eurochem-annual-report-2011

Where did we focus in 2011?
The Board of Directors focuses on long-term
strategic development by assessing major initiatives,
monitoring performance and ensuring that the core
elements of sound control, risk management and
effective structures are in place. Over the years
we have developed a deep understanding of the
business and an effective working relationship with
the executive team. We signed off on a number of
strategic milestones this year, including EuroChem’s
geographical expansion in Western Europe with
the announced acquisition of BASF fertilizer assets
in Belgium and, in a first for a fertilizer producer, our
upstream integration into natural gas production.
Across the Group, we have given an extra push
to investments and controls in health and safety
management systems with the goal of further
improving safety standards in the workplace.
Additionally, we continued to press for a tighter
financial reporting calendar and increased
oversight on the way we assess and mitigate risks,
particularly around our capital investment projects.
These are bound to be crucial issues for us
in 2012, as we accelerate the development
of the Gremyachinskoe potash deposit and start
integrating the assets acquired in Belgium and
Western Siberia.
2011 was a year of significant strategic initiatives
which pave the way to new markets and growth
opportunities.
Looking ahead
The six-month forward agenda we use has helped
us create a normal cycle for reviewing ongoing
issues such as budgets, financial reporting and
strategy. The timing, expectations and goals of
these reviews are well understood by the Board and
management and include detailed updates on core
operational areas, investment projects and strategy.
The table below summarises the Board’s activities over the year.
Strategic planning
and investments
Financial reporting
control, internal
control, and risk
management
Employee incentives
and development
Corporate
governance
and information
disclosure
• Revisited and repositioned the nitrogen, phosphate, potash, mining,
distribution and logistics strategies up to 2016.
• Monitored strategic developments and analysed opportunities presented
by management. Signed off on several transforming acquisitions.
• Increased our monitoring of the Gremyachinskoe potash deposit development,
especially targeting risks associated with any changes in either the project’s
budget or timeline.
• Approved further international expansion with the announced acquisition
of fertilizer assets in Belgium.
• Expanded the raw material base of the business to secure long-term cost
advantages, notably by increasing phosphate rock reserves and acquiring
a natural gas operator.
• Worked on enhancing budget controls and progress monitoring for large-scale
investment projects, including identifying and addressing future bottlenecks.
• Oversaw the development of documented financial reporting controls and the
tightening of reporting deadlines, bringing forward IFRS reporting to within
45 days after the close of the reporting period.
• Approved insurance coverage for large-scale investment projects.
• Reviewed the approach to financial risk management and health and safety risks.
• Reviewed the priorities and focus of the internal audit function.
• Oversaw preparations for responding to new transfer pricing tax regulations.
• Monitored the development of IT solutions within our unified information system
to reduce internal reporting delays and increase risk assessment capabilities.
• Developed an internal key executive and management succession and
contingency reserve programme.
• Evaluated the achievement of management targets in 2011, setting new targets
for 2012.
• Introduced changes to the incentives and bonus programme to include health
and safety components and indicators.
• Assessed the Board’s performance.
• Oversaw compliance of the Corporate Social Responsibility Report with
international standards, reviewed verification procedures.
• Rolled out an insider trading policy and tightened procedures ensuring we are
in line with anti-trust regulations.
Some specific areas we will focus on in 2012 include:
Enhancing
monitoring of the
integration process
Increasing value
and insights from
accounting system
Increase HSE
accountability
i
More detailed information about the Board’s
responsibilities can be found in the Company
Charter and the Board of Directors’ Regulations
on the Company’s website
www.eurochem.ru/about/corp-gov
• Strengthening the monitoring systems to exercise full oversight in the integration
of newly acquired assets.
• Further narrowing the gap between the reporting period and the production
and release of our IFRS accounts.
• Continue developing our KPI compliance to integrate workplace safety and
environmental targets.
Annual Report and Accounts 2011 EuroChem 71
Corporate governance