Annual Report 2012

Chairman’s letter

Acron Group is a developing, dynamic company. Our robust corporate governance system and top management team give us the strength to face any challenges and make the best use of every opportunity.

For many years, Acron Group has been committed to improving its corporate governance system to ensure adherence to all statutory requirements and global best practices and protection of shareholders' rights and interests. The Board of Directors, its three Committees and the Managing Board play an active role in managing the Group. Acron Group has established an effective system of internal control and adopted corporate documents and procedures that ensure transparency and the commitment of the entire governance system to its shareholders' interests and the Group's needs.

Risk management is one of the most important functions of the Board of Directors and the Managing Board. The directors use their expertise and professional experience to perform strategic planning and analysis, and take timely steps to prevent risks or mitigate their consequences. The Board of Directors and the Managing Board consist of the Company's top managers, who are responsible for professional assessment and close monitoring of existing and potential risks. The main benefit of this approach is Acron Group's development strategy, which will gradually decrease the impact of major risks and improve the Group's resilience.

One more important element of the Group’s corporate governance system deserves recognition: we are steadily enhancing transparency and simplifying our business structure with due account for the interests of shareholders and investors. We pay close attention to the Group's external audit and adopt measures that will result in improved shareholder value in the future. A key step in this direction was completion of a complex corporate procedure to eliminate cross-shareholdings between Acron and its subsidiary Dorogobuzh, which resulted in a 15% decrease in Acron's authorised capital. An important part of this process was settlement of the dispute between Acron and Yara International ASA and exchange of control over the blocked stake in Apatit for a stake of its own shares. In late 2012, we also amended our dividend policy by defining IFRS net profit as the benchmark for payments to shareholders and declaring our intent to pay dividends at least twice a year.

These accomplishments are just the beginning. The main tasks before the Board of Directors and the Group's leadership include further improvement of the corporate governance system, an increase in the number of independent directors on the Board of Directors, active work with shareholders and investors, and a permanent focus on the risk management system. This is our day-to-day work, which shapes the foundation of the Group's sustainability.

Alexander Popov

Chairman of the Board of Directors

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