separate documents, introduce changes which envisage partial replacement of traditional products with innovative ones. Simplify procurement procedures for small and medium businesses. Develop and apply criteria that take into account the product life cycle.
2.4. Increasing purchases of Russian-made products
Orders of RF President based on the results of a session of the Presidium of the Council of State of the Russian Federation dated 20.02.2009	Review at the BOD the possibility of updating investment programs with respect to increasing purchases of Russian-made products		Posted on the ID Portal is information about the purchases by the Corporation of Russian-made products in 2007 -2012.
3. DETERMINING THE DIVIDEND AMOUNT
RF Government direction of 29.06.2006 No. 774-r (as worded in RF Government direction of 12.11.2012 No. 2083-r). (FPMA’s Letters of 06.06.2014 No. 11/24262, of 18.07.2014 No. 09/31116, of 14.08.2014 No. VB-09/34938.	Apply recommendations of the RF Government on determining the size of dividends also to SAC	Allocate to the payment of dividends no less than 25 percent of net profit of the joint-stock company (without taking into account the revenue from revaluation of financial investment)	In pursuance of FPMA’s order, the Corporation ensured implementation of the provisions foreseen by the Government direction, i.e. in the period since 2009 the Corporation allocated no less than 25 % of net profit to the payment of dividends. No decision was made on the distribution of the Corporation’s profit (including payment of dividends) based on the results of 2013 at the annual general shareholders meeting held on 12.07.2014. On 14.01.2015 a special meeting of shareholders made a decision on the distribution of profit based on the results of 2013, including a decision on payment of dividends to the Corporation stockholders (25.65 % of the net profit). As for determining the size of SAC dividends, the Corporation extended to them the requirement of setting the size of dividends at no less than 25% of the net profit.