Integrated report 2018PURE MINERALS FOR HEALTHY LIVES CONTENTS
01 ABOUT PHOSAGRO
Company profile
Our key advantages
2018 performance highlights
Where we operate
Our business model
02 STRATEGIC REPORT
Chairman’s statement
CEO’s statement
Overview of the fertilizer market
Strategy
Managing our risks
Internal audit
03 BUSINESS REVIEW
Operational Review
Financial Performance
04 SUSTAINABILITY
REPORT
Management approach
Environmental review
Health and safety review
People development
Business conduct review
Stakeholder engagement
Social investment
05 CORPORATE
GOVERNANCE
System and principles of corporate governance
Board of Directors of PJSC PhosAgro
Management Board
Committees of the Board of Directors
Shares and dividends
Management responsibility statement
06 FINANCIAL STATEMENTS
07 GRI CONTENT INDEX
08 ADDITIONAL
INFORMATION
Glossary
Contacts
6
8
10
12
16
22
24
26
36
40
48
52
58
64
72
88
98
112
116
130
138
148
156
160
166
170
172
210
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221
ABOUT THIS REPORT
Our integrated Annual Report combines financial and
sustainability reporting and aims to inform readers
about all of the significant factors that may have an
impact on PhosAgro’s activities. The report explains how
these factors affect our strategy, operations, financial
performance, the long-term sustainability of the Company
and the value we create for our customers, employees,
shareholders, business partners, neighbours and the
wider public.
Sustainable development has always been a key priority
and an important aspect of our business. As a result, it is
important for us to show not only our business results for
2018 but also PhosAgro’s contribution towards achieving
the Sustainable Development Goals set out by the Global
Reporting Initiative (GRI) and the United Nations Global
Compact. With this in mind, and with the goal of providing
a fully integrated report, we will focus on six key issues on
the following pages, namely:
• What is the Company doing on a global scale, and
what steps is it taking to address the Sustainable
Development Goals?
See pages 6–7
• What is the Company’s business model, and how does
this create value for all stakeholders?
See pages 16–19
• What are the Company’s key strategic goals, and how
have the 2018 results contributed to their achievement?
See pages 36–39
• What are the key challenges and uncertainties that the
Company is likely to encounter in pursuing its strategy,
and what are the potential implications for its business
model and future performance?
See pages 38–39
• What is included in the Company’s approach towards
sustainable development governance, and what targets
does PhosAgro set for itself?
See pages 64–71
• Why does the Company consider it important to adhere
to high standards of corporate governance?
See pages 138–139
6
8
Company profile
Our key advantages
10
2018 performance highlights
12 Where we operate
16
Our business model
39 GRADES
OF FERTILIZERS AND OTHER
FINISHED PRODUCTS ARE
PRODUCED BY PHOSAGRO
01
ABOUT
PHOSAGRO
BY IMPROVING SOIL FERTILITY, WE ARE
HELPING LIFE ON EARTH PROSPER
COMPANY PROFILE
PhosAgro is a vertically integrated mineral fertilizer producer based
in Russia. We are one of the world’s most efficient producers of
phosphate-based fertilizers and one of the only companies to produce
high-grade phosphate rock with a P2O5 content of 39% or higher.
THE LIFE CYCLE OF PHOSPHATE-BASED
FERTILIZERS AT PHOSAGRO
As a vertically intergrated company, PhosAgro’s operations include upstream and downstream enterprises, as well as
distribution and logistics, and R&D. PJSC PhosAgro is the parent company, with control over 100% of the shares of its main
operating subsidiaries. For more details, see Our Business Model on pages 16–19.
THE COMPANY’S POSITION IN THE GLOBAL INDUSTRY
No 1
Producer of high-grade
phosphate rock
Source: IFA, PhosAgro
No 1
Fertilizer supplier
in Russia
One in every three tonnes
of fertilizer sold in Russia is
sold by PhosAgro
TOP 5
(One of the top 5) DAP/
MAP producers by
capacity
Source: IFA, CRU
(excluding Chinese producers)
No 2
NPK producer
in Europe
Source: PhosAgro
MINING
AND BENEFICIATION
DOWNSTREAM
PRODUCTION
LOGISTICS
SALES
Description
The life cycle of phosphate-based fertilizers begins at
PhosAgro’s Apatit mines on the Kola Peninsula, where
high-quality phosphate ore is mined and processed into
phosphate rock. We are one of several global producers
whose phosphate ore is virtually free of cadmium and
other potentially harmful impurities.
The fertilizers produced from PhosAgro’s phosphate rock
are among the purest in the world and are used for the
cultivation of agricultural products that end up on the plates
of consumers all over the globe.
Our flexible and efficient production and sales models
enable PhosAgro to produce 39 grades of fertilizers and
other finished products to meet demand from customers
in more than 100 countries.
Our guiding
principles
The high quality of the apatitenepheline ore that we mine
is central to our ability to efficiently produce high-quality
fertilizers that are naturally free of potentially harmful
impurities that could end up in agricultural soils or even
our food.
After completing a large-scale investment programme
in 2017, the full impact of PhosAgro’s new production
capacities was achieved in 2018: the Company’s production
capacity increased significantly, with 9 million tonnes
of fertilizer produced in FY 2018.
PhosAgro’s logistics infrastructure includes warehouses,
mineral hoppers and two port terminals. These assets
support our operations and help us to achieve savings
compared to third-party services. We constantly monitor
the changing business environment in order to maintain
streamlined and efficient logistics operations.
The Company has its own sales network in Russia, as
well as trading offices in priority export markets in Latin
America and Europe. PhosAgro strives to move closer to
its end customer through the further expansion of its sales
network, warehouse capacities and infrastructure, as well
as automation of production and measures to increase
efficiency.
We maintain a continuous focus on improving all aspects
of our logistics, striving to provide the most efficient, reliable
and highest-quality service to our customers and build
long-term relationships with them.
We strive to be as close as possible to our final consumer
through the implementation of a verified strategy to
strengthen existing trade links and a balanced approach
to entering new markets.
Our goals
By producing mineral fertilizers, which are vital for
increasing the yield, quality and nutritional value of crops,
we are contributing to ensuring food security throughout
the world and to more environmentally sustainable
agricultural practices.
PhosAgro aims to further expand its production capacities,
with a particular focus on key inputs like sulphuric and nitric
acids, as well as ammonium sulphate. PhosAgro also plans
to continue to expand the number of fertilizer grades it
produces, continuing the trend of the past five years, during
which the number grew from 19 to 39.
We plan to further increase our fleet to reduce costs incurred
by contracting cars from third-party operators.
We believe that implementing a strategy aimed at further
developing and strengthening our fundamental advantages
allows us to build a business that best meets the interests
of the residents of the regions where we operate, farmers
who use our products, as well as our investors and other
stakeholders.
Numbers
to know
>39
% P2O5
nutrient content of high-grade
phosphate rock produced at Apatit
93%
Recovery rate achieved at
ANOF-3 following upgrades
completed in 2018
6
39 GRADES
of fertilizers and other finished
products are produced by PhosAgro
RAILCARS
6,268
own fleet of various
configurations
MLN TONNES
1.9
PER TONNE
USD 2
export cargo volumes handled
via own port terminals
savings on export shipments
via own port terminals
>100
COUNTRIES
currently use PhosAgro
products
10 TRADING OFFICES
WORLDWIDE
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OUR KEY ADVANTAGES
WORLD-CLASS INTEGRATED
PHOSPHATE PRODUCER
WITH TRACK RECORD OF
VALUE CREATION
• Vertically integrated producer of fertilizers
and premium phosphate rock with P2O5
content over 39%
STRONG FINANCIAL
PROFILE
ONE OF THE LOWEST
CASH-COST PRODUCERS
IN THE WORLD
• Strong profitability and one of the highest
gross margins in the phosphate segment
• Developing a unique and extensive
resource base with a mine life
of around 60 years
• Investment-grade corporate ratings:
• Strong market position in the premium
BBB-/Baa3/BBB-
European market and fast-growing Latin
America market
• Largest supplier of DAP/MAP and NPK
fertilizers to Russia
• Demonstrated ability to create value
through project execution and capital
allocation under the Company’s Strategy
to 2020
• The lowest leverage among global and
domestic peers with a net debt/EBITDA
ratio of 1.8
• Successfully completed our investment
cycle under the Strategy to 2020 to return
capex to its normal level
• Self-sufficient in major inputs: 100%
in phosphate rock, about 90% in ammonia
• One of the lowest DAP cash-cost producers
globally and in the first quartile for urea
production
• Strict cost control and operational
efficiency rollout to drive lower costs
going forward
ADHERING TO HIGHEST
STANDARDS
OF SUSTAINABLE
DEVELOPMENT
FLEXIBLE PRODUCTION
AND SALES PLATFORM
TRANSPARENT AND
EFFECTIVE CORPORATE
GOVERNANCE
• Contributing to the UN Sustainable
• Depending on the market situation, 46%
• Transparent ownership structure with
Development Goals
of phosphate production can be switched
from DAP/MAP to NPK
27.6% of shares in free float
• Material investments into environmental
programmes (RUB 7.6 billion over
five years)
• Netback-driven sales model with
on the Board of Directors
a global presence
• Seven independent non-executive directors
• The technologies used at the Company’s
production sites meet the standards of best
available technologies
• PhosAgro’s special focus on value-added
NPKs secures extra margins compared
to a basket of individual nutrients
• Annual expenditures on charitable and social
projects amount to more than RUB 1.5 billion
• Developed domestic sales network and
trading offices in all key export markets
• One of the largest taxpayers in the regions
where it operates, paying RUB 12 billion in
taxes in 2018
• Dual listing on LSE and MOEX since 2011
and included in the MSCI Russia Index
8
8
9
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HIGHLIGHTS
FINANCIAL HIGHLIGHTS
Revenue,
RUB bln
EBITDA,
RUB bln
EBITDA
margin
Net profit,
RUB bln
Adjusted for FX
233.4
29%
74.9
47%
32%
4 P.P.
41.8
97%
2018
2017
2016
233.4
74.9
181.4
187.7
50.8
72.4
32%
28%
39%
41.8
21.2
42.9
Cash flow from
operating activities,
RUB bln
59.7
99%
2018
2017
2016
59.7
30.0
50.4
Net debt,
RUB bln
Net debt/
EBITDA
135.3
13%
1.8
135.3
120.0
105.1
-0.6
1.8
1.45
2.36
Invested in environmental
programmes,
RUB bln
3.5
169%
3.5
1.3
0.8
Dividends declared,
RUB bln
Dividend
yield
24.9
137%
7.3%
121%
2018
2017
2016
10.5
24.9
21.4
7.3%
3.3%
6.0%
The Company has implemented a series of
successive steps in recent years aimed at
consolidating its leading global positions as
a producer of phosphorus-based fertilizers
with very low production costs. From 2014
to 2018, PhosAgro invested more than 50%
of EBITDA in the development of existing and
the construction of new facilities, applying
the best available technologies in doing so.
The successful completion of our large-scale
capital investment cycle has created a solid
foundation for further sustainable growth.
This contributed to significant growth in our
FY 2018 financial performance.
efficiency and improving raw material self-
sufficiency and not requiring significant
capital expenditures.
The 47% increase in EBITDA and 97%
increase in net profit allowed the Company
to strictly follow its approved dividend policy
— for the 2018 fiscal year, accrued dividends
amounted to 60% of adjusted net profit. The
total amount of dividends declared in 2018
and in 2019 will amount to RUB 24.9 billion,
pending AGM approval of the dividends
recommended by the Board of Directors
on 19 March 2019.
significant resources to issues related to
sustainable development. PhosAgro takes
a very responsible approach to issues of
environmental protection and is constantly
investing in improving its efficiency and
reducing the impact of the Company’s
activities on the natural environment.
In 2018, the Company spent about
RUB 8 billion on projects aimed at reducing
its impact on the environment (including
investment and current environmental costs).
As of today, all of the Company’s production
sites meet the latest environmental
requirements.
In 2018, PhosAgro placed emphasis on
organic growth projects aimed at increasing
Along with ensuring profitability for
shareholders, the Company devotes
See additional information
on pages 58–61
10
OPERATIONAL HIGHLIGHTS
Total fertilizer
production, kt
Phosphate rock
production, kt
8,975
8%
10,067
5.5%
2018
2017
2016
8,975
8,338
7,425
10,067
9,540
8,530
Phosphate-based
fertilizers and MCP
production, kt
6,852
4%
Nitrogen fertilizers
production, kt
2,123
22%
6,852
6,604
5,904
2,123
1,735
1,495
PhosAgro reports its highest-ever production
in 2018, at 9 million tonnes. The successful
implementation of the Strategy to 2020
made this record-setting result possible. The
main driver of this growth in fertilizer output
was the commissioning of two key strategic
projects: the new ammonia and granulated
urea production facilities at the Cherepovets
site. The expansion of capacity and the
increase in raw material self-sufficiency have
strengthened our position as a leader in our
industry throughout the world. By the end of
the year, the production of phosphate-based
fertilizers had risen by 3.8% year-on-year to
6,852 thousand tonnes, while the production
of nitrogen-based fertilizers was up by 22.4%
year-on-year to 2,123 thousand tonnes.
Another important achievement in the past
year was the increase in the output of apatite
concentrate to 10,067 million tonnes, which
is a record in the industry over the past
25 years, which was made possible thanks
to ongoing work aimed at expanding our
enrichment capacities.
of Russia, as well as in foreign markets. The
volume of sales of PhosAgro products in
Russia increased over five years by a factor
of 50% and in 2018 amounted to 9 million
tonnes of primary material.
PhosAgro’s share of the Russian market is
about 80%, making the Company the leading
supplier in that market.
In 2018, the Company continued to develop
its own sales network in its priority market
See additional information
on pages 52–57
SUSTAINABILITY
Emissions into the air
per unit of production,
kg/t
Lost time injury
frequency rate (LTIFR),
per 1 mln hours worked
1.6
6%
2018
2017
2016
1.6
1.7
1.8
0.22
35%
0.22
0.34
0.52
PhosAgro takes a serious approach to
sustainability and continues to invest
in measures to mitigate its impact on
the environment and to implement best
practices in the field of occupational safety
and industrial safety. Over the course of five
years, the Company has invested around
RUB 7.6 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.
See additional information
on pages 64–134
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EXPORT MARKETS
OUR FLEXIBLE PRODUCTION AND SALES
MODELS ENABLE US TO SUPPLY THE TAILORED
FERTILIZERS THAT FARMERS USE TO GROW
BETTER CROPS IN OVER 100 COUNTRIES ON
EVERY INHABITED CONTINENT
A good example of successful interaction
and constructive dialogue between countries,
in this case Russia and Argentina, is the
abolition of the 6% duty on high-quality
diammonium phosphate from Russia. The
decision, adopted in 2017, allowed Russian
producers and, in particular, PhosAgro to
supply environmentally friendly phosphate-
based fertilizers without harmful impurities
to meet the growing needs of Argentinean
agricultural producers.
%
>90
SHARE OF DIRECT
SALES IN 2018
PhosAgro’s long-term strategy for production
and sales is aimed at maximising profit
margins, and it allows us to adjust flexibly to
changing demand in a particular market and
to respond quickly to market fluctuations.
Trading companies created by PhosAgro in
Brazil, Switzerland, Germany, Poland, France,
Singapore and last year also in Serbia provide
the Company with a presence in all of its
priority export markets. The share of direct
sales in 2018 exceeded 90%.
In 2018, we exported 6.4 million tonnes of
fertilizers. Volumes of supplies to priority
export markets in Europe and Latin America
increased year-on-year by 10.5% (to 2 million
tonnes) and 23.9% (to 2 million tonnes),
respectively, compared to the previous year.
Shipments of fertilizers to the CIS decreased
by 56.1% compared to the previous year due
to the cessation of deliveries to the Ukrainian
market.
TRADING OFFICES
Sales in North America
and Latin America,
kt
%
39
2018
2017
3,119
2,245
9
RUSSIA
8
Belarus
1
6
Kazakhstanв
Moldova
4
7
7
ыAzerbaijan
5
2
3
Sales in Europe,
kt
10.5
%
2018
2017
2,050
1,855
2018
2017
Sales in CIS,
kt
%
56
330
752
Due to the cessation of deliveries
to the Ukrainian market.
1
Hamburg
Germany
2
Bayonne
France
3
Zug
Switzerland
4
Belgrade
Serbia
5
Limassol
Cyprus
6
Warsaw
Poland
7
Singapore
Singapore
8
Vilnius
Lithuania
9
São Paulo
Brazil
Buenos Aires
Argentina
12
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continued
RUSSIA
TODAY, PHOSAGRO IS IN A FAVOURABLE
POSITION, WHICH ALLOWS IT TO OBTAIN
SIGNIFICANT BENEFITS FROM THE CURRENT
SITUATION AND INCREASE THE VOLUME OF
EXPORTS OF ITS OWN PRODUCTS.
Russia’s 2018 grain harvest reached 112.9
million tonnes, including more than 72 million
tonnes of wheat. This made 2018 the third-
best year in terms of the grain harvest in
recent Russian history, indicating a sustained
positive trend in the agricultural market and
the ability to meet domestic market demand
from the milling, feed and baking industries.
The total volume of wheat shipments also
increased by 10.8 million tonnes (32%) year-
on-year, amounting to 44.1 million tonnes,
thereby confirming Russia's leading position
in global wheat exports for the second year
running. Further development of the Russian
agricultural market is expected over the
coming years as a result of demand from
importers of Russian products, as well as due
to active state support for the sector.
One of the important drivers of Russian
economic growth in recent years has been a
focus on import substitution in a wide range
of areas, in particular in the agro-industrial
sector. Domestic needs are currently being
met to a large extent by domestic production.
The development of the country's export
potential, in particular non-oil exports, is
determined by the further development of the
Russian economy. A number of measures
are being taken to increase the proportion of
food products in exports, which, according
to the Federal Customs Service, currently
stands at 5.5%.
The zeroing of rail tariffs for transport is
among the measures already implemented
by the government to support agricultural
exports. This measure has significantly
increased exports of agricultural products
from Siberia and the Russian Rar East
regions. In addition to this, the government
is actively working to expand the geography
of supply of Russian agricultural products.
Thus, the Ministry of Agriculture of the
Russian Federation announced that by
2021 it intends to send 50 agricultural
industry representatives abroad to increase
awareness of Russian agricultural products
with the goal of increasing demand for
Russian goods. One of the most promising
importers of Russian agricultural products
is China. In 2018, the export of Russian food
products and agricultural raw materials to
China amounted to USD 2.5 billion, a more
than 300% year-on-year increase.
The Presidential Decree on National Goals
and Objectives for the Period to 2024,
published in May 2018, set a benchmark for
agricultural exports at USD 45 billion per year,
signalling a serious commitment on behalf of
the government to expanding the industry's
export volume. The Ministry of Agriculture
forecasts that by 2024, the total export value
of Russian wheat will grow by 50% to USD
11.4 billion, and that the total export value
of oilseeds and oilseed products will nearly
triple to USD 8.5 billion. The government
plans to allocate around RUB 350 billion
towards the development of agricultural
production within a six-year period. Most of
the funds – over RUB 290 billion – will be
allocated for the creation of new production
volumes through the development of
concessional lending to enterprises and land
reclamation. There will also be an expansion
of crop acreage: the territories of Siberia
and the Far East will be cultivated, requiring
additional mineral fertilizer to ensure the
production of high-quality grains and
oilseeds.
RUSSIA
Krasnoyarsk
Vladivostok
MLN T
112.9
RUSSIA’S GRAIN HARVEST
IN 2018
The plan is to turn a total of 4.41 million
hectares into agricultural land between 2019
and 2024. The government also plans to
chalk 19 million hectares of acidic soil in
order to increase the fertility of Russian soil
within the same period.
The use of highly efficient, pure and safe
mineral fertilizers will play an important
role in improving soil fertility and ensuring
production growth and exports by Russian
agribusiness. In 2018, agricultural producers
purchased about 3.1 million tonnes of
mineral fertilizers (by nutrient content). To
achieve the intended production and export
goals, Russia’s agribusiness must ensure
that by 2024 agricultural producers purchase
at least 11.3 million tonnes of mineral
fertilizers (by nutrient content).
Thanks to stable growth in demand for
agriculture products and government
initiatives aimed at developing the
agribusiness sector and exports, particularly
through the creation of a unified and
sustainable brand that guarantees high-
quality products, a positive environment
is being created for further growth of the
fertilizer market and of production capacities.
Cherepovets
BLN USD
2.5
EXPORTS OF RUSSIAN FOOD
PRODUCTS AND AGRICULTURAL
RAW MATERIALS TO CHINA
Nizhny Novgorod
Kazan
Saransk
Orel
Lipetsk
Kursk
Tambov
Voronezh
Belgorod
Volgograd
Rostov-on-Don
Krasnodar
Stavropol
MLN T
3.1
OF MINERAL FERTILIZERS
PURCHASED BY AGRICULTURAL
PRODUCERS IN 2018
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PHOSAGRO
PhosAgro’s business model spans the entire fertilizer value chain: from the mining
of unique, high-quality phosphate ore that contains virtually no harmful impurities,
to downstream processing at Company’s modern facilities in Cherepovets,
Balakovo and Volkhov, then on to our well-developed logistics infrastructure
and distribution network. The high quality of our products, our position as one
of the lowest cash cost producers in the industry and our strict adherence to the
principles of sustainable development are what make PhosAgro unique. This
efficient business model makes it possible for PhosAgro to deliver strong results
and create value for a wide range of stakeholders.
1DOWNSTREAM UPSTREAM3LOGISTICSDISTRIBUTION AND SALES 42See detailedinformationinside OUR BUSINESS MODEL
KEY ASPECTS OF PHOSAGRO’S
VALUE CHAIN
1
UPSTREAM
At Kirovsk, we mine a high-quality igneous
phosphate resource base that, unlike many
other producers’ raw materials, contains
almost no harmful impurities and can be
processed into premium-quality phosphate
rock. This reduces costs for processing ore,
obtaining apatite concentrate and turning
it into high-quality mineral fertilizers.
Mining and processing
PhosAgro has extensive mining operations,
along with highly qualified in-house
operational and technical know-how and
capabilities. We make every effort to find
the right balance between investments
in underground mining and beneficiation
capacities, and labour conditions and social
security. This approach made it possible to
turn the Kirovsk branch of JSC Apatit into a
sustainable, world-class mining and phosphate
rock production operation. PhosAgro is
continuously seeking opportunities to make
further improvements on the costs front.
We have achieved a 93% recovery ratio for
phosphate rock as a result of our upstream
optimisation programme.
The upstream operations in our phosphate
segment take place at Apatit, which mines
apatite-nepheline ore from open-pit and
underground mining. In 2018, PhosAgro
extracted 35,326 thousand tonnes of apatite
nepheline ore on the back of continued
expansion of phosphate ore mining and
measures to increase the rational use of
natural resources.
Beneficiation
Ore is processed at two apatite-nepheline
beneficiation plants. In 2018, PhosAgro
successfully completed the modernisation of
Beneficiation Plant No 3, which resulted in higher
production volumes of both phosphate rock
and nepheline concentrate and made possible a
recovery ratio of more than 93%, the highest level
ever achieved from at the plant.
PhosAgro Integrated Report 2018
phosagro.com
2
DOWNSTREAM
Our fertilizer production assets enjoy domestic
access to other key inputs like natural gas and
sulphur. We increased ammonia output by 28%
year-on-year after the launch of our new ammonia
line in 2017, which made PhosAgro 89% self-
sufficient in this input.
Manufacturing of fertilizers,
feed and industrial phosphates
Our portfolio offers 39 grades of fertilizers,
including grades containing secondary nutrients
(sulphur) and micronutrients like zinc and boron,
that are produced at our three downstream
production sites in Russia.
Production of phosphate-based
fertilizers, technical phosphate,
sulphuric and phosphoric acid
JSC Apatit
Balakovo branch of Apatit
In 2017, we completed the construction
of an ammonia pipeline at Balakovo with
an annual capacity of 504 thousand
tonnes, which secured a more efficient
and reliable supply of this key input for
the Balakovo branch of JSC Apatit. This
was the foundation for the next step
forward in further expanding fertilizer
production capacities.
Production of phosphate-
based fertilizers and feed
phosphates
With the successful completion of the
construction of two major strategic
investment projects at JSC Apatit in
Cherepovets, PhosAgro showed an
impressive example of how advanced
technologies have enabled the Company
to consolidate its industry-leading
position, expand production and improve
efficiency, ensure safe working conditions
and minimise the Company’s impact on
the environment. The Company aims to
increase total fertilizer output in 2019 by 5%
compared to 2018.
Мощности:
MAP/DAP/NPK/NPS
4,4
МЛН T
Аммиачная селитра
530
ТЫС. Т
Production of phosphate-based
and nutrient-based fertilizers
and ammonia
3
LOGISTICS
4
DISTRIBUTION AND SALES
PhosAgro’s logistics infrastructure includes
warehouses, mineral hoppers and two port
terminals. These assets support our operations
and help us to achieve savings compared to
third-party services. We constantly monitor
the changing business environment in order
to maintain streamlined and efficient logistics
operations.
In-house logistics infrastructure
Having our own logistics infrastructure helps
to significantly reduce costs and increase the
reliability of production activities.
Our distribution and sales operations serve
farmers in all inhabited continents, providing our
consumers with premium-quality phosphate-
based products. In 2018, we shipped ca. 40% of
downstream products’ export volumes through
our own port terminals.
The Company has continued to develop its sales
network both in its priority market of Russia and
abroad, aiming to be closer to our customers in
priority markets.
Mineral fertilizer distribution network
PhosAgro owns the largest mineral fertilizer
distribution network in Russia.
Beneficiation plants
Produced in 2018:
Phosphate rock (+5.5% y-o-y)
10.1
MLN T
Nepheline concentrate (+4.3% y-o-y)
986
KT
Metachem (Volkhov)
Capacities:
PKS, NPK
Phosphoric acid
200
KT
100
KT OF P2O5
Ammonia
1.9
MLN T
Prilled urea
1,030
KT
Sulphuric acid
STPP
240
KT
105
KT
APP
Granulated urea
200
KT 550
KT
Capacities:
DAP/MAP/NPS
MLN T
1.8
MCP
360
KT
Company’s own fleet
6,268
RAILCARS OF VARIOUS
CONFIGURATIONS
We plan to further increase our fleet to reduce costs
incurred by contracting cars from third-party operators.
The use of our own transhipment facilities helps reduce
the cost of transhipment per tonne of finished products,
which, among other things, allows us to increase our
margins on export sales.
16
SALES
OFFICES
25
DISTRIBUTION
CENTRES
This has enabled us to significantly increase
sales volumes and market share on the
back of Russia’s stellar agricultural sector
performance.
19
Underground mines
Extracted in 2018:
Аpatite-nepheline ore
(+14% y-o-y)
27.8
MLN T
High-quality natural resources
The Kirovsk branch of JSC Apatit,
where we mine apatite-nepheline
ore and process it into phosphate
rock, is the heart of our business.
The phosphate rock we produce at
Apatit is high in P2O5 nutrient content
and contains almost none of the
dangerous impurities, like cadmium,
often associated with other
phosphate mineral deposits. We are
committed to continuing to search
for options for the development and
more rational use of our extensive
resource base.
Open-pit mines
Extracted in 2018:
Аpatite-nepheline ore
(-6% y-o-y)
MLN T
7.6
17
Strategic ReportBusiness ReviewCorporate GovernanceFinancial ReportAdditional InformationSustainability ReportAbout PhosAgro
22
24
26
36
Chairman’s statement
CEO’s statement
Overview of the fertilizer market
Strategy
40 Managing our risks
48
Internal audit
NEW STRATEGY TO 2025 APPROVED
BY BOARD OF DIRECTORS
02
STRATEGIC
REPORT
FOCUS ON FURTHER GROWTH
AND SUSTAINABILITY PRINCIPLES
CHAIRMAN’S STATEMENT
STRATEGIC PROJECTS
PRODUCING RESULTS
I am pleased to report that 2018 marked
the completion of PhosAgro’s Strategy to
2020, which was announced in 2014, a full
two years ahead of schedule. By achieving
the strategic goals set out by the Board
of Directors, PhosAgro has strengthened
its low-cash-cost advantage, enhanced its
natural hedge against market headwinds
and become one of the most sustainably
profitable companies in the industry. The
financial and operating results we reported
for FY 2018 are testimony to this.
Since the Board of Directors approved the
Strategy to 2020 in 2014, PhosAgro has worked
hard to gain direct access to priority export
markets, improve vertical entegration, upgrade
existing capacities and build new ones, and
enhance our domestic market direct sales
infrastructure. The results are impressive:
fertilizer output has increased to 9.1 million
tonnes, and our product portfolio has
expanded from 19 to 39 grades of crop
nutrients in order to better meet demand
from farmers all over the world.
SUSTAINABILITY HIGHLIGHTS
%
47
EBITDA GROWTH
COMPARED TO 2017
Over RUB 1.5 billion invested
in community support and
charity programmes
LTIFR decreased by 35% year-on-year
to 0.22 (per 1 million hours)
Atmospheric emissions reduced
by 6% year-on-year to 1.6 kg/t
Over RUB 3.5 billion invested
in environmental protection
programmes
22
STRATEGY HIGHLIGHTS
New granulated urea and ammonia
capacities contributed to significant,
sustainable growth in PhosAgro’s cash
flows and EBITDA
Fertilizer production has risen by 50% over
last five years as a result of investments
in debottlenecking and modernisation of
existing capacities, as well as new capacities
PhosAgro aims to invest around 50%
of EBITDA into further expansion and
vertical integration in the years ahead
Expanding and strengthening
the Board of Directors
As the Chairman of PhosAgro’s Board
of Directors, I am ultimately responsible
for the quality and effectiveness of the
Company’s corporate governance system.
All of the members of the Board of Directors
share my commitment to ensuring that this
key governance body acts in the interests
of all of the Company’s stakeholders and
takes considered decisions.
In our ongoing efforts to further
strengthen and improve the work of the
Board of Directors, 2018 saw the number
of independent directors increase to seven
of the ten members after former LSE CEO
Xavier Rolet joined the Board of Directors
in May. I believe that the current Board
makeup provides us with a diverse and
highly qualified group of individuals, whose
contributions have further enhanced our
ability to provide PhosAgro with the strategic
guidance and oversight it needs to continue
its sustainable growth.
Fertilizers for future generations
Consumers and governments around the
world are becoming increasingly aware of
the quality and safety of our food supply. As
this trend develops, we believe that PhosAgro
stands to benefit, thanks to the unique quality
of the phosphate raw materials that the
Company uses to produce its fertilizers.
Unlike some of the world’s largest producers,
including several that supply the European
market, PhosAgro’s apatite-nepheline ore,
which comes from igneous rock deposits,
is virtually free of potentially harmful
elements like cadmium and other heavy
metals. While technologies exist to remove
such hazardous materials from crop
nutrients when they are manufactured,
PhosAgro is one of a small number of
producers whose fertilizers are naturally
pure and free of these elements.
In order to support sustainable agriculture
and protect the health of its population,
the European Union took the important
step of agreeing in 2018 to limit the amount
of cadmium allowed in phosphate-based
fertilizers. This is an important step in the
right direction that, together with transparent
and informative labelling for the fertilizers
with the lowest levels of cadmium, will enable
farmers and consumers to make more
informed decisions about the food they
grow and consume.
Preparing PhosAgro for
the next stage of growth
With all of the key elements of PhosAgro’s
Strategy to 2020 already completed,
the Board of Directors is now focused
on finalising the next five-year plan for
the Company. We have approached this
process with the aim of further enhancing
PhosAgro’s low-cost advantage through
modernisations and implementation of best
available technologies across the Company.
We believe that PhosAgro is one of the
best-positioned companies in the world to
continue growing its production capacities
to supply high-quality and pure fetilizers to
farmers all over the world, from our priority
domestic market to priority export markets
like Asia, Europe and Latin America.
At the same time, we will continue to prioritise
safety and environmental protection as we
plan PhosAgro’s further development. The
Company has spent over RUB 7 billion on
environmental protection measures over
the past five years and ca. RUB 2 billion on
workplace health and safety. The results of
these investments are just as impressive as
our financial and production performance.
Once again, I want to thank every member
of the PhosAgro team for their efficient and
effective work on delivering on the strategic
targets put before them by the Board of
Directors. The Company’s performance in
2018 has demonstrated that we chose the
right strategic path and that the team has
succeeded in delivering excellent results.
Sven Ombudstvedt
Chairman of the Board of Directors
23
PhosAgro Integrated Report 2018 phosagro.comSustainability ReportBusiness ReviewCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgro CEO’S STATEMENT
2018 HIGHLIGHTS
DELIVERING SUSTAINABLE GROWTH IN
OPERATING AND FINANCIAL RESULTS
In 2018, PhosAgro and our stakeholders ben-
efitted from our completion of all key goals
under the Strategy to 2020 a full two years
ahead of schedule. We delivered sustainable
increases in both production and financial
performance during the year and secured
significant potential for continued growth.
The Strategy to 2020, first presented at
our Capital Markets Day in 2014, focused
on building new capacities, upgrades and
debottlenecking at existing production sites,
direct access to priority export markets and
streamlining our corporate structure. Thanks
to the commitment, hard work and discipline
of our team, we are already able to see the
results of the successful implementation of
our strategy today.
We have unlocked value at every stage of
our business, from mining to beneficiation to
midstream and downstream production; in
transport, logistics and sales, we have also
delivered sustainable cost savings with new
port and storage capacities, as well as foreign
trading offices in South America, Europe and
Asia.
As a result, PhosAgro reported fertilizer
production of 9.0 million tonnes and achieved
an industry-leading EBITDA margin of 32% for
FY 2018.
We are pleased with these results, but we
are also confident about the future: by
implementing a comprehensive strategy to
further secure our low cash-cost advantage,
we are in an excellent position to continue
growth while delivering value for all of our
stakeholders. With the Strategy to 2020
already complete, the Board of Directors has
approved PhosAgro’s Strategy to 2025.
Investing in vertical integration and low
cash-cost advantage
After finishing our major expansion projects
under our Strategy to 2020, we continue to
invest in our operations, from upgrades and
expansions of our mining and beneficiation
capacities to new, efficient feedstock
production, as well as downstream and
logistics. Even as we formulate our Strategy
to 2025, the Company is seeking new ways
to leverage its low-cost advantage, which
starts with the uniquely high-quality and pure
phosphate rock that we produce at Apatit,
on to our cutting-edge production facilities,
integrated logistics and port infrastructure,
and sales offices in key priority markets.
PhosAgro stands out among Russian
companies and its international peers,
investing around 50% of its EBITDA annually
into development projects, while maintaining
investment-grade credit ratings, adhering
to its dividend policy and implementing
important social projects that address both
local and global issues that are relevant to
our stakeholders.
Taking on local and global
sustainability issues
PhosAgro operates large-scale mining and
chemical production facilities, is a major
employer in Russia, including in single-
industry towns like Apatity and Kirovsk, and
is a global supplier of crop nutrients that are
used in over 100 countries. We therefore play
a significant role in supporting and creating
value for a wide range of stakeholders. In the
cities where we operate industrial facilities,
we fulfil a wide range of obligations, ranging
from ensuring the environmental impact
of our operations is kept to a minimum to
investing in sport, education, healthcare
and even economic diversification for one-
industry towns.
At a global level, we are also taking on issues
relevant to our industry and key stakeholders.
The Green Chemistry for Life project that we
sponsor together with UNESCO and IUPAC
aims to support talented young scientists
engaged in applied research on projects that
use green chemistry principles to improve
our world. This programme was renewed
in January 2019 after the completion of
the first five years. We also agreed with the
UN’s Food and Agriculture Organization
in 2018 to support a global programme to
increase farmers’ access to soil testing kits
%
9
FERTILIZER SALES
GROWTH
BLN RUB
21
HISTORICALLY
HIGH FCF
%
32
STRONG EBITDA
MARGIN
%
7.3
GENEROUS DIVIDEND
YIELD
and laboratories in order to promote better
understanding of the proper application of
crop nutrients.
We worked hard in 2018 to promote
PhosAgro’s business reputation and image
as a socially responsible company both
in Russia and abroad. By joining the UN
Global Compact, we took on a commitment
to adhere to the Compact’s 10 principles
in the areas of human rights, labour,
the environment and the fight against
corruption. In doing so, we once again
demonstrated our commitment to the 17 UN
Sustainable Development Goals to 2030, the
key driving force in terms of environmental
accountability and preserving the planet for
future generations.
Financial and operating performance
Having completed our last capex cycle,
2018 was the first full year in which our new
ammonia and granulated urea lines were
fully functional. The additional volumes
made possible by these capacities, as well
as upgrades to existing lines, enabled us to
achieve year-on-year increases in fertilizer
production and sales by 7.6% and 9% to
9 million tonnes and 8.8 million tonnes,
respectively.
successfully complete its investment cycles
and deliver the results we expected at the
beginning of the process. Likewise, I would
like to thank our shareholders, customers
and all those who have contributed to our
success.
Higher production levels, which leveraged
our low cash-cost advantage, helped
PhosAgro achieve sustainable growth in
revenue, cash flows and EBITDA. On the
back of strengthening market prices, and
with operating cash flow of RUB 59.7 billion
for the full year, we were able to continue
to invest in new capacities while paying out
dividends that exceed our dividend policy.
Outlook
PhosAgro will continue to invest in
enhancing its vertical integration, including
in key feedstocks, and in strengthening
its position as one of the world’s lowest
cash-cost producers of phosphate-based
fertilizers. Together with increasing concern
for sustainable agricultural practices and
human health, we are optimistic about the
outlook for PhosAgro. Our fertilizers, which
are naturally pure and free of potentially
harmful heavy metals, are a key factor not
only in producing premium foods but also
in ensuring that the crop nutrients used
around the world contribute to long-term food
security.
Once again this year, I want to thank all of
our stakeholders, including our employees
and contractors who helped PhosAgro to
Andrey A. Guryev
Chief Executive Officer and Chairman
of the Management Board
24
25
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THE GLOBAL ECONOMY
AGRICULUTRAL MARKETS
% Y-O-Y
3
ESTIMATED GLOBAL
GDP GROWTH
Following on from a robust 2017, global
economic growth continued through much
of 2018 before fading towards the end of
the year. As recently as October 2018, the
International Monetary Fund forecast global
GDP growth of around 3.7% year-on-year. By
December, however, estimates were closer
to 3.0% year-on-year. Trade barriers, the
persistent strength of the dollar, growing
geopolitical tension, and volatile oil prices
have all played a role.
TRADE BARRIERS, THE PERSISTENT STRENGTH OF
THE DOLLAR, GROWING GEOPOLITICAL TENSIONS
AND VOLATILE OIL PRICES HAVE DAMPENED
EXPECTATIONS OF GLOBAL GDP GROWTH
One of the key areas of concern throughout
2018 was the escalation of trade barriers.
This kicked off when the Trump administration
imposed tariffs on imports of steel and
aluminium from the EU, Canada, Mexico,
and China in March. It subsequently grew
when retaliatory measures were introduced
on the United States by China, including
a 25% tariff on US soy (more on this below),
and a second round of US tariffs on Chinese
product. Although both countries agreed
to temporarily suspend further tariffs, their
impact was felt across different sectors
of the economy. This includes forex, where
most currencies lost ground to the US dollar
(which tends to be viewed as a safe-haven
currency), prompting tighter policy measures.
Increased geopolitical tensions and oil price
volatility also played a role. Sanctions were
reimposed on Iran in early November, and
although this initially helped to drive oil prices
higher — Brent reached a high of USD 86/
bbl — the subsequent introduction of waivers
and increased production elsewhere (Saudi
Arabia and Russia) saw prices fall below
USD 60/bbl in December. At the same time,
equities came under pressure with stock
markets losing ground through much of
December.
Performance of selected currencies of major phosphate importers
Country’s position
against rest of the world
DAP/MAP 2018 imports,
mln t
Devaluation vs. USD
throughout 2018, %
1
2
4
6
7
8
9
India
Brazil
Pakistan
Argentina
Canada
Turkey
Bangladesh
10
Vietnam
26
0.9
0.4
0.4
0.4
0.3
0.2
2.5
2.3
-9
-15-15
-20-20
-51
-8-8
-29-29
-1
-2
e
t
a
r
-
x
f
,
k
n
a
B
l
a
r
t
n
e
C
h
s
k
r
u
T
F,
M
i
I
,
U
R
C
:
e
c
r
u
o
S
C
G
I
:
e
c
r
u
o
S
%
25
TARIFF ON SOYA
IMPORTED BY CHINA
FROM USA
MLN T
54.2
ESTIMATED
SOYA PRODUCTION
IN ARGENTINA
BLN T
1.1
EXPECTED RECOVERY OF
CEREAL PRODUCTION
IN LATIN AMERICA IN 2019
Cereal production also suffered in 2017/18,
largely as result of lower corn output
(estimated between 3-5% lower year-on-year
by the IGC, USDA, and FAO/AMIS). This is
linked to lower acreage in the United States,
persistently hot and dry conditions through
the Safrinha in Brazil, and untimely rain that
had a negative impact on yields in the south
cone of Latin America. However, a recovery
to 1,073.4 million tonnes is expected for the
2018/19 crop. Better production is expected
year-on-year in Brazil and Argentina due to
good rainfall and beneficial field conditions,
Ukraine (despite a dry start to the season)
and China. Although US production is
estimated flat year-on-year for 2018/19,
this is on less acreage, implying exceptional
yields.
In contrast, wheat output peaked in 2017/18
on the back of bumper yields in the EU,
Russia, China, and India. The trend for
2018/19 is less encouraging though, with
production estimated 4–5% lower year-
on-year. Yields in Europe and Russia are
both sharply down due to persistent heat
and dryness through much of summer.
Elsewhere, contractions are also expected
in Australia and China.
Both grain and oilseed markets were subject
to various externalities throughout 2018,
many of which are set to drag on into 2019.
Whereas the year started on a positive
note, with Argentina committing to reduce
soybean tariffs by 0.5%/month during the
year, sentiment soon soured as the United
States and China became embroiled in a
trade war. China is today the world’s largest
importer of soya, accounting for two thirds
of global trade. In July, it introduced a 25%
tariff on soya imports from the United
States, the world’s largest producer and its
main trading partner. While trade between
the two countries continued throughout
2018, volumes have moderated, and China
has been forced to source more product
elsewhere (in particular, Brazil).
Meanwhile, Argentine soya output suffered
throughout 2018. The IGC estimates that
production was down by as much as a
third due to the poor growing conditions
in the beginning of the year. Moreover, the
country’s tariff position had to be reassessed
in September due to a lack of government
revenues and the associated loss of
confidence in the peso. Subsequently, the
government reinstated tariffs on soya (and
grains). While this may, at first glance, appear
negative for the 2018/19 crop, the fact that
Argentina exports most of its agricultural
output and incurs much of its cost on a peso
basis means that farming margins may well
improve year-on-year, boosting prospects for
the 2018/19 crop. At the time of writing, the
IGC estimated production to recover to 54.2
million tonnes.
Global agricultural production,
mln t
Corn
1,087
1,047
1,073
Wheat
753
Rice
Soybean
Other coarse
grain
487
349
298
767
491
340
289
729
491
367
277
2016/2017
2017/2018
2018/2019
Improved growing
conditions
in Brazil and Argentina.
Excellent yields in US
Prolonged hot/dry
conditions
in Europe/CIS
limiting yields
Large US crop despite
US-China trade war.
Continued growth
in Brazil and recovery
in Argentina
27
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HIGH-LEVEL NUTRIENT
DEMAND REVIEW
HIGH-LEVEL NUTRIENT
SUPPLY REVIEW
% Y-O-Y
N, P and K fertilizer demand developments,
mln t
1.3
NUTRIENT DEMAND
GROWTH
The implications of the above on fertilizer
demand have been estimated by the
International Fertilizer Industry Association
(IFA).
Potassium
Phosphate
184.4
186.4
35.4
36.1
187.9
36.9
44.3
44.9
45.3
104.7
105.3
105.7
167.6
28.2
42.4
97.0
In 2018, further revisions
were made to the IFA’s
historical consumption
estimates, resulting
in downward adjustments
in global N and P demand,
but an upward adjustment
in K demand
The preliminary estimate of nitrogen (N),
phosphate (P) and potassium (K) fertilizer
demand stands at 186.9 million tonnes
of nutrient for the 2017/18 season. This
represents growth of 1.3% year-on-year,
which is in line with recent trends. Changes
to policy led to greater consumption in India
(where the introduction of a soil health
card helped to promote more balanced
application) and Nigeria (where a presidential
initiative boosted fertilizer usage) but a
reduction in China (environmental focus).
Meanwhile, relative changes to FX and an
expansion of area also had an impact
(e.g. Ukraine, Brazil, Canada, etc.). Nutrient
use again increased across the board, with
N demand up 0.8% year-on-year, P demand
2.0% higher year-on-year and K demand
1.7% higher.
Moving to 2018/19, demand for N, P and
K is estimated at 188.3 million tonnes of
nutrient. This represents more modest
growth of 0.7% year-on-year due to
macroeconomic weakness, the impact of
tariffs and poor weather conditions. For a
second year running, Africa is set to enjoy
the strongest growth (3.9% year-on-year), as
efforts to improve fertilizing habits across
the continent continue to intensify. In Latin
Nitrogen
2010
2016
2017
2018
A
F
I
:
e
c
r
u
o
S
America, demand in Argentina and Brazil has
been driven by improved farming profitability
(due to the strength of the US dollar) and
China’s shift away from US soybean (US-
China trade war).
Whereas European demand is set to recover
(with the anticipated strengthening of the
euro and improved weather conditions),
Asian consumption is set to remain flat year-
on-year. Nutrient use growth is estimated
at 0.3%, 0.8% and 1.8% for N, P and K,
respectively.
The aforementioned estimates were
converted to calendar year estimates by
the IFA. N, P and K demand was assessed
at 186.3 million and 187.9 million tonnes
of nutrient in 2017 and 2018, respectively.
In this instance, N demand is estimated up
0.4% year-on-year and K 2.2% higher. P use
was 1.0% higher at 45.3 million tonnes of
nutrient.1 The IFA assessed demand for non-
fertilizer uses at 61 million tonnes in 2018.
Preliminary IFA estimates reflect a 1.2%
year-on-year increase in global N, P and K
production in 2018 – for both fertilizer and
non-fertilizer use – at 251 million tonnes of
nutrient. Fertilizer sales accounted for 75%
of global N, P and K output, similar to the
previous year.
Looking at the different nutrients, there was
a net 1.6% increase in global urea production
in 2018, bringing the total to 188 million
tonnes. Even so, new capacities continued
to be commissioned throughout the year,
driving the total up to 214 million tonnes.
Ammoniated phosphate (DAP/MAP)
production in 2018 declined 3% year-on-year
to 59.7 million tonnes of product, according
to CRU. New capacity in Saudi Arabia and
Morocco failed to offset declining output
driven by industry consolidation in the United
States and China, particularly for MAP, in
the former to capture higher margins for
premium products. Indian DAP production
also faltered due to high phosphoric acid
prices and the substitution effect from NPK
grades with lower P2O5 content.
Potash markets enjoyed another record year
in 2018, with global production estimated at
67.0 million tonnes by CRU.
188
MLN T 59.7 67
MLN T
GLOBAL UREA
PRODUCTION IN 2018
DAP/MAP
PRODUCTION IN 2018
GLOBAL POTASH
PRODUCTION IN 2018
MLN T
28
1 This represents a considerable change compared to previous estimates, with nitrogen
use being revised lower and phosphate higher for China during the period 2010–2015.
29
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NUTIRIENT DEMAND DRIVERS
FOCUS ON PHOSPHATE FERTILIZER
MARKETS IN 2018
Demand developments in key markets,
mln t
7.2
3.9
4.0
5.0
7.3
4.2
4.1
5.0
7.5
4.1
4.2
5.1
15.5
15.6
15.6
8.7
8.7
8.7
2016
2017
2018
South and Central
America
Rest of the world
Europe and CIS
North America
East and
South-east Asia
South Asia
Demand index 2010=100
139
113
109
100
94
2016
141
2017/2018
122
112
109
100
94
2017
146
2018/2019
Strong imports in
Argentina and robust
volumes in Brazil
despite logistics and
affordability changes
Driven by growth
in CIS
117
115
112
100
95
2018
A
F
I
:
e
c
r
u
o
S
The IFA’s preliminary assessment shows
that phosphate fertilizer demand stood
at 45.2 million tonnes of P2O5 in 2018,
registering 1.0% growth year-on-year,
following the 1.2% growth recorded in 2017.
Whereas European phosphate deliveries
were robust in early 2018, demand ground
to a halt in the latter part of the year. This
corresponded with a sharp increase in
ammoniated phosphate pricing, a weak euro,
and a prolonged period of heat/dryness
through the summer months that severely
impacted harvests and transportation (i.e.
through the Danube and Rhine rivers).
Germany was among those affected, with the
IFA assessing its demand 2.5% lower year-
on-year, as it was also impacted by regulation
limiting nutrient surpluses.
In Latin America, Brazilian deliveries were
impacted by transportation and affordability
issues in 2018. The truck drivers’ strike in
late May/June temporarily paralysed the
inland transportation network. With around
90% of the country’s fertilizer deliveries
made by truck, the strike action saw
coastal warehouses quickly filled, delaying
imports and raising the cost for the final
customer. In H2, affordability again became
problematic, as MAP prices moved out of
step with crop prices (see the barter ratio
diagram on the next page). This slowed
deliveries through Q4, as end-user demand
withdrew.
Argentina also had a challenging 2018, with
drought conditions followed by an economic
crisis and the subsequent reintroduction of
crop export tariffs.
Phosphate demand was assessed as stable
in the United States during 2018 but higher in
Canada due to the expansion of wheat area
and also higher application rates. The growth
in Canada is in line with long-term trends,
with the country boasting one of the more
robust growth rates in recent decades.
Elsewhere, Indian phosphate demand is
estimated marginally higher year-on-year by
the IFA at 6.9 million tonnes of P2O5 despite a
10% deficit of rainfall through the monsoon
season compared with long-term averages.
Good reservoir levels along with an increase of
minimum support prices in October on all rabi
crops (including wheat, barley and rapeseed)
helped to support fertilizer sales during H2.
Notably, a much larger amount of DAP was
imported during 2018 (6.2 million tonnes)
relative to 2017 (4.1 million tonnes) due to
the high cost of production using imported
phosphoric acid. Much of this stemmed from
China (2.9 million tonnes) and Saudi Arabia (2.0
million tonnes).
Africa has enjoyed some strong growth
in recent years. The IFA has assessed
its consumption a further 5.6% higher in
2018, following the 13.1% growth recorded
for 2017, as efforts to improve product
accessibility and technical support/expertise
continue to gain traction. In Sub-Saharan
Africa, welcome rains in the Cape (South
Africa) helped to ease the impact of drought,
but this was offset by fears of an El Niño
event impacting the south-east of the
continent in 2018/19.
Brazilian barter ratio,
60 kg bags of soya/tonne of MAP
fertilizer becoming
LESS affordable
fertilizer becoming
MORE affordable
In H2 2018, the barter ratio exceeded
22 bags of soya (60 kg) per tonne of MAP,
raising concerns about affordability
2013
2014
2015
2016
2017
2018
On the supply side of the phosphate industry,
CRU estimated a (prorated) 2% year-on-year
increase in global phosphoric acid capacity at
59.8 million tonnes of nutrient in 2018. New
integrated projects concentrated in Saudi
Arabia and Morocco accounted for almost
all of this growth in phosphoric acid capacity,
which offset the idling of 1.0 million tonnes
of nutrient supply in the United States.
In addition to reduced output from the United
States, new integrated phosphoric acid
capacity ramped up slower than expected,
and global production declined by 1% year-
on-year to an estimated 44.4 million tonnes
of nutrient in 2018. This resulted mainly from
accelerated phosphoric acid price growth
relative to downstream products. High
raw material costs also resulted in lower
domestic phosphoric acid production from
India, which DAP and NPK imports replaced.
Furthermore, where possible, non-integrated
phosphate fertilizer producers, located
mostly across India, moved away from high
P2O5 concentrates to lower-analysis NPK
formulations, further reducing phosphoric
acid requirements.
Indian imports across the
P value chain
Rock imports rebounded in 2018,
driven by high phosphoric acid prices,
which outstripped growth in DAP prices
Rock
Phosphoric acid
DAP
2018
2017
2016
35%
36%
33%
29%
35%
34%
36%
28%
33%
30
25
20
15
10
5
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30
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PhosAgro Integrated Report 2018 phosagro.comOVERVIEW OF THE FERTILIZER MARKETcontinuedSustainability ReportBusiness ReviewCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgro
PHOSPHATE FERTILIZER
MARKETS IN 2018
Global DAP, MAP, TSP and NPK production index
mln t
14.1
14.4
12.5
Production index 2010=100
5.7
6.8
15.5
16.7
2.5
2016
2.6
2017
6.8
16.5
2.6
2018
MAP
NPK
DAP
TSP
129
106
104
90
2016
132
127
112
93
2017
126
114
110
95
2018
Balanced nutrition important
in developing countries
Non-integrated Chinese
consolidation
India producing less
–
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36
CHINA’S SHARE
OF GLOBAL PHOSPHATE-
BASED FERTILIZER
PRODUCTION
Outside of China, DAP/MAP production
fell marginally year-on-year to around
34.8 million tonnes. Both Saudi Arabia and
Morocco notably lifted output following the
commissioning of new capacity. However,
the aforementioned reduced production from
India and lower output from the United States
resulted in lower DAP output. Notably, MAP
production outside of China maintained its
growth trajectory, owing in part to robust
import demand in the United States, where
capacity closed and where NP+S production
is increasingly prevalent at the expense
of DAP/MAP production.
Top 10
Rest of the world
47%
48%
2016
2018
In 2018, the top 10 producers (by
capacity) accounted for 48% of the global
total. The start-up of new operations and
M&A saw OCP and Mosaic consolidate
their positions as the industry's largest
producers. Meanwhile, Nutrient claimed
fifth spot following the merger between
Agrium and Potash Corp.
China benefited largely from the changing
P2O5 trade flows to India. Robust DAP export
demand — driven by high phosphoric acid
prices — despite domestic consolidation
supported marginal year-on-year growth in
Chinese phosphoric acid production. China
remains the largest phosphoric acid producer
globally, with 15.9 million tonnes of nutrient
production in 2018.
According to preliminary data from CRU, the
ammoniated phosphates (DAP/MAP) market
decreased 3% year-on-year to 59.7 million
tonnes of product in 2018. Combined, DAP/
MAP production fell by 1.5 million tonnes
compared to the previous year.
Phosphoric acid capacity by largest
producer, mln t P2O5
Top 10
Rest of the world
47%
48%
2016
2018
32
In 2018, the top 10 producers (by
capacity) accounted for 48% of the global
total. The start-up of new operations and
M&A saw OCP and Mosaic consolidate
their positions as the industry's largest
producers. Meanwhile, Nutrient claimed
fifth spot following the merger between
Agrium and Potash Corp.
k
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KEY PRICE DEVELOPMENTS
DURING 2018
DAP’s key price driver developments in 2018,
Price index, week 1 of 2018=100
Phosphate rock,
FOB Morocco
MGA,
CFR India
Sulphur,
FOB Middle East
Ammonia,
FOB Black Sea
120
100
80
60
week
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
51
DAP versus other commodities in 2018,
Price index, 2 Jan 2018=100
DAP prices remained robust throughout 2018 in
comparison to other commodities, finishing the
year 8% higher than at the start of the year
140
120
100
80
USD 385/t
DAP, FOB, TAMPA
Low/high commodity
price change range
USD 419/t
week
1
3
5
7
9
11
13
15
17
19
21
23
25
27
29
31
33
35
37
39
41
43
45
47
49
51
DAP prices peaked for a second straight
year in September at USD 439/tonne on a
FOB Tampa basis, recording a USD 46/tonne
increase from the end of 2017. In contrast to
2017, when prices were boosted by tight raw
materials markets, the upward trend in 2018
was driven by robust demand and tighter
than expected supply.
Note: First price point taken by Fertilizer Week in
2018 was 4 January, so the starting point refers to
the last recorded price in 2017.
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PhosAgro Integrated Report 2018 phosagro.comOVERVIEW OF THE FERTILIZER MARKETcontinuedSustainability ReportBusiness ReviewCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgro
PHOSPHATE ROCK MARKET REVIEW
207 MLN T
GLOBAL PHOSPHATE ROCK
PRODUCTION IN 2018
Marketable phosphate rock production
totalled an estimated 207 million tonnes in
2018, derived from 38 countries, 15 of which
supplied over 2.0 million tonnes. Following
the largest merchant sales of this century in
2017, internationally traded phosphate rock
volumes increased further to an estimated
32.8 million tonnes in 2018, stemming largely
from improved rock demand in Mexico and
for direct application in Indonesia. Most
of the additional volumes originated from
Peru, where production recovered from
a force majeure situation in 2017, and Syria,
which re-entered the market following a two-
year hiatus. Mexico imported much more rock,
exclusively from Morocco, helping to maintain
exports from the latter above 11.0 million
tonnes for the second consecutive year.
PHOSPHATE ROCK MARKET
DEVELOPMENTS IN 2018
Global phosphate rock capacity
and production, mln t
Global phosphate rock
trade, mln t
86.0
78.0
83.3
200.0
209.7
207.0
Max 37.6
(1988)
Avg 30.5
Min 19.6
(2009)
Capacity
Production
32.8
31.6
27.6
2016
2017
2018
2016
2017
2018
.
A
F
I
,
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C
:
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c
r
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S
34
OTHER
FERTILIZERS
AMMONIA
The recovery in the ammonia market has
been less pronounced than in the urea market.
Ammonia’s supply/demand fundamentals
remained weak, and the addition of 1.4
million tonnes of new capacity in the USA
and Indonesia kept the market somewhat
oversupplied. However, high energy prices
pushed up average prices for the year by
USD 20/tonne over 2017 values at FOB
Yuzhnyy and FOB Middle East.
Rising prices in the oil and seaborne LNG
markets put upward pressure on Europe’s gas
markets throughout the year, pushing prices up
from an average of USD 5.75/MMBtu in 2017
to almost USD 8.00/MMBtu in 2018. This level
of pricing forced Ukraine to cease exporting
ammonia and even some of the EU’s nitrate
producers to cease ammonia production
and switch to upgrading imported merchant
ammonia. This helped to offset the fall in
US ammonia imports that resulted from the
ongoing expansion of US ammonia production.
The US reduced ammonia imports by around
0.9–1.0 million tonnes in 2018, with the full,
stable operation of the Dyno Nobel plant
in Louisiana and the opening of the newly
completed Yara/BASF plant in Texas. This
ongoing reduction in ammonia imports from
around 5.2 million tonnes in 2015 to 2.8 million
tonnes in 2018 is forcing the US’s main import
supplier, Trinidad, to look further afield to
Morocco and the Asia-Pacific region for new
export opportunities, thus lowering Caribbean
prices and increasingly challenging Black Sea
exporters for business.
China’s regulation-triggered capacity
rationalisation is increasing the country’s
ammonia import requirement, which almost
reached 1.0 million tonnes in 2018. Meanwhile,
in Asia, higher oil prices helped drive a recovery
in downstream petrochemical prices (including
acrylonitrile and nylon), significantly boosting
industrial ammonia demand from South Korea,
Japan and Taiwan. At the same time, the ramp-
up of an explosives plant in Western Australia
constrained export availability from Australia.
POTASH
UREA
%
23
GROWTH OF PRICES FOR
POTASH IN BRAZIL
%
50
DECREASE IN UREA
EXPORTS FROM CHINA
Global MOP deliveries in 2018 were estimated
marginally higher year-on-year by CRU at
around 67 million tonnes. Like in 2016 and
2017, Indian and Chinese MOP contract
negotiations dragged on, this time through
to the end of Q3 2018. Delayed contractual
agreements, for China particularly, resulted
from inventory carry-over from high contract
volumes the previous year and increasing
global spot prices, while domestic producers
raised production and further unwound
stocks. Brazilian spot prices reached a three-
year high in nominal terms, increasing by
nearly 23% from the beginning of the year
to reach USD 353/tonne by the end of 2018
on a CFR basis.
Demand in Brazil remained robust, and
soybean in particular benefited from the
United States-China trade war, although it
has so far had a limited impact on US MOP
demand. Despite continued voluntary idling
of established capacity in Canada, K+S
Canada ramped up new export-oriented
supply and benefited most from the contract
delays in China. Combined, the country’s
producers reached record high output of
21 million tonnes. Slowing demand growth
across South-east Asia towards the end of
the year, reflecting a 10-year low in Malaysian
palm oil prices, dry summer weather
conditions in Europe and muted supply from
new capacity in Russia and Turkmenistan
helped balance the market.
The global urea market is now two years
into its recovery phase. Tighter market
conditions in 2018 allowed the recovery
to gain pace, with the Middle Eastern FOB
benchmarks breaking USD 300/tonne for the
first time since 2015. On average, the main
FOB Middle East benchmark increased by
USD 45/tonne last year and, factoring in the
improvement in 2017, annual average prices
are now USD 70/tonne above 2016 levels.
The rally in prices was driven mostly
by the ongoing rationalisation of China’s
huge domestic urea industry. The strict
enforcement of environmental regulations
is significantly restricting Chinese operating
rates and in doing so is reducing China’s
export availability. Full-year exports from
China more than halved in 2018, falling
from 4.6 million tonnes to 2.1 million tonnes.
China was not the only country to rationalise
urea production. Kuwait’s Petrochemical
Industries closed its 1.1 million tonnes/year
urea plant at Shuaiba, and Petrobras is in the
process of closing two loss-making plants in
Brazil with a combined capacity of 1.1 million
tonnes/year. Together with the reduction of
Chinese exports, these closures helped to
offset the 3.0 million tonnes of new capacity
that started production, including new plants
in Azerbaijan, Turkmenistan, Malaysia and the
USA.
The demand narrative was also positive
in 2018. Consumption increased in India,
the USA and Brazil, more than offsetting
consumption declines in China and Turkey.
India in particular was a major driver of
pricing in H2 2018, with decent growing
conditions driving an increase in tender
activity. Limited Chinese availability and
increased urea purchases from India and
Brazil pushed the average H2 2018 Middle
East benchmark to just over USD 300/tonne.
Energy markets also played a role in driving
up prices. Tight oil and LNG markets pushed
EU gas prices up to USD 10/MMBtu in Q3
2018, raising Europe’s marginal cost of
production and driving Ukrainian exporters
out of the traded market. Ukrainian urea
exports were reduced by around 1.0 million
tonnes to just 450,000 tonnes in 2018.
The urea market faced headwinds as the
year ended, triggering a sharp downwards
adjustment. A collapse in the energy
markets forced EU gas prices down to
USD 7.00/MMBtu, lowering producer costs
at the margin. Meanwhile, currency and
credit crises in Turkey and dry weather
conditions in Germany and France reduced
Mediterranean buying significantly.
As the market moved into the new year,
however, it found stability at USD 285/tonne.
And with India coming back to the market for
yet another tender and Chinese availability
looking severely limited, sentiment remains
positive for urea.
35
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STRATEGY
GOALS OF THE
STRATEGY TO 2020
PHOSAGRO INTRODUCED
ITS STRATEGY TO 2020
IN 2015 AND UPDATED
ITS GOALS IN 2017. IN
ADDITION TO PROVIDING
AN OVERVIEW OF THE
LAST 12 MONTHS, WE
WOULD ALSO LIKE TO
PROVIDE MORE DETAILS
ABOUT THE COMPANY’S
CURRENT CONDITION
1
DIRECT ACCESS
TO PRIORITY MARKET
We have built an end-to-end
distribution chain that captures
value all the way to regional
distributors and customers
Achieved
2
3
4
PRODUCTION CAPACITY
GROWTH AND ENHANCED
SELF-SUFFICIENCY
INCREASING
OPERATING
EFFICIENCY
CONSOLIDATION
Upgrading mid-stream capacities,
we were able to expand downstream
output and become less vulnerable
to feedstock price inflation
The key to our competitive
advantage and ability to provide
pure nutrients is maintaining low
production costs
Merging our production subsidiaries
into a single entity gives us greater
control over the assets and the
ability to deliver the greatest value
to our shareholders.
Achieved
Achieved
On track
Some of our key strategic
achievements include:
Goal: Increase share of direct sales in all
PhosAgro sales
Goal: Growth in total sales
to Latin America
Goal: Launch new 500 ths tonnes/year
granulated urea line in 2017
Goal: Reduce mining cash cost by increasing
share of underground mining up to 80%
Goal: Merge all of our production facilities
into a single legal entity
• Strengthened the Company’s
sustainable low cash-cost position
by modernising existing facilities,
enhancing vertical integration,
optimising logistics and streamlining
the corporate structure.
2020
2014
2018
Goal
90%
2020
50%
2016
90%
2018
mln t
2.0
Goal
1.3
2.0
Achieved
Achieved
Goal: Total sales
Goal: Total sales to Europe
• Increased fertilizer production by 53%
over five years to 9.0 million tonnes
for FY 2018.
• Achieved the highest level of
phosphate rock production in 25 years
at Kirovsk branch of JSC Apatit.
2020
2014
2018
mln t
8.7
Goal
2020
7.4
2016
8.8
2018
Goal
mln t
2.4
2.0
3.4
Achieved
Achieved
• Expanded our product portfolio from
19 to 39 grades of fertilizers.
• Achieved a an industry-leading
EBITDA margin of 32% for FY 2018.
• Delivered a record high cash flow
of RUB 21.3 billion for FY 2018.
• Paid out 90 RUB billion in dividends
for 2014–2018.
Goal: Domestic market share
Goal: Total sales to Russia
DAP/MAP
NPK
2020
2014
2018
Goal
70%
69%
79%
Goal
60%
2020
50%
2016
70%
2018
mln t
2.6
Goal
2.1
2.6
Achieved
Achieved
Goal: Phosphate rock production
2020
2014
2018
mln t
9.0
8.5
10.1
Goal
Achieved
Goal: Modernisation of Benefication
Plant No 3
2020
2014
2020
2018
80%
64%
80%
79%
Goal
Goal
Achieved
2014
2020
Goal: Capex/EBITDA target ratio of 50%
2018
Goal
64%
80%
79%
2014
Achieved
64%
Goal: One of the lowest cash costs
2018
79%
Goal: Increase PhosAgro self-sufficiency
in the industry
Achieved
in ammonia to 100% at JSC Apatit in 2020
Goal: Fertilizer production
2020
2014
2018
On track
Goal
mln t
8.7
7.4
9.0
Achieved
Goal: Increase PhosAgro self-sufficiency
in ammonium sulphate to 100% at JSC
Apatit in 2020
UNDER OUR STRATEGY TO 2020, WE INVESTED
USD 500 MILLION ANNUALLY, OR ON AVERAGE
50-60% OF EBITDA FOR THE SAME PERIOD.
WHILE ACHIEVING ALL KEY STRATEGIC
MILESTONES, WE MAINTAINED A COMFORTABLE
LEVERAGE RATIO WHILE PAYING OUT DIVIDENDS
IN LINE WITH THE DIVIDEND POLICY
36
37
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STRATEGY
continued
STRATEGY TO 2025
In 2018, PhosAgro completed all key milestones in its Strategy to 2020.
The Management Board and the Board of Directors adopted a new
Strategy to 2025 in March 2019.
5
IMPROVING ESG
DISCIPLINE
1
DEVELOPING
SALES IN PRIORITY
MARKETS
4
DEVELOPMENT
OF PROMISING
AREAS
STRATEGY
2025
3
IMPROVING
LOGISTICS
EFFICIENCY
2
INCREASING
PRODUCTION
THROUGH IMPROVED
OPERATIONAL
EFFICIENCY
THE STRATEGY TO 2025 AIMS TO FURTHER EXPAND PHOSAGRO’S
PRESENCE IN ITS PRIORITY DOMESTIC AND PREMIUM EXPORT MARKETS
WHILE STRENGTHENING ITS POSITION AS A PRODUCER OF PURE
PHOSPHATE-BASED FERTILIZERS WITH LOW LEVELS OF POTENTIALLY
HARMFUL HEAVY METALS AND ONE OF THE LOWEST CASH COSTS
OF PRODUCTION
Developing sales in priority markets
The Company will continue to develop its
own distribution network both in Russia
and in export markets.
The number of fertilizer grades produced
by PhosAgro is due to increase from 39 in
2018 to 50, including new high-performance
grades with bio-additives.
Starting from 2020, the Company plans
to implement end-to-end digitalisation
of logistics and to introduce elements of
precision farming technology, which will
enable Russian farmers to achieve an even
greater impact from the use of plant mineral
nutrition systems.
PhosAgro will continue to expand its
presence in the premium markets of Europe
and Latin America, as well as other markets
where the Company can achieve the best
netback prices, while also increasing
customer awareness about the safety
of the phosphate-based fertilizers
produced by PhosAgro.
Increasing production through improved
operational efficiency
As part of its Strategy to 2025, the Company
will focus on work in three priority areas:
expanding capacity, improving operational
efficiency and increasing self-sufficiency
in key inputs.
As part of a programme to modernise
existing and build new production capacities
using BATs, as well as innovative and digital
solutions, PhosAgro plans to increase the
production of high-quality fertilizers and feed
phosphates that stand out for their naturally
low levels of potentially harmful heavy metals
from 9 million tonnes in 2018 to 11.5 million
tonnes by 2025.
PhosAgro already passed the peak of its
investment cycle with the completion of
its key capital-intensive project under its
Strategy to 2020, i.e., the construction of
high-tech ammonia and granulated urea
facilities. The total investment in these
facilities amounted to RUB 65 billion. These
projects now generate a stable cash flow,
allowing for a balanced payment of decent
dividends, as well as implementation
of investment, social and charitable
programmes.
Improving logistics efficiency
Having a logistics system and sales
infrastructure in place in priority markets
will enable the Company to continue creating
value throughout the entire supply chain
all the way to end customers. To achieve
this, the Company will focus on expanding
the capacity of its own railway and port
infrastructure, as well as increasing and
upgrading its fleet of railcars, including
through the use of new rolling stock
management tools to reduce transport
costs.
Development of promising areas
We are continuously searching for ways
to expand and enhance our business
in new directions with new technologies.
This includes continued work by our
in-house R&D team at the NIUIF, which is
working on new grades of fertilizers and
crop nutrients with bio-additives. PhosAgro
is also considering potential additional new
capacities, including further expansion of its
ammonia production, purified phosphoric
acid, water-soluble fertilizers and nepheline
concentrate.These projects will be reviewed
by the Board of Directors on the basis of
their ability to create value for PhosAgro
shareholders and other stakeholders, while
also adhering to the Company’s dividend
policy and maintaining its solid financial
position.
Improving ESG discipline
PhosAgro has already created significant
value for shareholders and other
stakeholders through successful investments
in sustainable increases in efficiency and
production capacity, while also maintaining
a solid financial position, paying out
competitive dividends and undertaking
a wide range of social and environmental
projects. We have also achieved significant
progress in governance and transparency,
thanks in large part to an optimal corporate
structure and an expanded Board of Directors
with a majority of independent directors.
The Strategy to 2025 that the Board
of Directors approved aims to further
strengthen PhosAgro’s position as a
producer of environmentally safe phosphate
fertilizers with among the lowest costs in
the industry, while continuing to expand
production capacities and ensure the
long-term sustainability of our operations
globally. The Board of Directors have full
confidence that this is a strategy that will
prepare PhosAgro for the future, and that it
will create significant, sustainable value for
the Company’s shareholders as well as other
stakeholders, from employees to the farmers
that use our crop nutrients on their fields.
38
39
PhosAgro Integrated Report 2018 phosagro.comSustainability ReportBusiness ReviewCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgro MANAGING OUR RISKS
RISK MANAGEMENT SYSTEM
All PhosAgro employees, from mine and plant workers to the
members of the Board of Directors, are constantly involved in the
Company’s risk management procedures.
KEY ASPECTS OF RISK
MANAGEMENT AT PHOSAGRO
Board of Directors
Reviews information on management of the
Company’s key risks on a quarterly basis.
• Has overall responsibility for management
of financial and nonfinancial risks
• Establishes and monitors the performance
of the risk management system
• Holds management accountable for
implementation of the risk management system
Executive management
(CEO and Management Board)
• Oversees implementation of, and adherence to, risk
management policies
• Monitors and manages risks relevant to job functions
• Carries out risk identification and reporting
• Performs operational risk management
Functional and business units
Risk Management Committee
Coordinates issues related to risk management
on behalf of the Board of Directors.
• Carries out regular assessments of the risk
management system and principles
• Provides recommendations to the Board on
necessary changes and improvements to the financial
risk management system
Risk Commission
Regularly reviews the status of implementation
of risk management activities.
• Reviews the status of risk management
• Evaluates the effectiveness of risk management
measures
Risk Management and Internal Control Department
The Director of the Department reports operationally
to the CEO and functionally to the chair of the Risk
Management Committee.
• Facilitates work across the Company’s divisions
to identify and assess risks, as well as develop
programmes to manage and minimise risks
• Provides PhosAgro employees with methodological
and consultative support on issues related to risk
management
• Organises risk management training
BASED ON OUR RISK APPETITE, WE CONTINUOUSLY MONITOR
THE RISKS THE COMPANY ENCOUNTERS AND TRY TO ENSURE
THAT ALL CHANGES HAVE A CONTROLLED IMPACT ON THE
ACHIEVEMENT OF THE COMPANY’S GOALS
Audit Committee
In 2018, the company continued to develop
its risk management system, in particular:
• Has oversight responsibility for the finance
• A project to integrate the risk management
function
• Provides recommendations to the Board
on necessary changes and improvements
to the financial risk management system
Internal Audit Department
• Carries out regular assessments of the
Company’s internal control and risk
management systems
• Oversees compliance of PhosAgro’s financial
and economic operations with Russian
legislation and the Company’s Charter
• Develops recommendations for the Audit
Committee and the Board of Directors
on sound strategic changes to the risk
management system
system into operational business processes
at the Company’s key production sites
was successfully completed. This has
made it possible to enhance the culture of
risk management and internal control at
production sites with the aim of decreasing
the number of incidents and achieving
operational targets.
• The Company’s system for monitoring key
risk indicators was expanded in order to more
comprehensively monitor changes in the main
risk areas and in the context of risk appetite.
• A risk management and internal control policy
was approved by the Board of Directors, which
contributed to further improvement of the
Company’s corporate governance systems.
• An independent external evaluation
of PhosAgro’s risk management system was
carried out, which confirmed that it was at
the level of other leading Russian companies
and that it had made substantial progress
in comparison with the previous evaluation
conducted in 2016.
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KEY RISKS
The risks outlined in this report that may impact the Company do not constitute an exhaustive
list. The report aims only to identify the key risks.
Description
Mitigation
STRATEGIC RISKS
Risk of inadequate
strategic planning
Risk of inadequate strategic planning
associated with the adoption of an
incorrect strategic decision and associated
management decisions, resulting from
an erroneous assessment of internal and
external factors that have an impact on the
Company’s prospects for development and
its ability to achieve its strategic objectives.
Social and human
resources risks
Social and human resources risks are those
associated with the hiring, development and
retention of employees, as well as risks in
relations with local communities and the risk
of adverse social situations in regions
of operation.
PhosAgro has successfully implemented all
key projects under its Strategy to 2020, and
the Board of Directors approved the Strategy
to 2025 in March 2019.
The Company actively monitors both internal
and external factors that could impact
implementation of the strategy. PhosAgro
also takes a systematic approach to
assessing the potential costs and benefits
of new strategic projects in order to facilitate
optimal decision-making.
PhosAgro carries out independent and joint
programmes aimed at attracting talented
young specialists, including from other
regions, developing employees’ professional
competencies and increasing employee
motivation to ensure long-term retention.
The Company has adopted a Human
Resources Policy that identifies the main
areas of personnel management that
facilitate the achievement of the Company’s
business goals.
PRODUCTION RISKS
Production risks
Workplace health
and safety risks
Environmental
risks
Risks in the production process are negative
events of a technical/industrial nature that
lead to disruptions in the production process:
downtime of production equipment, outages,
incidents and accidents at production sites
and production infrastructure facilities, failure
to meet planned production volumes.
Workplace health and safety risks are related
to injury, occupational illnesses, accidents
and incidents at hazardous production
facilities, as well as risks associated with
discrepancies between the workplace health
and safety elements of the risk management
system and legal requirements.
Environmental risks cover the occurrence
of potential damage to the environment as
a result of the Company’s activities.
PhosAgro aims to operate all types of
equipment without breakdowns or unplanned
stoppages and to take steps to limit the
length of unplanned stoppages when they do
occur. With this aim in mind, the Company
invests in building new and upgrading
existing production and power-generating
equipment, schedules preventative
maintenance of equipment and major
overhauls, while using backup equipment
and creating a reserve of components,
accessories and spare parts. In addition, a
programme to boost the quality and reliability
of repair work carried out by suppliers is in
place, while insurance covers the Company’s
hazardous production facilities and property.
PhosAgro ensures workplace health and
safety in compliance with relevant legislation
and global best practices in this area. To
this end, the Company carries out training
for staff and checks their knowledge related
to workplace health and safety, promotes a
culture of safety, ensures that all contractors
adhere to workplace health and safety
standards, carries out safety audits and
inspections to ensure compliance with the
relevant regulations and requirements of the
OHSAS 18001 standard on the part of both
Company enterprises and suppliers. The
Company adopted a Strategy for Workplace
Health and Safety that specifies targeted
programmes to reduce the risks associated
with various types of Company activities.
PhosAgro regularly analyses and assesses
its impact on the environment. In an effort to
limit its environmental impact, the Company
is modernising its cleanup and storage
system and is putting energy-efficiency
programmes in place. The Company partners
with UNESCO and the International Union
of Pure and Applied Chemistry (IUPAC) to
provide grants for research in the field of
green chemistry with the aim of protecting
the environment and human health through
the implementation of energy-efficient
processes and environmentally friendly
technologies on the basis of innovative ideas.
PhosAgro’s investment projects make use of
the best available technologies to reduce the
unit costs of raw materials and energy, as
well as emissions of regulated substances.
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OPERATIONAL RISKS
Project risks
Risks of inefficiency and infringement
of business processes
Taxation risks
Information
security risks
Risks to economic
security
Description
Mitigation
Project risks are related to exceeding planned
budgets and timelines for the completion
of new construction and modernisation
projects, as well as the failure to achieve
efficiency targets related to projects.
Risks associated with inefficiency or the
intentional or unintentional infringement of
the Company’s business processes, including
counterparty risk related to the supply chain.
PhosAgro strives to adhere to project
budgets and timelines and to take a unified
approach to implementation with the help
of project management tools. All projects
go through a multi-step review and approval
process. For large-scale and strategically
important projects, a project office is set
up. Fixed-price contracts are also used.
The Company conducts regular monitoring
of progress against project budgets and
deadlines.
PhosAgro aims to support the efficient
functioning of all of the Company’s business
processes and systems. To achieve this, the
efficiency of business processes is regularly
evaluated, bottlenecks are identified, and
measures to improve efficiency or eliminate
bottlenecks are developed and implemented.
The Company also aims to minimise risk
in its supply chain by choosing suppliers
through competitive tender processes. For
these purposes, PhosAgro uses multistage
tender procedures and signs long-term supply
contracts with its most reliable suppliers.
The Company also carries out a number of
measures to reduce the risks associated with
disruptions to its business processes caused
by failures of its IT infrastructure, cyberattacks
and other external factors.
Taxation risks are related to potential claims
by the tax authorities that the Company
has not correctly filed its tax return or made
payments on time.
Risks in the field of information security
are risks associated with losses caused to
Company property and assets by means
of unauthorised access to its information
systems or by the disclosure of confidential
information.
Economic security risks are related to losses
caused to Company property and assets as
a result of legal violations in the economic
sphere committed by employees or third
parties, including fraud and theft.
PhosAgro complies with tax legislation in the
countries where it operates. Tax legislation,
including planned changes, is monitored;
law enforcement practices are analysed;
clarifications are sought from government
bodies regarding tax assessments; law
firms, accountants and tax authorities are
consulted on questions related to various
tax-related laws.
The Company carries out various measures
aimed at preventing unauthorised access to
its information systems as well as disclosure
of confidential information. Various technical
and software solutions, including encryption,
are used to control access to information
resources and systems; access rights
to information are regulated according
to different user groups; there is a clear
definition of what constitutes confidential
information and how it should be handled;
periodic audits are carried out to ensure
strict compliance with the Company’s
confidentiality policy.
The Company takes measures aimed at
preventing potential losses to its property
and assets as a result of legal violations in
the economic sphere. A system controlling
access to the Company’s administrative
and production facilities is in place; a clear
division of responsibility is established
when it comes to concluding contracts
or transactions; checks are carried out
on all counterparties before contracts are
executed; a hotline has been created to
enable the Company to receive feedback
from employees. Moreover, additional
oversight checks are carried out by various
departments within the Company.
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REGULATORY RISKS
REPUTATIONAL RISKS
FINANCIAL RISKS
Compliance with legal and
regulatory requirements
Corruption risks
Reputational
risks
Credit risks
Currency risks
Marketable
goods risks
Description
Mitigation
Compliance with legal and regulatory
requirements covers the risk of the
untimely receipt/extension of licences,
as well as risks related to changes
in legislation that could lead to an
increase in the cost of doing business,
the implementation of restrictive
measures by regulatory bodies,
a reduction in investment appeal
and/or changes in the competitive
environment.
Corruption risks associated with losses
resulting from penalties levied against
the Company by state authorities
as a result of non-compliance or
inadequate compliance on the part of
the Company or its employees with
the requirements of applicable anti-
corruption legislation.
Reputational risks cover damage to
the Company’s business reputation
as a result of unauthorised
disclosure in the media of
information about the Company’s
operations, financial results, upper
management, etc.
The Company ensures full compliance
in its activities with applicable
legislation. In order to ensure that it
receives information about potential
legislative changes in a timely
manner, the Company closely tracks
initiatives at the government and
regulatory level and takes part in
discussions of legislative initiatives
and preparation of recommendations
through professional associations. The
Company acts in a timely manner in
preparing and submitting documents
to receive or prolong the licences
needed to carry out its business.
The Company ensures compliance on
the part of its enterprises and partners
with the requirements of relevant
anti-corruption legislation. It conducts
training focused on combatting
corruption and on how to apply
anti-corruption legislation in practice,
and a principle of zero tolerance is
communicated to all employees
and counterparties with respect to
corruption, and they are warned that
they will be held accountable for any
violation of anti-corruption legislation.
The Company is a member of the
Anti-Corruption Charter of Russian
Business.
The Company is transparent and
discloses all material facts and
developments, while also having
adopted an information policy and
media engagement policy. The
Company publishes information
about its business on its website
and in the media, provides
comments in response to media
enquiries and regularly monitors all
relevant coverage in both Russian
and international media.
Credit risks resulting in potential financial
losses caused by the failure of buyers,
commercial contractors, suppliers, banks,
insurance companies, clearing centres or
other financial contractors to fulfil their
financial obligations to the Company in full
and on time.
Currency risks resulting in potential financial
losses caused by unfavourable changes
in exchange rates with respect to the
Company’s base currency.
Marketable goods risks cover possible losses
associated with unfavourable changes in the
market prices for mineral fertilizers and other
products, as well as increases in the price of
the main raw materials and equipment that
the Company purchases.
In the current environment of volatility with
respect to the price of oil and fluctuations
in the rouble exchange rate against major
currencies, the Company aims to align the
currency structure of its debt financing with
the currency structure of its sales. Most of
the Company’s debt is denominated in US
dollars as a natural hedge against primarily
USD-denominated sales. The Company
carefully tracks analyst forecasts and factors
that can influence the rouble exchange rate
against major currencies. Where needed, the
Company is able to use full or partial hedging
instruments against its currency positions.
The Company has adopted policies on
managing credit risk that employ different
methods of managing and reducing credit
risk, including by completing deliveries
after full or partial prepayments, with full or
partial insurance of credit risk and by using
letters of credit. Delivery without prepayment
and insurance is only permitted for long-
established clients. Providing advance
payments to suppliers and contractors is
only considered after the counterparties
have been tested for reliability, and also
after the provision of bank guarantees in the
event that the sum of the advance payment
exceeds established internal limits. The
Company works with banks, other financial
organisations and insurance companies with
a high level of financial stability and that meet
the criteria set out by the Company’s treasury
policy.
The Company monitors all covenants
applicable to existing loans on a regular
basis.
In the environment of volatile prices for its
core products, the Company is continually
optimising its sales structure according to
fertilizer brands and regional sales focus
in order to maximise margins, while also
increasing the share of fertilizer sales to end
users, increasing production efficiency and
providing add-on services to customers such
as packaging, blending and storage.
In 2018, PhosAgro opened a trade office
in Buenos Aires (Argentina), in addition to
existing offices in Hamburg (Germany),
Bayonne (France), Zug (Switzerland),
Belgrade (Serbia), Limassol (Cyprus), Warsaw
(Poland), Vilnius (Lithuania), São Paulo
(Brazil) and Singapore. With a presence in
priority export markets, the Company will be
able to respond more quickly to changes in
market demand and customer needs.
In order to reduce the cost of raw materials
and equipment, the Company concludes
tenders among multiple suppliers, conducts
long-term supply contracts and develops
lasting relationships with its suppliers.
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Internal control body
REVIEW
COMMITTEE
Appointed by
General Shareholders’
Meeting
Reports to
General Shareholders’
Meeting
Functions
AUDIT COMMITTEE
OF THE BOARD
OF DIRECTORS
BOARD
OF DIRECTORS
Board
of Directors
Board
of Directors
General Shareholders’
Meeting
Shareholders
Prepares a report on the results of the
Company’s operations for the prior year
ahead of the Annual General Shareholders’
Meeting and gives its opinion on whether
the Company’s financial statements
are true and accurate.
Monitors compliance with current legislation,
the Company Charter and internal
regulations.
Improves the efficiency and quality of the
work of the Board of Directors in the area
of internal control.
Determines how the internal control system
operates and approves various actions
and policies relating to it.
Considers issues and provides recommenda-
tions to the Board of Directors in areas like:
• Internal and external audits;
• The accuracy and efficiency of internal
Reports annually to the General Shareholders’
Meeting on the reliability and efficiency
of PhosAgro’s internal control system.
control procedures;
• Management accounting and financial
Approves the appointment and dismissal
of the Director of Internal Audit.
reporting;
• Risk management procedures and
systems;
• How risks are reflected in the Company’s
reporting.
Supervises the Internal Audit Department.
Internal control body
CHIEF EXECUTIVE
OFFICER
INTERNAL AUDIT
DEPARTMENT
EXTERNAL
AUDITOR
Appointed by
Board
of Directors
Reports to
Board
of Directors
Contract based
on tender procedures
Board of Directors and General
Shareholders’ Meeting
Functional:
Audit Committee
Audit
Committee
Functions
Functioning of PhosAgro’s internal control
system.
Implements internal control procedures
and ensures that they are put into practice.
Promptly informs the Board of Directors
of any significant risks faced by the Company
or any major weaknesses in the Company’s
internal control system.
Tells the Board what measures have been
or will be taken to address issues and the
results of these actions.
Provides an independent and objective
assessment of the Company’s internal
control and risk management systems.
Verifies the compliance, in terms of accuracy
and completeness, of the Company’s annual
financial statements with IFRS.
Inspects the Company’s financial and
commercial operations and its internal
control systems.
Prepares a report that is submitted to the
Audit Committee at least once a year.
In case of a disagreement between the
Company’s management and the independent
auditor, the Audit Committee oversees the
resolution of the disagreement.
JSC KPMG is currently PhosAgro’s external
auditor.
Assists top management in developing
and monitoring the implementation
of procedures and measures to improve
the risk management, internal control
and corporate governance systems.
Coordinates with the Company’s external
auditors and other third parties.
Conducts internal audits of subsidiaries
in line with established procedures.
Prepares and presents information about
the internal audit function’s operations
to the Board of Directors, Audit Committee
and General Shareholders’ Meeting.
Verifies compliance of management and
employees with legislation and internal
regulations on insider information.
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58
Operational Review
Financial Performance
51 % CAPEX TO EBITDA
RATIO
03
BUSINESS
REVIEW
A YEAR OF INDUSTRY-LEADING
PERFORMANCE
Looking back at 2018, PhosAgro saw the
positive impact of the successful implemen-
tation of its major investment projects under
its Strategy to 2020. Our new ammonia and
granulated urea lines, combined with further
debottlenecking and modernisation of ex-
isting capacities, helped PhosAgro to deliver
yet another year of growth in fertilizer output,
which rose by 7.6% year-on-year to 9 million
tonnes.
Mikhail Rybnikov
First Deputy CEO of PhosAgro
8,975 KT
fertilizer produced in 2018
Fertilizer production,
kt
2018
2017
2016
2015
2014
8 341
8,975
8,338
7,399
6,750
5,998
7.6 %
INCREASE IN FERTILIZER
PRODUCTION IN 2018
COMPARED TO 2017
39 GRADES
OF CROP NUTRIENTS
PRODUCED BY PHOSAGRO
50 %
INCREASE IN FERTILIZER
OUTPUT CAPACITY SINCE
2014
This represents an impressive 50% increase
in our fertilizer output capacity compared
to the 6.0 million tonnes produced in 2014.
Moreover, we have significantly improved
our ability to address demand from farmers
growing a wide variety of crops in different
soil and climatic conditions thanks to the 39
grades of crop nutrients that our facilities
now produce.
We were able to achieve these impressive
results thanks to the world-class assets
that form the core of PhosAgro’s business.
At Apatit we mine apatite-nepheline ore
that is unique for its high nutrient content
and extremely low levels of potentially
harmful heavy metals like cadmium.
Thanks to investments in the efficiency of
our upstream operations, we were able to
deliver sustainable cost savings on mining
and processing, and our vertical integration
means that PhosAgro’s downstream
production facilities can efficiently produce
fertilizers that are naturally free of heavy
metals and other contaminants.
Looking ahead, we plan to continue to
invest in further strengthening our low
cash-cost position by investing in further
debottlenecking and efficiency in our existing
business. At the same time, we are building
new mid-stream capacities that will improve
PhosAgro’s self-sufficiency in key inputs
with modern and efficient production units
for sulphuric and nitric acid. This in turn will
enable us to continue to ramp up production
of our fertilizer end products, offering
shareholders further sustainable growth
in cash flows and profitability, and farmers
around the world greater access to our pure
and high-quality crop nutrients.
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PHOSPHATE SEGMENT —
UPSTREAM
The Kirovsk branch of Apatit mines
apatite-nepheline ore that is processed into
phosphate rock and nepheline concentrate.
The downstream operations in our
phosphate segment take place at Apatit
(formerly PhosAgro Cherepovets), the
Balakovo branch of Apatit (formerly Balakovo
Mineral Fertilizers) and Metachem. Apatit
and the Balakovo branch of Apatit produce
phosphate-based fertilizers, and the
Balakovo branch of Apatit also produces feed
phosphate (MCP). Metachem produces PKS
and industrial phosphates such as sodium
tripolyphosphate (STPP).
Upstream
We extracted 35.3 million tonnes of apatite-
nepheline ore in 2018 and produced 10.1
million tonnes of phosphate rock, up by
5.5% from 9.5 million tonnes in 2017. This
marks the highest annual phosphate rock
production output in the last 25 years for the
Kirovsk branch of Apatit.
Intra-Group sales of phosphate rock
amounted to 70.5% (7.1 million tonnes)
in 2018, compared to 71.3% (6.8 million
tonnes) in 2017.
We sold 11.3% of the phosphate rock we
produced to domestic external customers
and 18.0% to international customers,
compared with 9.8% and 18.8%, respectively,
in 2017. Prayon (Belgium) and Yara (Norway)
accounted for most of the exports.
In 2018, nepheline concentrate production
and sales decreased by 1.2% and 7.4% year-
on-year, respectively.
PhosAgro’s upstream subsidiary, the Kirovsk
branch of Apatit, holds five mining licences
and two licences for geological exploration,
exploration and production, which allow it
to conduct exploration and mining activities
at six apatite-nepheline ore mines and to
conduct exploration activities at two deposits.
%
5.5
INCREASE IN
PHOSPHATE ROCK
PRODUCTION IN 2018
COMPARED TO 2017
MLN T
10.1
OF PHOSPHATE ROCK
PRODUCED SET 25-YEAR
RECORD
PHOSAGRO ORE RESERVES
AS OF 1 JANUARY 2019
Deposit
Kukisvumchorr
Yukspor
Apatitovy Cirque
Rasvumchorr Plateau
including the Plot Plateau
Koashva
Njorkparhk
Iyolitovy otrog
Total
LICENCES
MINING
LICENCE
Resources, kt
(Categories A+B+C1)
Average P2O5
content
386,855
484,791
100,641
314,157
1,061
590,008
54,703
134
1,931,289
14.20%
14.11%
14.11%
13.03%
17.06%
16.88%
13.35%
19.4%
14.78%
GEOLOGICAL SURVEY,
EXPLORATION AND
PRODUCTION LICENCES
PRODUCTION AND SALES VOLUMES —
APATIT MINE AND BENEFICIATION PLANT
Production volume, kt
Sales volume,* kt
Phospate rock
2018
10,067
Nepheline concentrate
986
2017
9,540
998
Change, y/y
5.5%
(1.2%)
2018
2,964
983
2017
2,732
998
* Not including Intra-Group sales.
Change, y/y
8.5%
(1.5%)
Kirovsky mine
(Kukisvumchorr and Yukspor
deposits)
31 December 2025
Rasvumchorrsky mine
(Apatitovy Cirque and
Rasvumchorr Plateau deposits)
1 January 2024
Plot Plateau
14 December 2040
Iyolitovy otrog deposit
1 February 2024
Tsentralny mine
(Rasvumchorr Plateau deposit)
31 December 2020
Vostochny mine
(Koashva deposit)
31 December 2019
Vostochny mine
(Njorkparhk deposit)
31 December 2063
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PHOSPHATE SEGMENT —
DOWNSTREAM
Performance
In 2018, PhosAgro’s output of phosphate-
based products was up by 3.8% year-on-year
to 6.9 million tonnes, primarily driven by
higher NPK production (up by 24% year-
on-year), which was made possible by the
successful modernisation of mid-stream
capacities (both phosphoric and sulphuric
acid) in Balakovo.
Sales of phosphate fertilizers rose by 2.3%
year-on-year to 6.6 million tonnes in FY 2018.
The strongest growth was in North America,
where sales rose by 62% year-on-year to 0.8
million tonnes due to a deficit of phosphates
following the closure of capacities in Florida.
Shipments to Latin America increased by 6%
year-on-year to 1.2 million tonnes in FY 2018
thanks to our close work with end customers.
Sales to Europe and Russia rose by 1% year-
on-year in each region to 1.6 million and
1.9 million tonnes, respectively, driven by our
strategic approach to move deeper into the
distribution chain and expand our on-the-
ground presence with new local offices.
Outlook
We expect to benefit from the completion
of several major investment projects
that helped us to achieve sustainable
cost savings in our upstream operations,
including a new conveyer system for
removing ore from open pit mines and the
overhaul of Beneficiation Plant No 3. We
are likewise on track to finish upgrades to
Beneficiation Plant No 2 that will enable us
to start processing off-balance-sheet ore that
previously had too low nutrient content to be
processed profitably.
PhosAgro is also committed to expanding
overall fertilizer production capacity and
self-sufficiency in key inputs like sulphuric
and nitric acid, which we believe will enable
PhosAgro to continue its sustainable growth,
while strengthening our cost leadership
among global peers.
NITROGEN
SEGMENT
Our nitrogen segment includes the assets of
the JSC Apatit, which produces ammonia,
ammonium nitrate and both granulated and
prilled urea.
Highlights
• Nitrogen fertilizer production increased
22.4% year-on-year to 2.1 million tonnes
• Nitrogen fertilizer sales were up 35.9%
and reached 2.2 million tonnes
• 2018 was the first full year in which our
new ammonia and granulated urea lines
were fully functional
Performance
Urea production increased by 28.4% year-
on-year to 1,590 kt in 2018 on the back of
the new urea plant commissioned in 2017,
while sales increased by 40.4% year-on-year
to 1,600 kt.
functional. This brought our self-sufficiency
in ammonia from 78% in 2017 to 89% in
2018. Most of the ammonia we produced
was consumed within the Group to support
increased production of phosphate-based
fertilizers, urea and ammonium nitrate in
2018.
In 2018, production of ammonium nitrate (AN)
increased by 7.4%, while sales were up 25%.
The majority of our urea sales were in the
spot market. We believe that this balance
ensures a significant degree of stability in our
urea sales volumes and prices, while at the
same time enabling us to benefit from the
flexibility that spot sales provide.
The ammonia we produce is used internally
for the production of phosphate-based
and nitrogen fertilizers. In 2018, ammonia
production increased by 28.2% compared to
2017, as our new ammonia plant was fully
%
3.8
YEAR-ON-YEAR INCREASE
IN PRODUCTION OF
PHOSPHATE-BASED
FERTILIZERS
%
9.1
INCREASE IN NPK
PRODUCTION
IN 2018 COMPARED
TO 2017
22.4
%
YEAR-ON-YEAR INCREASE IN
PRODUCTION OF NITROGEN-
BASED FERTILIZERS
%
40.4
INCREASE IN UREA SALES
VOLUME IN 2018 COMPARED
TO 2017
PRODUCTION AND SALES VOLUMES —
PHOSPHATE-BASED FERTILIZERS AND MCP
PRODUCTION AND SALES VOLUMES —
NITROGEN-BASED FERTILIZERS
Production volume, kt
Sales volume, kt
Production volume, kt
Sales volume, kt
2018
2,995.0
2,799.0
419.0
216.0
356.0
67.0
2017
3,004.0
2,566.5
423.4
155.4
354.4
99.8
Change, y/y
-0.3%
9.1%
-1.0%
39.0%
0.5%
-32.9%
2018
2,912.6
2,664.6
423.5
209.4
347.2
77.6
2017
2,963.9
2,488.8
409.8
170.7
350.4
101.2
Change, y/y
-1.7%
7.1%
3.3%
22.7%
-0.9%
-23.3%
DAP/MAP
NPK
NPS
APP
MCP
PKS
56
2018
2017
Change, y/y
2018
2017
Change, y/y
Urea
1,590.0
1,238.2
Ammonium nitrate
533.0
496.4
28.4%
7.4%
1,600.3
1,139.8
595.3
476.0
40.4%
25.1%
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PhosAgro Integrated Report 2018 phosagro.comOPERATIONAL REVIEWSustainability ReportBusiness ReviewCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgro FINANCIAL PERFORMANCE
Alexander Sharabaiko,
CFO
32 %
EBITDA MARGIN
In line with our Strategy to 2020, PhosAgro
completed crucial investment projects in
2018 and delivered significant growth across
all key financial metrics. Revenue rose by
29% year-on-year to RUB 233.4 billion, while
EBITDA increased by 47% year-on-year to RUB
74.9 billion. The EBITDA margin remained at
32%, which is one of the highest levels in our
industry.
With FX-denominated export sales
accounting for 70% of revenue while the
majority of operating costs are in RUB,
PhosAgro’s profitability benefited directly
from the recovery in the global fertilizer
market and the depreciation of the rouble
against the US dollar. In addition, measures
taken to control costs and timely upgrades
to our mid-stream capacities enabled the
Company to restrict cost of sales growth to
22% year-on-year amid volatility in prices for
raw materials.
The completion of a major investment cycle
in 2017 and the additional cash flows that our
new capacities generated in 2018 drove free
cash flow to a record high RUB 21.3 billion.
As a consequence, our net debt/LTM EBITDA
ratio as of 31 December 2018 declined to a
comfortable 1.8x, compared to 2.4x a year
earlier. In addition, our full-year adjusted net
income almost doubled year-on-year to RUB
42 billion. As an indication of our confidence
in the Company’s financial position over
the long term, the Board of Directors has
recommended a final dividend that brings the
total annual payout ratio to a generous 56.8%
of 2018 IFRS net profit.
We believe that the boost to EBITDA and cash
flow from our new production capacities is
sustainable in 2019. We are continuing to
invest in modernisation and upgrades at
our production units to further strengthen
our cash-cost advantage, while maintaining
attractive dividends for our shareholders and
investing in important social programmes
for the local communities where we operate.
With phosphate-based fertilizer markets
showing signs of recovery in 2019, we
are optimistic about our ability to deliver
value for our investors in the year ahead.
PhosAgro’s 2018 revenue amounted to RUB
233.4 billion (USD 3.7 billion), increasing 29%
year-on-year, driven by higher fertilizer sales
volumes and a weaker rouble. Revenue from
phosphate-based products amounted to RUB
187.0 billion, a 23% increase year-on-year.
At the same time, both domestic and export
revenue demonstrated strong growth of 15%
and 27%, respectively, year-on-year. Revenue
from the nitrogen fertilizers segment
233.4
REVENUE IN 2018
RUB BLN
amounted to RUB 37 billion, a 65% year-
on-year increase supported by both higher
domestic and export sales.
The geographic revenue split was in line
with PhosAgro’s historic performance: our
priority domestic market accounted for 30%
of total sales, while export markets brought
in the remaining 70%. PhosAgro’s priority
export markets, Europe and Latin America,
accounted for approximately 35% and 27%
of 2018 revenue, respectively. North America
brought in 17% of 2018 revenue (10% in
2017), with revenue in monetary terms more
than doubling year-on-year due to higher
imports following the shuttering of key North
American capacities. The remaining 21% of
PhosAgro’s 2018 revenue came from Asia
(including India), the CIS, Africa and Australia.
Gross profit grew by 38% year-on-year to RUB
109.5 billion (USD 1.7 billion), and the gross
margin rose by 3.0 p.p. year-on-year to 47%.
Gross profit and margin performance for
the phosphate-based and nitrogen-based
segments were as follows:
• The phosphate-based segment saw a 25%
year-on-year increase in gross profit to RUB
REVENUE BREAKDOWN BY KEY PRODUCTS
RUB mln
88.0 billion (USD 1.4 billion), with a gross
margin of 47%, compared to 46% in 2017
• Gross profit for the nitrogen-based segment
increased by 132% year-on-year to RUB
20.6 billion (USD 328 million). Gross margin
for the segment increased by 17 p.p. year-
on-year to 56%, driven by the first full year
of operations of PhosAgro’s new ammonia
and urea units
FY 2018
FY 2017
Change y/y
DAP/MAP
NPK(S)
Phosphate rock
Nitrogen-based
77.9
60.9
22.1
37.0
FY 2018 FINANCIAL AND OPERATIONAL HIGHLIGHTS
RUB mln or %
62.2
47.1
21.2
22.5
FY 2017
181,351
50,796
28%
25,331
21,190
FY 2018
233,430
74,908
32%
22,135
41,748
Revenue
EBITDA
EBITDA margin
Net income
Net income adj
Net debt
ND/LTM EBITDA
Sales, kt
Phosphate-based
Nitrogen-based
Phosphate rock
31 December 2018
31 December 2017
135,330
1.81х
FY 2018
6,635
2,196
2,964
119,985
2.36х
FY 2017
6,485
1,616
2,732
25.3%
29.2%
4.4%
64.5%
Change y/y
+ 29%
+47%
+4 p.p.
-13%
+97%
Change y/y
2.3%
35.9%
8.5%
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About PhosAgroPhosAgro Integrated Report 2018 phosagro.comStrategic ReportCorporate GovernanceFinancial ReportAdditional InformationSustainability ReportBusiness Review 124 RUB BLN
COST OF SALES IN 2018
FINANCIAL PERFORMANCE
continued
PhosAgro’s EBITDA in 2018 increased by
47% year-on-year to RUB 74.9 billion (USD
1.2 billion), while the EBITDA margin grew
by 4 p.p. to 32%, compared to 28% in 2017.
Net profit (adjusted for non-cash FX items)
amounted to RUB 41.8 billion (USD 666
million) in 2018, a 97% increase compared to
the year before.
During 2018, the rouble depreciated by
nearly 7% year-on-year (the average RUB/
USD foreign exchange rates for 2018
and 2017 were RUB 62.7 and RUB 58.4,
respectively), which had a net positive
impact on PhosAgro’s financial results, as
prices for most of the Company’s products
are denominated in USD, while costs are
primarily RUB-based.
Cash flow from operating activities increased
by almost 100% year-on-year to RUB 59.7
billion (USD 952 million), compared to RUB
30 billion (USD 514 million) in 2017.
Gross debt (including finance lease liabilities)
as of 31 December 2018 increased by 18%
to RUB 144 billion (USD 2.1 billion). Net
debt as of 31 December 2018 stood at RUB
135 billion (USD 1.9 billion). Most of the
Company’s debt is denominated in USD and
thus is naturally hedged by primarily
USD-denominated sales. The net debt to
LTM EBITDA ratio decreased to 1.81x as
of 31 December 2018, down from 2.36x
as of 31 December 2017.
Cost of sales grew by 22% year-on-year in
2018 to RUB 124 billion (USD 1.97 billion).
The key factors behind the growth were:
• Spending on materials and services grew
by 18% year-on-year to RUB 36.5 billion
(USD 584 million) driven by a 9% year-on-
year increase in overall production and
12% year-on-year PPI inflation;
• D&A was up significantly by 43% year-
on-year to RUB 19.0 billion (USD 304
million) as a result of the commissioning
of new ammonia and urea plants, the
modernisation of Beneficiation Plant No 3
and increased capitalised depreciation due
to higher operational activity;
• Spending on salaries and social
contributions increased by 8% year-on-year
to RUB 12.2 billion (USD 196 million) mainly
due to salary indexation (an increase of
almost RUB 500 million), overall fertilizer
production and an increase of around RUB
150 million in medical services and meals;
• Spending on natural gas rose by 32%
year-on-year to RUB 12.1 billion (USD 195
COST OF SALES
RUB mln
Materials and services
Depreciation and amortisation
Natural gas
Salaries and social contributions
Sulphur and sulphuric acid
Potash
Chemical fertilisers for resale
Electricity
Ammonium sulphate
Ammonia
Fuel
Heating energy
Total
FY 2018
FY 2017
Change y/y
36,493
18,936
12,096
12,209
10,682
10,238
6,287
5,474
3,015
4,195
3,775
564
30,869
13,242
9,154
11,265
6,120
8,279
4,932
5,451
2,287
6,287
3,264
667
123,964
101,817
18%
43%
32%
8%
75%
24%
27%
0%
32%
-33%
16%
-15%
22%
7 %
GROWTH OF SPENDING ON
CAPEX COMPARED TO 2017
million) driven by higher gas purchases
as a result of the first full year of operations
of our new ammonia plant;
• A year-on-year increase in expenditure on
sulphur and sulphuric acid of 75% to RUB
10.7 billion (USD 171 million) due to 73%
growth in the purchase price of sulphur;
• Potash costs increased by 24% year-
on-year to RUB 10.2 billion (USD 163
million) on the back of an 18% increase
in the purchase price and 5% growth in
purchased volumes (thanks to the greater
share of NPKs with high potash content);
• Electricity costs remained almost flat
and amounted to RUB 5.5 billion (USD
88 million);
• A 33% year-on-year decrease in spending on
purchased ammonia to RUB 4.2 billion (USD
67 million) was mainly due to additional
volumes of our own production following
the launch of the new 760 thousand tonnes/
year ammonia plant at Apatit in Cherepovets;
• Fuel costs grew by 16% year-on-year to
RUB 3.8 billion (USD 61 million) on the
back of a 30% increase in purchase prices
for heating oil and diesel. However, an
11% decline in overall consumption level
partially offset this growth;
• Spending on ammonium sulphate
increased by 32% year-on-year to RUB 3.0
billion (USD 49 million) due to 21% growth
in consumption (thanks to a higher share of
NPS and NPK grades with high ammonium
sulphate content) and a 9% increase in the
purchase price.
Administrative expenses increased by
6% year-on-year to RUB 14.9 billion (USD
240 million) in 2018, primarily due to a 5%
increase in personnel costs to RUB 8.3 billion
(USD 135 million) and a 32% increase in D&A,
which was partially offset by a 9% decrease
in professional services expenses.
In 2018, selling expenses increased by 37%
year-on-year to RUB 34.4 billion (USD 547
million). The main factors behind this growth
were:
• Freight, port and stevedoring expenses
grew by 57% year-on-year to RUB 17.3
billion (USD 277 million) primarily due to
a 23% year-on-year increase in export sales
of rock and fertilizers. Additional pressure
came from the depreciation of the rouble
by 7% year-on-year on average, as the
majority of freight and stevedoring tariffs
are still denominated in USD;
• Russian Railways infrastructure tariff and
operators’ fees grew by 13% year-on-year
to RUB 10.4 billion (USD 166 million), driven
by a change in shipment structures and
indexation of railway tariffs;
• Spending on customs duties grew by 61%
year-on-year to RUB 1.4 billion (USD 22
million), triggered by increased deliveries
under DDU terms.
CASH SPENT ON CAPEX IN 2018 AMOUNTED TO RUB 38.4 BILLION
(USD 613 MILLION), AN INCREASE OF 7% YEAR-ON-YEAR. THE MAIN
CAPEX SPENDING WAS ON SCHEDULED MAINTENANCE AND DEVEL-
OPMENT OF THE UPSTREAM BUSINESS, AS WELL AS ON CONSTRUC-
TION OF NEW SULPHURIC AND NITRIC ACID PLANTS
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72
88
98
Environmental review
Health and safety review
People development
112 Business conduct review
116 Stakeholder engagement
130 Social investment
PHOSAGRO JOINED THE UN GLOBAL
COMPACT AND FOCUSED ON
CONTRIBUTING TO THE ACHIEVEMENT
OF 10 OF ITS GOALS
04
SUSTAINABILITY
REPORT
DEMONSTRATING COMMITMENT
TO ESG PRINCIPLES
MANAGEMENT APPROACH
Unprecedented population growth in the 20th century put immense
pressure on limited natural resources and continues to have an impact on
every sphere of life. Being a global leader in fertilizer production, PhosAgro
sees itself as an essential contributor to the production of healthy food
and, as a result, to human well-being. Therefore, our management
team decided in 2018 to demonstrate our commitment by supporting
the implementation of 10 of the UN Global Compact’s Sustainable
Development Goals.
ABOUT THIS
INTEGRATED REPORT
This sustainability report provides an overview
of the Group’s policies and performance in
2018 in key areas, including human rights,
health and safety, the environment, human
capital management and community
engagement, as well as an outline of how
PhosAgro contributes and complies with 10
of the UN Sustainable Development Goals in
numerous other ways.
Alongside our corporate values, including
our concern for the environment and careful
use of natural resources, fair competition,
dialogue, compliance, stewardship and
effectiveness, the 10 Sustainable Development
Goals that the Company supports help inform
our sustainability policies. These values are
supported and agreed by the management
and implemented across the Group. We
benchmark our performance against the most
up-to-date regulatory requirements through
regular monitoring and auditing.
Being a producer of environmentally friendly
phosphate-based fertilizers, we take part in a
variety of initiatives in an effort to improve the
environment, address and monitor matters
related to corporate social responsibility,
support young scientists all around the world,
and share knowledge with our partners about
the best way to apply our fertilizers.
WE CONSIDER SUSTAINABLE
DEVELOPMENT TO BE ONE
OF OUR KEY STRATEGIC
PRIORITIES
64
IN 2018, PHOSAGRO CREATED A WORKING GROUP
ON SUSTAINABLE DEVELOPMENT THAT IDENTI-
FIED THE COMPANY’S MATERIAL TOPICS
IDENTIFICATION OF MATERIAL TOPICS
In 2018, PhosAgro created a Working Group
on Sustainable Development that identified
several material topics based on a survey
of its members and a benchmark analysis
of business practices in the industry. The
process of identifying and assessing these
topics has not yet been formalised within the
Company, but PhosAgro intends to develop
clear procedures for doing so that are aligned
with best market practices. The process for
identifying these topics, which will provide the
basis for internal procedures in the future, is
presented below.
Assessments will consist of three main
parts: analysing open sources, collecting
stakeholder feedback and producing a list
of material issues, and it will be completed
in accordance with GRI standards.
The selection of material topics will be carried
out in the following three stages:
1. Analysis of open sources
• Analysis of industry trends and risks;
• Analysis of publicly available information
about the Company;
• Comparison with material topics disclosed
by competitors and global metals and
mining companies;
• Alignment of the preliminary selection
of material topics with UN Sustainable
Development Goals that are relevant to the
Company.
At the end of the first stage, the Company
plans to compile a preliminary list of material
topics.
2. Collecting stakeholder feedback
• Q&A session with representatives from
operational enterprises involved in the
management of sustainability issues;
• Stakeholders opinion survey;
• Analysis of internal and external
stakeholder survey results.
By the end of the second stage, the Company
aims to have a more specific list of material
topics
3. Drawing up a list of material topics
• Approval of the list of material topics
specified by the Working Group on
Sustainable Development;
• List of material topics submitted to the
Board of Directors for evaluation.
See below for the list of material topics
approved by the Company’s working group
on Sustainable Development to be disclosed
in this integrated report.
Category
Related risk
Topic
Economic
• Risk of inadequate strategic planning
• Production risks
• Risks of inefficiency and infringement
of business processes
• Corruption risks
• Economic performance
• Market presence
• Indirect economic impact
• Anti-corruption
Environmental
• Compliance with legal
and regulatory requirements
• Environmental risks
• Water
• Emissions
• Energy
• Effluent and waste
Social
• Reputational risks
• Workplace health and safety risks
• Social and human resources risks
• Occupational health and safety
• Employment
• Training and education
On pages
102–104, 112–115, 213
On pages
72–87
On pages
88–111
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About PhosAgroPhosAgro Integrated Report 2018 phosagro.comStrategic ReportBusiness ReviewCorporate GovernanceFinancial ReportAdditional InformationSustainability Report
MANAGEMENT APPROACH
continued
REPORT
BOUNDARIES
This report includes information and data
from our operational enterprises over the
course of 2018.
ASSETS INCLUDED
IN THE REPORT BOUNDARIES*
Name of enterprise
Referred to in this integrated report as
JSC Apatit
Apatit
Kirovsk branch
of JSC Apatit
Balakovo branch
of JSC Apatit
KB of Apatit
BB of Apatit
JSC Metachem
Metachem
* Unless otherwise specified.
SUPPLY CHAIN MANAGEMENT
Suppliers are important PhosAgro
stakeholders, as they play a role in helping
the Company’s operations run smoothly.
In order for PhosAgro to guarantee safe
and sustainable production and maintain
its reputation as a responsible fertilizer
manufacturer, it is indispensible that high-
quality raw materials be supplied in a timely
manner.
PhosAgro strives for long-term cooperation
with suppliers and workers from only those
organisations that fully comply with federal,
regional and local regulations. We strive
to build relationships only with those that
share our values and support us in our
environmental initiatives, in developing a
better social environment and in ensuring
safe working conditions.
The raw materials used to produce mineral
fertilizers are one of the most important
elements of production. In order to ensure
the quality of these raw materials, PhosAgro
applies the principles of supply chain
management, which consist of planning,
implementing and controlling the inflow
of raw materials and obtaining relevant
operational information so as to facilitate the
running of an efficient service. Each of the
designated stages is closely supervised by
the Company’s employees.
In addition to the attention given to
environmental issues and to the continuous
work on initiatives in this domain, PhosAgro
imposes strict requirements on the quality
of raw materials supplied. The Company
controls the input of raw materials at multiple
production stages. The production of
fertilizers under the PhosAgro brand is only
possible when the Company has complete
confidence in the quality of its raw materials.
Thanks to the continuous improvement of
the Company’s production processes, we can
guarantee that our products are of very high
quality.
Another key element of the Company’s
business processes is logistics. The
production of fertilizers requires the
transportation of significant amounts
of materials, raw materials and finished
products. PhosAgro cooperates only with
reliable and licensed transport companies.
Ensuring workplace health and safety and
guaranteeing the safety of work processes
are also important aspects of our work.
As part of tender procedures, a supplier
must provide information regarding social
protections, including the protection of
human rights, fair working hours, etc.
CONTACT INFORMATION
The Company takes feedback from
stakeholders on the completeness,
objectivity and materiality of the information
disclosed in its sustainability reports into
careful consideration. This helps us improve
both our management of sustainability
performance and our non-financial reporting
processes. We are also open to your queries
and suggestions concerning the integrated
report. Any questions or recommendations
can be emailed to: ir@phosagro.ru
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SUSTAINABILITY
APPROACH
Sustainable development is considered
a strategic priority at PhosAgro. We strive to
maximise the value we create not only from
a commercial standpoint but also in terms of
our environmental and social activities to the
long-term benefit of all
of our stakeholders.
PHOSAGRO SUSTAINABILITY
STRATEGIC OBJECTIVES
1
2
3
4
5
Sustainable growth to ensure
productive operations and
efficiency across all aspects
of our business
Maintain stringent health and
safety performance standards
and achieve a zero injury rate
with a world-class safety culture
Mitigate the environmental
footprint of our production
activities
Be a reliable partner for local
communities where we operate
and maintain a dialogue with all
stakeholders, consistently taking
their interests into account when
making decisions
Contribute to the UN
Sustainable Development
Goals
68
PHOSAGRO CONTINUOUSLY STRIVES TO IMPROVE ITS
SUSTAINABILITY PERFORMANCE IN ORDER TO MINIMISE
ITS NEGATIVE IMPACT AND TO BUILD VALUE AT EVERY
STAGE OF ITS OPERATIONS
AS A WORLD-CLASS INTEGRATED PRODUCER OF PHOSPHATE-
BASED FERTILIZERS, WE UNDERSTAND THAT WE HAVE
A SUBSTANTIAL IMPACT ON THE ENVIRONMENT, AS WELL
AS ON VARIOUS GROUPS OF STAKEHOLDERS
PRIORITY AREAS
Social
• Assisting regional authorities and local
governments in creating modern social
infrastructure in the cities where we
operate
• Developing and implementing projects
for children and young people
• Supporting vulnerable segments
of the population
Environmental
• Reducing volumes of waste, emissions
Economic
• Paying taxes and other fees to
and discharges of pollutants and resource
usage on a per-unit basis by investing
in new, more efficient technologies
• Ensuring that we act as a conscientious
neighbour and maintain a constructive
dialogue with local stakeholders about
our environmental impact
governments at regional and federal levels
• Providing business prospects for local
suppliers and encouraging development
of local partners
• Maintain long-term financial stability
• Doing business in accordance with legal
requirements and business integrity
principles
• Providing stable employment and
• Preservation of natural ecosystems in
developing safe working conditions
• Offering fulfilling job opportunities, training
and developing a team of professionals
• Observing human rights
the regions where the Company operates,
rational use of natural resources and
implementation of programmes for
restoring environmental capacity
CORPORATE DOCUMENTS REGULATING
SUSTAINABILITY-RELATED ACTIVITIES
PhosAgro has a wide range of internal
standards and policies that regulate the
Company’s approach to sustainability
management. Together these provide the
necessary governance framework for the
Company’s sustainability performance.
Health, safety
and environment
People and economic
stability
Stakeholder engagement
and local communities
• Quality, environmental and
industrial safety policy;
• Hotline terms
and conditions of use;
• Charity policy;
• Environmental safety policy;
• Code of ethics;
authorities.
• Policy on interaction with state
• Quality management
• Anti-fraud and anti-corruption
policy;
• Personnel management policy.
system standard concerning
production and consumption
waste management;
• Occupational health and
safety management system
certificate OHSAS 18001;
• Quality management system
certificates ISO 9001 and
14001.
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continued
CONTRIBUTION
TO SUSTAINABLE
DEVELOPMENT GOALS
As a supplier of essential crop nutrients that
are used in more than 100 countries around
the world, PhosAgro plays an important role
in global food security. We contribute to the
UN Sustainable Development Goals (SDGs) in
numerous other ways, and while recognising
the importance of all 17 SDGs, PhosAgro
focuses on 10 of them.
In 2018, PhosAgro formed a Working
Group on Sustainable Development that
presented the SDGs to the Company’s senior
management. Members of the working
group discussed the role of the business in
attaining the SDGs and identified the Goals
that are most relevant for the Company’s
business and that PhosAgro is capable
of contributing the most to through its
operational activities and corporate social
responsibility initiatives.
PHOSAGRO’S CONTRIBUTION TO ACHIEVING
THE SUSTAINABLE DEVELOPMENT GOALS
2. Zero Hunger
4. Quality Education
7. Affordable and Clean Energy
11. Sustainable Cities and Communities
• Guarantor of Russia’s food security: one in every 3 tonnes
of fertilizer supplied to the Russian market is produced by
PhosAgro;
• Participant in a joint project with the UN Food and Agriculture
Organization called “Development of Sustainable Agriculture
through the Implementation of the Global Soil Doctors
Programme and the Creation of the Global Soil Laboratory
Network”.
3. Good Health and Well-being
• Producer of safe and pure fertilizers with close to zero
harmful impurities: PhosAgro’s phosphate-based fertilizers
meet EU standards for all regulated elements and qualify for
recently-introduced “green labels” for fertilizers.
• Producer of phosphate rock that, with its high P2O5 content
and low level of harmful impurities, is one of a kind, occupying
the top spot in ratings of phosphate raw materials.
• Sponsors and plays a role in the International Centre for
Education in Mining Engineering. Founder and sponsor of
a joint grant programme with UNESCO and IUPAC for young
scientists working in the field of chemistry;
• Participant in a joint programme with the Russian Ministry
of Agriculture and the UN Food and Agriculture Organization
to train farmers in the application of more effective solutions
in the field of sustainable agriculture (especially in terms of
soil fertility);
• Established various PhosAgro School and PhosAgro College
projects.
6. Clean Water and Sanitation
Our long-term investment programmes include the
implementation of cutting-edge technologies for environmental
protection. In 2018, for example, Metachem introduced a zero-
discharge production system that ensures that no waste water
is discharged into natural bodies of water.
Implementation of investment projects aimed at maximising
self-sufficiency in terms of electricity and heat by recovering
steam generated in the production of sulphuric acid.
8. Decent Work and Economic Growth
As a result of the implementation of promising investment
projects for the development of production facilities at the
Kirovsk and Balakovo branches of Apatit, more than 500
jobs for highly skilled workers will be created at Apatit’s
Cherepovets facility and at Metachem. Implementation of
corporate programmes in the areas of health, improved working
conditions, housing and the social safety net.
9. Industry, Innovation and Infrastructure
We support scientific research aimed at the development
of green chemistry technologies, including in the field of crop
nutrients.
Social responsibility projects in the regions where the Company
operates: PhosAgro Schools and the Education, Health and
Spirituality for Russia’s Children (DROZD) youth movement. The
development of tourism infrastructure in the Murmansk region,
the construction of residential housing in the regions where the
Company operates.
12. Responsible Production and Consumption
A participant in the Safe Phosphates campaign, which is
aimed at sharing knowledge and solving problems associated
with harmful elements, i.e., heavy metals found in phosphate-
based fertilizers. The mission of the campaign is to improve
understanding of potential risks and to promote solutions that
make the most of choosing healthier fertilizers to support food
security and sustainable agriculture.
17. Partnerships for the Goal
PhosAgro has been developing the Green Chemistry for Life
programme together with UNESCO. In addition, the Company
is developing a partnership with the UN’s Food and Agriculture
Organization.
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ENVIRONMENTAL REVIEW
2018 HIGHLIGHTS
%
6
REDUCTION IN EMISSIONS
PER TONNE OF PRODUCT
IN 2018 COMPARED TO 2017
GLOBAL SUSTAINABLE
DEVELOPMENT GOALS
7.6 RUB BLN
SPENT ON ENVIRONMENTAL
PROTECTION IN THE LAST 5 YEARS
KEY EVENTS
PhosAgro signed a cooperation agreement
in the field of sustainable soil management
with the United Nations Food and Agriculture
Organization (FAO)
Irina Bokova, the former Director-General
of UNESCO, became one of PhosAgro’s
independent directors and is contributing
to the Company’s sustainability activities
6. Clean Water
and Sanitation
7. Affordable and
Clean Energy
9. Industry,
Innovation and
Infrastructure
12. Responsible
Consumption
and Production
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MANAGEMENT
APPROACH
2018 was another year of adhering
to the highest standards and contributing
to environmental protection.
Effective management of the Company’s
environmental footprint is a key factor in
PhosAgro’s ability to meet its goal of being
a long-term sustainable business and in
balancing its obligations to all stakeholders.
POLICY
HIGHLIGHTS
Our environmental policy and goals entail
implementation of strategic plans for
our enterprises and form the basis for
PhosAgro’s environmental protection
management system.
The Company undertakes the following
activities to achieve this goal:
• compliance with legal requirements
and other responsibilities assumed by
PhosAgro in the area of environmental
protection;
• application of the best available
technologies at production facilities;
• minimising environmental risks at all
stages of investment projects;
• conservation of resources and measures
to prevent climate change and possible
damage to the environment;
• interaction with stakeholders on
environmental issues;
• improvement of management systems to
increase effectiveness and efficiency.
We monitor our progress in terms of fulfilling
our environmental obligations and achieving
our objectives on a systematic basis, so that
the CEO can make informed decisions about
identified opportunities for improvement.
In addition to internal guidelines, PhosAgro
adheres to Russian regulatory requirements
and is guided by EU environmental protection
directives and international agreements,
including the Basel Convention and the
Helsinki Convention.
PhosAgro strives to develop its extensive
resource base and produce fertilizers both
safely and in an environmentally friendly
manner in order to ensure sustainable
growth of agricultural production worldwide.
We have in place environmental management
practices that ensure our compliance with
applicable regulations, and that help to
reduce the impact of our operations on the
environment. The Group is committed to
continuous improvement in this area and
targets a reduction in environmental impacts
from its operations.
PhosAgro invests considerable resources
into upgrading facilities and implementing
new technologies that comply with the
most stringent environmental regulations.
Existing production facilities are expanded
and new facilities established in accord-
ance with environmental protection laws
and the best available technologies. At the
same time, we have seen a steady reduc-
tion in specific emissions.
Spending on environmental
protection,
RUB mln
8,053.06
3,465.35
Investments in fixed assets
aimed at environmental
protection and sustainable
use of natural resources
PHOSAGRO’S MAIN
ENVIRONMENTAL
PROTECTION AIM IS TO
REDUCE ITS NEGATIVE
IMPACT ON THE
ENVIRONMENT
5,062.20
1,312.58
3,749.62
4,587.71
Operating costs
for environmental
protection
MAIN
HIGHLIGHTS
We adopted KPIs in 2016 and made every
effort to meet them in the subsequent two
years. The main KPIs for the Company’s
environmental function are:
• Possession of all necessary environmental
• Possession of all necessary permits at
key production assets to ensure their
compliance with environmental legislation
• Reduction of over-limit payments for
environmental impact in year-on-year terms
permits for key production assets and
subsidiaries
• The amount of environmental investments
and financing of environmental activities
aimed at preserving and restoring the
natural-resource potential and biodiversity
of the regions where we operate
• The size of payments for environmental
impact, including over-limit payments,
which is a key indicator of the Company’s
overall environmental impact
Key 2018 highlights
Over-limit payments accounted for
1.86% of all payments for the Company’s
environmental impact.
Payments for environmental impact,
RUB mln
2.902: Over-limit payments
1.86%: % of over-limit payments out of total payments
2018
141.941
Waste
Limit:
140.615
Over-limit:
1.326
1.780
1.19%
2017
134.6
Waste
Limit:
134.574
Over-limit:
0.026
11.127
156.343
3.274
Aquatic environment
Atmosphere
Standard
permissible
discharge
1.225
Temporarily
permitted
discharge:
9.066
Over-limit:
0.836
Maximum
permissible
emissions
2.534
Temporarily
permitted
emissions
0.000
Over-limit:
0.740
12.539
149.638
2.499
Aquatic environment
Atmosphere
Standard
permissible
discharge
1.236
Temporarily
permitted
discharge
9.549
Over-limit:
1.754
Maximum
permissible
emissions
2.499
Temporarily
permitted
emissions
0.000
Over-limit:
0.000
2017
2018
Over-limit payments in 2018 for the atmospheric impact associated
with the extension of the time frame for conducting a sanitary and
epidemiological assessment of the draft standards on permissible
emissions at the Kirovsk branch of Apatit.
An over-limit payment for waste disposal associated with a change
in the waste classification at Metaсhem; new types of waste were
identified.
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ENVIRONMENTAL REVIEW
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SYSTEM HIGHLIGHTS
MANAGEMENT
AND REPORTING
JSC Apatit’s management system covers
the main levels of management and all
stages of production from development to
product release. It also establishes uniform
requirements for the management of the
enterprise’s production activities, which
influences the quality and competitiveness of
its product, as well as environmental safety.
IMPLEMENTATION OF
THE PRINCIPLES OF
A SYSTEMATIC APPROACH
TO INTERNATIONAL
STANDARDS IN THE FIELD
OF ENVIRONMENTAL
PROTECTION MAKES
A SIGNIFICANT
CONTRIBUTION TO
THE ENVIRONMENTAL
COMPONENT OF
THE SUSTAINABLE
DEVELOPMENT OF THE
ENTERPRISE AND THE
COMPANY AS A WHOLE
Presenting the Company’s activities as a set
of processes can improve the enterprise’s
efficiency by optimising internal and external
interactions. Compliance with environmental
standards is achieved by continuously
monitoring the quality of raw materials,
preventing critical excesses at all stages
of the production process, continuously
measuring the parameters of the production
process, monitoring and automating the
production process and conducting rapid
analysis of working environments.
We systematically monitor, measure and
evaluate not only the intended results in the
area of environmental protection, but we also
assess efforts aimed at preventing the occur-
rence of repeated and potential inconsisten-
cies. The results of the monitoring are used
to identify and assess environmental issues,
to determine risks and opportunities and to
develop and implement measures to manage
and respond to risks.
Company management has delegated to
the chief environmental officer responsibility
for the overall management, organisation
and coordination of work on the development,
implementation, operation and continuous
improvement of the environmental
management system. At each of the Group’s
production sites, the work of monitoring
the implementation of environmental
protection measures, ensuring compliance
with regulatory requirements and preparing
reports is carried out by experts from the
Company’s departments for environmental
monitoring and environmental management.
The distribution of responsibility and authority
within the environmental management system
is determined by regulatory documents,
including Сompany standards, regulations on
structural units, job descriptions, production
instructions, etc. These documents regulate
— as they are intended to — requirements on
the implementation of various activities and
workplace safety.
The journey of phosphate-based fertilizers,
our main product, begins at our Kirovsk
branch of the JSC Apatit mine on the Kola
Peninsula in north-west Russia, where we
extract unique apatite-nepheline ore that
contains almost no harmful heavy metals.
This high-quality raw material is a key input
for our downstream production sites, which
make some of the world’s purest and safest
phosphate-based fertilizers that farmers use
to grow the food that ends up on our plates.
The technological processes involved in
producing ammonia, mineral fertilizers
and inorganic acids and those used in the
production of mineral fertilizers correspond
to the best available technologies used in
the Russian Federation and can reduce any
adverse impact on the environment, cut
down on water consumption and improve
both energy and resource efficiency.
At all stages of production, indicators are
monitored regarding the following types
of environmental impact: monitoring of
atmospheric emissions at the source,
monitoring of the air near areas of sanitary
protection, monitoring of waste-water
discharge into bodies of water, monitoring
and keeping records on areas used to store
production and consumption wastes for
all of the Company’s assets, including the
activities of contractors. Monitoring is
carried out on the basis of environmental
monitoring programmes adopted at every
one of the Company’s production assets.
The results of environmental monitoring are
submitted to the territorial bodies for state
environmental monitoring (Rosprirodnadzor)
in the regions where the Company operates.
If the results of environmental monitoring
indicate deviations from norms, then, as a
rule, corrective measures of an organisational
and technical nature are developed. The
results of environmental monitoring are used
as the basis for investment decisions and in
financial planning for the implementation of
activities aimed at reducing the impact
of production activities, as well as to monitor
the effectiveness of implemented activities.
1
Requirements for contractors and suppliers
of works and services in the area of
environmental safety have been developed
and are available at all of the Company’s
tender sites.
PhosAgro management receives weekly
updates on all ongoing environmental
issues, and quarterly reports are produced
for the Chairman of the Health, Safety
and Environment Committee of the Board
of Directors. On a quarterly basis, the
Board receives updates on any expenses
or payments the Company has made
for its environmental impact. In addition,
the Board of Directors receives annual
and semi-annual updates on PhosAgro’s
environmental protection initiatives and
current environmental performance.
ENVIRONMENTAL
PRINCIPLES
Reducing the amount of disturbed
territory when developing
new territories: optimising the
development of new territories in
project documentation
2
3
4
Conserving biodiversity, such
as freshwater ecosystems and
spawning streams: construction of
treatment facilities and the adoption
of measures to replenish biological
resources; preservation of wildlife
migration routes
Implementing a comprehensive
programme for financing major
conservation measures and
initiatives for the conservation of
biodiversity
Refusing to carry out works in
specially protected natural areas
or conservation areas, World
Natural Heritage sites, wetlands
of international importance
(sites protected by the Ramsar
Convention): prohibiting employees,
including contractors, from hunting
or fishing in areas where the
Company is implementing projects
5
6
7
Confirming that the Company’s
activities are in compliance
with legislative requirements
and standards in the field of
environmental safety: requirements
for conducting regular external
environmental audits
Carrying out a comprehensive
environmental impact assessment
for a project from the construction
stage to the decommissioning stage
within the scope of implementation
of said project and any affiliated
projects
Holding all partners in the
supply chain responsible for
their environmental impact: the
Company has certain environmental
requirements for suppliers of
products and services and for
contractors that are published
on open tender sites and are one
of the fundamental criteria for
choosing suppliers and contractors.
Environmental and industrial
monitoring of contractors is carried
out on a mandatory basis, including
the filing of oversight reports and
the submission of state statistical
reports
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ENVIRONMENTAL REVIEW
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KEY ENVIRONMENTAL
MEASURES AT THE COMPANY’S
ENTERPRISES IN 2018
Kirovsk branch of JSC Apatit
JSC Apatit
• Dust-suppression measures are being
taken at tailings.
• A special-purpose programme is
also being implemented to reduce
the volume of waste produced and
to improve the quality of waste at the
Kirovsk branch of Apatit.
Balakovo branch of JSC Apatit
Measures taken at the Balakovo branch of
Apatit in 2018 were aimed at preserving
natural capital assets and implementing
obligatory measures aimed at compliance
with regulations on environmental
protection.
• Pursuant to Decree of the President
of the Russian Federation No 204 of
7 May 2018 on the National Goals
and Strategic Objectives for the
Development of the Russian Federation
for the Period up to 2024, JSC Apatit
has been taking measures to reduce
emissions of air pollutants in the city
of Cherepovets. The goal is to reduce
atmospheric emissions to 2,690 tonnes
by 2024.
• In 2018, measures were successfully
implemented to revamp facilities for the
production of 660/3-type sulphuric acid
and to re-equip the recuperative heating
stage for tail gas from Unified Acid
Line 7 and the production of nitric acid
aimed at reducing emissions of sulphur
dioxide, nitrogen oxides, ammonia and
carbon monoxide to a combined total of
990 tonnes.
• JSC Apatit is involved in a federal
project called “Preservation and
Prevention of Pollution in the Volga
River”, which involves measures aimed
at reducing the volume of waste water
released into the river.
JSC Metachem
• Since July 2018, JSC Metachem has
been operating a closed-loop water-
recycling system, making it impossible
to release waste water into the Volkhov
River.
• More than RUB 152 million was spent
in order to ensure the uninterrupted
operation of gas cleaning equipment.
78
LEGISLATIVE AND
ADMINISTRATIVE
FRAMEWORK
None of PhosAgro’s enterprises use ozone-
depleting substances in the production
process. A small amount (not more than 250
kg/year) of carbon tetrachloride (CCl4) is used
for some laboratory testing processes. We do
not undertake cross-border hazardous waste
transportation, and our production sites
are not situated in protected areas. Hence,
there are no significant restrictions on our
operations.
AWARDS
As of the end of 2018, PhosAgro Group was
the top-ranked producer of mineral fertilizers
in the CIS according to the Fertilizer Daily
industry portal.
JSC Apatit received an award — an
opportunity to undertake a national project
aimed at improving enterprise management
systems in Russia—from the government of
the Russian Federation for its product quality.
This prize has been awarded since 1996
by Russia’s Prime Minister to companies
and organisations that have implemented
best practices in terms of the application of
advanced management tools and practices.
JSC Apatit stands out in terms of its
implementation of lean production, its use of
innovative technologies and the outstanding
quality of its integrated management
systems, as well as its automation of
business processes. In addition, the
Сompany pays a great deal of attention to
issues related to the environmental impact
of production, an important criterion for the
award.
PERMITS AND
CERTIFICATES
The Company’s production sites hold all
necessary licences and permits related to
environmental protection.
We also undertake regular internal and
external audits to assess our compliance and
obtain certification, together with exposure
assessments, international format safety
data sheets and recommendations for safe
handling that are developed in compliance
with the requirements of European
Regulation No 1272/2008 on classification,
labelling and packaging of substances and
mixtures, and No 1907/2006 concerning
the Registration, Evaluation, Authorisation
and Restriction of Chemicals (REACH) in the
development of exposure scenarios.
In addition to observing Russian
environmental law, we adhere to international
standards relevant to our business to
guide our approach. In 2018, JSC Apatit
and its subsidiary, the Balakovo branch of
Apatit, successfully passed inspections for
compliance with the ISO 9001:2015 and ISO
14001:2015 international standards.
For the first time, it was confirmed that JSC
Apatit’s production and sale of feed additives
are in compliance with the requirements of
the GMP+ B1 Production, Trade and Services
standard.
The Balakovo branch of Apatit passed
a witness audit for compliance of its
monocalcium phosphate feed production
with the GMP+ international standard. The
GMP+ standard describes the requirements
for a management system for the production
of feed and feed ingredients, so as to
ensure the safety of feed product. The GMP
requirements apply to the entire production
process from feed production right up to the
consumer’s receipt of the product.
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IMPACT OF COMPANY ENTERPRISES
ON THE ENVIRONMENT IN 2018
EMISSIONS INTO THE ATMOSPHERE
WASTE
In 2018, gross emissions from the Group’s
production facilities amounted to 32,225
tonnes, which was 258 tonnes, or 1%, lower
than in 2017. JSC Apatit, the Balakovo branch
of JSC Apatit and JSC Metachem were able
to achieve such a reduction through the
successful implementation of a number
of measures aimed at reducing their adverse
impact on the atmosphere.
Increase in emissions of pollutants at
the Kirovsk branch of JSC Apatit: solid
substances and sulphur dioxide, is a result
of increased production of apatite
concentrate in 2018.
The emission of pollutants per tonne of
manufactured product in 2018 was down
6% compared to 2017, amounting to 1.6 kg
of emissions per tonne of product compared
to 1.7 kg per tonne the year before.*
* For JSC Apatit, the Balakovo branch of JSC Apatit and JSC Metachem, specific emissions are given per tonne
of fertilizer. For the Kirovsk branch of JSC Apatit, specific emissions are given per tonne of concentrate.
KT PER T
1.6
THE EMISSION OF
POLLUTANTS PER TONNE
OF MANUFACTURED
PRODUCT IN 2018
In 2018, the total volume of waste generated
amounted to 99.1 million tonnes. Approximately
90% of this volume was created at JSC Apatit,
where the total volume of production and
consumption waste increased by 9% compared
to the previous year due to the expansion of
production capacity and an increase in output.
Most of the Group’s waste (around 63%) is a
predominantly non-hazardous composite of
overburden rock at the Kirovsk branch
of JSC Apatit.
Specific waste generation in 2018 was 4.9
tonnes per tonne of product. This 4% increase
compared to 2017 is a result of an increase in
the production of apatite concentrate in 2018
as well.*
There was no change from 2017 to 2018 in the
amount of phosphogypsum produced.
%
9
INCREASE IN PRODUCTION
AND CONSUMPTION WASTE
DUE TO THE EXPANSION OF
PRODUCTION CAPACITY AND
AN INCREASE IN OUTPUT
* For JSC Apatit, the Balakovo branch of JSC Apatit and JSC Metachem, specific waste is given per tonne of fertilizer.
For the Kirovsk branch of JSC Apatit, specific waste is given per tonne of concentrate.
Emissions of NOx, SOx and other
significant pollutants in 2018, t
Waste, t
80
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PhosAgro Integrated Report 2018 phosagro.comBusiness ReviewSustainability ReportCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgroKB of Apatit BB of ApatitMetachemApatitTotalSolids Sulphur dioxide Сarbon monoxide Nitrogen oxides (calc. in NO2)Hydrocarbons(w/o VOC) Volatile organiccomponent (VOC)Others, gaseous and liquid2.62.6337.9509.8344.2542.224.52018Total11,086.77,097.56,950.4451.0410.74,115.24,156.7858.3742.5836.6737.71,411.512,887.82017201820172018201720182017201820175,512.82,192.9732.8245.60.12,402.51,216.612,402.211,656.15,752.83,326.0792.11,760.70.1621.7202.8155.665.2322.7150.1362.13.50.0148.056.7639.71,043.31,334.43,764.41,221.82,980.1145.25.43,241.93,001.21.0125.74,886.0855.02,684.632,483.632,225.27,828.511,361.12,915.65,801.23,799.8147.8371.37,938.03.6715.511,438.52,596.16,191.73,600.239,911.953,135.876.26,255.50.73,380.5799.33,616.31,381.51,998.90.720182017201820172018201720182017KB of ApatitBB of Apatit MetachemApatit20182017TotalReused waste Stored at waste dump Transferred to third parties for recyclingTransferred to third parties for treatmentTransferred to third parties for disposal 21,274,06867,117,45116,933.29.85,279.821,526.6340.12,606.750,252,148.429,633,656.56,0992,970,411.42,767,144.92,778,641.43,013,524.124,250,578.574,783,208.557,811,281.932,669,492.522,3129,879.226.437211,649.71.7222.312,984.118,469.3115.50.40.3603.71,490.1652.939.6457.2134.44,898,612.74,780,492.2Transferred to third parties for storage Transferred to third parties for processing ENVIRONMENTAL REVIEW
continued
WASTE
WASTE GENERATION BY HAZARD CLASS,
т
Kirovsk branch
of JSC Apatit
Balakovo branch
of JSC Apatit
JSC Metachem
JSC Apatit
Total
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
Hazard Class 1
Hazard Class 2
0.4
9.5
0.2
0.0
2.7
0.7
2.1
0.0
0.3
0.0
Hazard Class 3
390.3
237.4
260.2
38.0
26.5
0.4
0.0
0.0
6.5
0.2
4.7
1.3
9.9
10.4
7.5
1.3
655.1
981.2
1,332.1
1,256.6
Hazard Class 4
2,829.3
6,710.5
154,583.8
123,472.4
494.1
594.9
95,489.6
45,581.4
253,396.8
176,359.2
Hazard Class 5
79,907,048.7
88,406,793.5
4,647,047.5
4,786,328.1
1,517.8
2,123.2
5,714,759.1
5,751,953.2
90,270,373.1
98,947,198
Total
79,910,278.3
88,413,741.6
4,801,894.9
4,909,840.6
2,038.7
2,718.5
5,810,910.5
5,798,521.8
90,525,122.3
99,124,822.6
GREENHOUSE GAS
The increase in greenhouse gas emissions
is due to the fact that our new ammonia
production unit at JSC Apatit in Cherepovets
began operating at full capacity,
as well as an increase in total production
output.
In addition, we also managed to reduce our
specific emissions (per tonne) at our other
three sites.
Greenhouse gas emissions3
Volume of gross emissions, t
Volume of specific emissions per unit produced, kg/t1, 2
Apatit
BB of Apatit
Metaсhem
KB of Apatit
Total
2018
3,767,189.51
165,156.00
120,960.54
459,065.44
562.66
6%
78.16
7%
587.47
4%
41.53
3%
2017
3,246,927.53
528.85
169,960.00
105,463.18
448,934.55
83.79
609.69
42.60
4,512,371
224.86
7%
3,971,285
210.35
WATER
Ninety-three per cent of the Company’s
waste water comes from the Kirovsk branch
of JSC Apatit.
In 2018, the waste water discharged by
PhosAgro’s industrial enterprises decreased
to 185.622 million cubic metres. This was the
result of JSC Metachem’s introduction of a
closed-loop water-recycling system to avoid
discharging waste water into the Volkhov
River.
Of the total volume of unpurified waste
water produced by the Kirovsk branch
of JSC Apatit, 3% is discharged, while the
remaining 97% is treated in accordance
with regulatory documents — permits
issued by Rosprirodnadzor for the discharge
of pollutants. At our Cherepovets facility,
waste water from Apatit’s production
activities is discharged without treatment.
No waste water is discharged at the Balakovo
branch of JSC Apatit, and no waste water
has been discharged at Metachem since July
2018.
In 2018, state environmental monitoring
bodies issued two instructions, both of which
were fully addressed.
Total water withdrawal by source1, kt м3
Drainage, mln м3
Kirovsk branch
of JSC Apatit
Balakovo branch
of JSC Apatit
JSC Metachem
JSC Apatit
Total
Waste-water discharge
171.787
0.000
Discharged without treatment
(% of total waste-water discharge)
3%
–
0.141
0%
13.694
185.622
0%
3%
1 For Apatit, the BB of Apatit and Metachem, specific emissions of greenhouse gases are given per tonne of fertilizer.
2 For the KB of Apatit, specific emissions of greenhouse gases are given per tonne of concentrate.
3 The values of emissions and specific emissions differ from those reported in our 2017 integrated report due to a change in the data collection method
and improvements in the method used to make the calculations.
82
1 The values of the water withdrawal for 2017 may be different from the similar values from
the Integrated Report 2017 due to changes in data accounting method.
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PhosAgro Integrated Report 2018 phosagro.comBusiness ReviewSustainability ReportCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgroSurface water (including received from suppliers) Ground waterDrinking water frommunicipal supply Total2018201720182017201820172018201720182017KBof Apatit Apatit BB of ApatitMetachem Total28,38148047,10943,8187,20184,5529,8792,93878,2219,5152,8536,9471,8612,0811381779,2619,2382,1962,07474277958,56655,13028,86125,4757,9437,7261,9992,25897,36990,58925,375100
ENVIRONMENTAL REVIEW
continued
ENERGY EFFICIENCY
PhosAgro’s production activities are energy-
intensive, and we are constantly seeking
ways to improve both productivity and
the efficiency of resource consumption.
A fundamental component of the Company’s
work in this area is developing a strong
understanding of how our energy resources
are used.
WE ARE CONSTANTLY
LOOKING FOR
OPPORTUNITIES TO
UPGRADE TECHNICAL
ASPECTS OF THE
COMPANY’S PRODUCTION
CAPACITIES AS A WAY TO
INNOVATE AND OPTIMISE
OUR MANUFACTURING
PROCESSES
PhosAgro Group energy consumption in 20181
Gross
consumption
Specific consumption,
per tonne of output2
Gross volume of electricity,
kWh
Natural gas,
m3
Heating energy,
Gcal
3,647,221
Сost, RUB bln
1 bln
0.182
9.6
2,667,470
0.30
9,832,984
0.49
11.5
9.4
1 A comparison of energy consumption and specific energy consumption was not carried out because of improvements
to our data collection methods and changes in the method used to make the calculations.
2 For JSC Apatit, the Balakovo branch of JSC Apatit and JSC Metachem, specific consumption is given per tonne of fertilizer.
For the Kirovsk branch of JSC Apatit, specific consumption is given per tonne of concentrate.
84
Our Group of companies concentrates
on the following key areas:
• Increasing energy efficiency;
• Expanding our own power-generation
capacities;
• Waste-heat recovery — using the heat
from gas-turbine exhaust gases for steam
production;
• Optimising energy resources.
Energy efficiency
In 2018, the operations of PhosAgro’s
production subsidiaries were 40.7% self-
sufficient in electricity, which was achieved
by recapturing heat from the production
of sulphuric acid, as well as the use of a
gas turbine power plant at the Cherepovets
facility. In addition, the Company continues to
implement programmes aimed at improving
energy efficiency at all of the Group’s
enterprises.
Fuel,
t
147,977
0.01
2.2
Diesel,
t
40,371
0.0020
1.8
Total cost,
RUB bln
34.5
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METACHEM’S ENVIRONMENTAL
INITIATIVES
The Company has been introducing new technologies and carrying
out activities to protect the natural environment from the impact
of its production operations.
TAKING CARE OF THE ENVIRONMENT IS ONE OF THE COMPANY’S
DEVELOPMENT PRIORITIES. IN 2018, A ZERO-DISCHARGE
PRODUCTION SYSTEM WAS INSTALLED AT JSC METACHEM
86
87
Volkhov RiverEffluent from production facilities is directed to waste-water treatment plantsTreated water is returned to the production facilities Effluent stopped being discharged into the river 201620172018First halfSecond halfDecrease in waste water dischargedinto the Volkhov River, ths m3 per year140.62 911.69 1,142.81 0 KT M3OF WASTE WATER DISCHARGED INTO THE VOLKHOV RIVER IN THE SECOND HALF OF 2018In 2017–2018, the amount of water used in the closed-loop water circulation system increased, and the amount of waste water discharged into the Volkhov River decreased accordingly. CLOSED-LOOP WATER CIRCULATION SYSTEM • Retrofitting the industrial and rainwater drainage system• Upgrading the waste-water discharge system• Redirecting the streams of treated industrial rainwaterGreenery is planted in the adjacent territory every yearVolunteers from JSC Metachem organise an annual clean-up operation along the banks of the Volkhov River within city limits.1RECOVERY OF AQUATIC LIFE2PLANTING GREENERY IN ADJACENT TERRITORY3CLEAN-UP OF THE RIVER BANKS4Main activitiesIndustrial and rainwater treatment plant The endemic Volkhov whitefish is a unique type of whitefish with the highest growth rate among species of Ladoga whitefish. It is being reduced in number, however, and is on the endangered-species list. Metachem helps replenish the Volkhov whitefish population every year.were released into the Volkhov River in 20182,276JUVENILE VOLKHOV WHITEFISH PhosAgro Integrated Report 2018 phosagro.comBusiness ReviewSustainability ReportCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgro HEALTH AND SAFETY REVIEW
0
FATAL
ACCIDENTS
0.22
LTIFR (PER 1 MLN
HOURS WORKED)
2018 HIGHLIGHTS
4
MINOR
INJURIES
0
SERIOUS
INJURIES
GLOBAL SUSTAINABLE
DEVELOPMENT GOALS
3. Good Health
and Well-being
8. Decent Work
and Economic
Growth
Total number of workplace accidents in 2015-2018, people
Minor
injuries
Serious
injuries
Fatal
accidents
JSC Apatit
KB of Apatit
BB of Apatit
1
1
Metachem
2
8
2 10
8
1
1
10
12
3
2
2
1
1
1
The number of injuries
at the Kirovsk branch
of JSC Apatit has
decreased by 80%
compared to 2015
Total
14
10
6
4
2015
2016
2017
2018
LTIFR, per 1 mln working hours
JSC Apatit
0
Kirovsk branch
of JSC Apatit
0.26
Balakovo branch
of JSC Apatit
0.49
JSC Metachem
0.84
KEY EVENTS
More than 30 thousand training sessions
for contractors were conducted.
A system of barriers, signs and
checkpoints was introduced.
Ninety-seven per cent of scheduled
behavioural safety audits (more than
27 thousand) were conducted in 2018.
Conducting regular behavioural safety
audits is one of the keys to safe and
successful operations.
On 12 November 2018, a new training site
for working at heights was introduced. The
training was completed by 128 employees
in 2018.
Six hundred sixty-six third-party contractors
work at PhosAgro production sites.
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continued
HEALTH AND SAFETY
STRATEGY
MANAGEMENT
APPROACH
In 2017, the Company approved a strategy
for occupational health and safety that
specifies the main areas of work and target
programmes to reduce the risks inherently
associated with the Company's various
activies.
PhosAgro’s workplace
health and safety strategy
aims to achieve three key goals:
1
2
3
No fatal injuries among in-house
employees or contractors
No accidents or catastrophes
Ensuring sustainability
of results
In 2018, we continued making progress in
improving our health and safety performance
in order to contribute to achieving the
Company's strategic goals. Our strategic
and operational goals and tasks in the
area of workplace health and safety are
based on an analysis of large volumes of
data from internal and external audits and
inspections, incident investigations, and
recommendations from representatives of
the workforce.
The health and safety of our workers,
contractors and suppliers is our core
priority as well as an essential component
of PhosAgro’s sustainable performance.
We need a safe, healthy, motivated and
engaged workforce to sustain and expand
our operations, to spur innovations, and
to contribute to our partnerships with
local communities and other stakeholders
in a positive way. PhosAgro is fully
committed to creating a safe and healthy
working environment and to providing all
the necessary conditions for strengthening
the Company’s health and safety system.
We have implemented a unified
workplace health and safety system across
all of our operations, and we hold external
contractors to the same standards that
we set for our own employees. In 2014,
we began working with DuPont Sustainable
Solutions to enhance our workplace
health and safety performance. Since
then, we have implemented a system of
behavioural safety audits to reveal and
eliminate hazardous situations. A joint
project with DuPont Sustainable Solutions,
the consulting division of DuPont, which
was implemented in 2014–2015, proved
to be a strong impetus for upgrades to the
management system. In 2018, there was an
emphasis on the introduction of common
approaches throughout all enterprises to
ensure the safety of work performed by
contractors. The following two approaches
were initiated: raising awareness among
contractors (current and potential) about the
Company's workplace safety requirements
and improving the monitoring of the safety
of contractors.
As a result of these new approaches,
contractors understand the Company's
requirements at the time of entering into
a tender. Additional meetings are conducted
to explain specific regulations to bidders.
The practice of constantly reviewing work
plans for the most critical jobs has been
introduced. This allows risks to be assessed
in a timely manner, before work begins, so
as to take the necessary safety measures.
The practice of targeted inspections of
contracted organisations, before work
begins, was introduced, looking at priority
areas such as preparedness to work safely
at heights, the availability of serviced
scaffolding, safety when operating heavy
machinery and compliance with fire safety
regulations at work sites and in outbuildings.
In addition to this, regular checks are carried
out to ensure the personnel in charge of the
contracted organisations have documents
confirming the relevant OHS training. All of
this helps to ensure that workers for external
contractors follow the same rules as the
enterprise employees.
Our aim is to have no safety violations
and no workplace fatalities. Through close
collaboration among teams and with
contractors, we aim to improve our health
and safety performance every year.
It is our goal to improve on our lost-time
injury frequency rate (LTIFR) every year. Over
the past five years, our LTIFR has decreased
by 76%. However, there is still much work to
be done, and we will continue to improve in
this field.
HEALTH AND SAFETY
MANAGEMENT SYSTEM
PhosAgro ensures workplace health and
safety in compliance with relevant legislation
and global best practices in this area. For
this reason, the Company has implemented
a multi-level OHS management system,
which involves managers at all levels, as
well as providing managers, specialists and
labourers with the OHS training required
by national legislation. A system of audits
and inspections aimed at compliance with
the requirements of state regulations and
corporate standards has been introduced.
PhosAgro's largest enterprise, JSC Apatit,
is certified for compliance with the OHSAS
18001 international standard.
The work of the Committee is based on
the principles of social partnership.
The Occupational Health and Safety
Committee is an integral part of the
Company's health and safety management
system, and it is also one of the ways in
which production and other managers and
staff can take part in the Company's work
on occupational health and safety.
The Committee interacts with the Company's
executive body responsible for health
and safety, state bodies responsible for
overseeing compliance with Russian laws
on health and safety, other state oversight
bodies, and the Company's trade union.
Organisational unit
Key responsibilities
Environment, Health
and Safety Committee
• Sets strategic priorities and policies
• Holds management accountable for health and safety monitoring
and performance
• Receives quarterly reports on health and safety performance
Board of Directors
level
Management Board
• Sets and monitors company-wide health and safety policy
• Reviews of incidents involving people and machinery that occurred
on-site are conducted on a weekly basis
Directorate of Occupational
Health and Safety
Directors
of production sites
Enterprise
OHS management
• Provides functional OHS management in the Company's enterprises
in order to implement OHS policies and strategies
• Gathers data and prepares reports on OHS for the Board and the
OHS committee
• Works with external consultants to implement best OHS
management practices
• Conducts audits and investigations within Company enterprises
• Responsible for implementing OHS policies and strategies directly
at production sites
• Responsible for the development and implementation of effective
measures based on the results of internal and external audits, as
well as on the results of accident investigations
• Monitors the enterprise's compliance with OHS regulations
and corporate standards
• Develops targeted programmes, conducts training and arranges
new measures
• Interacts with regulatory authorities in the OHS sphere on behalf
of the enterprise and accompanies their inspections
• Conducts its own inspections and presents analytical reports
to enterprise management
Company-wide
management level
Operating level
Health and safety
team at operating
level
90
PhosAgro’s Occupational Health and Safety system is described in detail in JSC Apatit’s Policy on Quality,
the Environment and Occupational Health and Safety.
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continued
HEALTH AND SAFETY
ACTIVITIES IN 2018
Health- and safety-related standards and
regulations implemented in 2018
The corporate standard introduced in 2018 is
a good example of our systematic approach
to ensuring workplace safety for contractors.
It contains requirements for the approval
of work plans and task plans developed by
contractors. Firstly, this standard combines
the requirements of several state regulations.
This means that contractors do not have to
develop their own work plans and task plans.
It also means that specialists and Company
management no longer have to coordinate
these documents, which are critical to
workplace safety. Secondly, this document
provides a constant overview of work plans
and task plans in the most hazardous jobs.
Specific training highlights in 2018
included the following sessions:
This makes it possible to identify all hazards
related to a particular activity, assess risks
and develop effective measures to reduce
them in a timely manner before undertaking
this activity.
Safety at JSC Apatit sites
Safety at JSC Apatit's production sites
is ensured by both the mining and gas
rescue services. It is also overseen by the
fire divisions of LLC Agrokhimbezopasnost,
which is licensed to perform gas and fire
rescue services, as well as search and rescue
operations. All trained and certified personnel
undergo an annual medical examination.
In accordance with annual plans and
training sessions (approved by JSC Apatit,
EMERCOM, and Agrokhimbezopasnost),
each emergency service unit completes drills
with the relevant staff on the evacuation of
personnel, fire exercises and civil defence
training exercises. Agrokhimbezopasnost
also conducts preventative work at sites:
planned inspections and rounds, patrols,
fire safety checks, monitoring of gas and
fire hazards and of newly constructed
facilities. In 2018, a target programme for
the development of Agrokhimbezopasnost
emergency rescue units was developed and
approved at all sites of JSC Apatit for 2019 to
2022. Work on its implementation is currently
underway.
EMPLOYEES
EMPLOYEES
EMPLOYEES
331
43
489
underwent behavioural safety
audits
were trained through the Accident
Investigation programme
attended training courses
on the basics of safe behaviour
EVERY SINGLE MANAGER, SPECIALIST AND PRODUCTION LINE
EMPLOYEE AT PHOSAGRO RECEIVES WORKPLACE HEALTH AND
SAFETY INSTRUCTION AND TRAINING AND UNDERGOES TESTING
ON THE SUBJECT IN ACCORDANCE WITH RUSSIAN LEGAL
REQUIREMENTS. IN ADDITION, WE CONDUCT A NUMBER
OF ADDITIONAL INTERNAL TRAINING SESSIONS
CASE STUDY
1
MINING SAFETY: AN AREA
OF STRATEGIC IMPORTANCE
3
In 2018, PhosAgro was successful in
reducing the accident rate in its mining
operations. This was the result of ongoing
efforts to implement one of the priority
areas of the Company's OHS strategy that
was adopted at the beginning of 2017,
i.e., to ensure mining safety. Work on
this strategic area focused primarily on
personnel and equipment.
In terms of personnel and mine safety,
PhosAgro took another step in involving
senior and middle management, as well
as workers, in actions related to ensuring
safety. During the year, the Company
conducted a large number of initiatives
aimed at training and engaging staff.
Concerning mining safety, the following
achievements from 2018 should be
mentioned:
• New internal staff training courses
• Creation of nine animated safety videos
NEW TRAINING
CENTRE FOR WORKING
AT HEIGHTS
Opened by the Company in 2018.
4
EMPLOYEES
263
completed internal training
courses in 2018
33
Completed
specialist training
230
Took part in practical
workshops
CONTRACTOR
MANAGEMENT
PhosAgro pays close attention to OHS
issues when engaging contractors.
The Company clarifies its internal safety
requirements through regular meetings
with the management of its contractors.
2
HOW INCIDENTS
ARE REPORTED
It is important for us to receive
information about all incidents as quickly
as possible. To do this, the Company
has a procedure in which information
about incidents is transmitted from
eyewitnesses to the supervisors in
charge and from those supervisors to the
dispatcher of the respective enterprise.
Next, the company manager transmits
information on the established list
using text messages and phone calls.
Industrial accidents and incidents are
then investigated in accordance with
legislative requirements and procedures
for conducting internal investigations
in order to determine the root causes.
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SAFETY AT HEIGHTS
The Company’s employees can receive training on safe methods
and techniques for working at heights at a special training facility.
VYSOTA TRAINING CENTRE
ALL POSSIBLE TYPES OF SURFACES AND STRUCTURES ENCOUNTERED
AT OUR PRODUCTION FACILITIES ARE AVAILABLE AT THE TRAINING
CENTRE. EMPLOYEES CAN WORK ON MASTERING EVERY POSSIBLE
SCENARIO ASSOCIATED WITH WORKING AT HEIGHTS
94
95
FUNCTIONAL TRAINING ZONES Working on an inclined surface, such as a roof, or with two or more angles of inclinationWorking in a confined space equipped with stands containing defectivepersonal protective equipment (PPE)Working with both vertical and horizontal entry tanks Working with metal props678Working with cisternsWorking with scaffolding Working with rope access systemsEvacution of injured personnel from heights using rope access systems910Self-evacution from danger zonesAscending/descendingladders1112Ascending/descending vertical metal structuresWorking on a ladder 14131516Working near openings without barriersThe use of various anchoring devices and temporary fencing Work on a horizontal platform using stationary and mobile horizontal anchor lines Practice moving on a ladder with an incline of 75° or more by means of mobile anchor lines17181920Pipeline tressle zonesPractising skills for safe lifting (and passing) of tools, materials and equipment at heightsGeneral work at heights using safety PPEChecks and removal of defective equipment and PPE4 specially trained instructors conduct the training2 groups of 5 peoplecan be trained at the site at the same time Practising hands-on skills at our training facility is the best means of prevention. Safety harness 12345The nature of our work means we often have to deal with heights, and we must have safety training with access to working at heights.Our training facility simulates real-life situations as closely as possible, and everything is clear and understandable. Mobilehorizontalanchor line123151312356718891020141917Additional facilities:• Lockers• Staff room • Equipment warehouse • Classroom41115Work on a horizontal platform using stationary and mobile horizontal anchor lines 9Self-evacution from danger zonesWorking on an inclined surface, such as a roof, or with two or more angles of inclination1Inertia-based lockingdevicesSafety deviceWorking in a confined space 2MobileanchorpointMobile horizontalanchor lineInertia-basedbraking system16PhosAgro Integrated Report 2018 phosagro.comBusiness ReviewSustainability ReportCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgro SAFETY IN HAZARDOUS
WORKPLACES
In the interest of safety, the Company has introduced a BFC
system, which prevents the accidental or unauthorised
activation of equipment.
WHEN THE POWER IS SWITCHED OFF AND DISABLED, THE VERIFICATION STAGE
OF THE BFC PROCEDURE MUST BE COMPLETED IN ORDER TO ENSURE THERE IS
NO RESIDUAL ENERGY—PRESSURE, LIQUIDS AND GASES, COMPRESSED SPRINGS,
ETC.—IN THE PRODUCTION EQUIPMENT
96
* LOTO: lock-out / tag-out.
97
The valve is connected directly to the power switch and not to the equipment controls. This eliminates the risk that the equipment could suddenly turn on while people are performing maintenance, even if someone should accidentally press the start buttonWhile equipment is undergoing maintenance or repair and employees are within range, the BFC* (block — flag — check) uses a special lock to suspend the flow of energy, substances or product into the equipmentEmployees of Virtex and PwC conducted an audit to determine which units required locking mechanisms. A scheme designating the necessary BFC installation points was compiled. THE COMPANY'S IMPLEMENTATION OF BFC SECURITY as of 31 December 2018Directly connected to the power switchMost manufacturing equipment already has specially designed fitting points for locks Through a special locking mechanismIf no specially designed fitting point is available, the source is closed off using a locking mechanism with a special lock Master locking mechanism with cable lockBFCs can be applied to:• handlebars of valves of all sizes; • handles of cranes; • electric machines or knife switches; • electricity switches, etc.A SPECIAL LOCK MAY BE FITTED: BFC maps were developed and locking mechanism installation spaces marked with special tags. We have developed diagrams, maps, instructions for using BFCs, and fitting points indicated on the equipment for all the parts of the Company's safety devices.BFC systems are being successfully piloted in workshops at JSC Apatit, along with its Kirovsk and Balakovo branches, JSC Metachem, and LLC Mechanic.A plan to collect information and assess the impact of the BFC system on employee and contractor injuries has been drawn up.123456Locking mechanisms are made specifically for each piece of equipment. This ensures they fit securely.Universal cable disablers are the most common A correctly installedmaster locking mechanism The valve can only be removed by the employee who installed it. This guarantees the safety of every employee within range1PhosAgro Integrated Report 2018 phosagro.comBusiness ReviewSustainability ReportCorporate GovernanceFinancial ReportAdditional InformationStrategic ReportAbout PhosAgro PEOPLE DEVELOPMENT
2018 HIGHLIGHTS
17,458
AVERAGE HEADCOUNT*
6,447
NUMBER OF ATTENDEES OF
PROFESSIONAL TRAINING
COURSES
%
6.0
EMPLOYEE TURNOVER
RATE
>100
STUDENTS TOOK PART IN
PHOSAGRO CLASSES IN 2018
KEY EVENTS
Safety standards research
In 2018, the Company organised a number
of key events aimed at the development of
human resources. In December, for example,
a focus group was held for employees of the
Balakovo branch of JSC Apatit to discuss
employees’ thoughts on issues related
to compliance with safety standards, the
new incentivisation system, social welfare
programmes, mentoring and career building.
The topics discussed revealed the strengths
and weaknesses of projects in the area of
PhosAgro’s Personnel and Social Welfare
Policy. As a result of the focus group,
strategic sessions will be held to identify
opportunities for improving the quality of
existing staff programmes.
Strategic development training
for the JSC Metachem
On 7-8 August 2018, JSC Metachem
conducted the first stage of a training
course on strategic development to 2025.
The training session was attended by 42
staff managers and specialists involved
in the project. As a result of the event, the
project’s key principles were developed,
interdepartmental interaction improved, and
the roles within each team were defined. In
addition, the training session helped raise the
level of staff engagement in the project.
Management skills training
Throughout the year, a complete overhaul
of management skills for middle managers
and employees was implemented at the
Cherepovets site. Young managers gained
skills in organisation and work planning for
subordinate personnel, setting clear goals,
time management, etc.
GLOBAL SUSTAINABLE
DEVELOPMENT GOALS
3. Good Health
and Well-being
4. Quality
Education
8. Decent Work
and Economic
Growth
MEDIUM-TERM
PLANS FOR 2019
The Company is currently working to solve
a number of issues regarding its automation
process, including in personnel management.
It is analysing market options to find the
most appropriate digital solutions for process
management using current technology.
More information about the Company’s
people development system, recruitment
policy and other HR issues is available
on the PhosAgro website:
https://www.phosagro.com/career/policy/
98
* Total number of emploees in PhosAgro Group (including all branches and subsidiaries
— see paragraph 33 of the financial statements).
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continued
OUR PEOPLE ARE THE KEY
TO OUR SUCCESS
MANAGEMENT
APPROACH
We create value for our employees and
other stakeholders by investing in our
people: PhosAgro aims to provide stable
employment, safe working conditions and
fulfilling job opportunities. We start at the
level of primary school and continue to invest
in our people throughout their careers with
PhosAgro.
We are dedicated to providing respectable social
conditions for our workforce and safeguarding
employee rights, including compliance with
equality and non-discrimination principles.
We carry out labour practices strictly in line
with both Russian legal requirements and all
applicable international standards. Moreover,
the Company’s HR and Human Rights policies
reflect the UN Guiding Principles on Business.
STRATEGY HIGHLIGHTS
Total number of employees by region, gender and age, people
We use a KPI system to link executive
remuneration to priorities like health and
safety, as well as financial performance.
We strive to incentivise our staff by providing
competitive wages, paying close attention to
the conditions at our work sites and offering
generous non-monetary benefits.
We help prepare future generations
of PhosAgro employees by supporting school
and university programmes that encourage
students to pursue STEM studies.
We rely on a talent pipeline of staff with the
potential to take on leadership and/or more
technically challenging roles to ensure our
viability in the long term.
We aim to maintain our reputation as an
employer of choice in the regions where we
operate.
We train our staff to prepare them
to better navigate our ever-changing
working environment.
OUR PEOPLE ARE OUR MOST IMPORTANT ASSET: WITHOUT
THEIR HARD WORK, WE WOULD NOT BE ABLE TO ACHIEVE
OUR STRATEGIC GOAL OF CREATING SHAREHOLDER VALUE.
OUR RECRUITMENT AND RETENTION EFFORTS HELP ENSURE
THAT WE HAVE THE RIGHT PEOPLE FOR THE JOB
100
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continued
EMPLOYMENT POLICY
HIGHLIGHTS
FAIR AND FOCUSED
COMPENSATION AND BENEFITS
The Company’s policy on rewards and
its incentivisation system are aimed at
encouraging employees’ interest in the
Company’s performance and to improve
that performance in order to achieve our
business goals.
The Company’s payroll system fully complies
with labour legislation, while also providing,
for certain categories of employees, a
compensation package and benefits in
accordance with the best international
practices. Furthermore, additional
compensation and benefits are available for
valued employees who relocate to take up
employment.
In order to attract and retain staff and
motivate them to increase productivity,
PhosAgro offers its employees competitive
social security benefits and good working
conditions. The general consensus is that
the Company’s enterprises are among the
best in the regions in which they operate
and in the industry as a whole. Every year
since 2016, the Company has been working
to improve employee satisfaction with a
unilateral approach across its enterprises.
The Company’s social programmes cover
all aspects of employees’ daily lives:
improving living conditions; rest and
recreation programmes, such as the
Company’s corporate treatments and the
provision of medical services under VHI
contracts; organising activities for the
children and family members of personnel;
a corporate pension programme; and
comprehensive support for senior citizens
and youth movements.The implementation
The range of ratios between the standard entry-level wage and
the established minimum wage in the Company’s primary regions
of operation, including gender differentiation
Vologda region
Leningrad region
Moscow region
Murmansk region
Saratov region
Men
1.47
2.00
3.68
1.37
2.00
Women
1.47
2.01
3.07
1.27
1.76
EFFECTIVE REMUNERATION
SYSTEM
supports a culture of constant
development across the whole business
OUR POLICY FOCUSES ON ENSURING THAT OUR STAFF REMAIN HEALTHY AND
PROPERLY INCENTIVISED. IN THE COMING YEAR, WE PLAN TO REASSESS SOCIAL
BENEFITS FOR THE OVERALL PHOSAGRO GROUP, AS WELL AS ANALYSE THE
COLLECTIVE AGREEMENTS OF PHOSAGRO GROUP’S MAIN PRODUCTION FACILITIES
of programmes to improve social and
working conditions, sports and recreation
activities such as the annual corporate
Olympiad and the establishment of sports
facilities at enterprise sites are aimed at
improving the overall health of personnel
by preventing disease and encouraging
a healthy lifestyle. An annual loyalty and
satisfaction survey conducted among
Company personnel has shown a regular
increase in satisfaction with our social
welfare benefits.
The Company’s top management consists
of top-level managers who are responsible
for strategic decision-making. PhosAgro’s
top management is an effective structure
consisting only of highly qualified specialists
who work in the interests of all Company
stakeholders and make informed decisions
that allow for sustainable development.
The Company’s regions of significant
presence are located in the Murmansk,
Vologda, Leningrad and Saratov regions.
Our aim is to work in compliance with the
interests of the regions. PhosAgro not only
makes a significant contribution to the
local economies, but it is also one of the
largest taxpayers in each region and makes
a significant impact on social development
in the regions and on preservation of the
region’s environmental systems.
Proportion of staff and senior management hired from the local
community at locations of significant operations, as of 31 December 2018
Proportion of staff hired
from the local community in total headcount
Proportion of senior management hired
from the local community in total headcount
Vologda region
Leningrad region
Moscow region
Murmansk region
Saratov region
Average
95%
91%
86%
94%
98%
95%
54%
50%
83%
50%
33%
55%
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continued
FAIR AND FOCUSED
COMPENSATION AND BENEFITS
Coverage of the organisation’s defined
benefit plan obligations, RUB mln
Current value of employee benefit obligations
(private benefit coverage for newly retiring employees)
Retirement-related obligations
(other than employee benefit obligations)
Actual pension
payments 2018
Vologda region
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
Leningrad region
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
Murmansk region
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
Saratov region
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
Total
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
Return to work and retention rates of employees
who took parental leave, by gender, people
13.578
15.387
16.761
4.174
0.000
1.205
47.135
0.000
25.162
4.030
0,000
0,385
68.916
15.387
43.513
Total
45.726
5.379
72.297
4.415
127.817
Men
Women
Number of employees on maternity
leave and parental leave as of 31
December 2018
Number of employees on maternity
leave and parental leave between
1 January 2018 and 31 December
2018
Number of employees who returned to
work after maternity leave and parental
leave between 1 January 2018 and 31
December 2018
Saratov region
Murmansk region
2
Moscow region
Leningrad region
Vologda region
4
34
135
31
188
1
46
182
2
44
268
8
45
1
12
67
ASSESSMENT OF WORK AND
INCREASE IN PERSONNEL
Results of periodic performance and career development
assessments broken down by sex and employee categories, 2018
Return to work and retention rates of employees who took parental
leave, by gender
Proportion of staff and senior management hired from the local
community at locations of significant operations
443
Employees took part in periodic
performance and career development
assessments broken down by sex and
employee categories
Percentage of staff participating in periodic
performance and career development assessments
Kirovsk branch of JSC Apatit
Balakovo branch of JSC Apatit
JSC Metachem
JSC Apatit
Total
Men
4.5%
4.1%
6.0%
3.5%
4.2%
Women
Not broken down by sex
4.3%
3.9%
2.2%
4.2%
4.0%
4.4%
4.1%
4.3%
3.8%
4.2%
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PEOPLE DEVELOPMENT
continued
TRAINING
AND DEVELOPMENT
Personnel training and development
programme
We rely on a talent pipeline of staff with
the potential to take on leadership and/or
more technically challenging roles to ensure
PhosAgro’s long-term viability. Our focus on
training and developing our people also helps
us hedge against a potential shortage of
talent in the future. One aspect of this that we
prioritise is including schools, universities and
our own staff programmes in our recruitment
and training initiatives.
We use our PhosAgro Education Centre
to help our staff prepare for both external
(legislative/regulatory) and internal (related
to optimisation, changes to production or
business processes) changes. The Centre
helps run our long-term HR initiatives, like
PhosAgro Classes, High-Potential Graduates
and the Staff Reserve programme, and it
holds competitions for professional skills
and young managers.
PhosAgro relies on its Staff Reserve initiative
as a means of identifying talented staff with
the potential to expand their roles and step
into more senior positions, and it provides
additional training to help them achieve these
goals. The programme includes management
training courses on personal and business
skills like decision-making, leadership and
delegation, conflict management, project
management, communication skills and staff
mentoring.
Number of attendees of professional
training courses in 2018
Number of training hours
Total number of training
hours in 2018
Average number of training
hours per employee in 2018
6,447
Effective Management programme
As part of this programme, groups
of 14–16 employees took part in training
and development activities on the following
topics:
• personnel management, planning, goal
setting, organisational activities and
oversight;
• focus on results;
• management skills;
• decision-making;
• effective communication;
• leadership qualities and building
relationships;
• organisation and management;
• mentoring.
132
Metachem
1,309
KB of Apatit
1,459
BB of Apatit
3,547
Apatit
KB of Apatit
313,125
10 hours
Apatit
366,953
BB of Apatit
81,399
MetaСhem
30,145
Group average
791,622
6464
9696
7070
4343
7575
6,447
NUMBER OF ATTENDEES OF
PROFESSIONAL TRAINING
COURSES
791,622
Total number of training
hours in 2018
75
Average number of training
hours per employee in 2018
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continued
INVESTING IN FUTURE
GENERATIONS OF POTENTIAL
EMPLOYEES
PhosAgro Classes
Professional, highly qualified personnel
are the Company’s main asset. PhosAgro’s
technical equipment is so advanced that
staff must have at least basic knowledge
from their education before taking up
employment. With this in mind, the Company
launched an initiative in 2013 called PhosAgro
Classes, which involve specialised classes
for students in the 10th and 11th grades
on certain aspects of chemisty, mathematics
and physics.
Our PhosAgro Classes initiative encourages
school students in the regions where the
Company operates to pursue STEM (science,
technology, engineering and mathematics)
studies. Our focus on providing high-quality
education from a young age is an important
element of ensuring the sustainability of the
communities where we operate; it also helps
us hedge against a potential shortage of
talent in the future, especially in areas where it
can be difficult to find candidates with the skill
sets that we need.
The Company provides every participating
student with a corporate uniform and a tablet
computer. Specific funding is allocated to
schools for building repair. Since 2013, physics,
chemistry, mathematics and computer science
classrooms have been fully equipped. The
new equipment includes new-generation
interactive whiteboards with built-in
projectors and computer hardware that
accommodates educational teleconferences
and scientific conferences. In each region,
PhosAgro has signed a social and economic
partnership agreement with the local
authorities with regard to the project. Similar
agreements have also been signed with the
schools involved in the project:
• Vologda region: in Cherepovets, the project
partner is Secondary School No 10, which
offers in-depth study of each subject;
• Leningrad region: in Volkhov, the project
partner is School No 1;
• Saratov region: in Balakovo, the project
partner is Secondary School No 25;
• Murmansk region: in Kirovsk, the project
partner is Secondary School No 5;
• In Apatity, the project partner is Secondary
School No 15.
A total of 133 students took part in the
PhosAgro Classes programme in 2018,
all of whom excel at, and are interested in
studying chemistry, physics, mathematics
and computer science. The programme
graduated 122 students from five schools
in 2018, 68% of whom went on to study as
part of technical degree programmes at
universities, with a potential career track at
PhosAgro. Some of them were accepted
into universities on sponsored placement
programmes.
Project outcome:
• Students had an increasingly positive
attitude towards technical specialisations
(results from an independent study by
the Department of Sociology and Higher
Education);
• There was an increase in the number of
students, compared with September 2014,
who enrolled in specialist universities to
study technical subjects due to career
guidance from PhosAgro Classes, which
worked with these specialist universities;
• Professional development for teachers of
specialist subjects (chemistry, physics,
mathematics) to prepare students for
academic competitions through seminars
and workshops taught by methodologists
and the best teachers in Russia;
• A positive response from parents about
the choice of technical specialisations
and further career opportunities for
their children within PhosAgro Group
enterprises;
• Awareness of the project at local and
regional levels;
• The PhosAgro Classes project finished in
the top three in the “Best Programme for
Working with Students” category in the
2016 Graduate Awards, a Russian national
competition for recent graduates and
young professionals.
IN 2013, PHOSAGRO IMPLEMENTED
AN INITIATIVE TO CREATE
PHOSAGRO CLASSES
Our annual goal remains to have 125
participants join PhosAgro Classes at the
five schools in the five Russian cities where
we run the programme. We hope that 50% of
these students will join PhosAgro by 2021.
Interaction with higher education
institutions
Cooperation with universities is an important
part of our youth training system.
To reduce staff shortages in the most highly
sought-after specialisations, PhosAgro has
established contractual agreements with the
following higher education institutions:
• Saint Petersburg Mining University;
• Lomonosov Moscow State University;
• Ivanovo State University of Chemistry
and Technology;
• Cherepovets State University;
• D. Mendeleev University of Chemical
Technology of Russia;
• Saint Petersburg State Institute of
Technology;
• Murmansk Arctic State University;
• Regional universities.
As part of the project, PhosAgro:
• Sponsors further training for graduates
of PhosAgro Classes in relevant
specialisations under a future employment
contract;
• Offers scholarships to the most successful
students (based on their results in the
programme);
• Invites current university students to
see the industry in practice at one of the
Group’s many companies;
• Offers students a job in one of the
Company’s popular specialisations after
they graduate.
High-Potential Graduates
We build upon the foundation laid by
PhosAgro Classes by partnering with
universities through our High-Potential
Graduates programme as an avenue to
better reach university students interested
in working at PhosAgro. We offer programme
recruits a competitive salary, as well as
relocation and housing support, and we
assign them a mentor upon their arrival at
PhosAgro. The programme’s key tasks are
to prepare a talent pipeline for key positions
within the Company and to identify key
areas and career paths for talented young
specialists so as to prepare future executives.
PhosAgro recruited 48 young specialists
through the High-Potential Graduates
programme in 2018. This brought to 269
the total number of graduates who have
joined the Company through this programme
since its inception in 2012. A total of 214
of these employees are still with PhosAgro
today, pursuing careers in mineralogy,
geology, hydraulic engineering, chemistry,
thermal energy and electricity production, rail
transport, open-pit and underground mining,
and mine surveying.
Of the programme participants still employed
with PhosAgro, a total of 34% had received
promotions and/or had been included in the
Staff Reserve as of December 2018, and
many of them had successfully completed
the projects that they were entrusted with
when they joined the Company.
STUDENTS
133
took part in the PhosAgro
Classes programme in 2018
122
YOUNG
SPECIALISTS
were recruited by PhosAgro
through the High-Potential
Graduates programme in 2018
48
YOUNG
SPECIALISTS
were recruited by PhosAgro
through the High-Potential
Graduates programme in 2018
%
34
of the individuals hired through
the Talented Young Specialists
programme were promoted
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PEOPLE DEVELOPMENT
continued
INVESTING IN FUTURE
GENERATIONS
OF POTENTIAL EMPLOYEES
PUTTING SAFETY
AT THE CORE
PROVIDING EQUAL
OPPORTUNITIES
SETTING HIGH
STANDARDS
MAINTAINING OPEN
CHANNELS OF
COMMUNICATION
PhosAgro is one of the most attractive
employers in the regions where it operates,
mainly thanks to our equal opportunities
programme, which means that the best
candidate is chosen for each post regardless
of their gender, sexual orientation, religion,
native language and ethnic origin. In addition,
PhosAgro has a social responsibility towards
its employees and fulfils its obligations in full
compliance with the requirements of federal
and regional legislation. These requirements
include the prohibition of child and forced
labour, as well as freedom of association
and the right of trade unions to negotiate
a collective agreement with their employer.
Green Planet interactive educational centre
Green Planet is an educational centre that
provides instruction, insights and recreational
activities such as excursions, quests, career-
oriented case studies, exhibitions, chemistry
experiments, quizzes and round-table
meetings. Designed for all ages, the centre
is free of charge and is accessible for people
with disabilities.
Green Planet’s goals include:
• Providing career guidance;
• Increasing the prestige and attractiveness
of blue-collar and technical professions;
• Providing environmental education, as well
as industrial and educational tourism;
• Providing information about PhosAgro’s
history and success and also about the
Company’s social responsibility projects
in the cities where it operates.
We place employee safety above all, as
was recently confirmed by the International
Fertilizer Association, which gave PhosAgro
the SHE Excellence Gold Award in November
2018 in recognition of the high quality of
workplace health and safety practices
at the Company.
Since 2017, we have been implementing
a project called Development of a Culture
of Safety that is aimed at increasing
accountability among technical and
engineering personnel employed at
production units, as well as reducing
the accident rate and increasing the
accountability of employees for compliance
with safety regulations. More than 1,000
people have taken part in the project so
far. Employees who underwent training
developed skills in the use of modern
methods and tools for preparing instructions.
They also came to realise the need to
fine-tune instructions with the help of
modern teaching methods so as to become
consciously aware of the rules regarding their
own safety and that of their co-workers.
Our employees have access to multiple
channels for communication and feedback
with the Company, which enables them to
address employment-related or other issues
at PhosAgro. Some of the formats include
Q&As in the corporate newspaper, town-hall
meetings for staff and management and an
anonymous whistle-blower hotline, allowing
staff to choose from various degrees of
anonymity when deciding how to raise an
issue.
Our employees also use PhosAgro’s corporate
intranet for internal messaging, receiving
announcements, planning and accessing
informational resources.
PhosAgro adopted a Code of Ethics in 2014
and updated it in 2018. The Code applies to
all employees and is the Company’s primary
document for enhancing its corporate
culture. The Code clearly outlines all basic
requirements for Company employees
and establishes rules and regulations for
individual and collective behaviour within the
Company. It covers all industrial and business
relations, both within the Company and with
business partners and other external parties.
Commitment to these principles unifies the
values of our Company to ensure that all our
employees take pride in their work and are
keen to communicate with colleagues, feel
comfortable in a team and can grow both
professionally and personally. Commitment
to the principles of the Code of Conduct
helps the Company to avoid unjustified
risks, maintain long-term economic growth,
strengthen its position in Russian and foreign
markets, and increase the Company’s value.
>1,000
People have taken part in the
Development of a Culture
of Safety project
PHOSAGRO IS ONE OF
THE MOST ATTRACTIVE
EMPLOYERS IN THE REGIONS
WHERE IT OPERATES
mainly thanks to its equal opportunities
programme
HIGH LEVEL OF CORPORATE
CULTURE
supports the Company’s image among
its employees, encouraging respect
and loyalty
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GLOBAL SUSTAINABLE
DEVELOPMENT GOALS
8. Decent Work and
Economic Growth
WE AIM TO DO BUSINESS IN ACCORDANCE WITH
THE HIGHEST LEVEL OF ACCOUNTABILITY, INTEGRITY
AND TRANSPARENCY
MANAGEMENT
APPROACH
Our business Code of Ethics and
management procedures are based
on the best international practices. We
take preventative measures to avoid or
resolve specific and systemic incidents
and constantly seek means of further
improvement. Good governance systems
are an integral part of our risk management
and long-term sustainability.
The principles of our Corporate
Governance Policy are based on standards
and procedures that address a number
of important topics, including bribery and
corruption, conflicts of interest, benefits,
sponsorships and donations, data privacy,
fraud and third-party due diligence. In
order to better prepare the Company to
deal with these issues, we developed an
annual workforce training programme that
is available both online and in person. The
programme is updated on a regular basis.
We conduct audit forums to monitor
and oversee the implementation and
effectiveness of the integrity and compliance
of our business conduct policies company-
wide. Our training programme and materials
are updated when required to ensure they
remain engaging and relevant to the risks
employees may encounter. During the
year, we provided additional training to
targeted audiences on specific areas of our
programme.
ACTIVITIES IN 2018
Training and awareness of our policies,
procedures and guidelines are critical
components of our compliance programme.
Together, they support our employees’ and
contractors’ understanding of the behaviour
expected of them and provide guidance on
how to identify and deal with legal and ethical
issues they may encounter in their daily work.
All PhosAgro enterprises adhere to standards
aimed at preventing corruption and other
offences in accordance with the Federal
Law on Anti-corruption of 25 December 2008:
• Employees are required to sign an
agreement on compliance with the
requirements of the local normative act
(LNA) aimed at preventing corruption
and fraud;
• The observance of these anti-corruption
requirements is included in our employees’
job descriptions;
• Amendments were made to the
employment contracts of the Company’s
managers to prohibit part-time work in
commercial firms without the prior consent
of Company management;
• All contracts include a separate anti-
corruption clause;
• On 29 January 2018, JSC Apatit was added
to the Anti-Corruption Charter of Russian
Business.
An updated version of the following has
already been approved by PhosAgro’s
Board of Directors:
• Provision on Conflicts of Interest;
• Code of Ethics;
• Terms of use of the PhosAgro hotline.
Training
All employees receive regular training and
undergo testing on preventing corruption
as part of a Company-wide process. This
exercise aims to develop our employees’
understanding of the importance of
preventing corruption and of maintaining
a culture of zero tolerance for corruption
in all aspects of business.
Our training programme includes guidance
on raising concerns in a wide range of
professional spheres.
Reporting misconduct
We strive to create a culture of transparency
within the Company and encourage
employees to report problems and causes
of concerns. In 2016, PhosAgro launched
a hotline service that helps the Company’s
management prompty respond to reports on
a wide range of issues, including corruption,
violations of the Company’s bylaws, evidence
of potential and/or actual conflicts of interest,
as well as violations of workplace health and
safety rules, environmental policies or any
other Company policies.
One group that our anti-corruption training
targets are those who interact with third
parties, and it includes guidance on giving
and receiving gifts, entertainment, and
entertainment expenses. In order to raise
awareness about compliance risks related
to functions for relevant employees, the
Company also conducts face-to-face training.
In order to provide open access to the hotline,
information about all the available channels
of communication is posted on the Company
website and on the intranet portal. The
hotline service guarantees confidentiality for
anyone who reports a problem, as well as
the timely and unbiased consideration of all
reports.
In order to inform employees and contractors
of the Company’s anti-corruption standards,
documents will be posted on the internal
portal under the section “preventing fraud,
corruption and conflicts of interest” and
on the official website under “preventing
corruption”.
The Economic Security Department
is responsible for conducting initial
investigations into every report received via
the hotline and for informing management
about all incidents that require further
investigation or corrective actions.
The Company’s contractors are sent emails
with information on the anti-corruption
and anti-fraud measures adopted by the
Company.
Introductory briefings on the subject of the
Company’s anti-corruption and anti-fraud
standards in line with the LNA are conducted
on a regular basis throughout the job
application process.
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continued
ACTIVITIES
IN 2018
Conflicts of interest
Our subsidiary, JSC Apatit, maintains a
Commission for Combating Fraud and
Corruption and Regulating Conflicts
of Interest. Commission members are
appointed by the Chief Executive Officer.
The main objectives of the Commission
are to prepare proposals for the
implementation of policies to combat
fraud and corruption and the preparation
of proposals and recommendations for
the resolution of conflicts of interest. As
part of the implementation of measures to
resolve conflicts of interest, the Company’s
employees are required to disclose, in a
timely manner, information on the existence
of an actual or potential conflict of interest in
relation to fulfilling their duties. On an annual
basis, Company employees must declare any
conflicts of interest and provide a record of
their income and expenses.
In 2018, 1,842 declarations were submitted
by employees, in which 41 conflicts
of interest were found. The ensuing
investigations were used to resolve the
conflicts: the employees involved were
transferred to positions where the conflict
was no longer an issue.
The number of declarations submitted has
increased as a result of the expansion of this
process to include employees of subsidiary
companies and organisations. Consequently,
we are now working on the automation of
this process.
KEY PRINCIPLES OF
BUSINESS CONDUCT
• Our Government Relations Policy
• PhosAgro’s Charity Policy commits us
to supporting sustainable development in
the regions where we operate. PhosAgro’s
charitable giving is based on the following
principles: it must address a clear need
and be used for clear purposes, the
use of funds is closely monitored, and
transparency and disclosure of information
must be ensured. We do not engage
in charitable giving to representatives
of the Government, to political parties
or movements, or to commercial
organisations. This policy sets priority
areas for charitable giving, including
education, sport, health and well-being,
and vulnerable members of society such
as veterans and the elderly.
• PhosAgro does not participate in political
activities or provide financial support to
political organisations.
dictates that PhosAgro’s relationships
with government bodies and representatives
must be legal and ethical and based on
principles of fairness and partnership. In
accordance with this policy, interactions
involving government bodies should
only relate to PhosAgro’s strategic or
operational matters.
• Our Provision on Conflicts of Interest
establishes rules for identifying and
addressing potential conflicts of interest.
• Our Anti-corruption Policy states that our
directors and senior management must
adhere to high standards and set an example
for the entire business. It commits all
employees to a zero-tolerance approach
to corruption.
• Our Code of Ethics specifies the rules
for relationships with stakeholders ranging
from employees, shareholders, government
officials and NGOs to customers, suppliers
and other business partners. It commits
PhosAgro to engaging with stakeholders
in a fair and proper manner.
WE STRIVE TO MAINTAIN CORPORATE
GOVERNANCE TRANSPARENCY AND
REGULATORY COMPLIANCE IN ALL
AREAS OF OUR BUSINESS AND ALL
DIVISIONS OF THE COMPANY
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Our stakeholders are the key to our success. Any person or organisation
with an interest in what we do is considered a stakeholder. We also
consider any person or organisation that might be affected by our
activities and anyone who has an influence over our business decisions
to be our stakeholders. It is our ability to understand and adapt to our
stakeholders’ evolving needs and expectations that enables us to create
a strong and sustainable company.
MANAGEMENT
APPROACH
Working in complex markets and geographies
and establishing relationships on regional,
national and international levels, our activities
are heavily regulated. The constantly evolving
nature of both international regulations and
national legislation may affect our business.
Thus, we work hard to build relationships
with people at all government levels in the
countries in which we operate and ensure
that we comply with all permit requirements.
We collaborate with a variety of external
stakeholders in order to manage risks related
to our work and to remain competitive. These
partnerships enable us to create mutually
beneficial opportunities.
In our engagement with our stakeholders,
we strive to be constructive, honest and
principled. We establish links with only those
organisations and educational institutions
that share our values and are actively
involved in domains such as food security,
sustainable agriculture and health.
The following information illustrates how we
interact, how we create value, and what we
achieved in 2018.
116
2018 HIGHLIGHTS
7
NON-DEAL ROADSHOWS WERE
CONDUCTED WITH COMPANY
MANAGEMENT IN KEY FINANCIAL
MARKET CENTRES
>230
MEETINGS WERE HELD WITH
INVESTORS AND ANALYSTS
8
DOMESTIC AND INTERNATIONAL
PROFESSIONAL ASSOCIATIONS IN
WHICH PHOSAGRO IS A MEMBER
IT IS OUR ABILITY TO UNDERSTAND
AND ADAPT TO OUR STAKEHOLDERS’
EVOLVING NEEDS AND EXPECTATIONS
THAT ENABLES US TO CREATE A STRONG
AND SUSTAINABLE COMPANY
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continued
INVESTMENT AND FINANCE
COMMUNITY
WHY WE INTERACT
• To facilitate an understanding of the long-
term sustainability and potential value of
PhosAgro
• To update investors on PhosAgro’s strategic
priorities and progress we have made
• To provide market participants with concrete
indicators of progress, such as operational,
financial and non-financial results
• To attract a wider pool of investors
to improve liquidity, share price and
borrowing costs
• To increase our access to a variety
of capital market instruments
• To provide transparency on how our
corporate governance systems work
• To generate new ideas through a dialogue
with investors
• To clarify the Company’s contribution
to the UN Sustainable Development Goals
HOW WE CREATE VALUE
We issued USD 500 million in Eurobonds with
a coupon rate of 3.949%, representing a new
benchmark for the Company. This enabled
us to lower the average interest rate and to
significantly improve the structure of our debt
portfolio
PhosAgro maintained its
investment-grade credit ratings
from the rating agencies
Standard & Poor’s, Moody’s
and Fitch
Institutional Investor named
PhosAgro CEO Andrey Guryev
the best CEO in the emerging
EMEA chemicals sector
HOW WE INTERACT
ACTIVITIES IN 2018
• Roadshows
• One-on-one meetings with investors
• Investor conferences
• Conference calls on financial results
• Perception studies
• Ongoing engagement with analysts
• Regulatory press releases
• AGM and formal reporting
• Corporate website
• A dedicated in-house investor relations
team
• The interests of our shareholders are
represented by seven independent
non-executive directors on the Board of
Directors
1
2
3
4
5
Seven non-deal roadshows were conducted
with Company management in key financial
market centres (London, New York, Chicago,
Frankfurt, Vienna, Tallinn, Stockholm,
Helsinki)
More than 230 group and one-on-one
meetings were held with investors and
analysts
Four conference calls and webcasts for
analysts and investors were organised
in order to discuss the Company’s
financial results
120 messages were distributed throughout
the Russian Federation via the Company’s
corporate disclosure centre Interfax
More than 40 press releases were distributed
via the UK regulatory news service
120
MESSAGES
WERE DISTRIBUTED THROUGHOUT THE RUSSIAN
FEDERATION VIA THE CORPORATE INFORMATION
DISCLOSURE CENTRE INTERFAX
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continued
REGIONAL GOVERNMENTS
AND LOCAL COMMUNITIES
WHY WE INTERACT
• To ensure that we act as a good neighbour
• To support the sustainable socio-economic
welfare of the regions in which we operate
• To address community needs, including
social or environmental concerns
• To promote the health and well-being
of the communities where we operate
• To maintain an ongoing dialogue around
government policies or potential regulatory
changes that could affect our business
• To improve social infrastructure and
implement partnerships with regional
authorities
HOW WE CREATE VALUE
We help the residents of the
communities where we operate
maintain healthy lifestyles, and
we also support their education
We contribute taxes to local
and federal budgets
We help to increase the standard
of living in developing areas
through cooperation with local
and regional governments
We invest in the long-term
economic sustainability of one-
industry towns, help diversify
the economy and support the
creation of new jobs that are not
directly dependent on PhosAgro
HOW WE INTERACT
ACTIVITIES IN 2018
• Implementing environmental programmes
• Implementing cooperation agreements with
regional governments based on regional
development needs
• We support social and sporting organisations
• We sponsor PhosAgro Classes to promote
advanced chemistry education for
schoolchildren
• We offer university scholarships and
organise recruitment programmes aimed at
encouraging children to study chemistry
• Implementing the Healthy and Educated
Children of Russia programme
• We encourage the development of sport
in regions where we operate
• Organising recreational activities
for workers and their families
• Our employees are provided with free
medical treatment, and we also fund medical
infrastructure for residents of the regions in
which we operate
• We encourage the development of cultural
and spiritual awareness among the younger
generation, educating them about Russia’s
history and traditions
• Developing programmes to protect the socio-
economic rights of veterans, and providing
material assistance to participants and
veterans of World War II and members of their
families
• Holding regular meetings with government
and community representatives
• Investing in universities and technical colleges
that provide education relevant to people
seeking careers at PhosAgro
1
2
3
4
5
6
7
8
Organisation of environmental activities in the regions in
which the Company operates with the aim of protecting
and improving the environment
An agreement was signed to improve and further socio-
economic cooperation in the medium term between
PhosAgro and the administration of the Leningrad region
An agreement was signed between PhosAgro and
the administration of the Saratov region to promote
cooperation and introduce projects aimed at improving
the socio-economic development of the region and its
attractiveness as a place to live
An agreement on cooperation was signed between
the government of the Vologda region, PhosAgro
and JSC Apatit
Holding city-wide events to celebrate the Day of the
Chemist in all the regions in which the Company operates
The Education, Health and Spirituality for Russia’s
Children (DROZD) programme opened a children’s
sports and recreation centre in the city of Balakovo
Holding events to commemorate the rite of laying the
foundation stone for the construction of the Church of
the Apostle Andrew the First-Called in Vologda
The start of a PhosAgro school project at Volkhov
Secondary School No 1
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INTERNATIONAL
INSTITUTIONS
WHY WE INTERACT
• To address community needs, including
social or environmental concerns
• To discuss the most important issues
from experts’ point of view
• To develop a common strategy and
tactics and to unite in the effort to
overcome global challenges
• To review performance
• To identify priority issues and areas
of focus for current and future periods
HOW WE CREATE VALUE
HOW WE INTERACT
ACTIVITIES IN 2018
• Active participation as members of global,
national and regional organisations and
industry associations and their initiatives
• Implementing common programmes
1
2
3
4
PhosAgro became the first Russian
company ever selected by the UN Food
and Agriculture Organization to implement
a global soil protection initiative
PhosAgro received a SHE Excellence
Gold Award from the International Fertilizer
Association for its health, safety and
environment practices
PhosAgro acted as the general partner
for the Summer School on Green Chemisty,
which was organised by IUPAC
As part of the Green Chemistry for Life
grant programme, implemented jointly with
UNESCO and IUPAC, PhosAgro presented
young scientists with grants for research in
the field of green chemistry for the fifth time.
Over the five years that the project has been
in place (2013–2018), the scientific jury has
reviewed about 600 applications, and 34
grants have been awarded to young scientists
from 26 countries in Africa, Asia, Europe, Latin
America and the Middle East
We act as a general
and reliable partner for
educational programmes
We support scientific
conferences, thematic
exhibitions, competitions
for young scientists and
educational initiatives
We share our knowledge
and experience with partners
and consumers
We invest in research
and development
GRANTS
34
HAVE BEEN AWARDED TO YOUNG
SCIENTISTS FROM 26 COUNTRIES IN
AFRICA, ASIA, EUROPE, LATIN AMERICA
AND THE MIDDLE EAST
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EMPLOYEES AND
TRADE UNIONS
WHY WE INTERACT
• To promote a corporate culture that
is aligned with PhosAgro’s strategic
goals
• To ensure employee satisfaction
and motivation
• To guarantee appropriate social
welfare for our current and retired
employees
• To maintain an open dialogue with
trade unions and employees
• To use human resources
responsibly and effectively
• To provide our employees with
the opportunity for professional
advancement
HOW WE CREATE VALUE
We provide fulfilling careers; our employees are
recognised and rewarded for their work, as well
as motivated and pushed to better themselves.
By delivering training programmes to help our
employees develop their skills and meet their
personal career goals, we create a sustainable
business that is one of the global leader in its sector
124
HOW WE INTERACT
ACTIVITIES IN 2018
• By negotiating collective agreements with
trade unions that cover issues such as
working conditions and compensation
for employees at each of our production
enterprises (usually for a three-year period)
• We involve trade unions in the development
of PhosAgro’s workplace health and safety
programmes
• We collaborate extensively with trade unions
on cultural and sporting events, workplace
health and safety committees, on the
nomination of workplace health and safety
representatives, and on our health and safety
workshops
• Employee development programmes,
including our Staff Reserve Programme
• We conduct employee surveys, presentations,
bulletin boards, and run an intranet site and
corporate newspaper
• We hold meetings with general directors
of production sites and management
responsible for social and HR issues together
with trade union representatives
• We have a whistle-blower hotline, email
addresses for complaints and telephone
hotlines for inquiries and social issues and
also for reporting violations
1
2
3
4
5
Seminar for authorised personnel
on occupational health and safety
PhosAgro’s so-called Spartakiad games
for employees
The Stars of PhosAgro Festival
Professional craftsmanship competition
Training for trade union activists
EMPLOYEES AT ALL OF OUR
PRODUCTION SITES PARTICIPATE
IN COLLECTIVE BARGAINING
AGREEMENTS
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MEDIA AND THE GENERAL
PUBLIC
WHY WE INTERACT
• To promote and protect PhosAgro’s
reputation among all of its stakeholders
• To reinforce and enhance the public’s
understanding and thus its perception
of the Company
• To inform stakeholders about the Company’s
plans, performance and priorities
• To advocate for the role of mineral fertilizers
in supporting global food security and to
illustrate the Company’s contribution to
achieving the UN’s Sustainable Development
Goals
HOW WE CREATE VALUE
We make sure the public is
informed about our activities
and strive to protect our
Company’s reputation
We act as a reliable partner
by ensuring that information
is distributed about our joint
projects, initiatives and plans,
as well as other news that
requires wide distribution
HOW WE INTERACT
ACTIVITIES IN 2018
• Media relations, including regular meetings
and briefings with journalists, access to
senior management, site tours for press
and press releases
• Attendance at public hearings, exhibitions
and congresses
• Corporate website, social media
>200 ISSUES
OF CORPORATE NEWSPAPERS WERE PREPARED IN 2018
~ 25,000
THE NUMBER OF TIMES PHOSAGRO
WAS MENTIONED IN DOMESTIC AND
INTERNATIONAL MEDIA
1
2
3
4
5
6
7
We published four weekly
and one corporate newspapers
Along with our subsidiaries, we
published over 200 press releases
Domestic and international media
mentioned PhosAgro about 25,000 times
PhosAgro’s CEO conducted regular
meetings and interviews with Russian
and foreign journalists, providing expert
comments on important Company and
industry events to leading publications
in Russia, Europe, Latin America and the
United States
Our CEO spoke with the press at multiple
domestic and international events,
including the St Petersburg International
Economic Forum, the World Economic
Forum in Davos, the International Fertilizer
Association conference, the Sochi
International Economic Forum and other
industry and investment conferences
Our CEO participated in international
and regional industry conferences
We provided PR support for a variety
of corporate events, awards and
investments over the course of the year
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BUSINESS
PARTNERS
WHY WE INTERACT
• To provide agricultural producers with
high-quality mineral fertilizers at competitive
prices and to make a contribution to Russian
and world food security
• To preserve the health of future generations
and soil fertility through the application of
environmentally friendly mineral fertilizers
containing a minimum amount of harmful
impurities and heavy metals
• To establish business relationships built
on mutual trust and respect
• To ensure a mutual understanding
of obligations and expectations of the
relationship
• To inform partners about PhosAgro’s safety,
corporate conduct and other policies that
affect relationships with business partners
• To increase crop yields in Russia and abroad
through the development of integrated
plant nutrient systems and technologies for
efficient farming
• To promote the responsible and rational use
of mineral fertilizers, i.e., green agriculture
HOW WE CREATE VALUE
HOW WE INTERACT
ACTIVITIES IN 2018
• Continuous communication with customers
and partners — farmers, distributors and
business partners, including in related areas —
in both the domestic and international markets
• Development of our own agronomic service
• Partnership with research institutions
• Research and development of new solutions
to meet market needs
• Membership in industry organisations, such
as the IPNI, the IFA and the RAFP, and hosting
joint events with them
1
2
3
4
5
6
7
Took part in two international and domestic
industry conferences, seven agricultural
events, and two Field Days; organised our
own agronomic conference in Italy and
PhosAgro Field Day in the Oryol region
The creation of our own agronomic
service, which is aimed at providing
agricultural producers with expert support
Conducting a number of scientific
studies in cooperation with leading
research institutes in Russia and abroad:
Wageningen University (the Netherlands),
the University of Milan (Italy), the Lorch
Potato Research Institute (Moscow
region) and others
The development, together with RAPU
and leading Russian research organisa-
tions, of projects aimed at the creation
of environmentally friendly production
technologies in the field of mineral
fertilizers
The establishment of our own
Innovation Centre
Developing nutritional systems for various
crops and determining their effectiveness
for agricultural producers
The IPNI’s first-ever training seminar
for a Russian company, PhosAgro
We are a reliable partner and
a sought-after client within our
industry
We adhere to the highest
standards of workplace safety
and corporate conduct and
demand the same of our
suppliers
Together with our peers, we
make every effort to ensure
that our common voice is
heard all around the world
We drive the development of
green chemistry by investing in
scientific research, including as
it is applicable to the production
of mineral fertilizers
We support organisations
such as the International Plant
Nutrition Institute (IPNI) and
the International Fertilizer
Association (IFA)
We have 2 million domestic
warehouses and 10 international
trade offices in countries around
the world that enable us to have
closer relationships with our
customers
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2018 HIGHLIGHTS
KEY EVENTS
>1.5 RUB BLN
PROVIDED FOR SOCIAL ASSISTANCE
AND CHARITABLE ACTIVITIES IN 2018
GLOBAL SUSTAINABLE
DEVELOPMENT GOALS
The Education, Health and Spirituality for
Russia’s Children (DROZD) youth movement,
one of PhosAgro’s most important corporate
social responsibility projects, opened a new
children’s sports centre in Balakovo
PhosAgro signed an agreement with
the Leningrad region on stepping up the
pace of development in terms of socio-
economic cooperation in the medium
term
OUR GOAL
We strive to achieve sustainable growth in all
the areas where we operate and to contribute
to society through our value chain, with
employment opportunities, development of
enterprises, infrastructure development and
social investment programmes.
To achieve our goal, we have outlined three
strategic areas to focus our efforts on:
1
2
3
Working with local authorities to
create modern social infrastructure
(such as providing new equipment
to improve healthcare facilities,
assisting with the development
of municipal services, building new
and renovating existing sports
and leisure facilities, etc.) in all
geographies where we operate
Developing and implementing
projects for children and adolescents
with a focus on: education and
vocational guidance, technology
and engineering study programmes,
further education and preserving
cultural heritage and healthy
lifestyles
Providing support to the most
vulnerable sectors of society in
terms of treatment, development
and helping them get the assistance
they need
8. Decent Work and
Economic Growth
9. Industrialisation,
Innovation and
Infrastructure
11. Sustainable Cities
and Communities
PhosAgro signed an agreement with
the administration of the Saratov region
on the promotion of cooperation and
implementation of projects aimed
at increasing the socio-economic
development and attractiveness
of the region
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continued
MANAGEMENT
APPROACH
Our operations make a significant
contribution to the national economy
and local economies in the areas where
we operate. Our aim is to understand and
manage our impact and to create sustainable
benefits for these local communities, while
simultaneously encouraging diverse and
sustainable local economies.
Through our work, we have a significant
impact on the development of local
communities in the regions where we
operate, as well as society as a whole.
Therefore, we must recognise that we have
a duty to minimise any negative impact
and to support sustainable growth and
development. Through the proactive and
strategic involvement of stakeholders and
communities, we can achieve a level
of development that serves the interests of
both our local communities and our assets.
The Company carries out charitable activities
on account of the public benefit they bring
and on the basis of its partnerships with state
and local authorities, the local community
and civic organisations, educational
institutions and other stakeholders.
The Company’s charitable activities are
carried out on the basis of its own bylaws
and in accordance with the Federal Law
on Charitable Activities and Charitable
Organisations and the Federal Law on
Advertising.
Company bylaws:
• Code of Ethics of PJSC PhosAgro;
• Code of Ethics of JSC Apatit;
• Codes of Ethics at every company
managed by JSC Apatit;
• Policies on Charitable Activities of PJSC
PhosAgro, JSC Apatit and the companies
WE DO EVERYTHING WE CAN TO UNDERSTAND THE
SOCIO-ECONOMIC IMPACT OF OUR OPERATIONS AND TO
CREATE SHARED VALUE WHILE CONTRIBUTING TO SOCIAL
DEVELOPMENT
The total amount of contributions for social needs
and charitable activities in 2018, RUB mln
managed by JSC Apatit;
• Rules for the Provision of Charitable
Assistance by JSC Apatit and the
Companies It Manages;
• Regulation on Interaction between
Structural Divisions and on the Processing
of Documents by JSC Apatit and Managed
Companies for the Provision of Charitable
Assistance.
All of the above-mentioned documents are
public and are posted on the Company’s
website except for the Regulation, which
concerns the administration of activities,
and the Codes of Ethics , which are available
to every employee on the Company’s intranet.
61
Spiritual renewal
430
Social development
in the regions where
the Company operates
557
Other
466
Education
and youth sport
RUB BLN
>1.5
THE TOTAL AMOUNT OF
CONTRIBUTIONS FOR SOCIAL
NEEDS AND CHARITABLE
ACTIVITIES IN 2018
MANAGEMENT OF THE SYSTEM
OF CHARITABLE ACTIVITIES
Organisational unit
Key responsibilities
Executive body
The Company’s Management Board and CEO.
The Company’s Management Board and CEO
(within the limits of the allocated funds)
Make decisions on financing and supporting charity and social investment projects and programmes
on the basis of reports.
Deputy CEO
Leadership and coordination in respect of charity and social investment activities.
The Office for External Communications
Initiates bylaws, arranges and processes all information on ongoing projects and organises public hearings,
case studies, etc.
Departments for Social Development at the
Company’s enterprises
Provide administrative support: approving agreements, transferring funds, verifying reports from
beneficiaries.
Commissions for Social Issues and Charity
Review new applications, check and fill out paperwork, make proposals concerning the provision of support
within the limits of the funds allocated for these purposes for every Company enterprise.
The companies managed by JSC Apatit
have a sufficient number of highly qualified
specialists to oversee the implementation
of programmes in the areas of finance,
economics and social policy.
Every year, the Management Board reviews
the results of activities in this area and
decides whether to continue supporting
a programme or project or to discontinue
its support.
The budget for charitable projects is
determined every year as part of the overall
budget planning process and is approved
by the Company’s Management Board.
In line with the Company’s Policy on
Charitable Activities, the main criteria for the
selection of projects are as follows:
• The aim of the project should be to provide
support to particular groups in society, civic
organisations or charitable foundations;
• The project should not contravene
the principles or requirements of the
Company’s policies or other bylaws;
• The project must not be a tacit payment
for a service, action, inaction, collusion,
patronage or other unlawful advantage
provided to the Company or its partners.
New projects are considered by the
Company’s Management Board in
accordance with the procedure established
by internal regulations.
New projects may be proposed for
consideration as follows:
• upon the proposal of Company experts
for the creation of favourable conditions
in cities where the Company operates
(training personnel, support for veterans’
organisations, development of green
spaces or animal conservation, etc.);
• Following public hearings;
• Based on agreements with state authorities
and local governments;
• On the basis of opinion surveys;
• Following successful meetings between
Company executives and representatives
of civic organisations.
Funds are allocated for new projects on
the basis of a Management Board decision.
An essential factor in making a decision is
the availability of partners (state authorities,
local governments, non-profit organisations
etc.).
Targeted support, including the provision
of jobs by private entrepreneurs,
is carried out in accordance with the
decisions of the Commission for Charitable
Projects at every Company enterprise,
within the constraints of the allocated funds.
Decisions regarding the allocation of funds
are recorded in the minutes of Commission
meetings.
THE COMPANY HAS SET
UP ITS OWN OFFICE
FOR EXTERNAL
COMMUNICATIONS,
WHOSE MAIN TASK
IS THE ADMINISTRATION
OF CHARITABLE
ACTIVITIES
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continued
PRIORITY AREAS
FOR CHARITABLE PROJECTS
Social support and protection, such as
providing financial support to the poor and
reintegration services for the unemployed,
the disabled and others.
Support for preventative medical care and
public health, as well as promoting healthy
lifestyles and improving the psychological
well-being of residents.
Ensuring the conservation and maintenance
of buildings, facilities and land of historical,
religious, cultural or environmental
significance, including burial sites.
Promotion of activities in the fields of
education, science, culture, art and spiritual
growth;
Promoting the patriotic, spiritual and moral
upbringing of children and adolescents.
Financing activities in the areas of physical
education and amateur sport.
Promoting volunteer work.
COMMISSION FOR
CHARITABLE PROJECTS
BY IDENTIFYING
PRIORITY AREAS, THE
COMPANY ENSURES
THE EFFICIENT AND
EFFECTIVE ALLOCATION
OF CHARITABLE FUNDS
LIST OF COMMUNITY
INVESTMENT PROGRAMMES
The majority of programmes are
implemented in conjunction with regional and
local government authorities, since the state
is the most reliable partner.
The following activities are carried out to
evaluate the effectiveness of programmes
and projects:
• opinion surveys involving external
Some projects are implemented through
independent non-profit organisations with
the participation of state and local authorities
and of the Company itself.
The Company has established programmes
with specific goals and objectives (see
the Company’s website for more details,
phosagro.ru).
At present, the planning horizon for
charitable activities is from one to two years.
Responsible managers are assigned to every
programme and project pursuant to the local
regulations of each Company enterprise,
since all programmes are replicated in the
regions where the Company operates.
professional experts from among the
beneficiaries, civil society, state authorities
and local self-government;
• internal opinion surveys among Company
managers of various levels and ordinary
employees;
• programme and project managers assess
the activities and their impact on the
beneficiaries;
• public hearings in the cities where the
Company operates;
• an annual review of the results of charitable
activities at a meeting of the Company’s
Management Board.
Medium-term plans for 2019
PhosAgro will continue to make the most
positive impact it can on the life of local
communities through its social support
activities, in addition to measures aimed
at regional socio-economic development.
Management Board
and CEO
Deputy
CEO
The Office for External
Communications
The Department for Social Development at
each of the Company’s enterprises
The Commission for Social Issues and Charity
at each of the companies managed by JSC Apatit
• Executive body
• Take decisions on financing and support
for projects and programmes in the areas
of charity, sponsorship and community
investment after reviewing reports (within
the limits of the allocated funds).
Group level
Provides leadership and coordination in the
areas of charity, sponsorship and community
investment.
Initiates regulations, prepares and
processes all information on projects being
implemented, and organises public hearings,
opinion surveys, etc.
Handles the technical work: agreeing
contract terms, transferring funds, verifying
reports from the beneficiaries.
Considers new applications, checks and
processes documents, and makes proposals
for support within the limits of the funds
allocated for these purposes for each of the
Company’s enterprises.
Level of Company
enterprises
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138 System and principles of corporate governance
148 Board of Directors of PJSC PhosAgro
156 Management Board
160 Committees of the Board of Directors
166 Shares and dividends
170 Management responsibility statement
70 % OF MEMBERS OF THE
BOARD OF DIRECTORS
ARE INDEPENDENT
DIRECTORS
05
CORPORATE
GOVERNANCE
COMMITTED TO BEST PRACTICES
IN CORPORATE GOVERNANCE
SYSTEM AND PRINCIPLES
OF CORPORATE GOVERNANCE
As of 31 December 2018
For PhosAgro, the previous year gave us an
opportunity to take stock of where we are,
while also identifying new strategic goals. In
2018, we successfully completed a large-scale
investment cycle, highlighted by the launch
of state-of-the-art ammonia and granulated
urea production facilities, the positive impact
of which could already be felt at the end of
the year: we are now generating increased
cash flow, which allows us to maintain a
balance between investments in further
development, support for social initiatives
and the payment of dividends.
contribution to the Company’s sustainable
development in 2018 and to maintaining its
reputation as a responsible partner, as well
as to all of PhosAgro’s staff, shareholders
and partners for their loyalty to the Company.
OF THE 10
7
MEMBERS OF THE CURRENT
BOARD OF DIRECTORS ARE
INDEPENDENT
As before, we continued to pay special
attention to improving the quality of our
corporate governance. In 2018 the Board
of Directors was joined by several new
Independent Directors: Irina Bokova, who
spent the previous eight years as Director-
General of UNESCO; Xavier Rolet, the CEO
of the London Stock Exchange for the
previous nine years and Andrey Sharonov,
who has many years of experience in
high-ranking government posts and in the
investment field. We are pleased that they
chose PhosAgro, and we are confident
that their vast experience and knowledge
will help us achieve our strategic goals
and make a significant contribution to
solving global problems. As a result of
these appointments, seven of the ten
members of the current Board of Directors
are independent, which complies with best
practices in terms of openness, business
transparency and corporate governance, and
it also ensures that the Board of Directors
will take into account the rights and interests
of all stakeholders, from customers in our
domestic market to partners in the more
than 100 countries all around the world that
import our products.
Group’s corporate structure. At the end
of the year, we decided to restructure
JSC Apatit by merging JSC Metachem
and JSC PhosAgro-Trans. The restructuring
was aimed at further improving managerial
efficiency and optimisation of business
processes, as well as strengthening
PhosAgro’s competitive advantages as a
vertically integrated company. We intend
to continue this work as we move forward.
The Company’s commitment to best
practices in corporate governance is also
illustrated by the fact that the Board of
Directors carries out an annual assessment
of its compliance with the principles laid out
in the Central Bank of Russia’s Corporate
Governance Code of 10 April 2014. Annex
No 2 to this report provides comprehensive
information on compliance with these
principles in 2018. This was reviewed and
approved by the Board of Directors as an
independent report. In addition, the Board
provided a separate assessment of criteria
regarding the quality of corporate governance
that, for one reason or another, were not met
or were not fully met.
In 2018, PhosAgro continued work begun
the previous year aimed at simplifying the
I would like to express my gratitude to the
members of the Board of Directors and
the management of PhosAgro for their
Sven Ombudstvedt
Chairman of the Board of Directors
BOARD OF DIRECTORS
Gender split
Independence
Experience
10
2
Female
8
Male
10
10
3
Non-independent
directors
7
Independent
directors
1
Sustainable
development
1
Corporate governance
and legal
2
Finance
2
Chemical, metals
and mining
4
International
business
OUR CORPORATE
GOVERNANCE PRINCIPLES
1
3
ACCOUNTABILITY
The Board of Directors is accountable to PhosAgro’s
General Shareholders’ Meeting and is responsible for:
• Formulating and overseeing the implementation
of the Company’s strategy;
• Establishing and maintaining systems that enable
it to monitor PhosAgro’s performance.
2
4
TRANSPARENCY
PhosAgro ensures the reliable and suitable disclosure
of all matters relating to its operations, such
as financial updates, social and environmental
indicators, operating results, ownership structure
and corporate governance.
RESPONSIBILITY
EQUALITY
PhosAgro recognises the rights of all stakeholders
and is constantly looking for ways to improve
communication with them and pays attention
to their needs and expectations so as to foster
mutually beneficial relations.
PhosAgro’s corporate governance system protects
shareholders’ rights and ensures that their interests
are respected and taken into consideration.
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OF CORPORATE GOVERNANCE
continued
PhosAgro’s corporate governance system
PhosAgro is a public company, whose
shares are included in Moscow Exchange’s
Level 1 quotation list, and its depositary
receipts are traded on the London Stock
Exchange. The listing of securities on
Russian and foreign stock exchanges
imposes stricter requirements in terms
of corporate governance. The Company’s
corporate governance activities are based
on the principles and recommendations set
forth in the Corporate Governance Code
recommended for use by the Bank of Russia,
as well as other requirements of the regulator
(Bank of Russia) in the areas of corporate
governance, the Listing Rules of the Moscow
and London stock exchanges, as well as
standards for the disclosure of information
developed by the Global Reporting Initiative
(GRI).
The Company is constantly developing
its corporate governance system. Such
changes aim to improve internal efficiency
and external competitiveness, which includes
raising the level of acceptance of corporate
governance practices among stakeholders.
One of the criteria related to the maturity
of the Company’s corporate governance
system is the degree to which it complies
with the recommendations of the Corporate
Governance Code adopted by the Central
Bank of the Russian Federation.
THE PERCENTAGE
OF THE CODE’S
REQUIREMENTS FULLY
IMPLEMENTED BY THE
COMPANY HAS BEEN
INCREASING EVERY
YEAR AND CURRENTLY
EXCEEDS 80%
In 2018, the Company saw improvements
in a number of principles of the Corporate
Governance Code. In particular, the materials
for meetings now contain information on the
shareholders who proposed agenda items
and those who nominated candidates for the
Company’s Board of Directors and Statutory
Audit Commission, as well as the results
of the assessment by the Remuneration
and Human Resources Committee of
candidates for the Board of Directors;
the Board of Directors approved the Risk
Management and Internal Control Policy
and made changes to related documents;
all material transactions were given the prior
consent of the Board of Directors or the
General Shareholders’ Meeting; an order was
prepared and issued on the procedure for
preparing materials for the Board of Directors
that established, among other things, the
grounds for engaging an independent
assessor when giving consent (approval)
to material transactions.
Our General Shareholders’ Meeting is
the principal forum through which the
Company’s shareholders decide which issues
are most critical to our business. These
include approving financial statements and
amending the Company’s Charter and other
internal documents. The Board of Directors
provides overall guidance to the Company,
except in areas that are the remit of the
Shareholders’ Meeting. It sets targets and
oversees how the Management Board and
the Chief Executive Officer strive to achieve
them. The Management Board and the Chief
Executive Officer manage the Company’s
day-to-day operations and implement the
strategy approved by the Board of Directors.
The General Shareholders’ Meeting
The General Shareholders’ Meeting is the
Company’s highest governing body and is
convened by the Board of Directors at least
once a year. The Annual General Meeting
is held every year between 1 March and 30
June. Extraordinary General Meetings may
be convened by the Board of Directors on
its own initiative or at the request of the
Review Committee, the external auditor
or a shareholder owning individually or
together with other shareholders at least
10% of issued voting shares. The General
Shareholders’ Meeting has the exclusive
authority to take decisions on a number
of matters, including:
• implementation of amendments and
additions to the Company’s Charter, or
adoption of a new version of the Charter
• reorganisation or liquidation of the
Company
• election and removal of members of the
Board of Directors
• increases or reductions in the Company’s
authorised capital
• approval of the Company’s external auditor
• approval of the Company’s annual reports
and financial statements
• distribution of profits, including payment
of dividends
• payment of remuneration to the members
of the Board of Directors and the Review
Committee
Voting at a General Shareholders’ Meeting is
generally based on the principle of one vote
per ordinary share, with the exception of the
election of the Board of Directors, which is
done by cumulative voting. According to the
Law on Joint Stock Companies, the quorum
requirement for a General Shareholders’
Meeting is that shareholders (or their
representatives) accounting for more than
50% of the issued voting shares must be
present.
A General Shareholders’ Meeting may be held
in the form of a meeting (in person) or in the
form of absentee voting. All shareholders
entitled to participate in the General
Shareholders’ Meeting are notified of the
Meeting by a notice posted on a Company’s
website usually 21 days prior to the Meeting.
The list of persons entitled to participate in a
General Shareholders’ Meeting is compiled
on the basis of data in the Company’s
register of shareholders as of the date
established by the Board of Directors.
General Shareholders’ Meetings are usually
held in Russia (Moscow).
In addition to the Annual General
Shareholders’ Meeting, three Extraordinary
General Shareholders’ Meetings were held
in 2018, the main subject of which was the
distribution of dividends in accordance with
the Company’s dividend policy. In addition,
a decision on the composition of the new
Board of Directors was taken in light of the
changes to the corporate structure.
Role and composition of the Board
of Directors
The Board of Directors operates in
accordance with the Law on Joint Stock
Companies, the Company’s Charter, the
Company’s Regulations on the Board of
Directors, the Central Bank of Russia’s
recommended Corporate Governance Code,
guidelines of the UK Corporate Governance
Code and generally accepted good practice
in corporate governance.
At the Annual General Meeting of
Shareholders, the Members of the Board
of Directors are elected by cumulative
voting for a year-long term.
Since 2011, PhosAgro’s Board of Directors,
as well as its main committees – the Audit
Committee and the Rumuneration and
Human Resources Committee – have been
chaired by independent directors. Moreover,
these committees are composed entirely
of independent directors. In 2018, the Risk
Management Committee was also chaired
by an independent director. Since 2017,
the Board of Directors has been made up
of 10 members. The Board was expanded
both because of the requirements of
Russian corporate legislation and because
of the Company’s desire to recruit as
many independent directors as possible.
Since the Company has more than 10,000
shareholders, there should be, according
to Russian corporate legislation, no fewer
than nine Board members. The new makeup
of the Board of Directors was determined
at the Extraordinary General Shareholders’
Meeting held on 26 February 2018, when new
independent director Irina Bokova was added,
bringing to the Board her unique knowledge,
skills and competencies.
The Annual General Meeting of Shareholders
of 30 May 2018 elected a new Board of
Directors and appointed Xavier R. Rolet as
a new independent director. As a result,
the number of independent non-executive
directors was increased to seven, a change
that confirms the Company’s commitment to
best practices in corporate governance.
1. Are an employee or a member of
a management body and/or executive
bodies of a major counterparty
or competitor of the Company or
organisations under its control;
2. Are an owner or a beneficiary of shares
(a stake) in a major counterparty
or competitor of the Company that
constitutes more than 5 per cent of the
authorised capital or total number of
voting shares (stakes).
A person shall be considered to be related
to the government or a municipality if, inter
alia, they are currently or were within one
year prior to election to the Board of Directors
a state or municipal employee, a person
substituting positions in public authorities,
an employee of the Bank of Russia, or a
number of other cases stipulated by the
above documents.
THE BOARD OF DIRECTORS
IS CONSTANTLY LOOKING
FOR NEW WAYS TO
MAKE ITS ACTIVITIES
MORE EFFICIENT,
AND TO IMPROVE ITS
IMPLEMENTATION OF
THE BANK OF RUSSIA’S
RECOMMENDATIONS FOR
CORPORATE GOVERNANCE
AND COMPLIANCE
WITH INTERNATIONAL
CORPORATE GOVERNANCE
STANDARDS
An independent director (and therefore
candidates for the position of independent
director) is a person who is unrelated to:
• the Company
• a major shareholder of the Company
• a major counterparty of the Company
• a competitor of the Company
• the government (the Russian Federation
or a constituent entity of the Russian
Federation) or a municipality
A person shall be considered to be related
to the Company in the event that they or
persons related to them, inter alia:
1. Are currently or have been in the preceding
three years members of either the
executive bodies or employees of the
Company or of entities controlled by the
Company and or the managing company;
2. Are members of the Board of Directors of
a legal entity that controls the Company,
is controlled by the Company, or is a
management company of such a legal
entity; and in a number of other cases
stipulated by the above documents.
A person shall be considered to be related to
a major shareholder of the Company in the
event that they or persons related to them,
inter alia, are employees or members of the
executive bodies of a major shareholder of
the Company, as well as in a number of other
cases stipulated by the above documents.
A person shall be considered to be related
to a major counterparty or competitor of the
Company in the event that they or persons
related to them:
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The main areas of activities undertaken by
the Board of Directors in 2018 included:
• assessment and quarterly monitoring
of the risk management process;
• the Company’s strategy in the area
of international projects;
• the sales strategy for mineral fertilizers;
• development of a project management
• assessment and quarterly monitoring
system at Group enterprises;
of the activities of subsidiaries in the areas
of workplace health and safety, industrial
safety and environmental protection;
• ensuring compliance with the provisions
of the Company’s Information Policy and
determining the priorities thereof;
• assessment of the effectiveness of the
Company’s risk management and internal
control system;
• evaluation of the performance of the
Company’s CEO and Management Board;
• oversight over management relations
with shareholders, investors and other
stakeholders;
• supervising activities aimed at formulating
a Development Strategy to 2025, and the
implementation status of the Strategy
to 2020;
• assessing the degree to which the
• assessment of the work of the Corporate
requirements of the Company’s Insider
Information Policy were met;
Secretary;
• monitoring the implementation of priority
areas of the Company’s activities in 2018
and determining priority areas of the
Company’s activities for 2019;
• reviewing the Company’s budget for 2019,
as well as quarterly review of the budget
for 2018.
IN 2018, THE BOARD
OF DIRECTORS HELD
9 MEETINGS COVERING
A TOTAL OF 77 ISSUES
Held
Attended
Name
Year
of birth
Andrey A. Guryev
1982
Andrey G. Guryev
1960
Sven Ombudstvedt²
1966
Natalia Pashkevich²
1939
Marcus Rhodes
1961
Ivan Rodionov¹,²
1953
James Rogers
1942
Mikhail Rybnikov
1975
Irina Bokova¹
1952
Xavier R. Rolet¹,²
1959
Andrey Sharonov
1964
Alexander
Sharabaiko¹
1977
Board
of Directors
Audit
Committee
Strategy
Committee
Remuneration
and Human
Resources
Committee
Risk Management
Committee
Environment,
Health and Safety
Committee
1
1
1
1
1
1
1
1
5
5
5
5
5
5
2
2
2
2
1
1
2
2
4
4
4
4
4
2
4
2
9
9
9
9
9
9
9
9
9
9
9
9
9
6
9
7
9
4
9
9
7
4
9
1
5
5
5
5
5
5
5
4
In addition, the Board of Directors reviewed
a number of anti-corruption documents:
• Regulation on Conflicts of Interests within
the Company;
• The Company’s Code of Ethics;
• Regulation on the Company’s Hotline.
The above-mentioned documents were
amended to reflect changes in Russian
and international anti-corruption legislation.
Key documents in the field of corporate
governance—the Company’s Risk
Management and Internal Control Policy
and its Corporate Governance Code —
were updated in response to amendments
to Russian laws in 2018. The Board of
Directors also approved the work plan for
the Company’s Internal Audit Department for
2019.
In addition to the above-mentioned issues,
the Board of Directors also reviewed
and approved financial statements on a
quarterly basis, appointed the Company’s
top executives, approved major and
interested-party transactions, and convened
shareholders’ meetings.
In August 2018, an on-site meeting of
the Board of Directors took place at the
Metachem site in Volkhov, where the
Company’s key investment project for the
construction of new fertilizer production
facilities got under way last year. Board
members were informed about how the
design and construction of the facility—
an extremely important project for the
Company—was progressing. On the basis
of a detailed study of project indicators, the
Board gave the decisions of the Company’s
management a positive assessment. The
meeting highlighted significant progress in
all key areas of the Company’s operations in
recent years.
Board committees
The committees of the Board of Directors are
advisory and consultative bodies. The Board
committees consist of current members of
the Board of Directors who have relevant
experience and expertise in the area of each
committee’s focus.
The committees can also involve external
experts and consultants in their work.
The primary role of the committees is
the preliminary consideration of the key
issues reserved for the Company’s Board of
Directors. The committees are responsible
for ensuring that issues brought before the
Board have been subject to sufficient review
in order to ensure that the directors are able
to cast their votes based on full and accurate
information. To achieve this, committee
members maintain a regular dialogue with
management, the Company’s external auditor
and other advisors on the issues that fall
within their remit.
Planning and evaluation of the activities
of the Board of Directors
In accordance with the recommendations of
the Corporate Governance Code, the Board
of Directors conducted a self-assessment
based on 2018 results. In general, most
aspects of the work of the Board of
Directors and its committees were given a
positive evaluation. According to the main
criteria for assessing the impact of their
activities, the survey showed a positive
trend in comparison with Board members’
assessments from 2016 and 2017. The
self-assessment was carried out on the
basis of a survey of members of the Board
of Directors. The final report on the results
of the self-assessment was presented and
reviewed at meetings of the Remuneration
and Human Resources Committee and of
the Board of Directors. After being discussed,
the following self-assessment results were
recorded: the composition of the Board of
Directors fully meets the requirements of
the Code and the Moscow Exchange listing
rules. The directors consider the Board’s
composition to be strong and balanced.
The Board’s performance remained highly
rated. An improvement in the quality of
Board discussions was noted. In addition,
following a review of the results of the self-
assessment, the main areas for development
and improvement of the Board of Directors in
2019 were agreed.
THE BOARD’S ACTIVITIES ARE PLANNED. MEETINGS ARE
HELD AT LEAST ONCE A QUARTER. THE BOARD CONFIRMS
THE DATES AND AN INDICATIVE AGENDA IN ADVANCE
ONCE PER YEAR, MAKING CHANGES AS NEEDED
THROUGHOUT THE YEAR
¹ Alexander Sharabaiko was a member of the Board of Directors until 26 February 2018; Ivan Rodionov was a member of the Board of Directors until 30 May 2018; Irina Bokova has
been a member of the Board of Directors since 26 February 2018, and Xavier R. Rolet has been a member since 30 May 2017.
142
² Ivan Rodionov was the Chairman of the Risk Management Committee until 30 May 2018; Xavier R. Rolet has been the Chairman of the Risk Management Committee since 30 May
2018; Sven Ombudstvedt was a member of the Environment, Health and Safety Committee until 30 May 2018; Natalia Pashkevich has been a member of the Environment, Health
and Safety Committee since 30 May 2018.
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continued
STRUCTURE OF THE BOARD OF DIRECTORS
In relation to
the Company
Period of service
on the Board
Age
Place
of residence
10%
Non-executive
20%
Executive
20%
>7 years
30%
4–7 years
70%
Independent
Environment,
health and safety
50%
<3 years
10%
Under 40
10%
40–50
30%
60+
50%
50–60
10%
USA
40%
Europe
50%
Russia
HR management
HR management
Risk management
Risk management
Law and corporate
governance
Law and corporate
governance
Executive bodies
The Company’s day-to-day operations
and the implementation of its strategy are
managed by its collective executive body
(Management Board) and its sole executive
body (CEO).
Management Board
The matters that fall within the remit of the
Management Board are set out in the Charter
and include:
• Reviewing, revising and approving
PhosAgro’s quarterly and annual budgets;
• Determination of the Company’s
investment policy and new areas of
operations;
• Developing PhosAgro’s capital expenditure
plans and strategy with respect to any new
business activities;
• Making decisions on entering into,
amending or terminating transactions
related to the disposal or possibility
of disposal of securities owned by the
Company or shares in the charter capital
of business entities whose book value
exceeds 20% of the book value of the
Company’s assets;
• Arranging the preparation and provision
of reports to the Board of Directors
on PhosAgro’s financial and operating
performance;
• Approving the regulations on
incentivisation and other internal
documents that determine the
compensation and benefit policies
for PhosAgro employees;
• Election and removal of the secretary
of the Management Board and their
powers.
During the reporting period, the Management
Board held six meetings, at which it reviewed
the Company’s quarterly financial and
operational performance. It summarised
the results of the Company’s 2017 activities
in March, identified the Company’s priority
activities for 2019 in November, and
approved the 2019 budget in December.
The Management Board also made decisions
to approve and amend the charity budget.
The Chief Executive Officer
According to the Company’s Charter, the
Chief Executive Officer is appointed by the
Company’s Board of Directors for a period
of three years and may be dismissed by a
decision of the Board of Directors at any
time. The Company’s Corporate Governance
Code provides that the Chief Executive Officer
must act in good faith and with due diligence
to further the interests of the Company and
its shareholders. All issues related to the
Company’s day-to-day operations are within
the authority and responsibility of the Chief
Executive Officer except for those matters
that are subject to ratification by the General
Shareholders’ Meeting, the Company’s Board
of Directors and/or the Management Board.
The Chief Executive Officer, together with
the Management Board, is responsible for
ensuring that the Company’s strategy and
the decisions of the General Shareholders’
Meeting and the Board of Directors are
implemented. In order to ensure efficient
corporate communications between the
Company’s Board of Directors and the Chief
Executive Officer, the Chief Executive Officer
submits regular quarterly reports to the
Board.
Some of the matters for which the Chief
Executive Officer is responsible are:
• representing the Company before all
federal and local authorities and in
meetings with organisations and entities
in Russia and abroad
• hiring and dismissing the Company’s
personnel
• carrying out all other activities and legal
steps required to be conducted on behalf
of the Company in accordance with the
Company’s Charter, decisions of the Board
of Directors and the General Shareholders’
Meeting and/or in accordance with current
legislation
Andrey A. Guryev was the Company’s Chief
Executive Officer throughout 2018. For Mr
Guryev’s biographical details, please see the
“Board of Directors” section of this report.
Principles for remuneration of members
of the Board of Directors
When determining the composition of the
Board, the General Shareholders’ Meeting
approves the amount and the rules for
determining and paying remuneration and
compensation to members of the Board
of Directors. In addition, the amount of
remuneration provided by the Company
to members of the Board of Directors
creates sufficient motivation for them to
work effectively, allowing the Company
to attract and retain competent and
skilled professionals. At the same time,
the Company avoids paying out more
remuneration than is necessary.
The Company pays remuneration to members
of the Board of Directors during the period
during which they exercise their duties, and
it also reimburses expenses related to their
performance as members of the Board of
Directors. Regular (quarterly) remuneration
is paid only to independent members of the
Board of Directors. Additional (quarterly)
remuneration is paid to the chairmen of
Board committees who are independent
directors, as well as to members of the
Board of Directors who are not Company
employees. Remuneration is paid quarterly
no later than 20 days from the end of the
reporting quarter.
Regular (quarterly) remuneration for the
Chairman of the Board of Directors, who is an
independent director and is paid an amount
equivalent to USD 90,000.00 for a full quarter
at the official exchange rate set by the Bank
of Russia on the last day of the quarter for
which payment is made. Other independent
members of the Board of Directors are paid
remuneration in an amount equivalent to USD
45,000.00 for a full quarter at the official rate
set by the Bank of Russia on the last day of
the quarter for which payment is made.
Additional (quarterly) remuneration is paid
to the chairmen of Board committees who
are independent directors or who are not
Company employees in an amount equivalent
to USD 30,000.00 for a full quarter according
to the official exchange rate set by the Bank
of Russia on the last day of the quarter for
which the payment is made.
be at a level that enables the Company to
attract, motivate and retain highly skilled
professionals to help drive the future growth
and performance of the business. At the same
time, their remuneration shall not exceed the
amount needed to achieve this.
In 2018, the total remuneration paid
to PhosAgro’s Board of Directors was
RUB 97,318 thousand (excluding reimbursed
expenses). The amount of remuneration
and additional compensation paid to
PhosAgro’s Chief Executive Officer is
regulated by a contract between the Chief
Executive Officer and the Company, which
is signed by the Company’s Chairman of the
Board of Directors. The total remuneration
reflects the Chief Executive Officer’s
qualifications and takes into account the
particular contribution of the Chief Executive
Officer to the Company’s financial results.
Management Board remuneration
The remuneration paid by the Company to
the Chief Executive Officer and the six other
members of the Management Board (who
represent the Senior Management Team) for
their services to the Company during the year
ended 31 December 2018 was RUB 185.6
million (in 2017 it was RUB 234.5 million).
The renumeration paid to the Company’s
senior executives consists of a monthly base
salary plus additional compensation that is
paid twice a year.
Compensation is provided for actual
expenses incurred by the members of
PhosAgro’s Board of Directors in connection
with the performance of their functions
as members of the Board of Directors.
Reimbursement for expenses is provided
within the first 20 days of the month
following the reporting month on the basis
of requests from members of the Board
of Directors submitted to PhosAgro’s sole
executive body, accompanied by documents
confirming actual expenses incurred.
Compensation and reimbursements are
paid out in cash from PhosAgro’s payment
office or, upon the submission of the relevant
request from a member of PhosAgro’s Board
of Directors to PhosAgro’s sole executive
body (CEO), by a bank transfer to the account
indicated in the request.
Board of Directors remuneration
Members of PhosAgro’s Board of Directors
may receive remuneration and be
compensated for expenses incurred in the
course of their duties in accordance with
decisions of the General Shareholders’
Meeting. According to the Company’s
Corporate Governance Code, the remuneration
of the Board of Directors shall be in line
with current market conditions and shall
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SYSTEM AND PRINCIPLES
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continued
BOARD OF DIRECTORS REMUNERATION
RUB
Igor Antoshin
Sven Ombudstvedt
James Rogers
Ivan Rodionov
Marcus Rhodes
Andrey Sharonov
Xavier Rolet
Irina Bokova
Total
2017
4,749,761.34
19,376,953.47
16,147,461.81
6,458,984.49
16,147,461.81
2,592,009.00
—
—
65,472,631.92
2018
—
22,957,434.00
19,131,195.00
2,959,284.38
19,131,195.00
11,478,717.00
11,784,706.71
9,875,299.80
97,317,831.89
Payment of additional compensation is
based on achieving the Company’s key
performance indicators and accomplishing
additional tasks and goals, as set by the
Board of Directors and the Chief Executive
Officer for the reporting year or quarter.
The key performance indicators for each
individual senior manager are set by
period and mainly consist of indicators for
sustaining operational efficiency, as well
as for contributing to the achievement of
corporate growth and strategy.
To determine the amount of additional annual
compensation, the Company’s EBITDA for the
reporting period (pursuant to a decision of
the Board of Directors) is taken into account.
Insider Information Policy
Insider Information is precise and specific
information that has not been distributed or
shared that, if distributed or shared, could
have a significant impact on the value of
the Company’s securities. A list of such
information within the Company has been
drawn up and approved in accordance with
the applicable legal requirements.
An insider is a person who has the right to
access insider information on the basis of
a law, other regulatory legal act, their job
description or Company bylaws, as well as on
the basis of an agreement with the Company.
The purpose of the Company’s Insider
Information Regulation is to protect the
146
legitimate interests of investors and to
prevent actions by the Company, employees,
members of the Board of Directors and the
Statutory Audit Commission, related parties,
customers and counterparties aimed at
misusing insider information and market
manipulation.
The Company’s Insider Information
Regulation was developed on the basis
of Russian legislation on countering the
unlawful use of insider information and
market manipulation, as well as the European
Union’s market abuse regulation. It governs
the procedure for drawing up a list of insider
information; the procedure for compiling
a list of Company insiders and submitting
the list to interested parties; the rules for
the Company’s notification of insiders, as
well as the rules for insiders’ notification of
the Company and the authorities in charge
of regulating securities; the procedure for
gaining access to insider information and for
sharing insider information with interested
parties; the privacy policy regarding insider
information; the rules for insiders to conclude
transactions involving the Company’s
securities; rules for monitoring compliance
with the requirements of legislation and
these regulations; other issues related to
the handling and safeguarding of insider
information.
The Company division responsible for
fulfilling the legal requirements on insider
information and the Company bylaws
adopted in accordance with said legal
requirements is the Office of the Corporate
Secretary. The functions performed in this
area include the maintenance of lists of
Company insiders and related parties; the
sending and recording of notifications related
to the maintenance of said lists; notification
of the persons performing managerial
duties about periods when transactions
involving Company securities are prohibited
for them; analysis of the possibility of
using the Company’s insider information
in transactions involving the Company’s
securities; preparing a report for the Board
of Directors on the Company’s fulfilment of
its legal requirements in terms of protecting
and sharing insider information; analysis
of the grounds for, and organisation of, the
disclosure of information on transactions
involving insiders and related parties in
accordance with the requirements of
European legislation; advising the Company’s
employees on issues related to handling
insider information.
Dividend Policy
The Company’s Dividend Policy is based
on balancing the interests of the Company
and its shareholders when determining
the dividend amount, on respecting and
strictly observing the rights of shareholders,
as stipulated by the applicable Russian
legislation, the Company’s Charter and
its bylaws, and is aimed at increasing the
Company’s investment attractiveness
and its capitalisation.
recommended by the Board of Directors on
19 March 2019.
The Dividend Policy Regulation approved
by the Company establishes a transparent
procedure for determining the dividend
amount and the payment thereof. Its
purpose is also to provide information
on the conditions and procedure for the
payment of dividends to all interested
parties and to determine guidelines for
the Company’s Board of Directors when
developing recommendations on the amount
of dividends on shares and the procedure for
the payment thereof.
In accordance with this Regulation, when
determining the amount of dividends to
recommend to the General Shareholders’
Meeting and the corresponding share of the
Company’s net profit to allocate for dividend
payments, the Company’s Board of Directors
strives to ensure that the amount of funds
allocated for dividend payments ranges
from 30% to 50% of the Company’s profit in
accordance with its consolidated financial
statements under IFRS for the relevant
reporting period.
When determining the recommended
dividend amount, the Company’s Board
of Directors must take into account the
Company’s financial performance for the
relevant reporting period; the amount of profit
to be allocated for investment and growth,
financing the Company’s social responsibility
and other projects; as well as other
significant factors for making an informed
decision on recommended dividends.
If the Company has a net profit based
on the results of the reporting period, the
Company’s Board of Directors has the right
to refrain from recommending the payment
of dividends in cases where there is a
reasonable assumption that the payment
of dividends could entail a significant
deterioration in the Company’s financial
position.
The Review Committee
The Review Committee may undertake
audit procedures either on its own initiative,
pursuant to a decision of the General
Shareholders’ Meeting or the Board of
Directors or at the request of shareholders
owning at least 10% of the shares in the
Company. The General Shareholders’
Meeting elects the members of the Review
Committee for the period until the next
Annual General Shareholders’ Meeting.
The Review Committee comprises three
members and is led by the Chairman of
the Review Committee. Members of the
Committee cannot be on the Company’s
Board of Directors at the same time, nor
can they hold positions in the Company’s
executive bodies.
Internal audit
The Company’s Internal Audit Department
assists the Company’s executive
management and Board of Directors in
improving the effective management of
business processes, as well as the operation
of the internal control and risk management
systems.
In its activities, the Internal Audit
Department uses a risk-based approach
and works closely with the Departments
of Risk Management, Internal Control and
Economic Security, as well as with Company
management.
In 2018, the Internal Audit Department
audited the Company’s business processes
in the following areas: procurement
of materials and services, inventory
management, treasury, and investments, as
well as IT audits of the Company’s business
systems. The audit plan for the year is
reviewed, discussed, and approved by the
Audit Committee and the Board of Directors.
Audits are performed both at the Group level
and within subsidiaries.
According to the results of the Company’s
activities, the declared dividends amounted
to 60% of the net profit adjusted for FX. The
total amount of dividends declared in 2018
and in 2019 will amount to RUB 24.9 billion,
pending AGM approval of the dividends
In addition, the Internal Audit Department
monitors the implementation by the
Company’s management of corrective
actions proposed based on audit results
and reports to the Board of Directors on a
quarterly basis.
At the end of 2018, PricewaterhouseCoopers
conducted an assessment of the compliance
of the Internal Audit Department with the
requirements of the International Standards
for the Professional Practice of Internal
Auditing, the Institute of Internal Auditors’
Code of Ethics and the requirements of
the corporate governance code approved
by the Board of Directors of the Bank of
Russia. Significant improvement was noted
in the work of the Internal Audit Department
compared to 2017. A plan was developed
and is currently being implemented to further
improve the internal audit function.
Members of PhosAgro’s Board of Directors
On 1 January 2018, as elected by the
Extraordinary General Shareholders’ Meeting
of 2 October 2017:
1. Andrey A. Guryev
2. Andrey G. Guryev
3. Sven Ombudstvedt
4. James Rogers
5. Ivan Rodionov
6. Marcus Rhodes
7. Mikhail Rybnikov
8. Natalia Pashkevich
9. Alexander Sharabaiko
10. Andrey Sharonov
On 29 May 2018, as elected by the
Extraordinary General Shareholders’ Meeting
of 26 February 2018:
1. Irina Bokova
2. Andrey A. Guryev
3. Andrey G. Guryev
4. Sven Ombudstvedt
5. James Rogers
6. Ivan Rodionov
7. Marcus Rhodes
8. Mikhail Rybnikov
9. Natalia Pashkevich
10. Andrey Sharonov
On 31 December 2018, as elected by the
annual General Shareholders’ Meeting of
30 May 2018:
1. Irina Bokova
2. Andrey A. Guryev
3. Andrey G. Guryev
4. Sven Ombudstvedt
5. James Rogers
6. Xavier Rolet
7. Marcus Rhodes
8. Mikhail Rybnikov
9. Natalia Pashkevich
10. Andrey Sharonov
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OF PJSC PHOSAGRO
As of 31 December 2018
OMBUDSTVEDT
SVEN
Chairman
Title: Independent Director
Year of election: 2011
GURYEV
ANDREY G.
Deputy Chairman
Title: Non-executive Director
Year of election: 2013
Equity interest / Stake of ordinary shares: 0.001%
Equity interest / Stake of ordinary shares: no
Date of birth: 27 July 1966
Date of birth: 24 March 1960
Education:
Pacific Lutheran University (USA)
Bachelor’s degree in Business Administration
The Thunderbird School
of Global Management
Master’s degree in International Management
2008
—
2013
2010
—
2013
2010
—
2017
2011
—
Present
2017
—
2017
2017
—
Present
2017
—
Present
Saferoad AS
Member of the Board
of Directors
Western Bulk
Member of the Board of Directors
Norske Skogindusttrier ASA
CEO
PJSC PhosAgro
Chairman of the Board of Directors
Member of the Audit Committee
Member of the Strategy Committee
Norske Skogindusttrier ASA
Special Advisor
Norske Skog AS
Chairman of the Board
of Directors
Norske Skog Holding AS
Member of the Board of Directors
Education:
The G. V. Plekhanov St. Petersburg State Mining Institute
Degree in Economics and Management of Mining and Exploration
Enterprises
Central State Institute for Physical Education
2006
—
Present
2001
—
2013
2013
—
Present
06.2017
—
06.2018
06.2018
—
Present
Russian Chemists Union
Vice-President
Federation Council of the Federal Assembly
of the Russian Federation
Member of the Federation Council
of the Russian Federation
PJSC PhosAgro
Deputy Chairman of the Board of Directors
Member of the Strategy Committee
JSC AgroGard-Finance
Member of the Board of Directors
JSC AgroGard-Finance
Chairman of the Board of Directors
Key competencies:
• Strategy
• Finance and audit
• Chemistry and mining engineering
Key competencies:
• Strategy
• Chemistry and mining engineering
GURYEV
ANDREY A.
Title: Executive Director
Year of election: 2013
Equity interest / Stake of ordinary shares: no
Date of birth: 7 March 1982
Education:
The University of Greenwich in London
BA in Economics
Academy of National Economy under
the Government of the Russian Federation
Master’s degree; PhD in Economics
2011
—
2013
2011
—
2013
CJSC PhosAgro AG
Deputy CEO for Sales and Logistics
(in addition to other duties)
2013
—
Present
OJSC PhosAgro
Deputy CEO
2011
—
Present
Moscow Rhythmic
Gymnastics Federation
President
2012
—
Present
2012
—
2014
2012
—
Present
2013
—
Present
Andrey Guryev Charitable Foundation
Chairman of the Management Board
JSCB Investment Trading Bank OJSC
Member of the Board of Directors
LLC PhosAgro-Region
Member of the Management Board
PJSC PhosAgro
Member of the Board of Directors
Key competencies:
• Strategy
• Environment, health and safety
• Human resources
2016
—
Present
Russian Rhythmic
Gymnastics Federation
Chairman of the Board of Trustees,
Vice-President
2016
—
Present
International Fertilizer
Industry Association (IFA)
Member of the Board of Directors
2016
—
Present
Miners of Russia non-commercial
partnership
Deputy Chairman of the Supreme Mining
Council
PJSC PhosAgro
CEO
Chairman of the Managment Board
Chairman of the Strategy Committee
Member of the Environmental, Health
and Safety Committee
Member of the Risk Management
Committee
JSC PhosAgro-Cherepovets
Member of the Management Board
Russian Chess Federation
Member of the Board of Trustees
The Russian Olympians Foundation
Member of the Board of Trustees
of the Foundation
Member of the Board of the Foundation
2014
—
2016
2014
—
Present
2015
—
Present
2015
—
Present
Russian Union of Industrialists
and Entrepreneurs
Member of the Management Board
2016
—
Present
Russian Association of Fertilizer
Producers
President
148
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continued
ROGERS
JAMES BEELAND JR.
Title: Independent Director
Year of election: 2014
Equity interest / Stake of ordinary shares: 0.0064%
Date of birth: 19 October 1942
Education:
Yale University (USA)
Bachelor’s degree
Directorship:
1986
—
Present
1988
—
Present
1990
—
Present
2007
—
Present
2007
—
Present
2012
—
Present
2012
—
Present
Virtus Total Return Fund Inc.
Director
Virtus Global Dividend & Income Fund Inc.
Director
Beeland Interests, Inc.
Director
Beeland Enterprises, Inc.
Director
Beeland Holdings Pte Ltd
Director
Spanish Mountain Gold Limited
Director
Geo Energy Resources Limited
Non-Executive Director
06.2013
—
06.2014
Fab Universal Corp
Independent Director
2014
—
Present
PJSC PhosAgro
Member of the Board of Directors
Chairman of the Remuneration
and Human Resources Committee
Member of the Audit Committee
Key competencies:
• Finance and audit
• Human resources
150
University of Oxford, as a member of Balliol College (England)
Bachelor’s / master’s degree in Philosophy, Politics and Economics
2014
—
Present
2016
—
Present
2016
—
Present
03.2016
—
04.2018
08.2017
—
Present
01.2018
—
Present
Sinofortune Financial Holdings Limited
Non-Executive Director
Duff & Phelps Select Energy MLP Fund Inc.
Director
Virtus Global Multi-Sector Income Fund
Trustee
Crusader Resources Limited
Non-Executive Director
JSC AgroGard-Finance
Independent Director
Ocean Capital Advisors LLC
Director
09.2018
—
Present
Quantum Digital Asset
Management Pte. Ltd.
Member of the Board of Directors
11.2018
—
Present
Sirius International Insurance Group, Ltd.
Member of the Board of Directors
12.2018
—
Present
Ananti Inc
Director
Advisor:
2006
—
2015
2011
—
Present
2012
—
Present
2013
—
01.2018
02.2014
—
Present
07.2015
—
01.2017
04.2017
—
Present
08.2017
—
08.2018
10.2017
—
10.2018
CQS Cayman Limited Partnership
Advisor
Forbes & Manhattan
Advisor
Santiago Gold Fund
Advisor
Laguna Bay Pastoral Company Pty Ltd
Advisor
Genagro Limited
Member of the Advisory Board
Latitude Technologies Limited
Senior Advisor
Agritrade Resources Ltd
Advisor
ITF Corporation
Advisor
Global Blockchain Technologies Corp
Advisor
RHODES
MARCUS JAMES
Title: Independent Director
Year of election: 2011
PASHKEVICH
NATALIA V.
Title: Independent Director
Year of election: 2017
Equity interest / Stake of ordinary shares: 0.000644%
Equity interest / Stake of ordinary shares: no
Date of birth: 31 May 1961
Date of birth: 5 November 1939
Education:
Leningrad Mining Institute
Grand PhD in Economics, Professor
1999
—
Present
2017
—
Present
Saint Petersburg Mining University
First Vice-Rector
PJSC PhosAgro
Member of the Board of Directors
Member of the Environmental, Health
and Safety Committee
Education:
University of Loughborough
BS in Economics and History of Economics
The Institute of Accountants in England and Wales
Qualified as a chartered accountant, member
2008
—
2015
2008
—
2016
2008
—
2015
2011
—
Present
2014
—
Present
2014
—
2017
2018
—
Present
OJSC Rosinter Restaurants Holding
Member of the Board of Directors
OJSC Cherkizovo Group
Member of the Board of Directors
Tethys Petroleum Limited
Member of the Board of Directors
PJSC PhosAgro
Member of the Board of Directors
Chairman of the Audit Committee
QIWI plc
Member of the Board of Directors
Zoltav Resources Inc
Member of the Board of Directors
(left on 23 May 2017)
Rustranscom Plc
Non-Executive Director
Key competencies:
• Finance and audit
• Corporate governance
Key competencies:
• Chemistry and mining engineering
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continued
RYBNIKOV
MIKHAIL K.
Title: First Deputy CEO of PJSC Phosagro
Year of election: 2016
Equity interest / Stake of ordinary shares: 0.0258%
Date of birth: 30 November 1975
Education:
Moscow State University
Master’s degree in Economics
2011
—
2013
2012
—
2015
2012
—
2017
2013
—
2013
2013
—
2013
2013
—
2016
LLC PhosAgro-Region
Member of the
Management Board
CJSC PhosAgro AG
CEO
Chairman of the Management Board
JSC PhosAgro-Cherepovets
CEO
OJSC Moscow Stock Exchange
Member of the Board of Directors
OJSC Apatit
Member of the Board of Directors
JSC PhosAgro-Cherepovets
Member of the Board of Directors
2013
—
Present
PJSC PhosAgro
Member of the Management Board
Chairman of the Environmental, Health and Safety
Committee, Member of the Strategy Committee,
Member of the Risk Management Committee
Key competencies:
• Strategy
• Finance and audit
• Chemistry and mining engineering
• Environment, health and safety
152
2015
—
2017
2016
—
Present
2016
—
Present
2017
—
2018
2018
—
Present
2018
—
Present
JSC PhosAgro-Cherepovets
Chairman of the Managment Board
PJSC PhosAgro
Member of the Board of Directors
LLC PhosAgro-Region
Member of the Management Board
JSC Apatit
CEO
Chairman of the Management Board
JSC Apatit
Member of the Management Board
JSC NIIUIF
Member of the Board of Directors
SHARONOV
ANDREY V.
Title: Independent Director
Year of election: 2017
Equity interest / Stake of ordinary shares: no
Date of birth: 11 February 1964
Education:
Ufa Aviation Institute
Major in Aviation Instrument Making
Russian Academy of Public Administration under
the President of the Russian Federation
Major in Law
Government of Moscow
Deputy Mayor for Economic Policy
2014
—
Present
PJSC NOVATEK
Member of the Board of Directors
2010
—
2013
2011
—
2014
National Research University Higher School
of Economics
Member of the Supervisory Board
2011
—
Present
JSCB Bank of Moscow
Member of the Board
of Directors
2013
—
2016
2013
—
2016
2014
—
2015
2014
—
Present
2014
—
Present
Moscow School of Management SKOLKOVO
Rector
JSC MC Eko-Sistema
Chairman of the Board of Directors
ALROSA INC (OJSC)
Member of the Supervisory Board
LLC MC NefteTransServis
Chairman of the Board of Directors
PJSC Sovcomflot
Member of the Board
of Directors
Key competencies:
• Finance and audit
• Law and corporate governance
• Human resources
2015
—
2018
2015
—
2017
2015
—
2016
2016
—
Present
2017
—
Present
2018
—
Present
PJSC VTB Bank
Member of the Supervisory Board
JSC ROSGEO
Member of the Board of Directors
PJSC Moscow Exchange
Member of the Supervisory Board
Moscow School of Management SKOLKOVO
President
PJSC PhosAgro
Member of the Board of Directors
Member of the the Audit Committee
Member of the Remuneration and
Human Resources Committee
Medicina JSC
Chairman of the Board of Directors
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BOARD OF DIRECTORS
OF PJSC PHOSAGRO
continued
ROLET
XAVIER ROBERT
Title: Independent Director
Year of election: 2018
Equity interest / Stake of ordinary shares: no
Date of birth: 12 November 1959
Education:
KEDGE Business School (France)
MSc — Management Science, International Business
Columbia Business School (USA)
MBA, International Finance
The Institute for Higher National Defence
Studies (IHEDN) (France)
Post-graduate degree
Moscow State Institute of International Relations (Russia)
International Relations
John F. Kennedy School of Government at Harvard University (USA),
Executive Program
Leadership and Economic Development
BOKOVA
IRINA G.
Title: Independent Director
Year of election: 2018
Equity interest / Stake of ordinary shares: no
Date of birth: 12 July 1952
Education:
2000
—
2007
2007
—
2009
2009
—
2017
2011
—
Present
2013
—
2017
2014
—
2017
Lehman Brothers (New York and London)
Managing Director
Banque Lehman Brothers S.A. (France)
CEO
London Stock Exchange Group (LSEG)
CEO
Columbia University Business School
Member of the Board of Overseers
HM Treasury
Financial Services Trade and Investment Board
2014
—
2017
2017
—
2018
2017
—
Present
2018
—
Present
2018
—
02.2019
Bank of England
Governor’s Financial Services Forum
London Stock Exchange Group (LSEG)
CEO on garden leave
Department for International Trade
Committee of expert advisors
Shanghai Institute of Finance for the Real
Economy — SIFRE
Expert Advisor
Verseon
Non-executive director
The European Securities and Markets
Authority (ESMA)
Securities and Markets Stakeholder Group
2018
—
Present
PJSC PhosAgro
Member of the Board of Directors, Chairman
of the Risk Management Committee
Key competencies:
• Strategy
• Finance and audit
• Risk management
• Law and corporate governance
• Chemistry and mining engineering
154
1989
—
1989
1995
—
1997
1991
—
1992
2002
—
2005
2005
—
2009
University of Maryland School of Public Affairs
Ford Foundation Fellow on US Foreign Policy
Ministry of Foreign Affairs
of the Republic of Bulgaria
Secretary of the Council of Ministers
of Bulgaria for European Integration
Deputy Minister of Foreign Affairs
of the Republic of Bulgaria
Bulgaria’s First Secretary of State
for European Integration
National Assembly of the Republic
of Bulgaria
Member of the National Assembly
2009
—
2017
2018
—
Present
2018
—
Present
2018
—
Present
UNESCO
Director-General
Ban Ki-moon Centre for Global Citizens
Member of the Board of Directors
International Automobile Federation
Member of the Board of Directors
PJSC PhosAgro
Member of the Board of Directors
Member of the Remuneration and Human
Resources Committee
UNESCO
Ambassador of Bulgaria to France and Monaco and
Permanent Representative of Bulgaria
Key competencies:
• Environment, health and safety
• Human resources
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As of 31 December 2018
GURYEV
ANDREY A.
Date of birth: 7 March 1982
Equity interest / Stake of ordinary shares: no
Education:
The University of Greenwich in London
BA in Economics
2011
—
2013
2011
—
2013
2011
—
Present
2012
—
Present
2012
—
2014
2012
—
Present
2013
—
Present
2013
—
Present
CJSC PhosAgro AG
Deputy CEO for Sales and Logistics
(in addition to other duties)
OJSC PhosAgro
Deputy CEO
Moscow Rhythmic
Gymnastics Federation
President
Andrey Guryev Charitable Foundation
Chairman of the Management Board
JSCB Investment Trading Bank OJSC
Member of the Board of Directors
LLC PhosAgro-Region
Member of the Management Board
PJSC PhosAgro
Member of the Board of Directors
PJSC PhosAgro
CEO
Chairman of the Managment Board
Chairman of the Strategy Committee
Member of the Environmental, Health
and Safety Committee
Member of the Risk Management
Committee
Academy of National Economy under the Government
of the Russian Federation
Master’s degree; PhD in Economics
2014
—
2016
2014
—
Present
2015
—
Present
2015
—
Present
2016
—
Present
2016
—
Present
2016
—
Present
2016
—
Present
JSC PhosAgro-Cherepovets
Member of the Management Board
Russian Chess Federation
Member of the Board of Trustees
The Russian Olympians Foundation
Member of the Board of Trustees
of the Foundation
Member of the Board of the Foundation
Russian Union of Industrialists
and Entrepreneurs
Member of the Management Board
Russian Association of Fertilizer
Producers
President
Russian Rhythmic
Gymnastics Federation
Chairman of the Board of Trustees, Vice-President
International Fertilizer
Industry Association (IFA)
Member of the Board of Directors
Miners of Russia non-commercial
partnership
Deputy Chairman of the Supreme Mining Council
RYBNIKOV
MIKHAIL K.
LOIKOV
SIROJ A.
Date of birth: 30 November 1975
Date of birth: 9 September 1972
Equity interest / Stake of ordinary shares: 0.0258%
Equity interest / Stake of ordinary shares: no
Education:
Moscow State University
Master’s degree in Economics
Education:
Tashkent State
Economics University
International Economic
Relations
Nottingham Trent
University (UK)
Bachelor’s degree in Business
Management
2011
—
2013
2012
—
2015
2012
—
2017
2013
—
2013
2013
—
2013
2013
—
2016
2013
—
Present
2015
—
2017
2016
—
Present
2016
—
Present
2017
—
2018
2018
—
Present
2018
—
Present
LLC PhosAgro-Region
Member of the
Management Board
CJSC PhosAgro AG
CEO
Chairman of the Management Board
JSC PhosAgro-Cherepovets
CEO
OJSC Moscow Stock Exchange
Member of the Board of Directors
OJSC Apatit
Member of the Board of Directors
JSC PhosAgro-Cherepovets
Member of the Board of Directors
PJSC PhosAgro
Member of the Management Board
Chairman of the Environmental, Health and Safety
Committee, Member of the Strategy Committee,
Member of the Risk Management Committee
JSC PhosAgro-Cherepovets
Chairman of the Managment Board
PJSC PhosAgro
Member of the Board of Directors
LLC PhosAgro-Region
Member of the Management Board
JSC Apatit
CEO
Chairman of the Management Board
JSC Apatit
Member of the Management Board
JSC NIIUIF
Member of the Board of Directors
2011
—
2013
2013
—
2015
2013
—
2015
2013
—
Present
2013
—
2017
2014
—
2015
2015
—
2018
2015
—
2018
2015
—
2017
2017
—
2018
2017
—
2018
2017
—
2018
CJSC PhosAgro AG
Human Resources Director
OJSC PhosAgro
Human Resources Director
(along with other duties)
CJSC PhosAgro AG
Human Resources and Social
Policy Director
PJSC PhosAgro
Member of the Management Board
LLC Izumrud
Member of the Board of Directors
CJSC PhosAgro AG
Member of the Management Board
PJSC PhosAgro
Human Resources and Social Policy Director
(along with other duties)
LLC Korporativnoe pitanie (Corporate Nutrition)
Member of the Board of Directors
JSC PhosAgro-Cherepovets
Human Resources and Social Policy Director;
Member of the Management Board
LLC Tirvas
Member of the Board of Directors
JSC Apatit
Human Resources and Social
Policy Director
JSC Apatit
Member of the Management Board
2018
—
Present
PJSC PhosAgro
Deputy CEO
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continued
SHARABAIKO
ALEXANDER F.
Date of birth: 25 February 1977
Equity interest / Stake of ordinary shares: no
Education:
Belarusian State Economic University
Bachelor of Economics with honours
Nottingham University Business School
MBA in Finance
2015
—
Present
2017
—
2018
2017
—
Present
2017
—
Present
2018
—
Present
LLC PhosAgro-Region
Member of the Management Board
PJSC PhosAgro
Member of the Board
of Directors
JSC Apatit
Advisor to the CEO
JSC Apatit
Member of the Management Board
PJSC PhosAgro
Member of the Management Board
2012
—
2014
2013
—
2014
2013
—
2015
2013
—
2017
2014
—
2015
2014
—
Present
2015
—
2017
CJSC PhosAgro AG
Chief Financial Officer
OJSC PhosAgro
Chief Financial Officer
CJSC PhosAgro AG
Member of the Management Board
PJSC PhosAgro
Member of the Management Board
CJSC PhosAgro AG
Advisor to the CEO
PJSC PhosAgro
Chief Financial Officer
JSC PhosAgro-Cherepovets
Advisor to the CEO
Member of the Management Board
OSIPOV
ROMAN V.
Date of birth: 4 November 1971
Equity interest / Stake of ordinary shares: no
Education:
Baltic State Technical University
Master’s degree from the LETI-Lovanium International
School of Management.
2012
—
2015
2012
—
2013
2013
—
2013
2013
—
Present
2013
—
Present
2014
—
Present
10.2017
—
Present
2018
—
Present
PJSC PhosAgro
Member of the Board of Directors
CJSC PhosAgro AG
Member of the Management Board
OJSC PhosAgro
Member of the Management Board
PJSC PhosAgro
Business Development Director
JSC AgroGard-Finance
Member of the Board of Directors
JSC Giproruda
Member of the Board of Directors
PJSC PhosAgro
Member of the Management Board
JSC Apatit
Member of the Management Board
SIROTENKO
ALEXEI A.
Date of birth: 3 January 1969
Equity interest / Stake of ordinary shares: no
Education:
Moscow State University
Degree in jurisprudence
2007
—
2015
2010
—
Present
2011
—
2015
2013
—
Present
2015
—
2017
2017
—
Present
CJSC PhosAgro AG
Member of the Management Board
PJSC PhosAgro
Deputy CEO for Corporate and Legal
Affairs
(along with other duties)
CJSC PhosAgro AG
Legal Affairs Director
PJSC PhosAgro
Member of the Management Board
JSC PhosAgro-Cherepovets
Legal Affairs Director
Member of the Management Board
JSC Apatit
Legal Affairs Director
Member of the Management Board
2015
—
2018
2017
—
2018
2017
—
Present
2018
—
2018
2018
—
Present
2018
—
Present
2018
—
Present
LLC Gorniy tseh
Member of the Board of Directors
The Kirovsk branch of JSC Apatit
Executive director
JSC Hibinskаyа Teplovaya
Kompaniya
Member of the Board of Directors
PJSC PhosAgro
Deputy CEO and Chief of Staff for the
CEO
PJSC PhosAgro
Member of the Management Board
JSC NIUIF
Member of the Board of Directors
JSC Apatit
First Deputy CEO
Member of the Management Board
GILGENBERG
ALEXANDER A.
Date of birth: 6 December 1980
Equity interest / Stake of ordinary shares: no
Education:
The Vologda branch of the Moscow State Law Academy
Law degree
2006
—
2013
2013
—
2014
2014
—
2015
2014
—
2018
2014
—
2018
2014
—
2018
2015
—
2017
2015
—
2018
2015
—
2018
2015
—
2018
CJSC PhosAgro AG
Head of Legal
The Kirovsk branch
of CJSC PhosAgro AG
Head of Legal
The Kirovsk branch
of CJSC PhosAgro AG
Executive director
LLC Tirvas
Chairman of the Board of Directors
LLC Ecoprom
Member of the Board of Directors
LLC Teleset
Member of the Board of Directors
JSC PhosAgro-Cherepovets
Executive director
JSC Airport
Member of the Board of Directors
JSC Kanatnaya doroga (Cableway)
Member of the Board of Directors
LLC Tsentr Stroitelnikh Materialov
(Building Materials wholesale)
Member of the Board of Directors
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OF DIRECTORS
RISK MANAGEMENT COMMITTEE
AUDIT COMMITTEE
Сommittee members
Сommittee members
Xavier R. Rolet
Ivan Rodionov
Andrey A.Guryev
Mikhail Rybnikov
(since 30 May 2018)
Committee Chairman,
Independent Non-
executive Director of
the Board of Directors
(until 30 May 2018)
Committee Chairman,
Non-executive
Director of the Board
of Directors
Committee Member,
Executive Director
Committee Member,
Executive Director
Marcus Rhodes
Sven Ombudstvedt
James Rogers
Andrey Sharonov
Committee Chairman,
Independent Non-
executive Director of
the Board of Directors
Committee Member,
Independent Non-
executive Director of
the Board of Directors
Committee Member,
Independent Non-
executive Director of the
Board of Directors
Committee Member,
Independent Non-
executive Director of
the Board of Directors
Xavier R. Rolet
Committee Chairman
KEY AREAS
The Committee assists the Board
of Directors and other corporate
units in drafting recommendations
and proposals for identifying the
most significant risks, developing
management measures, as well as
improving the risk management
system.
ACTIVITIES IN 2018
Xavier R. Rolet became a member of
the Committee in 2018. His key areas of
responsibility include risk management,
strategy, finance and audit, law and corporate
governance, and chemistry and mining.
The Committee’s remit includes:
• assessment of the efficiency of the
Company’s risk management system
and drafting recommendations for its
improvement;
• preparation of risk management
methodologies, identification of the most
significant risks that require constant
monitoring and management;
• preparation of recommendations regarding
improvement of the risk management
system;
• risk appetite determination.
• Results of a reassessment of the
• Quarterly monitoring of the management
Company’s key risks and updating the
Company’s risk map;
• Assessment of the efficiency of the risk
management and internal control system.
of key corporate risks.
In 2019, the Committee is planning to pay
more attention to the Company’s risk appetite
analysis and deviations. The format of
quarterly reports will be adapted to reflect
this updated approach.
In 2018, the Risk Management Committee
held four meetings. The main issues
considered by the Committee in 2018 were:
• Results of the monitoring of the
management of key corporate risks
(quarterly);
Key issues to be considered by the Risk
Management Committee in 2019:
• Reassessment of the Company’s key risks
and updating the Company’s risk map;
• Assessment of the efficiency of the risk
management and internal control system;
Marcus Rhodes
Committee Chairman
KEY AREAS
The Audit Committee supervises the
Company’s financial and accounting
activities. It reviews and evaluates
the Company’s financial statements,
which are prepared by the Company
and audited by the Company’s external
auditor.
According to the Regulations on the
Company’s Audit Committee, the Audit
Committee shall consist of no fewer
than three current members of the
Board of Directors and shall be chaired
by an independent director.
The Committee’s remit includes:
• reviewing the IFRS financials for integrity
and transparency;
• analysis of financial reporting processes,
including carrying out regular reviews and
making recommendations for the Board of
Directors;
• recommending the Company’s external
auditor to the Board of Directors and
maintaining an ongoing relationship with
the external auditor;
• analysis and support of the internal audit
system and risk management procedures,
including drafting recommendations for
their improvement.
ACTIVITIES IN 2018
During the reporting period, the Audit Committee
held five meetings, where matters covering all
priority areas of the Company’s activity were
considered.
performance based on IFRS consolidated
financial statements, including reasons for
changes as compared with the results of
previous periods;
In 2018, the Audit Committe focused on the
following issues, among others:
• Establishing targets for the 2019 consolidated
budget and monitoring the budget planning
process;
• Distribution of quarterly press releases on
the Company’s performance for investors;
• Analysis of the Company’s compliance with
Russian and European legislation on the
protection and use of insider information;
• Assessing the Company’s internal
• Analysis of the implementation of the 2018
oversight and internal audit system;
budget;
• Analysis of the Company’s financial
• Further improving the quality of
the financial accounting and report
preparation process;
• Developing a 2019 performance plan for
the Company’s Internal Audit Department
and monitoring the implementation
of the 2018 plan, as well as assessing
the performance of the Internal Audit
Department and monitoring the
implementation of recommendations.
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COMMITTEES OF THE BOARD
OF DIRECTORS
continued
STRATEGY COMMITTEE
REMUNERATION AND HUMAN RESOURCES COMMITTEE
Committee members
Committee members
Andrey A. Guryev
Andrey G. Guryev
Mikhail K. Rybnikov
Sven Ombudstvedt
Committee Chairman,
Executive Director
Committee Member,
Non-executive Director
Committee Member,
Executive Director
(since 30 May 2015)
Committee Member,
Independent Director
James Rogers
Andrey Sharonov
Irina Bokova
Sven Ombudstvedt
Marcus Rhodes
Committee
Chairman,
Independent
Non-executive
Director
(since 20 November
2018)
Committee Member,
Independent Non-
executive Director
(since 20 November
2018)
Committee Member,
Independent Non-
executive Director
(until 20 November
2018)
Committee Member,
Independent Non-
executive Director
(until 20 November
2018)
Committee Member,
Independent Non-
executive Director
Andrey A. Guryev
Committee Chairman
KEY AREAS
The Strategy Committee assists the
Board of Directors in the development
of the Company’s strategy and related
processes, including management
of the Company’s assets and review
of major innovation and investment
programmes and projects. The
Committee and its Chairman are
appointed by the Board of Directors,
which ensures a comprehensive
discussion and analysis of issues
within the Committee’s remit and
considers a variety of opinions.
ACTIVITIES IN 2018
Following the Board of Directors’ self-
assessment in 2018, Sven Ombudsvedt
became a member of the Committee. His
key areas of responsibility include strategy,
finance and audit, and chemisty and mining.
In 2018, the Strategy Committee held one
meeting, where the following issues were
considered:
• Implementation status of the approved
Corporate Development Strategy;
• A strategy for the development of fertilizer
production, an assessment of the
The Committee’s remit includes:
• monitoring and updating the Company’s
mid-term and long-term strategy, and
drafting policy as required;
• evaluating the development of the
Company’s subsidiaries, including
reviewing their strategies;
• making recommendations regarding
the Company’s M&A projects;
• analysis and recommendations regarding
potential strategic partnerships.
Company’s economic efficiency, and the
outlook to 2025 in terms of the expansion
of output;
• Key indicators and sales development
models;
• Key areas of logistics development;
• Future projects (assessment of prospects,
preliminary calculation of the efficiency
of new products);
• Key investment projects in 2019.
In 2018, the Committee worked on creation of
the Corporate Development Strategy to 2025,
which is aimed at further strengthening of
the Company’s leading position in the global
phosphate-based fertilizer industry.
James Rogers
Committee Chairman
KEY AREAS
The Regulations on the Remuneration
and Human Resources Committee
require that the Committee Chairman
be an Independent Non-executive
Director on the Company’s Board of
Directors, and that the Chief Executive
Officer cannot be a member of the
Committee.
The Committee’s remit includes:
• development of the Company’s policy
in relation to organising the activities and
incentivisation of the Board of Directors;
• development of the Human Resources
Policy in relation to the Company’s senior
management, and supervision of its
implementation.
ACTIVITIES IN 2018
Andrey Sharonov and Irina Bokova
(independent directors) became members
of the Committee in 2018. Both have the
relevant experience.
Mr Sharonov’s key areas of responsibility
include finance and audit, law and corporate
governance, and HR management, while Ms
Bokova’s key areas of responsibility include
HR management and environment, health
and safety.
During the reporting period, the Remuneration
and Human Resources Committee held four
meetings. The main issues considered by the
Committee in 2018 were:
• Assessment of the professional skills and
independence of all candidates for the
Board of Directors;
• Assessment of the performance of the
Company’s executive bodies and senior
executives in 2017 in accordance with
the criteria described in the Company’s
Remuneration Policy, as well as a
preliminary assessment of the goals
achieved by the above-mentioned
executives in line with the Company’s
incentivisation programme;
• Results of the implementation of social
programmes in 2017 and the key social
policy areas in 2018;
• Analysis of Board members’ involvement
in Board activities in accordance with
the Regulations on the Company’s
Remuneration and Human Resources
Committee and the guidelines established
by the Corporate Governance Code;
• Assessment of the Corporate Secretary’s
performance;
• Results of the employment satisfaction
survey conducted at PhosAgro and
other Group companies, as well as an
analysis of the results and the drafting of
recommendations;
• Recommending that the Board of Directors
approve the methodology and schedule for
the Board’s performance self-assessment
in 2018.
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COMMITTEES OF THE BOARD
OF DIRECTORS
continued
ENVIRONMENTAL, HEALTH
AND SAFETY COMMITTEE
Mikhail Rybnikov
Committee Chairman
KEY AREAS
The Environmental, Health and Safety
Committee was formed to oversee the
Company’s activities in the areas of
environmental protection, the efficient
use of natural resources and energy,
and occupational health and safety for
employees, including the avoidance of
industrial accidents, and to advise the
Board of Directors on such issues.
The Committee and its Chairman are
appointed by the Board of Directors.
Committee members
Mikhail Rybnikov
Andrey A. Guryev
Natalia Pashkevich
Sven Ombudstvedt
Committee Chairman,
Executive Director
Committee Member,
Executive Director
(since 30 May 2018)
Committee Member,
Independent Non-executive
Director
(until 30 May 2018)
Committee Member,
Independent Non-
executive Director
The Committee’s remit includes:
• the Company’s compliance with legal
and regulatory requirements relating to
environmental and health and safety
issues;
• the prevention of industrial accidents,
including plans, programmes and
processes established by the Company
to evaluate, manage and decrease risks
of industrial accidents;
• the Company’s development and
• the improvement of conditions related
to the health and safety of the Company’s
employees, and the enforcement of
policies for decreasing and eliminating
occupational injuries.
enforcement of policies, procedures and
practices beneficial to the protection of the
environment and the health and safety of
employees, contractors, customers and
the public;
• the evaluation of the Company’s efficient
use of natural resources and energy,
enforcement of energy-saving and resource
conservation activities within the Company,
and providing recommendations for further
implementation and improvement of these
activities;
ACTIVITIES IN 2018
Natalia Pashkevich became a member
of the Committee in 2018. Her knowledge
and experienced enabled the Committee to
conduct an assessment of the environmental
technology used by the Company, taking
into account the latest scientific and
technological advancements, including those
developed by the Saint Petersburg Mining
University.
During the reporting period, the
Environmental, Health and Safety Committee
held two meetings, where the following
issues were covered:
• Key results of work aimed at compliance
with the regulatory occupational health
and safety requirements for the operation
of production facilities at the Company’s
subsidiaries as well as benchmark results;
• Key results of work aimed at environmental
The Committee monitored the
implementation of environmental mitigation
plans by the management of PhosAgro
Group companies.
safety compliance at the Company’s
subsidiaries;
• Factor analysis of changes in payment for
any negative impact on the environment;
• Review of changes to Russian
environmental protection legislation
and analysis of possible effects for the
Company’s subsidiaries;
• Analysis and assessment of the key
aspects of measures taken by PhosAgro
Group companies to improve energy
efficiency.
In 2018, the Committee focused on analysing
the Company’s adverse impact on the
environment in comparison with that of other
companies, as well as a comparison with the
expected adverse environmental impact if the
best available technologies were used.
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Share capital
PhosAgro’s authorised capital as of 31
December 2018 is RUB 323,750,000,
consisting of 129,500,000 ordinary shares
with a par value of RUB 2.5 per share.
Stock exchanges
PhosAgro’s shares are traded on the A1
quotation list of the Moscow Exchange under
the symbol PHOR (ISIN: RU000A0JRKT8).
Global depositary receipts (three GDRs
represent one share) are traded in the Main
Analyst coverage
PhosAgro is covered by analysts from
leading Russian and international brokers:
Company
Aton
Analyst
Andrey Lobazov
Phone
+7 (495) 213 0337
BCS Investment Bank
Oleg Petropavlovskiy
+7 (495) 785 5336
BMO
Credit Suisse
Gazprombank
Goldman Sachs
Morgan Stanley
Deutsche Bank
Raiffeisen
Sberbank CIB
VTB Capital
Uralsib
BAML
Alfa Bank
Joel Jackson
+1 (416) 359 4250
Semyon Mironov
+7 (495) 662 8510
Matvey Taits
Nina Dergunova
Muneeba Kayani
Denis Gabrielik
+7 (495) 983 1800
+7 (495) 645 4230
+971 (4) 709 7117
+971 (4) 428 3870
Konstantin Yuminov
+7 (495) 221 9842
Irina Lapshina
Elena Sakhnova
Denis Vorchik
+7 (495) 258 0511
+7 (495) 663 4682
+7 (495) 788 0888
Stephanie Bothwell
+44 (20) 799 50371
Boris Krasnojenov
+7 (495) 795 3612
Market of the London Stock Exchange under
the symbol PHOR.
Common code: 065008939 SEDOL:
0B5N6Z48
RIC: GBB5N6Z48.L
Regulation S GDRS
CUSIP number: 71922G209 ISIN:
US71922G2093
Common code: 065008939 SEDOL:
0B62QPJ1
RIC: PHOSq.L
Rule 144A GDRS
CUSIP number: 71922G100 ISIN:
US71922G1004
Citigroup Global Markets Deutschland AG
acts as the depositary for the Company’s
GDR Programme.
SHARE/GDR PERFORMANCE
LONDON STOCK EXCHANGE
20
Closing price, USD
15
15.60
10
12.75
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
1.5
Volume, mln
1.0
0.5
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
MOSCOW EXCHANGE
3
Share price, USD
2,5
2,510
2
2,546
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
200
Volume, ths USD
150
100
50
0
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
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SHARES AND DIVIDENDS
continued
Ownership structure
Based on information available to the
Company, the shares of Chlodwig Enterprises
Limited and Adorabella Limited are held in
trusts where the economic beneficiaries are
Mr Andrey Guryev and members of his family.
As of 29 December 2018, there were no
shareholders in the Company with a stake of
more than 5% beyond those already disclosed
by the Company (in the table above).
The Company does not have any information
about the possibility of acquisition or the
actual acquisition by certain shareholders of
a degree of control disproportionate to their
participation in the Company’s authorised
capital, including on the basis of shareholder
agreements or because of the availability of
ordinary and preferred shares with different
nominal values.
Number of shares
Share, %
Adorabella Limited
27,385,162
Chlodwig Enterprises Limited
29,151,400
Igor Antoshin1
5,941,353
Vladimir Litvinenko
25,052,800
Evgenia Guryeva
6,235,960
Free float
Total:
35,733,325
129,500,000
Number of shareholders and other registered persons
in the Company’s register as of 29 December 2018
21.15%
22.51%
4.59%
19.35%
4.82%
27.59%
100%
10,792
Number of voting shares in the Company
129,500,000 shares
Shares held by the Company and its subsidiaries
no
1 Igor Antoshin’s stake in PhosAgro does not include ordinary shares in the Company that were transferred
by him under a repo deal.
payments. The refund of previously withheld
tax on income paid to foreign organisations
in respect of which the Russian Federation’s
international treaties regulating taxation
matters or for which a specific article
provides for a special taxation regulation
shall be performed by the tax authority at the
place of registration of the tax agent within
three years from the end of the tax period in
which the income was paid.
Dividends
PhosAgro’s dividend policy calls for a target
payout ratio of 30–50% of consolidated
IFRS net profit, and the Board of Directors
considers recommendations of a dividend
payment on a quarterly basis.
DIVIDENDS ACCRUED
IN 2018 WERE PAID
IN FULL
On 19 March 2019, PhosAgro’s Board of
Directors recommended a final 2018 dividend
of RUB 51 per share (RUB 17 per depositary
receipt), or RUB 6.6 billion in total. If approved
by the Annual General Shareholders' Meeting
(AGM) on 24 May 2019, this will bring
PhosAgro’s payout ratio to 60% of net profit,
demonstrating our commitment to the
Company’s dividend policy and to upholding
the promises made to shareholders during
the IPO and SPO.
In 2018, PhosAgro acted as a tax agent
when it paid out dividends to the accounts
of organisations that own shares as listed
in the Russian share register. The Company
calculated and withheld tax on those
dividends and remitted the amount of tax to
the relevant authorities. Dividends paid out
to shareholders were net of the amount of
the tax deducted. The withholding tax rate
depends on the status of the shareholder,
in accordance with the information that the
shareholder provides. PhosAgro also took
into account any double taxation treaties
and, where appropriate, made tax payments
in accordance with the provisions of the
relevant treaty.
Due to changes in Russian Federation
law related to the payment of dividends
that came into effect on 1 January 2015,
existing or potential PhosAgro shareholders
and holders of the Company’s GDRs are
advised to consult their tax advisors for
tax implications with regard to dividend
Reporting period for which (following
the results of which) the declared
dividends are (were) paid
Declared dividends,
total, RUB
Declared dividends per
ordinary share,
RUB
depositary receipt,
RUB
9,324,000,000
5,827,500,000
3,108,000,000
1,942,500,000
2,719,500,000
3,108,000,000
2,719,500,000
3,885,000,000
5,050,500,000
4,273,500,000
8,158,500,000
7,381,500,000
8,158,500,000
7,381,500,000
6,216,000,000
1,942,500,000
2,590,000,000
3,237,500,000
2,499,350,000
72.00
45.00
24.00
15.00
21.00
24.00
21.00
30.00
39.00
33.00
63.00
57.00
63.00
57.00
48.00
15.00
20.00
25.00
19.30
24.00
15.00
8.00
5.00
7.00
8.00
7.00
10.00
13.00
11.00
21.00
19.00
21.00
19.00
16.00
5.00
6.67
8.33
6.43
DIVIDEND PAYMENTS
Type and date of the General
Shareholders' Meeting where
the relevant resolution on the
declaration of dividends was
adopted
EGSM 22 January 2019
EGSM 1 October 2018
EGSM 6 July 2018
AGSM 30 May 2018
EGSM 26 February 2018
EGSM 2 October 2017
EGSM 5 July 2017
– *
– *
– *
– *
– *
– *
– *
AGSM 30 May 2017
2016
EGSM 16 January 2017
EGSM 3 October 2016
EGSM 29 July 2016
– *
– *
– *
AGSM 31 May 2016
2015
EGSM 15 January 2016
EGSM 6 October 2015
EGSM 14 July 2015
– *
– *
– *
AGSM 8 June 2015
2014
EGSM 31 December 2014
9 M 2014
EGSM 16 September 2014
6 M 2014
AGSM 13 June 2014
– *
* Payments were made from undistributed profit for previous years.
Information disclosure
PhosAgro strictly follows the requirements
imposed by Russian securities regulations, as
well as rules for the companies traded on the
LSE, in its information disclosure and filings.
The Company publicly discloses all required
information to shareholders and investors in a
timely manner through authorised newswires;
the corporate website, www.phosagro.ru,
http://www.phosagro.ru/ori/item4157.php
and http://www.e-disclosure.ru/portal/
company.aspx?id=573 (PhosAgro’s official
disclosure page on the Interfax portal).
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STATEMENT
THE COMPANY’S MANAGEMENT HEREBY CONFIRMS
THAT, TO THE BEST OF ITS KNOWLEDGE:
The financial statements prepared in
accordance with International Financial
Reporting Standards as issued by the
International Accounting Standards Board
give a true and fair view of the assets,
liabilities, financial position and profit or loss
of the Company and the undertakings included
in the consolidation taken as a whole.
The management report includes a fair review
of the development and performance of the
business and the position of the Company and
the undertakings included in the consolidation
taken as a whole, together with a description
of the principal risks and uncertainties that
they face.
The Company was guided by GRI
standards, as well as the principles of
the ISO 26000 and AA 1000 standards
during the preparation of the intregrated
report.
A draft of this integrated report was
reviewed and pre-approved at a Board
of Directors meeting on 19 March 2019.
It was also reviewed and pre-approved
at the Annual General Shareholders'
Meeting on 24 May 2019.
THE CONSOLIDATED
FINANCIAL STATEMENTS FOR
THE YEAR ENDED
31 DECEMBER 2018 WERE
APPROVED BY THE BOARD OF
DIRECTORS ON 19 MARCH 2019
06
FINANCIAL
STATEMENTS
Independent Auditors’ Report
193
14. Income tax expense
172
175
176
177
178
Consolidated Statement of Profit
or Loss and Other Comprehensive
Income
Consolidated Statement
of Financial Position
Consolidated Statement of Cash
Flows
Consolidated Statement of Changes
in Equity
Notes to the Consolidated
Financial Statements
179
1. Background
179
2. Basis of preparation
182
3. Significant accounting policies
188
4. Determination of fair values
189
5. Prior year adjustments
and reclassifications
190
6. Segment information
191
7. Revenues
191
8. Personnel costs
191
9. Cost of sales
193
15. Property, plant and equipment
194
16. Investments in associates
195
17. Deferred tax assets and liabilities
197
18. Other non-current assets
197
19. Other current investments
197
20. Inventories
198
21. Trade and other receivables
198
22. Cash and cash equivalents
198
23. Equity
199
24. Earnings per share
200
25. Loans and borrowings
201
26. Defined benefit obligations
202
27. Leases
202
28. Trade and other payables
203
29. Financial risk management
206
30. Commitments
207
31. Contingencies
207
32. Related party transactions
Andrey A. Guryev
Chairman of the Management Board and Chief
Executive Officer of PJSC PhosAgro
170
171
192
10. Administrative expenses
209
33. Significant subsidiaries
192
11. Selling expenses
192
12. Other expenses, net
192
13. Finance income and finance
costs
209
34. Seasonality
About PhosAgroPhosAgro Integrated Report 2018 phosagro.comStrategic ReportBusiness ReviewFinancial ReportAdditional InformationSustainability ReportCorporate Governance
FINANCIAL STATEMENTS
INDEPENDENT
AUDITORS’ REPORT
Opinion
We have audited the consolidated financial
statements of PJSC “PhosAgro” (the
“Company”) and its subsidiaries (the “Group”),
which comprise the consolidated statement
of financial position as at 31 December 2018,
the consolidated statements of profit or loss
and other comprehensive income, changes
in equity and cash flows for the year then
ended, and notes, comprising significant
accounting policies and other explanatory
information.
In our opinion, the accompanying
consolidated financial statements
present fairly, in all material respects, the
consolidated financial position of the Group
as at 31 December 2018, and its consolidated
financial performance and its consolidated
cash flows for the year then ended in
accordance with International Financial
Reporting Standards (IFRS).
Basis for Opinion
We conducted our audit in accordance
with International Standards on Auditing
(ISAs). Our responsibilities under those
standards are further described in the
Auditors’ Responsibilities for the Audit of the
Consolidated Financial Statements section
of our report. We are independent of the
Group in accordance with the independence
requirements that are relevant to our audit of
the consolidated financial statements in the
Russian Federation and with the International
Ethics Standards Board for Accountants’
Code of Ethics for Professional Accountants
(IESBA Code), and we have fulfilled our other
ethical responsibilities in accordance with
the requirements in the Russian Federation
and the IESBA Code. We believe that the audit
evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
VALUATION OF DEFERRED TAX ASSETS
The key audit matter
How the matter was addressed in our audit
The Group has recognised significant deferred tax
assets in respect of tax losses.
Our audit procedures included the following:
The recovery of the deferred tax assets depends
on achieving sufficient taxable profits in the future.
We analysed the underlying methodology and tested
the mathematical accuracy of the taxable profits
forecast model used to estimate the likelihood
of the recovery of deferred tax assets.
Future taxable profits to be used for utilisation of
tax losses accumulated by the Company mainly
represent interest income to be received by
the Company on the loans issued to the Group
subsidiaries less expenses of the Company.
The assessment of the potential to utilise the tax
losses is dependent on the forecast profitability of
the Group subsidiaries, the amount of dividends to
be distributed to the Company, expected foreign
currency exchange and interest rates for loans.
We evaluated the appropriateness of management’s
key assumptions and estimates, in particular the
likelihood of generating sufficient future taxable
profits to support the recognition of deferred tax
assets, in reference to performance trends and
dividend capacity of the Group subsidiaries.
We corroborated expected interest rates for loans
to be issued and financing to be received by the
Company to publicly available market benchmarks.
There is inherent uncertainty involved in forecasting
timing and quantum of future taxable profits,
which support the extent to which tax assets are
recognised. Therefore, this is the key judgmental area
our audit is concentrated on.
Using KPMG tax specialist, we considered the
appropriateness of the application of relevant tax
legislation by the Group, in relation to the utilisation
of tax losses.
Audited entity: PJSC “PhosAgro”
Registration No. in the Unified State Register of Legal
Registration No. in the Unified State Register of Legal
Entities 1027700125628.
Entities 1027700190572.
Moscow, Russia
Member of the Self-regulated organization of auditors
“Russian Union of auditors” (Association). The Principal
Independent auditor: JSC “KPMG”, a company incorporated
Registration Number of the Entry in the Register of
under the Laws of the Russian Federation, a member
firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG
International”), a Swiss entity.
Auditors and Audit Organisations: No. 11603053203.
Key Audit Matters
Key audit matters are those matters that,
in our professional judgment, were of most
significance in our audit of the consolidated
financial statements of the current period.
These matters were addressed in the context
of our audit of the consolidated financial
statements as a whole, and in forming our
opinion thereon, and we do not provide a
separate opinion on these matters.
Other Information
Management is responsible for the other
information. The other information comprises
the information included in the Annual
Report but does not include the consolidated
financial statements and our auditors’ report
thereon. The Annual Report is expected to
be made available to us after the date of this
auditors’ report.
Our opinion on the consolidated financial
statements does not cover the other
information and we will not express any form
of assurance conclusion thereon.
In connection with our audit of the
consolidated financial statements, our
responsibility is to read the other information
identified above when it becomes available
and, in doing so, consider whether the other
information is materially inconsistent with
the consolidated financial statements or our
knowledge obtained in the audit, or otherwise
appears to be materially misstated.
Responsibilities of Management and
Those Charged with Governance for the
Consolidated Financial Statements
Management is responsible for the
preparation and fair presentation of the
consolidated financial statements in
accordance with IFRS, and for such internal
control as management determines is
necessary to enable the preparation of
consolidated financial statements that are
free from material misstatement, whether
due to fraud or error.
In preparing the consolidated financial
statements, management is responsible for
assessing the Group’s ability to continue as
a going concern, disclosing, as applicable,
matters related to going concern and using
the going concern basis of accounting unless
management either intends to liquidate the
Group or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are
responsible for overseeing the Group’s
financial reporting process.
Auditors’ Responsibilities for the Audit
of the Consolidated Financial Statements
Our objectives are to obtain reasonable
assurance about whether the consolidated
financial statements as a whole are free
from material misstatement, whether due
to fraud or error, and to issue an auditors’
report that includes our opinion. Reasonable
assurance is a high level of assurance, but
is not a guarantee that an audit conducted
in accordance with ISAs will always detect
a material misstatement when it exists.
Misstatements can arise from fraud or error
and are considered material if, individually
or in the aggregate, they could reasonably
be expected to influence the economic
decisions of users taken on the basis of
these consolidated financial statements.
As part of an audit in accordance with ISAs,
we exercise professional judgment and
maintain professional scepticism throughout
the audit. We also:
• Identify and assess the risks of material
misstatement of the consolidated financial
statements, whether due to fraud or error,
design and perform audit procedures
responsive to those risks, and obtain audit
evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk
of not detecting a material misstatement
resulting from fraud is higher than for one
resulting from error, as fraud may involve
collusion, forgery, intentional omissions,
misrepresentations, or the override of
internal control;
• obtain an understanding of internal control
relevant to the audit in order to design
audit procedures that are appropriate in the
circumstances, but not for the purpose of
expressing an opinion on the effectiveness
of the Group’s internal control;
• evaluate the appropriateness of accounting
policies used and the reasonableness
of accounting estimates and related
disclosures made by management;
• conclude on the appropriateness of
management’s use of the going concern
basis of accounting and, based on the
audit evidence obtained, whether a material
uncertainty exists related to events or
conditions that may cast significant
doubt on the Group’s ability to continue
as a going concern. If we conclude that a
material uncertainty exists, we are required
to draw attention in our auditors’ report to
the related disclosures in the consolidated
financial statements or, if such disclosures
are inadequate, to modify our opinion.
Our conclusions are based on the audit
evidence obtained up to the date of our
auditors’ report. However, future events or
conditions may cause the Group to cease
to continue as a going concern;
• evaluate the overall presentation, structure
and content of the consolidated financial
statements, including the disclosures,
and whether the consolidated financial
statements represent the underlying
transactions and events in a manner that
achieves fair presentation;
• obtain sufficient appropriate audit evidence
regarding the financial information of
the entities or business activities within
the Group to express an opinion on the
consolidated financial statements. We are
responsible for the direction, supervision
and performance of the group audit. We
remain solely responsible for our audit
opinion.
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We communicate with those charged with
governance regarding, among other matters,
the planned scope and timing of the audit
and significant audit findings, including any
significant deficiencies in internal control that
we identify during our audit.
We also provide those charged with
governance with a statement that we have
complied with relevant ethical requirements
regarding independence, and communicate
with them all relationships and other matters
that may reasonably be thought to bear on
our independence, and where applicable,
related safeguards.
From the matters communicated with those
charged with governance, we determine
those matters that were of most significance
in the audit of the consolidated financial
statements of the current period and are
therefore the key audit matters. We describe
these matters in our auditors’ report unless
law or regulation precludes public disclosure
about the matter or when, in extremely rare
circumstances, we determine that a matter
should not be communicated in our report
because the adverse consequences of
doing so would reasonably be expected to
outweigh the public interest benefits of such
communication.
The engagement partner on the audit
resulting in this independent auditors’
report is:
I.A. Yagnov
JSC “KPMG”
Moscow, Russia
19 March 2019
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME FOR 2018,
RUB mln
Revenues
Cost of sales
Gross profit
Administrative expenses
Selling expenses
Taxes, other than income tax
Other expenses, net
Operating profit
Finance income
Finance costs
Foreign exchange (loss)/gain, net
Share of (loss)/profit of associates, net of provision
Profit before tax
Income tax expense
Profit for the year
Attributable to:
Non-controlling interests*
Shareholders of the Parent
Other comprehensive income/(loss)
Items that will never be reclassified to profit or loss
Note
7
9
10
11
12
13
13
29(b)
16
14
2018
233,430
(123,964)
109,466
(14,864)
(34,410)
(3,469)
(2,726)
53,997
447
(6,098)
(19,613)
(623)
28,110
(5,975)
22,135
66
22,069
2017
181,351
(101,817)
79,534
(14,018)
(25,201)
(2,679)
(1,647)
35,989
615
(6,990)
4,141
287
34,042
(8,711)
25,331
(2)
25,333
Actuarial gains and losses
26
(170)
(342)
Items that may be reclassified subsequently to profit or loss
Foreign currency translation difference
Other comprehensive income/(loss) for the year
Total comprehensive income for the year
Attributable to:
Non-controlling interests*
Shareholders of the Parent
Basic and diluted earnings per share (in RUB)
24
* Non-controlling interests are the minority shareholders of the subsidiaries of PJSC “PhosAgro”
The consolidated financial statements were approved
on 19 March 2019:
2,872
3,042
25,177
66
25,111
170
(377)
(719)
24,612
(2)
24,614
196
A.A. Guryev
Chief executive officer
A.F. Sharabaiko
Chief financial officer
174
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continued
CONSOLIDATED STATEMENT OF FINANCIAL
POSITION AS AT 31 DECEMBER 2018,
RUB mln
Assets
Property, plant and equipment
Catalysts
Advances issued for property, plant and equipment
Intangible assets
Investments in associates
Deferred tax assets
Other non-current assets
Non-current assets
Other current investments
Inventories
Trade and other receivables
Cash and cash equivalents
Current assets
Total assets
Equity
Share capital
Share premium
Retained earnings
Other reserves
Equity attributable to shareholders of the Parent
Equity attributable to non-controlling interests
Total equity
Liabilities
Loans and borrowings
Finance lease liabilities
Defined benefit obligations
Deferred tax liabilities
Non-current liabilities
Loans and borrowings
Finance lease liabilities
Trade and other payables
Derivative financial liabilities
Current liabilities
Total equity and liabilities
176
Note
31 December 2018
31 December 2017
Note
2018
2017
CONSOLIDATED STATEMENT
OF CASH FLOWS FOR 2018,
RUB mln
15
16
17
18
19
20
21
22
23
25
27(a)
26
17
25
27(a)
28
186,231
175,113
2,414
6,759
1,786
506
8,995
1,843
208,534
313
31,870
36,186
9,320
77,689
286,223
372
7,494
93,951
7,809
109,626
195
109,821
122,877
376
630
9,023
132,906
20,679
718
21,473
626
43,496
286,223
1,900
2,334
1,773
969
5,371
1,955
189,415
352
25,445
33,727
2,691
62,215
251,630
372
7,494
85,480
4,767
98,113
129
98,242
76,530
1,004
950
7,914
86,398
44,025
1,117
21,848
–
66,990
251,630
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation and amortisation
Loss on disposal of property, plant and equipment and intangible assets
Finance income
Finance costs
Share of profit of associates, net of provision
Foreign exchange loss/(gain), net
Operating profit before changes in working capital and provisions
Increase in inventories
Decrease/(increase) in trade and other receivables
Increase/(decrease) in trade and other payables
Cash flows from operations before income taxes and interest paid
Income tax paid
Finance costs paid
Cash flows from operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment and intangible assets
(Issue)/repayment of loans issued, net
Proceeds from disposal of property, plant and equipment
Finance income received
(Acquisition)/disposal of investments, net
Other payments
Cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings
Repayment of borrowings
Dividends paid to shareholders of the Parent
Dividends paid to non-controlling interests
Finance leases paid
Payments for settlement of derivatives
Other payments
Cash flows used in financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of exchange rates fluctuations
Cash and cash equivalents at 31 December
9, 10, 11
12
13
13
16
25
25
23
25
22
28,110
34,042
20,911
586
(447)
6,098
623
19,613
75,494
(5,438)
324
655
71,035
(6,146)
(5,210)
59,679
(38,416)
(257)
19
307
(8)
(814)
14,807
614
(615)
6,980
(287)
(4,371)
51,170
(6,917)
(1,240)
(134)
42,879
(8,326)
(4,558)
29,995
(35,918)
475
365
371
359
-
(39,169)
(34,348)
83,874
(83,572)
(13,598)
-
(1,285)
(22)
-
(14,603)
5,907
2,691
722
9,320
90,094
(74,245)
(14,763)
(5)
(1,365)
-
(22)
(306)
(4,659)
7,261
89
2,691
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continued
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY FOR 2018,
ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT
RUB mln
Balance at 1 January 2017
372
7,494
74,932
(384)
5,870
137
88,421
Share capital Share premium
Retained
earnings
Actuarial
gains and
losses
Foreign
currency
translation
reserve
Attributable to
non-controlling
interests
Total
Total comprehensive income for the year
Profit for the year
Actuarial gains and losses
Foreign currency translation difference
Transactions with owners recognised directly in equity
Dividends to shareholders of the Parent
Other
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25,333
–
–
25,333
(14 763)
(22)
(14 785)
–
(342)
–
(342)
–
–
–
–
–
(377)
(377)
–
–
–
Balance at 31 December 2017
372
7 494
85 480
(726)
5 493
(2)
–
–
(2)
(6)
–
(6)
129
25,331
(342)
(377)
24,612
(14 769)
(22)
(14 791)
98 242
Balance at 1 January 2018
372
7 494
85 480
(726)
5 493
129
98 242
Total comprehensive income for the year
Profit for the year
Actuarial gains and losses
Foreign currency translation difference
Transactions with owners recognised directly in equity
Dividends to shareholders of the Parent, note 23
–
–
–
–
–
–
–
–
–
–
–
–
22,069
–
–
22,069
(13,598)
(13,598)
–
170
–
170
–
–
–
–
2,872
2,872
–
–
66
–
–
66
–
–
22,135
170
2,872
25,177
(13,598)
(13,598)
Balance at 31 December 2018
372
7,494
93,951
(556)
8,365
195
109,821
NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS FOR 2018
1. BACKGROUND
(a) Organisation and operations
PJSC “PhosAgro” (the “Company” or the
“Parent”) and its subsidiaries (together
referred to as the “Group”) comprise Russian
legal entities and foreign trading subsidiaries.
The Company was registered in October
2001. The Company’s location is Leninsky
prospekt 55/1 building 1, Moscow, Russian
Federation, 119333.
The Group’s principal activity is production
of apatite concentrate and mineral fertilisers
at plants located in the cities of Kirovsk
(Murmansk region), Cherepovets (Vologda
region), Balakovo (Saratov region) and
Volkhov (Leningrad region), and their
distribution across the Russian Federation
and abroad.
Starting in 2014, the United States of
America, the European Union and some
other countries have imposed and expanded
economic sanctions against a number
of Russian individuals and legal entities.
The imposition of the sanctions has led to
increased economic uncertainty, including
more volatile equity markets, a depreciation
of the Russian rouble, a reduction in both
local and foreign direct investment inflows
and a significant tightening in the availability
of credit. As a result, some Russian entities
may experience difficulties accessing the
international equity and debt markets and
may become increasingly dependent on
state support for their operations. The
longer-term effects of the imposed and
possible additional sanctions are difficult to
determine.
The Company’s key shareholders are two
Cyprus entities holding approximately 20%
of the Company’s ordinary shares each.
The majority of the shares of the Company
are ultimately owned by trusts, where the
economic beneficiary is Mr. Andrey G. Guryev
and his family members.
The consolidated financial statements reflect
management’s assessment of the impact
of the Russian business environment on the
operations and the financial position of the
Group. The future business environment may
differ from management’s assessment.
(b) Russian business environment
The Group’s operations are primarily located
in the Russian Federation. Consequently,
the Group is exposed to the economic
and financial conditions of the Russian
Federation, which display characteristics
of an emerging market. The legal, tax
and regulatory frameworks continue
development, but are subject to varying
interpretations and frequent changes
which together with other legal and fiscal
impediments contribute to the challenges
faced by entities operating in the Russian
Federation.
2. BASIS OF PREPARATION
(a) Statement of compliance
These consolidated financial statements
have been prepared in accordance with
International Financial Reporting Standards
(“IFRS”) as issued by the International
Accounting Standards Board.
The Group additionally prepares IFRS
consolidated financial statements in the
Russian language in accordance with the
Federal Law No. 208-FZ On consolidated
financial reporting.
(b) Basis of measurement
The consolidated financial statements are
prepared on the historical cost basis except
that investments available-for-sale are stated
at fair value.
(c) Functional currency
The national currency of the Russian
Federation is the Russian Rouble (“RUB”),
which is the functional currency of the Parent
and its subsidiaries, except for foreign trading
subsidiaries, where the functional currency
is USD.
(d) Presentation currency
These consolidated financial statements are
presented in RUB. All financial information
presented in RUB has been rounded to the
nearest million, except per share amounts.
The translation from USD into RUB, where
applicable, was performed as follows:
• Assets and liabilities as at 31 December
2018 were translated at the closing
exchange rate of RUB 69.4706 for USD 1 (31
December 2017: RUB 57.6002 for USD 1);
• Profit and loss items were translated at the
average exchange rate for 2018 of RUB
62.7078 for USD 1 (for 2017: RUB 58.3529
for USD 1);
• Equity items arising during the year are
recognised at the exchange rate ruling at
the date of transaction;
• The resulting foreign exchange difference
is recognised in other comprehensive
income.
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FINANCIAL STATEMENTS
continued
The translation from EUR into RUB, where
applicable, was performed as follows:
• Assets and liabilities as at 31 December
2018 were translated at the closing
exchange rate of RUB 79.4605 for EUR 1
(31 December 2017: RUB 68.8668 for EUR
1);
• Profit and loss items were translated at the
average exchange rate for 2018 of RUB
73.9546 for EUR 1 (for 2017: RUB 65.9014
for EUR 1);
• Equity items arising during the year are
recognised at the exchange rate ruling at
the date of transaction;
• The resulting foreign exchange difference
is recognised in other comprehensive
income.
(e) Use of estimates and judgments
The preparation of consolidated financial
statements in conformity with IFRS requires
management to make judgments, estimates
and assumptions that affect the application
of accounting policies and the reported
amounts of assets, liabilities, income and
expenses. Actual results may differ from
those estimates.
Estimates and underlying assumptions are
reviewed on an ongoing basis. Revisions to
accounting estimates are recognised in the
period in which the estimates are revised and
in any future periods affected.
Information about critical assumptions and
estimation uncertainties that have the most
significant effect on the amounts recognised
in the consolidated financial statements is
included in the following notes:
• Note 3(c)(iv) – estimated useful lives of
fixed assets;
• Note 17 – recognition of deferred tax
assets: availability of future taxable profit
against which carry-forward tax losses can
be used.
(f) Adoption of new and revised standards
and interpretations
The Group has adopted new standards that
are mandatory for financial annual periods
beginning on 1 January 2018.
IFRS 9 Financial Instruments has replaced
IAS 39 Financial Instruments: Recognition
and Measurement. The standard provides
amended guidance on the classification,
recognition and measurement of financial
assets and liabilities. The major impact from
the transition relates to the classification
of financial assets and introduction of an
expected credit loss model which results in
the earlier recognition of credit losses and
is more forward looking than the previous
incurred loss model. The Group used an
exemption in IFRS 9, which allows not to
restate prior periods in the year of initial
application.
The Group estimated the expected credit
losses for the entire period of the financial
instruments, applying a simplified approach
to measuring expected credit losses for trade
receivables, which uses lifetime expected
loss allowance. In the terms of calculating the
expected credit loss, the Group considers the
credit rating for each counterparty, adjusted
with forward-looking factors specific to the
debtors, historical credit loss experience
and economic environment in which they
operate. As at 1 January 2018, there was no
effect on the Group’s consolidated financial
statements as a result of the implementation
of an expected credit loss model. As at 31
December 2018, the Group’s estimation of
the expected credit losses resulted in the
increase of the allowance for doubtful debts
for trade receivables by RUB 69 million (USD
1 million) compared to the historical credit
loss model required by IAS 39.
IFRS 15 Revenue from Contracts with
Customers has replaced IAS 11 Construction
Contracts and IAS 18 Revenues. The
standard outlines the principles an entity
must apply to measure and recognise
revenue. The Group applies IFRS 15 using the
cumulative effect method (without practical
simplifications). The effect of application
of new standard on the date of the initial
application (1 January 2018) is estimated to
be insignificant. Therefore, the information
reported for 2017 was not restated and
presented in the form in which it was
previously reported in accordance with IAS
18, IAS 11 and related clarifications.
The Group analysed the impact of the new
standard on the financial statements. As
a result, the Group determined that under
the terms of the majority supply mineral
fertilizers contracts Group undertakes to
provide delivery of goods and the related
delivery services after the transfer of
control over the goods to the buyer at the
loading port. According to IAS 18, the Group
recognised such services and charged the
full costs at the time of loading. According
to IFRS 15, these services are a separate
performance obligation, which revenue must
be recognised during the period of delivery as
revenue from logistics activities. The Group
recognizes revenue from these logistics
services at the time of delivery, due to the
fact that the potential difference is calculated
and recognised as insignificant.
The group also assessed the impact of the
new standard on the revenue disclosure. The
Group believes that the current disclosure
meets the requirements of the new standard.
The Group will continue to monitor the
impact of accounting for logistics services
as separate contractual obligations and will
make the necessary changes to accounting
policies in the future if the effect becomes
significant.
The effect of applying the new standard as at
and for the year ended 31 December 2018 to
various reporting items was insignificant.
Other new standards and interpretations to
standards set out below became effective 1
January 2018 and did not have any impact or
did not have a material impact on the Group’s
consolidated financial statements:
• Amendments to IFRS 10 and IAS 28
regarding the sale or contribution of assets
between an investor and its associate or
joint venture;
• Amendments to IFRS 2, Share-based
Payment;
• Amendments to IFRS 4, Applying IFRS
9 Financial instruments with IFRS 4,
Insurance contracts;
• IFRIC 22, Foreign Currency Transactions
and Advance Consideration;
• Amendments to IAS 40, Transfers of
Investment property.
The following table explains the original
measurement categories under IAS 39 and
the new measurement categories under
IFRS 9 for each class of the Group’s financial
assets and financial liabilities as at 1 January
2018:
RUB mln
Financial assets
Equity securities
Debt securities
Original classification
under IAS 39
New classification
under IFRS 9
Original carrying amount
under IAS 39
New carrying amount
under IFRS 9
Available-for-sale
Mandatorily at FVTPL
Held to maturity
Amortised cost
Long-term loans issued
Loans and receivables
Amortised cost
Other long-term assets
Loans and receivables
Amortised cost
Short-term loans issued
Loans and receivables
Amortised cost
Interest receivable
Loans and receivables
Amortised cost
Trade accounts receivable
Loans and receivables
Amortised cost
Receivables from employees
Loans and receivables
Amortised cost
Other receivables
Loans and receivables
Amortised cost
Cash and cash equivalents
Loans and receivables
Amortised cost
Total financial assets
Financial liabilities
Loans and borrowings
Other financial liabilities
Other financial liabilities
Finance lease liabilities
Other financial liabilities
Other financial liabilities
Trade and other payables
Other financial liabilities
Other financial liabilities
Total financial liabilities
755
21
426
753
314
38
14,971
26
818
2,691
20,813
(120,656)
(2,121)
(12,385)
(135,162)
755
21
426
753
314
38
14,971
26
818
2,691
20,813
(120,656)
(2,121)
(12,385)
(135,162)
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(g) New standards and interpretations not
yet adopted
The following standard is not yet effective
as at 31 December 2018, and have not been
applied in preparing these consolidated
financial statements:
IFRS 16 Leases has replaced IAS 17 Leases,
IFRIC 4 Determining whether an Arrangement
contains a Lease, SIC-15 Operating Leases
– Incentives and SIC-27 Evaluating the
Substance of Transactions Involving the
Legal Form of a Lease.
IFRS 16 introduces a single, on-balance sheet
lease accounting model for lessees. A lessee
recognises a right-of-use asset representing
its right to use the underlying asset and a
lease liability representing its obligation to
make lease payments. There are recognition
exemptions for short-term leases and leases
of low-value items. Lessor accounting
remains similar to the current standard —
i.e. lessors continue to classify leases as
finance or operating leases.
IFRS 16 is expected to have a material
impact on the Group’s financial statements in
the period of initial application.
The Group is required to adopt IFRS 16
Leases from 1 January 2019. The Group
has assessed the estimated impact that
initial application of IFRS 16 will have on
its consolidated financial statements, as
described below.
In respect of the leases in which the Group
is a lessee, new assets and liabilities will be
recognised for the Group’s operating leases
of land, buildings and other facilities (see
Note 27). The nature of expenses related to
those leases will now change because the
Group will recognise a depreciation charge
for right-of-use assets and interest expense
on lease liabilities.
Previously, the Group recognised operating
lease expense on a straight-line basis over
the term of the lease, and recognised assets
and liabilities only to the extent that there
was a timing difference between actual lease
payments and the expense recognised.
No significant impact is expected for the
Group’s finance leases.
Based on the information currently available,
the Group estimates that it will recognise
additional lease liabilities of RUB 1,800
million as at 1 January 2019. The Group does
not expect the adoption of IFRS 16 to impact
its ability to comply with the loan covenants.
3. SIGNIFICANT ACCOUNTING
POLICIES
The accounting policies set out below have
been applied consistently to all periods
presented in these consolidated financial
statements, except for the adoption of IFRS 9
and IFRS 15 from 1 January 2018.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the
Group. The Group controls an entity when it is
exposed to, or has rights to, variable returns
from its involvement with the entity and has
the ability to affect those returns through
its power over the entity. The financial
statements of subsidiaries are included in the
consolidated financial statements from the
date that control commences until the date
that control ceases. The accounting policies
of subsidiaries have been changed when
necessary to align them with the policies
adopted by the Group.
(ii) Loss of control
Upon the loss of control, the Group
derecognises the assets and liabilities of the
subsidiary, any non-controlling interests and
the other components of equity related to
the subsidiary. Any surplus or deficit arising
on the loss of control is recognised in profit
or loss. If the Group retains any interest in
the previous subsidiary, then such interest is
measured at fair value at the date that control
is lost. Subsequently it is accounted for as an
equity-accounted investee or as an available-
for-sale financial asset depending on the level
of influence retained.
(iii) Acquisitions and disposals of non-
controlling interests
Any difference between the consideration
paid to acquire a non-controlling interest, and
the carrying amount of that non-controlling
interest, is recognised in equity.
Any difference between the consideration
received from disposal of a portion of a
Group’s interest in the subsidiary and the
carrying amount of that portion, including
attributable goodwill, is recognised in equity.
(iv) Associates
Associates are those enterprises in which
the Group has significant influence, but not
control, over the financial and operating
policies. The consolidated financial
statements include the Group’s share of
the total recognised gains and losses of
associates on an equity accounted basis,
from the date that significant influence
effectively commences until the date that
significant influence effectively ceases. When
the Group’s share of losses exceeds the
Group’s interest in the associate, that interest
is reduced to nil and recognition of further
losses is discontinued except to the extent
that the Group has incurred obligations in
respect of the associate.
(v) Transactions eliminated on consolidation
Intra-group balances and transactions, and
any unrealised gains arising from intra-group
transactions, are eliminated in preparing the
consolidated financial statements. Unrealised
gains arising from transactions with
associates and jointly controlled enterprises
are eliminated to the extent of the Group’s
interest in the enterprise. Unrealised gains
resulting from transactions with associates
are eliminated against the investment in the
associate. Unrealised losses are eliminated in
the same way as unrealised gains except that
they are only eliminated to the extent that
there is no evidence of impairment.
Where an item of property, plant and
equipment comprises major components
having different useful lives, they are
accounted for as separate items of property,
plant and equipment.
(ii) Leased assets
Leases under which the Group assumes
substantially all the risks and rewards of
ownership are classified as finance leases.
Plant and equipment acquired by way of
finance lease is stated at an amount equal
to the lower of its fair value and the present
value of the minimum lease payments at
inception of the lease, less accumulated
depreciation and impairment losses.
(iii) Subsequent expenditure
Expenses in connection with ordinary
maintenance and repairs are recognised in
the statement of profit or loss as they are
incurred.
Expenses in connection with periodic
maintenance on property, plant and
equipment are recognised as assets and
depreciated on a straight-line basis over the
period until the next periodic maintenance,
provided the criteria for capitalizing such
items have been met.
Expenses incurred in connection with major
replacements and renewals that materially
extend the life of property, plant and
equipment are capitalised and depreciated on
a systematic basis.
(iv) Depreciation
Depreciation is charged to the profit or loss
on a straight-line basis over the estimated
useful lives of the individual assets.
Depreciation commences on the month
of acquisition or, in respect of internally
constructed assets, from the month when an
asset is completed and ready for use. Land is
not depreciated.
The estimated useful lives as determined
when adopting IFRS (1 January 2005) are as
follows:
Buildings
12 to 17 years
Plant and equipment
4 to 15 year
Fixtures and fittings
3 to 6 years
Tangible fixed assets acquired after the date
of adoption of IFRS, are depreciated over the
following useful lives:
Buildings
10 to 60 years
Plant and equipment
5 to 35 years
Fixtures and fittings
2 to 25 years
(b) Foreign currencies
Transactions in foreign currencies are
translated to the respective functional
currencies of the Group entities at the
exchange rate ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies at the
reporting date are translated to the functional
currency at the exchange rate ruling at that
date. Non-monetary assets and liabilities
denominated in foreign currencies that are
stated at historical cost are translated to
the functional currency at the exchange rate
ruling at the date of the transaction. Non-
monetary assets and liabilities denominated
in foreign currencies that are stated at fair
value are translated at the exchange rate
ruling at the dates the fair values were
determined. Foreign exchange differences
arising on translation are recognised in the
profit or loss.
(c) Property, plant and equipment
(i) Owned assets
Property, plant and equipment is stated at
cost less accumulated depreciation and
impairment losses. The cost of property,
plant and equipment at the date of transition
to IFRS was determined by reference to its
fair value at that date (“deemed cost”) as
determined by an independent appraiser.
Cost includes expenditure that is directly
attributable to the acquisition of the asset.
The cost of self-constructed assets includes
the cost of materials and direct labour, any
other costs directly attributable to bringing
the asset to a working condition for their
intended use, the costs of dismantling and
removing the items and restoring the site
on which they are located, and capitalised
borrowing costs. Purchased software that
is integral to the functionality of the related
equipment is capitalised as part of that
equipment.
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(d) Intangible assets
(i) Research and development
Expenditure on research activities,
undertaken with the prospect of gaining
new scientific or technical knowledge and
understanding, is recognised in the profit or
loss as an expense as incurred.
(e) Financial assets
Non-derivative financial instruments.
Non-derivative financial instruments
comprise investments in equity and debt
securities, trade and other receivables, cash
and cash equivalents, loans and borrowings,
and trade and other payables.
Expenditure on development activities,
whereby research findings are applied to
a plan or design for the production of new
or substantially improved products and
processes, is capitalised if the product or
process is technically and commercially
feasible and the Group has sufficient
resources to complete development. The
expenditure capitalised includes the cost of
materials, direct labour and an appropriate
proportion of overheads. Other development
expenditure is recognised in the profit or
loss as an expense as incurred. Capitalised
development expenditure is stated at
cost less accumulated amortisation and
impairment losses.
(ii) Other intangible assets
Other intangible assets acquired by the Group
are represented by Oracle software, which
has finite useful life and is stated at cost less
accumulated amortisation and impairment
losses.
(iii) Amortisation
Intangible assets, other than goodwill, are
amortised on a straight-line basis over their
estimated useful lives from the date the asset
is available for use. The estimated useful
lives are 3 – 10 years.
Non-derivative financial instruments are
recognised initially at fair value plus, for
instruments not at fair value through profit
or loss, any directly attributable transaction
costs.
From 1 January 2018, the Group financial
assets are classified in the following
measurement categories based on the on the
Group’s business model for managing the
financial assets and the contractual terms of
the cash flows: financial assets at amortised
cost; financial assets at fair value (either
through other comprehensive income or
profit or loss).
Financial assets at amortised cost.
Financial asset is measured at amortised
cost if it meets both of the following
conditions and is not designated as at fair
value through profit or loss (“FVTPL”):
• The asset is held within a business model
whose objective is to hold assets in order
to collect contractual cash flows;
• The contractual terms of the financial
asset give rise on specified dates to cash
flows that are solely payments of principal
and interest on the principal amount
outstanding.
The financial assets are measured at
amortised cost using the effective interest
method, less any impairment losses. Any
gains or losses arising from derecognition
are recognised directly in profit or loss.
Financial assets at fair value through other
comprehensive income (“FVOCI”).
Financial assets are classified and measured
at fair value through other comprehensive
income if they meet both of the following
conditions and are not designated as at
FVTPL:
• They are held within a business model
whose objective is achieved by both
collecting contractual cash flows and
selling financial assets;
• Their contractual terms give rise on
specified dates to cash flows that are
solely payments of principal and interest on
the principal amount outstanding.
These assets are subsequently measured
at fair value. Interest income calculated
using the effective interest method, foreign
exchange gains and losses and impairment
are recognised in profit or loss.
Financial assets at fair value through
profit or loss (“FVPL”).
Financial asset that do not meet the criteria
for amortised cost or FVOCI are measured at
fair value through profit or loss (“FVPL”).
(f) Inventories
Inventories are stated at the lower of cost
and net realisable value. Net realisable value
is the estimated selling price in the ordinary
course of business, less the estimated costs
of completion and selling expenses.
The cost of inventories is based on the
weighted average principle and includes
expenditure incurred in acquiring the
inventories and bringing them to their
existing location and condition. In the case
of manufactured inventories and work in
progress, cost includes an appropriate share
of overheads based on normal operating
capacity.
An impairment loss in respect of goodwill
is not reversed. In respect of other assets,
impairment losses recognised in prior periods
are assessed at each reporting date for any
indications that the loss has decreased or no
longer exists. An impairment loss is reversed
if there has been a change in the estimates
used to determine the recoverable amount.
An impairment loss is reversed only to the
extent that the asset’s carrying amount does
not exceed the carrying amount that would
have been determined, net of depreciation or
amortisation, if no impairment loss had been
recognised.
(g) Impairment
Financial assets
Previously under IAS 39 a financial asset not
carried at fair value through profit or loss was
assessed at each reporting date to determine
whether there was any objective evidence
that it was impaired. A financial asset was
impaired if objective evidence indicated that
a loss event had occurred after the initial
recognition of the asset, and that the loss
event had a negative effect on the estimated
future cash flows of that asset that can be
estimated reliably.
Objective evidence that financial assets were
impaired could include default or delinquency
by a debtor, restructuring of an amount due
to the Group on terms that the Group would
not consider otherwise, indications that a
debtor or issuer would enter bankruptcy,
the disappearance of an active market for a
security.
From 1 January 2018 an impairment loss
in respect of a financial asset measured at
amortised cost the Group has changed the
accounting policy for impairment losses of
financial assets held at amortised cost by
replacing incurred loss model with an ECL
model following the transition to IFRS 9.
Under IFRS 9, loss allowances are measured
on either of the following bases: 12-month
ECLs that result from default events that
are possible within the 12 months after the
reporting date; and lifetime ECLs that result
from all possible default events over the
expected life of a financial instrument.
For trade receivables the Group estimated
the expected credit losses for the entire
period, applying a simplified approach to
measuring expected credit losses, which
uses lifetime expected loss allowance. In the
terms of calculating the expected credit loss,
the Group considers the credit rating for each
counterparty, adjusted with forward-looking
factors specific to the debtors, historical
credit loss experience and economic
environment in which they operate.
If, in a subsequent period, the fair value of
an impaired financial assets increases and
the increase can be related objectively to an
event occurring after the impairment loss
was recognised in profit or loss, then the
impairment loss is reversed, with the amount
of the reversal recognised in profit or loss.
Non-financial assets
The carrying amounts of the Group’s non-
financial assets, other than inventories and
deferred tax assets, are reviewed at each
reporting date to determine whether there
is any indication of impairment. If any such
indication exists, then the asset’s recoverable
amount is estimated.
The recoverable amount of an asset or cash-
generating unit is the greater of its value in
use and its fair value less costs to sell. In
assessing value in use, the estimated future
cash flows are discounted to their present
value using a pre-tax discount rate that
reflects current market assessments of the
time value of money and the risks specific
to the asset. For the purpose of impairment
testing, assets are grouped together into
the smallest group of assets that generates
cash inflows from continuing use that are
largely independent of the cash inflows of
other assets or groups of assets (the “cash-
generating unit”).
An impairment loss is recognised if the
carrying amount of an asset or its cash-
generating unit exceeds its recoverable
amount. Impairment losses are recognised
in the profit or loss. Impairment losses
recognised in respect of cash-generating
units are allocated first to reduce the carrying
amount of any goodwill allocated to the
units, if any, and then to reduce the carrying
amount of the other assets in the unit (group
of units) on a pro rata basis.
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(h) Share capital
(i) Repurchase of share capital
When share capital recognised as equity is
repurchased, the amount of the consideration
paid, including directly attributable costs, is
deducted from equity.
When the benefits of a plan are improved,
the portion of the increased benefit relating
to past service by employees is recognised
immediately as an expense in the profit
or loss. To the extent the benefits vest
immediately, the expense is recognised
immediately in the profit or loss.
(ii) Dividends
Dividends are recognised as a liability in the
period in which they are declared.
(i) Financial liabilities
The Group financial liabilities comprise trade
and other payables, borrowings and bonds
and derivative financial instruments. The
Group financial liabilities are measured at
amortised cost, except for financial liabilities
at fair value through profit or loss. Such
liabilities include derivatives, other liabilities
held for trading, and liabilities that the Group
designates to be measured at fair value
through profit or loss.
The Group derecognises a financial liability
when its obligation specified in the contract
is discharged or cancelled or expires.
(j) Employee benefits
(i) Pension plans
The Group’s net obligation in respect of
defined benefit post-employment plans,
including pension plans, is calculated
separately for each plan by estimating the
amount of future benefit that employees
have earned in return for their service in the
current and prior periods. That benefit is
discounted to determine its present value,
and the fair value of any plan assets, if any,
is deducted. The discount rate is the yield at
the reporting date on government bonds that
have maturity dates approximating the terms
of the Group’s obligations. The calculation
is performed using the projected unit credit
method.
All actuarial gains and losses are recognised
in full as they arise in other comprehensive
income.
(ii) Long-term service benefits other than
pensions
The Group’s net obligation in respect of long-
term service benefits, other than pension
plans, is the amount of future benefits that
employees have earned in return for their
service in the current and prior periods. The
obligation is calculated using the projected
unit credit method and is discounted to
its present value and the fair value of any
related assets is deducted. The discount
rate is the yield at the reporting date on
government bonds that have maturity dates
approximating the terms of the Group’s
obligations. All actuarial gains and losses
are recognised in full as they arise in other
comprehensive income.
(iii) State pension fund
The Group makes contributions for the
benefit of employees to Russia’s State
pension fund. The contributions are
expensed as incurred.
(k) Provisions
A provision is recognised when the Group
has a legal or constructive obligation as
a result of a past event, and it is probable
that an outflow of economic benefits will be
required to settle the obligation. If the effect
is material, provisions are determined by
discounting the expected future cash flows
at a pre-tax rate that reflects current market
assessments of the time value of money and,
where appropriate, the risks specific to the
liability.
(l) Income tax
Income tax expense comprises current
and deferred tax. Income tax expense is
recognised in profit or loss except to the
extent that it relates to items recognised
in other comprehensive income, in which
case it is recognised in other comprehensive
income.
Current tax is the expected tax payable on
the taxable income for the year, using tax
rates enacted or substantively enacted at
the reporting date, and any adjustment to tax
payable in respect of previous years.
Deferred tax is recognised using the balance
sheet method, providing for temporary
differences between the carrying amounts
of assets and liabilities for financial reporting
purposes and the amounts used for taxation
purposes. Deferred tax is not recognised
for the following temporary differences:
the initial recognition of assets or liabilities
in a transaction that is not a business
combination and that affects neither
accounting nor taxable profit, and differences
relating to investments in subsidiaries to
the extent that it is probable that they will
not reverse in the foreseeable future. In
addition, deferred tax is not recognised for
taxable temporary differences arising on the
initial recognition of goodwill. Deferred tax is
measured at the tax rates that are expected
to be applied to the temporary differences
when they reverse, based on the laws that
have been enacted or substantively enacted
by the reporting date. Deferred tax assets
and liabilities are offset if there is a legally
enforceable right to offset current tax assets
and liabilities, and they relate to income taxes
levied by the same tax authority on the same
taxable entity, or on different tax entities, but
they intend to settle current tax liabilities and
assets on a net basis or their tax assets and
liabilities will be realised simultaneously.
A deferred tax asset is recognised to the
extent that it is probable that future taxable
profits will be available against which
temporary difference can be utilised. Deferred
tax assets are reviewed at each reporting
date and are reduced to the extent that it is
no longer probable that the related tax benefit
will be realised.
Revenue from the sale of goods is measured
at the fair value of the consideration received
or receivable, net of returns and allowances,
trade discounts and volume rebates. Revenue
is recognised when the significant risks and
rewards of ownership have been transferred
to the buyer, recovery of the consideration is
probable, the associated costs and possible
return of goods can be estimated reliably,
and there is no continuing management
involvement with the goods.
Transfers of risks and rewards vary
depending on the individual terms of the
contract of sale. Transfer may occur when
the product is dispatched from the Group
companies’ warehouses (mainly for domestic
dispatches) or upon loading the goods onto
the relevant carrier or upon the delivery to the
destination point defined by the customer.
Where the Group acts in the capacity of
an agent rather than as the principal in a
transaction, the revenue recognised is the net
amount of commission earned by the Group.
Revenue from services rendered is
recognised in the profit or loss in proportion
to the stage of completion of the transaction
at the reporting date. The stage of completion
is assessed by reference to surveys of work
performed.
(n) Finance income and costs
Finance income comprises interest income
on funds invested (including available-for-
sale financial assets), dividend income,
gains on the disposal of available-for-sale
financial assets and changes in the fair value
of financial assets at fair value through profit
or loss, and foreign currency gains. Interest
income is recognised as it accrues in profit
or loss, using the effective interest method.
Dividend income is recognised in profit or
loss on the date that the Group’s right to
receive payment is established.
Finance costs comprise interest expense
on borrowings, foreign currency losses,
changes in the fair value of financial assets
at fair value through profit or loss and
impairment losses recognised on financial
assets. Borrowing costs that are not directly
attributable to the acquisition, construction
or production of a qualifying asset are
recognised in profit or loss using the effective
interest method.
Foreign currency gains and losses are
reported on a net basis.
(m) Revenues
Revenue from contracts with customers is
recognised when control of the goods or
services is transferred to a customer. The
amount of revenue recognised reflects the
consideration the Group expects to receive
in exchange for goods or services, taking
into account any trade, volume and other
discounts. Advances received before the
control passes to a customer are recognised
as the contract liabilities. There are no
other contract liabilities. The amount of
consideration does not contain a significant
financial component as payment terms
for the majority of contracts are less than
one year. No information is provided about
remaining performance obligations as at the
reporting date that have an original expected
duration of one year or less, as allowed by
IFRS 15.
Contracts with customers for the supply of
goods use a variety of delivery terms. The
Group determined that under the terms
of the majority contracts for the supply of
mineral fertilizers the Group undertakes
to provide delivery and the related delivery
services after the transfer of control over
the goods to the buyer at the loading port.
Under IFRS 15, these services are a separate
performance obligation, which revenue must
be recognised during the period of delivery as
revenue from logistics activities. The Group
recognises revenue from these logistics
services at the time of delivery, due to the
fact that the potential difference is calculated
and recognised as insignificant.
In the revenue disclosure the sales of certain
product groups include the proceeds from
logistics services. Costs related to rendering
of logistics services are mainly represented
by transportation costs and included in the
selling expenses disclosure.
Previous accounting policy applied under IAS
18 until 31 December 2017.
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(o) Overburden removal expenditure
In open pit apatite rock mining operations,
it is necessary to remove the overburden
and other waste in order to access the
economically recoverable resources.
Stripping costs incurred during the pre-
production phase of the open pit mine are
capitalised as the cost of the development of
the mining property and amortised over the
life of the mine.
According to the Group’s approach to
stripping, the ore, which becomes accessible
after the overburden removal, is extracted
within three months. Therefore, the stripping
ratio (volume of overburden removed over the
volume of resources extracted) is expected
to stay relatively constant over the future
periods and stripping costs incurred during
the production phase of the open pit mine are
recognised in the profit or loss as incurred.
(p) Other expenses
(i) Operating leases
Payments made under operating leases are
recognised in the profit or loss on a straight-
line basis over the term of the lease. Lease
incentives received are recognised in the
profit or loss as an integral part of the total
lease payments made.
(ii) Social expenditure
To the extent that the Group’s contributions
to social programs benefit the community
at large and are not restricted to the Group’s
employees, they are recognised in the profit
or loss as incurred.
(q) Earnings per share
The Group presents basic and diluted
earnings per share (“EPS”) data for its
ordinary shares. Basic EPS is calculated
by dividing the profit or loss attributable to
ordinary shareholders of the Company by the
weighted average number of ordinary shares
outstanding during the period, adjusted for
own shares held.
If the number of ordinary shares outstanding
increases/(decreases) as a result of a share
split/(reverse share split), the calculation of
the EPS for all periods presented is adjusted
retrospectively.
Diluted EPS is determined by adjusting
the profit or loss attributable to ordinary
shareholders and the weighted average
number of ordinary shares outstanding,
adjusted for own shares held, for the effects
of all dilutive potential ordinary shares,
which comprise convertible notes and share
options granted to employees.
(r) Segment reporting
An operating segment is a component of the
Group that engages in business activities
from which it may earn revenues and incur
expenses, including revenues and expenses
that relate to transactions with any of the
Group’s other components. All operating
segments’ operating results are reviewed
regularly by the CEO to make decisions about
resources to be allocated to the segment
and assess its performance, and for which
discrete financial information is available.
Segment results that are reported to the
CEO include items directly attributable to
a segment as well as those that can be
allocated on a reasonable basis. Unallocated
items comprise mainly corporate assets,
related head office expenses and Group’s
associates.
Segment capital expenditure is the total cost
incurred during the year to acquire property,
plant and equipment.
4. DETERMINATION OF FAIR VALUES
A number of the Group’s accounting policies
and disclosures require the determination of
fair value, for both financial and non-financial
assets and liabilities.
When measuring the fair value of an asset
or a liability, the Group uses market
observable data as far as possible. Fair
values are categorised into different levels
in a fair value hierarchy based on the inputs
used in the valuation techniques as follows:
• Level 1: quoted prices (unadjusted) in
active markets for identical assets or
liabilities.
• Level 2: inputs other than quoted prices
included in Level 1 that are observable for
the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from
prices).
• Level 3: inputs for the asset or liability that
are not based on observable market data
(unobservable inputs).
If the inputs used to measure the fair
value of an asset or a liability might be
categorised in different levels of the fair value
hierarchy, then the fair value measurement
is categorised in its entirety in the same
level of the fair value hierarchy as the lowest
level input that is significant to the entire
measurement.
The Group recognises transfers between
levels of the fair value hierarchy at the end of
the reporting period during which the change
has occurred.
Fair values have been determined for
measurement and / or disclosure purposes
based on the methods described in 4(a) to
4(с). When applicable, further information
about the assumptions made in determining
fair values is disclosed in the notes specific
to that asset or liability.
(a) Financial assets measured
at amortised cost
The fair values of financial assets carried
at amortised cost, which are mainly loans
issued and trade and other receivables,
approximate their carrying amounts as at the
reporting date.
(b) Financial instruments
measured at fair value
The fair values of derivative financial
assets and liabilities are determined using
inputs from observable market data and
are categorised as Level 2 of the fair value
hierarchy.
The fair values of derivative financial
liabilities, represented by put and call options
on oil (Brent) contracts, are based on broker
quotes. Similar contracts are traded in an
active market and the quotes reflect the
actual transactions in similar instruments.
RUB mln
Cost of sales
Selling expenses
Administrative expenses
Other expenses, net
Finance costs
RUB mln
Catalysts
Inventories
(c) Other financial liabilities
not measured at fair value
The fair values of other financial liabilities,
which are mainly loans and borrowings and
finance lease liabilities, are determined for
disclosure purposes and categorised as Level
3 of the fair value hierarchy. The fair values
are calculated based on the present value
of future principal and interest cash flows,
discounted at the market rate of interest at
the reporting date. For finance leases the
market rate of interest is determined by
reference to similar lease agreements.
5. PRIOR YEAR ADJUSTMENTS
AND RECLASSIFICATIONS
During the current period the Group made
a decision to make reclassifications to prior
year comparatives to be consistent with the
current year classifications, effecting the
following captions:
• cost of sales, administrative expenses,
selling expenses and other expenses,net;
• elements making revenue;
• elements making cost of sales;
• nventory, catalysts (as non-current assets),
trade and other payables;
• segment information.
As previously
presented
(101,429)
(24,466)
(14,662)
(2,136)
(6,980)
As previously
presented
–
27,345
Reclassifications
(388)
(735)
644
489
(10)
2017
As adjusted
(101,817)
(25,201)
(14,018)
(1,647)
(6,990)
Reclassifications
As adjusted
31 December 2017
1,900
(1,900)
1,900
25,445
188
189
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continued
6. SEGMENT INFORMATION
The Group has two reportable segments,
as described below, which are the Group’s
strategic business units. The strategic
business units offer different products,
and are managed separately because they
require different technology and marketing
strategies. The following summary describes
the operations in each of the Group’s
reportable segments:
• Phosphate-based products segment
includes mainly production and distribution
of ammophos, diammoniumphosphate,
sodium tripolyphosphate and other
phosphate based and complex (NPK)
fertilisers on the factories located in
RUB mln
Segment revenue and profitability
Segment external revenues, thereof:
Export
Domestic
Cost of goods sold
Gross segment profit
Certain items of profit or loss
Amortisation and depreciation
Total non-current segment assets1
Additions to non-current assets1
Cherepovets, Balakovo and Volkhov, and
production and distribution of apatite
concentrate extracted from the apatite-
nepheline ore, which is mined and
processed in Kirovsk;
Information regarding the results of each
reportable segment is included below.
Performance is measured based on gross
profit, as included in internal management
reports that are reviewed by the Group’s CEO.
• Nitrogen-based products segment includes
mainly production and distribution of
ammonia, ammonium nitrate and urea on
the factory located in Cherepovets.
Segment information as at 31 December
2018 and for the year then ended is as
follows:
Certain assets, revenue and expenses are not
allocated to any particular segment and are,
therefore, included in the “other operations”
column. None of these operations meet any
of the quantitative thresholds for determining
reportable segments.
Phosphate-based
products
Nitrogen-based
products
Other
operations
Total
186,971
132,098
54,873
(98,962)
88,009
(14,304)
124,418
25,618
37,011
30,178
6,833
(16,431)
20,580
(5,883)
60,748
5,890
9,448
903
8,545
(8,571)
877
(724)
5,265
843
233,430
163,179
70,251
(123,964)
109,466
(20,911)
190,431
32,351
Segment information of the Group as at 31 December
2017 and for the year then ended is as follows:
RUB mln
Segment revenue and profitability
Segment external revenues, thereof:
Export
Domestic
Cost of goods sold
Gross segment profit
Certain items of profit or loss
Amortisation and depreciation
Total non-current segment assets1
Additions to non-current assets1
Phosphate-based
products
Nitrogen-based
products
Other
operations
Total
151,519
103,648
47,872
(81,135)
70,384
(10,227)
108,711
26,928
22,495
16,983
5,512
(13,641)
8,854
(4,192)
66,081
8,955
7,337
262
7,074
(7,041)
296
(388)
3,994
613
181,351
120,893
60,458
(101,817)
79,534
(14,807)
178,786
36,496
The analysis of export revenue by regions is as follows:
RUB mln
Europe
South America
North America
India
CIS
Africa
Asia
Australia
7. REVENUES
RUB mln
Phosphate-based products
Sales of chemical fertilisers
Sales of apatite concentrate
Sales of other phosphate-based products and services
Sales of nepheline concentrate
Nitrogen-based products
Other
8. PERSONNEL COSTS
RUB mln
Cost of sales
Administrative expenses
Selling expenses
9. COST OF SALES
RUB mln
Materials and services
Depreciation
Salaries and social contributions
Natural gas
Sulphur and sulphuric acid
Potash
Chemical fertilisers and other products for resale
Electricity
Ammonia
Fuel
Ammonium sulphate
Heating energy
2018
57,308
43,684
27,589
11,890
11,557
7,895
3,250
6
2017
44,511
28,537
12,082
7,087
17,287
7,058
4,320
11
163,179
120,893
2018
186,971
155,733
22,098
8,326
814
37,011
9,448
233,430
2018
(12,209)
(8,271)
(1,888)
(22,368)
2018
(36,493)
(18,936)
(12,209)
(12,096)
(10,682)
(10,238)
(6,287)
(5,474)
(4,195)
(3,775)
(3,015)
(564)
2017
151,519
123,227
21,158
6,453
681
22,495
7,337
181,351
2017
(11,265)
(7,875)
(1,466)
(20,606)
2017
(30,869)
(13,242)
(11,265)
(9,154)
(6,120)
(8,279)
(4,932)
(5,451)
(6,287)
(3,264)
(2,287)
(667)
190
1 Total non-current segment assets include property, plant and equipment, intangible assets and catalysts.
(123,964)
(101,817)
191
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continued
10. ADMINISTRATIVE EXPENSES
RUB mln
Salaries and social contributions
Professional services
Depreciation and amortisation
Other
11. SELLING EXPENSES
RUB mln
Freight, port and stevedoring expenses
Russian Railways infrastructure tariff and operators’ fees
Materials and services
Salaries and social contributions
Custom duties
Depreciation
12. OTHER EXPENSES, NET
RUB mln
Social expenditures
Loss on disposal of property, plant and equipment and intangible assets
Increase in provision for bad debt
(Increase)/decrease in provision for inventory obsolescence
Reversal of accrual/(accrual) of contingent liabilities
Other income, net
13. FINANCE INCOME AND FINANCE COSTS
RUB mln
Interest income
Unwind of discount of financial assets
Dividend income
Other finance income
Finance income
Interest expense
Provision for bad debt on financial investments (note 18)
Bank fees
Other finance costs
Finance costs
Net finance costs
192
2018
(8,271)
(1,792)
(1,242)
(3,559)
(14,864)
2018
(17,344)
(10,383)
(2,671)
(1,888)
(1,391)
(733)
(34,410)
2018
(1,903)
(586)
(452)
(88)
35
268
(2,726)
2018
230
67
–
150
447
(4,666)
(566)
(156)
(710)
(6,098)
(5,651)
2017
(7,875)
(1,970)
(943)
(3,230)
(14,018)
2017
(11,065)
(9,218)
(1,966)
(1,466)
(864)
(622)
(25,201)
2017
(1,649)
(614)
(164)
85
(38)
733
(1,647)
2017
254
89
4
268
615
(4,347)
(2,243)
(355)
(45)
(6,990)
(6,375)
14. INCOME TAX EXPENSE
The Company’s applicable corporate income tax rate is 20% (2017: 20%).
RUB mln
Current tax expense
Origination and reversal of temporary differences,
including change in unrecognised assets
RECONCILIATION OF EFFECTIVE TAX RATE,
RUB mln
Profit before tax
Income tax at applicable tax rate
(Under)/over provided in respect of prior years
Unrecognised tax (asset)/liability on (loss)/profit from associates
Non-deductible items
Change in unrecognised deferred tax assets
Effect of tax rates in foreign jurisdictions
Reduction in tax rate
Recognition of previously unrecognised deferred tax liabilities
15. PROPERTY, PLANT AND EQUIPMENT
2018
(8,487)
2,512
(5,975)
2017
(5,803)
(2,908)
(8,711)
2018
100%
28,110
2017
34,042
100%
(5,622)
(20%)
(6,808)
(20%)
(3)
(125)
–
_
29
57
–
_
(1,434)
(5%)
(1,361)
(4%)
17
39
1,153
–
–
–
4%
–
13
38
144
(823)
–
–
–
(2%)
(5,975)
(21%)
(8,711)
(26%)
RUB mln
Cost
At 1 January 2017
Additions
Transfers
Disposals
At 1 January 2018
Additions
Transfers
Disposals
Other movements
At 31 December 2018
Accumulated depreciation
At 1 January 2017
Depreciation charge
Disposals
At 1 January 2018
Depreciation charge
Disposals
Other movements
At 31 December 2018
Land
and buildings
Plant and
equipment
Fixtures
and fittings
Construction
in progress
Total
44,879
1,391
21,379
(474)
67,175
2,286
6,835
(138)
94
84,169
2,774
42,248
(2,168)
127,023
3,903
13,425
(1,335)
1,632
8,297
2,874
–
(93)
11,078
2,363
–
(129)
12
76,323
29,457
(63,627)
(295)
41,858
23,309
(20,260)
(305)
–
213,668
36,496
–
(3,030)
247,134
31,861
–
(1,907)
1,738
76,252
144,648
13,324
44,602
278,826
(9,637)
(3,155)
357
(12,435)
(4,582)
74
(6)
(44,172)
(10,718)
1,614
(53,276)
(14,813)
1,234
(707)
(5,146)
(1,250)
86
(6,310)
(1,863)
96
(7)
(16,949)
(67,562)
(8,084)
–
–
–
–
–
–
–
–
(58,955)
(15,123)
2,057
(72,021)
(21,258)
1,404
(720)
(92,595)
193
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continued
RUB mln
Land
and buildings
Plant and
equipment
Fixtures
and fittings
Construction
in progress
Net book value at 1 January 2017
Net book value at 1 January 2018
Net book value at 31 December 2018
35,242
54,740
59,303
39,997
73,747
77,086
3,151
4,768
5,240
76,323
41,858
44,602
Total
154,713
175,113
186,231
During 2018, the Group capitalised borrowing
costs in the amount of RUB 836 million
(2017: RUB 652 million) in the value of
property, plant and equipment using the
weighted average interest rate of 3% per
annum.
• Development programme of production
facilities for sulphuric acid in the amount
of RUB 2,795 million;
• The construction of ammonium sulphate
plant in the amount of RUB 2,679 million;
• Development programme of production
As at 31 December 2018, the balance of the
construction in progress account includes
the accumulated costs related to.
In Cherepovets:
• Maintenance programme of ammonia
production facilities in the amount of RUB
3,099 million;
facilities for extraction of phosphoric acid
and fertilizers in the amount of RUB 2,419
million;
• Modernization of production facilities
for urea plant in the amount of RUB 976
million;
• The construction of service infrastructure
of ammonia plant in the amount of RUB
299 million.
In Kirovsk:
• Kirovsk mine extension and modernization
in the amount of RUB 10,962 million;
• The development of Rasvumchorrskiy
mine in the amount of RUB 7,067 million;
• The construction of apatit-nepheline
beneficiation plant in the amount of RUB
5,329 million;
• The construction of transporter
of Koashvinskiy quarry in the amount
of RUB of 2,821 million.
(a) Leasing
Plant and equipment with the carrying value
of RUB 4,496 million (31 December 2017:
RUB 5,422 million) is leased under various
finance lease agreements, see note 27(a).
16. INVESTMENTS IN ASSOCIATES
The movement in the balance of investments
in associates is as follows:
RUB mln
Balance at 1 January
Share in profit for the period
Provision for investments in associates
Foreign currency translation difference
Balance at 31 December
Carrying values of the Group’s investments
in associates are as follows:
RUB mln
JSC Khibinskaya Teplovaya Kompaniya
LLC PhosAgro-Ukraine
JSC Giproruda
JSC Soligalichskiy izvestkovyi kombinat
2018
969
99
(722)
160
506
2017
816
287
–
(134)
969
31 December 2018
31 December 2017
421
–
61
24
506
398
488
25
58
969
Summary financial information
for associates is as follows:
RUB mln
JSC Khibinskaya Teplovaya Kompaniya
LLC PhosAgro-Ukraine
JSC Giproruda
JSC Soligalichskiy izvestkovyi kombinat
RUB mln
JSC Khibinskaya Teplovaya Kompaniya
LLC PhosAgro-Ukraine
JSC Giproruda
JSC Soligalichskiy izvestkovyi kombinat
17. DEFERRED TAX ASSETS
AND LIABILITIES
(a) Recognised deferred tax assets
and liabilities
Deferred tax assets and liabilities are
attributable to the following items:
RUB mln
Property, plant and equipment
Other long-term assets
Current assets
Liabilities
Tax loss carry-forwards
Unrecognised deferred tax assets
Tax assets/(liabilities)
Set off of tax
Net tax assets/(liabilities)
Total
assets
1,876
–
146
526
2,548
Total
assets
2,128
2,611
132
425
5,296
Total
liabilities
(1,075)
–
(24)
(294)
Net
assets
801
–
122
232
(1,393)
1,155
Total
liabilities
(1,384)
(1,170)
(23)
(196)
(2,773)
Net
assets
744
1,441
109
229
2,523
Revenue
705
3,549
54
497
4,805
Revenue
751
13,996
99
500
15,346
2018
(Loss)/profit
for the year
48
181
9
11
249
2017
(Loss)/profit
for the year
23
777
(16)
5
789
Assets
Liabilities
102
17
1,067
748
8,482
(40)
10,376
(1,381)
8,995
(9,869)
(44)
(488)
(3)
–
–
(10,404)
1,381
(9,023)
2018
Net
(9,767)
(27)
579
745
8,482
(40)
(28)
–
(28)
Assets
Liabilities
2017
Net
78
6
469
947
5,486
(23)
6,963
(1,592)
5,371
(8,893)
(8,815)
(28)
(549)
(36)
–
–
(9,506)
1,592
(7,914)
(22)
(80)
911
5,486
(23)
(2,543)
–
(2,543)
194
195
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continued
The deferred tax assets on tax loss carry-
forwards relate to the Russian entities. Due
to recent amendments to the Russian tax
legislation, starting from 1 January 2017,
tax losses for Russian tax purposes carried
forward existing as at 31 December 2018
do not expire.
Management has developed a tax
strategy to utilise the tax losses above.
In assessing the recoverability of the tax
losses, management considers a forecast
of future taxable profits of the Company
(the “forecast”) and the Group’s tax position.
The forecast is reviewed at each reporting
date to ensure that the related tax benefit
will be realised. Future taxable profits are
expected to be generated from an excess
of interest income on loans, to be issued
by the Company to the Group subsidiaries,
over expenses of the Company. When
developing the forecast, management has
evaluated profitability and dividend capacity
of the Group subsidiaries, and considered
expected rates of interest for loans and
expected foreign currency rates.
As at 31 December 2018, no deferred tax
liability for taxable temporary differences of
RUB 52,016 million has been recognised (31
December 2017: RUB 48,502 million), either
because the Parent can control the timing
of reversal of the temporary differences and
it is probable that the temporary differences
will not reverse in the foreseeable future, or
because the applicable tax rate is expected
to be 0%.
(b) Movement in temporary differences
during the year
RUB mln
Property, plant and equipment
Other long-term assets
Current assets
Liabilities
Tax loss carry-forwards
Unrecognised deferred tax assets
Net tax (liabilities)/assets
RUB mln
Property, plant and equipment
Other long-term assets
Current assets
Liabilities
Tax loss carry-forwards
Unrecognised deferred tax assets
Net tax assets
31 December 2018
Recognised
in profit or loss
Recognised in other
comprehensive income
1 January 2018
(9,767)
(27)
579
745
8,482
(40)
(28)
(951)
(5)
655
(166)
2,996
(17)
2,512
(1)
–
4
–
–
–
3
(8,815)
(22)
(80)
911
5,486
(23)
(2,543)
31 December 2017
Recognised in other
comprehensive income
1 January 2018
1 января 2017
(8,815)
(22)
(80)
911
5,486
(23)
(2,543)
(3,154)
(8)
(414)
(149)
804
13
(2,908)
–
–
–
(145)
–
–
(145)
(5,661)
(14)
334
1,205
4,682
(36)
510
196
18. OTHER NON-CURRENT ASSETS
RUB mln
Loans issued to third parties, at amortised cost
Financial assets, at fair value
Loans issued to employees, at amortised cost
Financial assets, at amortised cost
Loans issued to related parties, at amortised cost
Loans issued to associates, at amortised cost
Provision for loans issued to third parties
Other long-term assets
19. OTHER CURRENT INVESTMENTS
RUB mln
Loans issued to related parties, at amortised cost
Interest receivable
Loans issued to employees, at amortised cost
Loans issued to third parties, at amortised cost
Investments in debt securities, at amortised cost
Loans issued to associates, at amortised cost
Provision for doubtful accounts
20. INVENTORIES
RUB mln
Raw materials and spare parts
Finished goods:
Chemical fertilisers
Other products
Apatite concentrate
Work-in-progress:
Chemical fertilisers and other products
Chemical fertilisers for resale, purchased from the third parties
Other goods for resale
Provision for obsolescence
31 December 2018
31 December 2017
779
724
88
28
–
–
(571)
795
1,843
232
755
77
21
97
20
–
753
1,955
31 December 2018
31 December 2017
117
88
52
35
32
13
(24)
313
213
42
35
43
–
23
(4)
352
31 December 2018
31 December 2017
12,500
12,982
651
327
3,782
1,729
83
(184)
31,870
9,812
9,363
1,260
200
3,543
1,279
84
(96)
25,445
197
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continued
21. TRADE AND OTHER
RECEIVABLES
RUB mln
Trade accounts receivable
VAT and other taxes receivable
Advances issued
Income tax receivable
Deferred expenses
Receivables from employees
Other receivables
Provision for doubtful accounts
The movements in provision for doubtful
accounts are as follows:
RUB mln
Balance at 1 January
Foreign currency translation difference
Written off provision through trade receivables
Increase in provision for bad debt
Balance at 31 December
See note 29(c) for the analysis of overdue trade
accounts receivable.
22. CASH AND CASH EQUIVALENTS
RUB mln
Cash in bank
Call deposits
Petty cash
23. EQUITY
(a) Share capital
Number of shares unless otherwise stated
Shares on issue at 31 December 2018, RUB 2.5 par value
Shares authorised for additional issue at 31 December 2018, RUB 2.5 par value
Shares on issue at 31 December 2017, RUB 2.5 par value
Shares authorised for additional issue at 31 December 2017, RUB 2.5 par value
31 December 2018
31 December 2017
20,379
8,973
5,716
533
159
11
1,033
(618)
36,186
2018
(536)
(16)
380
(446)
(618)
15,507
10,306
4,662
2,734
210
26
818
(536)
33,727
2017
(499)
17
110
(164)
(536)
31 December 2018
31 December 2017
5,126
4,188
6
9,320
2,459
227
5
2,691
Ordinary shares
129,500,000
994,977,080
129,500,000
994,977,080
(b) Dividend policy
The Company expects to distribute cash
dividends in the future and expects the
amount of such dividends to be between 30
and 50 per cent of the Group’s consolidated
profit calculated in accordance with IFRS
attributable to shareholders of PJSC
“PhosAgro”, adjusted by unrealised foreign
exchange gain/(loss).
Whether the Company will pay dividends
and the timing and exact amount of such
dividends will be subject to the approval of
the recommendation made by the Board
of Directors at the General Shareholders’
Meeting and will depend on a variety of
factors, including the Company’s earnings,
cash requirements, financial condition and
other factors deemed relevant by the Board
of Directors in making their recommendation
to the General Shareholders’ Meeting.
(c) Dividends
In accordance with Russian legislation the
Company’s distributable reserves are limited
to the balance of accumulated retained
earnings as recorded in the Company’s
statutory financial statements prepared
in accordance with Russian Accounting
Principles. As at 31 December 2018, the
Company had cumulative retained earnings
of RUB 35,076 million (31 December 2017:
RUB 32,102 million).
Proposed by the Board
of Directors in
Approved
by shareholders in
Amount per share,
RUB
Amount of dividends,
RUB mln
Total dividends approved during the reporting period
November 2017
March 2018
May 2018
August 2018
February 2018
May 2018
July 2018
October 2018
Total dividends approved subsequent to the reporting date
November 2018
March 2019
January 2019
To be approved in May 2019
21
15
24
45
72
51
2,720
1,942
3,108
5,828
13,598
9,324
6,605
15,929
24. EARNINGS PER SHARE
Basic earnings per share are calculated
based on the weighted average number of
ordinary shares outstanding during the year.
Basic and diluted earnings per share are the
same, as there is no effect of dilution.
Weighted average number of ordinary shares in issue
Profit for the year attributable to shareholders of the Parent, RUB million
Basic and diluted earnings per share, RUB
2018
2017
129,500,000
129,500,000
22,069
170
25,333
196
198
199
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FINANCIAL STATEMENTS
continued
25. LOANS AND BORROWINGS
This note provides information about the
contractual terms of the Group’s loans and
borrowings. For more information about
the finance leases, see note 27(a). For more
information about the Group’s exposure to
foreign currency risk, interest rate risk and
liquidity risk, see note 29.
RUB mln
Current loans and borrowings
Unsecured bank loans
Interest payable
Unsecured loans from other companies
Loan participation notes1
Bank commission (short-term)
Non-current loans and borrowings
Loan participation notes2,3
Unsecured bank loans
Unsecured letters of credit issued by banks
Bank commission (long-term)
The breakdown of the loans and borrowings
denominated in different currencies is as follows:
RUB mln
USD-denominated
EUR-denominated
RUB-denominated
The maturity of the loans and borrowings is as follows
Less than 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than 5 years
Reconciliation of liabilities arising
from financing activities:
RUB mln
31 December 2018
31 December 2017
19,934
733
20
–
(8)
20,679
69,471
53,570
–
(164)
122,877
143,556
14,266
946
13
28,800
–
44,025
28,800
46,577
1,254
(101)
76,530
120,555
31 December 2018
31 December 2017
123,152
18,531
2,045
143,728
20,687
19,623
46,326
5,665
38,380
13,047
100,874
6,356
13,426
120,656
44,025
9,483
16,291
31,844
5,064
13,949
143,728
120,656
31 December 2017
Cash inflows Cash outflows
Amortisation
of bank commision
Foreign
exchange loss
31 December 2018
Loans and borrowings
(excluding interest payable)
Finance lease liabilities
119,609
2,121
121,730
83,874
(83,572)
–
(1,285)
83,874
(84,857)
47
–
47
22,865
258
23,123
142,823
1,094
143,917
1 In February 2013, the Company’s SPV issued a USD 500 million 5-year Eurobond with a coupon rate of 4.204%, which is listed on the Irish Stock Exchange, with the fair value at the reporting date of
RUB nil million (31 December 2017: RUB 29,342 million). The redemption was financed by the Eurobond placed in January 2018.
2 In May 2017, the Company’s SPV issued a USD 500 million 4,5-year Eurobond with a coupon rate of 3.95%, which is listed on the Irish Stock Exchange, with the fair value at the reporting date of RUB
34,102 million (31 December 2017: RUB 29,258 million).
3 In January 2018 the Company’s SPV issued a USD 500 million 5,25-year Eurobond with a coupon rate of 3.949%, which is listed on the Irish Stock Exchange, with the fair value at the reporting date of
RUB 33,745 million.
200
Management believes that the fair value of the Group’s other loans and borrowings approximates their carrying amounts.
26. DEFINED BENEFIT OBLIGATIONS
RUB mln
Pension obligations, long-term
Post-retirement obligations other than pensions
The Group has defined benefit plans at JSC
“Apatit”, Kirovsk Branch of JSC “Apatit” and
JSC “Metachem” which stipulate payment
of a lump sum allowance to employees who
have a specified period of service in these
companies upon their retirement. All defined
benefit plans are unfunded. The movement
in the present value of the defined benefit
obligations is as follows:
RUB mln
Defined benefit obligations at 1 January 2017
Benefits paid
Current service costs and interest
Past service costs
Actuarial loss in other comprehensive income
Defined benefit obligations at 1 January 2018
Benefits paid
Current service costs and interest
Past service costs
Actuarial gain in other comprehensive income
Defined benefit obligations at 31 December 2018
31 December 2018
31 December 2017
302
328
630
701
249
950
767
(81)
79
(12)
197
950
(102)
87
(135)
(170)
630
The key actuarial assumptions used in measurement
of the defined benefit obligations are as follows:
Discount rate
Future pension increases
31 December 2018
31 December 2016
8.8%
4.1%
7.7%
4.2%
201
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continued
27. LEASES
(a) Finance leases
JSC “PhosAgro-Trans”, a Group subsidiary,
has entered into several agreements to
lease 2,000 railway wagons in 2011–2014.
Other Group subsidiaries also have entered
into lease agreements in 2016 and 2017.
At the end of the lease term, the ownership
for the leased assets will be transferred to
the lessee.
RUB mln
Less than one year
Between one and five years
RUB mln
Less than one year
Between one and five years
Minimum lease
payments
Interest
766
392
1,158
Minimum lease
payments
1,247
1,059
2,306
48
16
64
Interest
130
55
185
2018
Principal
718
376
1,094
2017
Principal
1,117
1,004
2,121
(b) Operating leases
During 2017–2018, JSC “PhosAgro-Trans”,
a group subsidiary, entered into several
operating lease agreements to rent 1,200
railway wagons. Also Kirovsk branch of JSC
“Apatit”, a group subsidiary, has long-term
lease contracts for production facilities.
Operating leases for other companies
of the Group are mainly represented by
office leases.
The non-cancellable operating lease rentals
(excluding VAT) are payable as follows:
RUB mln
Less than one year
Between one and five years
28. TRADE AND OTHER PAYABLES
RUB mln
Trade accounts payable
incl. accounts payable for property, plant and equipment
and intangible assets
Advances received (contract liabilities)
Payables to employees
Taxes payable
Income tax payable
Accruals
Other payables
202
31 December 2018
31 December 2017
907
1,562
2,469
717
1,202
1,919
31 December 2018
31 December 2017
11,922
12,129
4,248
3,644
3,068
2,229
298
36
276
5,838
4,414
2,933
2,014
109
51
198
21,473
21,848
29. FINANCIAL RISK MANAGEMENT
(a) Verview
In the normal course of its operations, the
Group has exposure to market, credit and
liquidity risks.
This note presents information about the
Group’s exposure to each of the above
risks, the Group’s objectives, policies and
processes for measuring and managing risk,
and the Group’s management of capital.
Further quantitative disclosures are included
throughout these consolidated financial
statements.
The Board of Directors has overall
responsibility for the establishment and
oversight of the Group’s risk management
framework. The Group’s risk management
policies are established to identify and
analyse the risks faced by the Group, to set
appropriate risk limits and controls, and
to monitor risks and adherence to limits.
Risk management policies and systems
are reviewed regularly to reflect changes in
market conditions and the Group’s activities.
RUB mln
Current assets
Non-current assets
Non-current liabilities
Loans and borrowings
Finance lease liability
Current liabilities
Loans and borrowings
Finance lease liability
Payables
(b) Market risk
Market risk is the risk that changes in
market prices, such as foreign exchange
rates, interest rates and equity prices will
affect the Group’s income or the value of
its financial instruments. The objective of
market risk management is to manage
and control market risk exposures within
acceptable parameters, while optimising the
return.
The Group implemented a natural hedge
approach (policy) aiming at reducing its
exposure to foreign currency risk by means
of borrowing in the same currencies in
which sales agreements are denominated.
The Group has the following foreign-
currency-denominated financial assets
and liabilities:
Foreign currency risk
The Group is exposed to currency risk on
sales, purchases and borrowings that are
denominated in a currency other than the
respective functional currencies of Group
entities. The currencies giving rise to this
risk are primarily USD and EUR.
In respect of monetary assets and liabilities
denominated in foreign currencies, the
Group ensures that its net exposure is
kept to an acceptable level by buying or
selling foreign currencies at spot rates
when necessary to address short-term
imbalances.
31 December 2018
31 December 2017
USD denominated
EUR denominated
USD denominated
EUR denominated
3,759
–
(108,405)
(375)
(14,747)
(674)
(495)
11
–
(12,615)
–
(5,916)
(38)
(679)
1,802
97
(68,705)
(1,004)
(32,169)
(1,117)
(74)
51
–
(5,807)
–
(549)
–
(321)
(120,937)
(19,237)
(101,170)
(6,626)
203
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continued
Management estimate that a 10%
strengthening/(weakening) of RUB against
USD and EUR, based on the Group’s
exposure as at the reporting date would
have increased/(decreased) the Group’s
profit for the year by RUB 14,017 million,
before any tax effect (2017: would have
increased/(decreased) the Group’s profit
for the year by RUB 10,780 million). This
analysis assumes that all other variables,
in particular interest rates, remain constant.
The analysis is performed on the same
basis for 2017.
The foreign exchange loss recognised in
profit or loss of RUB 19,613 million (RUB
4,141 million of foreign exchange gain for
the comparative period) resulted from the
devaluation of the Russian Rouble against
major currencies during the reporting period
(its appreciation during the comparative
period).
Foreign currency translation differences
In addition, the net assets of the Group’s
foreign subsidiaries denominated in USD
and EUR amount to RUB 15,069 million as
at the reporting date (31 December 2017:
RUB 18,429 million).
Interest rate risk
Interest rate risk is the risk that changes
in interest rates will adversely impact the
financial results of the Group. Management
does not have a formal policy of determining
how much of the Group’s exposure should
RUB mln
Fixed rate instruments
Other non-current assets
Other current investments
Long-term borrowings
Short-term borrowings
Finance lease liabilities
Variable rate instruments
Long-term borrowings
Short-term borrowings
be to fixed or variable rates. However, at
the time of raising new loans or borrowings
management uses its judgment to decide
whether it believes that a fixed or variable
rate would be more favourable to the Group
over the expected period until maturity.
The interest rate profile of the Group’s
interest-bearing financial instruments
is as follows:
31 December 2018
31 December 2017
868
4,405
(113,781)
(14,655)
(1,094)
(124,257)
(9,260)
(5,299)
(14,559)
427
541
(64,476)
(40,035)
(2,121)
(105,664)
(12,155)
(3,044)
(15,199)
At 31 December 2018, a 1% increase/
(decrease) in LIBOR/EURIBOR would have
decreased/(increased) the Group’s profit and
equity by RUB 146 million (31 December
2017: RUB 152 million).
As at 31 December 2018, the Group’s
maximum exposure to credit risk is
represented by the carrying amount of its
financial assets and amounted to RUB 32,281
million (31 December 2017: RUB 20,813
million).
(c) Credit risk
Credit risk is the risk of financial loss to
the Group if a customer or counterparty
to a financial instrument fails to meet its
contractual obligations, and arises from the
Group’s receivables from customers, loans
issued to related parties, current and non-
current financial assets and cash and cash
equivalents.
As at 31 December 2018, the Group’s
financial assets measured at amortised cost
amounted to RUB 31,557 million
(31 December 2017: RUB 20,058 million).
As at 31 December 2018, the Group’s
financial assets measured at fair value
amounted to RUB 724 million (31 December
2017: RUB 755 million).
Trade and other receivables
The Group’s exposure to credit risk is
influenced mainly by the individual specific
characteristics of each customer. The
general characteristics of the Group’s
customer base, including the default risk
of the industry and country, in which
customers operate, has less of an influence
on credit risk.
Management has established a credit
policy under which each new customer is
analysed individually for creditworthiness
before the Group’s standard payment and
delivery terms and conditions are offered.
The Group’s review includes external ratings,
when available, and in some cases bank
references. Purchase limits are established for
each customer, which represent the maximum
amount of outstanding receivables; these
limits are reviewed quarterly. Customers
that fail to meet the Group’s benchmark
creditworthiness may transact with the Group
only on a prepayment basis.
The majority of the Group’s customers have
been transacting with the Group for several
years, and losses have occurred infrequently.
In monitoring customer credit risk, customers
are grouped according to their credit
characteristics. Trade and other receivables
relate mainly to the Group’s wholesale
customers.
The Group does not require collateral in
respect of trade and other receivables, except
for new customers who are required to
work on a prepayment basis or present an
acceptable bank guarantee or set up letter
of credit with an acceptable bank.
In addition, the major part of trade
receivables in the Group’s foreign subsidiaries
is insured.
The Group establishes an allowance for
impairment that represents its estimate
of the expected credit losses in respect
of trade and other receivables and other
financial assets. The main component of this
allowance is a specific loss component that
relates to individually significant exposures.
The analysis of overdue trade and other
receivables is as follows:
RUB mln
Not past due
Past due 0–90 days
Past due 91–180 days
Past due 181–365 days
More than one year
Current and non-current financial assets
The Group lends money to related parties
and to third parties, who have good credit
standing. Based on the prior experience,
management believes that there is no
significant credit risk in respect of related
party and third party loans.
Cash and cash equivalents are primarily
held with banks with high credit rating.
Guarantees
The Group considers that financial guarantee
contracts entered into by the Group to
guarantee the indebtedness of other parties
are insurance arrangements in accordance
with IFRS 4 Insurance Contracts, and
accounts for them as such. In this respect,
the Group treats the guarantee contract
as a contingent liability until such time as
it becomes probable that the Group will
be required to make a payment under the
guarantee (note 32).
31 December 2018
31 December 2017
17,956
3,143
75
137
101
21,412
15,147
590
33
78
477
16,325
The Group’s policy is to provide financial
guarantees only to the subsidiaries or related
parties.
maintains several lines of credit in various
Russian and international banks.
The table below illustrates the contractual
maturities of financial liabilities, including
interest payments, which are converted
at the closing exchange rates, where
applicable:
(d) Liquidity risk
Liquidity risk is the risk that the Group will
not be able to meet its financial obligations
as they fall due. The Group’s approach to
managing liquidity is to ensure, as far as
possible, that it will always have sufficient
liquidity to meet its liabilities when due, under
both normal and stressed conditions, without
incurring unacceptable losses or risking
damage to the Group’s reputation.
Typically the Group ensures that it has
sufficient cash on demand to meet expected
operational expenses for a period of 30
days, including the servicing of financial
obligations; this excludes the potential
impact of extreme circumstances that
cannot reasonably be predicted, such as
natural disasters. In addition, the Group
204
205
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continued
RUB mln
Unsecured bank loans
73,504
80,901
22,009
21,258
12,795
Carrying value
Contractual
cash flows
0–1
year
1–2
years
2–3
years
Unsecured loans from other
companies
Interest payable
Secured finance leases
Loan participation notes
Trade and other payables
Financial guarantees issued
for asso-ciates and related parties
Derivative financial liabilities
20
733
1,094
69,471
12,221
1,057
626
3–4
years
6,515
–
–
–
4–5
years
4,255
–
–
–
20
733
1,158
20
733
766
–
–
262
–
–
130
79,303
2,744
2,751
37,250
1,372
35,186
12,221
12,221
1,233
626
300
626
–
455
–
–
478
–
–
–
–
–
–
–
> 5
years
14,069
–
–
–
-
–
–
–
158,726
176,195
39,419
24,726
50,653
7,887
39,441
14,069
RUB mln
Unsecured bank loans
60,843
68,276
16,236
9,656
17,483
Carrying value
Contractual
cash flows
0–1
year
1–2
years
2–3
years
Unsecured loans from other
companies
Unsecured letters of credit
Interest payable
Secured finance leases
Loan participation notes
Trade and other payables
13
1,254
946
2,121
57,600
12,385
14
1,276
14
14
946
946
2,306
1,247
–
1,262
–
734
62,252
30,133
1,137
12,385
12,385
–
Financial guarantees issued
for asso-ciates and related parties
1,374
1,697
301
455
–
–
–
217
1,141
–
461
31 December 2017
4–5
years
5,768
> 5
years
15,203
–
–
–
–
–
–
–
–
–
–
–
–
–
–
3–4
years
3,930
–
–
–
108
29,841
–
480
136,536
149,152
61,276
13,244
19,302
34,359
5,768
15,203
31 December 2018
31. CONTINGENCIES
(a) Litigation
The Group has a number of small
claims and litigations relating to regular
business activities and small fiscal claims.
Management believes that none of these
claims, individually or in aggregate, will have
a material adverse impact on the Group.
(b) Taxation contingencies
The taxation system in the Russian
Federation continues to evolve and is
characterised by frequent changes in
legislation, official pronouncements and
court decisions, which are sometimes
contradictory and subject to varying
interpretation by different tax authorities.
Taxes are subject to review and investigation
by a number of authorities, which have the
authority to impose severe fines, penalties
and interest charges. A tax year generally
remains open for review by the tax authorities
during the three subsequent calendar years;
however, under certain circumstances a
tax year may remain open longer. Recent
events within the Russian Federation suggest
that the tax authorities are taking a more
assertive and substance-based position in
their interpretation and enforcement of tax
legislation.
These circumstances may create tax risks in
the Russian Federation that are substantially
more significant than in other countries.
Management believes that it has provided
adequately for tax liabilities based on its
interpretations of applicable Russian tax
legislation, official pronouncements and
court decisions. However, the interpretations
of the relevant authorities could differ and
the effect on these consolidated financial
statements, if the authorities were successful
in enforcing their interpretations, could be
significant.
Transfer pricing legislation enacted in the
Russian Federation starting from 1 January
2012 provides for major modifications
making local transfer pricing rules closer
to OECD guidelines, but creating additional
uncertainty in practical application of tax
legislation in certain circumstances. These
transfer pricing rules provide for an obligation
for the taxpayers to prepare transfer pricing
documentation with respect to controlled
transactions and prescribe the basis and
mechanisms for accruing additional taxes
and interest in case prices in the controlled
transactions differ from the market level. The
transfer pricing rules apply to cross-border
transactions between related parties, as
well as to certain cross-border transactions
between independent parties, as determined
under the Russian Tax Code (no threshold is
set for the purposes of prices control in such
transactions). In addition, the rules apply
to in-country transactions between related
parties if the accumulated annual volume of
the transactions between the same parties
exceeds a particular threshold (RUB 1,000
million in 2014 and thereon). The compliance
of prices with the arm’s length level could be
as well subject to scrutiny on the basis of
unjustified tax benefit concept.
(c) Environmental contingencies
The environmental legislation, currently
effective in the Russian Federation, is
relatively new and characterised by frequent
changes, official pronouncements and
court decisions, which are often unclear,
contradictory and subject to varying
interpretation by different authorities.
The Group is involved in chemical production,
which is inherently exposed to significant
environmental risks. The Group companies
record environmental obligations as they
become probable and reliably measurable.
The Group companies are parties to different
litigations with the Russian environmental
authorities. The management believes that
based on its interpretations of applicable
Russian legislation, official pronouncements
and court decisions no provision is required
for environmental obligations. However, the
interpretations of the relevant authorities
could differ from management’s position and
the effect on these consolidated financial
statements, if the authorities were successful
in enforcing their interpretations, could be
significant.
(e) Capital management
The Board’s policy is to maintain a strong
capital base so as to maintain investor,
creditor and market confidence and to
sustain future development of the business.
The Board of Directors monitors the return on
capital invested and the level of dividends to
shareholders.
There were no changes in the Board’s
approach to capital management during the
year.
The Company and its subsidiaries are subject
to externally imposed capital requirements
including the statutory requirements of
the country of their domicile and the bank
covenants.
30. COMMITMENTS
32. RELATED PARTY TRANSACTIONS
The Group has entered into contracts to
purchase plant and equipment for RUB
30,826 million (31 December 2017: RUB
26,637 million).
(a) Transactions and balances
with associates
(i) Transactions with associates
RUB mln
Sales of goods and services
Other income, net
Interest income
Purchases of goods and services
206
2018
2,150
4
3
(472)
2017
9,262
–
15
(393)
207
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FINANCIAL STATEMENTS
continued
(ii) Balances with associates
RUB mln
Trade and other receivables
Short-term loans issued, at amortised cost
Long-term loans issued, at amortised cost
Trade and other payables
(iii) Financial guarantees
The Group issued financial guarantees to
banks on behalf of associates amounting to
RUB 1,007 million (31 December 2017: RUB
1,318 million).
(b) Transactions and balances with other
related parties
(i) Transactions with other related parties
RUB mln
Sales of goods and services
Other income, net
Interest income
Interest expenses
Purchases of goods and services
(ii) Balances with other related parties
RUB mln
Short-term loans issued, at amortised cost
Trade and other receivables
Long-term loans issued, at amortised cost
Finance lease liabilities
Short-term loans received
Trade and other payables
15
13
–
(10)
2018
557
22
14
(54)
(2,030)
573
23
20
(13)
2017
1,135
–
28
(54)
(1,340)
31 December 2018
31 December 2017
117
53
–
–
(20)
(131)
213
1
97
(285)
(5)
(65)
31 December 2018
31 December 2017
Subsidiary
33. SIGNIFICANT SUBSIDIARIES
Country
of incorporation
31 December 2018
Effective ownership
(rounded)
31 December 2017
Effective ownership
(rounded)
Apatit, JSC (including Balakovo and Ki-rovsk branchs)
Metachem, JSC
NIUIF, JSC
PhosAgro-Trans, JSC
PhosAgro-Region, LLC
PhosAgro-Belgorod, LLC
PhosAgro-Don, LLC
PhosAgro-Kuban, LLC
PhosAgro-Kursk, LLC
PhosAgro-Lipetsk, LLC
PhosAgro-Oryol, LLC
PhosAgro-Stavropol, LLC
PhosAgro-Volga, LLC
PhosAgro-SeveroZapad, LLC
PhosAgro-Tambov, LLC
Trading house PhosAgro, LLC
Phosint Trading Limited
Phosagro Asia Pte Ltd
PhosAgro Trading SA
Phosint Limited
PhosAgro Logistics SA
Phosagro Baltic Sp.z o.o.
Phosagro Deutschland GmbH
Phosagro France SAS
PhosAgro Balkans
UAB PhosAgro Baltic
34. SEASONALITY
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Cyprus
Singapore
Switzerland
Cyprus
Switzerland
Poland
Germany
France
Serbia
Lithuania
100%
100%
94%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
94%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
–
209
(iii) Financial guarantees
The Group issued financial guarantees to
banks on behalf of related parties amounting
to RUB 50 million (31 December 2017: RUB
56 million).
(c) Key management remuneration
The remuneration of the Board of Directors
and key management personnel amounted to
RUB 1,775 million (2017: RUB 1,449 million).
The balances and transactions with
related parties are usually unsecured and
denominated in RUB.
208
The Group is subject to certain seasonal
fluctuations in fertiliser demand due to the
timing of fertiliser application and, as a result,
fertiliser purchases by farmers. However, the
effect of seasonality on the Group’s revenue
is partially offset by the fact that the Group
sells its fertilisers globally and fertiliser
application and purchases vary by region.
The Group’s costs are generally stable
throughout the year with the exception of a
slight increase during May-June as a result
of maintenance activities undertaken at the
Group’s production facilities.
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GRI CONTENT INDEX
GRI Indicator
Comment
Page number (or link)
GRI Indicator
Comment
Page number (or link)
GRI 102 GENERAL DISCLOSURES
1. ORGANIZATIONAL PROFILE
GRI 102–1 Name of the organization
PJSC PhosAgro.
GRI 102–2 Activities, brands, products
and services
• Apatit concentrate
• Nepheline concentrate
• Monoammonium phosphate or MAP
• Diammonium phosphate or DAP
• NPK
• NPS
• PKS
• Liquid complex fertilisers (HCS) or APP
• Carbamide (prilled and granulated)
• Ammonium nitrate or AN
• Compound nitrogen phosphate fertilisers (NArFU) or NP
• Monocalcium phosphate or MCP
• STPP
GRI 102–11 Precautionary Principle or approach
This assessment is conducted as part of the current activities
related to modernization projects, reconstruction and new
construction. Plans are developed to prevent or reduce the
likelihood of incidents according to the biggest risk factors.
About PhosAgro,
Business model
on pages 6–7, 16–19
GRI 102–12 External initiatives
PhosAgro has signed an agreement on cooperation in soil
management with the Food and Agriculture Organization of the
United Nations (FAO). PhosAgro joined the UN Global Compact.
GRI 102–13 Membership of associations
1. The International Fertilizer Industry
Association (IFA)
2. The International Plant Nutrition Institute (IPNI)
3. Russian Union of Industrialists and Entrepreneurs
4. Russian Chemists Union (RCU)
5. Russian Association of Fertiliser Producers (RAFP)
6. NPP Mining Society
7. UN Global compact
8. Anti-Corruption Charter of Russian Business
GRI 102-3 Location of head-quarters
119333, Moscow, Leninsky Avenue, apt. 55/1, bld. 1
GRI 102–4 Location of operations
PhosAgro locates in Russia and supplies products
o more than 100 countries.
GRI 102–5 Ownership and legal form
Public Joint Stock Company “PhosAgro”.
GRI 102–6 Markets served
The Company considers Russia, Latin America
and Europe to be the priority markets.
GRI 102–7 Scale of the organization
GRI 102–8 Information on employees
and other workers
GRI 102–9 Supply chain
GRI 102–10 Significant changes to
the organization and its supply chain
There were no significant changes.
GRI 102–11 Precautionary Principle
or approach
Observance of the precautionary principle is part of a
comprehensive systemic assessment of various operational
risks related to the production and business activities of the
Company’s enterprises.
About PhosAgro
on pages 6–7
On pages
12–15
On pages
10–11, 16–19, 98
On pages
98–111
On page
66
On pages
40–47
2. STRATEGY
GRI 10–14 Statement from senior
decision-maker
3. ETHICS AND INTEGRITY
GRI 102–16 Values, principles, standards
and norms of behavior
4. GOVERNANCE
GRI 102–18 Governance structure
5. STAKEHOLDER ENGAGEMENT
GRI 102–40 List of stakeholder groups
GRI 102–41 Collective bargaining
agreements
Collective bargaining agreements have been concluded with
100% of employees from the Company’s main production
enterprises.
On pages
73, 123
On page
113, 123, 129
On pages
24–25
On pages
112–115
On pages
138–165
On pages
116–129
On page
125
210
211
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continued
GRI Indicator
Comment
Page number (or link)
GRI Indicator
Comment
Page number (or link)
GRI 102–42 Identifying and selecting
stakeholders
GRI 102–43 Approach to stakeholder
engagement
GRI 102–44 Key topics and concerns
raised
6. REPORTING PRACTICE
GRI 102–45 Entities included in the consolidated
financial statements
GRI 102–46 Defining report conюtent
and topic Boundaries
GRI 102–47 List of material topics
On page
116
On page
116
On page
116
On page
209
On page
64–66
On page
65
GRI 102–48 Restatements of information
No restatements of information was done according
to previous reporting period.
GRI 102–49 Changes in reporting
Throughout the reporting period, there were no significant
changes to the scope and boundaries of aspects compared to
previous reporting periods.
GRI 102–50 Reporting period
Reporting period — calendar year 2018.
GRI 102–51 Date of most recent report
The Company does not have a separate report on sustainable
development. Information on sustainable development is
included in the Integrated Report. Date of publication of last
Integrated Report – 28/04/2018
https://www.phosagro.com/
investors/reports/year/
GRI 102–52 Reporting cycle
Since 2011, PJSC PhosAgro has published Integrated
Reports annually.
GRI 102–53 Contact point for questions
regarding the report
GRI 102–54 Claims of reporting in accordance
with the GRI Standards
This report has been prepared in accordance
with the GRI Standards: Core option.
GRI 102–55 GRI content index
This appendix.
GRI 102–56 External assurance
On page
67
On pages
172–174, 218–219
MATERIAL TOPICS
GRI 200 ECONOMIC
GRI 201 ECONOMIC PERFORMANCE
GRI 103 Management approach
GRI 201–1 Direct economic value generated
and distributed
RUB mln
Item
Direct economic value generated
Revenue from sales
Revenue from other sales
Revenue from financial investments
Revenue from sale of assets
Economic value distributed
Operating expenses
Stakeholder
Wide range of stakeholders
Suppliers and contractors
Wages and other payments to employees
Employees
Payments to providers of capital
Shareholders and creditors
payments to shareholders
payments to creditors
Tax expenses and other payments to government
Government
including income tax expense
Economic value retained
GRI 201–3 Defined benefit plan obligations
and other retirement plans
GRI 202 MARKET PRESENCE
GRI 103 Management approach
GRI 202–1 Ratios of standard entry level wage
by gender compared to local minimum wage
GRI 202–2 Proportion of senior management
hired from the local community
On pages
16–19, 36–39
On pages
58–61
2018
233,896
223,982
9,448
447
19
(218,393)
(175,964)
(12,209)
(13,598)
(4,666)
(11,956)
(5,975)
15,503
On page
104
On page
100
On page
102
On page
103
212
213
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continued
GRI Indicator
Comment
Page number (or link)
GRI Indicator
Comment
Page number (or link)
GRI 203 INDIRECT ECONOMIC IMPACTS
GRI 103 Management approach
GRI 203–1 Infrastructure investments
and services supported
GRI 203–2 Significant indirect
economic impacts
GRI 205 ANTICORRUPTION
GRI 103 Management approach
GRI 205–3 Confirmed incidents of corruption
and actions taken
GRI 300 ENVIRONMENTAL
GRI 302 ENERGY
GRI 103 Management approach
GRI 302–1 Energy consumption within
the organization
The Company also consumes a small
amount of petrol.
GRI 302–3 Energy intensity
On page
132
On pages
130–135
On pages
130–135
On page
112
On page
114
On page
84
On page
84–85
On page
84–85
GRI 303 WATER AND EFFLUENTS
GRI 103 Management approach
GRI 303–1 Interactions with water
as a shared resource
GRI 303–2 Management of water
discharge-related impacts
GRI 303–3 Water withdrawal
GRI 303–4 Water discharge
GRI 305 EMISSIONS
GRI 103 Management approach
GRI 305–1 Direct (Scope 1) GHG emissions
GRI 305-4 GHG emissions intensity
GRI 305–7 Nitrogen oxides (NOX), sulfur oxides
(SOX), and other significant air emissions
On page
74
On pages
83
On page
83
On page
83
On page
83
On page
74
On page
82
On page
82
On page
80
214
215
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continued
GRI Indicator
Comment
Page number (or link)
GRI Indicator
Comment
Page number (or link)
GRI 306 EFFLUENTS AND WASTE
GRI 103 Management approach
GRI 306–2 Waste by type
and disposal method
GRI 306–4 Transport of hazardous waste
The Company performs no crossborder shipping of waste
deemed hazardous under the terms of the Basel Convention.
GRI 400 SOCIAL
GRI 401 EMPLOYMENT
GRI 103 Management approach
GRI 401– 1 1 New employee hires and employee
turnover
Data on employee turnover is presented without
breakdown by gender, age and region.
GRI 401–2 Benefits provided to full-time employees
that are not provided to temporary or part-time
employees
Benefits established by collective bargaining agreements apply
to all employees of the Company’s main production sites and do
not depend on the status or conditions of employment.
GRI 401–3 Parental leave
As of 31 December 2018, 390 from the Company’s main
production facilities were on maternity/paternity leave.
GRI 403 OCCUPATIONAL HEALTH AND SAFETY
GRI 103 Management approach
GRI 403–1 Occupational health and safety
management system
GRI 403–2 Hazard identification, risk assessment,
and incident investigation
GRI 403–3 Occupational health services
On page
74
On pages
81–82
On page
100
On page
98
On page
104
On page
104
On page
90
On page
91
On pages
40–43, 93
On page
93
GRI 403–4 Worker participation, consultation, and
communication on occupational health and safety
Health and Safety Committee
GRI 403–5 Worker training on occupational
health and safety
GRI 403–6 Promotion of worker health
GRI 403–7 Prevention and mitigation of
occupational health and safety impacts directly
linked by business relationships
GRI 403–8 Workers covered by an occupational
health and safety management system
GRI 403–9 Work-related injuries
GRI 404 TRAINING AND EDUCATION
GRI 103 Management approach
GRI 404–1 Average hours of training per year per
employee
GRI 404–2 Programs for upgrading employee skills
and transition assistance programs
GRI 404–3 Percentage of employees receiving
regular performance and career development
reviews
On page
92–93
On page
94–97
On page
92
On page
88–97
On page
92
On page
89
On page
100
On page
107
On pages
106–110
On page
105
216
217
About PhosAgroPhosAgro Integrated Report 2018 phosagro.comStrategic ReportBusiness ReviewCorporate GovernanceFinancial ReportSustainability ReportAdditional Information INDEPENDENT PRACTITIONER’S LIMITED
ASSURANCE REPORT
On PJSC PhosAgro’s Sustainability Report for 2018
To the Management of PJSC PhosAgro
Introduction
We were engaged by the Management
of PJSC PhosAgro (the “Management”)
to perform an engagement to issue an
independent limited assurance report on PJSC
PhosAgro ‘s (the “Company”) Sustainability
Report for 2018 (the “Report”) which is
included in the Company’s Integrated Report
“Clean Minerals for Healthy Life” for 2018 (the
“Integrated report”) on pages 62-135 with a
limited assurance conclusion that, based on
our work performed, nothing has come to
our attention that causes us to believe that
Management’s statement that the Report is
prepared, in all material respects, based on
the “core” version of the Global Reporting
Initiative Sustainability Reporting Standards
(the “GRI Standards”) and is free from material
misstatement, is not fairly stated.
Our conclusion covers only indicators in the
Report listed in the Appendix 1 “Index of GRI
Content” to the Integrated Report on pages
210-217 of the Integrated Report.
Management’s Responsibilities
Management is responsible for the
preparation and presentation of the Report
that is free from material misstatement in
accordance with the GRI Standards, and for
the information and statements contained
therein.
This responsibility includes designing,
implementing and maintaining internal
control system relevant to the preparation
of the Report that is free from material
misstatement, whether due to fraud or error.
It also includes: determining the Company’s
objectives in respect of sustainable
development performance and reporting,
including the identification of key stakeholder
groups and their material issues; selecting
applicable requirements of the GRI Standards;
preventing and detecting fraud; identifying
and ensuring that the Company complies
with the laws and regulations applicable to its
activities; selecting and applying appropriate
policies; making judgments and estimates
that are reasonable in the circumstances;
maintaining adequate records in relation to the
information included in the Report; ensuring
that staff involved with the preparation of
the Report are properly trained, information
systems are properly updated and that any
changes in the reporting system encompass
all key business units.
Our Responsibilities and Applicable
Standards
Our responsibility is to perform procedures
to obtain evidence in respect of the Report
prepared by Management, and to issue a
report with an independent limited assurance
conclusion regarding Management’s
statement in respect of the Report based on
the evidence obtained.
We conducted our engagement in accordance
with the International Standard on Assurance
Engagements 3000 Assurance Engagements
Other Than Audits or Reviews of Historical
Financial Information (ISAE 3000) issued
by the International Auditing and Assurance
Standards Board.
ISAE 3000 requires that we plan and perform
our procedures to obtain a meaningful level
of assurance about whether Management’s
statement that the Report is prepared, in all
material respects, based on the GRI Standards
and is free from material misstatement, is
fairly stated.
Our Independence and Quality Control
We have complied with the independence
and ethical requirements established by the
Rules on Independence of Auditors and Audit
Firms and the Code of Professional Ethics for
Auditors approved by the Audit Council of the
Ministry of Finance of the Russian Federation
and by the Code of Ethics for Professional
Accountants issued by the International Ethics
Standards Board for Accountants, which are
based on fundamental principles of integrity,
objectivity, professional competence and
due care, confidentiality and professional
behaviour.
We apply the International Standard on
Quality Control 1, and accordingly maintain
a comprehensive system of quality
control including documented policies and
procedures regarding compliance with ethical
requirements, professional standards and
applicable legal and regulatory requirements.
Procedures Performed
The procedures selected, and our
determination of the nature, timing and
extent of these procedures, depend on
our professional judgment, including the
assessment of risk of material misstatement
during the preparation of the Report, whether
due to fraud or error, our understanding of
the Company’s activities, as well as other
engagement circumstances.
In making these risk assessments, we
Engaging entity: PJSC PhosAgro.
Audit firm (practitioner): JSC “KPMG”, a company
Registration No. in the Unified State Register of Legal
incorporated under the Laws of the Russian Federation,
Entities 1027700190572.
Moscow, Russia.
a member firm of the KPMG network of independent
member firms affiliated with KPMG International
Cooperative (“KPMG International”), a Swiss entity.
Registration No. in the Unified State Register of Legal
Entities 1027700125628.
Member of the Self-regulated organization of auditors
“Russian Union of auditors” (Association). The Principal
Registration Number of the Entry in the Register of
Auditors and Audit Organisations: No. 11603053203.
considered the internal control system
relevant to the Company’s preparation of the
Report, in order to design procedures that are
appropriate in the circumstances, but not for
the purposes of expressing a conclusion as
to the effectiveness of the Company’s internal
control.
Our engagement also included: assessing the
appropriateness of the information included
in the Report and the suitability of the GRI
Standards used by Management in preparing
the Report in the circumstances of the
engagement; evaluating the appropriateness
of the methods, policies and procedures
used in the preparation of the Report and
the reasonableness of estimates made by
Management.
The procedures we developed based on the
performed risk assessment are a combination
of inspections, recalculations, analytical
procedures and inquiries.
Our procedures included, but were not limited
to, the following:
• Inspection of the processes used by the
Company to identify topics and issues
material to the Company’s key stakeholder
groups, with the purpose of understanding
such processes in the Company, as well
as analysis of information from open
sources on topics and issues material to key
stakeholder groups of other organizations in
the industry, with the purpose of determining
the level of completeness of disclosure of
such topics and issues in the Report;
• Interviews with Management representatives
and officers at corporate headquarter level
and subsidiaries regarding the sustainable
development strategy and policies regulating
material issues in areas of importance for
the Company, stage of implementation of
such policies, and procedures for collecting
information on sustainable development;
• Interviews with staff at the corporate
headquarter level and subsidiaries
responsible for providing the information in
the Report;
• Visit to the subsidiary JSC Apatit, which was
selected based on a risk analysis using both
qualitative and quantitative criteria;
performed continuously throughout the
reporting period, and the procedures were
performed on a test basis.
• Comparing the information presented in
the Report with data from other sources to
determine its completeness, accuracy and
consistency;
• Assessing the completeness of qualitative
and quantitative information on sustainable
development against recommendations of
the GRI Standards;
• Reading and analysing information on
sustainable development included in the
Report to determine whether it is in line with
our understanding and knowledge of the
Company’s sustainable development activity;
• Recalculation of quantitative data and
inspection of underlying documentation.
The procedures performed in a limited
assurance engagement vary in nature and
timing from, and are less in extent than
for, a reasonable assurance engagement.
Consequently, the level of assurance obtained
in a limited assurance engagement is
substantially lower than the assurance that
would have been obtained had a reasonable
assurance engagement been performed.
Criteria Used
To evaluate the Report, GRI Standards were
used which are available at the link:
https://www.globalreporting.org/standards/
Management’s Statement
Management states that the Report is
prepared, in all material respects, based on
the GRI Standards and is free from material
misstatement.
Inherent Limitations
Due to the limitations inherent in any internal
control structure, it is possible that errors or
irregularities in the information presented in
the Report may occur and not be detected.
Our engagement is not designed to detect all
weaknesses in the internal control system
over the preparation and presentation of the
Report, as the engagement has not been
Conclusion
Our conclusion has been formed on the basis
of, and is subject to, the matters outlined in
this report. We believe that the evidence we
have obtained is sufficient and appropriate to
provide a basis for our conclusion.
Based on the procedures performed and
described in this report, nothing has come to
our attention that causes us to believe that
Management’s statement that the Report is
prepared, in all material respects, based on
the GRI Standards and is free from material
misstatement, is not fairly stated.
Misiura E. I.
JSC “KPMG”
Moscow, Russia
May 29, 2019
218
219
About PhosAgroPhosAgro Integrated Report 2018 phosagro.comStrategic ReportBusiness ReviewCorporate GovernanceFinancial ReportSustainability ReportAdditional Information GLOSSARY
ABBREVATIONS
INDUSTRY TERMS
GDR or depositary receipt
Global Depositary Receipt
bln
Billion
km
Kilometres
kt
Thousand metric tonnes
mln
Million
mln t
Million tonnes
MW
Megawatt
RUB
Russian rouble
t
Metric tonne = 1,000 kg
ths
Thousand
CFR
Cost and freight — an Incoterms rule. CFR
means that the seller must pay the costs
and freight to bring goods to the port of
destination, including customs costs for
exporting the goods. The buyer pays to insure
the goods. Risk is transferred to the buyer
once the goods are loaded on the vessel.
Maritime transport only.
FOB
Free on board — an Incoterms rule. The
seller must load goods on board the vessel
nominated by the buyer; costs for delivery
of the goods on board of the vessel are the
responsibility of the seller.
USD
United States dollars
Ammonia
A colourless combustible gas with the
chemical formula NH3. Ammonia is a
compound of nitrogen and hydrogen and is
primarily used in the production of mineral
fertilizers and a wide variety of nitrogen-
containing organic and inorganic chemicals.
Ammonium nitrate or AN
A nitrogen fertilizer with a nitrogen content
of approximately 34% produced by reacting
nitric acid (an intermediate chemical
feedstock produced from ammonia) with
ammonia (NH3).
NP
(Ammonium nitrate-based fertilizers)
Complex ammonium nitrate-based fertilizer
with phosphorus content. Liquid complex
fertilizers or APP liquid phosphate- and
nitrogen-based fertilizer.
Apatite
A group of phosphate minerals (phosphate
ore), usually referring to hydroxylapatite,
fluorapatite and chlorapatite with the
chemical formula Ca5(PO4)3(OH, F, Cl). Apatite
is the world’s major source of phosphorus,
found as variously coloured, glassy crystals,
masses or nodules. The phosphorus content
of apatite is traditionally expressed as
phosphorus pentoxide (P2O5).
Apatite-nepheline ore
Ore containing minerals of apatite and
nepheline.
By-product
Material, other than the principal product,
that is generated as a consequence of an
industrial process.
Concentrate
Material that is the result of beneficiation of
an ore and that has a higher concentration
of mineral values than the mineral values
originally contained in the ore. Concentrates
are produced in beneficiation plants.
Crushing
A mechanical method of reducing the size
of rock.
Deposit
An area of reserves identified by surface
mapping, drilling or development.
Diammonium phosphate or DAP
A type of multi-nutrient fertilizer containing
nitrogen and phosphorous. Production
of DAP is based on the neutralisation
of phosphoric acid by ammonia with
subsequent drying and granulating.
Downstream
The processing of apatite concentrate,
natural gas, sulphur and potash into usable
products such as mineral fertilizer, industrial
and feed phosphates.
Drillhole
A circular hole made in rock, often in
conjunction with a core barrel, in order to
obtain a core sample.
EBITDA
Calculated as operating profit adjusted for
depreciation and amortisation.
Emission
Pollution discharged into the atmosphere
from smokestacks, other vents at
commercial or industrial facilities and from
transportation exhaust systems.
End product
Commercial product other than those
used internally to produce other types of
commercial products. For PhosAgro, end
products are phosphate-based fertilizers,
nitrogen fertilizers, feed and industrial
phosphates, and sulphate of potash.
Exploration
The search for minerals. Prospecting,
sampling, mapping, diamond drilling and
other work involved in the search for
mineralisation.
Feed phosphates
Inorganic feed phosphates are a high-quality
phosphorus source for animal feed. Most
inorganic feed phosphates are derived from
phosphate rock, which is chemically treated
to make phosphorus available for animals
in the form of quality feed phosphates.
storing nitrogen in nitrogen-containing
products.
NPK
A multi-nutrient fertilizer containing nitrogen,
phosphorus and potassium.
NPS
A multi-nutrient fertilizer containing nitrogen,
phosphorous and sulphur.
praseodymium, neodymium, promethium,
samarium, europium, gadolinium, terbium,
dysprosium, holmium, erbium, thulium,
ytterbium and lutetium.
Sedimentary
Formed by the deposition of solid fragmental
material that originates from the weathering
of rocks and is transported from a source to
a site of deposition.
Open-pit mine
A mine working or excavation that is open
to the surface and where material is not put
back into the mined-out areas.
Shaft
A mine working (usually vertical) used to
transport miners, supplies, ore or capping.
The main inorganic feed phosphates are
calcium, magnesium, calcium-magnesium,
ammonium and sodium phosphates. These
phosphates are constant in composition,
low in impurities and considered to be the
best available sources of phosphorus for
animals. An adequate supply of inorganic
feed phosphates in animal feed is essential
for animals’ well-being.
Grade of mineral fertilizer
The relative quality or percentage content of
useful components.
Key performance indicator (KPI)
Performance indicators of a division that help
the Company evaluate the implementation
of plans and make decisions regarding
management remuneration.
K2O
Universal means of storage of potassium
(potash) in potassium-containing products.
MER or ‘minor element ratio’
The sum of the iron, aluminium and
magnesium content divided by the P2O5
content.
Monoammonium phosphate or MAP
A type of multi-nutrient fertilizer containing
nitrogen and phosphorous. Production
of MAP is based on the neutralisation
of phosphoric acid by ammonia with
subsequent drying and granulating.
Monoammonium phosphate is often used in
the blending of dry agricultural fertilizers.
Phosphate rock
Phosphate rock (apatite concentrate or
phosphorus concentrate) is an imprecise
term that includes both unprocessed
phosphorus-containing ore and beneficiated
concentrates. Practically all production of
phosphate fertilizers is based on phosphate
rocks containing some form of the mineral
apatite.
Phosphates
A salt or ester of phosphoric acid or a
fertilizer containing phosphorus compounds.
Phosphoric acid
Mineral (inorganic) acid having the chemical
formula H3PO4.
P2O5 (phosphoric pentoxide)
A term used to express the content of
phosphorus in a substance.
Monocalcium phosphate or MCP
A type of feed phosphate with the highest
phosphorus digestibility and content.
Phosphorous or P
One of the primary plant nutrients essential
for plant growth.
Nepheline
A mineral containing aluminium oxide (Al2O3).
PKS
A multi-nutrient fertilizer containing
phosphorous, potassium and sulphur.
Netback price
Revenue net of costs associated with
shipping goods from the production site to
the buyer.
Potash or K
One of the primary plant nutrients essential
for plant growth.
Nitrogen or N
One of the primary plant nutrients essential
for plant growth and a universal way of
Rare earth elements/resources
A group of 15 elements with atomic numbers
ranging from 57 to 71: lanthanum, cerium,
Sulphate of potash or SOP
A non-chloride potash fertilizer.
Sulphuric acid
A strong sulphur-based inorganic mineral
acid with the chemical formula H2SO4.
Tailing
The fluid slurry that is left after treatment
and extraction of an economically extracted
mineral.
Trenches
Lines excavated to a predetermined depth
to establish the geological structure of a
deposit.
Urea
An organic compound of carbon, nitrogen,
oxygen and hydrogen. It is the most widely
used and highest-concentration nitrogen-
based fertilizer formed by reacting ammonia
with carbon dioxide at a high pressure.
Waste
Rock lacking sufficient grade and/or other
characteristics of ore to be economical.
Upstream
Extraction of solid, liquid and gaseous
resources from the earth using specialised
equipment.
Waste water
Spent or used water from individual homes,
communities, farms or industries that
contains dissolved or suspended matter.
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221
About PhosAgroPhosAgro Integrated Report 2018 phosagro.comStrategic ReportBusiness ReviewCorporate GovernanceFinancial ReportSustainability ReportAdditional Information GLOSSARY
continued
OTHER TERMS
Basel Convention
The Basel Convention on the Control of
Transboundary Movements of Hazardous
Wastes and their Disposal was adopted
on 22 March 1989 by the Conference of
Plenipotentiaries in Basel, Switzerland.
The overarching objective of the Basel
Convention is to protect human health and
the environment against the adverse effects
of hazardous wastes. Its scope of application
covers a wide range of wastes defined as
“hazardous wastes” based on their origin
and/or composition and their characteristics,
as well as two types of wastes defined as
“other wastes” — household waste and
incinerator ash.
The Department for Environment, Food
and Rural Affairs (Defra)
Defra is the government department
responsible for environmental protection,
food production and standards, agriculture,
fisheries and rural communities in the United
Kingdom.
The International Plant Nutrition Institute
(IPNI)
The IPNI is a global organisation with
initiatives addressing the world’s growing
need for food, fuel, fibre and feed.
Environmental assessment (EA)
A process where the breadth, depth and
type of analysis depend on the proposed
project. An EA evaluates a project’s potential
environmental risks and impacts in its
area of influence and identifies ways to
improve project design and implementation
by preventing, minimising, mitigating or
compensating for adverse environmental
impacts and by enhancing positive impacts.
FAO
Food and Agriculture Organization of the
United Nations.
IFA
International Fertilizer Association, France.
ISO
International Organization for Standardization,
the world’s largest standards development
organisation. Between 1947 and the
present day, the ISO has published more
than 19,000 international standards,
ranging from standards for activities such
as agriculture and construction through
mechanical engineering and medical devices
to the newest information technology
developments.
LSE
London Stock Exchange.
Moscow Exchange
Russia’s MICEX and RTS stock exchanges
were merged into one entity, MICEX—RTS,
in December 2011 and rebranded as the
Moscow Exchange in May 2012.
Risk assessment
Qualitative and quantitative evaluation carried
out in an effort to determine the risk posed
to human health or the environment by the
presence or potential presence and use of
specific pollutants.
Feasibility study
A comprehensive engineering estimate of
all costs, revenues, equipment requirements
and production levels likely to be achieved
if a mine is developed. The study is used
to determine the technical and economic
viability of a project and to support the
search for project financing.
Fertecon/Argus—FMB/CRU
Fertilizer Economic Market Analysis and
Consultancy, UK.
Group/Company/PhosAgro
Refers collectively to PJSC PhosAgro and its
subsidiaries.
Helsinki Convention
The Helsinki Convention was signed in 1974
by the then-seven Baltic coastal states, and
made all the sources of pollution around
the entire Baltic Sea subject to a single
convention. The 1974 Convention entered
into force on 3 May 1980. A new convention
was signed in 1992 by all the states
bordering on the Baltic Sea and the European
Community in light of political changes and
developments in international environmental
and maritime law. After ratification, the
Convention entered into force on 17 January
2000. The Convention covers the whole of
the Baltic Sea area, including inland waters
as well as the water of the sea itself and the
seabed. Measures are also taken in the whole
catchment area of the Baltic Sea to reduce
land-based pollution.
NAMES OF LEGAL ENTITIES USED IN THIS REPORT
PJSC PhosAgro
PhosAgro
JSC Apatit
Apatit
Kirovsk branch of JSC Apatit
KB of Apatit
Balakovo branch of JSC Apatit
BB of Apatit
JSC Metachem
Metachem
OJSC NIUIF
NIUIF
JSC PhosAgro-Trans
PhosAgro-Trans
PhosAgro-Region LLC
PhosAgro-Region
Mining and Chemical Engineering LLC
Mining and Chemical Engineering or
MCE
Smart Bulk LLC
Smart Bulk
Phosagro Asia Pte Ltd
Phosagro Asia
Phosint Trading Limited
Phosint Trading
Data on ore reserves presented in this report
are prepared on the basis of:
• Data from the approved state register as
of 1 January 2017;
•
• Data from Form 70-TP “Information on
Mineral Extraction During Production”,
which contains data on mined volumes
(extracted from the subsoil) and losses
during mining (regulatory, actual, excess);
Information on changes in reserves for
the 2017 reporting period: mining, losses
during mining, reserves remaining at year
end (as of 1 January 2018), reflected
in the statistical reporting form 5-GR
“Information on the state of and changes
to solid mineral reserves”;
• Approved Rosnedra protocols for
deposits.
Calculations and recalculations for approved
reserves are compliant with normative
documents:
• Order No 40 of the Ministry of Natural
Resources of the Russian Federation
dated 7 March 1997 on Approval of
Classifications of Mineral Reserves
(together with “Classification of Reserves
of Deposits and Potential Resources
of Solid Minerals”, “Classification of
Currently Mined Reserves and Forecast
Groundwater Resources”);
• Order of the Ministry of Natural
Resources of the Russian Federation
of 5 June 2007 No 37-R on Approval of
Methodological Recommendations for
Application of Classification of Reserves
of Deposits and Potential Resources of
Solid Minerals.
Ensuring the completeness of geological
exploration, rational use and preservation of
subsoil is carried out in accordance with the
Law of the Russian Federation 2395-1 on
Subsoils dated 21 February 1992.
The information in this Report related to
mineral resources as of 1 January 2018
is based on information compiled by the
Geology Service Department of the Kirovsk
branch of Apatit and authorised by Mr Sergey
Glubokiy, Chief Geologist of the Kirovsk
branch of Apatit.
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About PhosAgroPhosAgro Integrated Report 2018 phosagro.comStrategic ReportBusiness ReviewCorporate GovernanceFinancial ReportSustainability ReportAdditional Information CONTACTS
INVESTOR
RELATIONS
Alexander Seleznev
Head of Investor Relations
Tel.: +7 (495) 231 31 15
Email: ir@phosagro.ru
CORPORATE
SECRETARY
Sergey Samosyuk
Tel.: +7 (495) 232 96 89, ext. 2712
Email: ks@phosagro.ru
PHOSAGRO LEGAL
ADDRESS
55/1 Leninsky Prospekt, bldg. 1, Moscow
119333, Russia
Tel.: +7 (495) 232 96 89
Fax: +7 (495) 956 19 02
DEPOSITARY
Citigroup Global Markets Deutschland AG
Frankfurter Welle Reuterweg 16
60323 Frankfurt, Germany
AUDITOR
JSC KPMG
Naberezhnaya Tower Complex,
10 Presnenskaya Naberezhnaya
Moscow 123112, Russia
Tel.: +7 (495) 937 44 77
Fax: +7 (495) 937 44 00/99
Web: www.kpmg.ru
REGISTRAR
JSC Reestr
129090, Moscow, B. Balkanskiy
lane, 20, bldg. 1, Russia
Tel.: +7 (495) 617 01 01
Fax: +7 (495) 680 80 01
Email: reestr@aoreestr.ru
Web: www.aoreestr.ru
CONTACTS FOR EMPLOYEES
AND POTENTIAL EMPLOYEES
Diana Sidelnikova
Deputy Director of Human Resources
and Social Policy
Tel.: +7 (820) 259 31 13
Email: dsidelnikova@phosagro.ru
CONTACTS
FOR MEDIA
Andrey Podkopalov
Director of Information Policy
Tel.: +7 (495) 232 96 89, ext. 26 51
Timur Belov
Head of Information Policy Division
Press Secretary
Tel.: +7 (495) 232 96 89, ext. 26 52
Email: pr@phosagro.ru
Sam VanDerlip
International PR Advisor
Mobile (UK): +44 (7554) 993 032
Tel. (Russia): +7 (499) 918 31 34
Email: vanderlip@em-comms.com
SUSTAINABILITY
CONTACTS
Lyubov Nazarova
Head of the Environmental Management
and Control Department
Tel.: +7 (495) 231 27 47
Email: lnazarova@phosagro.ru
224
PhosAgro Integrated Report 2018 phosagro.com