Annual Report

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ASTARTA HOLDING N.V. Annual Report 2011The Group conducts budgeting and planning according to the Budget regulations adopted byCEO. The Budget regulations determine a system of development, approval, controlling andanalysis of operational, investment and financial budgets for each business segment andcompany of the Group. Department for budgeting and management accounting isresponsible for execution and adhering of the Budget regulations.2) Control over revenues and expenses.Control over revenues and expenses of the enterprises of Astarta-Kyiv, as well as overcrediting and withdrawal of funds of these enterprises is executed by way of elaboration onthe regulations regarding budgeting and elaboration of the budget of Astarta-Kyiv’senterprises itself.The budget commission was founded in order to improve efficiency of the control overrevenues and expenses of the subsidiaries, which commission holds meetings on a monthlybasis to approve budgets and control over budgeting in Astarta-Kyiv and its subsidiaries.3) Control over sales of the enterprises of the Group.Astarta-Kyiv provides for centralized sales of the Group’s core products. It is conductedthough carrying on negotiations with consumers, drafting schedules of dispatching andsending them to subsidiaries. The control over sales is established in a way of control overexecution of the dispatching schedules by our subsidiaries as well as cooperating with ourconsumers.4) Control over investment decisions.Astarta-Kyiv has developed procedures of the investment decisions adoption.The investment committee was founded to improve efficiency of the investment decisionsadoption process and to minimize risks of investment decisions.5) Policy of economic security.This policy is realized by an especially established system of the economic security service,which is a vertically integrated chain of security departments on the level of Astarta-Kyiv andthe operational companies.6) Hot line.Everyone who works with Astarta-Kyiv or within Astarta-Kyiv can communicate to InternalAudit Department by telephone, mail or e-mail and leave information about a fraud or otherviolations.With respect to (ii) mentioned above, the monitoring means of control environment includedirect control. One of the main instruments of direct control is the Department of accountingmethodology and control and the Internal Audit Department of Astarta-Kyiv.The Department of accounting methodology and control executes its control over Astarta-Kyiv’s subsidiaries periodically and examines compliance of the accounting of thesubsidiaries with the accounting standards and policy in place. The Internal Audit Department48
ASTARTA HOLDING N.V. Annual Report 2011executes its control over Astarta-Kyiv’s subsidiaries to examine the efficiency of the internalrisk management system, take active part in consulting the management of both Astarta-Kyivand its subsidiaries with respect to improving of the internal control system.In connection to the above mentioned, the management believes that it is taking adequatesteps to strengthen our internal risk management and control systems.DeficienciesOver the period covered by this annual report the Company has not identified any controlissues that could be classified as a material weakness or having a material impact on itsoperational and financial results. The internal risk management and control systems providea reasonable assurance that the financial reporting does not contain any errors of materialimportance and that the risk management and control systems worked properly in 2011.BSection II.1.5 of the Dutch Corporate Governance CodeThe Company has been working on a system that is in compliance with the Dutch CorporateGovernance Code, such in cooperation and consultation with the Company’s external auditor.Within the last year the Company has improved this system in such manner that it has madea lot of progress in its endeavour to comply with the relevant principles and provisions of theDutch corporate governance code.Deviation from the Dutch Corporate Governance CodeAs the Company is incorporated under the laws of the Netherlands, apart from applying theCode of Best Practice for WSE Listed Companies, the Company complies with the DutchCorporate Governance Code by applying principles and best practice provisions that areapplicable, or by explaining why the Company deviates from them. The Company tries tocomply with both Dutch and Polish corporate governance rules.Since the WSE Corporate Governance Rules are similar to the rules provided under the DutchCorporate Governance Code, a majority of the principles and best practice provisions of theDutch Corporate Governance Code are being complied with. Since the first General Meetingof Shareholders held after the listing of the Company’s shares on the Warsaw StockExchange, all the internal documents and regulations concerning the corporate governancerules of the Company were adopted and amended from time to time.The Company currently does not apply the following provisions of the newly applicable DutchCorporate Governance Code:Best practice principle III.5: composition and role of three key committees of the supervisoryboardThe Company has a one-tier structure with only two non-executive directors and is thereforenot obliged to have committees, other than the audit committee. However, the Company hasa remuneration committee and an audit committee.Best practice provision III.8.3: one-tier management structure49
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Viktor Ivanchyk, ASTARTA Holding N.
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