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ACRON. INVESTOR PRESENTATION 2006. COMPANY OVERVIEW. Acron Holding is a major mineral fertilizer producer in the world. It ranks fourth in Europe in terms of output volume of nitrogen and phosphate fertilizers.

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acron

ACRON

INVESTOR PRESENTATION

2006

company overview
COMPANY OVERVIEW
  • Acron Holding is a major mineral fertilizer producer in the world. It ranks fourth in Europe in terms of output volume of nitrogen and phosphate fertilizers.
  • Acron owns and operates three agrochemical facilities: JSC Acron (Veliky Novgorod, Russia), JSC Dorogobuzh (Smolensk Region, Russia) and Shandong Hongri Acron Chemical Joint Stock Company, Ltd. (Shandong Province, the PRC)*.
  • Besides, Acron holds stakes in two producers of raw materials for fertilizer industry – JSC Apatit, JSC Silvinit, and gas-producing JSC Sibneftegaz.
  • In addition, in October 2006 CJSC North-Western Phosphorous Company established by Acron Holding, won the tender for development of two apatite-nephelinic ore deposits in Oleniy Ruchey (reserves of 392 million tonnes) and Partomchorr (reserves of 800 million tonnes), which will provide in full the Holding’s facilities with the apatite raw material.
  • Among Acron’s projects is the construction of its own transhipment port terminal in Sillamae (Estonia) with the capacity of 1 million t/y of ammonia and 700,000 t/y of liquid fertilizers, which will significantly improve Acron’s logistics.

*Since Hongri Acron was incorporated in Acron Holding in May 2005, all figures through 2004 present consolidated data for JSC Acron and JSC Dorogobuzh, and exclude Hongri Acron performance.2005, 2006 and prospective data include JSC Acron, Dorogobuzh and Hongri Acron.

key competitive advantages
Domestic facilities of the Holding are most advantageously located in terms of proximity to ports as compared with other producers – the distance from Acron to the nearest Baltic port is 190 km, from Dorogobuzh – 680 km, while most plants are 1,500 to 2,500 km away from main sea terminals.

Acron Holding is one of the most efficient producers of nitrogen fertilizers in the CIS with gas consumption ratio of 1.147 m3 and 1.212 m3 per ton of ammonia for Acron and Dorogobuzh, respectively, which is significantly below the CIS average of 1.300 m3 per ton.

A wide product range allows the company to offset the negative effects of cyclical revenues from the sales of mineral fertilizers.

Regional sales diversification allows the company to respond flexibly to fall in demand in some regions by increasing deliveries to other markets (in particular, the company has strong market position in China and Russia).

Low gas consumption

KEY COMPETITIVE ADVANTAGES

Advantageous location in terms of proximity

to ports

Well-diversified product mix

Well-diversified market

production of mineral fertilizers in russia
PRODUCTION OF MINERAL FERTILIZERS IN RUSSIA

BASIC TRENDS

  • Economic downturn in the late 1980s through early 1990s resulted in a fertilizer consumption plunge in the domestic market. Between 1988 and 1944 it decreased by more than ten times.
  • Russian domestically oriented fertilizer producers were forced to notably cut their production and redirect their sales abroad.
  • 1998 economic crisis led to a considerable devaluation of the Russian currency and to a respective improvement of the exporters’ financial standing, which enabled the Russian fertilizer producers to rise their businesses. Consequently, in 2005 the domestic fertilizer output nearly doubled to 1990 level.
  • Russian fertilizers are highly competitive globally due to low internal energy tariffs.
  • It is anticipated that within next years the domestic fertilizer consumption will increase in line with a general economic upturn and the consolidation of farms into large holdings.
operational data
OPERATIONAL DATA
  • Acron Holding offers over 40 types of products. Mineral fertilizers account for more than 80% of total revenues, while the rest 20% are generated by organic and non-organic synthetic products.

Key Products:

- ammonia

- urea

- ammonium nitrate

- complex fertilizers

- methanol

- formalin

- urea-formaldehyde resins

- liquid carbon dioxide

- polyethylene and polypropylene products

- catalysts, etc.

  • Acron’s market share of mineral fertilizer production in Russia stands at 15%.
target markets domestic market
TARGET MARKETS DOMESTIC MARKET
  • The Russian fertilizer market offers huge growth potential.
  • As Acron production units are advantageously located close to major farming regions the company emerged as one of the leading suppliers of fertilizers in Russia.
  • Acron Holding sells its products to 55 administrative regions of the Russian Federation.
  • The Holding’s distribution network comprises 10 regional representative offices and 16 specialized agro-chemical businesses, in all key farming regions of the country. Total capacity of dedicated storage facilities amounts to over 200,000 tons.
target markets exports
TARGET MARKETSEXPORTS
  • Company’s products find a ready sale on global markets. Acron exports over 80% of its fertilizers.
  • Key markets include China, the USA, Western Europe, and South America.
  • Acron Holding is actively developing the Chinese market, which accounts for over 50% of global mineral fertilizers consumption. In China, the company registered A KANG, a proprietary brand for complex fertilizers, which is constantly in great request.
  • All products produced by Hongri Acron are sold on the Chinese market.
financial highlights
FINANCIAL HIGHLIGHTS
  • In 2005, Acron Holding managed to materially improve its financial performance due to both increased physical production volumes and growing prices for the whole range of its products.
stock market
STOCK MARKET
  • During 2004 and 2005, the aggregate market capitalization of the top ten Russian producers of mineral fertilizers in the domestic stock market increased nearly sixfold to USD8.2 billion from USD1.4 billion.
  • Strong share performance in the industry is explained by enhanced financial performance, a favorable price environment for mineral fertilizer producers in global markets, and improved transparency.

*** Shares conversion at 5,800 ratio took place on November 24. After the split 8,222 Acron’s ordinary shares with a par value of RUR29,000 were converted into 47,687,600 shares with a par value RUR5. Prices on graph reduced to nominal value after conversion.

acron holding development strategy
ACRON HOLDING DEVELOPMENT STRATEGY

Acquisition and construction of new production facilities (up to USD3 billion over the next decade)

Maximum transparency

Capitalization growth

An increase in fertilizer deliveries to the domestic market, while maintaining current export volumes

Achievement of definite leadership in the sector

corporate governance
CORPORATE GOVERNANCE

since 1997

since 1998

Quarterly disclosures

IAS reporting

PriceWaterhouseCoopers

IAS results auditor

Baker Tilly Russaudit

RAS consolidated results auditor

Corporate Governance Code

since 2005

contacts
CONTACTS

Acron Holding

Alexander Popov

Vice-President for Corporate Construction and Financial Control

Deputy Chairman of the Administration Boarde-mail: [email protected]

Alexei Milenkov

Head of Information and Analysis Department

e-mail: [email protected]

Nadezhda Bashkirtseva

Head of Securities Department

e-mai: [email protected]

37 (2) Prechistenka,

Moscow, 119034, Russiaphone: +7 (495) 246-3326fax: +7 (495) 777-0862