Download 2004 Annual Report - Polymetal

CorporategovernancePolymetal follows widely acceptedglobal corporate governancepractices in its financial and pro−duction activities. The companyalso strictly complies with normsand regulations stated in theCode of Corporate Governanceissued by the Federal Agency onFinancial Market of the RussianFederation.Corporate governance principlesin society are based on respect−ing the rights and legal interestsof all members of society. Effectivecorporate governance principlesshould also stimulate a company’sefficient operations, including in−creasing the value of its assets,creating new jobs and maintainingfinancial stability.Polymetal observes Russian andinternational business standardsand ethics. The company protectsthe rights of its shareholders,provides credible, complete, openand transparent information toconcerned parties and organizesmeetings of the Board of Direc−tors and shareholders. The com−pany strongly believes in adheringto environmental protection stan−dards (both Russian and interna−tional) and in meeting norms andrequirements dealing with thehealth, safety and social securityof its employees.Polymetal also actively collabo−rates with Russian regional au−thorities in planning and imple−menting social and economicdevelopment programs in theregions where the company oper−ates.Polymetal actively takes mea−sures to upgrade informationaltransparency for its sharehold−ers, investors and other interest−ed parties. The company preparesauditing reports in accordancewith US GAAP standards (auditor:PricewaterhouseCoopers), cer−tifies the quality of key businessoperations in accordance withISO−9001 standards and main−tains relations with investors andanalysts in domestic and interna−tional financial markets. The com−pany’s website provides detailedand relevant information about allaspects of the company’s activi−ties in both Russian and English.In 2004, Polymetal took steps toincrease business and technologi−cal efficiency and improve open−ness for investors. A key stepwas forming the holding company.The holding corporate structurewill maximize our ability to complywith international principles andimprove our efficiency in managingsubsidiary companies.A great deal of work was doneduring the reported period toensure that all aspects of thecompany’s operations comply withinternational standards. Polymet−al designed a long−term techni−cal−economic model for develop−ing its mining facilities. This modelwas approved during geologicalauditing carried out by the inter−national consulting company, SRKConsulting. Clifford Chance car−ried out a comprehensive juridicalauditing of all companies managedby Polymetal. Together with a spe−cialized international company,Polymetal is working on a detailedrisk management program.To minimize possible losses − dueto equipment malfunction or de−lay, fire at workplaces and otherrisk factors characteristic of themining industry − the company’ssubsidiaries have signed insur−ance contracts. These contractsinclude complete coverage fromwestern underwriters throughtwo leading global insurance bro−kers, AON (GB) and Marsh (GB).In the future, we plan to take nu−merous steps to reform ourecological standards and indus−trial and labor safety practicesto comply with internationalnorms, in particular with WorldBank standards. We also expectto complete recalculating thecompany’s mineral reserve baseaccording to international JORCclassifications in the near future.These measures are aimed ateffectively branding Polymetalamong potential strategic andportfolio investors, demonstrat−ing the transparency and attrac−tiveness of the company and cre−ating grounds for the company topotentially enter the internationalpublic market.Corporate governance39