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PhosAgro’s Board of Directors Applauds the Company’s Progress in Implementing Key Investment Projects Under its Development Strategy to 2025

6 November 2020

Moscow – At its meeting today, the Board of Directors of PhosAgro, one of the world’s leading vertically integrated phosphate-based fertilizer producers, applauded the Company’s progress in implementing key investment projects within the framework of its Development Strategy to 2025.

 

The Board of Directors took note of the results of the implementation of PhosAgro’s key areas of focus in 2020 and approved plans for 2021. These plans call for the further development of the company, construction of new production capacities and modernisation of existing ones as part of the investment programme. This will enable increased production of plant nutrition systems that are free from concentrations of heavy metals and are in demand in the Company’s priority domestic Russian market and in 100 countries around the world, while also strengthening the Company’s competitive advantages in both domestic and export markets. The Company also plans to continue implementing social and charity programmes, as well as sustainability projects.

 

PhosAgro CEO Andrey Guryev said: “Amid the pandemic and while we continue to take comprehensive preventive measures at our facilities, PhosAgro is still making steady progress. We have maintained a production output growth rate of 5% per year. I can say with full confidence that PhosAgro will produce 10 million tonnes of product this year, which is a new record for the company.

 

“Construction is in full swing at all the sites where we have investment projects: new production facilities are coming online, and innovative new grades are being produced. By the end of the year, we will have completed a large-scale programme, at a cost of more than RUB 100 billion, involving the overhaul of and fundamental upgrades to the equipment at PhosAgro’s production facility in Cherepovets. The SK-3300 sulphuric acid production line is going to come online, and trains are going to start running at the Cryolite railway complex. Another new production facility is already in commercial operation that includes our third high-tech ammonia production facility with a capacity of 760 thousand tonnes per year and a granular urea production facility with a capacity of 500 thousand tonnes per year, as well as an upgraded sulphuric acid production unit and a terminal for storing feedstocks with a capacity of 30 thousand tonnes, an ammonium sulphate production plant with a capacity of 300 thousand tonnes per year and state-of-the-art biochemical treatment facilities with a capacity of 10 thousand cubic metres per day. By the end of the year, the first production facilities will be launched at a new plant we are building in Volkhov at a cost of RUB 28 billion. In August, we completed another stage in the upgrade of our facilities producing mineral fertilizers in Balakovo.

 

“Improving operational efficiency and reducing production costs through the use of best available technologies remain priority development areas for PhosAgro. Progress in these areas will enable PhosAgro to remain one of the most efficient producers of mineral fertilizers in the world.”

 

Xavier Rolet, Chairman of PhosAgro’s Board of Directors, pointed out that the Company has undergone a major transformation in recent years, both in terms of the modernisation of its production facilities and in terms of compliance with the best global practices in the area of corporate and social responsibility.

 

“During my two and a half years on PhosAgro’s Board of Directors, including the last year and a half as its Chairman, I have visited all of the Company’s production sites and have personally witnessed the Company’s exceptionally professional approach to the implementation of any project within the framework of large-scale investment programmes, as well as its work in the social and charitable spheres.

 

“High standards of industrial safety, which have become part of the corporate culture, and constant concern for the workforce and all residents of the cities where PhosAgro operates are helping the Company to establish a reliable system of preventive measures at all its production facilities during the pandemic, to protect the health of employees and to actively engage in work under the leadership of regional and federal authorities to create a reliable antiviral shield in Russia’s regions.”

 

The meeting heard a report concerning the results of project management at PhosAgro enterprises in 2019–2020 and concerning monitoring of the Company’s management of key risks. The Board took note of information on arrangements for an assessment of the work of the Company’s Board of Directors, and also on the results of an assessment of the compliance of the Company’s goals, values and strategy with its corporate culture, as well as on the results of the assessment and monitoring of the corporate culture.

 

At the meeting, the Company’s new Management Board was elected, and consent was given for members of the Management Board to hold positions in the management bodies of other organisations. The new Management Board includes PhosAgro CEO Andrey Guryev as Chairman, First Deputy CEO Siroj Loikov, COO Mikhail Rybnikov, Deputy CEO for Corporate and Legal Affairs Alexey Sirotenko, Deputy CEO for Finance and International Projects Alexander Sharabaiko, Сhief of Staff for the CEO Alexander Seleznev and Director of Business Development Roman Osipov.

 

The Board of Directors reviewed information from the chairs of the Board of Directors committees on their work during the third quarter of 2020. Irina Bokova, Chair of the Committee on Sustainable Development, who headed UNESCO from 2009 to 2017, noted the Company’s commitment to the UN 2030 Agenda and its increased contribution to the achievement of the UN Sustainable Development Goals.

 

“PhosAgro is building a systematic approach to integrating sustainable development principles into its activities. As part of PhosAgro’s Development Strategy to 2025, we identified 10 UN Sustainable Development Goals that we are helping achieve directly. The Company’s contribution to their implementation is monitored by the committee I chair.

 

“The pandemic has highlighted the relevance of the SDGs for all countries, citizens, public institutions and businesses. The SDGs are becoming an increasingly important factor for investors and consumers around the world. Well aware of this, PhosAgro fully supports the principles of sustainable development and is an active participant in the UN Global Compact – an international UN business initiative related to corporate and social responsibility. This platform’s recent confirmation of PhosAgro’s LEAD status, MSCI ESG’s upgrading of PhosAgro’s rating from BB to BBB and the Company’s rating from Sustainalytics, the fact that PhosAgro won the Grand Prix at the Russian Business Leaders: Dynamics and Responsibility awards held by the Russian Union of Industrialists and Entrepreneurs, as well as the increase in investments that we are seeing in our Company on the part of ESG funds is evidence of progress in integrating the principles of sustainable development into the Company’s activities and of transparency in the disclosure of our results,” said Ms Bokova.

 

She added that PhosAgro's management actively supports young professionals, encourages the expansion of their competencies, develops and improves the quality of communication with employees, which helps them to understand and support the Company's mission.

 

In addition, PhosAgro’s Board of Directors recommended that an Extraordinary General Meeting of Shareholders (“EGM”) adopt a resolution to pay out dividends in the amount of RUB 15.9 billion, or RUB 123 per ordinary share (RUB 41 per Global Depositary Receipt) from retained earnings as of 30 September 2020.

 

This recommendation was made after reviewing information on the Company’s financial and economic activities for the first nine months of 2020, including the Company’s IFRS interim consolidated financial statements, which will be published on 9 November 2020. The Extraordinary General Meeting of Shareholders held in absentia on 14 December 2020. The Board recommended that the EGM set 25 December 2020 as the dividend record date.

 

As Jim Rogers, Head of the Remuneration and Human Resources Committee, noted, “in recent years, PhosAgro has been implementing a large-scale investment programme that has expanded opportunities for the Company to generate free cash flow and laid the foundation for financing new investment projects and programmes in the area of corporate social responsibility, while ensuring stable payments of dividends to shareholders.”