REG-PJSC PhosAgro: PhosAgro Board Reviews A. Guryev’s 5 Years as CEO

PhosAgro PAOAnnouncement

22/08/2018 16:05

PhosAgro’s Board of Directors Recognises Andrey Guryev’s Work as CEO
During Past 5 Years as Effective

PhosAgro’s key achievements during Andrey Guryev’s five years as CEO
include:

·      RUB 150 billion invested into development and modernisation,
which represents over 50% of EBITDA during the period, one of the highest
levels in Russian industry.

·      Despite a sharp decline in fertilizer prices, all projects under
the Strategy to 2020 were implemented on time and within budget.

·      The Company spent at least RUB 2.5 billion per year on social and
charitable programmes.

·      Fertilizer output increased by more than 40% to a record 8.3
million tonnes, while phosphate rock production hit the highest level achieved
in 25 years.

·      Investments in workplace safety resulted in a decrease in LTIFR
to 0.10 in 2017 compared with 0.20 in 2013

·      Labour productivity in the production of apatite concentrate
increased by 140%.

·      The number of fertilizer grades produced increased from 19 to 39,
including grades that contain secondary nutrients such as sulphur (NPS/NPKS).

·      Sales to the priority Russian market nearly doubled,
strengthening the Company’s position as the largest supplier in the country.

Volkhov, 22 August 2018. The Board of Directors of PhosAgro (Moscow Exchange,
LSE: PHOR), one of the largest global producers of phosphate-based
fertilizers, has heard a report from Andrey Guryev about the results of his
work as CEO over a period of five years and outlining his plans for the medium
term. Members of the Board of Directors particularly noted significant
progress made across all key areas of PhosAgro’s operations. The Board of
Directors conducted a site visit at the Company’s Volkov-based production
site the day after the official meeting took place in Cherepovets at JSC
Apatit.

Expansion of production, sales and geography

Over the last five years, fertilizer production volumes increased by 40%,
reaching a record amount of 8.3 million tonnes in 2017. The number of grades
of high-quality fertilizers that are naturally low in potentially-harmful
heavy metals produced by PhosAgro has increased from 19 in 2013 to 39 now.
Production of phosphate rock (apatite concentrate) increased by more than 20%,
exceeding 9.5 million tonnes, the highest volume achieved in the last 25
years. The Company plans to increase its production of fertilizers and
phosphate rock by another 6% and 8% by the end of 2018, to more than 9 million
and 10 million tonnes, respectively.

The Company has continued to develop its sales network both in its priority
market of Russia and abroad. In 2017, around RUB 600 million was invested in
developing infrastructure for the Russian sales network, PhosAgro-Region, and
more than RUB 2 billion has been invested over the past five years.

PhosAgro’s sales in the Russian market have doubled in five years, reaching
2.34 million tonnes in 2017. PhosAgro’s share of the Russian market is
around 30%, making the Company the leading supplier of mineral fertilizers in
the country. Thanks in large part to state policy and support for Russian
farmers from the members of the Russian Fertilizer Industry Association, which
Andrey Guryev has headed since 2016, domestic agricultural producers were able
to significantly increase the volume of fertilizers purchased and to achieve a
record grain harvest in 2017.

Over the past five years, the PhosAgro has also opened nine foreign trading
companies in all of the key regions where its products are sold: Europe, Latin
America and Asia. The share of direct export sales increased to more than 90%
by the end of 2017.

Investing in sustainable and profitable growth

Over the past five years, the Company has invested approximately RUB 150
billion, or 50-60% of EBITDA, into the construction of new capacities in
Russia that use best available technologies. This is one of the highest levels
of investment among Russian industrial companies.

The Company successfully completed its investment cycle with the commissioning
of the main projects in its Strategy to 2020: the construction of a high-tech
ammonia production line with a capacity of 760,000 tonnes per year and a new
granulated urea production line with a capacity of 500,000 tonnes per year.
Investments in these facilities amounted to RUB 65 billion.

In 2017, capital investments amounted to RUB 32.8 billion, and the forecast
for this year remains at the level of RUB 30 billion. In the next two years
(2018-2019), PhosAgro plans to earmark no less than RUB 60 billion for
investments, which will enable the Company to open up three new production
facilities by 2020: sulphuric and nitric acid lines, as well as a new ammonium
sulphate plant at the Company’s Cherepovets site. In Kirovsk, there are
plans to further develop the ore and raw materials base and to enlarge
enrichment capacities, while in Volkhov options for expanding the production
site are also being analysed.

Successful capital markets activities

This year, PhosAgro completed the placement of a USD 500 million Eurobond with
a 5.25 year (five years, three months) term and an annual coupon rate of
3.949%. At peak demand (with a volume of USD 2.5 billion), oversubscription
reached five times. Incredibly favourable investment conditions for the
Company made it possible for PhosAgro to reduce the average rate of its debt
portfolio and to significantly improve its structure. 

PhosAgro has investment-grade credit ratings from all three agencies: Standard
& Poor’s (rating/outlook: BBB-/negative), Moody’s (rating/outlook:
Baa/stable) and Fitch (rating/outlook: BBB-/stable), and the Company’s GDRs
were added to the MSCI Russia index in 2016.

Despite volatile mineral fertilizer prices, the Company has consistently
fulfilled its promises to investors and paid dividends in accordance with its
dividend policy.

Social responsibility as a strategic priority

In addition to its economic activities in the regions where it operates,
PhosAgro also builds housing as part of a corporate programme and plays a role
in implementing a number of major social programmes in the areas of education,
healthcare, youth policy and supporting sport. Annual expenditures on
charitable and social projects amount to more than RUB 2.5 billion. The
PhosAgro is one of the largest taxpayers in the regions where it operates,
paying some RUB 14.5 billion in taxes in 2017. The Company is the biggest
taxpayer in the Murmansk and Vologda regions.

Over the course of five years, the Company has invested around RUB 18 billion
into environmental programmes. PhosAgro’s programme for increasing energy
efficiency deserves special attention. The technologies used at the
Company’s production sites meet the standards of best available
technologies.

PhosAgro Board of Directors Chairman Sven Ombudstvedt said: “Over the past
five years with Andrey Guryev as CEO, PhosAgro has implemented a series of
consistent steps that have allowed the Company to consolidate its leading
positions in both the Russian and global markets. Under his leadership, the
Company has been able to fully implement all the plans envisaged by the
Strategy to 2020, the key elements of which are the new high-tech ammonia and
urea plants. I can say that these new facilities are truly an impressive
example of how advanced technologies have enabled PhosAgro to consolidate its
industry-leading position, expand production and improve efficiency, ensure
safe working conditions and minimise the Company’s impact on the
environment. PhosAgro has been developing in line with its strategy, paying
attention to all spheres of activity—from production and sales to corporate
governance, investor relations, environmental activities and the social
sphere. The Company is forging ahead, and we already have a clear vision of
growth priorities through 2025.”

Xavier Rolet, a member of PhosAgro’s Board of Directors and the Chairman of
its Risk Management Committee, said: “PhosAgro has been a model in terms of
its adherence to the principles of transparency and information disclosure, as
well as when it comes to improving its standards of corporate governance,
since going public. After an increase in the Company’s free float to more
than 25% as a result of its SPO in 2017, the Board of Directors was expanded
from eight to ten members, and the majority of Board members are currently
independent directors. This decision was the initiative of Andrey Guryev, the
Company’s young new leader, who is focused on bringing together Russian and
international best practices. I am extremely pleased with this decision, as
well as with my new position as one of the members of the Company’s Board of
Directors.”

According to Board member Irina Bokova: “PhosAgro takes a very responsible
approach to issues of environmental protection and is constantly investing in
improving efficiency and reducing the impact of its activities on the
environment. As of today, all of PhosAgro’s production assets meet the
latest environmental standards. During Andrey Guryev’s five years at the
helm, the Company has allocated about RUB 18 billion for the implementation of
environmental programmes. PhosAgro has also launched with UNESCO the Green
Chemistry for Life programme. In addition, the Company is now developing a
format for interaction and joint activities with the Food and Agriculture
Organization of the United Nations.”

James Rogers, a member of PhosAgro’s Board of Directors and the Chairman of
its Remuneration and Human Resources Committee, said: “I have been following
the work of the PhosAgro for a long time, and I've never once regretted my
decision in 2014 to join the Company’s Board of Directors or to become a
shareholder. While PhosAgro has been investing in its own development and in
social projects, it has not forgotten about its shareholders. I’ve actually
seen everything from the very beginning, like how Andrey Guryev, leading a
team of professionals, systematically built up the Company’s fundamental
value over these five years. And, in my opinion, Andrey is doing an excellent
job. The Company has increased production output by 50%, doubled the number of
fertilizer grades available and become one of the most efficient companies in
the global fertilizer industry. The Company’s fundamental value has
increased, and a strong basis for dynamic growth in the future has been
created. Moreover, the team that has been assembled is excellent—everyone is
motivated to achieve results and set new records. And I appreciate Andrey’s
openness and accessibility to the Board – I know I am always able to reach
him to discuss any question.”

PhosAgro CEO Andrey Guryev, speaking to members of the Board of Directors at
PhosAgro’s Volkhov-based enterprise, JSC Metakhim, had this to say:“Our
efforts are aimed at improving production and business processes, workplace
safety and protecting the environment. In my opinion, our close-knit team of
professionals, working consistently and in unison all these years, has
achieved impressive results: over the past five years, specific emissions have
decreased; labour productivity—an area in which PhosAgro is a leader among
industrial companies—has doubled at all the Company’s enterprises; and
workplace injuries have been cut in half, with LTIFR decreasing to 0.1, which
corresponds to best industry practice.

“I want to tell you that we are going to continue moving forward. We plan to
beat our records and establish new ones. The Company is going to develop
production lines, establish new programmes in the sphere of environmental
protection, develop methodologies to create an even more comfortable working
environment for staff and fulfil our obligations to our investors while
remaining a socially responsible business.

“Over the past five years, the Company has invested up to 50-60% of EBITDA
on developing its Russian assets as part of its long-term strategy. As a
result, the Company has demonstrated a nearly double-digit growth rate in
terms of production, thanks to which PhosAgro occupies a leading position on
the global industry cost curve and has also created a solid basis to further
strengthen its financial stability, increase cash flow and ensure sustainable
growth in shareholder value.

“In the medium term, PhosAgro intends to balance the volume of new
investments to ensure stable high growth rates and to offer existing and new
shareholders profitability on par with the top international and Russian
peers.”

The Board of Directors also considered a number of other issues. Inter alia,
the Board called an Extraordinary General Meeting of Shareholders (“EGM”)
for 1 October 2018 and recommended that the EGM approve the payment of
dividends in the amount of RUB 5.83 billion, or RUB 45 per ordinary share (RUB
15 per Global Depositary Receipt) from retained net profit as of 31 December
2017. This recommendation was made following a discussion by the Board of
Directors of the Company’s financial results in the first half of 2018 in
comparison with the approved budget, including the interim consolidated
financial statements in accordance with IFRS, which are expected to be
disclosed on 23 August 2018. The record date for shareholders eligible to
participate in the EGM was set as 6 September 2018, and the Board has
recommended that the EGM approve 12 October 2018 as the record date for
shareholders eligible to receive dividends.

At today’s meeting the Board also heard a report on implementation of the
Company’s international projects for the period August 2017 to July 2018, as
well as information about work with investors during the same period.

In addition, the Board heard information from the Committee chairs about the
work of the Board Committees during 2Q 2018, reviewed information about risk
management during the period and approved the report on the work of the
corporate secretary.

Finally, the Board acknowledged that all of the Independent Directors meet the
criteria for independence defined in the Regulation on the Board of Directors
of PJSC PhosAgro, the Corporate Governance Code recommended by the Central
Bank of the Russian Federation, and Moscow Exchange Listing Rules.

___________

PhosAgro (www.phosagro.ru) is one of the world’s leading vertically
integrated phosphate-based fertilizer producers in terms of production volumes
of phosphate-based fertilizers and high-grade phosphate rock with a P(2)O(5)
content of 39% and higher (according to IFA, Fertecon and CRU).

The Company is the largest phosphate-based fertilizer producer in Europe, the
largest producer of high-grade phosphate rock worldwide and is a top-three
producer of MAP/DAP globally (based on production capacity, according to IFA).
PhosAgro is also one of the leading producers of feed phosphates (MCP) in
Europe, and the only producer in Russia. PhosAgro is Russia’s only producer
of nepheline concentrate (according to the RAFP).

PhosAgro’s main products include phosphate rock, 39 grades of fertilizers,
feed phosphates, ammonia, and sodium tripolyphosphate, which are used by
customers in 100 countries spanning all of the world’s inhabited continents.
The Company’s priority markets outside of Russia and the CIS are Latin
America, Europe and Asia.

PhosAgro’s shares are traded on the Moscow Exchange, and Global Depositary
Receipts (“GDRs”) for shares trade on the London Stock Exchange (under the
ticker PHOR). Since 1 June 2016, the Company’s GDRs have been included in
the MSCI Russia and MSCI Emerging Markets indexes.



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