GROW
PRO2020 INTEGRATED REPORT
CONTENTS
PhosAgro is a vertically
integrated Russian company
and one of the world’s leading
producers of phosphate-
based fertilizers.
TCFD
Report 2020
PhosAgro’s climate-related
disclosures
(stand-alone document)
04 10 32
ABOUT
THIS REPORT
COMPANY
PROFILE
STRATEGIC
REPORT
005
006
Material topics
Case study navigator
on UN SDGs
012
016
Company mission
Key activities in 2020
020
Geography
022
026
028
Business model
Key indicators
Investment case
and credit ratings
034
038
042
046
052
054
072
Charman’s statement
CEO’s statement
Business environment
Market overview
The Company’s role
in the industry
Strategy to 2025
Strategic risks
80 192 250
PERFORMANCE
REVIEW
082
Financial performance
CORPORATE
GOVERNANCE
194
Chairman’s statement
SHARE
CAPITAL
252
Ownership srtucture
088
098
103
114
132
146
178
Operational performance
196
Research and education
Corporate governance
framework
Supply chain
People development
Industrial safety
Environmental review
Contributing to local
communities
203
230
238
242
247
Board of Directors
Executive bodies
Corporate controls
Ethical practices
Remuneration report
253
254
254
256
258
309
Share performance
Analyst coverage
Dividend policy
Relationships
with Shareholders
and Investors
FINANCIAL STATEMENTS
MANAGEMENT
RESPONSIBILITY
STATEMENT
310
ADDITIONAL INFORMATION
For interactive version
of the report, please visit
www.phosagro.com
APPENDICES
(stand-alone document)
02
03
34
Foreign offices
Report on conforming to the principles
and recommendations of the Corporate
Governance Code
Information on interested-party
transactions
38
Information on major transactions
ABOUT
THIS
REPORT
102-1
102-46
102-50
102-52
The 2020 integrated
Annual Report of PJSC
PhosAgro (the Company,
PhosAgro). PhosAgro
is a vertically integrated
Russian company and one
of the world’s leading
producers of phosphate-
based fertilizers.
The Company maintains
an annual reporting cycle,
with the previous report
released on 30 April 2020.
The Report highlights how
we integrate ESG principles
into everything we do.
102-49
BOUNDARIES
This Report provides insight into
the performance of parent company
PhosAgro and its subsidiaries (jointly
referred to as “PhosAgro Group”
or the “Group”). The key subsidiaries
of the Group and PhosAgro’s stake
in these subsidiaries are presented
in the Group’s 2020 IFRS consolidated
financial statements. There have been
no significant changes to the Group’s
size, structure or ownership during
the reporting period.
To ensure compliance
with the materiality principle
and comparability with historical data,
the information on pages 103–193
and in our 2020 TCFD report discloses
data on Apatit, including its branches
and standalone business units, only.
The disclosure does not include
information on other companies that
are part of the group to which Apatit
and PhosAgro belong, except where
there is a special comment.
In the report, GRI
indicators are marked
as follows:
GRI
STANDARDS
102-54
102-56
This Report has been prepared in accordance
with:
• the Bank of Russia’s Regulation on Disclosure
of Information by the Issuers of Issue-Grade
Securities No. 454-P,
• the Corporate Governance Code
recommended for implementation pursuant
to the Bank of Russia’s Letter dated 10
October 2014,
• the Listing Rules of the Moscow Exchange,
• the Guide to Listing of the London Stock
Exchange,
• the Disclosure Guidance and Transparency
Rules of the UK Listing Authority,
• the GRI Standards (Core option),
• the AA 1000 and ISO 26000 standards.
Financial results have been disclosed in line
with the audited IFRS consolidated financial
statements.
Appropriate disclosure of qualitative
and quantitative information prepared
in accordance with the GRI Standards
(sample information) has been assured
in accordance with the International Standard
on Assurance Engagements (ISAE) 3000
(Revised), Assurance Engagements Other
than Audits or Reviews of Historical Financial
Information. An independent auditor’s report
by JSC PricewaterhouseCoopers Audit
(JSC PwC Audit) on the results of the audit,
which provides limited assurances regarding
the sample information, is given in the Appendix
to this Report. JSC KPMG audited the IFRS
financial statements.
In preparing this Report, PhosAgro followed
the standards and requirements of the Carbon
Disclosure Project (CDP), the International
Integrated Reporting Council (IIRC), and the Task
Force on Climate-Related Financial Disclosures
(TCFD). The Company takes into account
and implements global best practices
in sustainable development.
54/
MATERIAL TOPICS
102-32
102-42
102-44
102-47
In preparing this Report, we focused on aspects
that have a material impact on PhosAgro’s
business and value creation and are relevant for all
stakeholders.
Any questions
or recommendations
from stakeholders can be
emailed to
ir@phosagro.ru.
Steps of defining material topics
Conducting a survey
of the management on signifi-
cant operational aspects that
had an impact on the society
and the environment in 2019,
and reviewing their relevance
and priority for 2020 (with an
option to add other important
topics)
Conducting a
survey of key
stakeholders
to find out how
important and
relevant these
topics are for
them
Setting SDG priorities on
a PwC-led project in late 2020
Conducting a
survey of in-
vestors on a list
of ESG-related
questions
Updating the materiality matrix
based on the outcome of internal
and external surveys
Prioritising the aspects
by importance
Having the final matrix of material topics approved by the Board of Directors.
Identification of stakeholders and significant topics
Name of indicators
Materiality matrix
Important
Economic
Not Important
201 Economic performance
202 Market presence
203
Indirect economic impacts
204 Procurement practices
205 Anti-corruption
302 Energy
303 Water and effluents
305 Emissions
306 Effluents and waste
307 Environmental compliance
Environmental
304 Biodiversity
l
r
e
d
o
h
k
a
e
t
s
y
e
K
h
g
H
i
i
n
o
n
p
o
i
201
203
203
307
306
306
413
413
403
403 305
303
303
305
204
204
401
202
304
304
417
410
402
205
404
202
302
404
412
415
Social
401 Employment
402 Labour/management relations
403 Occupational health and safety
410 Security practices
404 Training and education
412 Human rights assessment
413 Local communities
415 Public policy
417 Marketing and labelling
w
o
L
Low
2019
2020
Internal scoring
High
ABOUT THIS REPORTPHOSAGRO INTEGRATED REPORT 2020
CASE STUDY NAVIGATOR ON UN SDGS
We directly promote 11 out of the 17 UN
sustainable development goals
ZERO
HUNGER
GOOD HEALTH
AND WELL-BEING
QUALITY
EDUCATION
CLEAN WATER
AND SANITATION
DECENT WORK AND
ECONOMIC GROWTH
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
SUSTAINABLE
CITIES AND
COMMUNITIES
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
CLIMATE
ACTION
LIFE
ON LAND
PARTNERSHIPS
FOR THE GOALS
LETTER FROM IRINA BOKOVA, CHAIR OF THE BOARD OF DIRECTORS’
SUSTAINABLE DEVELOPMENT COMMITTEE
IRINA BOKOVA
Chairman of the PhosAgro
Board of Directors ‘ Committee
on Sustainable Development
The UN Sustainable Development
Goals (SDGs) were developed
to address the challenges
faced by humankind. Each SDG
relies on rigorous studies that
have identified such potential
consequences of these challenges
that no one will remain uninvolved.
It is obvious that SDGs
are global in nature and are relevant
to all countries, people, institutions,
companies, etc. It is also clear
that they receive attention
from investors and consumers
of our products, as people want
to enjoy a clean environment
and expect companies to supply safe
foods and products.
Businesses, including those in Russia,
are set to play a key role in achieving
the Goals. Such insight gave rise
to the Global Compact, the largest
association of businesses seeking
to implement the SDGs. Its mission
is to make sure that businesses
adhere to and deliver on the Global
76/
Compact’s 10 principles in the areas
of human rights, labour, environment
and anti-corruption, as well
as contribute to achieving the SDGs.
Importantly, Russian companies
are actively joining its ranks, while
some of them, like PhosAgro,
are among the few LEAD businesses
in the world.
Joining climate change initiatives was
a trend among companies in 2020.
Industry leaders define and endorse
science-based targets to cut GHG
emissions, develop roadmaps
to meet them and undertake
to file reports on their activities
in this area. PhosAgro is no
stranger to this. In December 2020,
the Board of Directors approved
the Climate Strategy and the plan
for low-carbon transition to 2028.
We are delighted to present
our first separate report on climate
related aspects of our business
under the framework developed
by the Task Force on Climate-related
Financial Disclosures (TCFD).
The ESG agenda can be called
a driver of sustainable business
transformation. As part
of the Company’s Development
Strategy to 2025, we are seeking
to contribute to 11 UN SDGs, keeping
a close eye on our progress. This
report is intended to give a clear
view of how we integrate these
SDGs into the Company’s strategic
priorities and operations.
Setting UN SDG priorities
In 2020, we prioritised the UN sustainable
development goals, which the Company
promotes
The approach:
• We identified the key areas
of impact on the society
and the environment by PhosAgro
as a mining and processing
company, based on academic
and industry articles and reports.
• For each area
identified, we compiled
a list of goals and indicators
that are used to measure
and report on the impact
of mining and processing
companies (with a focus
on phosphate mining and fertilizer
production) on the society,
including the UN SDGs, GRI,
UNCTAD, and Social Life Cycle
Assessment and SDG Compass.
• We matched the list of goals
and indicators with the categories
and principles of responsible
investment (including Green
and Social Bonds, Sustainable
Bond Guidelines, Green Loan
Principles, Sustainability Linked
Loan Principles).
• We matched the list of goals
and indicators with material
topics for PhosAgro Group’s key
stakeholders, and conducted
interviews with responsible
divisions to prioritise the impacts.
Project results:
• A list of priority impact areas was
compiled
• The list of priority SDGs was
updated to reflect the identified
impact areas
• A list of priority SDG objectives
was compiled
• For each objective:
– The measures being taken
by Company were indicated
– The management approach
was described
– The Company’s obligations
were defined
– The quantitative targets were
selected
– The relevant GRI indicators
were defined
For more information on how
we set UN SDG priorities, see
the Sustainability section
of the Company’s website
For more information
on the Goals, see
the Commitment to UN SDGs
section of the Company’s
website
ABOUT THIS REPORTPHOSAGRO INTEGRATED REPORT 2020 ABOUT THIS REPORT
98/
98/
PRIORITIZATION RESULTS
Prioritization result
SDG
Issue
number
Impact on
stakeholders
Read more in
the report
Prioritization result
SDG
Issue
number
Impact on
stakeholders
Read more in
the report
Priority SDGs impacted positively by the Company
Priority SDGs for which the Company minimizes its adverse impact
Expanding the use of fertilizers which, due to their natural
composition (zero/minimum concentration of radionuclides and
heavy metals), minimize potential adverse impact on human
health
Strengthening the Global Partnership in favor of sustainable
development complemented by partnerships with the
involvement of multiple stakeholders who mobilize and share
knowledge, expertise, technologies and financial resources
in order to support the achievement of the Sustainable
Development Goals in all countries, especially developing ones
Improved infrastructure, telecommunications, road network,
power and water supplies, improved access to health care
and education
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
12.4
direct
p. 24, 62, 104,
148
PARTNERSHIPS
FOR THE GOALS
17.3
direct
p. 98, 148, 312
6.1
9.1
CLEAN WATER
AND SANITATION
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
direct
p. 24, 148, 180,
312
Use of fertilizers boosts food production and contributes to
the availability of nutrients required for human health
ZERO
HUNGER
2.4
indirect
p. 24, 54, 98
Positive impact on the infrastructure development and
demographic changes in the regions of presence
SUSTAINABLE
CITIES AND
COMMUNITIES
11.3
indirect
p. 24, 180
Fertilizers play an important role in improving the quality of
soils – natural absorbers of greenhouse gases
Support of employment
Development of skills of both employees and the younger
generation
CLIMATE
ACTION
DECENT WORK AND
ECONOMIC GROWTH
QUALITY
EDUCATION
13.1
13.2
8.3
indirect
direct
p. 24, 66, 98,
104, 148
p. 24, 116, 134,
180
4.4
direct
p. 98, 116, 180
Inflation, price rise and limited accessibility of housing for
workers not involved in the mining industry; long-term
depopulation, income differences, prevalence of jobs for
unskilled and low-skilled employees
Environmental impact caused by improper use of fertilizers:
agriculture-related emissions of greenhouse gases,
degradation of natural ecosystems, drains, leaks and
contamination, bogging of fresh-water bodies and loss of
biological diversity
Air emissions (including greenhouse gases and solid impurities
in the atmosphere) affect the health condition
Harsh working conditions, heath impacts for workers, risk
of fatalities and industrial accidents inherent in the mining
industry
Discharges may cause pollution of surface and ground waters,
soils, and may also affect the ecosystem functioning
DECENT WORK AND
ECONOMIC GROWTH
8.3
indirect
p. 24, 116, 134,
180
6.3
12.4
15.1
3.4
3.9
13.2
8.5
8.8
6.3
12.4
CLEAN WATER
AND SANITATION
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
LIFE
ON LAND
GOOD HEALTH
AND WELL-BEING
CLIMATE
ACTION
DECENT WORK AND
ECONOMIC GROWTH
CLEAN WATER
AND SANITATION
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
indirect
p. 24, 98, 105,
148
direct
p. 24, 98, 105,
116, 134, 148, 180
direct
direct
p. 24, 116, 134,
180
p. 24, 98, 105,
148
ABOUT THIS REPORTPHOSAGRO INTEGRATED REPORT 2020 Company
profile
PhosAgro saw record-high sales in Russia – its key market.
PhosAgro-Region’s total fertilizer supplies to Russian
farmers grew by over 12% to exceed 3.5 mln t. Of that,
more than 80% (2.9 mln t) was PhosAgro’s products, which
is 8% higher year-on-year. This cemented the Company’s
undisputed leadership in the Russian market by total volume
of supplies.
32%
share of Russia and the
CIS in the Company’s
2020 sales volumes
COMPANY MISSION
OUR
MISSION:
CARING
FOR EARTH FERTILITY
FOR PROSPEROUS
LIVES
102-16
PhosAgro is a vertically
integrated Russian company
and one of the world’s leading
producers of phosphate-
based fertilizers. Our eco-
efficient products help farmers
from 102 countries on all
inhabited continents to improve
their crop quality and yields.
Russia is the priority market
where the Company leads
the charge in supplies across
fertilizer categories.
• PhosAgro acknowledges its
responsibility for the global food
security and efficiently works
towards this cause.
• PhosAgro offers high-grade
environmentally friendly
fertilizers as well as delivery
services and efficient application
solutions. We work for those who
feed the world.
12/
13
ZERO
HUNGER
ZERO
HUNGER
PhosAgro pays special attention to SDG 2, i. e. achieving world food
security, an even more pressing issue in light of the COVID-19 pandemic.
We supply fertilizers with no dangerous to human health toxic
substances to the key Russian market and 102 other countries around
the world, and are fully aware of our responsibility for efficient and safe
agricultural production.
Our eco-efficient fertilizers help preserve the natural fertility of soils
and prevent them from being degraded, which is one of the key
obstacles to fighting hunger (as 52% of farm soils face moderate
or severe degradation, according to the UN).
PhosAgro became the first Russian company chosen by the UN Food
and Agriculture Organization (FAO) to run a global soil protection
initiative. PhosAgro Group will invest USD 1.2 million in this project.
In partnership with FAO, PhosAgro is promoting sustainable soil
management among farmers and expanding the Regional Soil
Laboratory Network (RESOLAN) in Africa, Latin America and the Middle
East, which stands out as a unique and successful project, whereby
the Russian business community could help developing countries
to achieve SDG 2: Zero hunger.
The initiative is aimed primarily at creating regional soil laboratory
networks across developing countries with an emphasis on assessing
the quality and safety of fertilizers. PhosAgro plays a key role
in the project as it develops a unified global framework to promote
technology and know-how, including Russian practices, in sustainable
land use and agriculture. This should help agricultural producers who
use intensive farming practices to effectively grow crops without
causing additional plant contamination or damaging ecosystems.
For more information on SDG 2,
see the Commitment to UN goals
section of the Company’s website
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020
GLOBAL PRESENCE.
PhosAgro is the world’s leading
producer of eco-efficient mineral
fertilizers. We help farmers on all
continents to improve their crop
quality, thus promoting food
security on a global scale.
ORGANIC GROWTH
AND DEVELOPMENT.
The Company works continuously
to improve production
processes as it introduces
innovative technologies designed
to increase productivity
and maintain the exceptional quality
of our products.
INNOVATIVENESS.
We look beyond production
and marketing. Our aim is to build
a logistics chain that extends
from factory to fertilizer
application, and to provide a wide
range of farm-related services,
including agricultural distribution
centres and digital field systems.
Our customers – from large
agricultural companies to private
farms – have our support
throughout the course
of their business.
ABOUT THE COMPANY
IMPROVEMENT
AND INNOVATION.
Development is ongoing
at PhosAgro, with every
procedure relentlessly
improved and refined
LEADERSHIP.
Our goals
are ambitious as we strive
for professional excellence
and continuous
self-improvement
TEAMWORK.
As strong team players,
we look to ensure
smooth cooperation
of all our business units
EXPERTISE.
Everyone at PhosAgro
is a qualified professional
in what they do
VISION
VALUES
ECO-EFFICIENT.
As part of our efforts to keep
our products eco-efficient
and protect the environment
through the use of advanced
technology, we zealously
hone our green chemistry
and biotechnology expertise
and improve production
processes in order to mitigate
the environmental impact.
FOCUS ON PEOPLE.
Our employees are the heart
and soul of the Company. We help
them to maintain the right work–
life balance and grow professionally.
Their living standards, prosperity
and personal development
are at the forefront of our agenda.
SOCIAL RESPONSIBILITY.
The Company operates
responsibly across its footprint,
improving the lives of communities
and promoting a healthy lifestyle,
decent work, entrepreneurship
opportunities, personal
growth, physical well-being,
and learning for children and adults.
The Company’s endeavours
to restore and enhance Russian
national traditions and underpin
Orthodox Christian values is a driving
force for the prosperity of the nation
and its people.
SAFETY.
We promote and share
a safety culture within
the Company to ensure
safe working conditions
RELIABILITY.
We always honour
our obligations
and are a reliable
partner
ETHICS.
We support human
integrity, fostering moral
standards and ethics,
spiritual values, dedication
at work, and respect
for family values
PHOSAGRO INTEGRATED REPORT 2020 KEY ACTIVITIES
IN 2020
COMPANY PROFILE
16/
17
SENIOR MANAGEMENT
OPERATING ACTIVITIES
PARTNERSHIP
TECHNOLOGIES
Siroj Loikov was appointed
First Deputy CEO
of PhosAgro. In his new position,
Mr Loikov will coordinate the work
of the Group’s headquarters
in Moscow, its management company
in Cherepovets and the Company’s
production sites.
Mikhail Rybnikov was appointed
executive director and will focus
on the integration of production,
logistics and sales, further
improvement of the economic
efficiency of production and supply
processes and cost management.
Institutional Investor, a leading global
financial publication, named PhosAgro
the Most Honoured Company
and recognised members of its
senior management team as the best
in the EMEA chemicals sector.
Apatit was awarded a prestigious
prize for the Tax Project
of the Year sponsored by PwC
Russia and the Russian Union
of Industrialists and Entrepreneurs
(RSPP). The award ceremony
for the 2020 Corporate Tax Awards
was held as part of a RSPP congress.
For the first time in its 20-year
history, PhosAgro increased its total
sales of mineral fertilizers to Russian
farmers to 3.5 mln tonnes. The Group
remains the leader in the total volume
of supplies of all types of mineral
fertilizers to Russian farmers, according
to the Russian Association of Fertilizer
Producers.
PhosAgro was awarded the Exchange
Commodity Market Leader prize
as the biggest seller in the Mineral
Raw Materials and Chemical Products
section in 2020. Amid a nearly
10-fold upsurge in mineral fertilizer
sales, PhosAgro’s sales of finished
products on the SPIMEX spiked almost
20-fold to 80,000 tonnes in 2020,
with the number of supply locations
increasing to 87. The Company
accounted for 79% of the total
volume of on-exchange sales in 2020,
almost doubling its share, according
to SPIMEX.
PhosAgro won the Grand Prix
at the Russian Business Leaders:
Dynamics, Responsibility
and Sustainability Awards held
by the RSPP. The Grand Prix has been
awarded only twice in the history
of the awards, and both times it has
gone to PhosAgro taking more than
half of the nominations.
PhosAgro, represented by Apatit,
won the Chemical Business
Index Award for Best Digital
Implementation as a company
that successfully applies digital
solutions in production, management
and trading processes. Apatit
submitted its robotic process
automation project for competition.
Russia’s largest mineral fertilizer
distribution network, PhosAgro-
Region* (part of PhosAgro
Group), and Exact Farming
signed a cooperation agreement
on the development of digital
services for Russian consumers
of PhosAgro’s mineral fertilizers.
The companies plan to jointly
develop applications for remote
monitoring, evaluating and improving
the performance of mineral nutrition
systems based on PhosAgro
products, and for developing
and distributing agronomic expertise.
PhosAgro joined the Association
of Economic Cooperation with African
states (AECAS). The Company and AECAS
agreed to work together towards
strengthening Russian businesses’
foothold in Africa and implementing
humanitarian and educational programmes
on the continent. PhosAgro’s sales of mineral
fertilizers in African countries have been
on the rise, reaching almost 600 tonnes
in 2020, up 30% from the previous year.
PhosAgro joined the Social Charter
of the Russian Business sponsored
by the Russian Union of Industrialists
and Entrepreneurs (RSPP).
PhosAgro and the government
of the Murmansk region signed a social
and economic partnership agreement
for 2020—2022 aimed at promoting
sustainable social and economic development
in the region, the cities of Kirovsk and Apatity
as well as the Kirovsk branch of Apatit.
The agreement calls for implementing joint
investment projects, cultural and youth
initiatives, developing social, sports
and tourism infrastructure.
PhosAgro and the government
of the Leningrad region signed a social
and economic partnership agreement
aimed at strengthening collaboration
in implementing joint investment, social
and charity initiatives, health, safety
and environmental projects.
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020 KEY ACTIVITIES
IN 2020
(CONTINUED)
RESEARCH AND EDUCATION
SUSTAINABLE DEVELOPMENT
PhosAgro, together with the Moscow
Timiryazev Agricultural Academy
and Innopraktika, established
an applied academy-based research
educational centre to train highly
qualified personnel for the agro-
industrial sector. This facility
is the first in a series of educational
centres planned to be launched
by PhosAgro and Innopraktika
at leading Russian agricultural
universities. The centre will run
industry-specific classes and stream
them for agricultural students
in the regions, thus helping to roll out
best practices across Russia.
PhosAgro launched its YouTube
channel named PhosAgro Pro
Agro. It features the Company’s
agronomic service specialists
and visiting experts who discuss
advanced technologies and effective
plant nutrition systems. Video
clips will show how works
are performed at PhosAgro’s field
trial stations and serve as guidelines
on how to grow quality crops.
The YouTube channel is integrated
with an online trading platform,
enabling agricultural producers
to place orders for fertilizers right
away.
PhosAgro published its climate
reporting for the second time.
As a result, the Company’s CDP
rating was raised from C to B- (on
an A–F scale, where A is the best
possible score). The improvement
is associated with ongoing
work on the implementation
of the Company’s climate strategy,
which includes development
and analysis of climate scenarios,
a climate risk assessment, emissions
reduction targets and a low-carbon
transition plan, as well as improved
non-financial disclosure.
Major ESG rating provider
Sustainalytics considerably improved
its assessment of PhosAgro
from 43.8 points to 26.9 points
(medium risk). Sustainalytics rated
PhosAgro’s management of ESG-
related challenges as “strong”.
MSCI ESG Research upgraded
PhosAgro’s sustainability rating
from BB to BBB. PhosAgro’s updated
rating is one of the highest awarded
by the agency to a major Russian
corporation.
COMPANY PROFILE
18/
19
The Company’s project to install
a station for continuous automatic
air quality control in Volkhov won
a prize at the 8th Awards for Russian
Leaders in Corporate Philanthropy.
These long-standing awards
for socially responsible businesses
are organised by the Donors Forum,
a coalition of major grantmakers
in Russia.
For more information on key
activities in 2020, see the Company
News section of the Company’s
website
PhosAgro Group was awarded
an International Fertilizer
Industry Association (IFA) 2020
gold medal for a responsible
approach to production.
The presentation of another IFA
gold medal to PhosAgro highlights
the Company’s consistent
commitment to continuous
improvement and application
of the best solutions in terms
of energy efficiency and resource
conservation, occupational health
and safety and environmental
protection.
PhosAgro was announced as a Global
Compact LEAD participant for its
ongoing commitment to the United
Nations Global Compact and its
principles for responsible business.
The Company was identified as being
among the most highly-engaged
participants of the world’s largest
corporate sustainability initiative.
The UN Food and Agriculture
Organization (FAO) and PhosAgro
launched a joint Soil Doctors
Programme in sustainable
agriculture. The programme
is aimed at developing farmers’
skills in sustainable soil management
and establishing regional networks
of soil laboratories in Africa, Latin
America and the Middle East,
with a particular focus on assessing
fertilizer quality and safety.
The project envisages creating soil
testing kits and distributing them
to 5,000 farmers in developing
countries.
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020 GEOGRAPHY
OUR GLOBAL
OPERATIONS
102-2
102-4
102-6
PhosAgro operates mining and processing
assets as well as its own logistics infrastructure,
including two port terminals, along with Russia’s
biggest distribution network for mineral
fertilizers and feed phosphates.
Global humanitarian projects on the map:
PhosAgro is FAO’s strategic partner for the sustainable soil management initiative.
• We participate in developing the Soil Doctor Testing Kit to be distributed among
5,000 farmers in 30 countries in Africa, Latin America and the Middle East.
• We contribute to building GLOSOLAN, the Global Soil Laboratories Networks,
covering more than 600 laboratories in over 150 countries.
PhosAgro initiated and is running the Green Chemistry for Life grant programme
for young scientists sponsored by UNESCO and IUPAC.
• In eight years since the launch of the programme, the international jury has
reviewed more than 700 applications from 120 countries; more than 40
scientists from 29 countries have received grants.
PhosAgro carries out joint agricultural research with the Russian Academy
of Sciences and universities as well as foreign educational and research
institutions such as the University of Milan, Adam Mickiewicz University in Poznań
and Rothamsted Research.
• The research outcomes are shared with farmers from Brazil, Serbia, Poland,
Lithuania, Latvia, Estonia, Russia, France, Germany, Italy and other countries.
COMPANY PROFILE
20/
21
71 regions
across Russia,
supplies to over
100 countries
Kirovsk
Volkhov
Moscow
The Group includes
Samoilov Scientific Research
Institute for Fertilizers
and Insectofungicides, NIUIF,
Russia’s only and Europe’s
leading fertilizer research
and development centre.
Cherepovets
Nizhny Novgorod
BRAZIL
POLAND
BELARUS
Kursk
Belgorod
FRANCE
SWITZERLAND
ROMANIA
Rostov-on-Don
KAZAKHSTAN
GERMANY
LITHUANIA
Orel
Tambov
Lipetsk
Balakovo
SERBIA
Krasnodar
Stavropol
REPUBLIC OF CYPRUS
Holding companies
Distribution
PhosAgro (Moscow)
PhosAgro-Region (Moscow)
Ore mining and fertilizer production
Apatit (Cherepovets, Vologda region)
and its branches in:
• Balakovo (Saratov region)
• Volkhov (Leningrad region)
• Kirovsk (Murmansk region)
R&D
NIUIF (Cherepovets)
The Company boasts a developed domestic sales network
and trading offices in all key export markets, enjoying
a strong market position in the premium European
market. PhosAgro relies on a netback-driven sales model
with a global presence.
PhosAgro-Belgorod (Belgorod)
PhosAgro-Volga (Nizhny Novgorod)
PhosAgro-Don (Rostov-on-Don)
PhosAgro-Kuban (Krasnodar)
PhosAgro-Kursk (Kursk)
PhosAgro-Lipetsk (Lipetsk)
PhosAgro-Orel (Orel)
PhosAgro-Stavropol (Stavropol)
PhosAgro-SeveroZapad (Cherepovets)
PhosAgro-Tambov (Tambov)
Trading House PhosAgro (Cherepovets)
PhosAgro South Africa (South Africa)
PhosAgro Americas Representacoes e Negocios Ltda (Brazil)
Phosint Trading LTD (Cyprus)
Phosint Limited (Cyprus)
PhosAgro Balkans S.R.L. (Romania)
PhosAgro Asia (Singapore)
PhosAgro Trading SA (Switzerland)
PhosAgro Polska Sp.z o.o. (Poland)
PhosAgro Deutschland GmbH (Germany)
PhosAgro France SAS (France)
PhosAgro Balkans DOO (Serbia)
PhosAgro Baltic UAB (Lithuania)
Representative office of PhosAgro-Region in Kazakhstan
Representative office of PhosAgro-Region in Belarus
SOUTH
AFRICA
SINGAPORE
For more information
about our geographic
footprint, see the Company’s
website
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020 BUSINESS
MODEL
UNIQUE PRODUCT –
IMPORTANT MISSION
For more details, see page 312
CREATING VALUE
FOR STAKEHOLDERS
COMPANY PROFILE
22/
23
From Green Mine to Green Plate principle is key to Russian producers success in global food
markets. Competitive pricing is yet another factor to place Russian eco-efficient agricultural
products at the centre of the global consumer market.
James Rogers,
member of the Board of Directors, independent director
<1 mg Cd / kg P2O5
thanks to its magmatic origin, phosphate
rock mined on the Kola Peninsula boasts
exceptional purity
140.1 kg of CO2-eq. / t
emissions
(–2.2% y-o-y) of Scope 1 GHG
PhosAgro takes part in the Carbon
Disclosure Project (CDP) to reduce
greenhouse gas emissions.
Sales under national brand
«GREEN
STANDARD»
For more information
on the Company’s
Strategy to 2025, see
the Strategic Report
section on page 54
102-2
PhosAgro is a supplier
of eco-efficient
products
RUB 253.9 bln
Revenue
>100
countries
Products effectively
used in >100 countries
with different climatic
conditions
PhosAgro’s
international
initiatives
and programmes
RAW MATERIALS
AND MINING
SUPPLIERS AND
PARTNERS
INTERNAL
LOGISTICS
PRODUCTION
EXTERNAL
LOGISTICS
SALES
APPLICATION
SAFE FOOD
1,820 mln t
Reserves
(categories А +
В + С1 + С2) of high-
quality apatite-
nepheline ore
from igneous rock
deposits
37.55 mln t
Apatite-nepheline
ore extracted
−10.5%
12.3 RUB bln
Cost of annual potash
consumption
−52.4%
4.4 RUB bln
Cost of annual sulphur
and sulphuric acid consumption
12.3 RUB bln
−2.3%
Cost of annual consumption
of natural gas
17.3%
4.8 RUB bln
Cost of annual ammonia
consumption
8,400
own fleet of railcars
vs 2019
15 %
quicker railcar
turnaround
at 2019
30 %
reduction
in the number
of third-party
mineral hoppers
used due to quicker
turnaround
11.7 mln t
+0.1%
phosphate rock
and nepheline concentrates,
including 7.4 mln t of own
(+2% y-o-y) consumption
+ 4.4%
7.6 mln t
phosphate-based fertilizers
and feed phosphates
+6.7%
2.4 mln t
nitrogen-based
fertilizers
0.2 mln t
+12.3%
other products
Project with DANONE
to create forage grass
and silage corn nutrition
for the production
of eco-friendly, premium
quality milk
7.2 mln t
+1.8%
fertilizer transshipment
at ports
at 2019
8%
lower unit cost
of transshipment (USD/t)
22.0 mln t
+1.1%
rail shipments
203.6 RUB bln
52
(phosphate-based
products in domestic
market – RUB 68.0 bln)
fertilizer grades,
including
12
with micronutrients
38.7 RUB bln
(nitrogen-based
products in domestic
market – RUB 7.2 bln
11.6 RUB bln
OTHER
(internal market –
RUB 9.8 bln)
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020 BUSINESS
MODEL:
continued
GLOBAL DEMAND –
GLOBAL RESPONSIBILITY
By adopting the climate and water strategies, the low-carbon transition plan and by expanding our list
of priority SDGs, PhosAgro has once again demonstrated that the environmental and climate agendas
are at the core of its day-to-day operations. We have designed our investment programme to upgrade
production facilities and increase efficiency with the Company’s environmental footprint in mind to help
reduce direct GHG emissions.
Irina Bokova,
Chair of the Board of Directors’ Sustainable Development Committee
COMPANY PROFILE
24/
25
For more details, see page 6
UN SDGS NAVIGATOR
Information on PhosAgro’s
contribution,
achievements, and other
data is available on the UN
Global Compact website’s
participant page
REGIONS OF OPERATION
GOOD HEALTH
AND WELL-BEING
SUSTAINABLE
CITIES AND
COMMUNITIES
CLIMATE
ACTION
Protection of the Company’s employees,
and support of healthcare and social
institutions during COVID-19 in the cities
where we operate. Total project spending
in 2020 stood at
Spending on social
programmes and charity
totalled
3
RUB bln
4
RUB bln
Following modernisation,
the sulphuric acid plant
at the Balakovo site can
recycle steam to generate
power and is now
80%
self-sufficient in electricity
PhosAgro
is among
the most
highly engaged
participants
of the world’s
largest
corporate
sustainability
initiative
ZERO
HUNGER
ZERO
HUNGER
PhosAgro’s sales of mineral
fertilizers in Africa have been
on the rise, growing in 2020 by
30%
PhosAgro’s sales office in South Africa
helps drive the Company’s sales
in the region
PhosAgro partners
with FAO to improve
farmer skills and launch
a global network of soil
laboratories in Africa,
Asia, Latin America,
and the Middle East Funding
1.2
USD mln
RAW MATERIALS
AND MINING
SUPPLIERS AND
PARTNERS
INTERNAL
LOGISTICS
PRODUCTION
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
ZERO
HUNGER
EXTERNAL
LOGISTICS
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
SALES
APPLICATION
SAFE FOOD
DECENT WORK AND
ECONOMIC GROWTH
LIFE
ON LAND
ZERO
HUNGER
PhosAgro has
the world’s largest fleet
of remote-controlled
deep drilling rigs
+10%
productivity increase
Code of Conduct
for Counterparties
and supplier ESG rating
>60 criteria
to assess ESG aspects
The Company launched
production of granulated
ammonium sulphate
for both direct application
and dry fertilizer mixtures.
This is Russia’s only
large-scale granulated
ammonium sulphate facility
with a capacity of
110 ktpa
Ambitious infrastructure
initiative for long
trains (over 70 railcars
in length).
Over RUB 2 bln invested
in the development
of the Russian regional
sales network. Mineral
fertilizer supplies
to Russian farmers
in 2020
69%
of PhosAgro’s total
shipments in 2020
3.54
mln t
Soil Doctor project
to promote
sustainable agriculture.
Participating
in the project are
5,000
farmers
from around the world
PhosAgro has been consistently
increasing the output of mineral
fertilizers with micronutrients,
with production growing
from 524 kt in 2019 to 621 kt
in 2020. In 2021, the Company
will launch new grades
to expand output
2.7 times to
1.7 mln t
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020 KEY
INDICATORS
COMPANY PROFILE
26/
27
I
I
F
N
A
N
C
A
L
H
G
H
L
G
H
T
S
I
I
KEY INDICATORS
Revenue, RUB bln
Adjusted net profit, RUB bln
253.9
248.1
233.3
46.8
37.1
41.8
2018
2019
2020
2018
2019
2020
EBITDA AND EBITDA MARGIN
EBITDA, RUB bln
EBITDA margin, RUB bln
84.3
75.6
74.9
2018
2019
2020
2018
2019
2020
LEVERAGE
Net debt, RUB bln
Net debt / EBITDA
156.9
131.6
135.3
2018
2019
2020
2018
2019
2020
33.2
30.5
32.1
1.86x
1.74х
1.81х
CAPEX, including capitalised repairs,
RUB bln
Dividend payments , RUB bln
40.9
42.7
38.4
2018
2019
2020
2018
38.9
32.3
13.6
2019
2020
I
H
G
H
L
G
H
T
S
I
I
I
N
D
C
A
T
O
R
S
O
P
E
R
A
T
N
G
I
I
S
U
S
T
A
N
A
B
L
E
D
E
V
E
L
O
P
M
E
N
T
Production of phosphate-based fertilizers
and feed phosphates, kt
Sales of phosphate-based fertilizers
and feed phosphates, kt
7,577.9
7,256.8
6,852
6,606.2
5,929.9
7,668.9
7,255.0
6,634.7
6,489.0
5,829.2
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Production of nitrogen-based
fertilizers, kt
Sales of nitrogen-based
fertilizers, kt
2,402.3
2,251.8
2,123
1,734.6
1,495.0
2,285.7
2,197.3
2,195.6
1,615.8
1,394.0
2016
2017
2018
2019
2020
2016
2017
2018
2019
2020
Pollutant emissions, kg/t
GHG emissions, kg/t
0.892
0.888
1.048
140.1
143.27
157.97
2018
2019
2020
2018
2019
2020
Waste water discharge, m3/t
Share of recycled and decontaminated hazard
class 1–4 waste, %
5,571
4,684
6,039
37.6
34.5
26.8
2018
2019
2020
2018
2019
2020
Employee satisfaction
and loyalty, %
Average annual training hours
per employee
63
60
62
79.5
75
92.4
2018
2019
2020
2018
2019
2020
Injury frequency rate
per 1 mln hours
Workplace fatalities1
0.22
0.52
0.59
0
0
3
2018
2019
2020
2018
2019
2020
1.
No cases of death as a result of occupational diseases
were recorded.
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020
28/
29
INVESTMENT CASE
AND CREDIT RATINGS
FERTILIZERS1
A GLOBAL PRODUCER
OF HIGH-QUALITY
PHOSPHATE-BASED
The largest supplier of DAP/MAP
and NPK fertilizers in Russia. An
extensive domestic sales network
and trading offices in all key export
markets. A strong market position
in the premium European market.
A netback-driven sales model
with a global presence
ISO 9001:2015, ISO 14001:2015,
OHSAS 18001, and GMP+
certifications that attest
to the high quality of products
and management efficiency
throughout their life cycle
Products exported to European
Union customers have been
registered pursuant to Regulation
(EC) No. 1907/2006 concerning
the Registration, Evaluation
and Authorisation of Chemicals
(REACH)
The Company successfully passed
a certification audit for compliance
with the International Fertilizer
Association’s Protect and Sustain
standard. The audit was
conducted by SGS, the world’s
leading inspection, verification,
testing and certification company
The technologies used
at PhosAgro’s production
sites meet the highest global
standards
MARGINS2
UNIQUE RESOURCE BASE
AND SECTOR-LEADING
A unique resource base with a mine life of around
60 years.
Thanks to its magmatic origin, phosphate rock
mined on the Kola Peninsula boasts exceptional
purity.
High-grade phosphate rock with a P2O5 content
of 39% or higher.
Self-sufficiency in major
inputs: 100% in phosphate
rock, 85% in ammonia, 95%
in sulphuric acid.
One of the highest gross
margins in the phosphate
segment.
EBITDA margin, %
33
32
31
32
27
25
25
28
23
20
50
31
16
17,5
9
31
20
20
20
15
10
PHOSAGRO
CLOSEST PEERS
2018
2019
2020
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020 FERTILIZERS 3
ECO-EFFICIENT
417-1
GREEN STANDARD
The Company is working to make
sustainable agriculture a reality
by enhancing fertilizer production
methods, improving properties
and developing new grades
of fertilizers.
PROJECTS4
SOUND CAPITAL
ALLOCATION IN HIGHLY
EFFECTIVE INVESTMENT
PhosAgro initiated and all members of the Russian
Association of Fertilizer Producers supported
the adoption of ecolabels for Russian-made mineral
fertilizers. Green labelling guarantees that Russian-
made mineral fertilizers conform to the most stringent
international requirements for environmental safety,
including the EU’s recent restrictions on the content
of heavy metals, such as cadmium, lead and arsenic,
in fertilizers.
This brand has been officially registered in Russia
as green labelling and will be submitted for international
certification.
Investment projects may get a go-ahead subject
to their high IRR (20%+), compliance with the BAT
and sustainability criteria along with the CAPEX/EBITDA
target, and a comfortable net debt / EBITDA covenant
headroom.
CAPEX breakdown, RUB bln1
36.0
36.3
41.5
1.8
11.3
2.2
10.2
23.9
28.4
1.9
13.3
20.8
GOVERNANCE5
WELL-BALANCED
CORPORATE
Stable credit ratings, all investment-grade
Increasingly higher ESG ratings
Percentile among all companies globally
(100 for the worst performance,
1 for the best performance)
Percentile among all agrochemical
producers globally
(100 for the worst performance, 1 for
the best performance)
30/
31
Transparent
ownership
structure
with over
7(70%)
30%
of shares in free
float.
independent
non-executive
directors
on the Board
of Directors.
6 Board
committees
meeting
on a regular
basis with five
of them chaired
by independent
directors.
2018
2019
2020
ВВВ-
Ваа3
ВВВ-
2018
BB
F
n/a1
84
n/a
ВВВ-
ВВВ-
Ваа3
Ваа3
ВВВ-
ВВВ-
2019
BB
C
2020
BBB
В-
45.21
26.91
69
31
45
3
2019
2020
2021
Non-industrial construction
Projects to support existing capacity
Investment projects
1.
Excluding capitalised repairs.
1.
SUSTAINALYTICS materially amended its methodology in 2019. The indicators currently reflect the level of unmanaged ESG risks. The decrease
in the absolute value of the score reflects a position improvement.
COMPANY PROFILEPHOSAGRO INTEGRATED REPORT 2020 5.3%
Increase in sales volumes
in 2020
Strategic
report
In terms of output, 2020 was
a record-breaking year for
PhosAgro. The long-term
development programme
allowed the Company
to produce more than ten million
tonnes of commercial products
a year for the first time ever,
while total fertilizer sales grew
by more than 5%.
34/
35
6,6
Выплата дивидендов, млрд руб
2020
2019
2018
In 2020, the global community faced one of the greatest
challenges in decades – the COVID-19 pandemic.
In a matter of weeks, the normal course of events
was upended to affect both individual industries
and economies of entire regions.
4,3
2,3
STRATEGY
Production of phosphate-based fertilizers and feed phosphates, mln t
Responding to the challenges
posed by the global pandemic,
the Company maintained its focus
on the implementation of the 2025
Strategic Plan, which was approved
by the Board in the spring of 2019.
2020
2019
2018
PhosAgro continued to strengthen
its position as a global leader
in the production of sustainable
low-cost phosphate-based
fertilizers. The Company met its
objectives for 2020 to ramp up its
production capacities and improve
the long-term sustainability
of its operations around the world
and is on course to deliver a 25%
increase in fertilizer and phosphate
production by 2025. It completed
its large-scale RUB 100 bln upgrade
programme at the Cherepovets
site. The SK-3300 sulphuric
acid production line was fully
commissioned. We also launched
the Kryolite railway station. The first
7.6
7.3
6.9
7.7
7.3
6.7
Sales of phosphate-based fertilizers and feed phosphates, mln t
2020
2019
2018
facilities of a new phosphate-based
fertilizer plant under construction
in Volkhov came on stream.
In August, we completed another
stage of the Balakovo mineral
fertilizer plant upgrade.
As a result of all these
improvements, the Company
was able to increase its fertilizer
production by 5% year-on-year
to 10 mln t.
Commercial expansion
in the Company’s priority markets
was equally impressive: total mineral
fertilizer sales to Russian farmers
exceeded 3.5 mln t, a record
CHAIRMAN’S
STATEMENT
PHOSAGRO’S RESPONSE
TO COVID-19 CHALLENGES
In 2020, the global community
faced one of its greatest challenges
in decades: the COVID-19 pandemic.
More than three million lives
have been lost around the world,
and over hundred million people
have been infected. The world’s
economy contracted strongly.
PhosAgro reacted promptly
to the first signs of this global
pandemic by developing an action
plan designed to protect the health
of its employees and their families
wherever the Company operates.
Measures to minimise operational
disruptions were swiftly put
in place, including Industry-wide
cooperative initiatives to maintain
the global supply chain in the mineral
fertilizer Industry and the wider
agricultural economy. PhosAgro
made a further contribution
to the country’s healthcare system
with its emergency PPE and testing
kit procurement programme
in the amount of more than
RUB 3.5 bln.
COVID-19 prevention expenses,
RUB mln
465
Our management team led
by Andrey Guryev reacted
swiftly to this crisis by putting
in place an emergency COVID-19
action plan whilst continuing
to successfully execute
our 2025 Strategic Plan. On behalf
of the Board, I would like to thank
all our employees and contractors
for their selfless dedication
and hard work throughout the year
and their contribution to the overall
result.
3.0 RUB bln
purchasing the necessary equipment,
protective gear and testing kits
1,038
318
165
87
58
92
139
82
139
425
PPI
Medical equipment
Medications / testing kits
Additional payments and benefits
Construction
Disinfection
Meals and accommodation for medical
workers
IT
Transportation
Other services
Lump-sum financial support for employees
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
36/
37
in the Company’s 20-year history,
helping to further consolidate its
leading position in this strategic
market. Total fertilizer exports
increased by 4.2% to 7.1 mln t
throughout the year, buoyed
by the Company’s investments
in its sales and distribution
network and the high quality
of its sustainable fertilizers free
from cadmium and other toxic
substances that can damage human
health.
Besides our investment in new
projects and our corporate social
responsibility programmes
and thanks to the strong cash
flows generated in 2020, the Board
approved an increased dividend
of RUB 39 bln, or 83% of adjusted net
profit.
SUSTAINABLE
DEVELOPMENT
The Company’s strategic focus
on sustainability and its long-
term investment programme
to support it certainly paid dividends
in this most challenging year.
In 2020, the Company continued
to improve on its strong
sustainability ratings as assessed
by Sustainalytics and MSCI ESG
Research and maintained its
contribution to the UN Sustainable
Development Goals, as per our 2025
Strategy Plan. The United Nations
once again named PhosAgro
as a Global Compact LEAD company
along with only 41 other businesses
worldwide.
The Board of Directors also
approved the Company’s updated
priority UN Sustainable Development
Goals (SDGs), adding SDG 13 (Climate
Action) to the list of ten previously
approved goals. This is in line
with the Group’s Climate and Water
strategies and the low carbon
transition plan. Efforts in reducing
GHG emissions will focus on cutting
emissions at PhosAgro sites across
its entire production chain, as well
as on energy efficiency measures
at the Company’s production
and infrastructure facilities. In 2020,
the Company’s CDP rating was
raised to B-, further confirming
the progress made in combating
climate change.
B–
CDP rating raised
CORPORATE GOVERNANCE
PhosAgro’s Board remains
committed to reviewing
the Company’s corporate
governance practices
from time to time to protect
investors and ensure adherence
to the highest standards
of corporate governance,
including disclosures and director
independence. Throughout what
was no doubt a challenging year
for all, PhosAgro’s Board maintained
a high degree of proactiveness
and coordinated and supported
to the management team
to ensure efficient decision-making
and the timely implementation
of all necessary emergency
measures to protect our employees
and their families and maintain
business continuity for the benefit
of the global agricultural supply
chain. All individual mandates,
including committee memberships
and chairmanships, have been
confirmed for 2021.
In keeping with best practice
and upon the recommendation
of our Audit Committee Chairman,
Marcus Rhodes, the Board approved
the Company’s new IFRS auditor.
I would like to take this opportunity
to thank KPMG for their outstanding
and highly professional service
over the past 15 years and welcome
PwC as our new audit firm.
THE YEAR AHEAD
Mindful of its obligations
to commercial partners
and farmers around the world
and its responsibility to ensure food
security in Russia and over 100 other
countries with a reliable supply of its
effective fertilizers, the Company
will remain focused on the execution
of its 2025 Strategic Plan
as it upgrades its facilities,
continues to invest in sustainability
and the safe operation of all its
production assets. PhosAgro
is well-positioned to further
increase its share of the global
market for sustainable fertilizers
as the economic recovery takes
a firmer hold worldwide, particularly
in Asia, and the UN forecasts a 40%
increase in the world’s population
by the end of the century.
Xavier R. Rolet,
Chairman of the Board of Directors
of PJSC PhosAgro
STRATEGIC REPORT
38/
39
CEO’S
STATEMENT
HEALTH AND SAFETY
OF OUR EMPLOYEES
AT THE FOREFRONT IN 2020
2020 was caught up in the COVID-
19 pandemic. Amid this unmatched
challenge, the health and safety
of our employees, their families,
and local communities in the regions
where we operate remained
at the top of our priorities. Thanks
to our robust business processes,
we were able to quickly adjust
to the new operating environment
while avoiding disruptions
in production and sales of fertilizers
in our key markets. In 2020, PhosAgro
was leading the way in Russia
in terms of safety of its employees
and local communities, having
taken unprecedented measures
to fight the virus. Amid ravages
wrought by COVID-19, we introduced
ad hoc work practices, spanning
from transportation of employees
to their workplaces and special
access control at our production
sites to creating a safe working
environment. Dedicated
production workload regulations
and schemes ensuring the availability
of key reserve personnel supporting
continuous production facilities were
created for any epidemiological
scenario. More than 3,500 people
of PhosAgro’s 17,500 employees
transitioned to work remotely.
Each facility established
a response task force. Supported
by the management of the Company
and its subsidiaries and working
in conjunction with highly qualified
leading experts in virology and anti-
epidemic efforts, the task forces
helped us ensure that PhosAgro’s feel
safe at their workplace.
In addition to caring
for our employees and their families,
we actively assisted healthcare
institutions across our footprint:
we purchased necessary equipment
and protective gear such as oxygen
concentrators, lung ventilators,
disposable syringes, vacutainers
and biomaterials, medical masks
and infection prevention suits,
disinfectants, as well as tests
and reagents for express testing
of our employees and residents
of the regions where we operate.
It was through the teamwork
and joint efforts that we managed
to avoid COVID-19 outbreaks
and maintain a safe and comfortable
work environment at all
of our facilities while at the same
time ensuring uninterrupted supply
of fertilizers to our customers.
Despite all the challenges and restrictions of 2020, PhosAgro has done
more than simply adjusting to the new circumstances and demonstrating
sustainably strong performance: we also delivered record-high production
and sales of fertilizers, reached new milestones in our major strategic
investment projects, and honoured our promises to investors. With 2020
marked by the COVID-19 pandemic, PhosAgro remained focused
on the health of our employees and their families while also working
to ensure food security for the Russian market. We have weathered the last
year’s hardships and lived up to all the challenges we faced.
STEADY PROGRESS TOWARDS
STRATEGY TO 2025
2020 was an exceptionally successful
year for PhosAgro, despite all
the challenges caused by the COVID-
19 pandemic. We met all the targets
under our Strategy to 2025.
In particular, we achieved sustainable
growth in production by consistently
upgrading existing facilities and adding
new ones and also enhancing
production efficiency throughout
the year. In 2020, PhosAgro’s output
was up by 5% y-o-y, reaching 10.2 mt.
Fertilizer sales were also strong,
rising by 5.3% y-o-y to almost 10 mt.
Sales growth was driven by higher
production volumes and stronger
demand in our priority markets.
Most importantly, we continued
to strengthen our positions
in Russia, which is a strategic priority
for PhosAgro, with record-high sales
of over 3.5 mt, up by more than 12%
y-o-y.
Even during the pandemic, PhosAgro
kept on implementing its major
strategic investment projects
as scheduled. In 2020, the Company
completed a large-scale upgrade
and re-equipment programme
at the Cherepovets site worth
over RUB 100 bln, which will more than
halve our procurement of ammonium
sulphate from external suppliers.
We commissioned the SK-3300
sulphuric acid production line
and launched traffic at the Kryolite
railway station. In August 2020,
we finished yet another stage
of upgrading Balakovo’s mineral
fertilizer capacities. Our last year’s
efforts culminated in early 2021,
when we completed the first stage
of constructing an ammophos plant
with a capacity of 231 ktpa in Volkhov
and finalised unique repairs on main
shaft No. 2, one of the Kirovsk
mine’s key ore drawing assets set
to increase our output going forward.
Our CAPEX in 2020 reached
RUB 40.9 bln,
or
49%
of the EBITDA, precisely in line
with our Strategy to 2025.
Notwithstanding the COVID-19
pandemic, we stayed on track.
For years, PhosAgro has been
successfully implementing its
investment programme to generate
free cash flow enabling us to finance
our continued growth, increase
our contribution to sustainability
efforts, and deliver on our promises
to investors.
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020 OPERATIONAL
AND FINANCIAL RESULTS
Sales by market, %
17
In 2020, the Company continued
to ramp up production and increase
its self-sufficiency in major inputs.
PhosAgro’s fertilizer output was up
by 5% y-o-y, reaching to 10 mt. We
delivered this growth by upgrading
existing facilities and adding
new ones and also enhancing
production efficiency throughout
the year. During the year, PhosAgro
benefitted from a favourable market
environment. Robust demand
and high availability of fertilizers,
coupled with limited global phosphate
production, enabled us to increase
sales by more than 5% y-o-
y. As I have already mentioned,
we achieved record-high sales
in our key market, Russia. As a result,
the domestic market share
in our total supplies was up by 7.4%
y-o-y.
Driven by sales growth, PhosAgro’s
revenue in 2020 increased by 2.3%
y-o-y to RUB 253.9 bln (USD 3.5
bln). EBITDA grew by 11.5% to RUB
84.3 bln (USD 1,2 bln), while EBITDA
margin remained strong at 33.2%,
up by 2.7 pp y-o-y. In 2020, our free
cash flow rose by more than half
to over RUB 42 bln, hitting another
record. PhosAgro’s strong growth
enhances our ability to deliver on all
our existing obligations to partners
and the public at large.
SUSTAINABLE DEVELOPMENT
AS ONE OF THE PILLARS
OF OUR STRATEGY
PhosAgro is a responsible
producer of mineral fertilizers used
in more than 100 countries across
the globe. Sustainable development
32
25
26
Russia & CIS
Poland, Baltics, Balkans, Western Europe
Latin & North America
Asia, Africa & RoW
is key to implementing our Strategy
to 2025. All of our efforts
are geared to creating value
for our stakeholders and the public
at large. 2020 was an important
step towards our goals. PhosAgro’s
Board of Directors approved climate
and water strategies and endorsed
a low-carbon transition plan,
including measures to cut emissions
at the PhosAgro sites and across
the value chain, as well as to enhance
energy efficiency at the Company’s
production and infrastructure
facilities.
In September 2020,
the UN once again named PhosAgro
a Global Compact LEAD company
for its ongoing commitment
to the Compact’s principles
in the areas of human rights, labour,
the environment and anti-corruption
activities. The Company was identified
as being among the most highly-
engaged participants of the world’s
largest corporate sustainability
initiative. Today, there are only 41
LEAD participants globally.
EBITDA margin, RUB bln
2020
2019
2018
33.2
30.5
32.1
PhosAgro joined efforts
with the Russian Association
of Fertilizer Producers to support
the initiative on green labelling
of products with improved
environmental characteristics,
with an emblem depicting a green
wheat spike in a circle to confirm
eco-friendliness of Russian-made
fertilizers. This indicates the country’s
increased focus on food quality
and security, which we are willing
to support and guarantee.
Marking another milestone in 2020,
PhosAgro launched a project
to use renewable energy sources
at its production and social
facilities, with solar panels installed
in Balakovo. In early 2021, PhosAgro
increased green electricity use
in agrochemical production after
the Apatit mining and processing
plant signed a contract for the supply
of hydroelectric power from plants
on the Kola Peninsula, which
covered around 20% of its output.
These initiatives are fully in line
with PhosAgro’s growth trajectory
and the UN Sustainable Development
Goals it pursues.
On top of that, the Company’s
numerous projects won recognition
among the largest Russian
and international organisations
focusing on sustainable development.
In October 2020, PhosAgro won
the Grand Prix at the Russian
Business Leaders: Dynamics
and Responsibility Awards held
by the Russian Union of Industrialists
and Entrepreneurs. Of particular
note is that the Grand Prix has been
awarded only twice in the history
of the awards, and both times it has
gone to PhosAgro taking more
than half of the nominations. Also
in 2020, Sustainalytics improved
PhosAgro’s ESG rating from 43.8
to 26.9, which is one of the best
scores among the largest fertilizer
producers in Russia and beyond.
In August 2020, MSCI ESG Research,
another prominent sustainability
firm, upgraded PhosAgro’s rating
to BBB. Later in December 2020,
the Carbon Disclosure Project, one
of the largest and most authoritative
studies of companies in terms
40/
41
GHG emissions per unit of output, kg/t1
2020
2019
2018
140.00
143.272
157.973
of climate responsibility metrics,
raised PhosAgro’s rating from C
to B-. Having achieved appreciation
on a global scale, we will keep
evolving as we continue to deliver
strong results for our stakeholders
and the public at large.
of fertilizers with a proven track
record in our home market
and >100 countries across the globe.
In 2021, PhosAgro will also stay
focused on social and charitable
programmes and sustainability
initiatives.
I would like to thank all
of our stakeholders, including
employees and contractors
as our joint efforts help us continue
our journey and keep striving
for more. We are entering 2021
with the confidence that together
we can overcome any challenge
to ensure sustainable and successful
growth for PhosAgro.
Andrey Guryev,
General Director and Chairman
of the Management Board
of PJSC PhosAgro
OUTLOOK
2020 proved that PhosAgro
is on the right track. Even during
tough times, the Company
demonstrated excellent
performance and enhanced
its potential for the benefit
of our shareholders and all
stakeholders while also maintaining
its leadership in our key
market, Russia. We will certainly
continue our progress in 2021
by upgrading existing facilities
and adding new ones in line
with our investment programme.
We strive to ramp up the output
EBITDA for 2020 grew by
EBITDA margin stood at
11.5%
33.2%
1
Scope 1 GHG emissions per tonne of finished and semi-finished products.
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020 BUSINESS
ENVIRONMENT
42/
43
RUSSIA’S REVISED FOOD SECURITY DOCTRINE
JANUARY 2020
Russia’s President Vladimir Putin approved
the country’s revised Food Security Doctrine.
In addition to securing food independence,
and accessibility and affordability of high-quality
foods to every citizen nationwide, from now
on increasing food exports will be among
the doctrine’s targets. In addition, the doctrine
provides for boosting the yield of key crops
and fertility of agricultural land, sustainable
use of farm soils and for promoting land
reclamation.
Competitive pricing is yet another factor
to place Russian eco-efficient agricultural
products at the centre of the global consumer
market. According to Russia’s Ministry
of Agriculture, the share of crops to be supplied
under the Green One brand will account
for 10–15% of all agricultural exports by 2024.
LEGAL AND REGULATORY FRAMEWORK
FOR THE GREEN ONE BRAND
MARCH 2020
The government introduced the first out
of six packages of the national standard
for production, transportation and storage
of improved agricultural products, raw
materials, and food. This includes introduction
of GOST R 58658–2019 “Agricultural products,
raw materials and food with improved
environmental characteristics. Mineral
fertilizers. General technical requirements”.
On 17 March 2021, the State Duma
of the Russian Federation adopted in the first
reading a draft law On Agricultural Products,
Raw Materials and Food with Improved
Environmental Characteristics.
COVID-19 PANDEMIC
DECEMBER 2019 – PRESENT
In 2020, the world faced an unprecedented challenge
posed by the novel coronavirus (COVID-19). The virus
first appeared in China at the end of 2019 and spread
across the globe over the next couple of months.
Countries had to close borders and introduce
lockdowns to curb the outbreak, while healthcare
systems strained under the pressure.
The crisis caused by COVID-19 is one of the most
economically challenging since World War II. It has led
to a significant drop in business and trade activity
across global markets (especially during the first wave
in March–May 2020) and brought about considerable
uncertainty over the near- and mid-term economic
development prospects. The lockdown spurred massive
social changes with consequences yet to be fully seen.
As the pandemic broke out, the mineral fertilizer
market did not experience any major shocks.
On the contrary, it was actively expanding,
with the growth in fertilizer demand supporting
the prices. Even under the tightest restrictions, many
countries kept supplying and transporting mineral
fertilizers to safeguard the agricultural chain. A key
contributor to the planet’s food security, our industry
turned out to be less affected by the global crisis.
STRATEGIC REPORT
BUSINESS
ENVIRONMENT
44/
45
TIGHTER
ENVIRONMENTAL
REGULATIONS
IN EU
MAY 2020
The European Commission
announced a new strategy,
From Farm to Fork
The European Commission
published targets on restricting
the use of pesticides and sales
of antimicrobials by 2030. These
targets are listed in the draft
strategy on promoting sustainable
agriculture, From Farm to Fork,
which the European Commission
proposed to the European
Parliament and the Council
of the European Union.
MARCH 2021
Pascal Canfin, Chair of the Committee
on the Environment, Public Health
and Food Safety at the European
Parliament, says that the targets
should be transformed into the EU
legislation.
In addition, the European Commission
plans to develop a sustainable food-
labelling framework to inform consumers
about the climate, environmental,
and social impact associated
with production and consumption
of a particular food item.
In the next ten years,
the use of pesticides is to be halved,
and the use of fertilizers reduced
by at least 20%.
Another goal is to lower meat
consumption and increase fruit
and vegetable intake.
The European Commission also seeks
to lower the sales of antimicrobials
by 50% and expand the share
of organic farming to 25% by 2030.
The strategy is aimed at developing
sustainable agriculture to provide
the world with nutritious and affordable
food while minimising the climate
and environmental impact.
The EU introduced new green
labelling for fertilizers
label. The new labelling is set to help
identify eco-efficient fertilizers.
The European Commission published
guidelines for manufacturers
and market regulators
with information on eco-labels
for mineral fertilizers. Suppliers
of fertilizers with low levels
of the toxic metal cadmium (less
than 20 mg/kg) can now mark
their products with a special green
This is the first step in the EU’s
strategy to restrict fertilizers
with higher content of heavy metals,
including cadmium. The respective
regulation was drafted in 2016,
but the European Parliament only
adopted it in 2019 following long-
running discussions. According
to the document, fertilizer products
containing more than 60 mg
cadmium per kg will be banned
from the EU from spring 2022,
and this limit will be further reduced
in 2026 – to 40 mg/kg.
STRATEGIC REPORT
MARKET
OVERVIEW
46/
47
ECONOMIC FACTORS
GLOBAL ECONOMY
In 2020, the COVID-19 pandemic took the lives of nearly
two million people, with the death toll continuing to grow.
An even greater number of people suffered a severe
disease form. The pandemic is expected to push nearly
90 million people into extreme poverty. Global economy
is still recovering from the steep plunge it took in April
2020 amid the lockdown restrictions. However, due
to the ongoing spread of COVID-19, many countries
have slowed down the lifting of prohibitive prescriptions,
while some other nations are reintroducing part
of the lockdown restrictions to protect the most
vulnerable groups of populations. The crisis caused
by COVID-19 is one of the most economically challenging
since World War II, as it led to a significant drop
in business and trade activity across global markets
(especially during the first wave in March–May
2020) and brought about considerable uncertainty
over the near- and mid-term economic development
prospects.
According to the IMF outlook1, global economy will
lose 4.4% in 2020, with a growth of 5.2% forecasted
for 2021. That said, the scale and speed of recovery
remain largely unknown. The IMF believes that
industrial production in both advanced and developing
economies will drop below the 2019 level. With its strong
and resilient recovery rates, China stands out as one
of the remarkable exceptions. According to the World
Trade Organisation, global trade saw a sharp decline
in the first half of 2020, comparable to the plunge
experienced during the financial crisis of 2008–2009.
After the recovery in 2021, global growth rates
are expected to gradually slow down to approximately
3.5% in the mid-term. This implies only limited progress
toward catching up to the path of economic activity
for 2020–2025 projected before the pandemic for both
advanced and emerging market and developing
economies. It is also a severe setback to the projected
improvement in average living standards across all
country groups.
1
World Economic Outlook, IMF, October 2020
Evolution of global GDP, %
Countries
Actual
Forecast
World
Advanced economies
Emerging market and
developing economies
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
5.1
3.0
7.4
3.9
1.7
6.2
3.4
1.2
5.1
3.3
1.4
4.7
3.4
1.8
4.6
3.2
2.1
4.0
3.2
1.7
4.3
3.7
2.3
4.7
3.6
2.2
4.5
2.8
(4.4)
1.7
3.7
(5.8)
(3.3)
5.2
3.9
6.0
RUSSIAN ECONOMY
In 2020, the Russian economy
faced unprecedented challenges
due to the suspension of business
activity in an attempt to stop
the spread of COVID-19, as well
as the drop in oil prices and export
demand. The pandemic crisis
led to a significant fall in Russian
GDP, record-breaking reduction
of real disposable incomes, growing
unemployment rates, slowdown
in consumption and investment,
and, finally, a “staggering” budget
Russian economic growth
deficit (as the Russian authorities
put it themselves). Estimates
of the pandemic scale and timeline
changed throughout the year.
To date, the range of forecasts
and projections is still very broad.
According to the forecast
by the Russian Ministry of Economic
Development, the GDP decline in 2020
will amount to 3.9%, with a growth
of 3.3% projected for 2021.
The key assumption in the forecast
by the Russian Ministry of Economic
Development is that of gradual
global economic recovery, including
the revival of foreign export demand.
Oil and gas are not expected
to dominate the export mix.
The 2021 forecast also assumes
the resumption of product
and service imports (up by 10% in real
terms) primarily driven by recovery
in the service segment.
Item
Actual
Forecast
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021F
GDP, %
Industrial production, %
4.5
7.3
4.3
5.0
3.7
3.4
1.8
0.4
0.7
(2.0)
0.3
1.7
(3.4)
1.1
1.8
2.1
2.5
2.9
1.3
2.3
(3.9)
(4.1)
3.3
2.6
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020 KEY TRENDS IN THE GLOBAL FERTILIZER MARKET
Global fertilizer demand, mln t nutrient
48/
49
AGRICULTURAL MARKETS
Agricultural products, food and allied
industrial goods, including fertilizers,
are classified as strategic supplies,
with COVID-19 having a limited impact
on them. These goods benefitted
from preferential supply terms
during the lockdown. As a result,
we saw an increase in trade volumes
for both core agricultural products
and fertilizers. Farmers from many
advanced and developing economies
received additional government
subsidies designed to boost
the resilience of supply chains
in the agricultural sector. This had
a positive effect on the global mineral
fertilizer market.
HIGH LEVEL NUTRIENT
DEMAND REVIEW
The International Fertilizer Association
(IFA) expects1 global fertilizer use
to rebound by 1.6% to 189.8 mln
t nutrient in 2019/20, following
an estimated decline of 1.7% to 186.8
mln t nutrient in 2018/19.
Global fertilizer use, mln t nutrient
200
195
190
185
180
195.6
193.5
190.0
189.8
187.8
186.2
186.8
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21 2021/22
The rise in global fertilizer use
in 2019/20 was led by India, where
the monsoon brought abundant
rainfall, and improved consumption
in the US. In South Asia and North
America consumption grew by ca.
6.0%, or 2.0 and 1.4 mln t nutrient
respectively. Eastern Europe
and Central Asia (FSU countries)
registered a more than 10% (0.9
mln t nutrient) growth in 2019/20,
mostly driven by higher consumption
in Russia. Latin America and the Middle
East saw an increase of 0.5 mln t
nutrient, or 2% and 10% respectively.
Fertilizer use remained almost stable
in West and Central Europe (WCE)
and Oceania
Despite the overall growth in global
fertilizer use, some countries are still
experiencing difficulties due to logistics
and other limitations related
to the pandemic.
The World Bank, International Grains
Council (IGC) and other industry
organisations expect global production
of grains and oilseeds to grow,
with drivers including increases
in cultivated land and crop yields
across the key regions (in Brazil
and the USA following a recovery
from the 2019 challenges). Global
output of rice rose slightly
on expanded acreage in Asia, while
wheat output remained stable.
and was estimated to be down
in Africa by some 0.2 mln t nutrient,
or 2.4%. Lower consumption was also
recorded in East Asia (down by 2.3
mln t nutrient, or 3.5%) primarily due
to reduced demand in China, Indonesia
and Malaysia caused by unfavourable
weather conditions (drought) coupled
with adverse trends in the palm oil
market.
South Asia (with an anticipated growth
of 5.6 mln t nutrient) is expected
to be the main positive driver of global
fertilizer use in 2020/21, followed
by North America and Latin America
(0.5 and 0.7 mln t nutrient respectively)
and Europe (0.5 mln t nutrient). Four
regions could gain around 100,000
tonnes of nutrients each: EECA, Africa,
Oceania and WCE.
In 2020/21, IFA anticipates a 2%
increase in global fertilizer use to 193.5
mln t nutrient despite the COVID-
19 pandemic. Phosphorus (P2O5)
consumption is expected to increase
by 3%, compared with 1.6% for nitrogen
(N) and 1.4% for potassium (K2O).
Several factors are contributing
to greater fertilizer demand, including
government measures to support
agricultural producers and the mineral
fertilizer industry, resilient crop prices,
weakening of domestic currencies
in large agricultural exporting
countries, and favourable weather
in key consuming countries.
India will be the main contributor
to global demand growth in 2020/21,
including as a result of a favourable
monsoon season in the second half
of 2020. In Latin America, Brazil
will be the main growth driver given
an expected soy and corn acreage
expansion. Further recovery
in fertilizer use is anticipated
in the USA and Canada, also
as a result of expanded acreage.
Russia is also expected to deliver stable
growth in fertilizer use attributable
to favourable conditions in the grains
market.
Nutrient
Nitrogen (N)
Phosphate (P2O5)
Potassium (K2O)
Total
2019/20
2020/21
2019/2020, %
2020/2021, %
106.7
47.1
36.1
189.9
108.4
48.6
36.6
193.6
2.8
2.6
(2.7)
1.7
1.6
3.2
1.4
1.9
Fertilizer consumption trends by region in 2019–2021,
mln t nutrient
Anticipated changes in fertilizer consumption by region
in 2020–2021, mln t nutrient
Latin America
−1.052
East Asia
−0.889
North America
−0.511
Africa
Middle East
Oceania
Eastern Europe and Central Asia
Western and Central Europe
South Asia
−0.010
0.131
0.160
0.189
0.312
Oceania
0.070
Middle East
0.070
Africa
Eastern Europe and Central Asia
North America
Western and Central Europe
0.102
0.122
0.472
0.533
1.584
Latin America
0.684
East Asia
South Asia
1.520
5.565
HIGH LEVEL NUTRIENT
SUPPLY REVIEW
World fertilizer supply in 2020
remained relatively resilient globally.
Despite uncertainties and new
challenges related to the COVID-19
pandemic, global supply of ammonia,
urea, MAP and potassium fertilizers
was on a steady growth path,
while both DAP and TSP production
declined slightly.
Temporary shutdowns
or closures of plants
in the nitrogen and potassium
market segments were balanced
by the start-up of new facilities
/ ramp-ups. As for phosphate
products, capacities remained
almost unchanged compared
with 2019. The key factors
affecting the supply of fertilizers
in 2020 included natural gas price
volatility, notably in Europe, higher
inflation, FX rate fluctuations,
and new trade defence measures.
In June 2020, US-based Mosaic
filed petitions with the country’s
Department of Commerce
and International Trade
Commission for countervailing
duty investigations to determine
whether producers of phosphate
fertilizers in Morocco
and Russia were receiving
subsidies. In November 2020,
the US Department of Commerce
issued preliminary determinations
on phosphate fertilizer imports,
with rates ranging from 17%
to 75% depending on the producer
from Morocco or Russia.
The investigations are expected
to end with a final decision
on the rates in Q2 2021.
According to IFA1, despite
the uncertainties associated
with the COVID-19 pandemic,
the output of raw materials
demonstrated moderate growth.
Estimates show that global output
of ammonia, phosphate rock
and primary potash was up by 1%
each.
In 2020, global supply of the key
nutrients – nitrogen, phosphate
and potassium – was estimated
at 253 mln t nutrient, up 0.7% year-
on-year. Fertilizer demand (79%
of total demand) was estimated
at 191.4 mln t nutrient, up 2.2%
year-on-year. Net industrial
uses, non-allocated tonnages
and distribution losses totalled 51.7
mln t nutrient.
Production capacities showed
mixed performance in the key
segments, remaining almost flat
in phosphoric acid and increasing
in ammonia and potassium.
Overall global net capacity growth
in the three segments was 5.4
mln t nutrients.
1
Executive Summary Short-Term Fertilizer Outlook 2020–2021 Market Intelligence and Agriculture Services International Fertilizer Association (IFA), November 2020.
1
Executive Summary Short-Term Fertilizer Outlook 2020–2021 Market Intelligence and Agriculture Services International Fertilizer Association (IFA), November 2020.
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020 PHOSPHATE ROCK
AND PHOSPHATE-BASED
FERTILIZER MARKET
Phosphate rock
According to IFA’s preliminary
estimates, global production
of phosphate rock in 2020 rose
slightly, by 1% year-on-year,
to 207.7 mln t following two years
of contraction.
Exports of phosphate rock
remained steady at around 30 mln t,
with Morocco remaining the world’s
largest exporter (one-third of total
exports). Jordan and other North
African countries accounted
for 18% and 14% of global exports
respectively. The largest importers
of phosphate rock were India (25%),
Europe (23%) and Latin America (15%).
Phosphate rock prices were growing
gradually throughout 2020 amid
favourable trends in phosphate-
based fertilizer markets.
Phosphate-based fertilizers
According to preliminary estimates,
global production of the main types
of phosphate-based fertilizers (DAP/
MAP) grew by 3% in 2020 to 64
mln t in real terms. MAP output
increased by ca. 5% driven by higher
production in Russia, Brazil, Morocco
and the US, while DAP output grew
by 2%, in particular as a result
of reduced production in China
and India caused by COVID-19 related
restrictions.
Global trade in DAP/MAP in 2020
was 31.3 mln t vs 30.1 mln t in 2019.
Imports of DAP/MAP to Latin
America and South Asia (India) grew
strongly, whereas supplies to the US
shrank due to, among other things,
the investigation opened
to determine whether producers
from Morocco and Russia,
the key suppliers of phosphate-
based fertilizers globally, were
receiving subsidies. Exports
of DAP from China declined in 2020
on the back of lower production/
exports amid COVID-19 restrictions.
Global prices for the main types
of phosphate-based fertilizers were
mostly growing in 2020 supported
by favourable conditions in the core
agricultural product markets
and high affordability of fertilizers
as a result. Besides, the key markets
enjoyed favourable weather
conditions, which also contributed
to higher seasonal demand in India,
Brazil and the US. As DAP/MAP
exports from China and the US
reduced in favour of domestic
supplies, this served as an additional
driver of higher global prices.
AMMONIA AND UREA
MARKET
Ammonia
According to preliminary estimates,
global ammonia production in 2020
expanded by 1.1% to 179.4 mln t,
with Russia, the USA and Saudi
Arabia among the main growth
contributors. At the same time,
ammonia production contracted
in Latin America (with amplified
idle capacity in Brazil, disruptions
in natural gas supplies in Venezuela,
and one of the plants shut down
in Trinidad) and South Asia (due
to disruptions in commodity
supplies and fallout from COVID-
19 in Bangladesh and India). Despite
the closure of production capacities
in Kuwait and trade sanctions
imposed on Iranian products still
50/
51
in force, ammonia production
in the Middle East increased by 1%
driven by growth in Saudi Arabia.
Global ammonia trade volumes
in 2020 are estimated at 19.7 mln
t, up 0.4% year-on-year. Russian
exports account for 24% of world
trade. The share of Trinidad
and Tobago in global ammonia
exports stands at 23%. There
is also a notable rise in exports
from Eastern Europe, Central
Asia and North America. In 2020,
contraction of ammonia imports
was recorded in India, Mexico
and Ukraine, whereas China, Morocco
and the USA increased their imports.
Pricing in the global ammonia market
was influenced by low natural
gas prices and decreased import
activity in Q2–Q3 2020, including due
to the impact from COVID-19. In late
2020, global ammonia prices began
to recover on the back of stronger
seasonal demand in the key
merchant ammonia export markets.
Urea
Global urea production in 2020
increased by 2.8% to 181.7 mln
t driven by growing volumes
in Asia, Africa and North America.
China still ranks as the largest
urea manufacturer in the world,
with production in 2020 rising
by 2.9% to 56.8 mln t. The only
recorded contraction was in Latin
America due to the suspension
of production and disruptions
in commodity supplies in Brazil,
Bolivia and Venezuela.
Global urea trade volumes
in 2020 are estimated at 52.2
mln t, up 3.4% year-on-year. This
is due to a considerable increase
in demand for imports in Brazil
and other Latin American countries
and continued demand from India,
the world’s largest urea importer.
2020 saw the resumption of urea
exports from Ukraine driven
by relatively low prices for natural
gas and higher production volumes.
Global urea prices are traditionally
highly volatile due to seasonal
changes in the balance between
demand and supply
in the global market. The reduction
of prices from April to June comes
about as seasonal demand in the key
sales markets (North America,
Europe, China and Russia draws
to an end, with recovery following
on the back of higher import
demand from India and Brazil,
the leading urea consumers.
POTASH FERTILIZER MARKET
According to the preliminary
IFA estimates, global production
of potash feedstock in 2020
recovered by 0.8% to 42.1 mln t
of К2О, including as a result of higher
demand from the key markets
of North and South America
and India. New capacity launches
in 2020 had a limited impact due
to the gradual ramp-up of new
capacities.
Global trade volumes
for potassium chloride, the key type
of potash-based fertilizers, reached
approximately 51.4 mln t in 2020, up
5.8% year-on-year. With favourable
weather conditions and continued
growth in the agricultural markets,
the USA, Brazil and India increased
their imports, whereas the key
consumption markets in Asia (China,
South East Asia) cut back on import
demand, producing a negative
on global prices, especially in the first
half of 2020.
Phosphate rock prices, USD/t, FOB Morocco (32% Р2О5)
DAP/MAP prices, USD/t, FOB Baltic
Evolution of merchant ammonia prices, USD per tonne,
FOB, Baltic
Evolution of urea prices, USD per tonne, FOB,
Baltic
90
85
80
75
390
370
350
330
310
290
270
240
230
220
210
200
190
180
270
260
250
240
230
220
210
200
190
70
January February March April May June July August September October November December
250
January February March April May June July August September October November December
170
January February March April May June July August September October November December
180
January February March April May June July August September October November December
Prilled
Granulated
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020 THE COMPANY’S ROLE
IN THE INDUSTRY
№ 1
globally as a producer of
high-quality phosphate
rock (P2O5 content at 39%
and above)
№ 1
in Europe in terms of
urea and mineral fertilizer
capacity concentrated at one
production facility
(Apatit, Cherepovets)
One of the
top-5
global producers of DAP/MAP
by capacity
52/
53
100+
products supplied to countries
covering all inhabited continents
Share of the Company’s supplies
in the key sales markets (share of DAP/
MAP/NPS/NPK supplies in total regional
imports, 2020 estimates), %
Russia – 57%
(share of total supplies)
Europe – 18%
North America – 6%
Latin America – 8%
Africa – 10%
India – 12%
Sources: CRU, RAFP
Europe’s largest producer of
phosphate-based fertilizers1
Leading supplier of all types of
mineral fertilizers in the Russian
market in aggregate terms
The only Russian and one of the
leading European producers of feed
phosphate (MCP) and liquid complex
fertilizers
Peer comparison by EBITDA margin, 2020
PhosAgro
Nearest
competitors
1
By total production capacity for DAP/MAP/NP/NPK/NPS.
17.5
16.0
20.0
14.0
28.0
33.2
32.0
31.0
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
STRATEGY TO 2025
2020 marked the beginning of a new strategic
cycle, with the Strategy to 2025 approved
by the Company in 2019. The new strategic cycle
envisages construction of hi-tech production
sites and ramp-up of fertilizer output to 11.7
mln t. Achieving this goal would be impossible
without long-term investments in both expansion
of production capacities and infrastructure
projects.
In 2020, we saw clear progress towards
the 2025 goals. In Q4 2020, main shaft
at the Kirovsky mine was put into operation,
with works ongoing to complete another critical
resource development project – construction
of the first start-up facility for the tenth horizon
of the Kirovsky mine (with commissioning
scheduled for late 2021). The ambitious projects
launched to upgrade the sites in Balakovo
and Volkhov will help increase in-house
concentrate processing volumes and boost
mineral fertilizer output.
PhosAgro is actively developing its logistics
chains in a bid to become closer to customers.
In 2020, the Company achieved interim
targets against such metrics as the number
of distribution and logistics centres, and storage
capacity for solid and liquid mineral fertilizers.
The completion of construction and start
of traffic service at the Kriolit railway station
marked an important milestone on the path
towards the key goal in the realm of logistics –
expansion of the Company’s railway throughput
capacity to over 16.5 mtpa. The Company
is also firmly on track with other logistics goals
from the Strategy to 2025, including acquisition
of own rolling stock and development of port
infrastructure.
Our objective is to set new standards
for the industry in terms of product eco-
efficiency as a way to promote public health,
protect the environment, and prevent air
and water pollution. We are integrating
sustainability principles into all aspects
of our operations. Adoption of the Climate
and Water strategies in 2020 was an important
step marking progress towards the ESG targets.
SUSTAINABILITY IS THE CORE
PRINCIPLE INTEGRATED INTO ALL LINES
OF THE COMPANY’S OPERATIONS
Sustainability principles are becoming a new parlance used
by PhosAgro to communicate with all its stakeholders.
In today’s world, the Company cannot develop its
strategy and look into the future without having a clear
understanding of the UN sustainability principles.
S
A
E
R
A
S
U
C
O
F
C
G
E
T
A
R
T
S
I
54/
55
STRATEGY PRINCIPLES
1.
2.
3.
Innovativeness
Vertical integration
Digitalisation
OPERATING EFFICIENCY
AND PRODUCTION
GROWTH
Learn more
on the p. 58
INCREASING
SALES IN PRIORITY
MARKETS
Learn more
on the p. 64
BOOSTING LOGISTICS
EFFICIENCY
Learn more
on the p. 68
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
OPERATING EFFICIENCY
AND PRODUCTION GROWTH
56/
57
STRATEGIC GOALS
TARGET VALUES 2025
RISKS
Capacity
expansion
Higher self-sufficiency
in feedstock
11.1 mln t
phosphate rock
production
8.4 mln t
Group’s phosphate
rock processing
11.7 mln t
marketable product
output
Mismatch between staff headcount and skills,
and corporate needs
Failure to achieve targets under investment projects
HSE risks
Production process risks
ammonia 91%
76%
sulphuric
acid
electricity 75%
42%
ammonium
sulphate
Mismatch between staff headcount and skills,
and corporate needs
Failure to achieve targets under investment projects
Stronger operating
efficiency
Implementation of organisational projects with a high IRR (15%+) in line with
the BAT and sustainability criteria Compliance with the CAPEX/EBITDA
target and a comfortable net debt / EBITDA covenant headroom
Mismatch between staff headcount and skills,
and corporate needs
Failure to achieve targets under investment projects
Expansion of the foothold
in premium markets
Focus on Russia and the CIS
Russia and the CIS
North and South
America
Europe
Foreign sanctions imposed on the Group’s companies
Regulatory risks
Mismatch between staff headcount and skills,
and corporate needs
up
to
3.7 mln t
up
to
3.5 mln t
up
to
3.1 mln t
Increase:
in the number of
distribution and logistics
centres
total storage
capacity
to 351
to 650 kt1
storage capacity
for liquid complex
fertilizers
to 62 kt1
INCREASING SALES IN PRIORITY
MARKETS
Higher share
of premium fertilizer
brands in the sales mix
Increase in the share of complex fertilizers (NPK/NPS/PKS)
Production process risks
to 43% (5 mln t)
of total output
Alignment of production
and sales
Increase in the railway throughput capacity to over
Regulatory risks
Failure to achieve targets under investment projects
Reduction of per unit
transportation costs
Redistribution of cargo flows
to the ports:
Expansion of own rolling
stock
Regulatory risks
Foreign sanctions imposed on the Group’s companies
28.3 mtpa1
BOOSTING LOGISTICS EFFICIENCY
Vistino
(Leningrad region)
Lavna (Tuloma,
Murmansk region)
3
mtpa
2.5
mtpa
1
2022 targets.
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
OPERATING EFFICIENCY
AND PRODUCTION GROWTH
CAPACITY EXPANSION
Key projects under the Strategy to 2025
Objectives
Technical upgrade of main shaft No. 1
at the combined Kirovsky underground mine
for rock and ore delivery
Project completed in 2020
Restore the operability of main shaft No. 1
to increase the ore delivery capacity at the combined
Kirovsky underground mine to 3 mtpa, streamline
the transportation flowsheet to improve delivery of rock
from the excavation area to the surface
Stripping and mine development preparations: +10
m at the combined Kirovsky underground mine
First start-up facility
Ramp up mining capacity and streamline transportation
flowsheet at the Kirovsky mine. Achieve the maximum
production capacity of 8.8 mln t by 2028
Project in progress
Development of the Volkhov branch of Apatit
First project stage
Project completed in 2020
Improve the financial and operating performance
of Apatit’s Volkhov branch by increasing the gross output
of phosphate-based mineral fertilizers boasting high
margins thanks to the branch’s logistic strengths
Project
schedule
2018–2020
2016–2021
(first start-up
facility)
First stage:
2018–2020
Second stage:
2021–2022
58/
59
Targets
Investments
Economic
performance
Current
status
Ore delivery
3 mtpa
≈2
RUB bln
36
RUB bln
>28
RUB bln
Ore volume
95 mln t
by 2035
Fertilizer output
first stage
231 ktpa
second stage
877 ktpa
(including the first
stage)
DPP
3
years
DPP
12
years
DPP
12
years
IRR
72%
IRR
21%
Design ore delivery
capacity reached
Underground construction
in progress. Core
equipment for crushing and
delivery unit No. 1 received
From October 2020, the
Company began temporary
production of NPS 16:20, with
the intention to switch to
МАР 12:52 in February 2021.
IRR
18%
according to
the 2019 price
forecast
The construction team uses the best available techniques.
The new facility will fully comply with the most stringent environmental laws
and regulations in both Russia and Europe.
The second stage of development at the Balakovo
site: ramp-up of the ammonium sulphate
production capacity to 360 ktpa
Project in progress
Increase the ammonium sulphate production capacity
at the Balakovo site to 250 kt by re-equipping technological
systems No. 5 and 6 of the phosphate fertilizers unit
and upgrading vacuum evaporation units 1–9
2020–2022
Product output
+250 ktpa
≈3
RUB bln
DPP
8
years
IRR
39%
Tender procedures in
progress, with ongoing
manufacturing and delivery
of core process equipment
PROGRESS TOWARDS OUR TARGETS
Phosphate rock production,
mln t
10.5
10.5
10.5
10.5
10.7
10.5
11.1
11.1
Phosphate rock processing,
mln t
Production of nitrogen-
based fertilizers, mln t
Production of phosphate-based
fertilizers and MCP, mln t
The integrated report includes only
selected projects of the Strategy
to 2025. Our large-scale investment
programme features a number
of promising projects bringing
us closer to the strategic goals.
7.3
7.1
7.4
7.4
8.4
8.4
7.9
7.9
7.3
7.1
7.6
7.3
7.9
7.7
8.9
8.9
2.2
2.3
2.4
2.2
2.4
2.2
2.6
2.6
2019
2020
2021
2025
2019
2020
2021
2025
2019
2020
2021
2025
2019
2020
2021
2025
Strategy to 2025
Actual/forecast
Strategy to 2025
Actual/forecast
Strategy to 2025
Actual/forecast
Strategy to 2025
Actual/forecast
STRATEGIC REPORT
HIGHER SELF-SUFFICIENCY IN FEEDSTOCK
Vertical integration is an important
driver of success in a highly
competitive market environment.
The Company has increased its self-
sufficiency in feedstock by ramping
up production of key commodities.
This is the secret behind PhosAgro’s
standing as one of the most
efficient company among global
fertilizer players. Vertical integration
in the segments of phosphate
rock, sulphuric acid and ammonia
is an important advantage
for successful competition with other
producers.
Key projects under the Strategy to 20251
Objectives
Sulphuric acid production unit with a capacity
of 3.3 kt per day
Project completed in 2020
Сonstruction of the fifth sulphuric acid production unit
with a capacity of 3.3 kt per day and infrastructure
facilities in Cherepovets for the replacement of externally
sourced sulphuric acid with internally produced supplies
Project
schedule
2017–2020
60/
61
Targets
Investments
Economic
performance
Current status
Product output
+1 .1
mtpa
≈10.6
RUB bln
DPP
14
years
IRR
15%
according to
the 2019 price
forecast
Put into operation in March
2020 with the confirmation
of design capacity
attainment. Commissioning
permit obtained in December
2020, with fixed assets
recorded on the books
Preparation of design
documents in progress
The third stage of development at the Balakovo
site: capacity ramp-up of the SK-20 sulphuric
acid unit to 3.3 kt per day
Project in progress
Capacity ramp-up of the SK-20 technological system
in Balakovo to 3.3 kt per day as a way to reduce
the volumes of sulphuric acid sourced from external
suppliers for the needs of the Balakovo production site
2021–2022
Product output
+300
kt
≈4
RUB bln
PROGRESS TOWARDS OUR TARGETS
CAPITAL INVESTMENTS
NEW PROMISING PROJECTS
Breakdown of key resources consumed internally
Breakdown of CAPEX for 2019–20202, RUB bln
Item
2019
2020
2021
2025
Item
2019
2020
2021
Ammonia, %
86.0
83.0
78.0
76.0
Investment projects
20.8
23.9
28.4
Production, mln t
Consumption, mln t
1.9
2.2
2.0
2.4
1.9
2.4
1.9
2.5
Maintenance
Non-industrial construction
Sulphuric acid, %
88.0
93.0
94.0
91.0
Total
13.3
1.9
10.2
2.2
11.3
1.8
36.0
36.3
41.5
Production, mln t
Consumption, mln t
Electricity, %
Generation, bln kWh
Consumption, bln kWh
6.1
6.9
41
1.5
3.7
6.8
7.3
40
1.5
3.8
7.4
7.9
42
1.6
3.9
7.8
8.6
42
1.8
4.4
Ammonium sulphate,%
3.0
55.0
51.0
75.0
Production, mln t
Consumption, mln t
0.0
0.4
0.3
0.5
0.3
0.6
0.7
0.9
Investments in development as a percentage of CAPEX, %
2021F
2020A
2019A
28.4
68 %
+2 %
23.9
66 %
+8 %
20.8
58 %
1
2
The integrated report includes only selected projects of the Strategy to 2025.
Our large-scale investment programme features a number of promising
projects bringing us closer to the strategic goals.
CAPEX excluding capitalised repairs.
Total CAPEX
for 2019–2025 will
amount to
>250
RUB bln
All of the Company’s projects meet
the economic efficiency criteria
approved by the Board of Directors
as part of the Strategy (IRR above
20%) and aim to promote further
development in line with strategic
priorities, drive progressive
production growth, implement
innovations and ESG-compliant
products and processes, and boost
operating efficiency.
Re-equipment of the aluminium fluoride shop in Cherepovets
Increase aluminium fluoride
production from 48
to 58 ktpa by making arrangements
for the transportation
and acceptance of fluosilicate acid
from Balakovo and boost processing
of internally produced fluosilicate acid
from 58 to 73 ktpa by re-equipping
the aluminium fluoride shop
Project
schedule
2019–2021
Economic
performance
DPP
IRR
Targets
Investments
Aluminium fluoride
First stage
+10 kt
Second stage
+15 kt
0.5 RUB bln
1 year
100%
2.8 RUB bln
9 years
18%
Current status
Key works to prepare
the construction site
completed, with the
re-equipment of the
aluminium fluoride shop
commenced in December
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
62/
63
STRONGER OPERATING EFFICIENCY
KEY PROJECTS UNDER
THE STRATEGY TO 20251
Objectives
Improving operating efficiency
at Apatit and its Balakovo
and Volkhov branches
Project completed in 2020
to revise the economic loss allocation approach
and improve the accuracy of management accounting;
to develop organisational and technical measures
for reducing phosphate rock losses in wet-process
phosphoric acid production at Apatit and its Balakovo
and Volkhov branches, assessing the existing capacities
in logistics and those used to load or unload raw
materials or feed them into machines, drawing flowcharts
for the Balakovo branch, and identifying bottlenecks
and other limitations in these areas
Effect
>250
RUB mln
• To develop a five-year target model concept for transport logistics
management;
• To reduce costs associated with transporting feedstock and finished
products by USD 1/t vs 2019;
• To improve railcar turnaround by one day;
• To increase transportation efficiency by using various modes of transport
(rail, road, river, and sea);
• To improve transportation management
Adoption of Climate and Water strategies
and implementation of the Energy
Efficiency Programme
A digital twin in transport
logistics
Project in progress
Environmental agenda
Addressing climate issues and saving
energy and other resources
is integral to the Company’s
Development Strategy. Every
addition to our production
capacities is designed to employ
the best available techniques
and used in strict compliance
with sustainability requirements.
We are working to make sure that
a project’s assessment takes into
account its environmental impacts.
One of the steps we consider
for 2021 is including a carbon
price as a factor in our final
investment decisions. In 2020,
the Board of Directors completed
the integration of PhosAgro’s climate
and environmental agendas into
its business strategy by approving
Climate and Water strategies that
set measurable, achievable targets
for minimising the Company’s
environmental footprint through
specific initiatives.
The Climate Strategy, which
was adopted in December,
focuses on further cuts to GHG
emissions, including indirect ones
associated with generating power
for our production facilities. It
is based on a low-carbon transition
plan that we use as a guidance
in devising and implementing
technical, technological
and organisational measures.
We are committed to making
our operations as green and energy-
efficient as possible.
Contribution to UN SDGs
DECENT WORK AND
ECONOMIC GROWTH
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
CLEAN WATER
AND SANITATION
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
CLIMATE
ACTION
CLEAN WATER
AND SANITATION
GOOD HEALTH
AND WELL-BEING
SDG 8.3
Maintaining
and developing
existing operations
and creating
innovative facilities
SDG 12.4
Making eco-efficient
products in line
with sustainability
requirements
SDGs 6.1 and 9.1
Increasing water use
efficiency
SDG 13.2
Reducing our Scope 1
and 2 emissions.
SDGs 6.3 and 3.9
Minimising
environmental
risks at all stages
of investment
projects and along
the production
chain. Using the best
available techniques
Strategic environmental goals
Projects implemented as part of Strategy to 2025 are fully compliant with environmental
requirements and contribute to the achievement of our environmental goals.
Reduction in specific
effluents by 2025
Reduction in specific
pollutant emissions
by 2025
Reduction in specific
GHG emissions
(Scopes 1, 2, and 3)
by 2028
Increase
in the share of recycled
and decontaminated
hazard class 1–4
waste
Increasing energy
efficiency
27%
23.7%
(to 4.4 m3/t
of finished and semi-
finished products)
(to 0.8 kg per tonne
of finished and semi-
finished products)
to 40%
30.9%
(to 109.1 kg of CO2
equivalent per tonne
of finished and semi-
finished products)
For more details, see the Environmental Review section on page 148
1
The integrated report includes only selected projects of the Strategy to 2025. Our large-scale investment programme features a number of promising
projects bringing us closer to the strategic goals.
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
INCREASING SALES
IN PRIORITY
MARKETS
EXPANDING THE FOOTHOLD IN PREMIUM MARKETS
Roadmap for the strategy to increase sales: the Russian and CIS market
PhosAgro fertilizer and feed phosphates structure in markets, kt
1,651
3,218
1,255
3,700
9,955
11,555
The Company’s strategic goal
is to increase sales in its strategic
markets: up to 3.7 mln t in Russia
and CIS, 3.5 mln t in North and South
America, and 3.1 mln t in Europe
by 2025, by strengthening its
position as a producer of fertilizers
free of heavy metal concentrations
dangerous to health amid
toughening of the EU cadmium
regulations.
The sales breakdown of premium
markets is generally in line
with our strategy, with minor
differences attributable to changes
in a market environment
and the netback-driven sales model.
Expand in-house storage
and logistics capacities
Boost sales of liquid
fertilizers
Increase sales of third-party
and associated products
Increase the number of fertilizer storage
facilities to 35
Improve the warehouse technology
infrastructure (capex of over RUB 2 bln)
Expand storage capacity for liquid
fertilizers
Provide agronomic services for liquid
fertilizer customers
Create associated product lines
for fertilizer buyers
(seeds, CPAs, bioadditives, etc.)
Build compaction facilities
2,587
3,500
2,498
2020A
Russia & CIS
Premium
markets
Poland, Baltics, Balkans, Western Europe
Latin & North America
Asia, Africa & ROW
3,100
Strategy to 2025
Ensure digitalisation of sales
and customer services
Implement RFID technology for big bag
tagging
Develop e-services for customers
Develop agronomic support
and consulting services
Promote sales of high-performance and
high-margin fertilizer grades
64/
65
Storage capacity
Min
>650
kt
Liquid fertilizer
storage capacity
62
kt
Sales
500
kt
Precision
farming
Arable land coverage
Min
>100
k ha
3.7
mln t
Increasing sales in the domestic market
• Retain the current
market share
in phosphate
and complex fertilizers,
increase sales
in the nitrogen segment
• Enter the associated
products segment
(CPAs, seeds, feed
additives)
• Develop the service
model and distribute
agricultural equipment
• Potential effect
of developing
the service model
on EBITDA: USD 40–150
mln per year
1
McKinsey estimate
Progress towards our targets
The ongoing expansion of storage and logistics capacities in Russia is in line with our strategy.
Number of DLCs
Total storage capacity, kt
APP storage capacity, kt
35
25
27
29
652
679
>650
500
62
52
44
32
2018
2019
2020 2022 target
2018
2019
2020 2022 target
2018
2019
2020 2022 target
From 2018 to 2020,
a total of over RUB 2 bln was
invested in the development
of the Russian regional network.
In 2021, the Company plans
to focus on expanding its storage
and transshipment infrastructure
for liquid mineral fertilizers. In 2020,
its storage capacity for liquid
complex fertilizers exceeded 50 kt,
which was unprecedented in Russia.
2020 saw the number of distribution
and logistics centres rise
to 29. PhosAgro strives to place
its distribution centres as close
as possible to the crop fields
to effectively provide domestic
farmers with high-quality mineral
fertilizers and services, which also
helps educate them on all innovations
in mineral nutrition systems and new
agricultural technology uses.
STRATEGIC REPORT
HIGHER SHARE OF PREMIUM FERTILIZER BRANDS IN THE SALES MIX
Change in the product structure of the premium segment, kt
2025
2021
2020
2019
3,270
3,562
3,203
3,205
4,980 (43.1%)
213
472
2,620
11,555
3,695 (36.2%)
220
390
3,887 (39.0%)
200
379
3,475 (36.8%)
198
377
2,352
10,219
2,286
9,955
2,197
9,452
MAP/DAP
NPK/NPS/PKS
(share of total)
APP
MCP
Urea/AN/AS
Innovative products
developed by PhosAgro’s
Innovation Centre
Fertilizers with micronutrients
Micronutrients are key to ensuring
high-quality crops, with the right
combination of microelements
(such as B, Mn, Fe, Cu, Zn, Mo) used
at the right growth stages making
plants healthier and crops higher.
Fertilizers with micronutrients
which can be accumulated
by plants with a positive effect
on human health are considered
one of the most promising ways
to combat malnutrition and reduce
nutrient deficiencies.
In recent years, the Company has
been aggressively ramping up its
production of mineral fertilizers
with micronutrients.
intends to boost its sales
in the coming years.
Urea with urease inhibitor
Tighter environmental regulations
in the EU are shaping a new market
for eco-efficient fertilizers, such
as urea with urease inhibitor.
Effects of use: environmental –
gaseous losses of nitrogen reduced
by up to 98%, economic – higher
fertilizer efficiency resulting in a 5%
increase in crop yields, urea remains
in effect in the soil for extra 7–14
days, thus extending the period
of incorporation or irrigation.
The Company started producing
this innovative high-performance
fertilizer in 2020. Having sold 20
kt in the reporting year, PhosAgro
Biological and biomineral
fertilizers
PhosAgro’s Innovation Centre
also focuses on developing
innovative biostimulants
and biomineral fertilizers as part
of the Green Standard for eco-
friendly agricultural products.
The Company seeks to create
special biological and biomineral
fertilizers, slow and controlled-
release fertilizers, and ameliorants.
Biotechnology advances are set
to greatly boost crop yields without
damaging ecosystems and bring
the agriculture to a whole new level
of development. Given the limited soil
resources and the strong population
growth, biotechnology is key
to achieving the global food security.
Production of fertilizers with micronutrients, kt
2021
target
2020
2019
2018
2017
2016
2015
524.2
481.6
621.3
611.6
306.0
110.0
1,698.4
2020
2021
2022
2023
2024
2025
2026
2027
2028
Urea with urease inhibitor, kt
Reduction in CO2 equivalent, kt
20
8.2
35
14.4
50
20.6
55
22.6
60
24.7
74
30.4
84
34.5
94
38.7
104
42.8
66/
67
Online fertilizer sales
platform
S
E
R
V
I
G
N
I
R
E
D
R
R O
E
C
E
A
N
D
S
U
P
P
O
RT
F ERTILIZ
Agro calculator /
monitoring and scouting
PhosAgro’s digital ecosystem
Website available
in eight languages
C
O
N
S
U
L
T
A
N
C
Y
N
TIO
A
M
R
O
F
N
I
FARMER
Agronomic
YouTube channel
Farmer’s personal
account
was signed by PhosAgro-Region
and Exact Farming in December
2020, the companies plan
to expand the system’s coverage
to over 100,000 ha in 2021.
Sales support
PhosAgro seeks to be closer to its
customers and make eco-efficient
mineral fertilizers even more
available to domestic farmers.
Transition to the service model
The Company started migrating
from a commodity seller to a service
provider. The new model relies
on a digital environment to offer
a compound product, i.e. product
+ agronomic expertise or access
to innovations.
The product offering is customised
to the fullest extent based
on big data (customer data obtained
in a digital environment).
Digital crop nutrient monitoring
system using NFC tags
In 2020, PhosAgro successfully
completed its pilot project to deploy
a digital system using NFC tags
to carry out remote monitoring
of the effectiveness of mineral
fertilizers. This was a joint project
between PhosAgro-Region and Exact
Farming. One of the advantages
of using the NFC technology
is the ability to control the delivery
and application of PhosAgro’s
mineral fertilizers along the entire
logistics chain ‘from factory to farm’
in order to minimise the loss or theft
of fertilizers during transportation.
The system currently covers
more than 23,000 ha in 20 regions
throughout the country. As part
of the partnership agreement, which
Contribution to UN SDGs
ZERO
HUNGER
CLIMATE
ACTION
CLEAN WATER
AND SANITATION
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
LIFE
ON LAND
SDG 2.4
Expanding sales of eco-efficient
mineral fertilizers and developing
innovative plant nutrition systems
SDGs 13.1 and 13.2
Producing mineral fertilizers
with micronutrients which enhance
the quality of soils as natural sinks
of СО2 and help adapt to climate
change
SDGs 6.3, 12.4, 15.1
Promoting and raising awareness
about best farming practices
and developing the service model
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
BOOSTING
LOGISTICS EFFICIENCY
REDUCTION OF TRANSPORTATION COSTS
ALIGNMENT OF PRODUCTION AND SALES
Increased reliance on own rolling
stock
Innovative railcar fleet put into operation
Developing rail infrastructure
Railcars put into operation
Maximum rail infrastructure throughput, mtpa
The Company’s decision to purchase
its own tank cars for liquid sulphur
was made in view of the gradual
retirement of such railcars
from the market of rolling stock
services starting in 2017. With its
own fleet increased to 520 tank
cars, PhosAgro will transport
an additional 4 mln t of liquid sulphur
in 2017–2021. This will result in safety
improvement and a significant
environmental effect as liquid sulphur
transportation and storage prevents
dusting and catching fire.
Increased reliance on own rolling
stock:
• cost efficiency – own railcars
are cheaper in use than third-
party rolling stock,
• safety of operation – PhosAgro’s
production and logistics
processes are less dependent
on third-party services,
• positive environmental effect
– the use of innovative rolling
stock with higher cargo
tonnage per railcar and train
minimises the negative impact
on the environment per tonne
of cargo.
Contribution to UN SDGs:
Year
2017
2018
2019
Total
Liquid sulphur,
tank cars
APP,
tank cars
Mogilev
Carriage Works
Total
672
336
440
160
232
176
112
520
0
0
87
87
1,500
1,699
2,100
2,707
12.0
Cherepovets
PhosAgro’s programme to purchase
innovative mineral hoppers
with a capacity of 76.5 t enabled
it to free up 285 mineral hoppers
with a standard capacity of 70 t
in 2020, which is equivalent to more
than four trains with 70 railcars
each.
Railcars freed up in 2020 due
to increased capacity of innovative
rolling stock
300
250
200
150
100
50
0
285
1.6
Volkhov
91
42
2018
2019
2020
6.7
Balakovo
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
SDG 12.4
Managing chemicals and wastes wisely throughout their life
cycle, including transportation.
68/
69
16.5
3.8
8.0
+4.5
Project costs
4.7
RUB bln
+2,2
Project costs
2.9
RUB bln
+1.3
Project costs 2.4 bln
based on the investment project’s
third stage that is pending approval
2019
2020
2021
2022
2023
2024
2025
STRATEGIC REPORT Targets
Investments
Current status
DEVELOPING PORT INFRASTRUCTURE
Development of transport infrastructure between Kriolit and Nelazskoye
Project
schedule
2018–2022
Project in progress
Objectives
PhosAgro is revamping
the Kriolit station
to connect
it to the Nelazskoye station
with a view to reducing
the load on the existing
infrastructure at Russian
Railways’ Koshta station
and capturing prospective
cargo flows.
Start of traffic service
at the Kriolit railway station
The Cherepovets site completed
a strategically important
project to develop its rail
infrastructure and connect
it to the Severnaya and October
Railways. This marked an important
milestone on the path towards
Long trains
The Company’s ambition is to use
long trains (over 70 railcars
in length) on all routes. In 2020,
long trains accounted for 69%
of PhosAgro’s total shipments,
greatly speeding up the traffic,
increasing the rolling stock
turnaround, and resulting
in a positive environmental effect
due to lower energy costs per
tonne of cargo.
70
60
50
40
30
20
10
0
4.7
RUB bln
Traffic service started in December 2020
at the Kriolit station and along the track
connecting to the Nelazskoye station
A rail car service station to be designed
and constructed in 2021–2022
Increase in
the railway
throughput
capacity from 12
to over
16.5
mtpa
The decision to electrify the Kriolit railway station during its construction enabled
PhosAgro to spare two diesel locomotives, resulting in a positive economic and
environmental effect.
the key goal in logistics – expansion
of the Company’s rail infrastructure
throughput
to over 16.5 mtpa.
Contribution to UN SDGs
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
SDG 9.1
Developing rail infrastructure
and contributing to the development
of local communities through
our value chain.
69
53
Increase in the number of long trains
21
3
2017
2018
2019
2020
Switching to long trains (100 railcars in length)
2020 Kriolit station launched (Apatit)
2022 Port infrastructure improvement in Vistino
with the Northern park to be launched (phase 2)
2023 Revamp of the Aykuven railway station (Kirovsk Branch of Apatit)
Higher traffic
speed
Quicker railcar
turnaround
Environmental
effect
Apatity
Ust-Luga
Ports of discharge
Cherepovets
70/
71
including more than 3 mtpa
of PhosAgro fertilizers, which
will make it a crucial facility
for the Company. The transshipment
through the Ultramar Terminal
is scheduled to begin in 2021–2022.
The terminal will be able to handle
100-car trains delivering mineral
fertilizers from Cherepovets.
Tuloma Sea Terminal
PhosAgro signed a memorandum
of cooperation with Infotech Baltika
concerning the construction
of a specialised marine terminal
for the transshipment of mineral
fertilizers and apatite concentrate
at the seaport of Murmansk.
Infotech Baltika is building a terminal
in the area of the Lavna River.
The start of operations is planned
for March 2023.
The project will help provide PhosAgro
with the needed transshipment
capacity and reduce transport costs.
The ability of the terminal, which
is currently under construction,
to receive large Panamax-class
vessels will improve the economic
efficiency of sea transportation
through the northern territories,
while the proximity of the terminal
to the Company’s production assets
will streamline the railway logistics
for transshipments.
Contribution to UN SDGs:
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
SDG 9.1
Developing port infrastructure,
creating employment opportunities
and implementing social investment
programmes.
Enhancing port infrastructure
5.2
1.0
1.0
5.5
1.0
1.0
2.2
2.0
2.0
2.0
5.1
1.0
1.0
0.1
1.0
1.0
1.5
1.5
1.0
0.7
0.5
1.0
1.0
2020
SBT
5.6
5.6
5.6
2.5
2.5
2.0
2.5
2.5
2.5
2.5
0.1
0.1
0.1
0.1
0.1
0.1
3.0
3.0
1.0
3.0
3.0
3.0
3.0
2021
2022
2023
2024
2025
Vistino,
Leningrad region
Kotka
EST
Murmansk
Lavna (Tuloma),
Murmansk region
Strategy to 2025
Forecast
In addition to developing its
distribution network in Russia,
our key market, PhosAgro continues
to expand its footprint and enhance
the competitiveness of its products
in foreign markets by both building
up state-of-the-art transshipment
facilities and reducing the cost
of transportation.
The new transshipment destinations
enable the Company to optimise
empty runs and come closer
to achieving even more ambitious
goals of increasing the train carrying
capacity. The joint project between
PhosAgro and Russian Railways
provides for both companies’
infrastructure upgrades and aims
to start operating 100-car trains
on the Apatity–Cherepovets–Ust-
Luga–Apatity loop as early as in 2023.
If successful, this project will make
transportation of phosphate
rock and mineral fertilizers much
more efficient, both economically
and environmentally.
The Kriolit railway station
in Cherepovets launched in 2020
and specifically designed to service
100-car trains is the linchpin
of this loop.
PhosAgro is a key partner of such
ports as Tuloma Sea Terminal (Lavna)
and Ultramar Terminal (Vistino).
These ports are being constructed
in compliance with all applicable
environmental requirements
and located outside the 500 m water
protection area.
Ultramar Terminal in Ust-Luga
PhosAgro and Ultramar
signed a long-term agreement
for transshipment of PhosAgro’s
mineral fertilizers through the new
terminal being built by Ultramar
at the port of Ust-Luga. The terminal
will be the largest in Europe in terms
of cargo storage capacity. Going
forward, it will be able to handle up
to 25 mtpa,
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020 STRATEGIC
RISKS
Robust risk management is a sine qua non for PhosAgro to achieve its strategic goals
and sustainable development. We continuously develop and improve our risk management
framework, which enables us to identify external and internal risks in a timely manner
and develop effective mitigants.
Key risks
72/
73
KEY RISKS ASSOCIATED WITH PHOSAGRO’S ACTIVITIES
102-15
Map of key risks for 2021 (assessment of residual risk)
1
4
2
10
15
17
18
6
21
3
9
7
11
8
13
12
16
14
22
19
5
20
Low
Medium
High
Probability
h
g
H
i
i
m
u
d
e
M
w
o
L
t
c
a
p
m
I
List of key risks for 2021
Strategic risk
Strategic planning risk
Failure to deliver on SDGs
Social risk
HR risk
1
2
3
4
19
Climate risk
20
Infectious disease risk
21
Sanctions risk
Production risk
Production risk
Health and safety risk
Environmental risk
5
6
7
Financial risk
16
17
18
Credit risk
Currency risk
Commodity risk
22
Interest rate risk
Operational risk
Project risk
Business processes and
systems risk
Information security risk
Economic security risk
Regulatory risk
Tax risk
Regulatory risk
Corruption risk
Reputational risk
8
8
11
12
10
13
14
15
Risk
Description
Risk mitigants
Key indicators / risks
materialised in 2020
Risk associated with the
adoption of an incorrect
strategic decision and
ensuing 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 strategic
objectives.
Risk factors for the
Company’s sustainable
development include
failure to set the
Sustainable Development
Goals (SDGs) or update
them in a timely manner,
as well as the lack of
resources and processes
necessary to achieve the
SDGs.
Risk of an adverse social
environment in the regions
of operation.
1
Strategic planning
2
Failure to deliver
on sustainable
development goals
3
Social
The Company actively monitors both internal and external
factors that could impact the strategy. PhosAgro also takes
a systematic approach to assessing the potential costs and
benefits of new strategic projects to facilitate and improve
the decision-making process.
Deviations from
strategic targets.
No material risk events
occurred.
In 2020, the Company made great progress in mitigating
sustainability risks. The Sustainable Development Committee
helped set and prioritise the SDGs and strategic ESG targets
covering environmental, social, and corporate governance
matters. To achieve the same, PhosAgro developed action
plans, including the low-carbon transition plan, the Climate
Strategy, the Water Strategy, and the Energy Efficiency
Programme.
Deviations from SDG
targets.
No material risk events
occurred.
Deviations from
ESG targets (social
dimension).
No material risk events
occurred.
For more information on the Company’s activities
and indicators in this area, see page 6
With its commitment to the principles of partnership and
cooperation between private business and the government,
the Company runs a number of social programmes on a
voluntary basis. Social projects are designed, among other
things, to support local authorities in promoting sports and
culture, and enhancing the public utilities and opportunities
for growth in the cities where the Company operates.
Sustainable development in the regions of operation is one
of the key goals the Company pursues in its community
activities. In particular, PhosAgro provided substantial
support to public health authorities in the cities of its
operation with a view to combating the spread of a novel
coronavirus (COVID-19) in 2020.
For more information on the Company’s activities
in this area see the Contributing to Local
Communities section on page 180
STRATEGIC REPORT
Risk
Description
Risk mitigants
Developments and
decisions related to the
hiring, development and
retention of employees.
Technical/industrial
disruptors of production
processes, unscheduled
equipment downtime.
PhosAgro runs independent and joint programmes
seeking to train and attract young talents, including those
from other regions, develop employee skills and enhance
motivation as a way to improve retention and productivity.
Given the rising number of employees working from home
in 2020, the Company is introducing an online personnel
appraisal system together with qualification criteria.
For more information on the Company’s activities
in this area, see the People Development section
on page 116
PhosAgro seeks to ensure uninterrupted operation of
machinery and reduce unscheduled equipment downtime.
To that end, the Company invests in the construction
and upgrade of equipment and carries out preventative
maintenance and major overhauls by relying on backup
equipment and a reserve pool of components, accessories
and spare parts. The Company’s insurance programme
covers the risk of production disruptions.
4
HR
5
Production
Key indicators / risks
materialised in 2020
Personnel turnover and
skill mismatch.
No material risk events
occurred.
Unscheduled equipment
downtime.
No material risk events
occurred.
6
Health and safety
Risk associated with
injuries, occupational
illnesses, accidents and
incidents at hazardous
production facilities, and
non-compliance with
statutory requirements
in the realm of health and
safety.
PhosAgro enforces health and safety in workplaces in line
with applicable laws and best global practices. To that end,
the Company trains staff in health and safety and regularly
checks their knowledge, promotes safety culture, and
makes sure that all contractors adhere to the health and
safety standards. In addition, safety audits and inspections
ensure compliance with applicable regulations and OHSAS
18001 requirements. Tasks and measures to reduce the
corresponding risks in various Company’s activities are
defined in its Health and Safety Strategy. Given the rising
number of employees working from home in 2020, the
Company arranged for online training in internal regulations
on health and fire safety.
Deviations in terms of
workplace injuries and
incidents
2020 saw some risks
materialise in terms
of workplace injuries.
The Company carefully
investigated each
accident, with remedial
action plans developed
to prevent their
recurrence.
For more information on the Company’s indicators
in this area, see the Health and Safety Review section
on page 134
74/
75
Key indicators / risks
materialised in 2020
Deviations from
environmental impact
targets.
No material risk events
occurred.
Deviations from project
efficiency targets.
No material risk events
occurred.
Deviations from business
process targets (by
focus area).
No material risk events
occurred.
Risk
Description
Risk mitigants
Risk of potential
environmental damage
resulting from the
Company’s operations.
7
Environmental
Risk associated with
delays and budget
overruns in construction
and upgrade projects,
along with failure to deliver
project efficiency targets.
Inefficiency or disruption
of the Company’s business
processes, including risks
related to counterparties
and supply chain.
8
Project
9
Business
processes and
systems
The Company has put in place the Environmental Policy, the
Water Strategy for 2020–2025, and the Code of Conduct for
Counterparties setting out key environmental requirements
for suppliers and contractors. PhosAgro conducts regular
analysis and assessment of its impact on the environment.
The environmental impact is mitigated through the
upgrade of treatment and warehousing facilities and the
implementation of energy efficiency programmes. The
Company partners with the UNESCO and the International
Union of Pure and Applied Chemistry (IUPAC) to provide
research grants as part of the Green Chemistry for Life
project seeking to protect the environment and human
health through energy efficient processes and eco-efficient
technologies based on innovative solutions. PhosAgro’s
investment projects harness the best available techniques to
reduce unit feedstock and energy costs while also cutting unit
emissions of regulated substances. The Company discloses
its environmental impact mitigation goals and performance in
line with applicable laws and as part of the Carbon Disclosure
Project. In 2020, the Company’s CDP rating was raised from C
to B-, which is one of the best scores in Russia.
For more information on the Company’s activities
in this area, see the Sustainability Report:
Environmental Review section on page 148
PhosAgro strives to adhere to approved project
budgets and schedules and to take a unified
implementation approach leveraging a variety of
project management tools. All projects go through a
multi-step review and approval process. For large-
scale and strategically important projects, dedicated
project management offices are set up. The Company
regularly monitors progress against project budgets
and deadlines.
PhosAgro seeks to maximise efficiency of all its
business processes and systems. Business process
efficiency reviews are conducted on a regular basis
to identify potential bottlenecks and develop and
implement efficiency improvement initiatives. The
Company strives to minimise the risk of disruptions
in supplies of key raw materials to its production
facilities. To that end, PhosAgro uses multi-stage
tender procedures and enters into long-term
contracts with its most reliable suppliers. The
Company also monitors its IT infrastructure on an
ongoing basis and carries out a number of initiatives
to mitigate risks associated with business process
disruptions caused by technological factors or
cyberattacks.
Potential claims lodged by
tax authorities in response
to the Company’s failure
to correctly file tax
returns or pay taxes in
due time.
PhosAgro complies with tax laws of the countries
where it operates. The Company tracks all changes
(including the planned ones) in tax laws, analyses the
law enforcement practices, and seeks clarifications
from the government on taxes. In addition, law and
accountancy firms are engaged to advise on the
administration of applicable tax laws.
Tax claims.
No material risk events
occurred.
10
Tax
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
Risk
Description
Risk mitigants
Losses incurred on the
Company’s property
and assets as a result of
unauthorised access to
its information systems or
disclosure of confidential
data.
11
Information
security
Losses incurred on the
Company’s property
and assets as a result
of economic crimes
committed by employees
or third parties, including
fraud and theft.
12
Economic security
13
Regulatory
14
Corruption
Untimely receipt/extension
of licences; legislative
changes that might bring
about higher cost of
doing business, restrictive
policies by regulators,
weaker equity story of
the Company and/or
transformation of the
competitive landscape.
Losses resulting from non-
compliance or inadequate
compliance with applicable
anti-corruption laws
by the Company or its
employees (penalties levied
against the Company by
government authorities
and other damages).
PhosAgro implements a number of initiatives to
prevent unauthorised access to its information
systems and disclosure of confidential data. A wide
variety of technical and software solutions, including
those based on encryption, are used to control
access to information resources and systems. Access
rights are granted to specific user groups. There
is a clear definition of what constitutes confidential
information and how it should be handled. The
Company undertakes regular audits to ensure strict
compliance with its confidentiality policy.
The Company takes steps to prevent potential damage
to its property and assets as a result of economic
law infringements, including by introducing access
authorisations to the Company’s administrative and
production facilities, clearly differentiating between
responsibilities as part of contract or transaction
execution, vetting counterparties before signing a
contract, and putting in place a dedicated hotline.
Moreover, additional checks are undertaken by a variety
of the Company’s functions.
PhosAgro is in full compliance with applicable laws. To
make sure it gets timely updates on potential legislative
changes, the Company closely tracks initiatives of
legislators, the government and regulators, and takes
part in discussing such initiatives and drafting relevant
recommendations in partnership with professional
associations. The Company prepares and submits
documents in due time to receive or extend licences
required for its business.
PhosAgro makes sure its facilities and partners fully
comply with applicable anti-corruption laws. To that
end, it provides training in combating corruption and
administrating the anti-corruption law, and promotes
zero tolerance towards corruption among the Company’s
employees and partners. Among other things, the
Company has approved the Anti-Fraud and Anti-
Corruption Policy, the Code of Ethics, and the Regulations
on Conflict of Interest. The Company’s counterparties are
obliged to declare their compliance with anti-corruption
laws. The Company is a member of the Anti-Corruption
Charter of Russian Business.
Key indicators / risks
materialised in 2020
Unauthorised disclosure
of confidential data,
unauthorised access to
IT systems.
No material risk events
occurred.
Theft and fraud
incidents.
No material risk events
occurred.
Deviations related to
regulatory compliance.
No material risk events
occurred.
Corrupt practices,
conflicts of interest.
No material risk events
occurred.
76/
77
Key indicators / risks
materialised in 2020
Stakeholder confidence.
No material risk events
occurred.
Overdue accounts
receivable, provision for
bad debt.
No material risk events
occurred.
Changes in FX rates.
No material risk events
occurred.
Risk
Description
Risk mitigants
Damage caused to the
Company’s business
reputation as a result of
unauthorised disclosure
of information about the
Company’s operations,
financial results, senior
management, etc. in the
mass media or employees’
neglect of business ethics.
Financial losses caused
by the failure of buyers,
commercial contractors
and other financial
counterparties to fulfil
their financial obligations
to the Company in full and
on time.
15
Reputational risk
16
Credit risk
Financial losses arising
from unfavourable
changes in FX rates
against the Company’s
base currency.
17
Currency risk
In its operations, PhosAgro demonstrates commitment to
transparency by disclosing all relevant material facts and
circumstances. The Company has adopted an information
policy and a media engagement policy. Information about
the Company is available on its website and in the mass
media. PhosAgro provides comments in response to
media enquiries and regularly monitors coverage in both
Russian and international media. To protect its business
reputation, the Company has approved the Code of Ethics
setting out unified rules for PhosAgro’s employees based
on the principles of integrity, good judgement, fair play
and partnership and designed to support the Company’s
success.
PhosAgro has approved policies on managing credit
risks to institutionalise a number of credit risk mitigation
techniques, including deliveries against full or partial
prepayments with full or partial insurance of credit risks,
use of letters of credit, and factoring (securitisation) of
accounts receivable. Providing advance payments to
suppliers and contractors is only considered after the
counterparties have proved their reliability or after they
have offered adequate bank guarantees for advance
payments that exceed approved internal limits. The
Company partners with banks, financial organisations and
insurance companies that boast a high level of financial
stability and meet the criteria set out in the Company’s
treasury policy. PhosAgro monitors all covenants under
the existing loan agreements on an ongoing basis. For
more information on the Company’s activities and
indicators in this area, see the Financial Risk Management.
Credit Risk section of the Notes to the consolidated
financial statements.
For more information on the Company’s activities
and indicators in this area, see the Financial Risk
Management. Credit Risk section of the Notes
to the consolidated financial statements
on page 298
In the context of oil price volatility and fluctuations of the
rouble exchange rate against major international currencies,
the Company seeks to align the currency breakdown of its
debt financing with the FX structure of its sales. As of now,
most of PhosAgro’s debt is denominated in US dollars as
a natural hedge against predominantly USD-denominated
sales. The Company carefully tracks analyst forecasts and
factors that may influence the rouble exchange rate against
major currencies. If need be, PhosAgro can hedge its FX
positions either fully or partially. For more information on
the Company’s activities and indicators in this area, see the
Financial Risk Management. Currency Risk section of the
Notes to the consolidated financial statements.
For more information on the Company’s activities
and indicators in this area, see the Financial Risk
Management. Currency Risk section of the Notes
to the consolidated financial statements
on page 298
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
Key indicators / risks
materialised in 2020
Changes in product and
feedstock prices.
No material risk events
occurred.
Risk
Description
Risk mitigants
Losses associated with
unfavourable changes
in the market prices for
mineral fertilizers and
other products or a hike
in prices for key feedstock
and equipment sourced by
the Company.
18
Commodity risk
In the context of heightened price volatility in the core
product markets, PhosAgro takes consistent steps to
optimise its sales structure in terms of the fertilizer grade
offering and regional sales focus as a way to maximise the
Company’s margins. PhosAgro also continues to increase
the share of sales to end consumers, improve production
efficiency and offer its customers add-on services such
as packaging, blending and storage. PhosAgro has offices
in Buenos Aires (Argentina), Belgrade (Serbia), Hamburg
(Germany), Bayonne (France), Zug (Switzerland), Limassol
(Cyprus), Vilnius (Lithuania), Warsaw (Poland), São Paulo
(Brazil) and Singapore. With a foothold firmly established
in the priority export markets, the Company can respond
more quickly to changes in the market demand and
customer needs. To reduce its feedstock and equipment
expenses, PhosAgro invites multiple suppliers to take part
in tenders, enters into long-term supply contracts and
develops lasting relationships with its suppliers.
19
Climate risk
Risks associated with
changes in natural
processes or phenomena
amid climate change
(physical factors) or
with political, economic,
financial or other decisions
made by governments,
multilateral organisations,
financial institutions, or
producer or consumer
associations or other
NGOs to curb climate
change by reducing
GHG emissions through
carbon border adjustment
or restrictions on the
use of fossil fuels or
non-renewable energy
(transitional factors).
Processes to identify and assess climate change risks are
being integrated throughout the value chain – from design,
procurement and apatite-nepheline ore mining to finished
product delivery. The climate risk management framework is
also an integral part of the Company’s risk management and
internal control framework.
In December 2020, the Board of Directors approved
PhosAgro’s Climate Strategy, the key elements of which are
an analysis of climate risks and opportunities, a scenario
analysis, the setting of science-based targets and a low-
carbon transition plan.
In accordance with the Climate Strategy, priority actions
are being taken to develop and implement the following
measures: direct (Scope 1) emission reduction programmes;
an internal energy efficiency programme, and communication
with energy suppliers to improve the climate profile of energy
supplies (Scope 2); a supplier and customer engagement plan
and supplier ESG ratings (Scope 3); and integration of climate
risks into the risk management framework, climate KPIs,
science-based climate targets (SBTi) and global projects.
Deviations resulting
from climate impacts (by
focus area).
In 2020, there were
severe weather events,
with effects including
squalls and excessive
precipitation. However,
at this stage it is difficult
to assess the extent
to which this weather
was caused by climate
change. In any case, the
Company did not incur
any significant losses
associated with these
natural phenomena.
Thanks to these actions, the Company has improved
its ratings for climate disclosure (CDP) and sustainable
development (Systainalytics).
78/
79
Key indicators / risks
materialised in 2020
Confirmed cases,
Progress in
epidemiological
response.
Several countries
declared a state of
emergency and almost
all have imposed
lockdowns, restricting
business activity.
Russia is experiencing
a mild COVID-19
scenario thanks to
its prompt response,
including restricted
international travel, self-
isolation requirements,
adequate medical care,
vaccination, etc.
Losses associated with
sanctions.
No material risk events
occurred.
Risk
Description
Risk mitigants
Risks associated with the
outbreak and spread of
infectious diseases that
pose a threat to business
continuity.
20
Infectious disease
risk
In early 2020, an infectious disease caused by a newly
discovered coronavirus (COVID-19) spread around the world.
PhosAgro has been taking unprecedented measures to
prevent mass infection of employees and local populations
in its regions of operation (jointly with government agencies).
Thanks to these measures, the Company managed to
minimise the pandemic’s negative impact on its operations,
ensure business continuity and deliver on its business
targets. The Company’s pandemic experience in 2020 and
the procedures it has established help respond to further
developments associated with COVID-19, as well as to other
infectious disease outbreaks.
21
Sanctions risk
22
Interest rate risk
Any foreign sanctions
imposed on the Group’s
companies.
Economic globalisation has increased the exposure of the
Russian economy and the Company’s foreign operations to
potential sanctions by individual countries or their groups.
The Company’s flexible production and sales model would
help minimise any negative impact should such a risk event
occur.
The Company borrows
money to finance its
investment programme
and working capital
requirements, including via
floating interest rate loans.
Rising floating rates might
lead to higher debt service
costs and adversely impact
the bottom line.
Should the Company accumulate significant floating interest
rate borrowings, it would hedge this risk using interest rate
derivatives.
Losses associated with
changes in interest
rates.
PhosAgro closely monitors and manages its fixed-to-floating
debt ratio to mitigate interest rate risk. For more information
on the Company’s activities and indicators in this area, see the
Financial Risk Management. Interest rate risk section of the
Notes to the consolidated financial statements.
No material risk events
occurred.
For more information on the Company’s activities
and indicators in this area, see the Financial Risk
Management. Credit Risk section of the Notes
to the consolidated financial statements
on page 298
STRATEGIC REPORTPHOSAGRO INTEGRATED REPORT 2020
33.2%
EBITDA margin in 2020
Performance
review
For a number of years now, PhosAgro’s EBITDA
margin has been one of the highest among
direct competitors. In 2020, its key drivers were
technological and operational improvements
in production processes, completion of key
investment projects, and recovery in global prices
for fertilizers.
FINANCIAL
PERFORMANCE
KEY DRIVERS
OF FINANCIAL
RESULTS
PhosAgro’s financial performance in 2020
was materially impacted by the following
key factors and events:
• surge in prices for all major types
of mineral fertilizers during the year
as a result of high prices for major
crops and seasonal demand in key sales
markets – Europe, the domestic market
of the US, and China;
• limited supply of phosphate-
based fertilizers due to lack of new
production capacities and lower output
at the beginning of the year amid
the spread of COVID-19;
• shrinking phosphate-based fertilizer
exports from China and other countries.
REVENUE ANALYSIS
Revenue for 2020 grew by 2.3% y-o-y
and amounted to RUB 253.9 bln. Revenue
growth was driven by higher sales.
In 2020, lower average sales prices
for phosphate- and nitrogen-based
fertilizers were fully offset by a 5.3%
increase in sales volumes and an 11.4%
depreciation of the rouble against
the US dollar.
253.9 RUB bln
revenue for 2020
2020 was a record year for the Company. The
long-term development programme allowed us to
produce more than ten million tonnes
of commercial products a year for the first time
ever, while total fertilizer sales grew by more than
5%. Growth in fertilizer sales against a backdrop
of favourable pricing environment on the global
markets ensured an 11.5% increase
in the Company’s EBITDA to RUB 84.3 bln.
At the same time, our EBITDA margin of more than
33% remains one of the highest in the industry.
I would also like to highlight our business’s ability to
generate significant cash flows despite
the challenging conditions – by the end of the year
our cash flow reached RUB 42.5 bln, an all-time
record for the Company.
PhosAgro’s leverage is stable at 1.86x net debt
/ EBITDA, while CAPEX for the reporting period
amounted to less than 50% of EBITDA.
We currently see a surge in demand and prices for
all major types of mineral fertilizers as a result of
high prices for major crops and seasonal demand
in key sales markets – Europe, the domestic
market of the US, and China.
On top of that, India is likely to contribute to
fertilizer demand in the near term due to low
carry-over stocks and, consequently, a potential
early start of seasonal procurement.
Alexander Sharabaiko,
Deputy CEO for Finance and International Projects
82/
83
FY 2020 financial and operational highlights, RUB mln
Item
Revenue
EBITDA1
EBITDA margin
Net profit
Adjusted net profit2
Free cash flow
Net debt
12M net debt / EBITDA
Sales volume, kt
Phosphate-based fertilizers
Nitrogen-based fertilizers
Total sales
Revenue breakdown by key products, RUB bln
Item
Phosphate-based products
Nitrogen-based products
Other
Total
Revenue breakdown by region, RUB bln
Item
Russia
CIS
Europe
South America
Africa
India
North America
Others
12M 2019
12M 2020
Change y-o-y, %
248,125
75,582
30.5%
49,408
37,062
28,272
253,879
84,280
33.2%
16,921
46,791
42,517
31 December 2019
31 December 2020
131,583
1.74
156,875
1.86
2.3
11.5
2.7 p.p.
(65.8)
26.3
50.4
12M 2019
12M 2020
Change y-o-y, %
7,255
2,197
9,452
7,669
2,286
9,955
5.7
4.0
5.3
2019
201.3
37.9
9.0
248.1
2020
Change y-o-y, %
203.6
38.7
11.6
253.9
1.1
2.1
28.9
2.3
2019
2020
80.7
13.6
72.4
34.8
9.5
14.2
19.4
3.9
85.1
10.5
66.5
41.9
12.3
21.6
12.3
3.6
1.
2.
EBITDA is calculated as operating profit adjusted for depreciation and amortisation.
Adjusted net profit means net profit less foreign exchange gain or loss and other non-cash items.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
OPERATING COSTS ANALYSIS
Cost of sales, RUB mln, %
Item
12M 2019
12M 2020
Change y-o-y, %
Depreciation and amortisation
Materials and services
Phosphate rock transportation
Repair
Drilling and blasting
Other materials and services
Raw materials
Ammonia
Sulphur and sulphuric acid
Potassium
Natural gas
Ammonium sulphate
Salaries and social contributions
Electricity
Fuel
Products for resale
Total
21,368
41,221
8,641
10,119
2,323
20,138
43,155
4,095
9,165
13,691
12,627
3,577
12,744
6,204
4,849
6,683
23,743
40,973
8,134
10,134
3,168
19,537
35,514
4,802
4,360
12,253
12,342
1,757
13,807
6,311
3,885
9,102
136,224
133,335
11.1
(0.6)
(5.9)
0.2
36.4
(3.0)
(17.7)
17.3
(52.4)
(10.5)
(2.3)
(50.9)
8.3
1.7
(19.9)
36.2
(2.1)
In 2020, cost of sales went down
by 2.1% y-o-y, to RUB 133.3 bln. This
decline amid increased output was
achieved a result of a production
upgrade, better self-sufficiency in raw
materials, and lower feedstock prices.
Costs for raw materials decreased
by 17.7% y-o-y to RUB 35.5 bln
on the back of:
• a 52.4% cut in the spending
on sulphur and sulphuric acid ,
to RUB 4.4 bln due to a decline
in the sales of sulphur-rich
fertilizer grades, pilot
commissioning of a new sulphuric
acid unit in Cherepovets
at the beginning of 2020,
as well as falling global prices
for this feedstock;
• a 50.9% decline in the spending
on ammonium sulphate, to RUB 1.8
bln after our ammonium sulphate
plant reached its design capacity.
Ammonia costs increased
by 17.3% to RUB 4.8 bln due to higher
consumption caused by the launch
of the ammonium sulphate plant.
• 10.5% lower spending on potassium
chloride, to RUB 12.3 bln, amid
falling global prices;
84/
85
Change in EBITDA components in 2020, RUB bln
75.6
+4.5
(17.6)
+5.9
+15.9
84.3
EBITDA
EBITDA for 2020 grew by 11.5%
y-o-y and amounted to RUB
84.3 bln, with a 33.2% margin.
The growth was driven
by recovering global prices
for fertilizers and the completion
of technological and operational
upgrades. Among other
contributing factors were rouble
depreciation and low prices
for key raw materials. EBITDA
margin is one of the highest
among direct competitors
2019
Sales volume
Prices
Expenses
FX rates
2020
FREE CASH FLOW
2020 EBITDA (plan/actual), RUB bln
In 2020, free cash flow increased
1.5x y-o-y and amounted to a record
RUB 42.5 bln. The growth was driven
by high EBITDA margin and efficient
working capital management.
Capital investments for the year
reached RUB 40.9 bln (USD 567 mln),
which is equal to 49% of the 2020
EBITDA. The Company’s investments
were focused around
the development of the raw
material base in Kirovsk, upgrade
of fertilizer production and railway
infrastructure in Cherepovets,
launch of a new flexible line producing
ammonium sulphate in Balakovo
and construction of new facilities
at the Volkhov site.
+ 13.4
(+19%)
+8.5
(2.4)
+3.3
+1.8
84.3
+2.2
70.9
Plan
Amount
by profit
Price of mineral
fertilizers and
phosphate rock
(FOB)
FX rate
(RUB 72.8/USD
RUB 72.1/USD)
Prices for raw
materials and
supplies
Other
operating
expenses
Actual
EBITDA to FCF conversion in 2020, RUB bln
9.8
(6.5)
84.3
0.2
(4.1)
83.7
(41.2)
In 2020, cost of sales went
down by 2.1% y-o-y, to
Costs for raw materials
decreased by 17.7% y-o-y to
133.3 RUB bln
35.5 RUB bln
84.3 RUB bln
EBITDA in 2020
42.5 RUB bln
free cash flow (FCF) in 2020
42.5
EBITDA
2020
Adjustment
Working
capital
Taxes paid
Interest
paid
Operating
cash flow
Investment
cash flow
FCF
2020
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 DEBT
At the end of 2020,
our net debt to EBITDA ratio stood
at 1.86x. The growth compared
to 31 December 2019 was a result
of rouble depreciation, since most
of the Company’s loan portfolio
is denominated in US dollars. Net
debt as at 31 December 2020 was
RUB 156.9 bln (USD 2.1 bln).
Loans and borrowings breakdown
as rate type at 31 December 2020, %
Loans and borrowings breakdown
as currency at 31 December 2020, %
7.4
6
12.5
92.6
81.5
Fixed rate
Floating rate
USD-denominated
EUR-denominated
RUB-denominated
86/
87
Direct economic value generated and distributed
201-1
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, including:
wages and other payments to employees
social expenses
Payments to providers of capital:
Stakeholder
2019
2020
Wide range of stakeholders
Suppliers and contractors
Employees
249,583
254,854
239,130
242,262
8,995
1,458
0
11,617
975
(243,077)
(247,254)
(194,090)
(193,263)
(24,706)
(28,540)
(2,661)
(2,570)
payments to shareholders
Shareholders and creditors
(32,244)
(38,852)
payments to creditors
Tax expenses and other payments to government:
Government
55.320
including income tax expense
Economic value retained
(4,635)
(12,108)
(9,724)
6,506
(4,132)
(11,007)
(8,045)
7,600
Loans and borrowings breakdown as maturity, RUB mln
Less than a year
1–2 years
2–3 years
3–4 years
4–5 years
More than 5 years
12.182
3.921
6.214
Repayment schedule, RUB bln
36.9
36.9
40.859
40.859
28.3
25.9
12.2
3.9
3.9
3.9
2021
2022
2023
2024
2025
Loans
Bonds
6.2
2026
and later
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
OPERATIONAL
PERFORMANCE
PRODUCT PORTFOLIO
The Company developed its own green
label certifying the environmental
safety of products. PhosAgro’s
fertilizers do not have as much
cadmium content as would be
dangerous for health (less than 5 mg
/ kg, which is much less than the 20
mg / kg threshold recommended
by France’s ANSES), contributing
to cleaner soil, healthy crops and high
quality of foods.
Speaking about PhosAgro’s operating
results, I would like to point out
the favourable market conditions
throughout the year. Robust demand
and high affordability of fertilizers,
coupled with limited global phosphate
production, laid grounds for a 5%
y-o-y sales growth for this type
of product. We greatly benefitted
from our consistent investments in
production over the previous years.
The Kirovsk branch of Apatit reached
stable annual production of more than
10.5 mln t of apatite concentrate. The
Cherepovets site increased its output
by almost 5%. The Balakovo branch
launched the production of granulated
ammonium sulphate, a product new
for the Company and unique for the
Russian market. The Volkhov branch
of Apatit is undergoing a global
transformation, PhosAgro’s largest
investment project to date, worth
about RUB 28 bln.
As a result of higher output and larger
share of higher-margin complex
fertilizers, we were able to solidify our
leadership on the Russian market and
increase sales to domestic farmers by
almost 10%.
Mikhail Rybnikov,
First Deputy CEO
Today, PhosAgro’s portfolio includes
52
fertilizer grades
12
including 12 with micronutrients.
88/
89
Mineral fertilizers
Feed
additives
Concentrates
Industrial
phosphates
Sodium
Tripolyphosphate
Nitrogen-phosphorus
and complex fertilizers
Feed grade
urea
High-grade phosphate
rock
Nitrogen-phosphorus
and complex fertilizers
with micronutrients
Monocalcium
phosphate feed grade
Syenite alkali
aluminium
concentrate
Nitrogen-based
fertilizers
Liquid complex
fertilizers
Nepheline concentrate
Industrial products
PhosAgro is the only producer of liquid
nitrogen-phosphorus fertilizers in Russia
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 UPSTREAM
AND DOWNSTREAM
Apatit’s Kirovsk branch mines,
beneficiates and processes apatite-
nepheline ore into phosphate
rock and nepheline concentrate.
Apatit is the world’s largest
producer of high-grade phosphate
rock and Russia’s only producer
of nepheline concentrate.
UPSTREAM
PhosAgro has its own deposits
of apatite-nepheline ore,
which is unique in terms
of its environmental friendliness
and safety. Its feedstock reserves
are of igneous origin, and so
they do not have concentrations
of toxic heavy metals. PhosAgro’s
own deposits of apatite-nepheline
ore ensure 100% self-sufficiency
when it comes to the production
of phosphate rock (apatite
concentrate extremely rich in P2O5).
The mine life of the Company’s
resource base is estimated
at around 60 years.
The branch develops six Khibiny
deposits: Kukisvumchorr, Yukspor,
Apatitovy Cirque, Rasvumchorr
Plateau, Koashva and Njorkpahk.
Further development
of the Kirovsk branch depends
on underground and open pit mining.
The development of the raw material
base is currently seen as a priority
and PhosAgro’s capital investments
are focused on the construction
of new mining facilities to replace
the retired ones, increase
in productivity, as well as upgrade
and purchase of equipment.
PhosAgro ore reserves as at 1 January 2021
Key projects
Technologies
90/
91
• In December 2020, re-equipment
of main shaft No. 2 reached
the final stage – shaft equipment
was fortified and and new solid
conductors were installed
to increase the reliability of ore
drawing.
• In 2020, investment projects
for open-pit mining at the Koashva
and Njorkpahk deposits included
procurement of nine units of road
machinery, 32 mining dump trucks,
and three electro-hydraulic
excavators.
Remote underground drilling.
An operator can manage several
drilling rigs from an above-ground
control centre. In 2020, the Kirovsk
branch of Apatit expanded its fleet
with four units and formed a large
fleet of 14 remotely-operated
drilling rigs. The Unified Control
Centre located on the premises
of the Kirovsky mine also operates
two rigs drilling at the Rasvumchorr
mine 7 km away.
• In Q4 2020, a skip hoisting complex
was commissioned at main shaft
No. 1 with an annual design capacity
of 3.4 mln t. The reconstruction
included the replacement of shaft
equipment as well as installation
of a tipple bunker complex, a new
headgear, and a modern hoist.
• Construction and installation
works at the crushing and delivery
unit and haulage level +10 m
of the Kukisvumchorr deposit
entered the active stage following
massive underground construction
of 2016–2020.
• In Q4 2020, Yukspor tunnel
No. 1 was commissioned.
Re-equipment included replacement
of the assembled rails and sleepers,
crushed-stone ballast, and trough
gutters, raising the throughput
of this railway section by doubling
the train speed.
DOWNSTREAM
Production volume, kt
Item
2018
2019
2020 plan
2020 actual
Change
y-o-y, %
2021 forecast
Phosphate rock
Nepheline concentrate
10,067
986
10,507
1,188
10,500
1,145
10,541
1,159
0.3
(2.4)
10,670
1,148
Deposit
Kukisvumchorr
Yukspor
Apatitovy Cirque
Rasvumchorr Plateau
Koashva
Njorkpahk
Total
Licences
Mining licences
Kirovsky mine
Balance reserves, kt
(A+B+C1+C2)
Average P2O5 content,
%
368,549
462,056
98,824
88,569
748,634
53,204
1,819,836
Kukisvumchorr and Yukspor
deposits
14.17
13.98
13.82
10.64
15.94
13.87
14.65
31.12.2025
31.12.2038
31.12.2063
01.01.2024
Vostochny mine
Koashva deposit
Rasvumchorrsky mine
Njorkpahk deposit
Apatitovy Cirque and Rasvumchorr
Plateau deposits
Vostochny / Rasvumchorrsky mine
Rasvumchorr Plateau deposit
31.12.2021
Geological survey, exploration and mining licenses
Plot Plateau
Iyolitovy Otrog deposit
14.12.2040
01.02.2024
In 2020, the Company produced
37.55 mln t of apatite-nepheline ore,
and it plans to increase the output
to 41 mln t by 2027.
In 2020, the Company produced
of apatite-nepheline ore
37.55 mln t
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 92/
93
2018
2019
2020 forecast
2020 actual
Change y-o-y, %
2021 forecast
FEEDSTOCK, KT
Feedstock, kt
Item
Ammonia
Phosphoric acid
2,546.2
2,684.0
1,866.0
1,930.1
1,936.1
2,761.7
Sulphuric acid
5,731.7
6,123.0
6,855.2
Ammonium sulphate
–
13.5
291.9
Total
10,143.9
10,750.6
1,970.3
2,716.8
6,815.6
293.9
11,796.6
2.1
1.2
11.3
2,071.0
1,905.8
2,916.7
7,376.6
292.3
9.7
12,491.4
In 2020, the production of sulphuric
acid went up by 11.3% y-o-y
and amounted to 6.8 mln t.
The significant increase was driven
by pilot commissioning of the new
sulphuric acid unit in Cherepovets
in the middle of Q1 2020.
With an annual design capacity of 1.1
mln t, it will make the Company more
self-sufficient.
At the beginning of the year,
PhosAgro brought the synthetic
ammonium sulphate production unit
in Cherepovets to full capacity (up
to 300 ktpa) and will, consequently,
more than halve the procurement
of ammonium sulphate from external
suppliers. The sulphate is used
in production of NPK(S) grades
and, made in-house, will help bring
down the production costs.
In 2020, the production of sulphuric
acid increased by 11.3% y-o-y
and amounted to 6.8 mln t. The surge
was driven by:
• completion of a large-scale
upgrade and re-equipment
programme at the Cherepovets
site;
• completion of the next stage
of upgrade of the mineral fertilizer
capacities in Balakovo;
• completion of the first stage
of a modern phosphate-based
fertilizer facility and construction
of a power plant at Apatit’s
Volkhov branch;
• synthetic ammonium sulphate
facility in Cherepovets reaching its
full capacity.
PRODUCTION
PHOSPHATE-BASED FERTILIZERS
Phosphate-based fertilizer production, kt
Item
DAP/MAP
NPK
NPS
APP
MCP
PKS
Total
2018
2019
2020 plan
2020 actual
Change y-o-y, % 2021 forecast
2,992.0
3,186.7
3,340.5
3,164.4
2,799.0
2,771.6
2,747.6
2,840.3
422.0
644.3
216.5
193.4
356.0
367.7
67.0
93.0
680.8
224.0
385.9
87.1
928.9
205.8
392.1
46.4
6,853.0
7,256.8
7,465.9
7,577.9
(0.7)
2.5
44.2
6.4
6.6
(50.1)
4.4
3,562.4
2,870.5
793.1
219.8
389.8
31.7
7,867.3
In 2020, fertilizer production
in the phosphate segment
increased by 4.4% y-o-y due
to higher productivity of the existing
facilities making phosphoric acid
and phosphate-based fertilizers.
Better performance was driven
by technological and operational
improvements in the production
of phosphoric acid and major
overhauls of the fertilizer facilities
completed in late 2019.
fertilizer production in the phosphate
segment increased by
4.4 %
NITROGEN-BASED FERTILIZERS
Nitrogen-based fertilizers production, kt
Item
2018
2019
2020 forecast
2020 actual
Change y-o-y, %
2021 forecast
Ammonium nitrate
533.0
566.4
Urea
1,590.0
1,684.1
Ammonium sulphate
–
1.2
671.9
1,640.8
36.4
691.5
1,679.1
31.7
22.1
(0.3)
2,641.7
668.0
1,624.4
59.9
Total
2,122.0
2,251.8
2,349.1
2,402.3
6.7
2,352.3
In the nitrogen segment, production
over 12 months of 2020 grew by 6.7%
y-o-y due to the start of production
of commercial ammonium sulphate
and a 22.1% rise in ammonium nitrate
output, to 691.5 kt. The increase
is attributed to the launch of a new
facility for producing nitric acid
(the main component of ammonium
nitrate) and it reaching the design
capacity, as well as completed works
to support the existing nitric acid
facilities and upgrade ammonium
nitrate capacities.
In the nitrogen segment, production
over 12 months of 2020 grew by
6.7 %
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Key projects
Technologies
Launch of SK-3300 sulphuric acid production line (Cherepovets)
SK-3300 sulphuric acid system, Cherepovets production facility
94/
95
In Q1 2020, the Company began pilot operation of a new sulphuric acid
plant in Cherepovets. With an annual design capacity of 1.1 mln t, it will make
the Company more self-sufficient in terms of sulphuric acid.
Investments
in the project
~10.6
RUB bln
Synthetic ammonium sulphate facility reaching full capacity
(Cherepovets)
In early 2020, PhosAgro brought the synthetic
ammonium sulphate production unit
in Cherepovets to full capacity (up to 300
ktpa) and will, consequently, more than halve
the procurement of ammonium sulphate
from external suppliers. The sulphate is used
in production of NPK(S) grades and, made
in-house, will help bring down the production
costs.
Investments
in the project
~2.5
RUB bln
Development of the Volkhov branch of Apatit
PhosAgro intends to build a new modern
phosphate-based fertilizer facility
and a power plant at Apatit’s Volkhov branch.
The project will involve the construction
of an 800 ktpa sulphuric acid plant, a mineral
fertilizer facility producing, among other
things, water soluble MAP, warehouses
for liquid ammonia and finished products,
and a 25 MW heat and power plant.
In addition, the wet-process phosphoric acid
capacities will be ramped up to 500 ktpa.
Investments
in the project
In October 2020, the Company began
temporary production of NPS 16:20,
with the intention to switch to МАР 12:52
in February 2021.
>28
RUB bln
The project
is scheduled
for completion
in 2023
The technology was developed
by NIUIF, which also assisted
with the project implementation.
The system was commissioned
in March 2020.
Sulphuric acid is produced according
to a short, eco-efficient, and energy-
saving process involving double
contact double absorption, which
is used by modern sulphuric acid
facilities around the world.
Benefits:
• quickly reaches design capacity;
• reliable and easy to operate;
• guarantees minimal exhaust of harmful gases
into the atmosphere;
• has minimum power consumption levels;
• fitted with simple and reliable equipment;
• SO2 conversion rate of 0.9980 and above;
• total SO3 absorption rate of 0.9999.
Its production
capacity stands at
~1.1
mln t
of monohydrate
per year.
All of the system’s performance indicators are in line with best
available technologies or even exceed them.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 SALES
In 2020, PhosAgro’s domestic
fertilizer sales increased by 8.0%
y-o-y and exceeded 2.9 mln t. This
growth was driven by higher sales
to Russian farmers as a result
of the upsurge of the entire Russian
agricultural sector.
Exports of all types of fertilizers
in 2020 increased by 4.2% to 7.1 mln t.
The growth was largely attributable
to an advanced sales system as well
as high quality and environmental
efficiency of the fertilizers produced.
Better sales were also prompted
by favourable weather conditions,
high affordability of fertilizers
for end consumers, and a temporary
halt in fertilizer production in India
and China in the spring as a result
of the pandemic-related restrictions.
All these factors supported
the growth of PhosAgro sales
in the key markets of Latin America,
India and Africa.
Sales of phosphate-based
fertilizers to North America
over 12 months of 2020 amounted
to about 316.5 kt, almost halving y-o-y
on the back of the unfavourable
pricing environment in the US
market early in the year as well
as Mosaic’s petition against Moroccan
and Russian phosphate imports.
PhosAgro’s flexible distribution
allowed the Company to redirect
products to other markets, including
Canada and India, without any losses.
SALES IN 2019–2020
Sales by category, kt
Item
Phosphate rock
Nepheline concentrate
Total
Phosphate-based fertilizers
DAP/MAP
NPK
NPS
APP
MCP
PKS
Total
Nitrogen-based fertilizers
Ammonium nitrate
Urea
Ammonium sulphate
Total
Total fertilizers
Other products
STPP
Other
Total other products
2019
3,256.4
1,189.8
4,446.2
3,204.6
2,775.7
616.0
198.4
377.4
82.9
7,255.0
506.4
1,690.9
0.0
2,197.3
9,452.3
103.5
82.2
185.6
2020
Change 2020/2019, %
3,151.8
1,159.0
4,310.8
3,203.4
2,924.6
912.2
200.3
378.6
49.8
7,668.9
618.6
1,649.0
18.1
2,285.7
9,954.6
93.3
90.4
183.7
(3.2)
(2.6)
(3.0)
0.0
5.4
48.1
1.0
0.3
(39.9)
5.7
22.2
(2.5)
>100
4.0
5.3
(9.9)
10.0
(1.0)
Sales by region, kt
PHOSPHATE-BASED FERTILIZERS
2,357.2
2,194.7
2,037.0
2,098.7
1,142.6
1,033.8
924.9
+7.4 %
(2.9 %)
10.5 %
63.2 %
69.3 %
(46.6 %)
(17.6 %)
4.8 %
Russian
Federation
Europe
Latin
America
India
Africa
North
America
CIS
RoW
Total
566.7
440.0
259.9
316.5
592.4
302.7
367.5
148.0
141.2
2020
2019
2020
2019
NITROGEN-BASED FERTILIZERS
546.1
492.4
461.4
535.3
+10.9 %
(13.8 %)
871.5
22.7 %
710.5
(11.4 %)
(11.2 %)
(11.6 %)
Russian
Federation
Europe
Latin
America
North
America
CIS
RoW
Total
256.6
289.5
11.9
13.4
138.2
156.3
2020
2019
2020
2019
96/
97
7,668.9
+5.7 %
7,254.9
2,285.7
2,197.3
+4.0 %
Sales of phosphate-based fertilizers
to North America over 12 months of
2020 amounted to about
316.5 kt
PhosAgro’s domestic fertilizer
sales amounted to
2.9 mln t
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Research and
EDUCATION
PhosAgro runs
the Samoilov Scientific
Research Institute
for Fertilizers
and Insectofungicides
(NIUIF), Russia’s only
institute specialising
in this area. The Company
actively cooperates
with the Russian Ministry
of Agriculture, the Russian
Academy of Sciences,
scientific and educational
institutions in Russia
and abroad, and innovation
funds.
Research and education has
always been an integral part
of our operations.
Fully aware of our responsibility
for ensuring efficient
and safe agricultural production,
we develop new innovative
fertilizers, and work to minimise
the environmental impact of both
mineral fertilizer application
and production.
GLOBAL SUSTAINABLE
DEVELOPMENT GOALS (SDGS)
ZERO
HUNGER
QUALITY
EDUCATION
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
CLIMATE
ACTION
LIFE
ON LAND
PARTNERSHIPS
FOR THE GOALS
NIUIF ACTIVITIES
The NIUIF is Russia’s oldest and so far only research
institute focusing on downstream technologies
for phosphate rock, production of phosphoric
and sulphuric acids and manufacturing of phosphate-
and nitrogen-based mineral fertilizers. It is the country’s
leading issuer of standards and certificates for mineral
fertilizers, sulphuric and phosphoric acids, and other
associated products, and No. 1 provider of metrological
solutions for production facilities. The institute
holds around 70 patents for phosphate processing
and fertilizer production technologies.
The NIUIF cooperates with the leading agricultural
institutes from Russia and abroad, and studies mineral
fertilizer properties and the ways to make their use
more efficient and produce healthy foods for the planet’s
growing population.
98/
99
SOLUTIONS DEVELOPED BY THE NIUIF IN 2020
R&D FOR SULPHURIC ACID PRODUCTION
• The first stage of creating
• Development of as-built
• R&D support
the in-house production of high-
performance vanadium sulphuric
acid catalysts: providing input
data for the feasibility study.
Run jointly with the Boreskov
Institute of Catalysis (Siberian
Branch of the Russian Academy
of Sciences), the project will
continue in 2021.
documentation and support
for the design of the SK-800
sulphuric acid plant in Volkhov (the
NIUIF technology).
for the commissioning
and deployment of a new SK-3300
sulphuric acid unit in Cherepovets
(the NIUIF technology and design).
R&D SOLUTIONS FOR MINERAL FERTILIZER PRODUCTION
• Intensifying MFPU-2 operation
in Cherepovets using a catalytic
converter.
• R&D support
for the start-up and deployment
of MFPU-3 in Volkhov (developed
and designed earlier by the NIUIF).
• Development and implementation
of the ammoniator-granulator
and dryer drum technology
in Balakovo.
• R&D support
for the commissioning and start
of crystalline ammonium sulphate
production in Cherepovets.
• Analysis of available technologies,
research, substantiating
the choice of water-soluble
monoammonium phosphate (MAP)
technology.
DEVELOPMENT OF ADVANCED TYPES OF FERTILIZERS AND OTHER PRODUCTS
The project has environmental and climatic significance
• Trial and research (together
with the Russian State
Agrarian University – Moscow
Timiryazev Agricultural
Academy) to study
the possibility of creating
innovative fertilizers
with enhanced environmental
and agrochemical
efficiency. This relates
to slow and controlled-
release fertilizers produced
by applying inorganic digestible
coatings / shells on granules.
The preliminary results
are positive, and the work will
continue in 2021.
• R&D support for the start-up
and deployment of the granulated
ammonium sulphate production
powered by the NIUIF technology
and design.
Plans for 2021
• Conduct research to develop
technologies for water-soluble
fertilizers, primarily monocalcium
phosphate.
PERFORMANCE REVIEW
100/
101
R&D SOLUTIONS FOR PHOSPHORIC ACID PRODUCTION
The project has environmental
and climatic significance
• Development of solutions
for the vacuum evaporation
of wet-process phosphoric
acid in Cherepovets, Balakovo,
and Volkhov. The project
will help reduce fluorine
content in fertilizers, recycle
fluorine into popular chemical
products, and optimise
the use of chemical reaction
heat, which in turn will reduce
natural gas consumption
and greenhouse gas emissions.
• Development of hemihydrate
and dihydrate process
for the production of wet-
process phosphoric acid at all
sites, increasing the efficiency
of raw material processing.
ENVIRONMENTAL R&D, INCLUDING WITH A FOCUS ON THE USE OF RECYCLED MATERIALS
• Upgrade and improvement
of scrubbing systems
in Cherepovets and Balakovo.
• Closer examination of the Volkhov
branch water use plan to confirm
the possibility of implementing
a zero-discharge scheme
for the purpose of new production
facilities.
• Monitoring the condition
and stability of dump sites
in Balakovo. Collaboration with St
Petersburg Mining University.
• Research and development
support for the design of an acidic
waste water treatment station
in Volkhov.
• Analysis of high-potential
fluosilicate acid processing
methods.
• Research and development
support for the design
of a unit for the integrated
treatment of by-products
from wet-process phosphoric
acid – fluosilicate acid
and phosphogypsum production
(based on a NIUIF technology).
• Research and development
support for the design
of aluminium fluoride shop
reconstruction with increased
capacity.
• Research on recovery
and processing of waste water
phosphorus.
• Research to create
a technology for hydrogen
sulphate treatment of nepheline.
Plans for 2021
• Development of a technology
to produce crystalline ammonium
sulphate by processing
phosphogypsum and carbon
dioxide.
• Development of an action plan
to optimise the use of chemical
reaction heat, reduce natural gas
consumption and, consequently,
greenhouse gas emissions
at the fertilizer drying stage.
PHOSAGRO INNOVATION CENTRE
The Innovation Centre was created
in 2018 to develop innovative
products and technologies
in collaboration with research
institutions in Russia and abroad.
The Centre also conducts market
research and shapes the product
portfolio expansion strategy
for the Company.
Today, PhosAgro’s portfolio includes
52 fertilizer grades, including
12 with micronutrients. We plan
to develop 50 new products by 2025,
and 70 by 2030, including innovative
biomineral fertilizers, fertilizers
with inhibitors and ameliorants,
as well as fertilizers with prolonged
effect.
PhosAgro Innovation Centre
cooperates with 15 federal research
centres and institutes. It has signed
22 research and development
contracts for the total of RUB 34.9
mln. The Centre has put in place
a procedure to develop and register
innovative agrochemicals comprising
the following stages: laboratory
analysis – growth chamber – field –
product concept – registration. It
also collects information on new
developments in the field of fertilizer
production and application,
and works to create educational
and training films.
PHOSAGRO’S AGRONOMIC SERVICE
Educational activities
of the agronomic service include
the following:
• field days (over 35 field days
annually);
PhosAgro’s field trial stations
are a tool for transferring
advanced agricultural
technologies from scientific
community to producers.
• seminars and training
for farmers, distributors and sales
managers (over 60 seminars
and conferences annually);
The field trial stations are used
to:
• demonstrate growing
technologies;
• internal training for agronomists
• test new fertilizer grades
and traders;
• agronomic advice and support;
• creation of a knowledge base
focusing on the efficiency
and benefits of PhosAgro
fertilizers (150+ trials per year).
and prepare recommendations
on their safe and effective use;
• conduct field conferences;
• provide on-the-job training
for students.
It has signed
22
research and development contracts
for the total of
34.9 RUB mln
In 2020, PhosAgro launched its
YouTube channel named PhosAgro
Pro Agro. It features the Company’s
agronomic service specialists
and invited experts discussing
advanced technologies and effective
plant nutrition systems.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 INNOVATIONS
IN EDUCATION
We believe that availability of human
resources for the agro-industrial
sector is an essential part of ensuring
the country’s food security.
• PhosAgro, together with the Russian
State Agrarian University – Moscow
Timiryazev Agricultural Academy
and Innopraktika non-government
development institution, has
established an applied academy-
based research educational centre
to train highly qualified personnel
for the agro-industrial sector.
• Training centres were established
at the Kuban State Agrarian
University and the Russian State
Agrarian University – Moscow
Timiryazev Agricultural Academy.
• A university of innovations was
established, and a course of 20
lectures and webinars was developed
and implemented. The project
involves globally renowned
scientists, innovative companies that
are PhosAgro’s partners, PhosAgro
specialists and university professors.
• Video lectures designed to promote
knowledge about new products
through PhosAgro’s digital education
programme are being prepared.
• The first online conference held
in June 2020 was attended by a total
of 290 participants.
GREEN CHEMISTRY FOR LIFE
At the onset of the Green Chemistry for Life project, we were thinking,
first and foremost, about influencing the scientific search criteria,
and directing the efforts of young scientists toward the development
of new technologies to secure the efficient and rational use of available
resources, as well as application of recycled materials. Our common goal
has been to promote and popularise new progress ethics making sure
that scientific and technological advances of today do not compromise
the planet’s natural diversity and well-being of future generations.
Our ideas have been strongly supported by the scientific community,
and the project was widely discussed and became an effective mechanism
for stimulating scientific research. The efforts of an ever increasing
number of people united by this project are aimed at benefiting all
mankind.
Andrey Guryev
PhosAgro’s CEO
102/
103
GLOBAL HUMANITARIAN PROJECTS
Since its launch in 2013, Green
Chemistry for Life, an initiative run
by UNESCO and PhosAgro in close
cooperation with the International
Union of Pure and Applied
Chemistry (IUPAC), has reviewed
over 700 applications
and awarded grants to over 40
young chemists from 29 countries
for research in health, sustainable
development, environmental
protection and human health.
It is the first ever project
under the auspices of the UNESCO
and the entire UN system funded
by a Russian company.
PhosAgro’s contribution
to the project over 2013–2022 will
amount to
2.5 USD mln
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 IUPAC GREEN CHEMISTRY SUMMER SCHOOL
In 2018, the Company’s partnership with UNESCO and IUPAC reached
a new milestone as the first session of the IUPAC Summer School on Green
Chemistry kicked off.
PhosAgro has been a general
partner of IUPAC’s Summer Schools
on Green Chemistry providing
scholarships to young researches
from developing economies.
Over the course of three years,
our total spending to support
this project exceeded USD
40,000. Sessions have been held
annually with PhosAgro’s support,
attracting hundreds of young
talented scholars from emerging
and transition economies.
In 2020, the IUPAC Summer
School was held online for the first
time. Dictated by the new reality,
the format made the school’s
events accessible to a record
number of participants. More than
200 postgraduates and young
scientists engaged in innovation
activities based on the principles
of sustainable development
and about 40 professors
and teachers from 25 countries
participated in the sessions.
PROMOTING SUSTAINABLE AGRICULTURE
among farmers and create
the Regional Soil Laboratory
Network (RESOLAN) in Africa,
Latin America and the Middle East,
with USD 1.2 mln allocated for these
purposes. Results of the laboratory
activities are aggregated in a global
international network of such
laboratories allowing to assess soil
quality and the role of fertilizers
in boosting yields.
PhosAgro has also financed
the creation of a rapid soil testing
kit as part of the Soil Doctors
programme. The project will see
more than 5,000 farmers across 30
countries receive these kits.
In order to preserve soil fertility
and purity, boost yields, and ensure
stable agricultural production
in a high-risk farming environment,
the Company shares its research
results with farmers in various
countries and arranges their training
and professional development.
PhosAgro cooperates
with the United Nations Food
and Agriculture Organisation (FAO),
which has 197 member states.
In 2018, the Company became
a partner in FAO’s Global Soil
Partnership. PhosAgro is the first
Russian company in the history
of this organisation to implement
a global soil protection initiative,
promoting new technologies
and knowledge for sustainable
agricultural development.
In 2019, PhosAgro launched
a large-scale project to promote
sustainable soil management
PhosAgro is helping farmers
and the industry understand
how to improve soil management
while avoiding the accumulation
of contaminants in it.
SUPPLY
CHAIN
104/
105
PhosAgro strives
to make its
procurement
activities transparent
and ensure fair
competition and equal
conditions for all
suppliers of equipment
and services. We
seek to build strong,
trustful and mutually
beneficial relationships
with our partners
in compliance
with the applicable
laws, regulations,
industry standards,
contractual and other
obligations.
GLOBAL SUSTAINABLE DEVELOPMENT GOALS
(SDGS)
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
CLIMATE
ACTION
PROCUREMENT PRINCIPLES
102-12
103
As set out in the relevant
policy of Apatit, the Company’s
procurement activities should rely
on the following principles:
and total cost of equipment
and materials ownership, along
with legal and social matters;
• use the best-fitting, sustainable
• be legitimate, competitive,
business solutions;
and transparent;
• factor in the requirements
for specifications, quality,
customer service, delivery,
reliability, eco-friendliness
• protect the Company’s reputation;
• comply with the Company’s
existing procedures and best
practices.
PROCUREMENT METHODS
Corporate procurement
is a competitive process,
with a dedicated commission put
in charge of organising tenders
for equipment, materials, petroleum
products and services.
PhosAgro requests are placed
on the Group’s electronic bidding
platform (EBP) that meets all
applicable requirements set
by Russian law.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 TRANSPARENCY AND OPENNESS OF PROCUREMENT PROCESSES
106/
107
ON-THE-MARKET
TRANSPARENCY
REQUEST
PREPARATION
IN-SYSTEM
TRANSPARENCY
DELIVERY
TO THE WAREHOUSE
BIDDING PROCEDURE
CONTRACT
AWARD
PhosAgro’s procurement
system ensures transparency
of all corporate procedures,
as well as their transparency
and openness to all market
participants. This means:
for the Company:
• updating request
status every seven
days,
• total transparency
of procurement
at all stages,
• end-to-end
reporting
and analytics for all
business units.
for suppliers:
• participation
in an objective
and unbiased supplier
selection procedure,
• public access to EBP,
• preview of prices
(which are to be
published).
Key requirements for purchased products
QUALITY
RELIABILITY
ECO-FRIENDLINESS
Suppliers are evaluated
and selected
in accordance
with the Company’s
standard STO 7.4-01
outlining the supplier
reliability criteria.
As a socially
and environmentally
responsible business,
the Company checks
its potential suppliers
for compliance
with relevant
requirements.
When purchasing raw
materials, components,
packaging, the Company
implements a pre-
supply evaluation based
on verification
tests conducted
by the Company’s quality
control department
subject to a report
(approval) providing
full information
about the purchased
items.
PROTECTING HUMAN
RIGHTS
In line with PhosAgro’s
Code of Ethics,
the Company may
refuse to cooperate
with suppliers
or business partners
discriminating their own
or subcontractors’
employees or using
forced labour.
The full text of PhosAgro’s Code of Ethics
is available on the Company’s website
Committed to fighting corruption,
PhosAgro adheres to the Anti-
Corruption Charter of the Russian
Business. We are making reasonable
efforts to minimise risks of doing
business with partners that might be
involved in fraud and/or corruption.
In furtherance of our Anti-Corruption
Policy, we establish and maintain
business relationships with companies
that operate in a bona fide manner,
care about their own reputation,
show commitment to high ethical
standards, combat corruption,
and take part in joint anti-corruption
initiatives in accordance with article
133 of the Federal Law On Combating
Corruption.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 GREEN PROCUREMENT
103
The Procurement Department,
as the Company’s other
departments, is committed
to sustainable development.
We bear responsibility not only
for what we do but also for what
our partner companies, suppliers
and service providers do to comply
with the sustainability principles.
On top of that, we seek to have
an entirely sustainable supply chain
and adopt the relevant principles
across the board to implement
a green procurement system.
CODE OF CONDUCT FOR COUNTERPARTIES
The Code of Conduct for Counterparties only deals
with the sustainability-related aspects of counterparty
relationships. It seeks to give a clear understanding
of our approach to selecting suppliers and partners,
along with our priorities in making the choice.
Pillars of our green procurement system
Based on the Code of Conduct for Counterparties,
PhosAgro developed a system to evaluate suppliers
against ESG criteria that cover environmental issues,
social responsibility and quality management.
For the Code of Conduct
for Counterparties, see the Company’s
website
108/
109
Creating a sus-
tainable corporate
framework for ESG
based on internal
regulations
Considering suppliers
and contractors as
vital participants in
the Company’s value
chain as part of our
commitment to the
UN Sustainable Devel-
opment Goals
Covering all aspects
of ESG-related activi-
ties in the Company’s
non-financial disclo-
sures
Discussing suppli-
er and contractor
relationships with
stakeholders
Focusing the ESG
ratings on corporate
responsibility, including
the value chains and
supplier and contrac-
tor relationships
Code of Conduct for Counterparties
Legal
compliance
Internal control
and monitoring
Conflict
of interest
Fair
competition
Green procurement activities
Highlights of 2020
Action plan for 2021
60 ESG criteria developed to evaluate suppliers and
contractors
• Automating the assignment and review of supplier
and contractor ESG ratings
Category-based supplier and contractor evaluation
system created
• Expanding the ESG evaluation coverage
Code of Conduct for Counterparties drafted and
published
• Adding the ratings to the counterparty selection
criteria
• Revising the supplier audit procedure to incorporate
ESG criteria integrated into procurement
ESG requirements
Regulations drafted to implement the ESG evaluation of
suppliers and contractors
• Revising contracts to include a reference to the
Code of Conduct for Counterparties
ESG evaluation coverage exceeded 4% of purchase
volumes, with the average score close to 64 (out of
100)
• Considering the share of ESG-evaluated suppliers
and contractors and their average ESG rating as
potential KPIs for the Procurement Department
Safe working
environment
Requirements for salary
and working time
Equal employment
opportunity
Inside
information
Freedom of
association
Human trafficking
and slavery
Confidentiality
and data protection
Countering
corruption
Confirming consent
to this Code’s provisions
Whistleblowing and
safety guarantees
Occupational health
and safety
Minimising environmental
impact
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 110/
111
Key stages in developing our supplier ESG evaluation system
HUMAN RESOURCES
Training
Analysing corporate reports,
stakeholder expectations
and ESG ratings
01
04
Testing the automated
system, analysing
the results, identifying
the gaps and proceeding
with the implementation
Defining ESG
requirements
for counterparties
based
on the Code of Conduct
for Counterparties
02
99 %
of PhosAgro employees
received professional training
In 2020
03
Developing a matrix
of 60 ESG indicators
and a procedure
for using them
in evaluation and selection
Key elements of supplier evaluation
Each question is accompanied
by a list of documents accepted
as proof of compliance
Suppliers/contractors are classified into six
categories, three for suppliers and three
for contractors
1
2
3
4
5
Supplier/contractor completes a ques-
tionnaire listing ESG-related require-
ments/questions, including those dealing
with quality management
Each question is assigned
a weight in points
Questions are grouped
by supplier/contractor
category
The evaluation results in an individual supplier/contractor rating (in points). These ratings help us determine
the share of ESG-compliant suppliers and contractors and make the right choice.
Procurement training in 2020
Training under Sergey Dubovik,
a leading business coach
in Russia
31 people
received job-related training
Programmes by Moscow School of
Management SKOLKOVO
2 people
completed a course by Moscow
School of Management SKOLKOVO
Training at the Apatit Training
Centre
The Gap Partnership’s
and MBA programmes
11 people
upgraded their skills
36
webinars, training sessions,
workshops
were held for the Department’s
employees
10 people
completed a course
by The Gap Partnership
2 people
completed an EMBA course
Recruitment
The COVID-19 pandemic
triggered fundamental
changes to our recruitment
approach. Previously,
we used
to source candidates locally,
but the health emergency
forced us to take a different
route. This resulted in new
opportunities, making
the search not restricted
to the regions we are based
in and the candidate’s
expertise and business
competencies the first
consideration. Attracting
talent from large and global
companies also proved
beneficial.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 PROCUREMENT IN FIGURES
Service tenders in 2020
Number of counterparties in 2020,
units
Tenders
Unit of
measurement
JSC Apatit
Balakovo
branch
Volkhov
branch
Kirovsk
branch
112/
113
Total
242
10,122
183
1,447
69
Capital construction
Procedures
Maintenance and
repairs
RUB mln
Procedures
RUB mln
Transportation, incl. rail
Procedures
73
4,017
54
711
52
RUB mln
3,930
Corporate and other
services
Total
Procedures
RUB mln
Procedures
RUB mln
49
1,261
228
9,919
33
307
42
97
3
0.5
15
188
93
593
27
1,430
43
300
2
209
15
201
87
109
4,368
44
339
12
1,568
5,707.5
22
122
187
101
1,772
595
2,140
6,397
19,049
Procurement from local and other businesses in 2020,
RUB ths
Share of local and other
counterparties in 2020, %
204-1
Asset
Local
businesses
Other
businesses
Total
JSC Apatit
15,067,520
41,456,426
56,523,946
Balakovo branch
Volkhov branch
1,875,152
3,346,186
7,133,525
6,287,501
9,008,677
9,633,687
Kirovsk branch
3,178,357
25,724,637
28,902,995
Total
23,467,216
80,602,090
104,069,306
Local counterparties
Other counterparties
23
77
Procurement from local businesses, %
204-1
90
90
71
71
73
79
75
78
93
89
87
81
83
77
65
35
2,844
JSC Apatit
Balakovo branch
Volkhov branch
Kirovsk branch
1,530
361
314
639
635
531
261
161
150
120
109
Geography, units
Moscow
St Petersburg
Vologda region
Murmansk region
Saratov region
Sverdlovsk region
Moscow region
Chelyabinsk region
Leningrad region
Nizhny Novgorod region
Samara region
Yaroslavl region
Perm territory
Republic of Tatarstan
Tula region
Rostov region
Republic of Bashkortostan
Novosibirsk region
Voronezh region
Vladimir region
Belgorod region
Kaluga region
Novgorod region
Others
58
56
53
50
45
43
40
30
30
28
27
26
20
18
18
16
93
foreign counterparties
226
29
29
27
21
25
22
10
10
13
11
7
19
17
23
2018
2019
2020
2018
2019
2020
2018
2019
2020
2018
2019
2020
2018
2019
2020
JSC APATIT
BALAKOVO BRANCH
VOLKHOV BRANCH
KIROVSK BRANCH
Local businesses
Other businesses
JSC APATIT
AND BRANCHES
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
114/
115
SUPPLY CHAIN
102-9
Our supply chain represents a set of interconnected processes covering all
stages of value creation, from procurement to product delivery. At PhosAgro,
supply chain management aims to ensure smooth operation of all facilities, high
product quality, and seamless shipments to customers.
PhosAgro’s supply chain
PROCUREMENT
• Market activities / category
strategy
• Selecting the procurement
method
• Pre-bid arrangements
• Bidding
• Agreement and specification
WAREHOUSES
AND INVENTORIES
• Analysing inventory
movement and structure
• Monitoring timely receipt
and write-off
• Inventory Management
Committees
Foreign vs domestic contracts in 2020, RUB ths
Asset
JSC Apatit
Foreign
Domestic
Total
1,113,600
55,410,347
56,523,946
Balakovo branch
22,995
8,985,683
9,008,677
Volkhov branch
Kirovsk branch
Total
242,552
9,391,136
9,633,687
1,499,352
27,403,642
28,902,995
2,878,498
101,190,808
104,069,306
Structure of purchases
abroad and in Russia, %
I
N
O
T
C
U
D
O
R
P
1
2
3
4
5
PLANNING
SUPPORT
• Arranging and holding
a request campaign
• Analysing the product/
service required
and selecting the supply
source
• Cancelling or adjusting
requests and orders
• Signing the agreement
and specification
• Delivery monitoring
• Requesting/replacing original
documents
• Arranging for the replacement
of defective items
• Pre-complaint resolution
and complaint management
• Payment planning and control
PRODUCTION
CONTROL
• Monitoring operational
indicators
• Monitoring compliance
with SLA and NSD
• BI reporting
• Bidding support
• Corrective action plan
Domestic
Imported
97
3
SIGNIFICANT CHANGES TO PHOSAGRO AND ITS SUPPLY CHAIN
SME procurement in 2020, RUB ths
Asset
JSC Apatit
Balakovo branch
Volkhov branch
Kirovsk branch
Total
Other businesses
48,140,395
6,636,792
7,005,262
22,083,140
83,865,589
SMEs
8,383,552
2,371,885
2,628,426
6,819,855
20,203,717
102-10
The reporting year saw some
changes to PhosAgro’s supply chain.
Our ammonium sulphate
and sulphuric acid projects brought
about a significant decrease
in external purchases and reduced
our dependence on outside
suppliers, which had a positive
effect on purchase prices. In 2020,
ammonium sulphate consumption
grew by 23%, while its purchases
sank by 42%. Sulphuric acid
purchases were down by 31%.
In recent years, urea-formaldehyde
concentrate (UFC) consumption has
been on the rise as urea production
grows. Between 2018 and 2020, urea
production increased by 8%, driving
UFC purchases up by 16%.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 PEOPLE
DEVELOPMENT
GOALS TO 2025
Raising employee satisfaction
and loyalty to
Increasing average annual of training
hours per employee by
65 %
50 %
GLOBAL SUSTAINABLE DEVELOPMENT GOALS
(SDGS)
GOOD HEALTH
AND WELL-BEING
QUALITY
EDUCATION
DECENT WORK AND
ECONOMIC GROWTH
Employee loyalty and satisfaction
index, %
Average annual training hours
per employee, h
70
65
60
55
50
65
63
62
60
54
52
2016
2017
2018
2019
2020
2025
target
130
110
90
70
50
We seek to deliver
on our targets by running
the following programmes:
• Implementing a remedial action
plan based on employee survey
results
• Developing and implementing
e-learning modules on blue-
collar jobs, occupational safety,
and managerial skills; introducing
an innovative approach
to professional training (virtual
123
91
75
92.4
79.5
64
2016
2017
2018
2019
2020
2025
target
reality simulators, 3D models
for training, production training
grounds for improving workplace
safety skills, etc.)
• Developing and implementing
online training courses
on personal competencies
• Developing a system of corporate
libraries, guidelines, and knowledge
management at large
116/
117
INTEGRATED HR MANAGEMENT FRAMEWORK
OUR HR MANAGEMENT PRINCIPLES
102-12
103
103-2
406
PhosAgro relies on talented, professional, and committed
employees that share our corporate values. Our people
are the backbone of our success. We aim to deliver benefits
to our employees.
IN LINE WITH THAT, WE OFFER:
• competitive and fair pay;
• professional and creative growth opportunities;
• a discrimination-free working environment;
• a range of social benefits, along with employee support and health programmes;
• a fair and robust framework to assess the performance of each employee.
In keeping with our commitment
to generally accepted ethical
business standards, we pay special
attention to developing, implementing
and overseeing employee social
security programmes.
PhosAgro respects employees’
human rights as required
by the International Bill of Human
Rights and the ILO Declaration
on Fundamental Principles
and Rights at Work, including
zero discrimination, not using
child or forced labour, respecting
the right of association and collective
bargaining, and creating a safe
and favourable working environment
for the employees of PhosAgro
and its contractors.
PhosAgro appreciates
and encourages diversity
among its employees. We
maintain our commitment
to an equal opportunities
policy and do not tolerate any
discrimination or privacy violations
in respect of our employees.
We adhere
to the Personnel Management
Policy of PJSC PhosAgro, which
provides for additional guarantees
to protect human rights. We also
approved a transparency statement
under the UK Modern Slavery Act.
Our goal is to keep
our working environment
free from restrictions based
on nationality, gender, age, faith
or other grounds as required
by the applicable laws.
The full text of the Personnel Management
Policy of PJSC PhosAgro is available
on the PhosAgro website
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 RECRUITMENT
Our recruitment process relies
on the continuous monitoring
of the labour market in Russia
and beyond for skilled staff
and efficient managers
with experience at leading global
companies, determined to excel
in their roles and be one step ahead
of the curve.
Our talent attraction
and recruitment priorities
• Cooperating with schools
across our footprint. Creating
a favourable environment
for improving educational
standards and providing targeted
career guidance to final-year
students.
• Cooperating with technical
colleges in our regions
of operation. Creating a pipeline
of skilled employees with relevant
competencies who are competitive
in the labour market, understand
related professions, and have
what it takes to pursue career
opportunities. Offering
recruitment opportunities
to young talents.
• Cooperating with universities
to fill the most relevant jobs
by attracting and retaining
talented graduates.
If two or more candidates qualify
for a job, we are more likely to select
the one who is either:
• a young talented professional
(a programme for attracting,
mentoring and training high-
potential university graduates); or
• an employee included in our talent
pool (a programme for those
looking to develop professional
and managerial competencies
for career growth).
In 2020, the Company introduced
a training system for recruitment
professionals to improve the hiring
process. The system includes:
• a competency model
In 2020, we launched a training course
comprising four modules:
1
Candidate flow generation
2
Candidate evaluation
methods
3
for recruitment professionals;
Persuasive arguing skills
• performance evaluation
of employees responsible
for recruitment;
• ongoing training
4
and further improvement courses
for recruitment professionals.
Analytics and additional
methods to fill vacancies
The course will help improve
employee competencies, making
talent recruitment more effective.
118/
119
in introducing novel technology
in corporate communications.
These include personal accounts
for the employees, self-service
options, and a chatbot, along
with new capacities we added
to our corporate portal.
The full text
of the PhosAgro Code
of Ethics is available
on the PhosAgro website
CORPORATE CULTURES AND INTERNAL COMMUNICATIONS
PhosAgro adopted the Code
of Ethics. It applies to all employees
and is the Company’s primary
document for promoting its
corporate culture. The Code clearly
outlines the basic requirements
for Company employees
and establishes rules and regulations
for individual and collective behaviour
within the Company. The document
covers all professional and business
relationships, both at PhosAgro
and with business partners
and other external parties.
When agreeing and concluding
contracts with external contractors,
it is an imperative for us to cover
arrangements and commitments
related to mutual respect
of human rights and compliance
with the Company’s Code of Ethics.
Commitment to these principles
ensures 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.
We pay special attention
to receiving regular employee
feedback and identifying areas
for improvement. Access to multiple
communication and feedback
channels within the Company
allows our employees to resolve
employment and other job-related
issues. Some of the formats
are Q&As in our corporate
newspaper and town-hall meetings
for staff and management.
Any employee or other stakeholder
can use PhosAgro’s whistle-blower
hotline to report human rights
violations or discrimination of any
nature or to communicate any
other issues or concerns related
to employer-employee relationships.
In 2020, our employees reported
no human rights violations via
the hotline.
Responding to the way people
have to communicate in the wake
of the turbulences and remote
working of 2020, we are active
KEY INDICATORS
102-7
102-8
405-1
Productivity1, t per person
Average headcount by region of operation in 2020, people4
2,329
2,246
2,1632
1,641 1,648
1,602
Region
1,958
1,901
1,889
Saratov region
Murmansk region
Moscow region
Leningrad region
Vologda region
Other
Total
Men
1,263
5,997
216
721
3,129
653
Women
623
2,021
172
479
2,365
252
11,978.5
5,912.8
Total
1,886
8,018
388
1,200
5,494
905
17,891
Kirovsk
branch
of Apatit
JSC Apatit, its
branches in
Balakovo and Volkhov3
Company
total
2018
2019
2020
17,891
people
the Company had
an average headcount
In 2020
1.
2.
3.
4.
The calculation is based on the average headcount of Apatit and its Kirovsk, Balakovo, and Volkhov branches, as well as on the output of Apatit and its
Kirovsk, Balakovo, and Volkhov branches, with the exception of the aluminium fluoride and ammonium sulphate production.
The lower productivity in 2020 was due to the increase in the share of auxiliary downstream processes.
Concentrate processing
Employees of all companies that are part of the group to which Apatit and PhosAgro belong.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
Employees by gender and age1, %
Headcount by region, employment type and employment contract as at 31 December 2020, people1
120/
121
2019
2020(a)
2020(b)
Below 25
25–34 years
35–44 years
45-54 years
Above 55
Men
3.1
22.3
21.6
12.5
3.1
Women
1.9
11.0
13.3
9.2
2.1
Employees by category1, %
Men
3.4
21.8
22.1
12.6
2.6
Women
1.8
10.9
13.7
9.1
1.9
Men
3.3
20.9
22.8
14.1
3.7
Women
1.9
10.1
12.4
8.4
2.3
2019
2020(a)
2020(b)
Blue-collar workers
White-collar
workers
Executives
Men
40.8
11.5
Women
17.4
17.0
Men
39.8
12.1
Women
17.3
17.0
Men
42.6
11.7
Women
15.0
17.2
10.3
3.1
10.7
3.1
10.6
3.0
Employees by education1, %
2019
2020(a)
2020(b)
Higher
Higher (unfinished)
Secondary
Secondary
vocational
Men
24.6
0.2
10.0
29.7
Women
19.9
0.1
3.4
12.1
Men
27.3
0.2
8.6
26.5
Women
22.6
0.2
3.1
11.5
Men
25.1
0.2
10.1
29.4
Women
20.1
0.1
3.3
11.7
1.
To ensure compliance with the materiality principle and comparability with historical data information on 2020 was
disclosed within two boundaries: (a) Apatit, including its branches and standalone business units; (b) Information
disclosed on PhosAgro and Apatit, including its branches and standalone business units, and other Group’s subsidiaries
incorporated in Russian Federation.
102-8
Region
Vologda region
Saratov region
Leningrad region
Murmansk region
Moscow region
Total
Employment
Contract
Gender
full-time
part-time
permanent
temporary
Men
Women
Total
Men
Women
Total
Men
Women
Total
Men
Women
Total
Men
Women
Total
Men
Women
Total
3,142
2,607
5,749
1,273
661
1,934
768
524
1,292
6,059
2,229
8,288
221
184
405
11,463
6,205
17,668
1
4
5
1
8
9
1
1
4
9
13
1
1
7
22
29
3,073
2,395
5,468
1,244
619
1,863
725
479
1,204
5,585
2,107
7,692
218
177
395
10,845
5,777
16,622
70
216
286
30
50
80
43
46
89
478
131
609
4
7
11
625
450
1,075
PhosAgro average employee profile
Key personnel turnover indicators, people2
39.07
years
Average age
10.35 %
Pay rise
401-1
7.3
3 123
2 750
6.0
2,274
6.5
2,035
8.77
years
Average tenure
1.65
Male-to-female
pay ratio
1,720
1,699
1,610
1,651
63 %
Loyalty
2018
2019
2020
Hired
Dismissed
Turnover, %
1.
2.
Employees of all companies that are part of the group to which Apatit and PhosAgro belong.
In 2020 turnover rate at PhosAgro and Apatit, including its branches and standalone business units, and other Group’s subsidiaries incorporated in Russian
Federation amounted to 8,0%, total amount of hired employees amounted to 3 123, dismissed - 2 750.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
GENDER EQUALITY AT PHOSAGRO
The Company’s gender ratio: an overview
6 %
of all the employees perform
duties that only require men
WOMEN IN PHOSAGRO’S MANAGEMENT AT ALL LEVELS
20 %
of women
on the Board
of Directors
(2 out of 10)
21 %
of women
in the Company’s
Talent Pool
(6 out of 29)
22 %
of women
among
managers
of all levels
33 %
of women
in the Company’s
total headcount
Gender ratio in 2020
Corporate training activities
for men and women
High-Potential Graduates
programme participants
33 %
27 %
26 %
67 %
73 %
74 %
Men
Women
Men
Women
Men
Women
The Company’s commitments
to enhance women’s social security
• Provides women, at their request,
with a parental leave until the child
reaches the age of three
• Does not use female labour
for manual lifting or carrying
weights exceeding maximum
allowable limits
• Releases pregnant women
from their job duties and transfers
them, subject to their medical
reports, from production sites
to lighter-duty positions
• Prohibits business trips, overtime
or night work, work on weekends
and public holidays for pregnant
women, except when there
are a written consent and no
contraindications
• Safeguards employment
of pregnant women,
with their employment contracts
terminated only in the event
of liquidation of the enterprise,
as well as that of women having
children up to three years of age
and single mothers having disabled
children up to 18 years of age
Proposal to establish PhosAgro Women’s Club with a view to exchanging best practices within the Company
Developing the club concept based on corporate values
Setting up a meeting schedule (once a quarter), aligning the agenda with
business targets, initially under close observation by HR
Building a system of “simple” win-win project-based assignments
Running a PR campaign
Concept harmonised
Regulations and the Chair approved
Schedule set up and approved
First meeting organised by HR
Competition held, projects rated, winners announced
Establishing a professional network to create conditions for knowledge sharing
Ensuring transparent conditions for career growth within the Company
Club members awarded
Feedback sourced and the club’s
performance reviewed
PHOSAGRO’S WOMEN TAKING PART IN EXTERNAL EVENTS
Participation in 2021
All-Russian
Business
Women
Competition
Uspekh1
Goal — promote the image of a community-minded business woman in Russia
Objectives:
• initiate discussions on business women’s issues in Russia;
• build and promote a positive image of a business woman through
collaboration of businesses, government authorities, media and society (at
relevant forums and assemblies).
122/
123
Winner
Diana Sidelnikova,
Deputy Director of
Human Resources and
Social Policy, won in the
Best Industry
Organisation or Entity
nomination
PHOSAGRO’S WOMEN TAKING PART IN CORPORATE EVENTS
Young Manager Competition
Participants in 2020
Participants in 2021
34 %
35 %
1st place
Anna Karabanova
66 %
Senior officer, JSC
Apatit
Men
Women
65 %
Men
Women
Pre-qualification
underway
Best Professional in Laboratory-Based Chemical Analysis
PROFESSIONAL EXCELLENCE COMPETITIONS
AT PRODUCTION SITES
CORPORATE FINAL
IN VOLKHOV
January–May
September–October
2021 competencies:
Laboratory-Based
Chemical Analysis
ACHIEVEMENTS
• Employee motivation for professional
• Fostering employee loyalty
development and advancement
• Building awareness of the Company’s
• Promotion of blue-collar professions
HR brand
• Balancing the gender ratio
1.
Potentially based the Company’s trade union.
1.
Link: https://www.dgr.ru/uspeh
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 INCENTIVES AND REWARDS
Staff and senior management hired from the local community, %1
Our robust system of rewards
is aligned with the Company’s
performance and motivates
all employees to improve
their performance in order
to achieve our business goals.
It ensures:
• decent pay;
a transparent system of KPIs
to calculate managerial rewards;
along with development
of urban communities across
the Company’s footprint;
• implementation of incentive
programmes to motivate
employees to deliver against
their targets;
• availability of benefits for certain
employee categories;
• adherence to global best practices
• availability of financial and non-
on benefit packages.
financial rewards for employees;
• implementation of incentive
• better quality
programmes for PhosAgro’s
leadership team through
of life and more creative
opportunities for employees
202-2
Region
Vologda region
Leningrad region
Moscow region
Murmansk region
Saratov region
Average
124/
125
Staff
Senior management
94
86
80
90
97
92
52
25
91
64
40
62
Average monthly pay, RUB
Indicator
Apatit and its branches
Group
(excluding foreign traders)
2018
80,672
76,741
2019
87,191
83,770
2020
96,401
92,442
Ratios between the standard entry-level wage and the established minimum wage in the Company’s regions
of operation, including gender differentiation1
202-1
Region
Saratov region
Murmansk region
Moscow region
Leningrad region
Vologda region
Minimum guaranteed conditions provided
by the Group2
Actual minimum payments made
in 2020
Men
1.0
1.0
3.32
1.28
1.0
Women
1.0
1.0
1.53
1.35
1.16
Men
1.80
1.18
3.57
1.76
1.99
Women
1.41
1.13
2.01
1.82
1.46
Due to the nature of our operations,
more of our employees are male.
At PhosAgro, we believe that
professionalism, sustainably strong
performance and adherence
to corporate values are the grounds
and the only guarantee of promotion
and career advancement. Our
regulations on labour relations,
remuneration and social benefits
cover all of the Company’s
employees and underpin the principle
of equitable remuneration
and performance rewards.
We comply with the principle
by implementing a remuneration
framework that offers equal pay
to employees in equivalent positions,
regardless of their gender.
We aim to work in line
with the interests of our regions
of operation. The Company’s
key areas are the Murmansk,
Vologda, Leningrad and Saratov
regions. As a major contributor
to the local economies and one
of the largest taxpayers in these
regions, PhosAgro helps advance
their social development and protect
and preserve the environment.
In developing our production
and creating new jobs, we aim
to prioritise local residents when
filling our vacancies.
Up to
97 %
of employees
at the Group companies
are hired from the local
community
SOCIAL POLICY
Our sustainable
development is closely linked
to improving the quality of life
for our employees. PhosAgro’s
social policy embraces
targeted programmes aimed
at enhancing individual and team
motivation while also providing
our people with a competitive
social package.
Our major social
programmes
Health and Leisure
The programme aims
to strengthen our people’s
health, prevent occupational
diseases, ensure full
rehabilitation, and boost
performance through healthy
nutrition, recreation and fitness.
Improvement of Working
Conditions
The programme aims
to enhance labour productivity
and operating culture, protect
employee health, optimise
workplaces and streamline
the approach to arranging
working and amenity areas.
Corporate Housing Programme
The programme aims
to improve living conditions
of employees to attract
and retain highly qualified
personnel, employees
from the Company’s succession
pool and young talents,
and to retain professionals
with hard-to-find skills
and motivate the personnel
to perform better.
Hosting Mass Cultural Events
The programme is designed to plan
and host cultural and recreational
events, industry-related and festive
occasions, anniversary celebrations,
and joint activities with local
communities, authorities and non-
profit organisations.
Engagement with Trade Unions
The programme is meant to provide
financial support to trade unions,
hold joint wellness and fitness events,
and engage with youth and veterans’
organisations.
Social Benefits
The programme aims to ensure
sustainable labour relations
and social security and covers
employee incentives and financial aid.
1.
Information disclosed on PhosAgro and Apatit, including its branches and standalone business units, and other Group’s subsidiaries incorporated in Russian
Federation.
1.
Information disclosed on PhosAgro and Apatit, including its branches and standalone business units, and other Group’s subsidiaries incorporated
in Russian Federation.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Social expenses. RUB mln
203-2
Programme
Financial aid to employees
Recreation. rehabilitation. health
resort treatment and VHI
Improvement of working conditions
Corporate housing programme
Other social benefits and
guarantees
Corporate and cultural events
Support to the trade union (special
purpose funding and bonuses)
2018
41,86
332,56
95,48
61,18
201,94
93,22
137,66
2019
43,63
394,73
403,26
68,02
215,04
150,78
164,17
2020
2021 budget
48,26
225,93
80,71
67,51
84,64
72,34
151,94
57,28
437,93
223,48
123,30
384,11
168,35
181,62
Number of training courses per capita
Indicator
Volkhov branch
Balakovo branch
Kirovsk branch
Apatit
Group total
Additional online training
Group total including additional
online training
2018
487
1,469
1,309
3,548
6,813
n/a
2019
552
2,393
2,771
8,769
14,485
n/a
126/
127
2020
1,609
2,638
5,405
6,518
16,170
21,566
37,736
Total
963,90
1 439,63
731,33
1 576,07
Number of training hours
TRAINING AND EVALUATION
103
Our focus on training and developing
our people also helps us hedge
against a potential shortage of talent
at all levels. The Company’s personnel
training framework is mainly
designed to help the employees
unlock their career potential
and ensure ongoing improvement
of their professional and managerial
competencies.
Due to the COVID-19 pandemic
and external restrictions in 2020,
we completely transformed
our personnel management
processes both on the operational
and strategic sides. Personnel
training, evaluation and development
all went online, helping to develop
distance learning and evaluation.
In 2020, PhosAgro implemented
new solutions such as employee
potential assessment used along
with managerial competency
assessment to decide
on whether an employee should
be promoted; personality tests
and questionnaires for white-collar
workers and executives to quickly
identify risk areas in personnel
management and fine-tune the cycle
of management initiatives for higher
operational efficiency.
404-1
Indicator
Volkhov branch
Balakovo branch
Kirovsk branch
Apatit
Additional online additional training for
the Company’s employees
2018
2019
2020
Average per employee in 2020
30,145
81,399
41,533
92,531
71,747
107,669
313,125
365,680
302,713
367,138
504,270
375,219
59,230
80.8
88.8
55.9
93.4
3.5
79.5
Apatit and branches total
791,807
1,004,014
916,578
Training hours, by gender
404-1
PROGRAMMES FOR UPGRADING EMPLOYEE SKILLS AND TRANSITION ASSISTANCE
hours, total
hours per employee
404-2
PhosAgro relies on its Talent Pool
initiative as a means of identifying
talented staff with the potential
to step into senior positions.
Eligible employees are provided
with additional training they need
to succeed. The programme includes
management training courses
on personal and business skills
such as decision-making, leadership
and delegation, conflict management,
project management, communication
skills and staff mentoring.
2020 saw the launch of the Senior
and Middle Management Mentoring
Programme, with the senior
executives (mentors) sharing
their expertise and knowledge
and taking the Company’s
management culture to the next
level. This is a unique opportunity
for those included into the talent
pool (mentees) to learn the skill
of management from the best
professionals. The programme
involves over 30 managers.
As part of the Line Manager
programme, the Company’s middle
and junior managers attend training
courses and development initiatives
on personnel management, planning,
goal setting, organisational activities
and oversight, results-oriented
thinking; decision-making; effective
communication; and mentoring.
Blue-collar workers
White-collar workers
Executives
Total
M
477,991
63,950
86,144
F
Total
141,460
62,582
25,221
619,451
126,532
111,365
628,085
229,263
857,348
M
99.5
46.0
68.8
84.4
F
Total
73.5
34.7
71.8
56.2
92.1
39.6
69.4
74.4
In 2020, we launched new mandatory courses and training programmes,
including those covering IT skills and information security, for all
the employees. A course consists of four large modules, with the total
number of individual training cycles involving one or more modules
exceeding 21,500.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Training expenses, RUB
Indicator
Training expenses
2018
2019
2020
170,505,002
236,089,189
199,683,856
Training expenses per employee
16,064
21,695
11,830
MENTORING
Savings on training costs thanks
to the introduction of an online
format in 2020 of
with the training programme
29%
100%
implemented
In 2020, most of the activities
previously attended in person went
online, achieving financial and time
savings. The Company’s personnel
training budget for 2020 was
spent by 71%, with all the planned
activities implemented in full. Our
employees highly appreciate the new
opportunities they have for self-
development and training using
distance learning technologies, which
allow them to train and improve
their competencies anywhere at any
time.
PERSONNEL EVALUATION
404-3
To assess HR management
and make efficient decisions,
we continuously monitor relevant
metrics and analyse the structure
Personnel evaluated in 2020
of staff costs, labour productivity,
along with the performance of social,
training and other programmes.
THE PROGRAMME’S KEY OBJECTIVES ARE TO:
128/
129
In 2020, the Company
gave a new impetus
to mentoring
in the workplace.
Management
White-collar workers
Blue-collar workers
• improve onboarding;
Indicator
Men
Women
Men
Women
Men
Women
Total
• create a system to accumulate Company-wide expertise to help develop the competencies
Volkhov branch
Balakovo
branch
Kirovsk branch
Apatit
Group total
11
16
71
20
118
5
5
4
7
21
8
7
17
41
73
4
3
8
55
70
0
0
36
7
43
0
0
3
3
6
28
31
139
133
331
Personnel evaluated in 2020, %
Indicator
Volkhov branch
Balakovo branch
Kirovsk branch
Apatit
Group total
Men
3.9
2.9
3.0
3.3
3.1
Not broken down by gender
Women
3.2
3.3
2.6
2.6
2.2
1.9
1.2
3.3
2.4
Volkhov
branch
Balakovo
branch
Kirovsk
branch
JSC Apatit
of new hires;
• identify, evaluate and develop the initial potential of employees and leverage their professional
experience in line with the Company’s requirements;
• improve labour productivity;
• reduce workplace injuries;
• improve professional skills of employees;
• reduce the number of errors, defects and other failures at work.
To organise the process,
we identified a pool
of mentors of over 1,500 people.
The main selection criteria included
qualifications and professional
experience; perception by the team;
organisational and training skills;
commitment and motivation to share
experience and knowledge.
When implementing the programme,
we developed and approved
the mentor’s competence
model and evaluated most
of the participants using
competency-based interviews. That
was followed by comprehensive
training to help learn more
about personnel development
and training approaches.
The mentoring programme will serve
to improve the professionalism
of our employees and reduce
personnel turnover and recruitment
costs while at the same time
enhancing employee loyalty
and engagement. The programme
is expected to play a major role
in building the Company’s profile
as an attractive employer.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 KEY PROJECTS
QUALITY
EDUCATION
INVESTING IN FUTURE TALENT
PhosAgro Classes and PhosAgro Schools
Over
> 600
RUB mln
the Company has invested in
PhosAgro Classes since 2013
Launched in 2013, PhosAgro Classes
are part of the Company’s education
and training programme to build
a future talent pipeline by supporting
young people in their journey
through school and university
education to employment.
The project covers 10th and 11th
graders in five schools across
the Company’s footprint and offers
them advanced programmes
in physics, chemistry, mathematics
and computer science. On top
of that, the PhosAgro Classes
curriculum includes economics,
management, ethics, leadership,
career planning and other disciplines.
Taking the success of PhosAgro
Classes further, we launched
PhosAgro Schools. They provide
career-related learning as early
as in primary school and rely
on greater funding from PhosAgro,
with PhosAgro Classes still enjoying
popularity among both students
and parents as one of our key
educational and career guidance
projects.
Since 2013, the Company has
invested over RUB 600 mln
in PhosAgro Classes, including RUB
400 mln spent on renovations
and equipment.
130/
131
Project results
In September 2019, a total
of nine former PhosAgro Classes
students joined the Company
as employees, including
five in Cherepovets, two
in Balakovo and one in Volkhov
and Kirovsk each. In 2020,
17 former PhosAgro Classes
students accepted job offers
from the Company’s facilities. All
of them will pursue engineering
careers, having demonstrated
a high level of qualification
from their first days on the job. We
expect to hire over 30, 40 and 45
former PhosAgro Classes students
in 2021, 2022 and 2023, respectively.
More than 100 PhosAgro Classes
2020 graduates have been admitted
to higher educational institutions,
with the St Petersburg Mining
University enjoying the most
popularity among them (eleven
graduates). Some graduates
selected technical courses to study
disciplines relevant to PhosAgro.
Since 2015, a total of over 600
graduates of PhosAgro Classes have
been enrolled in higher educational
institutions, with technical careers
gaining more traction among them
every year.
In September 2020, 125 new students
started their 10th grade programme
at PhosAgro Classes, marking
the eighth admission round since
the project launch.
Agro Class project
32
lecture classes
the programme provides
Launched in 2020, the Agro Class
project is based on a trilateral
agreement signed by PhosAgro,
Voronezh Secondary School No. 102
and the Voronezh State Agricultural
University. The project focuses
on facilitating early specialism
in school education, career guidance
for schoolchildren, their motivation
to choose an agricultural profession
and obtain the necessary in-depth
knowledge in natural and exact
sciences. The project targets 10th
and 11th graders of Voronezh
Secondary School No. 102. In 2020,
the programme’s first students were
enrolled in the 10th grade.
The programme provides for 32
lecture classes. In addition to theory,
the project includes practical lab
classes held at the Voronezh State
Agricultural University. There
are also visits planned to the sites
of agribusiness companies. To ensure
an industry immersion experience,
the students will have an opportunity
to meet with agribusiness
professionals.
The project is expected to deliver:
• better quality of knowledge
demonstrated by school
graduates;
• an increase in applicants to obtain
degrees in targeted areas;
• a rise in contracts assigning
students to partner enterprises.
Educational activities as part
of the project include:
• lectures and practical classes
in agronomy;
• research projects in agronomy
in school and university labs;
• meetings with professionals
and tours to the sites of partner
companies.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Collaboration with universities
132/
133
We maintain strong relationships
with universities as part
of our commitment to improving
access to quality education
and supporting academic research.
As part of its collaboration
with universities, PhosAgro:
• sponsors advanced training
for graduates of PhosAgro
Classes in the fields relevant
to PhosAgro (subject
to their commitment to future
employment at the Company);
High-Potential Graduates
We build upon the foundation
laid by PhosAgro Classes
and PhosAgro Schools by partnering
with universities through our High-
Potential Graduates programme.
This helps better reach out
to university students potentially
interested in career opportunities
with PhosAgro. We offer programme
recruits a competitive salary,
as well as relocation and housing
support, and we assign them
a mentor upon their employment
by the Company. The programme’s
key tasks are to build a talent pool
for key positions within the Company
and to identify career paths
for young talented professionals
to prepare future executives.
Employer brand
Every year, PhosAgro participates
in various events, contests,
and conferences, including
international ones.
• offers scholarships to the most
• allocates money for repair
talented students (based on exam
results);
and equipment of chemistry
laboratories at dedicated
universities.
• runs tours for 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;
In 2020, PhosAgro recruited 71 young
specialists through the High-Potential
Graduates programme. As a result,
the total number of graduates
who have joined the Company
through this programme since its
launch in 2012 has reached 389.
Over 300 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.
>30 %
of the programme participants
employed by PhosAgro received
promotions and/or were included
in our talent pool
Over 30% of the programme
participants employed by PhosAgro
received promotions and/or were
included in our talent pool, with many
of them successfully completing
the projects they were assigned
upon recruitment.
In 2020, the Company’s most spectacular victories included:
15th
ranking on the list of Russia’s top
50 employers compiled by Forbes
1st place
in the Region category
of the HR Brand Award,
a nationwide competition
Collaboration with technical colleges
Since 2013, as part of its focus
on nurturing talent from secondary
schools to employment, PhosAgro
has been partnering with technical
colleges across its footprint,
including:
These joint efforts cover:
• setting up testing grounds
and labs for students to acquire
hands-on experience using real
equipment;
• Kirovsk branch of the Murmansk
Arctic State University (Kirovsk,
Murmansk region);
• internship programmes
at PhosAgro’s facilities with highly-
qualified mentors;
• Cherepovets College of Chemistry
and Technology (Cherepovets,
Vologda region).
• undergraduate and graduate
thesis research;
• sports, educational and research
initiatives, competitions,
and Olympiads.
PhosAgro also supports a regional
Training Centre at the Cherepovets
College of Chemistry and Technology
that offers express programmes
in chemistry and associated fields
to nurture talent for most in-demand
jobs. In 2020, some 1,000 students
and employees completed training
and professional development
courses at the Training Centre
in Cherepovets.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
INDUSTRIAL
SAFETY
134/
135
MANAGEMENT APPROACH
103
Our Strategy to 2025 Development
focuses on fostering a safety
culture and adhering to the highest
occupational health and safety (OHS)
standards.
We have adopted a Health
and Safety Strategy, which defines
key focus areas and targeted
initiatives to reduce the risks
associated with various operations.
PhosAgro achievements
in 2020
We place a great emphasis
on making our health and safety
system compliant with applicable
laws and global best practices.
We carefully monitor and seek
to implement the latest requirements
in this area.
In 2020, the Company maintained
its commitment to a safe
working environment. To achieve
this goal, we are constantly
working to improve our safety
culture, increase awareness among
our employees, identify hazards
and minimise high-risk actions
and conditions. Managers at all levels
are leading this process.
We apply continuous efforts
to identify and reduce health
and safety threats to PhosAgro
employees, contractors and visitors
to the Company’s sites. Our aim
is to completely eliminate fatalities
and take a leading position in terms
of key health and safety indicators.
PhosAgro works to improve
the effectiveness
of its OHS practices, which enables
us to deliver on our strategic goals.
The Company’s relevant goals
and objectives, both strategic
and operational, are based
on huge volumes of data derived
from internal and external audits,
inspections, incident investigations,
employee recommendations
and feedback.
PhosAgro’s three main OHS goals:
• reduce workplace injuries by 10%
annually;
• reduce the number of incidents
by 10% annually;
• improve the health and safety
management system.
To achieve these goals, we run
the following targeted programmes:
• Improving the safety of working
at heights (theoretical course,
drills in the Vysota (Height) training
centre and with mobile simulators);
• Use of the LOTO system (auxiliary
lockout and tagout devices);
• Gas safety;
• Improving transport safety;
• Identifying and managing
production process risks;
• Development of gas and mine
rescue, fire fighting and fire
prevention services;
• Programme to improve
contractor safety practices.
In November, PhosAgro Group
received an International
Fertilizer Association (IFA)
gold medal for excellence
in the area of health, safety
and environment. The award came
as a recognition of the Company’s
strong occupational health
and safety practices and was
preceded by an audit according
to IFA standards, with the scope
of certification expanded compared
to 2019 to include the Balakovo
branch in addition to the Cherepovets
production site.
Thanks to its efforts to promote
a healthy lifestyle and create
a culture of wellness, the Volkhov
branch of Apatit won the regional
contest of corporate programmes
called Healthy Work Environment
for the Best Corporate Health
Programme at a Large Enterprise.
The full text of the Strategy
in the field of Industrial Safety
and Labor Protection is available
on the PhosAgro website
INTEGRATED HEALTH
AND SAFETY MANAGEMENT
SYSTEM
We view the life and health of our people
as our top priority. As part of our commitment,
we focus on creating a safe working environment
for our employees, contractors and suppliers. We also
make it as essential component of our sustainability
strategy.
Improve
the health and safety
management system
GOALS TO 2025
Reduce workplace
injuries by
10 %
annually
Reduce the number
of incidents by
10 %
annually
UN GLOBAL SUSTAINABLE
DEVELOPMENT GOALS (SDG)
GOOD HEALTH
AND WELL-BEING
DECENT WORK AND
ECONOMIC GROWTH
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 OCCUPATIONAL HEALTH AND SAFETY MANAGEMENT SYSTEM
403-1
PhosAgro goes to great lengths
to ensure compliance of its OHS
system with the Russian laws
and international standards.
To this end, the Company
has put in action a multi-tier
OHS management system
at all management levels. Following
the introduction of a public scrutiny
mechanism by Apatit in 2019
and its roll-out in all branches
in 2020, our OHS management now
involves dedicated officers and all
employees of business units.
All our employees (executives
together with blue- and white-collar
staff) take OHS training as required
by the national laws, as well
as additional safety training. All
visitors, including contractor
representatives, are tested
for the required level of OHS
training. Everyone without exception
undergoes introductory briefing
in accordance with statutory
requirements and the Company’s
internal regulations.
The Environmental, Health and Safety
Committee of the Board of Directors
is the central element of the OHS
system, which provides a forum
for resolving health and safety issues
by the joint efforts of production
and other divisions’ managers
and the Company’s employees.
In its work, the Committee
relies on the principles of social
partnership.
Its members interact
with the Company’s executive body
responsible for health and safety,
state supervisory bodies overseeing
compliance with the Russian health
and safety laws, other government
watchdogs, and the Company’s trade
union.
Health and safety management system
LEVEL
ORGANISATIONAL
UNIT
KEY
RESPONSIBILITIES
The Board of
Directors
Environmental,
Health and Safety
Committee
• Sets strategic priorities and approves the OHS policy
• Holds management accountable for health and safety monitoring
and performance
• Receives quarterly reports on OHS effectiveness
Executive bodies
• Define and oversee the health and safety policy
• Review all on-site incidents involving people and machinery on a weekly basis
Management
OHS Department
• Supervises OHS management functions across the Group’s companies
to implement OHS policies and strategies
• Collects data and prepares OHS reports for the Management Board and the Health
and Safety Committee
• Cooperates with external consultants to implement the best practices of OHS
management
• Conducts audits and inspections at the Company’s sites
Heads of
production sites
• Oversee OHS policies and strategies at respective production sites
• Develop and implement response measures following internal and external audits
Operations
and accident investigations
Operational OHS
staff
Local OHS
management
functions
• Monitor the site’s compliance with OHS regulations and corporate standards
• Develop targeted programmes, conduct training and stage initiatives
• Interact with relevant regulatory authorities on behalf of the site and facilitate
inspections
• Conduct internal inspections and audits and present analytical reports to the local
management
136/
137
For more information on PhosAgro’s OHS system, please
see Apatit’s Industrial Safety Policy Statement and Quality,
Environmental and OHS Policy.
Occupational health services
403-3
To enforce and monitor compliance
with health and safety requirements,
we have established occupational
health services at our facilities.
Key objectives of occupational health
services:
• taking steps to ensure employees’
compliance with health and safety
requirements;
• monitoring employees’ compliance
with OHS laws and regulations,
the collective agreement, OHS
agreement and other internal
regulations;
• process regulations;
• accident management action
plans, etc.
In 2020, the Company
launched a project to evaluate
and improve the safety culture
and the OHS management
system at Apatit. The project
focuses on comprehensive
evaluation of the safety culture
and the OHS management
system’s performance, as well
as development and finalisation
of action plans to improve them
in line with established targets.
• preventing workplace injuries,
occupational diseases and work-
related illnesses and improving
workplace conditions;
• advising employees
on, and raising their awareness
about occupational health
and safety;
For better OHS efficiency,
and to automate and streamline
the relevant processes, we have
been successfully using the Safety
and Instructions (Shift Assignments)
management systems.
They helped us achieve the following
goals:
• studying and disseminating best
OHS practices and promoting
occupational health.
• improve the manageability
of employees and equipment
safety;
The Company’s operations
are regulated by the Russian health
and safety laws, as well as:
• optimise administrative expenses
associated with managing
the safety of employees
and equipment;
• health and safety SOPs
at the facility (shop) level;
• production SOPs;
• obtain reliable and complete
information about the safety
of employees and equipment.
• worker health and safety
instructions;
With these systems, we also reached
the following objectives:
• corporate standards;
• centralised health and industrial
and fire safety management;
• faster collection, processing
and analysis of employee
and equipment safety data;
• real-time reporting across
the Group, including reports
to government authorities;
• 24/7 access to current
information about every employee
and site.
In line with statutory requirements,
the Company is subject to scheduled
external audits by Russian regulatory
authorities, including the Federal
Service for the Supervision
of Environment, Technology
and Nuclear Management
(Rostekhnadzor), State Labour
Inspectorate, Federal Service
for Surveillance on Consumer Rights
Protection and Human Wellbeing
(Rospotrebnadzor), and Ministry
for Civil Defence, Emergencies
and Elimination of Consequences
of Natural Disasters (EMERCOM).
We may also engage consulting
companies, or international
associations of which the Company
is a member to conduct additional
external audits, or may organise
such audits as part of a special
assessment of workplace conditions.
In 2020, state supervisory
authorities carried out 146
audits at Apatit and its managed
companies. A considerable decrease
in the number of audits (vs 286
in 2018 and 368 in 2019) was driven
by the COVID-19 pandemic, which led
to some of them (including scheduled
audits) being cancelled or postponed.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 in the Safety and Instructions (Shift
Assignments) management systems
for further analysis, gap identification
and elimination monitoring.
We also submit all relevant
reports to state supervisory
bodies and statistical agencies
in accordance with the Russian laws.
We also run internal audits
conducted by our OHS departments,
managers and employees exercising
production H&S control.
The results of internal and external
audits serve as the basis for orders
and instructions issued to Group
enterprises. Orders contain remedial
action plans, including the deadlines
and persons responsible
for their implementation. Identified
breaches are remedied within
the agreed time limits, and gaps that
can be eliminated at no additional
cost are addressed immediately.
The Company has a procedure
for drafting, submitting
and reviewing reports
on internal and external OHS
audits. The results of all internal
and external assessments
and audits are recorded
WORKERS COVERED
BY AN OCCUPATIONAL HEALTH
AND SAFETY MANAGEMENT SYSTEM
403-8
100 %
In 2020, our health and safety
management system covered all
of the Company’s employees.
HAZARD IDENTIFICATION, RISK ASSESSMENT, AND INCIDENT INVESTIGATION
403-2
The Company has implemented
a systems-based approach
to hazard identification, risk
assessment, and incident
investigation as a fully integrated
process. This approach seeks
to integrate occupational health
and safety management into
the Company’s overall business
processes.
We have adopted a system
that moves through a “plan–
do–check–act” cycle, promoting
leadership and best
practices through meaningful
consultation and participation
of employees from all job levels
in the Company.
Performance
analysis, and re-
vision and setting
of strategic OHS
goals
4
1
Forecasting and assessment
of key OHS risks
2
Development and
implementation of
OHS initiatives
138/
139
In accordance with an established
procedure, information
about incidents is provided
by eyewitnesses to the supervisors
in charge and by those supervisors
to the dispatcher of the enterprise.
Next, the dispatcher notifies
the designated persons using text
messages and phone calls.
Industrial accidents and incidents
are investigated in accordance
with legislative requirements
and internal procedures
to determine the root causes.
The Company encourages its staff
to disclose information on potential
sources of danger to employee
health and life.
• degree of personnel exposure;
• impact on personnel;
• frequency of occurrence;
• compliance with the applicable
regulatory and other OHS
requirements.
The list of material occupational risks
is available on our intranet site. We
update the lists of hazards and risks
to factor in new inputs.
In 2020, we implemented a Risk
Management module in the Safety
and Instructions (Shift Assignments)
management systems to enable
the use of check lists for systems-
based internal OHS assessments
at all business units of Apatit.
The module will simplify control
and analysis and boost the efficiency
of production H&S control.
The Company has a formal
procedure for addressing workplace
hazards. When a hazard
is identified, employees are required
to suspend work and report
it to their supervisors directly or via
the Public Inspector mobile app
(the report is then used to develop
a remedial action plan).
The Company has introduced
audits and assessments to ensure
compliance with and PhosAgro’s
corporate standards.
Apatit, our largest enterprise,
is certified for compliance
with OHSAS 18001.
We are constantly working to assess
and mitigate risks. We perform
risk assessment and identify
material risks using our proprietary
methodology. Following hazard
identification and risk assessment,
the unit’s OHS officer compiles
a list of local occupational risks,
which is then used as a basis
for the Company’s list of material
occupational risks. Risk assessment
takes into account the following
aspects:
Using the Public Inspector app
2.
Take photos
4.
Devise action plan
Control, analysis
and investigation of accidents
3
1.
Identify hazard
3.
Send photos and provide
location
5.
Confirm risk
elimination
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 The roll-out was completed in three
stages:
Stage 2 (August–November):
drafting the documents;
403-4
WORKER PARTICIPATION, CONSULTATION, AND COMMUNICATION ON OCCUPATIONAL HEALTH
AND SAFETY
140/
141
LOTO SYSTEM
In 2020, the Company successfully
continued the implementation
of the LOTO system to avoid hazards
associated with unauthorized supply
of electricity, gases, liquids, ensure
proper shutdown, and prevent
restart of dangerous equipment
before completion of all maintenance
and repair work.
Stage 3 (December):
training the personnel and launching
the system.
Stage 1 (August):
auditing the business unit
(performing a technical audit,
estimating the number of required
lockout devices, developing energy
isolation plans, tagging the isolation
points, and installing lockout devices);
EMERGENCY RESPONSE PROCEDURES
At our sites, we have introduced
the following emergency response
and prevention measures compliant
with the Russian laws:
• accident management action
plans for all hazardous industrial
facilities;
• training sessions, test alerts
for different scenarios,
and emergency response
exercises, with EMERCOM
and other services also taking
part. In 2020, the Company
arranged 245 internal training
sessions and two joint training
sessions with EMERCOM;
• Apatit’s programme
for developing gas
and mine rescue, fire-fighting
and prevention activities
for 2019–2021 (approved
and ongoing).
ROAD TRAFFIC SAFETY
In 2020, we carried
on with our efforts to ensure
safety of passenger and cargo
transportation.
In 2018–2020, Apatit and its branches
managed to reduce the number
of traffic accidents by 48% (to 45
from 86). The systematic efforts
made by the OHS Department
and transport departments
to mitigate traffic accident risks
include drafting internal regulations
to ensure safe operation of motor
vehicles, self-propelled machines
and rail transport and performing
targeted and full-scope inspections
of vehicles used by our contractors,
subsidiaries.
Number of incidents
86
26
60
50
6
45
16
29
44
2018
2019
2020
Road accidents
Railway accidents
Mobile teams formed
at Cherepovets-based Apatit
and its Balakovo branch to monitor
compliance with laws and internal
regulations on road traffic safety
(RTS mobile teams) inspect vehicles
on a daily basis.
In 2020, Apatit and its branches,
assisted by the RTS mobile teams,
carried out 7,188 vehicle inspections
(vs 3,357 in 2018 and 4,120 in 2019),
identified around 1,300 violations
(vs 1,169 in 2018 and 1,259 in 2019),
and charged fines for a total
of RUB 6,067,000 (vs RUB 2,308,000
in 2018 and: RUB 4,559,000 in 2019).
For better OHS communication
with employees ,
we have adopted Regulations
on the OHS Communication System.
The system provides for both
internal and external communication
and includes a feedback procedure.
• Assessment of workplace
conditions, and healthcare
influence their attitudes to safety
and ongoing OHS compliance.
• Trade union
• Accident/incident investigation
Channels for health and safety
feedback:
• Safety assessments and audits
• regular OHS meetings at business
Internal communication is achieved
through:
• PPE effectiveness
• Education and training
units and enterprises;
• OHS meetings on production sites,
in departments and at facilities;
• health and safety committees;
• management meetings
and conferences
to discuss the health and safety
performance of our enterprises;
regular OHS meetings
in departments, on production
sites and at facilities;
• Contractors’ safety
• union and union committee
• OHS leadership, promotion
and communication
• Industrial safety
• Fire safety
meetings (for feedback from OHS
officers);
• one-on-one meetings,
and supervision;
• OHS training sessions
and briefings;
• health and safety bulletin boards,
• Transport safety
posters and other visuals;
• industrial and fire safety drills;
• corporate television (screens),
Project
• corporate e-mail;
• Safety Culture Transformation
intranet site, e-mail;
• corporate periodicals;
stage 2
• LOTO system implementation –
• corporate periodicals;
• health and safety committees;
• preventive practices by OHS
officers at business units (including
one-on-one meetings, training,
mentoring and supervision).
There are health
and safety committees in place
at all Group enterprises. They
are both an integral part
of our OHS management system
and a form of employee participation
in it. In their work, these committees
rely on the principles of social
partnership. In 2020, we revised
the rules of procedure of our health
and safety committees to enhance
their efficiency. Now, they meet
on a monthly basis (instead
of at least once in three months
previously) to review reports on 13
focus areas:
Working groups have been created
to cater to these areas.
• employee loyalty surveys and OHS
questionnaires.
Employees can also use the Public
Scrutiny application to submit
their health and safety proposals.
Employees are represented
on the committees by heads/
representatives of local unions.
In 2020, the committees met 15
times, passing more than 250
resolutions.
We are making special efforts
to strengthen the role of OHS
officers, the key and most common
element in unions’ health and safety
monitoring. These people stand
out from other monitors
thanks to their omnipresence
and continuous work. Always
in contact with employees, they can
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
WORKER TRAINING ON OCCUPATIONAL HEALTH AND SAFETY
403-5
Employees of the Group can
train either online or in person
at PhosAgro Education Centre.
Since 2020, we introduced
training in. Our e-courses are easy
to understand and are followed
by tests to evaluate the students’
progress.
PhosAgro Education Centre
organises OHS training, including
that in basic fire safety and electrical
safety, industrial safety pre-
certification sessions, and drills
in the Vysota training centre,
to develop employee hands-on
knowledge and skills.
All our employees, from managers
to blue-collar staff, receive health
and safety briefing and training
as required by the Russian laws.
On top of that, we offer a number
of additional in-house courses.
The training is provided
to employees of the Group,
as well as some of our contractors
(Agrokhimbezopasnost, Universal-
Elektrik, Infrastructure TK).
To improve OHS training and remind
employees about workplace safety,
PhosAgro Education Centre has
created a number of animated
videos.
4.6 employees of the Group
received OHS training and completed
the knowledge tests in 2020.
76 % employees
of Apatit and 24% of contractor/
third-party employees completed
our training courses in 2020.
DURING THE YEAR, WE ALSO DEVELOPED AND ROLLED OUT SEVEN ONLINE
COURSES ON KEY REGULATIONS:
• Health and safety promotion
• Lockout/tagout (LOTO) system
• Investigation
at Apatit
at Apatit
• Contractor safety
requirements
• Working at heights
• LOTO system in maintenance
and repairs
and communication of OHS
accidents/incidents
• Management of contractors’
organisational and technical
documents
ADDITIONAL (THEMATIC) TRAINING COURSES:
• Safe operation of conveyors
• Safe detection and elimination
• Briefing methodology, etc.
• Job permits for electrical
works
of misfires in the pit face
of the Vostochny mine
• Signals used in underground
blasting,
PROMOTION OF WORKER HEALTH PREVENTION AND MITIGATION OF OCCUPATIONAL HEALTH
AND SAFETY IMPACTS DIRECTLY LINKED BY BUSINESS RELATIONSHIPS
142/
143
403-6
403-7
PhosAgro places a strong
emphasis on disease prevention
and treatment, health improvement,
high-quality medical aid
and health resort rehabilitation.
Group companies organise
initial and regular check-ups
and examinations of staff involved
in potentially hazardous and/or
dangerous activities. Most employees
are offered long-term voluntary
health insurance (VHI) covering
a broad range of risks.
Apatit JSC and its branches
have special wellness and health
programmes in place. Voluntary
health insurance plans include:
• health resort treatment
for PhosAgro employees
and retired staff;
• treatment (expensive, dental,
medical counselling);
Actual HSE expenses, RUB mln
• services of outpatient clinics
and health posts at divisions
and production units (on-site
clinics can provide accident
and emergency care and specialist
advice from therapist,
endocrinologist, neurologist,
ophthalmologist, and dentist);
• vaccination of employees,
their family members and retired
employees.
Employees of the Company
and members of their families
have access to health resorts
at a reduced price. Since October
2020, Apatit (Cherepovets)
has provided its employees
and their families with free health
resort vouchers and a compensation
for 50% of the travel expenses.
Employees working in harmful
conditions receive health and dietary
meals, milk. Food quality is monitored
under the supervision of a trade
union. Quality is assessed based
on employee surveys, books
of complaints, frequency of visits
to the canteen, and ratio of dietary
and health meals taken to dietary
and health meals prescribed.
As part of healthcare initiatives, staff
canteens provide nutrition according
to Diet No. 10 targeting patients
with cardiovascular diseases.
The fitness centres at PhosAgro
facilities include gyms, fitness
halls, air rifle shooting ranges,
as well as game halls (for volleyball,
badminton, basketball, futsal,
table tennis, billiards, and darts)
and swimming pools.
Under the health improvement
programme, employees can visit
both on-site and off-site fitness
centres and pools.
283.3
194.2 198.1
296.7 295.8
238.0
220.1 220.1
187.3
87.0 88.7
67.6
Dietary
and medical meals
Medical
examinations
Insurance
(VHI, accidents)
Workwear
457.9
340.9
300.8
312.5
177.5
141.9
Improvement of
social and working
conditions
754.5
352.3
202.1
1.7
1.5
1.6
Professional assessment
of workplace conditions
635.6
526.0
541.8
63.4
5.8
6.1
Insurance of hazardous
production facilities
12.6 24.9
7.5
Training
2018
2019
2020
109.7 124.7
171.1
Expert examination of
industrial safety of
buildings, structures and
equipment
Fire safety, fire,
mining and gas rescue
teams
Maintenance to ensure
compliance with safety
requirements
Capital investments in health
and safety, ensuring
compliance with supervisory
instructions
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Each of the Company’s facilities
has an on-site church to promote
spiritual and moral health. Twice
a year, PhosAgro organises
employee pilgrimages to visit
the relics of St Nicholas in the Basilica
of St Nicholas in Bari (Italy).
An on-site psychotherapist
is available to assist employees
in addressing mental health
and wellbeing in the workplace.
Apatit employees have access
to psychological counselling online
and by telephone (with automatic
registration of calls, a free hotline,
corporate e-mail of a psychologist,
and instant messengers).
An effective diagnostic toolkit was
developed and tested to measure
employees’ psychological
and emotional state,
the level of wellbeing, performance,
and emotional burnout, which affect
the team’s morale and their general
productivity.
The company uses corporate
media, information stands, lectures
and brochures to distribute
information on all its initiatives.
The announcement page
of the corporate portal provides
information on currently available
social programmes.
As part of an experiment, there
have also been installed Social Policy
stands with feedback boxes.
Performance monitoring
and measurement
are key prerequisites for achieving
sustainable long-term results in line
with our OHS strategy.
LTIFR, per 1 mln man-hours
Indicator
Apatit
Kirovsk branch of Apatit
Balakovo branch of Apatit
Volkhov branch of Apatit
Total:
WORK-RELATED ILL HEALTH
403-10
144/
145
2018
0
0.26
0.49
0.84
0.22
2019
0.56
0.75
0.48
0
0.59
2020
0.42
0.47
0.48
1.37
0.52
WORK-RELATED INJURIES
403-9
Most of the injuries were caused
by moving or rotating objects
and equipment, or by falling while
in motion.
In 2020, the number of accidents
decreased by 29%, with zero fatal
injuries (in 2019 – three cases)1.
Looking at PhosAgro facilities
separately as two groups – chemical
production facilities (Apatit and its
branches in Balakovo and Volkhov)
and mining facilities (Kirovsk Branch),
there is a clear downward trend
in injuries at the mining facilities,
with the number of accidents
decreasing from nine cases
in 2019 to four in 2020. This was
achieved through tighter 24/7 H&S
control measures at underground
mines and a six-fold increase
in unscheduled inspections –
from 625 to 2,302.
Another major factor contributing
to lower injury rate is a new system
motivating employees to work safely.
The system aims:
• to keep all employees motivated
to protect their own safety
and the safety of others;
• to encourage initiative
and introduce improvements
in this area.
Accidents
2020
f
o
s
e
h
c
n
a
r
B
i
t
t
a
p
A
JSC Apatit
Balakovo branch of Apatit
Volkhov branch of Apatit
Kirovsk branch of Apatit
Subsidiaries2
Third-party contractors
2019
f
o
s
e
h
c
n
a
r
B
i
t
t
a
p
A
JSC Apatit
Balakovo branch of Apatit
Volkhov branch of Apatit
Kirovsk branch of Apatit
Subsidiaries2
Third-party contractors
2018
f
o
s
e
h
c
n
a
r
B
i
t
t
a
p
A
JSC Apatit
Balakovo branch of Apatit
Volkhov branch of Apatit
Kirovsk branch of Apatit
Subsidiaries2
Number of injured
Minor
injuries
Serious
injuries
Fatalities
Total
2
0
2
2
8
5
4
0
0
5
5
5
0
1
1
2
5
1
1
0
2
5
2
0
1
0
1
1
6
0
0
0
0
3
5
0
0
0
0
0
2
0
0
0
3
0
2
0
0
0
0
0
3
3
1
2
4
13
9
4
1
0
9
6
13
0
1
1
2
8
22
Third-party contractors
14
1.
2.
The accidents indicator is calculated for Apatit, including its branches and standalone business units.
Subsidiaries and affiliates: Tirvas, Gorny Tsekh, PromTransPort, Korporativnoe pitanie, Construction Materials Centre, DROZD-Khibiny, NIUIF, Aeroport,
SMART, Teleset, Khibiny Electricity Retail Company, Ecoprom, PhosAgro Education Centre, Mekhanik, PhosAgro Engineering Centre, Trading House PhosAgro
In 2016–2020, the Company
recorded 174 cases of occupational
diseases, with the Kirovsk branch
of Apatit accounting for 99% of them.
No cases of death as a result
of occupational diseases were
recorded.
• ensuring that employees undergo
regular medical examinations
in a timely manner;
• timely maintenance and inspection
of equipment;
• control of PPE use at workplaces
with higher risk of occupational
diseases;
• oversight of compliance
with the work and rest regime
and regulated workplace breaks;
• compliance with sanitary rules
at workplaces with higher risk
of occupational diseases;
• unscheduled special audits
of working conditions
at workplaces with higher risk
of occupational diseases caused
by harmful and/or hazardous
production factors.
Occupational diseases
The main causes of occupational
diseases are:
• hard labour;
• vibration (general or local);
• noise;
• predominantly fibrogenic aerosols.
In line with the order on measures
to prevent occupational diseases,
the following initiatives were
introduced:
Cases of occupational diseases
Apatit
Kirovsk branch of Apatit
Balakovo branch of Apatit
Volkhov branch of Apatit
Occupational disease types
Occupational diseases are divided
into three groups:
Group 1: HAVS, stage 1
and 2, Polyneuropathy of the upper
and lower limbs, Cervical/lumbosacral
radiculopathy, Hard labour,
Myofibrosis of the forearms, Bilateral
humeroscapular periarthrosis,
Osteoarthritis deformans
of the shoulder and elbow
joints, Bilateral humeroscapular
periarthrosis, Reflex myotonic
syndrome of the cervical/
lumbosacral area;
Group 2: Respiratory diseases
associated with exposure to complex
chemical aerosols;
Group 3: Chronic bilateral
sensorineural hearing loss, 1st
and 2nd degree.
2018
2019
2020
0
50
0
0
0
27
0
0
0
23
0
0
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
146/
147
• ensuring compliance with gas, mine and fire
rescue regulations and personnel training;
• re-equipping gas/mine rescue and fire
fighting units.
The Kirov branch of Apatit adopted
a new procedure for servicing and repairing
automatic fire safety units in order to transfer
them to a single qualified contractor –
of PhosAgro Engineering Center.
Five FTEs were added to the fire safety, civil
defence, emergencies, health and safety
management team.
APATIT
Kirov
branch
KEY PROJECTS IN 2020
DECENT WORK AND
ECONOMIC GROWTH
APATIT
To ensure fire, gas and mining safety at Apatit
and be better prepared for accidents
and emergencies, PhosAgro is implementing
Apatit’s programme for developing gas
and mine rescue, fire-fighting and prevention
activities for 2019–2021.
The programme focuses on:
• improving training facilities and equipment
of gas/mine rescue and fire-fighting units;
• enhancing the quality of hands-on training
for young hires;
APATIT
Cherepovets
branch
Seven additional jobs were created in the gas
emergency and fire-fighting services of Apatit’s
Cherepovets production site. The company
purchased machinery, equipment, and PPE:
a rescue simulator, a SKAD-1 breathing
apparatus control system, a GS-16 lung
ventilator, a TC-41M testing unit for fire
escapes and rescue safety equipment, high
pressure breathing air compressors, breathing
apparatuses.
7 new jobs
in gas emergency and fire-fighting
services created at Apatit’s
Cherepovets
At the Volkhov branch of Apatit,
the commanders of gas rescue squads
underwent the Gas Rescue Unit Management
training at the Training and Consulting Centre
of Emergency Rescue Forces in Novomoskovsk,
and another 15 received rescue training
for contingency emergency rescue teams. New
equipment purchased by the branch included
a tripod with a winch, a gas cutter, breathing
apparatus, a glowing guiding wire, two gas-
tight protective suits, two cutting blades,
ten hardhats, testing unit for fire-fighting
equipment, a CPR mannequin, a hydraulic
rescue tool kit.
APATIT
Volkhov
branch
The Balakovo Branch of Apatit
commissioned a smoke and heat simulation
training facility and purchased a special
operation vehicle, a ventilator, four chemical
protection suits, a thermal imaging system,
and a breathing air compressors.
APATIT
Balakovo
Branch
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 ENVIRONMENTAL
REVIEW
GOALS TO 2025
by 27 %
Reduction of specific
effluents (to 4.4 m3 per
tonne of finished and semi-
finished products)
by 23.7 %
Reduction of specific
pollutant emissions
(to 0.800 kg per tonne
of finished and semi-
finished products)
to 40 %
Increase
in the share of recycled
and decontaminated
hazard class 1–4 waste
GOALS TO 2028
by 30.9 %
Reduction of specific GHG
emissions (to 109.1 kg
of СО2 equivalent per
tonne of finished and semi-
finished products)
by 14 %
Reduction of total GHG
emissions (Scopes 1, 2,
and 3)
GLOBAL SUSTAINABLE DEVELOPMENT
GOALS (SDGS)
148/
149
APPROACH TO ENVIRONMENTAL MANAGEMENT
102-12
103
KEY PRINCIPLES AND OBLIGATIONS
Effective environmental management
is a key factor of the Company’s
long-term sustainability, impacting
PhosAgro’s ability to set and achieve
goals, be a socially responsible
business, and balance its obligations
to a wide range of stakeholders.
The key priorities set out in PhosAgro’s
Environmental Policy are careful use
of natural resources and reduction
of the environmental footprint.
PhosAgro understands that
our environmental impact may
potentially affect a wide range
of stakeholders and has therefore
carried out a comprehensive
assessment of its operations to identify
key areas of this impact, both direct
and indirect, and map them against
the UN Sustainable Development Goals.
the environmental impact of its
production operations and across
the value chain.
We seek to ensure compliance
with environmental regulations
throughout the whole life cycle
of a fertilizer, from our ore
to the food on our end consumers’
plates. PhosAgro strives to produce
fertilizers in a safe and eco-
friendly manner, thus contributing
to the sustainable agricultural
development worldwide. Committed
to continuous improvement,
the Group keeps working to lessen
For PhosAgro’s Environmental
Policy, see the Company’s website
Focus areas of the environmental strategy
Focus area
PhosAgro’s obligations
Reducing environmental
impact
• Minimise environmental risks at all stages of investment projects and along
the production chain
• Use the best available techniques and environmental monitoring solutions
in the regions of operation
• Raise the staff environmental awareness
Preserving natural
eco-systems
• Take steps to prevent climate change and save resources
• Preserve biodiversity, natural landscapes, and habitats across the Company’s footprint
• When developing new sites, take measures to reduce the area disturbed as a result of
operating and other activities, protect wildlife migration routes, freshwater ecosystems
and spawning streams
• Make sure no activities take place in specially protected natural areas or conservation
areas, traditional territories of indigenous peoples, natural world heritage sites, and
wetlands of international importance (the Ramsar List)
CLEAN WATER
AND SANITATION
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
RESPONSIBLE
CONSUMPTION
AND PRODUCTION
Further improving
environmental management
• Comply with environmental laws
CLIMATE
ACTION
LIFE
ON LAND
PARTNERSHIPS
FOR THE GOALS
Partnering to reduce
environmental footprint
of our products
• Hold all partners in the supply chain responsible for their environmental impact
• Communicate and foster dialogue with all stakeholders involved in environmental
protection, stage public discussions of design documents for future facilities
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 ENVIRONMENTAL MANAGEMENT
COMPLIANCE
150/
151
PhosAgro’s environmental
management system embraces key
management levels and all production
stages, from development to product
release. It also standardises
requirements for production
management at the Company’s
facilities.
By implementing a consistent
approach in line with international
environmental standards, each
subsidiary contributes greatly
to its own and the Company’s
environmental performance
and sustainable development.
Treating the enterprise’s operations
as a set of processes can boost
its efficiency through optimising
internal and external interactions,
preventing critical excesses
at all stages of production,
continuously monitoring the quality
of raw materials and measuring
production parameters. Compliance
with environmental standards
is achieved by constantly
measuring parameters, monitoring
and automating production
processes and conducting rapid
assessments of the operating
environment.
Environmental management framework
MANAGEMENT
LEVEL
STRUCTURAL
UNIT
MANAGEMENT
APPROACH
The Board
of Directors
• defines the Company’s environmental policy and sets strategic goals to ensure
environmental protection and reduce the negative impact of its operations
The Environmental,
Health and Safety
Committee and
Sustainable
Development
Committee of the
Board of Directors
Apatit’s Department
of Ecology and
Environmental
Management
Group
level
Subsidiary
level
• is responsible for planning, identifying key focus areas for environmental
management, tracking progress, and assessing results
• is responsible for general management, organisation and coordination of
efforts to continuously enhance environmental management
• To honour its commitment to the ongoing environmental improvement, the Company
has established dedicated monitoring and management functions at its subsidiaries
and their branches
• Environmental protection officers were appointed at the Company’s production
operation
• Production units, which have the greatest environmental impact, have introduced a
procedure for identifying and assessing risks and opportunities. Based on the results,
we develop measures to bring risks pertaining to significant environmental aspects to
an acceptable level
• Managers and experts responsible for making operational and other decisions that
may adversely affect the environment take a specially designed training course in
environmental safety. Only specially trained employees are cleared to handle hazard
class 1–4 waste
Environmental compliance is key
to running a responsible business.
PhosAgro’s environmental
management practices ensure
our compliance with the applicable
environmental and nature
conservation regulations. To that
end, the Company has developed
an internal and external control
framework, which includes internal
audit and external compliance
reviews, a reporting system designed
in accordance with legislative
requirements, and a staff training
system.
All our facilities that have an adverse
environmental impact are included
in dedicated state registers,
with relevant categories assigned
to them. PhosAgro has all necessary
permits in place for each of these
facilities.
ASSESSMENT, ANALYSIS, AND MONITORING
The Company continuously
monitors the impact of its
operations to ensure compliance
with environmental regulations.
At all stages of production, we take
the following steps to evaluate
our environmental performance:
control atmospheric emissions
at the source, monitor air quality
near sanitary protection zones,
monitor pollutants in waste-waters
discharged into water bodies, keep
records of areas used to store
production and consumption
waste for all of the Company’s
assets, including the operations
of contractors.
Monitoring is based on dedicated
programmes in effect at each
of the Company’s production assets.
The results are submitted to local
environmental monitoring authorities
in the regions where the Company
operates. In case of deviations
from the standards, the Company
develops corrective measures.
The monitoring results are used
as a basis for:
• investment decisions and financial
planning;
as a basis for updating risk
factors and their descriptions,
as well as for developing new
risk management activities,
bringing forward new initiatives,
and introducing policies.
• initiatives aimed at reducing
the impact of production
operations;
• assessing the achieved effects;
• identifying and controlling
environmental issues, determining
risks and opportunities,
developing and implementing
risk management and response
activities.
Environmental risk management
is subject to regular assessment
by the Board of Directors.
The assessment serves
Engaging stakeholders in the planning
process is an important part
of the environmental
management. Public hearings
are a legitimate and effective
mechanism for establishing
dialogue with stakeholders
using a discussion platform
to express their opinions and make
suggestions on the initiatives
under consideration. This mechanism
has a positive and constructive
impact on the decision-making
process. Engaging the general
public and an array of stakeholders
in discussion helps ensure that all
points of view are considered.
PhosAgro public hearings coverage
Number of public hearings
Average number of participants per hearing
2019
2020
13
102.7
13
42.9
For more information on public
hearings regarding state
environmental expert evaluation
subjects in 2019–2020, see
the Company’s website
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 PERMITS, CERTIFICATES, AND CONFIRMATION OF COMPLIANCE WITH INTERNATIONAL
ENVIRONMENTAL STANDARDS
Spending on environmental protection, RUB mln
152/
153
In 2020, the Balakovo branch
and Apatit JSC (Vologda
Region):
confirmed the compliance
of their environmental
management system with ISO
14001:2015;
were certified for compliance
with IFA’s Protect and Sustain
international standard (the
certification scope was
expanded from the previous
year); similar to the Cherepovets
production site, the Balakovo
branch had the highest score (a
total of 97.8 out of 100).
Products exported to EU
customers have been registered
pursuant to Regulation (EC)
No. 1907/2006 concerning
the Registration, Evaluation
and Authorisation of Chemicals
(REACH). The quality of mineral
fertilizers produced by the Company
is confirmed by state registration
certificates, declarations
of conformity, and safety data
sheets. According to expert
reviews, new fertilizer grades
are effective and environmentally
and toxicologically safe.
The products are properly classified,
labelled and packaged in accordance
with Regulation (EC) No 1272/2008
(CLP Regulation).
Mineral fertilizers produced by Apatit
are subject to mandatory state
registration of agrochemicals
by the Russian Ministry
of Agriculture. All grades of Apatit’s
mineral fertilizers registered
in Russia passed a mandatory
examination for compliance
with toxicological and hygienic,
biological, environmental,
and sanitary and epidemiological
standards. The examination was
performed by experts of the F.F.
Erisman Federal Research Centre
of Hygiene, D.N. Pryanishnikov
All-Russian Research Institute
of Agrochemistry, Rosprirodnadzor
and Lomonosov Moscow State
University, and Rospotrebnadzor,
respectively.
ISO 14001 certification
of all production sites is scheduled
for 2021.
The Company’s production sites hold
all necessary licences and permits
related to environmental protection.
We pass audits in accordance
with ISO 9001:2015, ISO 14001:2015,
OHSAS 18001, and GMP+ to ascertain
the efficiency of our product life-
cycle management.
Every year, we successfully
confirm compliance
of our environmental management
system with
ISO 14001
and International Fertilizer
Association (IFA)’s Protect
and Sustain standard
Our facilities have also put in place
a procedure to manage internal
environmental audits. Every
year, they develop internal audit
programmes taking into account
the environmental significance
of the reviewed processes, changes
affecting the facility and previous
audit outcomes. The audits provide
input data for the management
to analyse environmental
management efficiency.
It is important to note that
PhosAgro’s environmental
management system,
as well as internal and external audit
processes coupled with performance
monitoring and evaluation
by the management help identify
potential improvement areas
by means of a dedicated procedure
for taking corrective actions.
Item
Total
Operating costs of environmental protection (form 4-OS)
Investments in fixed assets aimed at environmental protection (form 18-KS)
Environmental impact payments
Environmental fines and damages
Investments in fixed assets aimed at environmental protection
(not included in form 18-KS)
The decrease in spending
on environmental protection in 2020
is associated with the completion
of a large-scale project to construct
the in-pit crushing and conveying
system of the Koashvinsky open
pit in 2019. The project’s capital
expenditures were included
in the item “Investments in fixed
assets aimed at environmental
protection”. In addition, there
are several major projects underway
to be accounted for in subsequent
periods.
In 2020, Apatit paid a fine
for exceeding the dust generation
rate at the beneficiation waste
disposal facilities (tailing)
of the Kirovsk branch.
Environmental impact payments, RUB mln
2018
8,210.0
4,587.7
986.3
156.3
0.6
2,479.1
2019
2020
9,059.5
4,351.9
8,120.3
4,825.3
4,221.9
3,120.4
165.3
0.79/2.12
317.5
174.6
0.02
–
In 2020, Apatit received legal claim
from Balto-Arctic transregional
department of Federal Service
of Environmental management.
The claim was under court
proceeding during 2020.
atmosphere
aquatic environment
waste
year
MPE
TPE
O-limit
SPD
TPD
O-limit
Limit
O-limit
TOTAL
over-limit
share of over-
limit in total
payments
2018
2.534
2019
2.467
2020
2.901
0
0
0
0.740
1.225
9.066
0.836
140.615
1.326
156.343
2.902
1.860
0
0
1.644
3.286
2.165
0
0
157.880
169.487
0
0
165.227
174.553
0
0
0
0
LEGISLATIVE AND ADMINISTRATIVE FRAMEWORK
None of PhosAgro’s enterprises
uses ozone-depleting substances
in the production process. A small
amount (not more than 250 kg/year)
of carbon tetrachloride (CCl4) is used
in laboratory testing.
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.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 ENVIRONMENTALLY RESPONSIBLE PROCUREMENT POLICY
308-2
PhosAgro Group checks its potential suppliers for compliance
with social and environmental requirements set out in the Code
of Conduct for Counterparties.
The Company takes the following steps to make sure all sourced inputs and materials are eco-efficient:
incoming quality
control;
contractor
and supplier
compliance;
additional checks.
Incoming quality control
The list of industrial and technical
products subject to incoming
control is made on a daily basis.
For a chemical product, a document
containing information on its
environmental and toxicological
safety is a safety data sheet.
Safety data sheets
for chemical products are reviewed
by professional experts and included
in product specifications. They
provide consumers
with details on chemical products’
safe usage, storage, transportation,
and utilisation, as well as their safe
usage by households. Safety data
sheets contain reliable information
in an accessible and concise form,
sufficient for the consumer to take
necessary measures to ensure
the protection of human health
and safety in the workplace,
as well as environmental protection
throughout the entire life cycle
of chemical products.
All supplies undergo quality testing. If
needed, the Company may request
third-party centres to perform
sample testing within their scope
of certification.
2020 INITIATIVES TO IMPLEMENT PHOSAGRO’S ENVIRONMENTAL RESPONSIBILITY
PRINCIPLES
154/
155
For more information on the system
to evaluate suppliers and contractors against
ESG criteria, see the Company’s official website
Development and publication of the Code
of Conduct for Counterparties setting out
key environmental, governance and social
requirements for suppliers and contractors,
including those covering human rights
and modern slavery issues.
Development of a questionnaire
with more than 60 ESG indicators to evaluate
suppliers (contractors), conducting
of the first ESG survey and preparation
of the ESG rating of the Company’s suppliers
and contractors. Currently, the survey covers
over 4% of the total procurement, and we plan
to increase this share going forward.
Stipulation of the procedures for assigning
and regularly reviewing ESG ratings
of suppliers and contractors in the Company’s
internal regulations.
2021 TARGETS
CONTRACTOR COMPLIANCE
• Automating the assignment and regular review
• Considering the expediency of introducing
Safety data sheets, technical
quality control reports, certificates
of quality management compliance
with ISO 9001:2011 (ISO 9001:2008,
EAEU technical regulations, MSDS)
to assure product quality.
Employment of materials
and equipment compliant
with Russian quality standards
(rules and regulations), certified
by manufacturers and permitted
for use in Russia.
Compliance with applicable
regulations on freight storage
and transport by road and rail.
Additional checks
The Company’s experts perform
additional checks and assessments
of potential suppliers if required
for a specific tender. They may
include a request to confirm
the availability of production
capacities and technologies, staff
qualifications, licences, certificates,
including ISO ones, and technical audit
reports. An executive responsible
for environmental management
recommends an appropriate solution
with regard to environmental safety.
of supplier and contractor ESG ratings
• Adding the ratings to the counterparty
selection criteria
• Revising the supplier audit procedure
to incorporate ESG requirements
• Revising contracts to include a reference
to the Code of Conduct for Counterparties
the share of ESG-evaluated suppliers
and contractors and their average ESG
rating as potential KPIs for the Procurement
Department
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 2020 HIGHLIGHTS
103
EMISSIONS INTO THE ATMOSPHERE
PhosAgro’s emissions management
system seeks to comply with national
air pollution regulations, ensure air
quality in sanitary protection areas
near production sites, and upgrade
the Company’s capacities using
the best available techniques.
The Group takes part
in the nationwide Clean Air initiative,
which aims to drastically reduce air
pollution in major industrial cities.
PhosAgro’s strategic goal
is to achieve a 23.7% reduction
in pollutant emissions per tonne vs
2018 by 2025.
Unit pollutant emissions in 2020
remain close to the level of 2019.
The uptick is due to the accounting
for the impact the in-pit
crushing and conveying system
at the Koashvinsky open pit
of the Vostochny mine has on air.
Subject to accounting since 2020,
the pit’s dust emissions have
exceeded 1 kt (+3% to the Group’s
total emissions). The environmental
effect of 2020 measures
to reduce pollutant emissions
will be determined in 2021 based
on the achieved results.
PhosAgro’s strategic goal is to achieve a 23.7% reduction in specific
pollutant emissions vs 2018 by 2025.
Pollutant emissions, kg per tonne
of finished and semi-finished
products
1.048
0.888
0.892
2018
2019
2020
Initiatives implemented in 2019–2020 to achieve the target
Activity
Volkhov branch
Environmental effect
Terms of
implementation
The Company’s project to install a station
for continuous automatic air quality control
Obtaining objective, reliable, real time data on air quality and
information on the sources of pollution, forecasting
2020
Installation of equipment to treat waste
gases on par with the best available
techniques as part of the effort to
modernise the wet-process phosphoric
acid production unit and increase its
capacity to 450 ktpa
Installation of equipment to treat waste
gases as part of the construction of an
800 ktpa sulphuric acid facility
Balakovo branch
re-equipping technological systems No.
5 and 6 of the phosphate fertilizers unit
Stage 1
Kirovsk branch
Maintaining per unit emission of gaseous fluorides on par with
the best available techniques included in the best available
technique guidelines (ITS2-2015) (0.31 kg/t)
Q2 2020 (Stage 1),
Q4 2021 (Stage 2)
Maintaining SO2 emissions on par with the best available
techniques (1.292 kg/t)
Q4 2021
targeted reduction in pollutant emissions of 0.1 kt
Q2 2021
156/
157
over RUB 10 mln
CAPEX for the deployment of new
tailing gas pre-heating equipment
for the UKL-7 plants
The Company’s project to install
a station for continuous automatic air
quality control
RUB 10.872 mln
NOX, SOX, AND OTHER SIGNIFICANT AIR EMISSIONS, T
305-7
Kirovsk branch of Apatit
Pollutants
Solids
Sulphur dioxide
Carbon monoxide
2018
2019
2020
5,752.8
3,734.1
5,148.6
3,326.0
3,458.3
3,104.0
792.1
477.6
711.1
Nitrogen oxides (NOx as NO2)
1,760.1
1,534.8
1,012.2
Hydrocarbons (w/o VOCs)
Volatile organic compounds (VOCs)
Other gaseous and liquid pollutants
24.5
0.1
16.1
0.1
8.0
19.0
0.5
Total
11,656.1
9,221.1
10,003.4
Balakovo branch of Apatit
Pollutants
Solids
Sulphur dioxide
Carbon monoxide
Nitrogen oxides (NOx as NO2)
Hydrocarbons (w/o VOCs)
Volatile organic compounds (VOCs)
Other gaseous and liquid pollutants
2018
410.7
2019
410.8
2020
429.5
4,115.2
4,293.7
4,432.1
836.6
737.7
2.6
337.9
509.8
782.8
724.1
2.6
340.0
448.5
870.0
746.9
2.6
340.1
465.1
Dust suppression on tailing dump surfaces
Reducing emissions of pollutants into the atmosphere
Total
6,950.4
7,002.4
7,286.2
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 CHEREPOVETS SITE
OF APATIT
(Vologda region)
Implementation
of the Comprehensive Plan
to Reduce Pollutant Emissions
and the Programme to Optimise
Water Use During Production
Upgrade in 2020–2025
340 TPA
estimated
reduction
in pollutant
emissions
Upgrade of technological system
No. 3, block 2.70 at the mineral
fertilizer production site.
Project schedule: Q4 2020
The environmental effect
will be assessed in 2021 based
on the achieved results.
The estimated effect is a 340 tpa
reduction in emissions compared
to 2017.
RUB 467.3 mln
expenses
Water use optimisation at the Cherepovets site of Apatit
as part of the production upgrade
Project schedule: 2020-2025
The first stage has been completed.
105 TPA
environmental effect
Deployment of new tailing gas pre-
heating equipment for
the UKL-7 plants.
• Unit for pumping treated effluent back to the phosphate facility
Project schedule: 2019
reconstructed
• Technical audit of the water use at the phosphate facility carried out
Environmental effect amounted to 105 t
RUB 11 mln
expenses
20 TPA
reduction in pollutant
emissions
Technical upgrade of the low-
capacity absorption unit
of blocks 7.00 and 7.01
at the ammophos site.
Project schedule: Q4 2021
Estimated effect: reduction
of pollutant emissions
by 20 tpa
158/
159
892 тpa
reduction of SO2 emissions
Upgrade of the sulphuric acid plant
EE SK-600/3
Project schedule: 2019.
Environmental effect amounted to 892 tpa
RUB 2.7 bln
expenses
3.3 KTPD
Capacity of sulphuric acid production unit
As part of the investment programme to build a 3,300 t
per day sulphuric acid unit, initiatives were implemented
to optimise the water use system by:
• reusing sludge water from the water clarification unit;
• returning additional condensate from the sulphur
melting unit;
• reusing the concentrate of the reverse osmosis water
treatment unit
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Volkhov branch of Apatit
GREENHOUSE GASES
160/
161
Pollutants
Solids
Sulphur dioxide
Carbon monoxide
Nitrogen oxides (NOx as NO2)
Hydrocarbons (w/o VOCs)
Volatile organic compounds (VOCs)
Other gaseous and liquid pollutants
2018
622.0
155.0
65.0
323.0
0
3.0
48.0
2019
610.4
161.7
73.3
149.8
0
3.4
163.9
2020
461.7
180.8
92.4
283.1
0
4.6
46.2
Total
1,216.5
1,162.5
1,068.9
2018
2019
1,043.3
3,764.4
1,221.8
2,980.1
145.2
5.4
1,356.3
3,297.4
1,476.3
2020
917.3
3,367.2
1,573.5
2,309.2
2,540.0
37.8
2.8
38.1
2.2
Environmental protection, including
climate related matters, and efficient use
of resources are among the Company’s
strategic priorities. The Group
is committed to tackling greenhouse
gas emissions and climate change.
At PhosAgro, we work continuously
towards accomplishing these objectives.
In 2020, as part of a project
to scientifically verify and prioritise
the UN SDGs, we added SDG 13 Climate
Action to the list of priority goals
the Company will be contributing to.
The responsibility to consider and make
decisions on climate action has been
vested with the Environmental,
Health and Safety Committee, chaired
by a member of the Company’s Board
of Directors, an Executive Director.
The committee’s climate functions
include monitoring greenhouse gas
emissions, as well as developing
and implementing projects to reduce
greenhouse gas emissions, including
initiatives to improve energy efficiency
at PhosAgro’s production facilities.
Other gaseous and liquid pollutants
3,241.9
3,009.1
3,392.6
GHG emissions, СО2 eq. (direct), Scope 1, kt1
12,402.2
11,488.9
11,830.7
305-1
Apatit (Vologda region)
Pollutants
Solids
Sulphur dioxide
Carbon monoxide
Nitrogen oxides (NOx as NO2)
Hydrocarbons (w/o VOCs)
Volatile organic compounds (VOCs)
Total
Total
Pollutants
Solids
Sulphur dioxide
Carbon monoxide
Nitrogen oxides (NOx as NO2)
Hydrocarbons (w/o VOCs)
Volatile organic compounds (VOCs)
2018
7,828.5
11,361.1
2,915.6
5,801.2
147.8
371.3
2019
6,111.7
11,211.1
2,810.0
4,717.9
40.4
362.3
2020
6,957.1
11,084.0
3,247.0
4,582.1
48.7
365.8
Other gaseous and liquid pollutants
3,799.8
3,621.5
3,904.3
Total
32,225.2
28,874.9
30,189.0
Kirovsk branch
Balakovo branch
Volkhov branch
Apatit (Vologda region)
Total
GHG emissions, СО2 eq. (indirect), Scope 2, kt1
305-2
Kirovsk branch
Balakovo branch
Volkhov branch
Apatit (Vologda region)
Total
2018
583.1
157.9
118.4
3,995.8
4,855.3
2018
815.8
63.1
72.4
164.3
1,115.6
2019
636.3
152.6
121.3
3,746.1
4,656.3
2019
856.7
66.0
71.7
197.0
1,191.4
2020
646.4
170.0
111.4
3,811.5
4,739.4
2020
856.3
61.5
75.5
228.0
1,221.3
1.
Greenhouse gas emissions are given in СО2 equivalent The calculation includes the following list of gases: СО2, СН4, NO2
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Scope 1 GHG emissions per tonne of output have been
decreasing. Total Scope 1 and 2 GHG emissions have been
rising due to production growth.
For more information on GHG, see
the TCFD Report 2020, Climate-
Related Financial Disclosures
under the TCFD standards
PhosAgro has set a 14% reduction target for total
GHG emissions (Scope 1, 2, and 3) by 2028. The target
for the Scope 1 GHG emissions per unit of output
is set at 109.1 kg of СО2 equivalent per tonne
of finished and semi-finished products, down
by 30.9% compared to the 2018 baseline.
GHG EMISSIONS BY PRODUCTION SITE (DIRECT), SCOPE 1
305-4
305-5
Apatit (Vologda region)
Item
Total GHG emissions, t
2018
2019
2020
3,995,830
3,746,069
3,811,534
162/
163
CLIMATE STRATEGY
PhosAgro’s Climate Strategy was
developed in 2020 and approved
by the Company’s Board
of Directors. It provides an analysis
of climate scenarios in line
with the Task Force on Climate-
related Financial Disclosures
(TCFD), identifies climate risks
and opportunities, sets scientifically
verified targets for GHG emissions,
and outlines measures to achieve
them – a low carbon transition plan.
The Strategy also includes provisions
for interacting with participants
in the Company’s value chain,
including a supplier engagement
concept. The main purpose
of the interaction provisions
is to manage GHG emissions across
the value chain by providing
relevant data that will allow
the Company to regulate internal
corporate processes and activities
and guide suppliers and consumers
on reducing GHG emissions.
The Climate Strategy is aimed at ensuring the adoption
and implementation of obligations and an end-to-end efficiency
enhancement measures by the Company in the face of growing climate
change and tightening of environmental regulations for businesses.
GHG emissions, kg per tonne of finished and semi-finished products
295.2
261.9
246.4
Balakovo branch of Apatit
Item
Total GHG emissions, t
2018
2019
2020
157,886
152,632
170,024
GHG emissions, kg per tonne of finished and semi-finished products
28.4
25.7
27.9
Volkhov branch of Apatit
Item
Total GHG emissions, t
GHG emissions, kg per tonne of finished and semi-finished products
2018
118,396
181.5
2019
121,325
197.4
2020
111,415
179.5
AS PART OF ITS PRIORITIES, PHOSAGRO’S CLIMATE STRATEGY SEEKS TO
Kirovsk branch of Apatit
Expand the ranks of climate-responsible businesses
in Russia and globally by responsible supplier selection
Reduce the climate risks of production and business
processes and use potential climate opportunities
to develop and strengthen the Company’s business
Increase the Group’s openness and transparency,
including by expanding cooperation with stakeholders
and international platforms with a view to advancing
the climate agenda
Include climate matters in the Company’s
management and decision-making processes
By adopting and implementing its
Climate Strategy, PhosAgro makes
a new commitment to the global
community and future generations
– an essential requirement
for ensuring the Company’s
sustainable development
in the modern world.
Item
Total GHG emissions, t
2018
2019
2020
583,144
636,303
646,395
GHG emissions, kg per tonne of finished and semi-finished products
53.0
54.7
55.5
Total
Item
2018
2019
2020
Total GHG emissions, t
4,855,256
4,656,329
4,739,368
GHG emissions, kg per tonne of finished and semi-finished products
158.0
143.3
140.1
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 WASTE
103
Waste management is an integral
part of PhosAgro’s comprehensive
environmental management system.
Action taken to achieve
waste management targets
The Cherepovets site is upgrading
its aluminium fluoride plant, with its
capacity to be expanded to 70 ktpa,
to ensure the use of all the fluorine
extracted as part of phosphate rock
processing, reduce lime consumption
in treating effluents, and decrease
the generation and disposal
of fluorine-containing waste.
At Balakovo, in 2020, Wet-Process
Phosphoric Acid Unit No. 3 started
treating acidic waste water
coming from the site for waste
and recyclables. With RUB 22.785 mln
spent on the project, the initiative
resulted in lower lime consumption
in treating effluents and reduced
generation of hazard class 4 waste.
Share of recycled and decontaminated
hazard class 1–4 waste, %
37.6
34.5
26.8
Our strategic goal
to 2025 is to increase
the share of recycled
and decontaminated hazard
class 1–4 waste to
40 %
2018
2019
2020
Another project included developing
and deploying a technology
allowing to use phosphogypsum
(phosphoric acid production waste)
in road construction. In June
2020, IFA included this project
in the Phosphogypsum: Leadership,
Innovation, Partnership report
as an innovative practice in waste
by-product management illustrating
transition to a circular economy.
We place major emphasis on safe
operation of tailings, which are special
hydraulic structures and equipment
for storage and disposal of mineral
processing wastes.
164/
165
Based on the safety requirements
for hydraulic structures
approved by the Federal Service
for Environmental, Technological
and Nuclear Oversight
(Rostekhnadzor)
in 2018, the Company’s tailings have
the highest safety level. This means
that they fully meet the design
requirements and applicable
rules and regulations. The state
of structures and foundations
corresponds to the requirements.
The tailings are operated
in accordance with industrial
safety laws and regulations as well
as instructions of supervisory bodies.
WASTE BY TYPE AND DISPOSAL METHOD
306-2
Kirovsk branch of Apatit, t
Disposal method
Reused
Landfilled
Third-party recycled
Third-party decontaminated
Third-party landfilled
Third-party stored
Third-party processed
2018
2019
2020
21,274,068.0
19,656,977.0
18,641,022.0
67,117,451.0
81,635,022.6
102,425,569.5
16,933.2
15,665.9
15,286.0
9.8
5,279.8
–
–
166.0
4,197.1
–
–
171.6
2,200.9
–
–
Disposal of beneficiation waste and overburden at Kirovsk branch, t
Reused
Landfilled
recycled
decontaminated
landfilled
stored
processed
Third-party
Third-party
Third-party
Third-party
Third-party
Third-party disposal
2018, including
21,274,068.0
67,117,451.0
16,933.2
apatite-nepheline ore
processing waste
(tailings)
rocks and overburden
mix
12,259,354.0
12,220,389.0
9,014,714.0
54,897,062.0
–
–
9.8
–
–
5,279.8
–
–
2019, including
19,656,977
81,635,022.6
15,665.861
165.949
4,197.13
apatite-nepheline ore
processing waste
(tailings)
rocks and overburden
mix
12,500,635.0
12,560,903.0
7,156,342.0
69,073,827.0
–
–
–
–
–
–
2020, including
18,641,022.0 102,425,569.5
15,285.986
171.588
2,200.88
apatite-nepheline ore
processing waste
(tailings)
rocks and overburden
mix
12,015,508.0
12,947,652.0
6,625,514.0
89,454,699.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Balakovo branch of Apatit, t
Waste generation, tonne per tonne of finished and semi-finished products
166/
167
2018
2019
2020
3.2
8.0
0.9
3.5
8.7
0.9
0.005
0.002
0.4
0.4
3.9
10.4
0.9
0.031
0.4
Asset
Total
Kirovsk branch
Balakovo branch
Volkhov branch
Cherepovets production site
Waste generation (hazard class 1–4), kg per tonne of finished and semi-finished products
Asset
Total
Kirovsk branch
Balakovo branch
Volkhov branch
Cherepovets production site
Waste generation by hazard class, t
Waste hazard class
TOTAL
I
II
III
IV
V
2018
2019
2020
5.8
0.6
22.2
0.9
3.4
6.1
0.6
19.5
2.2
5.2
Unit of
measurement
2018
2019
5.4
0.3
16.7
27.0
3.8
Total
2020
t
t
t
t
t
t
99,124,822.59
112,657,243.30
132,674,061.36
7.48
1.3
7.636
10.764
6.485
7.613
1,256.626
1,938.625
1,070.645
176,359.19
196,725.824
180,439.544
98,947,198.03
112,458,560.40
132,492,537.1
In 2020, the waste generation rate grew mostly due to increased generation
of rock overburden mix because of a higher open pit mining share.
Disposal method
Reused
Landfilled
Third-party recycled
Third-party decontaminated
Third-party landfilled
Third-party stored
Third-party processed
Volkhov branch of Apatit, t
Disposal method
Reused
Landfilled
Third-party recycled
Third-party decontaminated
Third-party landfilled
Third-party stored
Third-party processed
JSC Apatit (Vologda region), t
Disposal method
Reused
Landfilled
Third-party recycled
Third-party decontaminated
Third-party landfilled
Third-party stored
Third-party processed
Total, t
Disposal method
Reused
Landfilled
Third-party recycled
Third-party decontaminated
Third-party landfilled
Third-party stored
Third-party processed
2018
2019
2020
6,099.0
16,580.3
3,584.9
4,898,612.7
5,302,285.7
5,433,703.7
9,872.2
4,720.5
10,314.8
26.4
372.0
–
4.5
257.0
–
43.0
211.9
–
1,381.5
2,906.1
1,590.9
2018
2019
2020
–
–
115.5
0.4
–
–
43.9
0.3
603.7
1,345.0
–
1,998.9
–
–
–
–
17,765.0
0.3
1,311.2
–
–
2018
2019
2020
2,970,411.4
3,195,192.6
3,232,425.4
2,767,144.9
2,856,356.6
2,912,609.9
12,984.1
17,266.3
9,011.9
39.6
–
0.7
–
100.7
125.8
–
–
47.5
0
0
0
2018
2019
2020
24,250,578.5
22,868,749.9
21,877,032.2
74,783,208.5
89,793,664.9
110,771,883.1
39,911.9
37,696.5
52,377.7
76.2
271.4
262.4
6,255.5
6,039.9
3,724.0
0.7
0
0
3,380.5
1,381.5
1,590.9
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 WATER
103
303-1
168/
169
Our waste water management
approach is focused on maximum
reuse of water through closed-loop
water recycling system and proper
treatment of effluents discharged
into water bodies in addition
to continuous monitoring of water
bodies in the regions of operation
and aquatic life recovery.
The increase in waste water
discharge was driven by heavier
precipitation at the Kirovsk
branch of Apatit that resulted
in higher mining water discharges.
From October 2019 to May 2020,
the amount of snow fallen grew
by 54.2% year-on-year. This led
to higher water inflows across
the branch sites during the thaw.
At the same time, the Company’s
overall water consumption has been
on the decline in recent years.
Waste water discharge, m3 per
tonne of finished and semi-finished
products
6.0
5.6
4.7
2018
2019
2020
The Company’s strategic goal
is to achieve a 27% reduction
in waste water discharge per
tonne of output by 2025
27 %
The strategy is available
on the Company’s website
Water strategy
In 2020, PhosAgro developed
a Water Strategy to improve its
water management.
Its main objectives
are as follows
Increasing water use
efficiency
We optimise our own production
processes and try to reclaim water
without having to draw more
and discharge treated waste water.
Two plants, in Volkhov and Balakovo,
have implemented arrangements
that basically exclude the discharge
of treated industrial waste water
into surface water bodies. All water
from the production cycle passes
through a multi-stage treatment
system and returns into production.
The Water Strategy contains
a list of projects for each branch,
including the following investment
programmes:
• Water efficiency improvement
at Apatit (Vologda Region)
during production upgrade
in 2020–2025;
• Reduction of discharge volumes
and improvement of waste water
quality at the Kirovsk branch
of Apatit in 2019 and beyond;
• Creation of a closed water
circulation system at the Volkhov
branch of Apatit (elimination
of waste water discharge into
the Volkhov River)
These activities have been
consolidated into a single schedule
Thanks to long-term
reductions in specific
water intake and waste
water discharge rates
and to our investment
programmes, we can set
ambitious strategic goals
for water protection.
For many years, we have been
implementing joint riverside cleaning
programmes with local volunteer
associations.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Water intake reduction targets for 2018–2025 (per tonne of finished and semi-finished products)
Total water withdrawal by source, ths m3
Intake, m3 per tonne
of finished and semi-
finished products
After planned arrangements
After planned and prospective arrangements
5.16
4.78
26%
31%
303-3
Surface water
170/
171
UoM
2018
2019
2020
Total
After planned arrangements
After planned and prospective arrangements
process water
ths m3
57,191
58,315
59,081
Total water withdrawal from surface sources, including:
ths m3
176,300
145,179
170,862
Waste water discharge reduction targets for 2018–2025 (per tonne of finished and semi-finished products)
Intake, m3 per tonne
of finished and semi-
finished products
After planned arrangements
After planned and prospective arrangements
4.16
3.93
35%
31%
Adopting a responsible and caring attitude towards water resources
and water bodies as an integral part of the environment, with all of the
Company’s personnel contributing to these goals
After planned arrangements
After planned and prospective arrangements
Pollutant discharges, kg per tonne
of finished and semi-finished product
0.8
0.6
0.4
2018
2019
2020
drinking water (internal use)
ths m3
935
885
995
drinking water (for supplies to third parties)
ths m3
498
466
399
mining water
drainage water
rainwater
Ground water
ths m3
111,213
79,933
104,475
ths m3
4,965
3,577
3,312
ths m3
1,498
2,002
2,600
Water withdrawal from ground-water sources:
ths m3
2,938
2,842
2,832
Water received from third-party suppliers
Total water received from third-party suppliers, including:
ths m3
44,927
42,082
52,898
process water received from suppliers
ths m3
25,491
27,546
28,443
water from municipal supply (internal use)
ths m3
9,857
8,560
8,138
water from municipal supply (for supplies to third parties)
ths m3
23
34
17
waste water from other waste-water discharge systems
ths m3
9,556
5,943
16,300
TOTAL
ths m3
224,166
190,104
226,592
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
Measurement of total and specific water withdrawal including and excluding mining and drainage waters
Total
UoM
2018
2019
2020
Total water withdrawal from, including mining and drainage waters
ths m3 / t
224,166
190,104
226,592
Specific water withdrawal from, including mining and drainage waters
м3/t
7.29
5.85
6.70
Total water withdrawal from, excluding mining and drainage waters, and waste
water from other waste water discharge systems
ths m3 / t
107,987
106,593
118,805
Specific water withdrawal from, excluding mining and drainage waters, and waste
water from other waste water discharge systems
м3/t
3.51
3.28
3.51
Total water discharge by source, ths m3
303-4
GRI 303-4 Total water discharge by source 3
2018
2019
2020
Water discharge into surface waters
Total water discharge into surface waters:
185,621
152,223
188,455
Total
172/
173
Water consumption, ths m3
303-5
GRI 303–5 Water consumption
2018
2019
2020
Total water withdrawal (all sources)
Total water discharge (all sources)
Water consumption
224,166
190,104
225,849
189,656
156,341
192,602
34,510
33,763
33,990
Total
79,933
104,475
Water discharge in 2020, mln m3
mining water
drainage water
waste water from other waste-water discharge systems
Supplies to third parties
Total water supplies to third parties:
waste water to the public water discharge system (after use)
waste water to the public water discharge system (unused)
water supplies to third parties from surface sources
water supplies to third parties from municipal sources
111,213
4,965
9,500
4,035
3,458
56
498
23
3,577
5,494
4,118
3,170
448
466
34
3,312
15,901
4,147
3,314
399
417
17
TOTAL
189,656
156,341
192,602
Treated effluents (reused in the production cycle)
303-5
Asset
Total, mln m3
Share of reused water, %
2018
2019
2020
224.0
231.5
240.4
87
87
88
303-4
Indicator
Waste water discharge
Discharged without treatment (% of total water discharge)
Kirovsk
branch
Balakovo
branch
Volkhov
branch
173.7
0
0
0
0
0
Apatit
(Vologda
region)
14.8
0
Total
188.5
0
Waste water discharge at Apatit
Waste water discharge
Kirovsk branch
Discharge 1. Industrial waters at ANBP-3
Discharge 2. Industrial waters at ANBP-2
Discharge 3. Rainwater at ANBP-2
Receiving water body
Zhemchuzhnaya River
Belaya River
Belaya River
Discharge 4. Mining waters of the combined Kirovsky, Central and Rasvumchorrsky mines
Lake Bolshoi Vudyavr
Discharge 6. Waters of the wells installed at the Vostochny mine to reduce groundwater level
Vuonnemyok River
Discharge 5. Mining waters of the Koashva and Njorkpahk open pits
Discharge 8. Mining waters of the Koashva and Njorkpahk open pits1
Discharge 9. Waters of water-lowering wells of the Vostochny mine2
Apatit (Vologda region)
Effluents from the phosphate facility
Effluents from the nitrogen facility
Lake Kitchepahk
Lake Kitchepahk
Vuonnemyok River
Rybinsk Reservoir
Rybinsk Reservoir
1.
2.
The resolution on Discharge 8 ceased to have effect on 12 May 2020. Discharge 8 was closed down.
On 3 July 2020, a new resolution was recorded in the State Water Register for the Vuonnemyok River, with the former Discharge 6 split into two, Discharge
6 and Discharge 9.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020
Development Committee in late 2021,
will include a programme we adopted
a few years ago to promote
reproduction of aquatic biological
resources.
BIODIVERSITY PROTECTION
103
304-2
304-3
Before building any new production
facilities or renovating existing ones,
PhosAgro conducts an environmental
impact assessment (EIA) based
on the results of engineering
and environmental surveys that
provide deep insights into the local
flora, fauna and landscapes. EIAs help
identify all potential environmental
and public health impacts
of business or other projects,
determine the respective risk levels
and assess their adverse economic
and social effects. If needed,
a plan can be developed to mitigate
these risks. EIAs also offer a look
into public attitudes to matters
like protecting biodiversity,
with the findings incorporated later
in the decision-making.
In early 2021, PhosAgro’s
Environmental Policy was amended
to set forth the Company’s
obligations to preserve biodiversity,
natural landscapes and habitats
across its footprint and prevent
its projects from causing any harm
to the same.
Since 2020, with research institutions
engaged, we have also been
working on a programme that will
establish our priorities in protecting
biodiversity based on indicator
species monitoring and help us check
and restore the ecosystem health
across our footprint.
The document, which we expect
to submit to the Sustainable
174/
175
Fish released in 2020
Asset
Species
Quantity Water body
Apatit (Vologda region)
Juvenile carp
6,500
Gorky Reservoir
Pike larvae
654,400
Rybinsk Reservoir
Balakovo branch
Juvenile carp
Juvenile silver carp
Juvenile silver carp
Sterlet yearling
Juvenile carp
Volkhov branch
Char
Kirovsk branch
Juvenile Atlantic salmon
Total
Fish released in 2019
25,000
Volgograd Reservoir
20,000
Volgograd Reservoir
440
Volgograd Reservoir
471
Volgograd Reservoir
26,393
Saratov Reservoir
2,116
Lake Ladoga
4,000
Umba River
739,320
Asset
Species
Quantity Water body
Apatit (Vologda region)
Juvenile carp
6,500
Gorky Reservoir
Balakovo branch
Juvenile carp
30,000
Volgograd Reservoir
Juvenile silver carp
25,000
Volgograd Reservoir
Kirovsk branch
Sterlet yearling
84,353
Sukhona River
Total
147,983
Juvenile Atlantic salmon (2 yrs)
2,130
Umba River
Fish released in 2018
Asset
Species
Quantity Water body
Apatit (Vologda region)
Juvenile carp
6,500
Gorky Reservoir
Balakovo branch
Juvenile carp
Juvenile silver carp
Juvenile carp
Juvenile silver carp
45,000
Volgograd Reservoir
45,000
Volgograd Reservoir
16,620
Saratov Reservoir
10,140
Saratov Reservoir
Metachem
Juvenile whitefish
2,276
Volkhov River
Kirovsk branch
Juvenile Atlantic salmon
5,000
Umba River
Total
130,536
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Key activities in 2020
Key projects
KEY INITIATIVES OF THE ENERGY EFFICIENCY PROGRAMME FOR 2020–2021
176/
177
The Company delivered on its commitment
to install and launch a fixed station for air
quality control, the first facility of its kind
in Volkhov and the Leningrad region.
The station assesses air quality in the ground
layer of the atmosphere against permissible
concentrations and informs local residents
accordingly via the website of the Volkhov
municipal district administration. The site
for the station was selected following public
discussions and approved by the Federal
Service for Surveillance on Consumer
Rights Protection and Human Wellbeing
(Rospotrebnadzor) in the Leningrad region.
PhosAgro takes part in the Carbon Disclosure Project
(CDP) to reduce greenhouse gas emissions. PhosAgro
published its climate reporting for the second time.
As a result, the Company’s CDP rating was raised
from C to B- (on an A–F scale, where A is the best
possible score). The improvement is associated
with work on the implementation of the Company’s
climate strategy, which includes development
and analysis of climate scenarios, a climate risk
assessment, emissions reduction targets and a low-
carbon transition plan, as well as improved non-
financial disclosure.
Another project included developing and deploying
a technology allowing for the use of phosphogypsum
(phosphoric acid production by-product) in road
construction. In June, IFA included this project
in the Phosphogypsum: Leadership, Innovation,
Partnership report as an innovative practice in waste
by-product management illustrating transition
to a circular economy.
ENERGY EFFICIENCY
103
DEVELOPING ENERGY EFFICIENCY MANAGEMENT SYSTEM IN 2020
In the reporting period,
the Company’s Board of Directors
approved the Climate Strategy,
with its key elements made part
of the Company’s Corporate
Strategy to 2025 (Strategy to 2025).
An important milestone was
the approval of Apatit’s Energy
Efficiency and Energy Saving Policy.
The Policy sets out the following key
goals:
• continuously improving energy
efficiency;
• using energy resources
in a sustainable and efficient
manner;
• streamlining the energy
management process for all types
of operating activities.
To implement the provisions
of Strategy 2025 and obligations
listed in Apatit’s Energy Efficiency
and Energy Saving Policy, in August
the Board of Directors’ Sustainable
Development Committee approved
a unified Energy Efficiency
Programme in addition to existing
energy efficiency programmes
at each of the Company’s four
production sites. The Programme
comprises over 20 measures
to develop the following aspects.
The initiative timelines range
from several months to two years
and are regularly monitored
by the Board of Directors’
Sustainable Development Committee.
The Energy Efficiency Programme
is open to updates and additions,
with new proposals considered
on an ongoing basis.
The Programme’s implementation
is reviewed by the Board
of Directors once every six
months. Since the Company has
approved and carried out
a number of initiatives expected
to deliver strong results, this will
have a positive effect on energy
consumption in 2021.
The activities of the Energy Efficiency
Program are aimed at developing
the following areas:
in-house power generation
through utilisation of sulphuric
acid production steam;
increase of the share
of renewable energy sources;
introduction of technologies
aimed at loss reduction
and energy savings (e.g. LED
lighting, frequency converters,
less heat energy losses).
The Energy Efficiency Programme
is available on the Company’s website
302-4
Project
Details and effect
Spending,
RUB mln
Completion
Implemented in 2020
Cherepovets
Construction of the SK 3300 plant at
the phosphate facility of Apatit
SK 3300 generates steam in the amount of 175 t/h for
the thermal power station. With the power generation
remaining unchanged (no installed capacity added), this
helps reduce natural gas consumption by some 135 mln
m3 per year
10,500.0
2020
Balakovo
Installation of the 45kW+ solar power
station at Apatit’s Balakovo branch
(Phase 1)
Solar power station pilot running at two production
sites of the Company is geared towards assessing the
potential of solar energy and the viability of a further
scale-up
4.5 (Phases 1 the
25kW and 2 the
20kW in total)
2020
2021 target
Balakovo
Installation of the 45kW+ solar power
station at Apatit’s Balakovo branch
(Phase 2)
Phase 2 of the project to replace third-party electricity
supply with an alternative energy source (solar panel).
4.5 (Phases 1 and
2 in total)
Q2
Volkhov
Construction of a thermal power
station with a 34 MW high-efficiency
electric turbine and a water
treatment system at Apatit’s Volkhov
branch
Project seeks to cut electricity costs through the
utilisation of process steam from the new sulphuric
acid plant at the thermal power station of Apatit’s
Volhov branch, with the objective of providing all of the
site’s consumers with low-grade steam. This will also
significantly reduce the need to purchase electricity
from third-party power suppliers
3,000.0
Q4
Volkhov
Upgrade of the lighting system at the
granulated sulphur warehouse, LED
lights installation
Kirovsk
Upgrade of the lighting system to LED
at ANBP-2 of Apatit’s Kirovsk branch
Cherepovets
Transfer by river water between c.
911 and 901 for boiler blowdown tank
cooling
Energy savings due to replacing mercury lamps with
LED ones
1.5
Q2
A 0.5 MW reduction in annual energy consumption,
lower maintenance and repair costs
42.0
Q4
Reduced water consumption, cost cutting
0.5
Q4
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 ENERGY EFFICIENCY METRICS
In 2020, the Company’s production
facilities were 39.8% self-sufficient
in terms of electricity needs, which
is 0.4% less than in 2019. In absolute
terms, the electricity generated
by PhosAgro went up by 22 mln kWh
year-on-year (the increase in total
electricity consumption in 2020
was 89 mln kWh, with the new
facilities commissioned). In 2021,
the share of electricity generated
in-house is likely to increase due
to the planned launch of the 34 MW
thermal power station at the Volkhov
branch.
39.8 %
the Company’s production facilities
were 39.8% self-sufficient in terms
of electricity needs in 2020
In-house electricity generation with the use of secondary products
Asset
Apatit (Vologda region)
Balakovo branch
Electricity generated through utilisation
of sulphuric acid production steam
In-house electricity
generation, mln kWh
1,167.0
355.1
mln kWh
534.2
346.2
%
45.8
97.5
Initiatives 2020
PhosAgro launched a project
to use renewable energy sources
at its production and social
facilities, with the Izumrud
corporate health resort
in Balakovo becoming a pilot
site. The first 25 kW solar power
plant was installed on the roof
of the resort’s medical treatment
building. The spring of 2021
will see similar panels installed
on Izumrud’s hotel building,
resulting in a total capacity of 45
kW. It is also planned to test
the technology at the Company’s
chemical facility in Balakovo
to assess the viability
of a further scale-up.
Apatit’s Kirov branch signed
a contract with TGC-1
to purchase electricity generated
by hydroelectric power plants.
In 2021, 323 mln kWh of green
electricity will be supplied,
covering around 20%
of the mining and processing
plant’s output. Entering into
a power supply contract
with TGC-1 is yet another step
toward achieving our goal
to reduce GHG emissions (Scope
2). This will help diminish
the carbon footprint and make
our products more attractive
for international customers.
The Group’s facilities widely use
LED lighting, which has made
it possible to cut lighting costs
by 2–2.5 times. The lighting
system of Apatit’s apatite-
nepheline beneficiation plant
(ANBP-3) was upgraded to LED
in 2019, and a similar project
will be implemented at ANBP-2
in 2021. These initiatives serve
to reduce GHG emissions
and, consequently, the carbon
footprint of the Company’s
finished products.
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179
Total for production assets
Unit
2018
2019
2020
mln kWh
ths kWh/t
mln kWh
ths kWh/t
mln kWh
ths kWh/t
RUB bln
ths Gcal
ths Gcal
ths Gcal
ths Gcal
ths Gcal
ths Gcal
ths Gcal/t
RUB bln
mln m3
ths m3 / t
RUB bln
t
RUB bln
t
RUB bln
t
RUB bln
thou t
RUB bln
2,165.56
2,234.57
2,300.77
0.071
1,485.00
0.048
0.069
1,500.11
0.046
3,650.57
3,734.68
0.119
8.919
0.115
10.286
0.068
1,519.00
0.045
3,819.77
0.113
10.418
2,847.59
2,742.82
2,435.44
1,055.83
388.07
178.01
6,854.24
1,121.49
406.60
155.46
7,215.41
1,030.34
374.54
200.78
8,091.16
10,967.71
11,330.87
11,730.70
0.357
10.009
0.349
10.748
0.347
10.491
2,667.47
2,704.24
2,699.88
0.087
11.467
0.083
12.058
0.079
12.413
2,704.60
3,134.80
2,273.40
0.076
0.091
0.069
147,976.68
154,132.80
146,785.80
2.200
2.538
1.551
697.43
0.004
703.30
0.004
725.50
0.004
40,343.58
40,071.98
53,054.25
1.769
2.100
2.268
PhosAgro’s energy consumption1
302-1
302-3
Electricity
Purchased electricity
Purchased electricity (per unit)
Produced electricity (non-renewables)
Produced electricity (non-renewables), per unit
Internal use electricity
Internal use electricity (per unit)
Electricity cost
Heat energy
Produced by TPPs
Produced by boilers (steam)
Purchased (in hot water)
Sold (in hot water)
Exhaust steam
Internal use heat energy
Internal use heat energy (per unit)
Heat energy cost
Natural gas
Natural gas for production purposes
Natural gas consumption (per unit)
Natural gas cost
LNG
LNG consumption
LNG cost
Fuel oil
Fuel oil consumption
Fuel oil cost
Heating oil
Heating oil consumption
Heating oil cost
Diesel fuel
Diesel fuel consumption
Diesel fuel cost
1.
The cost of electricity per finished products
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 CONTRIBUTING TO LOCAL
COMMUNITIES
GLOBAL SUSTAINABLE DEVELOPMENT
GOALS (SDGS)
PhosAgro’s charitable giving priorities
Priority
GOOD HEALTH
AND WELL-BEING
QUALITY
EDUCATION
DECENT WORK AND
ECONOMIC GROWTH
Developing and implementing projects for children and young people with a focus on
education, career guidance, technology and engineering teaching, and extra-curriculum
education
INDUSTRY,
INNOVATION AND
INFRASTRUCTURE
SUSTAINABLE
CITIES AND
COMMUNITIES
We carefully consider the needs and expectations
of our stakeholders when identifying our social investment
priorities.
In 2020, PhosAgro continued to develop its social
programme in line with the goals and provisions
of the Strategy to 2025, focusing on sustainable
development and organic growth. We cannot move
successfully towards these goals without unlocking the full
potential of local communities.
In 2020, PhosAgro conducted an assessment of its
impact on local communities under UN SDGs. It revealed
that the Company has a significant impact on the regions
where it operates, including that achieved through social
and charitable initiatives.
Through proactive and strategic engagement
with stakeholders and communities, we help drive local
development in their best interests. Our charitable
activities are based on public benefit priorities
and opportunities to partner with regional and local
government authorities, local communities and non-
governmental organisations, educational institutions
and other stakeholders.
The Company’s charitable activities are carried out
in line with its bylaws, the Federal Law On Charitable
Activities and Charitable Organisations, and the Federal
Law on Advertising.
As an enduring partner of local
communities in which we operate,
we are committed to promoting
their sustainable development.
While hinging upon long-established
social responsibility practices
implemented by our production
facilities, this partnership is perfectly
tailored to meet today’s challenges
and stakeholder expectations.
We seek to help the regions
where we operate to achieve
sustainable growth, and contribute
to the development of local
communities through our value
chain, employment opportunities,
infrastructure improvements
and social investment programmes.
180/
181
Select corporate programme
Educated and Healthy Children of
Russia (DROZD)
University partnership programmes
PhosAgro Schools
Spiritual Revival
Our Favourite Cities
Connecting Generations
Volunteers of the trade union youth
movement
#Wearetogether
DROZD project
Preserving cultural heritage (supporting museum development) and promoting a healthy
lifestyle
Collaborating with regional and local government authorities to create modern social
infrastructure (by providing new equipment to healthcare facilities, assisting in utilities
development, building new and renovating existing sports and recreation facilities, etc.)
across our geographies
Volunteering
Providing support to vulnerable groups in terms of access to healthcare services,
development opportunities and the aid they need
Targeted assistance initiatives
103
We have a single Group-wide process
framework in place to manage social
programmes across PhosAgro
entities, which is underpinned
by the following bylaws:
The budget for charitable projects
is set annually as part of the overall
budgeting process and is approved
by the Company’s Management
Board.
• Codes of Ethics of PhosAgro
and Apatit;
• Codes of Ethics of the companies
managed by Apatit;
• Policies on Charitable
Activities of PhosAgro, Apatit
and the companies managed
by Apatit;
• Rules for the Provision
of Charitable Assistance by Apatit
and the companies managed
by Apatit;
• Regulations on Business Unit
Interaction and Document
Execution for the Provision
of Charitable Assistance by Apatit
and the companies managed
by Apatit.
Importantly, most projects
are implemented by the Company
in partnerships based on co-financing
arrangements. This helps to ensure
stronger engagement of the public,
local authorities and the business
community, while maintaining
the principles of partnership.
Any new projects are carefully
scrutinised by PhosAgro’s
Management Board as required
by the internal regulations. Every
year, the Management Board
reviews the results of charitable
activities and decides on whether
or not to continue supporting
a programme or a project.
Project selection criteria
In line with the Company’s Policy
on Charitable Activities, the main
criteria for selecting projects
are as follows:
• a project should aim to provide
support to particular population
groups, community organisations
or charitable foundations;
• a project should not contradict
the principles or requirements
of the Company’s policies or other
bylaws;
• a project should not constitute
a disguised payment for any
service, act, omission, connivance,
patronage, empowerment
or provision of other unlawful
benefits to the Company and/or its
partners.
PERFORMANCE REVIEW
Management framework for charitable activities
OUR KEY SOCIAL PROGRAMMES
Management Board and CEO
The Management Board: reviewing and approving the Company’s annual
charity budget and adjusting it as necessary
Group
level
The CEO: deciding on the necessity and appropriateness of the
Company’s participation in charity projects and programmes, ensuring
the preparation of relevant materials for the Management Board, and
supervising the drafting of the Company’s annual charity budgets
Our Favourite Cities
182/
183
Company
level
Deputy CEO
Leadership and coordination of activities related to charity,
sponsorship and community investment
Office for External
Communications
Coordination of community projects and programmes
Raising the need for developing new bylaws
Administering all information on ongoing projects
Arranging public hearings and opinion surveys
Process management, etc.
Government Relations
Department, Information Policy
Department, HR and Social Policy
Department
(responsible for community
investments of the Group
companies)
Social Development Departments
of the Group companies
Within the limits of the charity and sponsorship budgets of the Group
companies
• Coordination of counterparty relations
• Project and programme management
• Proposals to revise projects and programmes
Administrative support through the project management system:
• contract approval
• transfer of funds
• verification of beneficiary reports
Commissions for Social Issues
and Charity at the Group
companies
Within the limits of funds allocated to the CEOs of the Group companies
• Review of new applications
• Project paperwork and document verification, proposals concerning
the provision of support within the limits of funds allocated to the
Group companies
New projects may be proposed
in the following way:
with regional and local government
authorities;
• on the recommendation
of the Company experts
with a view to creating
favourable conditions in the cities
where the Company operates
(including qualified personnel
training, support for veterans’
organisations, development
of green spaces, animal
conservation, etc.);
• based on public hearing
discussions and agreements
• based on social surveys;
• following successful meetings
between Company executives
and representatives of community
organisations.
Funding for new projects is subject
to approval by the Management
Board. The availability of partners
(regional and local government
authorities, non-profit organisations,
etc.) plays an essential role
in decision-making. The Company
has set up its own office for external
communications which is in charge
of charitable activities administration.
PhosAgro is committed
to accountability and transparency
in relations with non-governmental
organisations and government
bodies based on openness, dialogue
and partnership.
The mission of Our Favourite
Cities programme implemented
by PhosAgro since 2003
is to improve the quality
of urban environment and promote
sustainable development of the cities
where we operate, including Kirovsk,
Cherepovets, Balakovo, and Volkhov.
To this end, PhosAgro collaborates
and maintains partnership
with regional and local authorities,
charitable foundations and non-
governmental organisations, and has
also established its own non-profit
organisations.
As part of the initiative,
the Company focuses on creating
safe and convenient public spaces
that form leisure destinations
for local residents while also
providing opportunities for physical
and aesthetic development
of children.
Our projects to develop rural
communities in 2020
Most of the projects
implemented in 2020 were aimed
at the development of rural
communities, which is fully consistent
with the Company’s commitment
to SDG 11 Sustainable Cities
and Communities.
The Company also continues
a project to develop transport
infrastructure in the regions where
it operates. In 2020, the concrete
covering of the airfield of the Khibini
Airport was repaired as part
of the project. The development
of the road network continues
in Volkhov, Cherepovets
and Balakovo.
2
3
9
3
1
Suda
Volkhov
Umba
Balakovo area villages (3)
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Educated and Healthy Children of Russia (DROZD)
Promotion of sports
184/
185
The programme has been
underway since 2001. Its objective
is to effectively combine high-quality
education and physical training,
moral and ethic development,
and promotion of health
of the younger generation. The key
areas of working with children:
organisation of athletic events,
spiritual and patriotic training,
environmental projects, artistic
festivals, and mass cultural events.
In 2020, despite the pandemic,
we saw the number of alumni grow
to 5,920 people.
The programme focuses on SDG
4 Quality Education, SDG 8 Decent
Work and Economic Growth, and SDG
3 Good Health and Well-Being.
In 2020, three students of the DROZD
programme became winners
and awardees of international
contests; 44 won prizes and awards
in Russian contests; 233 gained
recognition in regional and local
competitions.
Educational institutions supported by PhosAgro in 2020
Supplementary education institutions
Schools
3
6
DROZD-Khibiny centre attendance
2020
2019
2018
2017
2016
2,477
2,414
2,192
1,603
1,169
Kindergartens
2
7
4
1
9
Cherepovets
Volkhov
Kirovsk
Balakovo
28
1
34
18
4
25
Cherepovets
Cherepovets
Volkhov
Volkhov
Kirovsk
Balakovo
Kirovsk
Balakovo
Cherepovets
Volkhov
Kirovsk
Balakovo
Increasing public access
to sports and recreation facilities
is an important area of focus
for PhosAgro.
In 2020, we implemented a project
for the construction of a sports
centre with a 25 m five-lane swimming
pool, a gym and a conference
room at the Cherepovets
Chemical Technical College.
The pool features an advanced
water purification system.
The sports centre is accessible
to people with disabilities. PhosAgro
invested some RUB 16 mln to build
the facility and will bear the cost
of its maintenance going forward.
A project to build a climbing wall
and a rope park was implemented
by PhosAgro in the village
of Kadui, Vologda Region, following
consultations with the local
residents. It will help improve leisure
and recreation opportunities
for children and youth, and promote
creativity, sports and local tourism.
Further plans to develop the DROZD-
Khibiny youth cultural centre
in Kirovsk include opening four
gyms, a volunteer and rehabilitation
centre, and a centre for military
and patriotic training. In five years,
the number of children attending
the centre increased to nearly 2.5
thousand, tightening its need for new
classes, so the Company decided
to step in and partially finance
the facility’s upgrade.
In 2020, a 300 sq m ski lodge was
constructed and put into operation
at a ski resort in Volkhov. The ski
lodge is connected to the city’s
utilities grids and has locker rooms,
a first aid post, a cafe, a ski rental,
a boiler room and a commentator’s
booth with a panoramic view
of the track. The area features newly
completed landscaping, a parking
lot, and football and volleyball
playgrounds. It offers barrier-free
environment with access for persons
with disabilities and limited mobility.
Several projects were implemented
by the Company in Kirovsk:
• A new chairlift was launched
on the southern slope
of the Bolshoi Vudyavr Ski Resort
to replace the outdated 20-year
old one, and another magic carpet
was added, doubling the resort’s
total throughput capacity.
• The Company continued
with the development
of the Tirvas Ski Stadium, a major
training venue for Russian skiers
with internationally certified 5
km and 10 km tracks. It hosts
two iconic races – Khibiny Race
and Khibiny Spring – which
traditionally open and close
the skiing season of the Russian
Cross-Country Skiing Federation.
Plans for 2021 include upgrading
the lighting along the ski tracks,
installing a stationary snow-
making system and a drainage
system, asphalt paving of a roller
skiing track for summer training,
laying a cable for a timing system,
building a biathlon shooting
range with 30 stands, a tribune
and a penalty loop, and a parking
lot with a passageway.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Since 2012, PhosAgro has been
supporting non-profit organisations
which promote sports, tourism
and healthy lifestyles. In 2020,
the beneficiary organisations
included:
• The Russian Olympians Foundation
• The Russian Chess Federation
• The Severyanka women’s
volleyball club, whose team won
the 2020 Girls’ U17 Volleyball
European Championship
as part of the Russian youth
team and also retained leadership
in the Russian Championship
(winning five gold and one silver
medals in 2020 overall)
• The Russian Cross-Country Skiing
Federation
• Proton-Saratov volleyball club
• Avtodor basketball club
• The Russian Rhythmic Gymnastics
• Turbina 2016 speedway team
Federation
• The Russian Swimming Federation
• The Champion Foundation
(Sambo 70)
• Kovrovets Motoball Club
Spiritual Revival
We assist in rebuilding and aiding
• Assistance in maintaining three
26 churches,
provide support to the Secretariat
of the Moscow Patriarchate
on-site churches.
KIROVSK
PhosAgro has been providing
charitable assistance in building
and rebuilding orthodox holy sites
both in Russia and abroad, while also
pursuing projects fostering long-
standing cultural and spiritual values.
We assist in rebuilding and aiding
26 churches and provide support
to the Secretariat of the Moscow
Patriarchate. The Company also
contributes to reviving a pre-
revolutionary tradition of building
on-site churches.
Supporting churches
CHEREPOVETS
• Mineral fertilizers are shipped
to five churches on an annual
basis.
• Six churches receive assistance
in repairing, and purchasing
equipment.
• Assistance in maintaining three
church complexes and three
on-site churches.
BALAKOVO
• Assistance in maintaining two
church complexes and one
on-site church of St Spyridon.
In 2020, the Company financed
the purchase of church bells
(mobile belfry), church utensils
and accessories, and books
for the church’s newly created
orthodox library.
• 2020 saw the launch of the first
stage of the project to restore
the Vernicle Image of the Saviour
mosaic panel on the southern
facade of the Church of the Life-
Giving Trinity. Completed works
included the repairs of the seam
roofing of the Sunday school, one
of the oldest buildings in Balakovo
and an architectural monument
dating back to 1891.
• Repairs and furnishing of adult
and children’s Sunday schools
of the spiritual and educational
centre were completed in the town
of Volsk located 48 km away
from Balakovo as part of the aid
to the local Cathedral of the Life-
Giving Trinity.
VOLKHOV
• The Church of St Andrew was
built and consecrated. All interior
finishing works were completed
and exterior architectural lighting
installed. An information board
was mounted near the church
to broadcast the Company’s
corporate social responsibility
videos. In 2021, a new spiritual
and educational centre
will be added to the church’s
architectural ensemble,
with the design stage already
completed.
186/
187
Events dedicated to the 75th anniversary of the end of World War II
To celebrate the 75th anniversary
of the end of World War II,
the Company helped build
a unique Wall of Memory memorial
in Cherepovets featuring nearly
three thousand photo images
of local war veterans. The memorial
has a shape of a waving banner
and is decorated with granite.
The images were made using photo
printing technology and are weather
resistant.
Supporting community and volunteer projects
We see volunteering as an activity
consistent with our corporate values
as it helps strengthen social ties
within the team, promote a positive
image of a volunteer and get more
people involved in socially important
initiatives, which contributes
to creating a favourable social
environment in the regions where
we operate.
In late May 2020, PhosAgro joined
the #WeAreTogether campaign
launched by the All-Russia People’s
Front and the Medical Volunteers
public movement. The proposal
to join the campaign was raised
by the members of PhosAgro’s
youth organisation who engage
in volunteering and was strongly
supported by employees across
all our enterprises. Participation
in the #WeAreTogether campaign
came as a natural step for PhosAgro
in line with its corporate strategy
to combat the spread of the novel
coronavirus.
As part of the campaign,
the Company donated ventilators
and two split systems
to the Cherepovets-based
coronavirus hospital. The devices
were purchased in partnership
between local entrepreneurs
and PhosAgro.
Employees of the Volkhov branch
of Apatit launched a fund-raising
campaign to purchase laptops
for schoolchildren from low-income
families. The campaign helped
collect RUB 550,000 and purchase
20 laptops that were handed
over to primary and middle school
students from low-income families
in Volkhov.
The #WeAreTogether
campaign launched in the midst
of the coronavirus outbreak was
also aimed at supporting doctors
and volunteers. The proceeds were
received by volunteers (23 people),
It helped employees of the Balakovo
branch of Apatit raise about
750 ths RUB
members of the Veterans Council
(15 people), primary healthcare
practitioners (89 people), and health
professionals of the additional
medical station at the infectious
hospital based on the Balakovo City
Clinica Hospital (26 people).
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Connecting Generations
Fostering entrepreneurship
PhosAgro provides assistance to
20 non-governmental
organisations
of labour and war veterans,
charitable organisations
and individuals facing hardships.
and rehabilitation funding,
equipment purchase)
KIROVSK
• Kukisvumchorr, Koashva,
in PhosAgro’s competition of socially
important projects Solving the City’s
Problems Together.
BALAKOVO
and Rodnik volunteer centres
for pensioners and disabled people
• Annual aid to three non-
governmental foundations
Connecting Generations projects
CHEREPOVETS
• Harmony recreation and cultural
• Assistance to Great Patriotic War
veterans and equal-status persons,
children of war and home front
workers (apartment renovations,
holiday congratulations and gifts)
• Funds are also allocated
to the CEOs of the Group
companies to provide assistance
to organisations of veterans
and disabled people on an ad-hoc
basis.
centre, with some 400 pensioners
as regular visitors
• Annual aid to three non-
governmental foundations
• Annual aid to four non-
governmental foundations
• In the Name of Good charity
foundation (treatment
• In 2020, a local project Rodnik
Volunteer Club – Club of New
Opportunities was awarded
financing as the winner
Supporting museum development across our footprint
In 2020, the Company’s Green
Planet centre for interactive
education in Cherepovets launched
the following new programmes: Eco
Rescuers and Educating Children
About PhosAgro programmes; АМ-3,
Let’s Play With Chemistry, Take It
And Make It, and The Art of Origami
online master classes; Bookworms,
Where Is The Logic, and I Doubt It
(Facts About PhosAgro) intellectual
games; Why Do We Need Acid, As Easy
as ABC, The Wealth of Our Fertile Land,
and In The Kingdom of Minerals online
excursions.
In addition to interactive events
involving visitor participation,
a number of both offline and online
exhibitions were held.
Corporate museums take part
in the daily life of our enterprises,
for example, they carry out
training courses and social events
and get employees involved in museum
activities, which had a positive impact
on the overall sentiment within
the team during the pandemic.
PhosAgro supports and develops
corporate museums across
the regions were it operates.
In recent years, they have emerged
as important regional educational
centres as well as venues for providing
career guidance for young
people and interactive platforms
for promoting creativity and science.
In 2020, despite the restrictions
on in-person activities, our corporate
museums continued to actively
participate in the life of their host
regions, building up their audience
through popular streaming services,
social networks and online event
platforms.
188/
189
In 2020, the centre provided
support to
65 entrepreneurs
The Khibiny Business Development
Centre, an independent non-
profit organisation, takes
active action to promote small
and medium-sized enterprises (SMEs)
in Kirovsk with support from Apatit
and the Kirovsk city administration.
Its priority focus areas are improving
entrepreneurial literacy and providing
information, consultations
and marketing support.
The activities of the Khibiny Business
Development Centre help to boost
the local SME sector. The total
number of SMEs registered in Kirovsk
in 2019 and 2020 increased by 24.6%
and 39.5% respectively as compared
to 65 enterprises registered in 2018.
Seven more SMEs were launched
in Kirovsk in 2021 year-to-date.
In 2020, the centre provided support
to 65 entrepreneurs.
The centre’s key programmes
implemented in 2020 and 2021:
• The School for Social Entrepreneurs
and NGOs
• The ABC of Entrepreneurship:
Promoting and Supporting Youth
Entrepreneurship
• The Centre for Arts and Crafts
• The School for Tour Guides
and Travel Bloggers
Targeted assistance
Since 2003, we have been
providing targeted assistance
to vulnerable population groups.
Commissions for Social Issues
and Charity have been set up across
the Group companies to consider
new applications. The Group
also partners with In the Name
of Good charity foundation (Vologda
Region), providing financial
support for disabled children who
need urgent treatment, in line
with our commitment to SDG 3 Good
Health and Well-Being.
Social spending by area
Charitable giving and community and infrastructure investment in 20201,
RUB mln
203-2
203-1
10.8 0.3 4.6
2.1
9.9
13.5
Indicator
Total
Contributions to charities, NGOs and research
institutions (not related to the organisation’s
commercial research and development)
2018
2019
2020
2,133.2
2,851.2
3,213.8
470.2
597.7
624.4
58.8
Funds allocated to support community
infrastructure such as recreational facilities
950.9
1,413.2
1,869
Direct spending on social programmes,
including arts and educational activities
712.1
840.3
720.4
Nation-wide projects
Infrastructure facilities, including repairs
of educational institutions
Education spending, excluding repairs
of educational institutions
Spending on sports
Spending on veterans and disabled people
Spending on churches
Membership fees
1.
Information disclosed on PhosAgro and Apatit, including its branches and standalone business units
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 Supporting local communities during the COVID-19 outbreak
190/
191
In 2020, the world faced
an unprecedented threat
from the novel coronavirus
(COVID-19). Ensuring the safety
of our employees, their families,
and all residents of the regions
where we operate has historically
been number one priority
for PhosAgro. Our ability to take
timely, accurate and appropriate
action let us buy time in a constantly
changing environment
and with limited knowledge
about the virus in the early days
of the pandemic. Our strong
teamwork, responsible behaviour
and support for the measures
taken to fight the outbreak helped
PhosAgro protect the health
of employees and maintain
production and supply chain
integrity.
The unacceptable risks of business
closure or interruption prompted
the management of the Company,
which makes an essential
contribution to the nation’s food
security, to develop and actively
implement a plan to prevent
the spread of COVID-19 prepared
in coordination with the federal
and regional authorities.
PhosAgro has been supporting
the healthcare sector
from the onset of the pandemic
and continues to do so.
In 2020, PhosAgro:
supported the construction of a
400 bed
infectious disease centre
in the Saratov region, allocating
for this project
100 RUB mln
financed the launch of and purchased
equipment for PCR laboratories
across our footprint, which made
it possible to more than double
the number of tests;
acquired a CT scanner
for the City Hospital
of Apatity and Kirovsk;
bought ambulances outfitted
with the necessary medical
equipment, including
ventilators;
purchased ventilators
and personal protective
equipment for hospitals;
provided (and continues
to provide) free hot
meals for medical staff
on the coronavirus frontline.
3 RUB bln
our total COVID-19 spending has
exceeded.
Amid the pandemic, PhosAgro has actively
supported small and medium-sized restaurant
businesses, helping them to survive.
In Cherepovets, PhosAgro arranged
the delivery of meals for doctors treating
COVID-19 patients. The project totalling RUB
6.9 mln of investment relies on the hot meals
prepared by the city’s cafes and restaurants
whose normal operations have been
interrupted by the pandemic. A large order
from PhosAgro has helped local entrepreneurs
to keep staff busy in turbulent times.
PhosAgro’s CEO Andrey Guryev had been
elected co-chairman of the RSPP Coordinating
Council for COVID-19 at its establishment
in April 2020, and became its head in mid-
October. High-profile infectious disease
doctors have been engaged to contribute
to the work of PhosAgro’s coronavirus
response task force. The Company was
awarded a commemorative medal for selfless
contribution to the #WeAreTogether all-
Russian mutual assistance campaign.
PERFORMANCE REVIEWPHOSAGRO INTEGRATED REPORT 2020 70%
share of independent
directors
Corporate
governance
The Company consistently works on increasing
the number and role of independent directors.
At present, seven of the ten directors are
independent, which is well above the average
in Russia and on par with the best global
practices. Independent directors chair five
of the six Board committees.
194/
195
CHAIRMAN’S
STATEMENT
The Board of Directors bears
responsibility for upholding
PhosAgro’s corporate governance
rules and principles, as well
as maintaining the Company’s
compliance with all applicable
corporate governance
codes. The Board assesses
the quality of PhosAgro’s strategic
decisions and management
processes and protects
the interests of a wide range
of stakeholders. The year
2020 highlighted the Board’s
importance for the Company’s
corporate governance. Its
decisions involved protecting
the health of PhosAgro’s
employees and their families,
the seamless operation of its
facilities, and managing the many
challenges, internal and external,
amid the uncertainty created
by the COVID-19 pandemic.
During the fiscal year 2020,
the Board of Directors held eleven
meetings and considered a total
of 79 agenda items, with particular
focus on health & safety, strategy,
sustainable development &
climate change, operational
resiliency and IT security. In May
2020, the Board of Directors’
Sustainable Development Committee
approved the overall framework
for the Company’s climate strategy
and then reviewed the draft
strategy proposal in November
for final approval by the Board
of Directors in December. The Board
was also pleased to note that
the Company’s efforts and strong
progress in the area of sustainable
development was suitably
acknowledged by Russian
and international advisory
and rating agencies.
PhosAgro’s response to the COVID-
19 pandemic has confirmed
the central role and effectiveness
of the Company’s crisis management
capabilities and operations. These
matters were discussed as part
of the Board’s regularly scheduled
sessions as well as at an ad hoc
meeting held in April 2020.
The Board of Directors
is committed to the Company’s
policy to continuously review
and implement best market
practices throughout its
operations. PhosAgro continues
to receive top corporate
governance ratings amongst
its peers in Russia and abroad
and has been particularly attentive
to its compliance with the Bank
of Russia’s recommendations.
Its high score in an external
report assessing its conformity
and compliance with the principles
and recommendations of the Russian
Corporate Governance Code was
duly noted. The Board also reviewed
the compliance assessment
with the Russian and UK corporate
governance codes performed
by the Internal Audit Department.
Where applicable, improvements
or additional disclosure were
discussed and approved.
In particular, an updated Inside
Information Regulation was
adopted in August 2020 to account
for recent changes in Russian
The COVID-19 pandemic made crisis management an important part
of the Company’s operations. In addition to including the matter
into the agenda of its scheduled sessions, the Board held an ad hoc
meeting on the COVID-19 response in April 2020.
and financial results, as well
as delivering on all the Group’s
strategic targets for the year.
External recognition was also
noted as PhosAgro’s CEO Andrey
Guryev received the 2020
Director of the Year National
Award for his contribution
to the “Development of a Strong ESG
Culture”.
The Board of Directors is committed
to uphold the highest standards
of corporate governance practices
and will maintain its focus
on health & safety, sustainability
and climate change and the global
challenges facing the agricultural
sector. It will continue to support
the management team in its
implementation of the PhosAgro’s
Development Strategy to 2025.
and European legislation. Bespoke
training led by Russian experts was
provided to Directors and Senior
Management.
The Board was also pleased to note
that Sustainalytics and MSCI
raised the Company’s corporate
governance scores in the second
half of 2020, respectively, from 50.6
(“Average Performer”) to 59.1
(“Outperformer”) and from 6.7 to 6.9,
which puts the Company among
the top 22% of businesses globally
and in top 5% in Russia.
Overall, PhosAgro continues
to score highly versus its Russian
peers.
The Board of Directors also wishes
to commend the performance
of the management team and its
contribution to the strong results
delivered by the Company in 2020.
At its 18 February 2021 meeting,
the Board praised the Company’s
Management team on achieving
excellent 2020 operational
Xavier Rolet,
Chairman of the Board of Directors
of PJSC PhosAgro
Sustainalytics upgraded
our ranking from 50.6
(“Average Performer”) to 59.1
(“Outperformer”), while MSCI
revised our score from 6.7
to 6.9 on a scale from 0 to 10,
which puts the Company
in the top 22% best-rated
companies globally and top 5%
domestically.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 CORPORATE GOVERNANCE
FRAMEWORK
SUSTAINABLE DEVELOPMENT GOVERNANCE
102-19
102-20
102-21
Our governance framework
for sustainable development (SD)
relies on a number of internal
and external drivers:
• Internal SD drivers
are centred around PhosAgro’s
mission and values, which,
in turn, are upheld through
our corporate strategy.
• External drivers include
stakeholder expectations
and the global community’s
requirements for the maturity
of the Company’s SD
governance framework.
Over the past
6 main components
of a sustainable development
governance framework can be
represented as a model.
Documentation
support
Developing high-level
documents such as policies,
regulations and codes
Business processes
and organisation
Establishing corporate
bodies and units dedicated
to governing sustainability
matters, setting procedures
for their operation, and
ensuring cross-functional
interaction within the
Company
Project management
Setting goals and targets,
defining objectives and UN
SDGs relevant to the Company,
developing appropriate metrics
and key performance indicators
(KPIs)
196/
197
IT technologies
Developing and automating business
processes
Competencies and people
Providing staff training and ensuring
continuity of sustainability-related
competencies
Performance review
and reporting
Implementing a standardised approach to
reporting, ensuring performance review
by top management, and adopting the
requirements of leading ESG analysts and
agencies under a phased plan to improve
the Company’s ESG ratings
CORPORATE GOVERNANCE Components of SD governance framework
and measures to improve them
198/
199
DOCUMENTATION
SUPPORT
BUSINESS PROCESSES
AND ORGANISATION
PROJECT
MANAGEMENT
IT TECHNOLOGIES
COMPETENCIES
AND PEOPLE
PERFORMANCE REVIEW
AND REPORTING
• Environmental Policy updated
• Health and Safety Policy updated
• Code of Conduct for
Counterparties drafted and
implemented
• Regulation on the Environmental,
Health and Safety Committee of
the Board of Directors updated
• Regulation on the Remuneration
and Human Resources Committee
of the Board of Directors updated
• Personnel Management Policy
updated
• Sustainable Development
• Climate Strategy drafted and
Committee of the Board of
Directors, established in 2019,
further developed by the
Company in 2020
• Sustainable Development
Department further developed by
the Company in 2020
• Comprehensive regulations on
interaction in preparing non-
financial reporting drafted and
implemented
• Climate risks and opportunities
identified, assessed and included in
the corporate risk register
• Company’s management systems
certified to ISO 9001, ISO 14001
and ISO 45001
approved by the Board of Directors
• Water Strategy drafted and
approved by the Board of Directors
• Energy Efficiency Programme
developed and approved by
the Sustainable Development
Committee
• List and coverage of sustainability
KPIs expanded
For more information
on the Company’s KPIs, see
the Remuneration Report section
on page 248.
• Goals set in 2019 reviewed and
approved by the Sustainable
Development Committee as part
of exercise to adopt Water and
Climate Strategies
• Comprehensive system to evaluate
suppliers against ESG criteria
developed, with its automation
and migration to an e-platform in
progress
• Project to prioritise the UN SDGs
implemented, with a list of initiatives
pursuing individual SDGs-related
targets being complied
• The transfer of data on
environmental protection via the
natural resource user’s online
account enabled
• Supplier ESG evaluation system
digitalised
• Mandatory training in various
areas (for example, health
and safety) included in the
sustainability training framework;
some of the training courses
digitised and adapted to be
provided online
• GRI reporting training provided to
all specialists in key areas
• Comprehensive regulations on
interaction in preparing non-
financial reporting drafted and
implemented
• Participation in major international
and Russian initiatives (RSPP, UN
Global Compact, IFA) maintained
• Procedure for preparing integrated
annual reports drafted and
approved. CEO appointed as chair of
the working group in charge of the
integrated annual report
• Procedure for the Sustainable
Development Committee to monitor
the Company’s ESG scores and
ratings assigned by leading global
ESG data providers (Sustainalytics,
MSCI, CDP, FTSE Russell) developed
• Action plan for improving the
Company’s key ESG scores and
ratings (Sustainalytics, MSCI,
CDP, FTSE Russell) developed
and approved by the Sustainable
Development Committee
• Easy-to-use procedure for
preparing GRI-compliant reporting
developed and implemented, links to
initial data sources enabled in the
Company’s information system
• CDP report published
• TCFD recommendations for
reporting implemented
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020
CORPORATE GOVERNANCE ASSESSMENT
When assessing the quality
of corporate governance
at PhosAgro, we follow best practices
and adhere to the recommendations
of the Corporate Governance Code
(CGC) approved by the Bank of Russia
on 21 March 2014. PhosAgro’s own
Corporate Governance Code is based
on the CGC.
The actual compliance
with the CGC is measured
on an annual basis and disclosed
in a dedicated report, which
is subject to review and approval
by the Board of Directors
and is given as an appendix
to the Company’s annual report.
For the degree of alignment between these two
documents, see PhosAgro’s corporate website
Over the past
In 2020
3 years
PhosAgro has demonstrated a high
level of compliance with the Bank
of Russia’s recommendations
67 out of 79 principles,
were fully complied with, 11 were
partially complied with, and only 1
principle was not complied with.
Compliance with the CGC recommendations
CGC section
1. Shareholder rights and equitable treatment of
shareholders
2. Board of directors, its remit, independence, and
committees
3. Corporate secretary
4. Remuneration of the company's directors,
members of the executive bodies, and other key
employees
5. Risk management and internal control
6. Disclosures and the company's information
policy
7. Material corporate actions
Total
Full compliance Partial compliance
Non-compliance
Number of
recommendations
2018 2019 2020 2018 2019 2020 2018 2019 2020
13
11
11
11
36
33
33
33
2
10
6
7
5
2
4
6
7
4
2
4
6
7
3
2
5
6
7
3
79
67
66
67
2
3
–
5
–
–
1
11
2
3
–
5
–
–
2
12
2
3
–
4
–
–
2
11
–
–
–
1
–
–
–
1
–
–
–
1
–
–
–
1
–
–
–
1
–
–
–
1
In 2020, the Company achieved
compliance with principle 4.1.3 through
the adoption of internal regulations
providing a comprehensive set of rules
for reimbursing expenses of its
directors, members of the executive
bodies, and other key managers.
Eleven corporate governance
principles are partially not complied
with. The non-compliance relates
primarily to the remuneration
of the Company’s directors, members
of the executive bodies, and other
key employees. Cases of partial
compliance with the recommendations
of this CGC section are mainly due
to the fact that the Company does
not have a single bylaw governing
payments to its directors, members
of the executive bodies, and other
key managers. At the same time, its
approaches to remuneration, including
that payable to directors, are clearly
defined in other internal documents –
the resolutions of annual shareholders’
meetings.
For every case of partial compliance,
the Company specifies the measures
taken to mitigate the associated risks.
managers. The Company believes that
in the current situation its existing
system of executives’ remuneration
is sufficiently motivating, meets
the needs of the Company and its
shareholders, aligns the executives’
goals with those of the Company,
and minimises the risks of qualified
leadership talent attrition, which
is why the Company is not currently
considering any share-based incentive
programmes.
The only case of non-compliance
with the CGC recommendations, which
relates to principle 4.3.2, is caused
by the lack of a long-term share-based
incentive programme for members
of the executive bodies and other key
In 2020, the Internal Audit
Department assessed the quality
of the Company’s corporate
governance in line with best practices
represented by the recommendations
of CGC and the UK Corporate
200/
201
Governance Code adopted
by the Financial Reporting Council
(FRC) in July 2018. The Internal Audit
Department verified and confirmed
the degree of compliance
of the Company’s corporate practices
with the CGC recommendations
as stated in the 2019 report.
On top of that, it reported
a high degree of compliance
with the recommendations of the UK
Corporate Governance Code relevant
to PhosAgro’s operations.
• providing more detailed
information to shareholders
ahead of general shareholders’
meetings about external
auditors, interested-party
transactions, notable appointments
of external candidates
to the Board of Directors
and their contribution to its
work, as well as the procedure
for net profit distribution and its
compliance with the Company’s
dividend policy;
In March 2020, PhosAgro’s
Board of Directors reviewed
the report on the Company’s
corporate governance quality,
taking into account the MSCI
and Sustainalytics ratings, the report
on compliance with the CGC principles
and recommendations, as well
as the assessment of compliance
with the Russian and UK corporate
governance codes performed
by the Internal Audit Department.
Noting a high level of compliance,
the Board of Directors also analysed
the governance quality criteria
that were not met fully or partially,
and reviewed an improvement plan.
Among other things, it includes
the following improvements:
• disclosing information
about PhosAgro’s Corporate
Governance Code and its
compliance with the CGC approved
by the Bank of Russia,
on the Company’s official website;
• expanding the scope of the annual
report to include the Board
of Directors’ viability statement,
the going concern assumptions,
consideration given to key
stakeholders’ voice in the Board’s
3 123
decision-making, information
about notable external
appointments to the Board,
and more details on the activities
of the Audit Committee,
Remuneration and Human Resources
Committee, and the Corporate
Secretary;
2 750
• including additional matters related
to corporate culture, leadership
succession planning, diversity,
gender equality, and inclusion
in the agenda of the Board
of Directors and its committees.
In April 2021, the Board
of Directors approved the report
on compliance with CGC principles
and recommendations in 2020
and gave a positive assessment
of the progress against
the improvement plan.
In 2021, the Company will keep
working to identify more areas
for improvements based
on the UK Corporate Governance
Code and the review of best
practices, and ensure their phased
implementation.
Degree of disclosure to explain non-
compliance (partial compliance)
with CGC recommendations
at PhosAgro and other Russian
companies, %
67.3
53.0
65.8
60.0
77.0
63.0
2017
2018
20191
PhosAgro
Other public joint-stock companies
Compliance with CGC recommendations at PhosAgro and other Russian companies, %
Full compliance
Partial compliance
Non-compliance
86
69
80
71
85
85
76
84
78
67
58
27
25
22
13
21
17
18
14
16
15
14
15
8
2015
2016
2017
2018
2019
2020
2015
2016
2017
2018
2019
2020
2015
PhosAgro
Other public joint-stock companies
1.
2019 – the most recent year assessed by the Bank of Russia
9
1
2016
8
1
2017
6
1
2018
6
1
2019
1
2020
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 CORPORATE GOVERNANCE FRAMEWORK
102-18
BOARD OF
DIRECTORS
202/
203
General Shareholders’ Meeting
Board of Directors
Review Committee
Board of Directors committees:
Management Board
Chief Executive Officer
• Audit
• Remuneration and Human Resources
• Strategy
• Environmental, Health and Safety
• Risk Management
• Sustainable Development
Corporate
Secretary
Internal Audit
Department
Legal and Corporate
Governance
Department
GENERAL SHAREHOLDERS’ MEETING
The activities of the Company’s
supreme governing body –
the General Shareholders’ Meeting
– are governed by the Regulation
on the General Meeting
of Shareholders. In May 2020,
the Annual General Shareholders’
Meeting was held in absentia to elect
a new Board of Directors and Review
Committee, determine the Board
of Directors’ remuneration, distribute
the 2019 profit, including dividend
payouts, and resolve on other
matters within the its remit. It was
held in absentia due to the COVID-19
outbreak. Despite the pandemic-
related restrictions, the Annual
General Shareholders’ Meeting was
held no later than usual, i. e. in last
ten days of May.
The reporting year also saw
4 extraordinary General
Shareholders’ Meetings,
whose main agenda was to vote
on interim dividends.
Full text of the Regulations on the General
Meeting of Shareholders PJSC «PhosAgro»
is presented on the official website
of the Company
The Board of Directors plays a key
role in the Company’s corporate
governance system. Its activities
are governed by the Regulations
on the Board of Directors.
In 2020, the Board
of Directors held
11 meetings
(three of them by absentee
voting) and reviewed a total of \
79 matters
2020 saw a slight increase
in the number of matters considered
by the Board of Directors. Less
attention was paid to discussing
the organisation of the Board’s
activities and preparation for general
shareholders’ meetings, while
matters such as strategy (nine
matters vs seven in 2018 and 2019),
sustainable development (six
matters vs two and five in 2018
and 2019, respectively) and IT security
(two matters vs zero and one
in 2018 and 2019, respectively) were
addressed more often.
The COVID-19 pandemic made
crisis management an important
part of the Company’s operations.
The Board of Directors included
this matter in the agenda
of its scheduled sessions and held
an ad hoc meeting on the pandemic
response in April 2020.
Key activities undertaken
by the Board of Directors in 2020
included:
• assessment and quarterly
monitoring of the risk management
process;
For the first time, the Board considered corporate culture
and its correlation with the Company’s values and strategy.
The sustainability agenda included a significant block of climate-
related issues. In May 2020, the Board of Directors’ Sustainable
Development Committee approved the main parameters
of the Company’s future climate strategy. And already
in November, the committee reviewed the draft document
and recommended it to the Board of Directors. As part
of the strategy, the Board approved climate scenarios, risks
and targets for reducing total GHG emissions (Scope 1, 2, and 3),
and adopted a low-carbon transition plan.
• assessment and quarterly
monitoring of subsidiary activities
with a focus on workplace health
and safety, industrial safety
and environmental protection;
• reviewing the Company’s budget
for 2021, as well as quarterly
follow-up on the 2020 budget
utilisation;
• determination of sustainable
• assessing the degree to which
development priorities;
the requirements of the Company’s
Insider Information Policy were met;
• the Company’s strategy in the area
of international projects;
• the sales strategy for mineral
fertilizers;
• Climate Strategy;
• Water Strategy;
• development of a project
management system at Group
enterprises;
• evaluation of the performance
of the Company’s CEO
and Management Board;
• oversight over management
relations with shareholders,
investors and other stakeholders;
• monitoring the implementation
of priority areas of PhosAgro’s
activities in 2020 and determining
priority areas of its activities
for 2021;
• determining whether PhosAgro’s
corporate culture is aligned with its
mission, values and strategy, as well
as assessing and monitoring
the corporate culture;
• IT security and management
of cyberrisks;
• anti-crisis management;
• performance and work plans
of the Internal Audit Department.
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 2020, the Board of Directors
continued to foster cooperation
with the Company’s functional
units by reviewing reports
and issuing recommendation for such
functions as procurement, project
management, IT and global projects.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 14
16
20
9
9
9
10
10
8
8
8
7
7
7
Matters considered by the Board of Directors
102-26
102-29
The business of the
Board of Directors
Financial results and
reporting
Strategies, business
plans and their
implementation
Preparation for the
General Meeting of
Shareholders
Transactions
3
4
6
6
6
5
4
4
4
Risk management
and internal control
Sustainable
development
Internal and
external audit
Formation of and oversight
over the executive bodies
Corporate governance
Cybersecurity
0
Stakeholder
engagement
Corporate
ethics
0
2
2
2
2
1
1
1
1
1
1
1
Procurement
2
0
3
3
3
3
3
Other
4
6
2020
2019
2018
S172 STATEMENT
According to Section 172
“Duty to promote the success
of the company” of the UK
Companies Act 2006, PhosAgro’s
Board of Directors acts in good
faith to promote the success
of the Company for the benefit,
taking into account possible long-
term consequences of its decisions
for the society and the environment,
as well as the interests
of the Company’s employees
and other stakeholders.
For the members of PhosAgro’s
Board of Directors, these standards
mean that the Company’s
stakeholders should be interacted
with responsibly and that
their interests should be respected
to the maximum extent possible.
This includes developing a special
section of PhosAgro’s corporate
website and our electronic bidding
platform to enhance procurement
transparency, and encouraging
small and medium-sized businesses
and local counterparties to become
our suppliers or contractors.
Procurement principles
of the Remuneration and Human
Resources Committee’s agenda.
Analysis of hotline complaints
and respective management
response is reviewed by our Audit
Committee on a quarterly basis.
Importantly, the said committees
are composed solely of independent
directors.
Although at the moment
we do not apply such practices
as appointing directors
from among the employees
or appointing a non-executive
director responsible for interaction
with employees for considering
their standpoint when managing
the Company, we consider
it effective and are actively
involved in a dialogue on all major
management issues with the trade
union organisation (Minudobreniya
Association), which has
historically been an equal partner
for the Company’s management
and an authorised representative
of employees in collective bargaining,
review and resolution of labour
disputes.
Our employees have a special
place among the Company’s
stakeholders, which is reflected,
in particular, in one of our strategic
objectives – increasing the loyalty
and satisfaction of our staff.
Employee satisfaction and loyalty
surveys and programmes based
on their results are at the forefront
In addition, heads of each production
site of the Company regularly
(at least twice a year) visit all
business units and hold meetings
with employees, at which they inform
the staff about the Company’s
performance, implemented
measures, and plans for production
and social development. Based
204/
205
on employees’ suggestions
and comments, an action plan
for improving organisational
and technological processes is then
developed and implemented.
In 2020, the Company also expanded
its dialogue with stakeholders
about our environmental
footprint. Under the guidance
of the Sustainable Development
Committee, we implemented
a project to identify and prioritise
the Company’s environmental
and social impacts, develop
management approaches
and mitigants to maximise
positive and minimise negative
effects. We worked intensively
with local communities, holding
public hearings on the development
of the Company’s production sites
and their environmental impact.
Procurement
principles
List of public
hearings
PROSPECTS
PhosAgro’s development scenarios
are reviewed by the Board
of Directors when approving
its Strategy. The Company’s
strategic planning cycle spans
five years, which we believe
to be optimal given the growing
speed of external changes
and our investment horizon. Since
2019, in addition to our traditional
analysis of sensitivity to FX rate
fluctuations and changes in product
and feedstock prices, the Board
of Directors has been considering
a Contingency Plan to prepare
for critical changes in the external
operating environment, such
as possible restrictions
on our supplies to key markets.
These risks must be assessed
and managed – a key takeaway
for us from 2020, when the USA
initiated a countervailing duty
investigation causing PhosAgro
to suspend virtually all of its supplies
to this key market.
When approving the Strategy
to 2025, the Board of Directors also
weighed the associated strategic
risks. Risk management maps were
drawn for each, containing a detailed
description along with mitigants
and probability, materiality and risk
appetite estimates.
For more information
on our strategic risks, see
the Strategic Report section,
p. 72.
Based on the foregoing, the Board
of Directors finds it reasonable
to believe that the Company will,
without any reservations, be able
to continue its operations and meet
all its obligations as they fall due while
the Strategy to 2025 is in force.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020
COMPOSITION OF THE BOARD OF DIRECTORS
102-22
Participation in the Board meetings and key competencies
Irina
Bokova
Andrey A.
Guryev
Andrey G.
Guryev
Sven
Ombudstvedt
Natalia
Pashkevich
James
Rogers
Marcus
Rhodes
Mikhail
Rybnikov
Xavier
R. Rolet
Andrey
Sharonov
1966
11/11
5/5
2/2
3/3
1952
11/11
1982
11/11
1960
10/11
2/2
2/2
4/5
3/3
3/3
2/2
1939
11/11
1942
11/11
1961
11/11
1975
1959
1964
11/11
11/11
11/11
5/5
5/5
2/2
5/5
5/5
5/5
3/3
2/2
2/2
Full name
Year of birth
Board of
Directors
Audit Committee
Strategy
Committee
Remuneration
and Human
Resources
Committee
Risk
Management
Committee
Environmental,
Health and
Safety
Committee
Sustainable
Development
Committee
Key competences
Strategy
Finance and
audit
Chemistry
and mining
engineering
Environment,
health and
safety
Human
resources
Law and
corporate
governance
Risk
management
206/
207
Board of Directors: independence, %
Board of Directors: gender split, %
20
10
20
PhosAgro’s Board
of Directors is compared
to other boards based
on Stanton Chase’s Overview
of Boards of Directors
at Russia’s Largest Public
Companies.1
Board of Directors: age, %
10
10
Source:
Stanton
Chase1
PhosAgro
15
29
56
Source:
Stanton
Chase1
PhosAgro
70
Non-executive directors
Independent directors
Executive directors
12
88
Men
Women
Board of Directors:
place of residence, %
10
Board of Directors:
length of service, %
20
40
50
80
40
3/3
3/3
40
40
40
Above 60
50–60 years
40–50 years
Under 40 years
Generalised board member profile
Criterion
Gender (female | male)
Age
Foreign citizen
Duration of service since appointment
Brief bio on the corporate website
Photo on the corporate website
Number of the Board of Directors, people
Average term on the board
Chair (appointment)
Non-executive directors (on the board)
Executive directors (on the board)
All directors (on the board)
Russia
Europe
Southeast Asia
<3 years
4–7 years
>7 years
Source: Stanton Chase1
PhosAgro
Number of companies
disclosing information
108
106
108
104
83
80
108
Average
2020
12% | 88%
20% | 80%
53 years
20%
5 years
77%
74%
10
60
50%
5.2
100%
100%
10
Source: SpencerStuart
PhosAgro
2015
2016
2017
2018
2019
2020
4.7
3.8
6.3
4.2
4.2
3.1
6.1
3.9
5.4
4.3
6.8
4.7
5.3
4
7
4.7
8.6
4.8
7.4
5.5
2.0
5.1
5.5
5.2
1.
Companies were selected from RIA Rating’s TOP-100 Russian companies by market capitalisation ranking. The list includes companies from the 2020
ranking as well as those that were included in the previous ranking but subsequently dropped out. The list comprised a total of 109 companies.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 102-24
ROLE OF INDEPENDENT DIRECTORS
Starting from 2011, when the Company
established the Board of Directors,
the number of independent directors
and their authority have been steadily
growing. Independent directors make
a valuable contribution to the Board’s
decision-making as their opinions rely
on professional skills and expertise,
as well as a comprehensive
study of the matter. Their
position is unbiased, independent
and free from the influence
of other members of the Board
and PhosAgro`s management,
and primarily focused on improving
the Company`s performance.
At present, seven of the ten
directors are independent, which
is well above the average in Russia
and at par with the best global
practices1. Independent directors chair
five of the six Board committees.
Independent directors are world-class
experts with unique competencies
and a track-record in investment
and management of major
businesses, financial and research
organisations and government
agencies. They are equipped with a full
set of knowledge and skills needed
to propel the Company and its Board
of Directors forward and foster
dialogue with stakeholders at various
levels.
The independence of Board
members and nominees is assessed
biannually by the Remuneration
and Human Resources Committee.
The assessment meets the criteria
established by the Regulations
on the Board of Directors
and the Moscow Exchanges
rules. In 2020, a special resolution
of the Board of Directors recognized
two of its members, Sven
Ombudstvedt and Markus Rhodes,
as independent, despite them having
a formal affiliation with the Company
after serving for nine years on its
Board of Directors.
ONBOARDING OF NEWLY ELECTED DIRECTORS
Despite the fact that there were no
changes in the Board composition
in 2019 and 2020, the Remuneration
and Human Resources Committee
updated the onboarding programme
for new Board members. This
is done annually to provide them
with an effective tool to gain an insight
into the Company’s operations. As part
of the onboarding programme,
newly appointed directors visit
PhosAgro’s production sites and meet
with functional managers.
PROFESSIONAL DEVELOPMENT AND TRAINING OF THE BOARD
OF DIRECTORS
102-27
The Company views commitment
to continuous professional growth
as a cornerstone of good corporate
governance. By expanding
their knowledge and skills,
directors add value to the Board
of Directors and the Company
on the whole. An annual performance
assessment highlights
the need for the qualification upgrade
and training of the Board members.
The following areas are in most
demand:
• industry trends in Russia
and abroad;
• risk management;
• cyberrisks and cybersecurity;
• technological and agricultural
innovations.
In 2020, trainings could
not be held in a traditional format
due to the COVID-19 pandemic.
Nonetheless, the development
areas identified during the 2020
assessment of the Board of Directors
performance, including innovative
development, cyberrisks
and cybersecurity, were addressed.
These topics were added
to the meeting agendas, and heads
of the relevant functions were
invited to the Board meetings, which
ensured deep understanding of these
matters by the Board members
and gave an impetus for PhosAgro’s
accelerated development in these
areas.
Besides, given the adoption
of the updated Inside Information
Regulation in August 2020, which
reflects all the changes in applicable
Russian and European laws, a training
was held for directors and senior
management with the leading Russian
experts invited as guest speakers.
The Board of Directors
regularly receives newsletters
from the Company, including
quarterly newsletters on corporate
governance and weekly updates
on the developments in the chemical
and related industries.
208/
209
D&O LIABILITY INSURANCE
Directors and officers liability
for damage caused to third parties
by their duties is insured by SOGAZ
(contract No. 18 DO 0028 in effect
from 1 June 2018 to 31 May 2019,
contract No. 19 DO 0020 in effect
from 1 June 2019 to 31 May 2020,
contract No. 20 DO 0018 in effect
from 1 June 2020 to 31 May 2021)
and is covered up to USD 75 mln
(in rouble equivalent) and extended
by USD 2 mln for independent
directors. Apart from directors’
liability, the above contracts include
the liability of the Company’s officers
(since 2012).
INDEPENDENT ASSESSMENT OF THE BOARD OF DIRECTORS
102-28
In accordance with CGC
recommendations, PhosAgro
assesses the performance of its
Board of Directors on an annual
basis, with external experts engaged
for this purpose once every three
years. Each new assessment
relies on previous assessments
allowing to analyse both absolute
values and any changes that occur
over time. February 2020 saw KPMG
conduct an external assessment
of the Company’s Board of Directors.
The independent consultant
recognised the Board’s high
efficiency and a strong engagement
of its members.
contributes to well-reasoned
decision-making.
KPMG also highlighted a balanced split
between executive and independent
directors and confirmed that
they have the required skills,
competencies and expertise. In terms
of independence and the presence
of foreign directors, PhosAgro
is almost on a par with foreign
industry practices and ahead
of the Russian players. The current
Board’s composition is fully in line
with the Company’s needs, which
The efficiency of the Board’s key
functions was also highly rated
by the independent consultant.
The Board of Directors discusses
a wide range of matters
to ensure the effective governance
of the Company’s operations.
In February 2021, the Board
of Directors completed a self-
assessment exercise confirming that
it operates to a high standard in all
aspects of its role.
Self-assessment: the key aspects of the Board of Directors operations1
1 Organising the business of the Board of Directors
2 Effectiveness of the Board of Directors
3 Continuous improvement
4 Liaising with committees
5 Corporate Secretary assessment
6 Composition and structure of the Board of Directors
6
4.7
4.4
4.3
3.9
4.1
3
2019
1
4.7
4.5
4.5
4.2
4.3
4.4
2
2020
5
4.5
4.5
4.4
4
4.3
4.4
2018
1.
According to the Stanton Chase study of 109 largest public companies of Russia conducted in August 2020, the average share of independent directors
stands at 29%.
1.
Assessed on a 5-point scale.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 Special focus was placed on the extent to which the Company has implemented the recommendations given following
the 2019 performance assessment.
MEMBERS OF THE BOARD OF DIRECTORS
210/
211
Compliance with recommendations given after the 2019 self-assessment
Matters/action recommended
for careful consideration /
implementation by the Board of
Directors
1.
Innovations
2. Management performance
assessment
3. Determining the optimum
remuneration and incentives
for executive management
Implementation Action taken
+
+
+
Matter is ready for consideration and
considered by the Board on 27 August
2020, with a report expected to be
delivered in April 2021. Added to the
agenda as a permanent item
The Board of Directors scrutinises the
Chief Executive Officer’s Review, as well as
reports submitted by functional leaders, on
a regular basis (at least twice a year)
The incentive system for the N-1 – N-3
executive-level roles is reviewed twice
a year by the Remuneration and Human
Resources Committee
Changed perception among
directors assessing the Board of
Directors
Further consideration required.
Assessment improved from 4.20
in 2019 to 4.43 in 2020.
Strong result of 4.11 in 2020 (2019:
4.20)
4. Succession planning for
executive-level roles and the
Board of Directors
+ −
Succession planning for executive roles
is a permanent agenda item for the
Remuneration and Human Resources
Committee, unlike that for the Board of
Directors, which has not been implemented
Assessment by directors
improved with respect to
executive roles (from 3.70 to 4.11)
and worsened with respect to
directors (from 3.90 to 3.67)
5. Updating the Board of
Directors' Competency Matrix
to reflect the Company’s
current needs
+ −
The matrix is prepared as part of the
annual report. The balance of the Board’s
skills is subject to self-assessment by
directors
Excellent assessment results
in terms of the balance of the
Board’s skills, experience and
expertise: 4.43 in 2020 vs 4.40
in 2019.
Assessment improved from 4.00
in 2019 to 4.62 in 2020
+
+
+ −
−
6. Anti-crisis management
7. IT security and management of
cyberrisks
8. IT strategy
9. Developing the Board of
Directors training programme
and plan, including visits to the
Company’s sites
10. More active dialogue between
the directors and various
stakeholders
Matter is ready for consideration
and considered by the Board on 27
August 2020. Added to the agenda as a
permanent item. Additional meeting of the
Board of Directors held on 17 April 2020 to
discuss COVID-19 response
The Board of Directors discussed the item
twice, on 13 May and 18 December 2020.
Further discussion is scheduled for May
2021. The item is added to the permanent
agenda of the Risk Management Committee
Assessment results: 4.00 in 2019
and 4.05 in 2020. The directors
raised mixed opinions, from being
satisfied to reporting lack of
attention to the matter
The item is under review and will be ready for consideration in March 2021
The programme was not developed amid
the COVID-19 pandemic. Inside and COVID-
19 trainings were provided with relevant
experts engaged
Further consideration required
Not assessed
The programme was not developed amid
the COVID-19 pandemic
Further consideration required
The assessment identified
the following areas of improvement
for the Board of Directors:
more active engagement
with investors, analysts,
business unit leaders, key
employees, and members
of the Management Board;
providing training
on industry trends
in Russia and globally, cyber
threats, risk management,
as well as technological
and agricultural innovations;
adding the audit and internal
control policy, climate
change matters, corporate
governance assessment
as part of the internal audit
process to the 2021 agenda
of the Board of Directors’ Audit
Committee.
The next assessment is scheduled
for early 2022 and will also be
conducted in the self-assessment
format.
Xavier
ROLET
Chairman of the Board of Directors
Independent director
Year of election: 2018
2019 — Pr. PhosAgro,
Equity interest / Stake of ordinary shares None
Date of birth: 12 November 1959
Education:
KEDGE Business School (France)
Master’s degree in Management Science and Finance
Columbia Business School (USA)
MBA in International Finance
Institute for Higher National Defence Studies (IHEDN)
(France)
Post-graduate degree
Professional experience:
1994–1996 Credit Suisse,
Managing Director.
1997–2000 Dresdner Kleinwort
Managing Director.
2000–2007 Lehman Brothers (New York and London)
Senior Executive.
2007–2009 Banque Lehman Brothers S.A. (France)
CEO.
2009–2017 London Stock Exchange Group (LSEG)
CEO.
2011 — Pr. Columbia Business School,
Member of the Board of Overseers.
2013–2017 HM Treasury,
Advisor.
2017–2018 London Stock Exchange Group (LSEG),
Advisor.
2018–2019 Verseon,
Non-executive director.
2018–2019 PhosAgro,
Chairman of the Risk Management Committee.
2018 — Pr. Shanghai Institute of Finance for the Real
Economy — SIFRE,
Expert Advisor.
2019–2020 CQS Management LTD,
Chief Executive Officer.
2018 — Pr. PhosAgro,
Chairman of the Board of Directors.
Chairman of the Board of Directors,
Member of the Risk Management Committee.
2019 — Pr. The Public Investment Fund (Saudi Stock
Exchange — TADAWUL),
Member of the Board of Directors.
2020 — Pr. Shore Capital Markets,
Non-executive chairman.
2020 — Pr. TowerBrook Capital Partners L.P.,
Member of the Senior Advisory Board.
2020 —Pr. Seplat Petroleum Development Company Plc.,
Independent non-executive director.
2020 — Pr. Golden Falcon Special Acquisition Corporation,
Independent non-executive director.
Key competences
Strategy
Finance and audit
Risk management
Law and corporate governance
Chemistry and mining engineering
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 Andrey G.
GURYEV
Deputy Chairman of the Board of Directors
Non-executive director
Year of election: 2013
Equity interest / Stake of ordinary shares: None
Date of birth: 24 March 1960
Education:
Plekhanov St Petersburg State Mining Institute
(Technical University)
Degree in Economics and Management of Mining
and Exploration Enterprises
Central State Institute for Physical Education.
Professional experience:
2001–2013
Member of the Federation Council of the Russian
Federation.
2006 — Pr. Russian Chemists Union,
Vice President.
2013 — Pr. PhosAgro,
Deputy Chairman of the Board of Directors,
Member of the Strategy Committee.
2017–2018 AgroGard-Finance,
Member of the Board of Directors.
2018 — Pr. AgroGard-Finance,
Chairman of the Board of Directors.
Key competences
Strategy
Chemistry and mining engineering
Human resources
212/
213
Andrey A.
GURYEV
Executive director
Year of election: 2013
Equity interest / Stake of ordinary shares: 0.048%
Date of birth: 7 March 1982
Education:
University of Greenwich (UK)
Bachelor’s degree in Economics
Academy of National Economy and Public Administration
under the Government of the Russian Federation
Saint Petersburg Mining University
PhD in Economics
Professional experience:
2011–2013
PhosAgro AG,
Deputy CEO for Sales and Logistics.
2015 – Pr.
Russian Olympians Foundation
Member of the Council of Trustees
2015 – Pr.
Russian Union of Industrialists
and Entrepreneurs
Member of the Management Board
2016 – Pr.
Russian Association of Fertilizer Producers
President
2016 – Pr. Russian Rhythmic Gymnastics Federation
Chairman of the Board of Trustees, Vice
President
2016 – Pr.
International Fertilizer Association (IFA)
Member of the Board of Directors
2016 – Pr. Miners of Russia non-commercial partnership
Deputy Chairman of the Supreme Mining
Council
2011 — Pr. Present Moscow Rhythmic Gymnastics
2019 – Pr. Russian Union of Industrialists
Federation,
President.
and Entrepreneurs
Member of the Management Board Bureau
2012 — Pr. Andrey Guryev Charitable Foundation,
Chairman of the Management Board.
2012–2014
Investment Trading Bank,
Member of the Board of Directors.
2012 — Pr. PhosAgro-Region,
Member of the Management Board.
2013 — Pr. PhosAgro,
Member of the Board of Directors.
2013 — Pr. PhosAgro,
CEO, Chairman of the Management Board,
Member of the Strategy Committee, Member
of the Environmental, Health and Safety
Committee, Member of the Risk Management
Committee.
2014–2016 PhosAgro-Cherepovets
Member of the Board of Directors
2014 – Pr. Russian Chess Federation
Member of the Board of Trustees
Key competencies
Strategy
Finance and audit
Chemistry and mining engineering
Environment, health and safety
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 214/
215
Mikhail
RYBNIKOV
Executive director
Sven
OMBUDSTVEDT
Independent director
Irina
BOKOVA
Independent director
Year of election: 2016
2015–2017 PhosAgro-Cherepovets
Year of election: 2011
Year of election: 2018
Equity interest / Stake of ordinary shares: 0.0258%
CEO
Date of birth: 30 November 1975
Education:
Lomonosov Moscow State University
Master’s degree in Economics
Professional experience:
2011–2013
PhosAgro-Region,
Member of the Management Board.
2012–2015 PhosAgro AG
CEO, Chairman of the Management Board
2013
2013
Moscow Exchange
Member of the Board of Directors
Apatit
Member of the Board of Directors
2013–2016 PhosAgro-Cherepovets
Member of the Board of Directors
2013 – Pr. PhosAgro
Member of the Management Board, Chairman
of the Environmental, Health and Safety
Committee, Member of the Strategy Committee,
Member of the Sustainable Development
Committee
2015–2017 PhosAgro-Cherepovets
Chairman of the Management Board
2016 – Pr. PhosAgro
Member of the Board of Directors
2016 – Pr. PhosAgro-Region
Member of the Management Board
2017–2018 Apatit
CEO, Chairman of the Management Board
2018–2019 Apatit
Member of the Management Board
2018 – Pr. Samoilov Scientific Research Institute
for Fertilizers and Insectofungicides
Member of the Board of Directors
2018 – Pr. Apatit
Advisor to the CEO (part-time)
2018–2020 PhosAgro
First Deputy CEO
2020 – Pr. PhosAgro
Executive director
Key competencies
Strategy
Finance and audit
Chemistry and mining engineering
Environment, health and safety
Equity interest / Stake of ordinary shares: 0.00103%
Equity interest / Stake of ordinary shares: None
Date of birth: 27 July 1966
Date of birth: 12 July 1952
Education:
Pacific Lutheran University (USA),
Bachelor’s degree
Thunderbird School of Global Management,
Master’s degree in International Management
Professional experience:
2008–2011 Saferoad AS,
Member of the Board of Directors.
2010–2013 Western Bulk,
Member of the Board of Directors
2010–2017 Norske Skogindustrier ASA,
CEO
2011–2019 PhosAgro,
2011 – Pr.
Chairman of the Board of Directors
PhosAgro,
Member of the Audit Committee, Chairman
of the Strategy Committee, Chairman
of the Risk Management Committee,
2017
Norske Skogindustrier ASA,
Special Advisor
2017–2019 Norske Skog AS,
Chairman of the Board of Directors
2017 – Pr. Norske Skog Norway Holding AS,
Member of the Board of Directors
2019 – Pr. Norske Skog ASA,
CEO
Key competencies
Strategy
Finance and audit
Chemistry and mining engineering
Risk management
Education:
Moscow State Institute of International Relations (Russia),
International Relations
John F. Kennedy School of Government at Harvard
University (USA),
Leadership and Economic Development.
Professional experience:
1989–1989 University of Maryland School of Public Affairs
(USA),
Ford Foundation Fellow.
1991–1992
National Assembly of the Republic of Bulgaria,
Member of the National Assembly
1995–1997 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
2002–2009 UNESCO ,
Ambassador of Bulgaria to France and Monaco,
Permanent Delegate of Bulgaria
2009–2017 UNESCO,
Director-General
2018 – Pr. Ban Ki-moon Centre for Global Citizens,
Member of the Board of Directors
2018 – Pr. PhosAgro ,
Member of the Board of Directors, Member
of the Remuneration and Human Resources
Committee, Chair of the Sustainable
Development Committee
2018 – Pr. Federation Internationale de l’Automobile,
Member of the Board of Directors
2020 – Pr. FIA Foundation,
Member of the Board of Directors
Key competencies
Environment, health and safety
Human resources
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 216/
217
James
ROGERS
Independent director
Marcus
RHODES
Independent director
Natalia
PASHKEVICH
Independent director
Year of election: 2014
2014–2019 Sinofortune Financial Holdings Limited,
Year of election: 2011
Year of election: 2017
Equity interest / Stake of ordinary shares: 0.0064%
Date of birth: 19 October 1942
Education :
Yale University (USA),
Bachelor’s degree
Balliol College, University of Oxford (UK),
Bachelor’s / master’s degree in Philosophy, Politics
and Economics
Professional experience:
1986 — Pr. Virtus Total Return Fund Inc.,
Director.
1988–2019 Virtus Global Dividend & Income Fund Inc.,
Director
1990 – Pr. Beeland Interests, Inc.,
Director
2006–2015 CQS,
Advisor
2007 – Pr. Beeland Interests, Inc.,
Director
2007 – Pr. Beeland Holdings Pte Ltd,
Director
2011 – Pr.
Forbes & Manhattan,
Advisor
2012–2019 Spanish Mountain Gold Limited,
Director
2012 – Pr. Geo Energy Resources Limited,
Non-executive director
2012 – Pr. Santiago Gold Fund,
Advisor
2013–2014 Fab Universal Corp.,
Independent director
Non-executive director
2015–2016 TLV Holdings Limited,
Advisor
2015–2017 Latitude Technologies Limited,
Senior Advisor
2016 – Pr. Duff & Phelps Select Energy MLP Fund Inc.,
Director
2016 – Pr. Virtus Global Multi-Sector Income Fund,
Trustee
2016–2018 Crusader Resources Limited,
Non-executive director
2017 – Pr. AgroGard-Finance,
Member of the Board of Directors
2017–2018 Agritrade Resources Ltd,
Advisor
2017–2018
ITF Corporation,
Advisor
2017–2018 Global Blockchain Technologies Corp,
Advisor
2018–2019 Ocean Capital Advisors LLC,
Director
Equity interest / Stake of ordinary shares: 0.000644%
Equity interest / Stake of ordinary shares: None
Date of birth: 31 May 1961
Date of birth: 5 November 1939
Education
Leningrad Mining Institute Mining Engineering
and Economics,
PhD in Economics, professor
Professional experience
1999 — Pr. St. Petersburg Mining University,
First Vice Rector.
2017 — Pr. PhosAgro,
Member of the Board of Directors,Member
of the Environmental, Health and Safety
Committee
Education:
Loughborough University (UK)
Bachelor’s degree in Economics and History of Economics
The Institute of Chartered Accountants in England
and Wales,
Qualified as chartered accountant
Professional experience
2008–2015 Rosinter Restaurants Holding,
Member of the Board of Directors.
2008–2015 Tethys Petroleum Limited,
Member of the Board of Directors
2008–2016 Cherkizovo Group ,
Member of the Board of Directors
2011 – Pr.
PhosAgro,
Member of the Board of Directors, Chairman
of the Audit Committee
2014 – Pr. QIWI Group (QIWI plc) ,
Member of the Board of Directors, Chairman
of the Audit Committee
2018–2019 Quantum Digital Asset Management Pte Ltd,
2014–2017 Zoltav Resources Inc.,
Member of the Board of Directors
Member of the Board of Directors
2018 – Pr.
Sirius International Insurance Group, Ltd,
Member of the Board of Directors
2018 – Pr. Ananti Inc,
Director
2019 – Pr. Spanish Mountain Gold Limited,
Advisor
2019 – Pr. ENPlus Co Ltd,
External director
2017 – 2019 SIA Enterprises Limited,
Honorary Treasurer
2018–2019 Rustranscom Plc,
Non-executive director
2021 — Pr. Segezha Group
Member of the Board of Directors
2013–2018 Laguna Bay Pastoral Company Pty Ltd,
Advisor
2014 – Pr. Genagro Limited,
Advisor
2014 – Pr.
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
Risk management
Law and corporate governance
Key competencies
Key competencies
Law and corporate governance
Chemistry and mining engineering
Finance and audit
Human resources
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 CORPORATE SECRETARY
The Corporate Secretary is responsible for day-to-
day interactions with the shareholders, coordination
of the Company’s efforts to protect shareholder
rights and interests, and support provided
to the Board of Directors to ensure its efficient
performance. The Corporate Secretary is appointed
by the Board of Directors. The operating procedures
of the Corporate Secretary are governed
by the Regulation on the Corporate Secretary
approved by the Board of Directors of PhosAgro.
Regulation on the Corporate Secretary
218/
219
Sergey
SAMOSYUK
Year of appointment: 2016
Date of birth: 1 October 1976
Education :
St Petersburg State University of Economics (former St
Petersburg Academy of Engineering and Economics)
Engineering and Economics
St. Petersburg University,
Law
National Research University Higher School of Economics,
Executive MBA
Professional experience
In 1996
Mr Samosyuk joined the financial
department at Ammophos.
From 2003
In October 2014
he held leading finance positions
at PhosAgro AG, Metachem and Mining
and Chemical Engineering (MCE),
and was a member of PhosAgro-
Cherepovets review committee.
he was appointed head
of methodology and economic
analysis at PhosAgro-Cherepovets
Achievements
2020 Director of the Year National Award for the best
corporate governance directors / corporate secretaries.
Andrey
SHARONOV
Independent director
Year of election : 2017
2016 – Pr. SKOLKOVO Endowment Fund,
Equity interest / Stake of ordinary shares: None
Director
Date of birth: 11 February 1964
Education:
Ufa Aviation Institute
Aviation Instrument Making
Russian Academy of Public Administration
under the President of the Russian Federation
Law, PhD in Sociology
Professional experience:
2009 – Pr. National Research University Higher School
of Economics,
Professor (part-time) at the School of Finance
of the Faculty of Economic Sciences
2016 – Pr. Association for the Development of Moscow
School of Management SKOLKOVO ,
Executive director
2016 – Pr. Moscow School of Management SKOLKOVO,
President
2017 – Pr. PhosAgro ,
Member of the Board of Directors,
Member of the Audit Committee, Member
of the Remuneration and Human Resources
Committee, Member of the Sustainable
Development Committee
2018 – Pr. Medicina ,
Chairman of the Board of Directors
2010–2013 Government of Moscow,
Deputy Mayor for Economic Policy
2019 – Pr. En+ Group ,
Independent director
2011–2014 National Research University Higher School
2020 – Pr. Rosseti,
of Economics,
Member of the Supervisory Council
2011–2015 Bank of Moscow ,
Member of the Board of Directors
2013–2016 Moscow School of Management SKOLKOVO ,
Rector
2013–2016 MC Eko-Sistema ,
Chairman of the Board of Directors
2014–2015 ALROSA ,
Member of the Supervisory Board
2014–2019 NOVATEK,
Member of the Board of Directors
2014 – Pr. MC NefteTransService ,
Chairman of the Board of Directors
2014 – Pr. Sovcomflot ,
Member of the Board of Director
2015–2016 Moscow Exchange ,
Member of the Supervisory Board
2015–2017 Rosgeologia,
Member of the Board of Directors
Key competencies
Member of the Board of Directors
Law and corporate governance
2015–2018 VTB Bank ,
Member of the Supervisory Council
Finance and audit
Human resources
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 BOARD COMMITTEES
102-29
102-33
The committees of the Board of Directors are advisory and consultative
bodies made up of the current Board members with relevant experience
and expertise in committees’ specific focus areas.
The committees can also engage
external experts and consultants
in their work. The primary role
of the committees is the preliminary
consideration of key issues submitted
for review by the Company’s Board
of Directors.
The committees are responsible
for making sure that issues
brought before the Board
have been sufficiently reviewed
as a way to enable the directors
to cast their votes based
on full and accurate information.
To achieve this, committee members
maintain an ongoing dialogue
with the management team,
the Company’s external auditor
and other advisors on the issues that
fall within their remit.
The existing committees were
established by the Board of Directors
on 26 May 2020 without any changes
to their composition.
COMMITTEE REPORTS
AUDIT COMMITTEE
Committee members
Marcus Rhodes,
Committee Chairman,
independent director
Sven Ombudstvedt,
Committee member,
independent director
James Rogers,
Committee member,
independent director
Andrey Sharonov,
Committee member,
independent director
Activities in 2020
Marcus Rhodes,
chairman
of the committee
According to the Regulations
on the Company`s Audit Committee,
the Audit Committee shall consist
of at least three current members
of the Board of Directors, and shall
be chaired by an independent
director. Since 2018, the Committee
has consisted of four independent
directors. Marcus Rhodes,
chairman of the committee,
has the necessary experience
and expertise in preparation,
analysis, assessment and audit
of accounting (financial) statements.
reviews and recommendations
for the Board of Directors;
• recommending the Company’s
external auditor to the Board
of Directors and maintaining
an ongoing dialogue
with the external auditor;
• support to the Internal
Audit function and analysing
the quarterly results
of their work;
• discussing and approving
The Committee’s remit includes:
the annual internal audit plan;
Regulation on the Audit Committee
• reviewing the IFRS financials
• ensuring compliance
for integrity and transparency;
• analysis of financial reporting
processes, including regular
with applicable legislation
and relevant standards
of business conduct.
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221
During the reporting period, the Audit
Committee held five meetings,
where the following matters were
considered:
• analysis of the Company’s financial
performance based on the IFRS
consolidated financial statements,
including reasons for changes
as compared with the previous
periods’ results; review
of the quarterly results compared
with the budget;
to introduction of a consolidation
system, unification of IFRS
and RAS accounting procedures
and automatic integration
with the accounting systems. Besides,
the project introduced a convenient
tool for analysing sales efficiency
and generating management
reports, enabled in-depth analytics
across a wide range of financial
and operational indicators, and full
harmonisation of management
reporting and IFRS statements.
• review and discussion
of the quarterly IFRS financial
statements, along with ensuring
the adequacy of disclosures;
• drafting the quarterly press
releases on the Company’s
performance for investors;
• analysis of the Company`s
compliance with Russian
and European legislation
on protection and use of insider
information;
In line with best corporate
governance practices, the Company
has prepared a draft policy
for selecting an external auditor
to be approved by the Board
of Directors, which specifies
the grounds and procedure
for selection, maximum duration
of services, rotation rules
for the audit partner, and maximum
cost of non-audit services in the total
scope of auditor services.
External auditor
• analysis of the Company’s
corporate governance compliance
with the Bank of Russia’s
Corporate Governance Code
and the UK Corporate Governance
Code;
• assessing the Company’s internal
control and internal audit system;
A key element of the Audit
Committee’s work is ongoing
interaction with the external auditor,
as well as drafting recommendations
for the Board of Directors regarding
the approval of the auditor. When
selecting an auditor, we evaluate
the following factors in addition
to the cost of their services:
• further improving the quality
of the financial accounting
and reporting preparation
process;
• developing the of the Company’s
Internal Audit Department’s
plan of activities for 2021
and monitoring the implementation
of the previously approved
plan for 2020, as well
as assessing the Internal Audit
Department’s performance
and control over follow-up on its
recommendations.
In 2020, the project for integration
of the IFRS consolidated management
reporting and financial statements
preparation procedures using
Oracle Hyperion Financial
Management was finally completed
under the guidance and supervision
of the Audit Committee, which
allowed for reducing the reporting
preparation period by 1.5 months due
• Composition of the audit
team (in terms of experience
and qualifications), which should
ensure that the statements
are audited within acceptable
deadlines and with adequate
quality.
• Evaluation
of the auditor’s independence
based on a variety of factors,
including assessment of the scope
of non-audit services provided
to us by the candidate company
during the relevant periods. Each
offer from the current auditor
for non-audit services requires
confirmation by the audit partner
to make sure there is no risk
to independence and is submitted
to the Company’s Audit Committee
for consideration and approval.
The Committee consents
to the contract only if the scope
of the non-audit services
is not so substantial as to call into
question the ability to perform
the audit service independently
and impartially. The Committee’s
assessment of the auditor’s
independence is also significantly
influenced by the auditor’s internal
procedures for controlling
the impartiality and professional
ethics of the auditor`s staff,
including requirements
for periodic rotation of the audit
partner, training arranged
in this area and the use
of specialised software to perform
the respective audits.
• Balance between the benefits
of long-term cooperation
with the auditor and the need
for a fresh look at the Company’s
financial statements
and preparation procedures.
• Auditor’s performance
over the previous period.
Finally, when assessing
the possibility of continuing
cooperation with the external
auditor, the Committee
e may form its opinion
on the quality of the external
auditor’s work during in-person
Committee meetings, where
the external auditor’s mandatory
participants are a manager
and the partner, as well
as during meetings between
the audit team and the Chairman
of the Audit Committee held prior
to the Committee meetings.
In December 2020, as recommended
by the Audit Committee,
the Board of Directors
approved the appointment
of PricewaterhouseCoopers Audit
(«PwC») as auditor of the Company’s
2021 IFRS financial statements. This
recommendation was the result
of a formal tender between six
audit firms in Russia, including
the incumbent KPMG. Based
upon extensive presentations
and discussions these six firms were
reduced to a short list of two, out
of which PWC was chosen. Meanwhile,
it should be noted that, the Company
was extremely satisfied with the high
quality of the audit conducted
by KPMG over the last 15 years,
and is grateful for the constructive
cooperation and utmost
professionalism that the KPMG team
showed during this period.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 REMUNERATION AND HUMAN RESOURCES COMMITTEE
Committee members
James Rogers,
Committee Chairman,
independent director
Irina Bokova,
Committee member,
independent director
Andrey Sharonov,
Committee member,
independent director
The Committee’s remit includes:
• planning staff appointments so
• drafting, regularly reviewing
and overseeing the Company’s
policy on remuneration
of the Board members, members
of the Company’s executive bodies
and other key executives;
• carrying out a preliminary year-
end performance appraisal
in respect of the Company’s
executive bodies and key
executives based on the criteria
set forth in the remuneration
policy, and making preliminary
assessment of their performance
against the targets set forth
in the long-term incentive
programme;
as to ensure, inter alia, continuity
of the executive bodies’ work;
• analysing the Board’s composition
by way of assessing its members’
professional skills, expertise,
independence and involvement
in the Board’s work, identifying
priority areas for improvements,
and assessing qualifications
and independence of nominees
to the Board of Directors;
• arranging for an annual self-
appraisal or third-party appraisal
of the Board of Directors’ and its
Committees’ efficiency.
According to the Regulations
on the Remuneration and Human
Resources Committee, the Committee
shall consist of at least three
independent directors.
Regulations on the Remuneration
and Human Resources
Committee
Activities in 2020
James Rogers
chairman
of the committee
• Succession planning. We
additionally discussed succession
planning for members
of the Board of Directors,
members of executive bodies
and other key employees,
and gave a number of relevant
recommendations for N-1
executives.
In early 2020, we assessed
the efficiency of the Committee
and significantly expanded the scope
of matters for us to address based
on such assessment:
• Incentive system. we scrutinised
all internal regulations of PhosAgro
related to the incentive
system. The Committee strives
to find a balance so as to ensure
the number of documents
regulating remuneration
is both sufficient to provide
the details of all existing processes
and gives a clear understanding
of the remuneration framework
to employees. The existing
management incentive system,
which relies on key performance
indicators (KPIs) correlated
with strategic targets, made
another step forward in 2020,
covering as many as 277 people
from N to N-3 levels, up 2.6
times year-on-year. A notable
part of this growth came
from the extended scope
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223
general meeting, the Committee,
among other factors, analysed
the effect of the below
appointments of independent
directors on their ability to duly
discharge their responsibilities
as the Company’s Board members.
Independent directors’ external
appointments:
• Xavier Rolet: Saudi Stock
Exchange TADAWUL, Shore Capital
Markets, TowerBrook Capital
Partners L.P., Seplat Petroleum
Development Company Plc.,
Golden Falcon Special Acquisition
Corporation;
• Sven Ombudstvedt: Norske Skog;
• James Rogers: Virtus Total Return
Fund Inc, Beeland Interests Inc.,
AgroGard-Finance, ENPlus Co Ltd,
etc.;
• Andrey Sharonov: Moscow School
of Management SKOLKOVO,
Sovcomflot, Rosseti, En+ Group,
Medicina, etc.;
• Natalia Pashkevich: St Petersburg
Mining University;
• Irina Bokova: Ban Ki-moon Centre
for Global Citizens, International
Automobile Federation, FIA
Foundation.
The Committee found that in 2020
the above external appointments
did not prevent the Board
members from duly discharging
their responsibilities, while also
maximising their contribution
to the Company’s growth.
of KPIs linked to the Company’s
sustainability targets.
The Committee confirmed
that the existing remuneration
framework is efficient and in line
with the Company’s requirements.
For more information
on the remuneration, please see
the Management remuneration
section, p. 246
• Diversity, gender equality
and inclusion. 2020 was
the first year when the progress
in securing diversity, gender
equality and inclusion became
a part of the Committee’s
agenda. We are adamant that
our people’s professionalism,
consistently strong performance
and adherence to corporate
values are a prerequisite
and the only guarantee of career
growth, and we are happy that
the Company’s management
shares this belief. As early
as in April 2021, the Committee’s
goals and objectives set
forth in the Regulations
on the Remuneration and Human
Resources Committee will
comprise control over securing
diversity, gender equality
and inclusion.
• Corporate culture. The reporting
year also was the first year
when the Committee discussed
whether the goals, values
and strategy of the Company
are aligned with its corporate
culture, along with its assessment
and monitoring. PhosAgro fosters
a corporate culture where all
employees have the freedom to be
themselves and can fully unlock
their potential. In 2020, following
the Committee’s proposal,
questions that help evaluate
various aspects and evolution
of the corporate culture were
included in the annual staff loyalty
and satisfaction survey conducted
by a third-party expert since 2013.
The above matters must become
a permanent item on the Committee’s
agenda because they are key
to the Company’s long-term success
and sustainable development.
We also stayed focused on regular
matters:
• assessment of professional
skills, independence, engagement
and important external
nominations or appointments
to the Board of Directors;
• best practice guidance
and analysis following the appraisal
of the Board of Directors’
performance;
• assessment of the performance
of the Company’s executive
bodies, other key employees,
and the Corporate Secretary;
• assessment of social and employee
training programmes, including
the progress towards
a sustainability target approved
in the Strategy to 2025 –
the number of employee training
hours;
• review of the outcomes
following the annual staff loyalty
and satisfaction survey, including
progress towards a sustainability
target approved in the Strategy
to 2025 – integrated employee
loyalty index.
Two times a year, when initially
assessing nominations to the Board
of Directors and subsequently
when finalising its composition,
the Committee decides which
reasons should disqualify members
from serving on it.
While preparing the shareholder
information for the annual
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 ENVIRONMENTAL, HEALTH AND SAFETY COMMITTEE
Committee members
Mikhail Rybnikov,
Executive Director,
Chairman of the Committee
The Committee
is governed by the Regulation
on the Environmental, Health
and Safety Committee.
Regulations
on the Environmental, Health
and Safety Committee
Activities in 2020
Andrey A. Guryev,
Executive Director
Natalia Pashkevich,
independent director
The Committee’s remit includes:
• considering proposals
on improving working conditions
and safety regulations compliance,
lowering injury rates, reducing
pollutant and greenhouse gas
emissions, decreasing waste
generation and disposal, improving
energy efficiency;
• analysing the progress
on programmes and initiatives
to introduce resource and energy
efficiency solutions and eco-
efficient technologies.
• developing core documents
for the integrated health,
safety and environment (HSE)
management system;
• monitoring the Group
companies’ production activities
for compliance with the applicable
HSE laws;
• assessing environmental, social,
technological, and industrial
risks associated with the Group
companies’ production activities;
• reviewing investigation
records on industrial accidents
and incidents, environmental laws
violation, and breach of climate
impact regulations;
Mikhail Rybnikov,
chairman
of the committee
Traditionally, the Committee oversees
three workstreams:
• health and safety;
The Committee oversaw
the implementation of several
important health and safety projects,
including:
• environmental protection;
• Risk Management
In the reporting year,
the Committee held
2 meetings
and discussed
13 issues
• energy efficiency.
The reporting year proved
to be successful in terms of reducing
industrial injuries, accidents
and incidents. For us, the most
important results were zero fatal
injuries among our employees,
including subsidiaries (vs three
fatalities in 2019), no breakdowns,
fires, traffic accidents with injuries
or major damage, and the overall
decline in significant incidents by 13%.
module implementation
in the Safety and Instructions
(Shift Assignments) management
systems;
• lockout/tagout (LOTO) system
implementation at the Kirovsk
branch of Apatit;
• expanded use of the Public
Scrutiny app;
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225
• project to evaluate
and improve the safety culture
and the OHS management
(launched in December).
The Company managed to avoid
excessive environmental impacts
for the second year in a row,
and all our emissions were within
limits of the best available
technologies. The Committee also
oversees a number of environmental
management activities, such
as the initiatives of the Water
Strategy adopted in 2020, and earlier
projects for reducing emissions
and raising the industrial waste
recycling rate.
The Company made strong progress
in improving energy efficiency.
In 2020, consumption rates for all
major energy resources continued
to decrease.
We launched the first module
of our solar power plant in Balakovo.
Although it produces a small amount
of energy as yet, the project is very
important for the Group. We will
meticulously study its effects and then
decide on its further replication.
In 2020, we approved the Energy
Efficiency Programme covering all
our projects and initiatives designed
to reduce energy consumption.
In 2021, the Committee will monitor
the programme implementation.
We also remained focused
on regulatory compliance,
reviewing, among others, draft
laws, which are yet to be considered
and approved.
STRATEGY COMMITTEE
Committee members
Sven Ombudstvedt,
Committee Chairman,
independent director
Andrey A. Guryev,
Committee member,
executive director
Andrey G. Guryev,
Committee member,
non-executive director
Mikhail K. Rybnikov,
Committee member,
executive director
The Committee’s activities
are governed by the Regulations
on the Strategy Committee.
mid-term and long-term strategy,
and drafting strategic policies
as required;
• making recommendations
regarding the Company’s M&A
projects;
The Committee’s remit includes:
• evaluating the development
• monitoring
and updating the Company’s
of the Company’s subsidiaries,
including reviewing
their strategies;
• analysis and recommendations
regarding potential strategic
partnerships.
Regulations on the Strategy
Committee
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 of expanding the capacity of our rail
infrastructure to over 16 mln t per
year. We also comply with our interim
targets for other logistics indicators
of Strategy 2025: acquisition
of our own rolling stock and port
infrastructure development.
The adoption of the Climate
and Water Strategies in 2020 was
an important step toward achieving
the ESG targets.
In addition, the Committee focused
on monitoring the progress
of the investment projects
underlying PhosAgro’s ongoing
growth in the current strategic cycle,
together with development of new
projects that will ensure the further
dynamic evolution of the Company.
Our strategy cannot be static,
we are developing, the external
business environment is changing,
and we hope that in 2021
we will be able to present amended,
even more ambitious strategic goals
for the period up to 2025.
Activities in 2020
Sven Ombudstvedt,
chairman
of the committee
In 2020, the Strategy Committee held
two meetings, where the following
matters were considered:
• the implementation status
of the Company’s Development
Strategy until 2025;
• key target indicators and sales
development models by market
group;
• key areas of logistics
development;
• future projects (assessment
of prospects, preliminary
calculation of the new products
efficiency).
The Strategy Committee’s
activities within the first year
of the new strategic cycle were
focused on monitoring the progress
towards the Goals 2025 approved
in 2019. According to a resolution
of the Board of Directors, control
over compliance of the current
activities with the approved strategy
is carried out at least twice a year
by reviewing the monitoring results,
as well as in the course of the Board
of Director’ review of the Company’s
annual budgets. At both
meetings, in March and August
2020, the Committee checked
the production volumes, sales
in priority markets, and expansion
of sales and transport infrastructure
against the Strategy. Another
innovation for the Committee
was the mandatory monitoring
of approved ESG indicators.
The 2020 results show that
we are well on our way to the Goals
2025:
We expect the production
of phosphate rock to exceed
the approved target level of 11 mln
t in 2025. This will be largely due
to commissioning in Q4 2020
of the main shaft of the Kirovsk mine,
as well as the ongoing construction
and expected commissioning in late
2021 of another major ore and raw
material resource development
project – the 1st start-up facilities
at level 10 of the Kirovsk mine.
Similarly, the 2025 target
for our internal phosphate rock
processing (8.4 mln t) will be met,
with the corresponding increase
in mineral fertilizer production,
through, among other things,
the ambitious projects already
underway to develop the Balakovo
and Volkhov sites.
We expect the Company to maintain
its target sales share in premium
markets, although we allow for minor
deviations due to changes in market
conditions and adherence to the best
netback strategy.
We successfully achieved our interim
goals 2020 in such indicators
as the number of distribution
and logistics centers (as many
as 29 now), storage capacity
for solid and liquid mineral
fertilizers (more than 700 kt).
We believe that the Goals 2025
will also be successfully achieved
in this important area, reflecting
our commitment to be closer
to the consumer.
The completion in late 2020
of construction, and launch
of traffic at the Kryolite railway
station (Cherepovets
production site) became
an important milestone on the way
to achieving our key logistics goal
RISK MANAGEMENT COMMITTEE
Committee members
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227
Sven Ombudstvedt,
Committee Chairman,
independent director
Xavier Rolet,
Committee member,
independent director
Andrey A. Guryev,
Committee member,
executive director
The Committee assists the Board
of Directors and other governing
bodies of PhosAgro in developing
recommendations to identify
material risks, work out risk
management initiatives and upgrade
the risk management framework.
The Committee’s activities
are governed by the Regulations
on the Risk Management Committee.
• defining the methodology
and identifying the Company’s
most material risks to ensure
their continuous monitoring
and management;
• drafting recommendations
for improving the comprehensive
risk management framework;
• defining the Company’s risk
The Committee’s remit includes:
appetite.
• assessing the effectiveness
of the Company’s risk management
framework and providing
recommendations for its
improvement;
• Evaluation of the Company’s
risk management and internal
control system. Audit completed
in 2020 once again showed
that the PhosAgro complies
with the industry’s leading
practices, while in some areas (such
as the establishment and convincing
performance of a dedicated
risk management committee
under the Board of Directors)
it is far ahead of the peers.
• Results of monitoring
of the Company’s key risk
management activities (quarterly).
The key novelty of the risk
monitoring exercise in 2020 was
the necessity to address the risk
of the new coronavirus infection.
The spread of COVID-19
had its toll on practically all
operations of the Company,
tipping the probability scales
of inherent risks to a higher
level. As a result, the Company
placed a particular emphasis
on the management of COVID-
related risks and the impact they
had on the continuity of business
processes. The steps taken
by the Company in response
to COVID-19 helped prevent
the suspension of production
operations and avoid disruptions
to other material business
processes.
• Management of key specific
corporate risks. In addition
to the cybersecurity and COVID-19
risks, climate change was a focus
of attention for the Committee
in 2020. In 2021, the Committee
will keep a close watch
for the use of a risk-oriented
approach in the implementation
of PhosAgro’s Climate Strategy.
The risks were also reviewed
in the context of the Company
strategy implementation, with regular
risk monitoring done to assess
their impact on the Company’s
strategic goals.
Regulations on the Risk
Management Committee
Activities in 2020
Sven Ombudstvedt,
chairman
of the committee
In 2020, the Committee held three
meetings focusing on:
• Results of a reassessment
of the Company’s key risks
and updating its risk map
for 2020. One of the key changes
introduced as part of the risk
map update was the integration
of the cybersecurity risk into
it. In addition to the IT infrastructure
continuity, the Committee started
focusing on key cybersecurity
metrics and the status of initiatives
to promote computer security.
With the effective cybersecurity
tools in place, the Company did
not record any material incidents
in this area in 2020.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 SUSTAINABLE DEVELOPMENT COMMITTEE
Committee members
Andrey Sharonov,
independent director
Mikhail Rybnikov,
executive director
The Committee’s remit includes:
• organising staff training
Irina Bokova,
independent director,
Chair of the Committee
The Committee’s activities
are governed by the Regulations
on the Sustainable Development
Committee.
Regulations on the Sustainable
Development Committee
• building and analysing PhosAgro’s
framework of sustainable
development bylaws, controlling
their drafting, relevance,
effectiveness and quality;
• engaging with key
stakeholders and contributing
to the development and growth
of healthy and sustainable
communities in all regions where
the Company operates;
• controlling compliance
with applicable statutory
requirements and internal
sustainability objectives;
Activities in 2020
Irina Bokova,
chairman
of the committee
Already in November, committee
members reviewed a draft
strategy, including climate
scenarios, a list of risks
and opportunities associated
with each scenario, a low-
carbon transition plan, as well
as scientifically verified GHG
reduction targets.
In 2020, the Committee held three
meetings and reviewed 11 matters
focusing on the following key themes:
• Climate policy. At its first meeting
in May 2020, the committee
outlined a plan for drafting
an appropriate strategy until
2028, determined responsible
persons and control points.
Importantly, the low-carbon
transition plan reflects the rules
for interacting with other parties
involved in the Company’s
value chain, including a supplier
engagement concept.
In this way, PhosAgro commits
to climate change action across
the entire value chain.
on best sustainable development
practices;
• preparing recommendations
to the Board of Directors
on determining the Company’s
strategic sustainable development
objectives;
• reviewing sustainable development
reports;
• supervising PhosAgro’s sustainable
development disclosure;
• Analysing PhosAgro’s practices
and bylaws in terms of compliance
with sustainable development
rating requirements and managing
efforts to maintain and improve
the Company’s rating positions.
For each of the three scopes of GHG
emissions, the actual volumes
and their evolution, the main sources
as well as possible measures
to reduce emissions were quantified
and analysed.
Following the review
and the Committee’s
recommendations, the Board
of Directors approved the Climate
Strategy and endorsed the low-
carbon transition plan.
We are pleased that
the Company is already taking action
under the plan.
It is active in implementing
initiatives to reduce direct (Scope
228/
229
and the World Business Council
for Sustainable Development
(WBCSD). As a result, we created
a matrix describing the Company’s
approaches to achieving SDGs.
• Monitoring environmental
and social performance. At each
of its meetings, the Committee
reviewed the status of activities
approved in 2019 in terms
of achieving the environmental
and social goals until 2025,
including waste water discharge
levels, Scope 1 GHG emissions,
occupational injury and accident
rates, hazardous waste
treatment, employee satisfaction
and loyalty, and training hours.
On the Committee’s initiative,
in 2020 the Board of Directors
approved PhosAgro’s
Water Strategy, which
consolidated all initiatives
related to the three types
of impact that the Company’s
production sites have on water
bodies such as water intake,
discharge and consumption.
As is the case with the Energy
Efficiency Programme, the Water
Strategy set the schedule
for specific activities to be designed
and reviewed by the senior
management. The strategy has
urged the Company to toughen its
targets for discharges into water
bodies.
1) GHG emissions. In particular,
the Company has been expanding
the use of steam associated
with sulphuric and nitric acid
production to generate electricity
and heat. PhosAgro has prepared
and is evaluating an action plan
aimed at achieving the Scope 1 GHG
emission reduction targets.
At the end of 2020, the Company
launched a solar power station
pilot in Balakovo. The Committee
is awaiting the plant’s operational
update before deciding
to expand the project and replicate
it at the Company’s other sites.
Moreover, in December 2020
PhosAgro signed a contract
to purchase hydro-generated
electricity for its mining
and processing plant in Kirovsk,
the largest production site
of the Company. Finally,
the Committee approved a new
Energy Efficiency Programme,
which combines the existing energy
efficiency programmes at each
of the Company’s production
sites and establishes a schedule
to be followed by the Company’s
management in designing
and reviewing these initiatives.
The three projects, as they
are implemented, will definitely
contribute to the reduction of Scope
2 GHG emissions.
In early 2021, PhosAgro
and the Russian Academy of Sciences
are set to sign a cooperation
agreement aimed at building
carbon farms in the Vologda region.
Coupled with other initiatives,
such as the production of urea
with inhibitor launched in 2020
to significantly reduce nitrous oxide
emissions in fertilizer application,
the project will also contributes
to the achievement of Scope 3 GHG
emission reduction targets.
We are closely monitoring
developments surrounding
the expected introduction in 2023
of the carbon border adjustment
mechanism and analysing, together
with the senior management,
associated risks and mitigations
as well as opportunities.
• External assessments
of the Company’s sustainable
development activities.
The Committee believes that
external assessments, such
as ratings, are an effective
measure of the Company’s
sustainable development
activities. We value opinions
of specialist ESG agencies,
including Sustainalytics, MSCI,
CDP and others, as we can gauge
the Company’s performance
against best global practices
and identify areas of improvement
and communication
with stakeholders. Therefore,
at the Committee’s
recommendation, an action
plan was developed to improve
the Company’s key ESG ratings,
and the Committee reviewed
appropriate reports at each
of its three meetings in 2020. We
intend to maintain this approach
in the future. We are pleased that
PhosAgro has made significant
progress in this area and look
forward to further improvements.
• Setting sustainable development
priorities. At the Committee’s
initiative, the Company
implemented an important
project to prioritise sustainable
development goals in 2020. In 2019,
the Company approved its priority
strategic goals and objectives
and related activities based
on internal discussion and dialogue
with stakeholders, and in 2020
the Committee decided that
expert justification was required
for setting SDG-related priorities,
selecting indicators to measure
the Company’s environmental
impact, designing environmental
management approaches
and actions to boost the positive
impact, while reducing the negative
impact.
About 80 sources were
reviewed, and 36 types of impact
across the value chain were
identified. The approach reflects
the Company’s multifaceted impact
on the achievement of SDGs during
the product life cycle and is based
on recommendations of the SDG
Compass, GRI, the UN Global Compact
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 EXECUTIVE
BODIES
230/
231
In charge of PhosAgro’s day-to-day
operations are two executive bodies
accountable to the Board of Directors:
the collegial body:
Management Board
the sole executive body:
CEO
In 2020, the Management Board held
six meetings and reviewed
12 items
most of which were related
to the budget discipline
At least twice a year (after the end
of the previous calendar year in February
and after a new Management
Board is elected in August) the CEO
submits a report on the performance
of PhosAgro’s executive bodies
to the Board of Directors for review
and approval.
AS AT 31 DECEMBER 2020, THE MANAGEMENT BOARD WAS COMPOSED OF
Andrey A. Guryev,
CEO
Siroj Loikov,
First Deputy CEO
Roman Osipov,
Business Development Director
Mikhail Rybnikov,
Executive Director
Alexander Seleznev,
Сhief of Staff
for the CEO
Alexei Sirotenko,
Deputy CEO
for Corporate and Legal
Affairs
Alexander Sharabaika,
Deputy CEO for Finance
and International Projects
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 INFORMATION ON MEMBERS OF THE MANAGEMENT BOARD
232/
233
Andrey A.
GURYEV
Chief Executive Officer and Chairman of the Management Board
Mikhail
RYBNIKOV
Equity interest / Stake of ordinary shares: 0.048%
2016 – Pr. Russian Rhythmic Gymnastics Federation,
Equity interest / Stake of ordinary shares: 0.0258%
2017–2018 Apatit,
Date of birth: 7 March 1982
Education:
University of Greenwich (UK),
Bachelor’s degree in Economics
Academy of National Economy under the Government
of the Russian Federation,
Saint Petersburg Mining University
PhD in Economics
Professional experience:
2011–2013
PhosAgro AG,
Deputy CEO for Sales and Logistics.
2011 — Pr. Moscow Rhythmic Gymnastics Federation,
President
2012 – Pr. Andrey Guryev Charitable Foundation,
Chairman of the Management Board
2012–2014
Investment Trading Bank,
Member of the Board of Directors
2012 – Pr. PhosAgro-Region,
Member of the Management Board
2013 – Pr. PhosAgro,
Member of the Board of Directors
2013 – Pr. PhosAgro,
CEO, Chairman of the Management Board,
Member of the Strategy Committee, Member
of the Environmental, Health and Safety
Committee, Member of the Risk Management
Committee
2014–2016 PhosAgro-Cherepovets,
Member of the Board of Directors
2014 – Pr. Russian Chess Federation,
Member of the Board of Trustees
2015 – Pr. Russian Olympians Foundation,
Member of the Council of Trustees
2015 – Pr. Russian Union of Industrialists
and Entrepreneurs,
Member of the Management Board
2016 – Pr. Russian Association of Fertilizer Producers,
President
Chairman of the Board of Trustees, Vice
President
2016 – Pr.
International Fertilizer Association (IFA),
Member of the Board of Directors
2016 – Pr. Miners of Russia non-commercial partnership,
Deputy Chairman of the Supreme Mining Council
2019 – Pr. Russian Union of Industrialists
and Entrepreneurs,
Member of the Management Board Bureau
CEO, Chairman of the Management Board
2018–2019 Apatit,
Member of the Management Board
2018 – Pr. Samoilov Scientific Research Institute
for Fertilizers and Insectofungicides,
Member of the Board of Directors
2018 – Pr. Apatit,
Advisor to the CEO (part-time)
2018–2020 PhosAgro,
First Deputy CEO
2020 – Pr. PhosAgro,
Executive Director
Date of birth: 30 November 1975
Education:
Lomonosov Moscow State University,
Master’s degree in Economics
Professional experience:
2011–2013
PhosAgro-Region,
Member of the Management Board.
2012–2015 PhosAgro AG,
CEO, Chairman of the Management Board
2015–2017 PhosAgro-Cherepovets,
CEO
2013
2013
Moscow Exchange,
Member of the Board of Directors
Apatit,
Member of the Board of Directors
2013–2016 PhosAgro-Cherepovets,
Member of the Board of Directors
2013 – Pr. PhosAgro,
Member of the Management Board, Chairman
of the Environmental, Health and Safety
Committee, Member of the Strategy Committee,
Member of the Sustainable Development
Committee
2015–2017 PhosAgro-Cherepovets,
Chairman of the Management Board
2016 – Pr. PhosAgro,
Member of the Board of Directors
2016 – Pr. PhosAgro-Region,
Member of the Management Board
Key competencies
Strategy
Finance and audit
Chemistry and mining engineering
Environment, health and safety
Key competences
Strategy
Chemistry and mining engineering
Environment, health and safety
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 234/
235
Siroj
LOIKOV
Roman
OSIPOV
Alexander
SELEZNEV
Equity interest / Stake of ordinary shares: None
2017–2018 Apatit,
Equity interest / Stake of ordinary shares: None
Equity interest / Stake of ordinary shares: None
Date of birth: 9 September 1972
Education:
Tashkent State University of Economics,
International Economic Relations
Nottingham University Business School (UK),
Bachelor’s degree in Business Management
Professional experience:
2011–2013
PhosAgro AG,
HR Director.
2013–2015 PhosAgro,
HR Director
2013–2015 PhosAgro AG,
Human Resources and Social Policy Director
2017–2018 Apatit,
Member of the Management Board
2018–2019 PhosAgro-Region,
Deputy CEO for Human Resources (part-time)
2018–2020 PhosAgro,
Deputy CEO
2018–2020 Apatit,
Deputy CEO (part-time)
2020 – Pr. Apatit,
Advisor to the CEO (part-time)
2020 – Pr. PhosAgro,
Human Resources and Social Policy Director
First Deputy CEO
2013 – Pr. PhosAgro,
Member of the Management Board
2013–2017
Izumrud,
Member of the Board of Directors
2014–2015 PhosAgro AG,
Member of the Management Board
2015–2018 PhosAgro,
Human Resources and Social Policy Director
2015–2018 Korporativnoe pitanie (Corporate Nutrition),
Member of the Board of Directors
2015–2017 PhosAgro-Cherepovets,
Human Resources and Social Policy Director,
Member of the Management Board
2017–2018 Tirvas,
Member of the Board of Directors
Date of birth: 4 November 1971
Date of birth: 6 July 1984
Education:
Baltic State Technical University,
Master’s degree from the LETI-Lovanium International
School of Management
Education:
Bauman Moscow State Technical University,
Information Security
Professional experience:
2011–2014 VTB Capital,
Analyst.
2015–2019 PhosAgro,
Head of Investor Relations .
2019 — Pr. PhosAgro,
Chief of Staff for the CEO,
Member of the Management Board.
Professional experience:
2012–2015 PhosAgro,
Member of the Board of Directors.
2012–2013 PhosAgro AG,
Member of the Management Board
2013 – Pr. PhosAgro,
Business Development Director
2013 – Pr. AgroGard-Finance,
Member of the Board of Directors
2014 – Pr. Giproruda,
Member of the Board of Directors
2017 – Pr. PhosAgro,
Member of the Management Board
2018–2019 Apatit,
Member of the Management Board
2018 – Pr. Apatit,
Advisor to the CEO (part-time)
Key competences
Human resources
Key competences
Strategy
Chemistry and mining engineering
Key competences
Finance and audit
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 Alexei
SIROTENKO
Equity interest / Stake of ordinary shares: None
Date of birth: 3 January 1969
Education:
Lomonosov Moscow State University,
Jurisprudence.
Professional experience:
2007–2015 PhosAgro AG,
Member of the Management Board.
2010 — Pr. PhosAgro,
Deputy CEO for Corporate and Legal Affairs
(part-time)
2011–2015 PhosAgro AG,
Legal Affairs Director
2013 – Pr. PhosAgro,
Member of the Management Board
2015–2017 PhosAgro-Cherepovets,
Legal Affairs Director,
Member of the Management Board
2017–2019 Apatit,
Member of the Management Board
2017 – Pr. Apatit,
Legal Affairs Director
236/
237
Alexander
SHARABAIKA
Equity interest / Stake of ordinary shares: None
2017 – Pr. Apatit,
Advisor to the CEO (part-time)
2017–2019 Apatit,
Member of the Management Board
2018 – Pr.
PhosAgro,
Member of the Management Board
2019 – Pr. PhosAgro,
Deputy CEO for Finance and International
Projects
Date of birth: 25 February 1977
Education:
Belarus State Economic University,
Finance and Credit
Nottingham University Business School (UK),
Bachelor’s degree in Finance
Professional experience
2012–2014 PhosAgro AG,
CFO.
2013–2014 PhosAgro,
CFO (part-time)
2013–2015 PhosAgro AG,
Member of the Management Board
2013–2015 Ekoprombank,
Member of the Supervisory Board
2013–2017 PhosAgro,
Member of the Management Board
2014–2015 PhosAgro AG,
Advisor to the CEO (part-time)
2014–2016 PhosAgro-Cherepovets,
Member of the Management Board
2014–2019 PhosAgro,
CFO
2015–2017 PhosAgro-Cherepovets,
Advisor to the CEO (part-time),
Member of the Management Board
2015 – Pr. PhosAgro-Region,
Member of the Management Board
2017–2018 PhosAgro,
Member of the Board of Directors
Key competences
Law and corporate governance
Key competences
Finance and audit
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 CORPORATE
CONTROLS
The risk management and internal
control framework represents
a set of organisational measures,
methods, practices and standards
of corporate culture. It also
embraces actions taken
by the Company to strike the right
balance between value growth,
profitability and risks, support
financial sustainability, and ensure
efficient operations, protection
of its assets, compliance
with the laws, and bylaws, along
with timely and accurate reporting.
The Board of Directors
defines the key principles
of, and approaches to, risk
management and internal controls,
oversees the Company’s
executive bodies, and performs
other key functions. The Risk
Management Committee provides
recommendations to the Board
of Directors on identifying material
risks and developing relevant
management tools and measures
to enhance the risk management
framework. The Audit
Committee focuses on assessing
and making proposals to improve
the risk management and internal
control efficiency. On top
of that, its members supervise
the preparation of accounting
(financial) statements
and the measures taken
to prevent fraudulent behaviour
of the Company’s employees
or third parties.
For key roles and other relevant information,
see the Risk Management and Internal Control
Policy.
RISK MANAGEMENT AND INTERNAL
CONTROLS
102-30
Organisational structure of the risk management
and internal control framework
Review
Committee
Audit
Committee
Board of
Directors
Risk
Management
Committees
Executive bodies
(Management Board and CEO)
Internal Audit
Department
Risk Management
and Internal Control
Department
Other organisational
units
238/
239
The Review Committee elected
by the General Shareholders’
Meeting exercises control
over the financial and business
operations of the Company.
The executive bodies
establish and maintain
an efficient risk management
and internal control framework.
To this effect, they have set up
a Risk Commission that monitors
the status and effectiveness of risk
management initiatives. The results
serve as a basis for the relevant
proposals issued by the Commission
to executive bodies and the Board
of Directors.
Following the audits, the Internal
Audit Department provides
the Board of Directors and executive
bodies with recommendations
and reports, including, among
other things, the assessment
of the current status, reliability
and efficiency of the corporate
governance, risk management
and internal control framework.
The Risk Management and Internal
Control Department is charged
with the general supervision
of risk management, including
related activities and consolidated
reporting to the Board of Directors
and executive bodies.
As part of their duties, heads
of other organisational units
are responsible for building,
documenting, implementing,
monitoring and developing the risk
management and internal control
framework in their respective
functional areas. The framework
requires the Company’s employees
to identify and assess relevant
risks and efficiently implement
the controls and risk management
initiatives.
RISK MANAGEMENT
In 2020, PhosAgro’s risk
management and internal control
framework performed strongly
thanks to timely identification
and assessment of risks, as well
as development and implementation
of risk management measures.
On a quarterly basis,
the Board of Directors reviewed
reports on the management
of the Company’s key risks.
PhosAgro’s executives paid special
attention to managing these
key risks. The Risk Commission
continuously monitored the status
of risk management activities
and, when necessary, initiated
changes to improve those related
to key risks.
Development of the risk
management and internal
control framework in 2020
The Company is making a consistent
effort to develop its risk
management and internal control
framework. In 2020, the Board
of Directors reviewed the results
of the framework’s assessment,
which showed that it was on par
with those adopted by the industry’s
leading companies, including:
• full compliance with regulatory
requirements;
• risk management
and internal controls being
in place at production sites;
• analysis of key risk indicators;
• development of corrective
actions;
• follow-up control and review.
In 2020, the Company also
rearranged the risks related
to climate change and analysed
climate scenarios for its regions
of operation.
• the key risk indicators being
Plans for 2021
monitored;
• the risk appetites being evaluated
and regularly reviewed.
The reporting year saw
the production sites
and the Company as a whole
complete a full-year cycle of risk
management and internal control,
including:
• ongoing risk monitoring;
We look to maintain the existing
elements of our risk management
framework, focus on their further
integration into the Company’s
processes and practices,
and improve climate risk monitoring.
For information on key risks
and risk management, see
the Strategic Report section,
p. 72
CORPORATE GOVERNANCE REVIEW COMMITTEE
The General Shareholders’
Meeting held in May 2020 elected
the following members to the Review
Committee:
INTERNAL AUDIT
PhosAgro’s Internal Audit
Department (IAD) assists
the Company’s top executives
and the Board of Directors
in improving the management
of business processes and enhancing
the internal control and risk
• Ekaterina Viktorova;
• Elena Kryuchkova;
• Olga Lizunova.
The Committee endorsed PhosAgro’s
financial statements for 2020, with its
report dated 19 March 2021 included
in the materials for the Annual
General Shareholders’ Meeting.
management framework. In doing
this, it uses a risk-oriented approach
and works closely with the Risk
Management, Internal Control
and Economic Security Departments,
and the Company management.
Цели, задачи и полномочия внут-
реннего аудита определены
в Политике в области внутреннего
аудита, утверждённой Советом
директоров 16.08.2016.
Internal audit goals, objectives
and powers are outlined
in the Internal Audit Policy
as approved by the Board
of Directors on 16 August 2016.
plans, with the progress monitored
by the Internal Audit Department.
The 2021 audit plan covers following
business processes: logistics, project
management, insiders and inside
information, as well as IT audit
of production facilities.
for compliance with the requirements
of the International Standards
for the Professional Practice
of Internal Auditing and the Institute
of Internal Auditors’ Code of Ethics,
and carry out sample documentation
audits.
Going forward, external assessments
will take place once every three years.
AUDIT OF BUSINESS PROCESSES
The audit plan for the calendar
year is subject to review, discussion
and approval by the Audit Committee
and the Board of Directors. Audits
are performed at the Group level,
as well as at specific subsidiaries
and their standalone business
units. In addition, the Internal
Audit Department monitors
the effectiveness and efficiency
of corrective actions taken
by the management following the audit,
and reports to the Audit Committee
on a quarterly basis and to the Board
of Directors annually.
In 2020, the Internal Audit Department
fully met the annual action plan.
The audit covered the Company’s
business processes related to human
resource management and sales,
as well as IT audit of internal trading,
financial and economic function
analysis, testing of controls
over revenue and procurements.
Audits were followed by proposals
for automation of business processes,
streamlining key controls, better
cooperation between business
units. The management developed
and approved remedial action
EXTERNAL ASSESSMENT
In 2018, PwC completed an external
assessment of the IAD’s compliance
with the International Standards
for the Professional Practice
of Internal Auditing, the Institute
of Internal Auditors’ Code of Ethics
and the Corporate Governance Code
approved by the Bank of Russia.
For the IAD, the results were overall
positive. The Company is consistently
working to improve its internal audit
function according to the plan.
Following the assessment, the internal
audit methodology saw the following
amendments:
• annual audit plans take into
account the outcomes of reviewing
and assessing IT and information
security risks;
• each audit includes risk evaluation
and control testing for information
systems used by the audited
processes.
On top of that, the Company
is taking steps to improve
the quality of internal audit based
on feedback from the management
of the audited entities, ensure
regular self-assessment
240/
241
For more information
on the auditors, their selection
procedure and independence,
please see the Company’s
quarterly reports, as well
as the respective section
of this report that discusses
the Audit Committee’s activities
The full text
of the Regulation
on Insider
Information is available
on the official website
The company
EXTERNAL AUDIT
PhosAgro’s auditor performs
the audit of its financial and business
operations in compliance
with Russian laws and regulations
and the agreement signed
with the Company. The auditor
is approved by the Company’s
General Shareholders’ Meeting.
In 2020, the Company engaged KPMG
(Presnenskaya Naberezhnaya, 10,
Moscow, Russia) to audit its IFRS
financial statements.
In 2019, the Company engaged FBK
(44/1 Myasnitskaya St., Bld. 2AB,
Moscow, 101990, Russia) to audit its
RAS accounting statements.
Key aspects of the new version
of the Inside Information Regulation:
• requirements applying
to employees of both PhosAgro
and its subsidiaries;
• detailed description
of the procedure for obtaining
a permit to deal in securities;
• detailed procedure for arranging
and holding meetings
with analysts, shareholders,
and the media;
• detailed procedure for identifying
the Company’s inside information;
• detailed procedure for delaying
the disclosure of the Company’s
inside information.
2020 saw no violations of the Inside
Information Regulation.
INSIDE INFORMATION
PJSC PhosAgro has adopted
an Inside Information Regulation
compliant with the Russian
laws and the EU Market Abuse
Regulation (MAR). In accordance
with its provisions, the Corporate
Secretary’s office keeps a list
of insiders, persons discharging
managerial responsibilities (PDMR)
and persons closely associated
with them (PCA). The Regulation
defines the scope of responsibilities
for each insider group, which
the Corporate Secretary’s office
from time to time communicates
to respective persons. First
and foremost, these include
the limitations on the use
of inside information and trading
in the Company’s securities.
Depending on the group, an insider
may be prohibited from such
transactions or obliged to notify
the Company or obtain its consent
for such transactions. Every quarter,
the Corporate Secretary’s office
checks the list of shareholders
to identify transactions that may
have been executed in breach
of such limitations.
In 2020, the Board of Directors
approved a new version
of PhosAgro’s Inside Information
Regulation, which reflects Russia’s
latest legal developments and MAR
requirements.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 ETHICAL
PRACTICES
VALUES, PRINCIPLES, STANDARDS,
AND NORMS OF BEHAVIOUR
Elimination of any possible
occurrences bearing the signs
of corruption or potential conflict
of interest, and maintaining
the commitment of PhosAgro Group’s
employees to the highest ethical
behaviour are at the forefront
of the activities carried out
by the Company and its subsidiaries.
All employees of the Company,
including its management,
are personally responsible
for compliance with the ethical
principles and standards. Employees
who have violated internal regulations
are subject to the respective
sanctions, including social
condemnation, public censure through
publication in the Company’s media,
full or partial withholding of bonuses
in accordance with PhosAgro’s internal
documents, and – if the employee’s
action (omission) bears signs
of a disciplinary offence – disciplinary
measures also apply to such employee
pursuant to the Labour Code
of the Russian Federation.
102-16
102-17
A set of corporate legal, information
and explanatory measures has been
developed and adopted to ensure
that PhosAgro Group companies
comply with the civilised business
rules and generally recognised
business standards. These
measures are intended to improve
the shared corporate culture based
on high ethical standards, mutual
respect and good faith, maintaining
an atmosphere of trust among
employees, preventing and combating
fraud and corruption, identifying
and resolving any conflict of interest
arising within the scope of activities
carried out by the Company’s
employees and job applicants,
and minimising risks of employee
involvement in illegal activities.
PhosAgro Group uses its best
endeavours to improve, enhance
and protect its business reputation
as a fair, transparent and bona
fide partner, thus ensuring that
it communicates a positive
image to shareholders, potential
investors, partners, employees,
and counterparties. The Company
also applies its best efforts to avoid
corrupt practices that may result
in penalties and sanctions against
the Group’s entities and executives,
as well as a decline in stakeholder
trust.
242/
243
Activities carried out by PhosAgro Group in order to comply with the key principles and standards of ethical conduct
are governed by the following internal policies and procedures currently in effect
Document name
Code of Ethics
Anti-Corruption Policy
Content
The Code outlines the key principles and rules of ethical business conduct
underlying the corporate culture of PhosAgro Group companies
The Policy defines the goals and objectives and sets forth the Company’s
key principles and employee responsibilities in the sphere of anti-fraud and
anti-corruption
Regulations on Conflict of Interest
The Regulations establish the procedure for identifying and resolving conflicts of
interest arising with employees in the course of their employment
Regulations on the Commission for Combating
Fraud and Corruption and Regulating Conflicts of
Interest
The Regulations address and govern the issues pertaining to employee anti-
corruption compliance
Regulations on Internal Checks
Regulations on Inspections
Terms of use of the PhosAgro Hotline
The Regulations govern a set of actions taken to elicit the facts and identify
the circumstances, motives and conditions of misconduct, incidents, and other
violations of requirements set out in the Company’s internal documents
The Terms set out the goals and objectives with regard to the receipt of
employee reports on the matters pertaining to combating fraud, corruption and
theft and identifying conflicts of interest
Internal regulations are corporate legal instruments mandatory for all executives, officers,
and employees of the Company.
Notification tools in place at PhosAgro Group to notify the relevant Company’s executives of any instances
of misconduct and corrupt practices
Instrument
Description
Obligation
Any Company employee, as well as any member of the Board of Directors and Management Board who has
become aware of any actual or potential violation of law or PhosAgro’s internal regulations is obliged to
give a prompt notice of the same in writing.
The employee is obliged to notify the Company of any inducement to corruption and any violations
showing signs of corruption, including those targeted at other employees, counterparties or other parties
interacting with the Company
Communication
The procedures for reporting and consideration of violation reports are defined in the Anti-Corruption
Policy, the Code of Ethics, the Regulations on Conflict of Interest, and the anti-corruption agreement
Confidentiality and
protection
A person who has submitted the above notice/report is guaranteed confidentiality of the information
received, as well as such person’s personal data.
The Company assumes measures to protect the employee who has notified the employer of any actual or
potential of law and the Company’s internal regulations that poses a threat to its interests
Advice
PhosAgro’s Code of Ethics states that each Company employee, if they have any questions relating to anti-
corruption compliance or any concerns as to the rightness of their actions or the actions of other Company
employees, counterparties, or other parties interacting with the Company, may seek advice or assistance from
their immediate supervisors or, if need be, the relevant business units of the Company
PhosAgro Hotline
The Hotline operates to improve the efficiency of measures taken to prevent fraud, corruption, theft, and conflict
of interest, as well as mitigate the compliance and reputational risks resulting from violation of professional and
ethical standards by the Company’s employees
ANTI-CORRUPTION
205-1
The Company operates in strict
compliance with generally accepted
ethical business standards
and is intolerant to anyone taking
advantage of their official position
contrary to public or national
interests. To prevent fraud
and corruption, PhosAgro has
put in place its Anti-Corruption
Policy together with a system
covering 100% of its activities
and a commission on fraud,
corruption, and conflicts of interest.
The Company seeks to identify
and assess corruption risks
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 on a regular basis to keep
track of functions and positions
exposed to such risks. PhosAgro’s
management receives regular
reports on the progress
of anti-corruption initiatives
and the performance of the anti-
fraud and anti-corruption system.
Managers are required to identify
risks and prevent wrongdoings
within the scope of their authority
as provided for by internal
regulations, including Apatit’s Risk
Management Regulations.
PHOSAGRO’S PARTICIPATION IN COLLECTIVE EFFORTS TO COMBAT CORRUPTION
205-2
The Company’s Anti-Corruption
Policy is implemented in accordance
with Russian anti-corruption laws
and international conventions
(including the United Nations
Convention Against Corruption
and the OECD Convention).
with business communities
and participates in public
associations:
• the Anti-Corruption Charter
of the Russian Business;
• the Social Charter
To prevent and combat corruption,
the Company cooperates
of the Russian Business
sponsored by the Russian Union
of Industrialists and Entrepreneurs
(RSPP);
• the Russian Association
of Fertilizer Producers (RAFP),
a sectoral non-profit organisation
established by the largest Russian
producers of mineral fertilizers.
PREVENTING CORRUPTION THROUGH INTERACTION WITH PARTNERS AND COUNTERPARTIES
205-2
In line with its anti-fraud and anti-
corruption policies, PhosAgro seeks
to minimise the risk of business
relations with those potentially
involved in fraud and/or corruption
or tolerant to corrupt practices.
In 2020, PhosAgro refused to enter
into a contract with a business
partner because of the latter’s
fraudulent acts (resulting in criminal
proceedings). PhosAgro reminded
another counterparty of strict
compliance with the anti-corruption
clause which requires employees
to refrain from abusing their official
position in order to obtain any
benefits, such as money, valuables,
other property, or property-related
services.
COMMUNICATION AND TRAINING ABOUT ANTI-CORRUPTION POLICIES AND PROCEDURES
205-2
The Company offers ongoing
training programmes to educate
employees on anti-corruption
in order to minimise the risk
of their involvement in corrupt
practices. PhosAgro has put in place
a robust training system to prevent
any and all corrupt practices,
mitigate possible harm, and eliminate
the consequences thereof.
In 2020, the compliance officer
conducted an additional induction
training exercise for all new hires
on how to prevent and combat
corruption in practice in line
with internal regulations, with 543
briefings held.
Every year, the Company’s dedicated
training centres engage external
consultants to teach employees
of the Economic Security Department.
PhosAgro is considering an extension
of the annual anti-corruption
training programme to include blue-
collar workers as well, with a view
to covering 100% of the Company’s
headcount.
In 2020
5,441 employees
(white-collar workers) received
training or
32 %
of the Company’s headcount.
4,388 employees (26%) in 2019.
CONFIRMED INCIDENTS OF CORRUPTION AND ACTIONS TAKEN
244/
245
205-3
In 2020, two cases of corruption
were identified, one involving
an administrator of the Balakovo
branch at Tirvas Sanatorium
and the other one involving
a manager of PhosAgro Education
Centre. Following an internal
investigation, the Company
terminated their employment
and recovered damages in full,
with no criminal proceedings initiated.
In order to improve the efficiency
of measures aimed at preventing
corruption, fraud and theft,
the Company runs a hotline portal
which is governed by Hotline
Regulations PVD91-2018 dated 3
September 2018.
Reports received by the hotline
by category in 2020
2 2
20
41
5
32
30
2
Corruption
Conflicts of interest
External fraud
Reputational risks
Violations of law and tender procedures
Internal fraud
HSE
Other
For more information
on the Company’s non-
discrimination policy
and human rights, see
the People Development
and Environmental Report
sections.
NON-DISCRIMINATION POLICY
AND HUMAN RIGHTS
In its operations, PhosAgro remains
committed to generally accepted
ethical standards.
Our goal is to keep our working
environment free from restrictions
based on nationality, gender, age,
faith or other grounds as required
by the applicable laws. Any
decisions regarding promotion,
hiring, remuneration or benefits
are based solely on the employee’s
qualifications, performance, skills
and experience.
In 2020, the Board of Directors
and the Remuneration and Human
Resources Committee paid special
attention to human rights focusing
on diversity, equality of genders
and that of staff appointments.
The discussion led to the key
conclusion that every employee who
works dutifully and has professional
skills and competencies may apply
for any position within the Company,
including in an executive role.
CONFLICTS OF INTEREST
102-25
The Board of Directors pays special
attention to resolving conflicts
of interest, with independent
directors playing a crucial role
in their prevention. The restated
Regulations on Conflict of Interest
were approved by the Board
of Directors as part of the Company’s
internal anti-corruption regulations
in late 2018.
The Company’s Economic Security
Department is responsible
for identifying conflicts of interest
and taking the required corrective
actions. In its quarterly report,
the IAD informs the Board’s Audit
Committee of all complaints
received via the hotline and relevant
investigation results.
The Regulations on the Board
of Directors also contains provisions
defining a conflict of interest
and regulating the directors’ actions
if any such conflict arises. Every
year, at one of the Board’s in-person
meetings, directors are notified
of their duties in connection
with potential conflicts of interest.
In the reporting year, there were
no conflicts of interests among
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020
the Board members and the top
management.
The Company requires that its
respective managers complete
and submit their annual statements
on conflicts of interest in order
to prevent wrongdoings, combat
corruption, and comply with Russian
anti-corruption laws. It is mandatory
for the employee concerned
to disclose each and every actual
or potential conflict of interest.
The information provided is then
scrutinised for any connections
with potential counterparties.
Conflicts of interest are managed
by the Commission on Fraud,
Corruption and Conflicts of Interest.
In 2020, it considered
12 potential conflicts
of interest.
and conducted three internal
investigations, with disciplinary actions
taken against three employees.
The new version of the Conflict
of Interest Regulation can be found
on the Company’s official website
There are three ways to report
to the hotline: by phone at +8
8202 59 3232, e-mail at help@
phosagro.ru and regular mail
to the Economic Security
Department at 75 Severnoye
Highway, Cherepovets,
Vologda Region, 162622,
Russia. To ensure free access
to the Company’s hotline, all
existing communication channels
are posted on its website.
HOTLINE
The Company runs a hotline portal
which is governed by the Hotline
Regulations.
Reports received by the hotline
by category
Any employee or other stakeholder
can use PhosAgro’s hotline to report
any potential violations detrimental
to the Company’s interests, while
the Company may not disclose
the identity of the whistle-blower
to other employees and third parties.
In 2020, the hotline
received
134 calls
134
126
50
20
2
32
66
11
4
15
30
30
2019
2020
Occupational health, industrial safety
and ecology
Violations of legislation
and tender procedures
Internal fraud
External fraud
Other
246/
247
REMUNERATION
REPORT
BOARD OF DIRECTORS REMUNERATION
102-35
When deciding on a Board
composition, the General Meeting
of Shareholders approves
the amount
and the rules for determining
and paying remuneration
and compensation
to the Board members. According
to the Company’s Corporate
Governance Code, the Board
remuneration shall be in line
with current market trends and shall
be sufficient to enable the Company
to attract, motivate and retain highly
skilled professionals to help drive
the future growth and performance.
At the same time, the Company
avoids higher-than-necessary
remuneration.
During their term of office,
directors receive remuneration
and compensation for the expenses
they incur while discharging
their duties. Fixed (quarterly)
remuneration is paid to independent
Board members only. Additional
(quarterly) remuneration
is paid to the chairmen of Board
committees who are independent
directors and the non-employee
directors of the Board of Directors.
equivalent to USD 30,000 for a full
quarter.
If such independent or non-employee
director chairs two or more
committees, the additional (quarterly)
remuneration is increased to USD
45,000 for a full quarter.
The Chairman of the Board
of Directors who is an independent
director receives fixed (quarterly)
remuneration equivalent to USD
90,000 for a full quarter. Other
independent directors are paid
an equivalent of USD 45,000 for a full
quarter.
Additional (quarterly) remuneration
is payable to the chairmen of Board
committees who are either
independent directors or non-
employee directors in an amount
The Company compensates
directors for actual expenses
incurred by them while performing
their respective functions.
In 2020, the total remuneration paid
to the Board of Directors was
135.6 RUB mln
(excluding reimbursed expenses;
no salaries, bonuses, fees or other
remunerations were payable).
Board of Directors’ remuneration, RUB ths
Member of the Board of Directors
2018
2019
2020
Andrey A. Guryev
Andrey G. Guryev
Mikhail Rybnikov
Natalia Pashkevich
Sven Ombudstvedt
James Rogers
Ivan Rodionov
Marcus Rhodes
Andrey Sharonov
Xavier Rolet
Irina Bokova
Total
—
—
—
—
22,957.4
19,131.2
2,959.3
19,131.2
11,478.8
11,784.7
9,875.3
97,317.8
—
—
—
—
22,871.8
19,059.9
–
19,059.9
11,435.9
21,339.4
15,995.0
109,761.8
—
—
—
—
27,112.0
22,593.3
–
22,593.3
13,555.6
27,112.0
22,593.3
135,559.8
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020 REMUNERATION OF THE MANAGEMENT
102-36
REMUNERATION PRINCIPLES
The remuneration due
to the Company’s senior
executives consists of a monthly
base salary plus additional
compensation payable twice a year.
Additional compensation is linked
to achieving the Company’s key
performance indicators (KPIs)
and accomplishing additional tasks
and objectives, as determined
by the Board of Directors
and the CEO for the reporting
year or quarter. KPIs for each
senior manager are set by period
and take into account metrics
related to operational efficiency
and individual contribution
to the corporate growth
and strategic performance.
The Company calculates
the additional annual compensation
using EBITDA for the reporting
period as resolved by the Board
of Directors.
In 2013, PhosAgro implemented
a KPI framework in accordance
with the adopted Regulations
on KPI Targets and Performance
Assessment.
Depending on the manager level,
KPI proposals are reviewed
by the remuneration and human
resources committees of Apatit
and PhosAgro or in consultation
with the Human Resources and Social
Policy Director, functional managers
and key directors, while individual
KPI scorecards are determined
by the respective CEO or functional
manager.
Each year culminates in an order
which provides a basis for actual
KPIs and performance calculations
vs KPI scorecards, with interim KPI
assessments held every six months.
Any and all KPI disputes
are resolved by the Remuneration
and Human Resources Committee
for manager levels of N-1 and N-2
or in consultation with the Human
Resources and Social Policy Director,
functional managers and key
directors for levels of N-3 and below.
In 2020, the Company cascaded
the KPI framework down
to N-3 level (heads of units
and functions) in order to roll out
the performance assessment
process and incentivise managers’
focus on results and strategic goals.
The KPI framework now covers 277
employees, up 173 employees (163%)
year-on-year.
All KPIs are aligned
with the Company’s strategic
goals defined in its Strategy
to 2025 and oriented towards
their achievement.
KPI driven areas:
Commitment
to sustainability,
Expansion of production
capacities through
improved operational
efficiency,
63 %
of KPIs
28 %
of KPIs
Development in high-
potential areas,
3 %
of KPIs
Boosting logistics
efficiency,
Increasing sales
in priority markets,
Improved investment
case,
3 %
of KPIs
2 %
of KPIs
1 %
of KPIs
Performance breakdown
by management level, %
Performance breakdown
by function, %
109
108
104
104
105
106
100
120
115
112
N
N-1
N-2
N-3
The average employee
performance in 2020 stood
at
104 %
Capital Construction
Human Resources and Social Policy
Production Engineering
Logistics and Sales
IT
Other functions
248/
249
When defining KPIs for 2021,
the Company further increased
the number of sustainability KPIs
and expanded their coverage
of managers at all levels:
• sustainability KPIs were included
in KPI scorecards for managers
of the Marketing Department
and the Corporate Secretary
Office;
The KPI driven remuneration
as a percentage of annual salary
depends on the manager’s position
and level ranging from 15% for N-3
to 150% for N-1.
• in terms of OHS,
the KPI framework added LTIFR
for contractors, with OHS KPIs
now covering more KPI holders;
• in terms of human resources
and social policy, the KPIs
based on strategic sustainable
development goals were cascaded
down to more employees;
• in terms of environmental
protection, KPIs remained
unchanged vs 2020,
but the Company decided
to include climate change KPIs
in KPI scorecards for managers
in charge of implementing the low
carbon transition plan starting
from 2022.
The Company does not provide
for any compensation payable
to managers in case of their voluntary
resignation or the Company’s
acquisition or the change of its
owner (golden parachutes). Neither
does it use options, pre-determined
unconditional bonuses or a clawback
mechanism.
MANAGEMENT BOARD REMUNERATION
The amount of remuneration
and additional compensation due
to PhosAgro’s CEO is regulated
by a contract between them
and the Company, which is signed
by the Chairman of the Board
of Directors. The total remuneration
reflects the CEO’s qualifications
and their personal contribution
to the Company’s financial results.
Remuneration paid to the CEO and six other Management Board members who represent the senior management
team for their services to the Company, RUB ‘000
102-38
Pay type
Total
Salary
Bonus
Other types of remuneration
Fee
2018
2019
2020
185,575.96
90,288.48
94,929.98
357.5
0
451,201.7
170,490.6
280,408.6
302.5
0
1,098,922.6
421,033.0
677,807.1
82.5
0
EXTERNAL AUDITOR’S REMUNERATION
In 2020, the Company engaged KPMG
(10 Presnenskaya Embankment,
Moscow, Russia) to audit its IFRS
financial statements.
The actual remuneration paid
to the auditor for this service
stood at RUB 36.5 mln, net of VAT
and overhead costs.
In addition, KPMG was engaged
in preparing the Company’s Eurobond
issue and received RUB 16.3 mln, net
of VAT, for this service.
In 2020, the Company engaged
FBK to audit its RAS accounting
statements.
Furthermore, during the reporting
year, other agreements were
signed with the auditor for non-
audit services worth of RUB 1.8 mln,
net of VAT, as well as for non-audit
services provided to the Company’s
subsidiaries worth of RUB 4.9 mln, net
of VAT.
The actual remuneration
of FBK to audit the Company’s RAS
accounting statements in 2020 was
RUB 590,000 plus VAT.
CORPORATE GOVERNANCEPHOSAGRO INTEGRATED REPORT 2020
83%
dividend payout ratio based on
net profit after foreign exchange
differences
Share
capital
PhosAgro is committed to striking an effective and
reasonable balance between the payment of dividends
and reinvestment of profit in further development. Higher
transparency and predictability of dividend payments are
a priority for the Company as it seeks to strengthen its
investment case.
SHARE
CAPITAL
OWNERSHIP STRUCTURE
The authorised capital
of PhosAgro (the “Company”)
as at 31 December 2020 amounted
to RUB 323,750,000 consisting
of 129,500,000 ordinary shares
with a par value of RUB 2.5 per
share.
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 Andrey Guryev
and members of his family.
The register of holders
of PhosAgro’s securities is main-
tained by JSC Reestr whose details
are set out in the Contacts section.
As at 31 December 2020,
there were no shareholders
in the Company with a stake
of more than 5% beyond those
already disclosed by the Company
in this report.
The Company is unaware
of any shareholders that may
gain or have gained control
disproportionate to their share
in the Company’s authorised capital,
including by virtue of shareholder
agreements.
The current
ownership
structure
is available
on the Company’s
website
Shareholding structure as at 29 December 2018
Shareholders
Number of shares
% of issued and
outstanding shares
Adorabella Limited
Chlodwig Enterprises Limited
Evgeniya Guryeva
Vladimir Litvinenko
Igor Antoshin
Other shareholders
Total
27,385,162
29,151,400
6,235,960
25,052,800
5,941,353
35,733,325
21.15
22.51
4.82
19.35
4.59
27.59
129,500,000
100.00
Shareholding structure as at 31 December 2019
Shareholders
Number of shares
% of issued and
outstanding shares
Adorabella Limited
Chlodwig Enterprises Limited
Evgenia Guryeva
Vladimir Litvinenko
Other shareholders
Total
32,176,662
24,359,900
6,235,960
27,174,815
39,552,663
24.85
18.81
4.82
20.98
30.54
129,500,000
100.00
Shareholding structure as at 31 December 2020
Shareholders
Number of shares
% of issued and
outstanding shares
Adorabella Limited
Chlodwig Enterprises Limited
Evgeniya Guryeva
Vladimir Litvinenko
Other shareholders
Total
30,234,162
26,302,400
6,235,960
27,174,815
39,552,663
23.35
20.31
4.82
20.98
30.54
129,500,000
100.00
252/
253
SHARE
PERFORMANCE
PhosAgro’s shares
are traded on the A1 quotation
list of the Moscow Exchange
under the ticker symbol PHOR (ISIN:
RU000A0JRKT8).
Global depositary receipts (three
GDRs represent one share)
are traded in the Main Market
of the London Stock Exchange
under the symbol PHOR.
Shares of PhosAgro are included
in the following indices of the Moscow
Exchange:
• MSCI Russia;
• MSCI Emerging Markets;
• MOEX Russia;
• RTS.
Citigroup Global Markets Deutschland
AG acts as the depositary
for the Company’s GDR Programme.
Share/GDR performance in 2020
Tickers
STOCK SYMBOLS
STOCK EXCHANGE
BLOOMBERG
TICKER
REUTERS
ISIN
Moscow Exchange
PHOR RU
PHOR.MM
RU000A0JRKT8
London Stock Exchange
PHOR LI
PHORq.L
US71922G2093
Codes for Regulation S Global
Depositary Receipts
Codes for Rule 144A Global
Depositary Receipts
Regulation S Global Depositary
Receipts
Rule 144A Global Depositary Receipts
CUSIP:
71922G209
ISIN:
US71922G2093
CUSIP:
71922G100
ISIN:
US71922G1004
Common code:
065008939
SEDOL:
0B62QPJ1
Common code:
065008939
SEDOL:
0B5N6Z48
RIC: PHOSq.L
RIC: GBB5N6Z48.L
3500
3250
3000
2750
2500
2250
2000
The key factors affecting
the Company’s share performance
in 2020:
• global factors: COVID-19 pandemic,
events surrounding the elections
in the USA, petition filed by Mosaic
against imports from Morocco
and Russia, higher fertilizer prices;
• internal factors: strong
performance, high and regular
dividend payments.
15
14
13
12
11
10
9
January February March
April
May
June
July
August September October November
December
GDR price (LSE)
Share price (MOEX) rebased to one GDR
Share performance as at 31 December 2020
Share price on the Moscow Exchange, RUB
GDR price on the London Stock Exchange, USD
Market capitalisation, USD mln
3,133.00
13.64
5,299.00
For more
information
on our historical
share
performance,
please visit
SHARE CAPITAL 254/
255
Reporting period for which (following the
results of which) the declared dividends
are (were) paid
Declared
dividends, total,
RUB
ordinary
share, RUB
depositary
receipt, RUB
Declared dividends per:
ANALYST COVERAGE
PhosAgro is covered by analysts from leading Russian and international brokers.
Company
Analyst
Aton
Andrey Lobazov
BCS Investment Bank
Kirill Chuyko
VTB Capital
Goldman Sachs
Elena Sakhnova
Artem Vodyannikov
Nina Dergunova
Ilya Dmitriev
BMO
Joel Jackson
Sberbank CIB
Irina Lapshina
Alexey Kirichok
Bank of America
Sashank Lanka
Alfa Bank
Boris Krasnojenov
Yulia Tolstykh
Renaissance Capital
Derick Deale
Phone
+7 (495) 213 03 37
+7 (495) 213 15 26
+7 (495) 213 15 03
+7 (495) 287 68 77
+7 (495) 645 42 30
+1 (416) 359 42 50
+7 (495) 258 05 11
+971 (44) 258 23 11
+7 (495) 795 36 12
+27 (11) 750 14 58
DIVIDEND POLICY
PhosAgro is committed to striking
an effective and reasonable balance
between the payment of dividends
and reinvestment of profit
in further development. Higher
transparency and predictability
of dividend payments are a priority
for the Company as it seeks
to strengthen its investment case.
All resolutions on the payment
of dividends and the timing
and amount of such payment
are subject to approval
of the General Shareholders’ Meeting,
based on recommendations provided
by the PhosAgro Board of Directors.
When preparing recommendations
for the General Shareholders’
Meeting on any dividend payout
(declaration), besides the current
financial standing assessment,
the Board of Directors factors
in and sticks to relevant provisions
of the Company’s dividend policy
which states that the amount
of distributed dividends ranges
from 50% to over 75% (subject
to the Company’s leverage ratio)
of the Company’s consolidated
free cash flow for the respective
year under IFRS. At the same time,
the amount of declared dividends
should not be lower than 50% of net
profit for the year under IFRS.
On 14 April 2021, PhosAgro’s Board
of Directors recommended that
the Annual General Shareholders’
Meeting (AGM) approve dividends
of RUB 63 per share (RUB 21
per depositary receipt), or RUB
8,158.5 mln in total. If approved
by the Annual General Shareholders’
Meeting on 25 May 2021, declared
dividends for 2020 will amount
to RUB 38,461.5 mln or 90%
of the free cash flow calculated
on the basis of the Company’s
2020 IFRS consolidated financial
statements.
Dividend information
Type and date of the General
Shareholders’ Meeting where
the relevant resolution on
the declaration of dividends
was adopted
EGM 14 December 2020
EGM 30 September 2020
EGM 19 June 2020
AGM 22 May 2020
EGM 24 January 2020
EGM 4 October 2019
EGM 24 June 2019
AGM 24 May 2019
EGM 22 January 2019
EGM 1 October 2018
EGM 6 July 2018
AGM 30 May 2018
EGM 26 February 2018
EGM 2 October 2017
EGM 5 July 2017
–1
–1
–1
–1
–1
–1
–1
–1
–1
–1
–1
–1
–1
–1
–1
AGM 30 May 2017
2016
EGM 16 January 2017
EGM 3 October 2016
EGM 29 July 2016
–1
–1
–1
AGM 31 May 2016
2015
EGM 15 January 2016
EGM 6 October 2015
EGM 14 July 2015
–1
–1
–1
AGM 8 June 2015
2014
EGM 31 December 2014
9M 2014
EGM 16 September 2014
6M 2014
AGM 13 June 2014
–1
15,928,500,000
123.00
4,273,500,000
33.00
10,101,000,000
78.00
2,331,000,000
18.00
6,216,000,000
48.00
6,993,000,000
54.00
9,324,000,000
72.00
6,604,500,000
51.00
9,324,000,000
72.00
5,827,500,000
45.00
3,108,000,000
24.00
1,942,500,000
15.00
2,719,500,000
21.00
3,108,000,000
24.00
2,719,500,000
21.00
3,885,000,000
30.00
5,050,500,000
39.00
4,273,500,000
33.00
8,158,500,000
63.00
7,381,500,000
57.00
8,158,500,000
63.00
7,381,500,000
57.00
6,216,000,000
48.00
1,942,500,000
15.00
2,590,000,000
20.00
3,237,500,000
25.00
2,499,350,000
19.30
41.00
11.00
26.00
6.00
16.00
18.00
24.00
17.00
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
The full text of our dividend
policy is available
For more information
on our dividend policy
and dividend history, please visit
1.
Payments were made from undistributed profit for previous years.
SHARE CAPITALPHOSAGRO INTEGRATED REPORT 2020 DEBT MANAGEMENT
INFORMATION DISCLOSURE
256/
257
The Company uses a conservative
approach to leverage and believes
that a comfortable net debt/EBITDA
ratio should be below 2х or even
within a range of 1–1.5х in the long
run. When determining its borrowing
requirements, the Company
assesses the cost of borrowing
from banks and public debt markets,
the amount and maturity available
while striving to ensure that this fits
into the Group’s long-term debt
reduction strategy. The choice
of the currency of borrowings
is based on the structure
of the Company’s revenue, 70%
of which is in foreign currency
and the rest is strongly correlated
with US Dollar exchange rate.
BONDS
Borrower
Issuer
PJSC PhosAgro
PJSC PhosAgro
PJSC PhosAgro
PhosAgro Bond Funding
Limited
PhosAgro Bond Funding
Limited
PhosAgro Bond Funding
Limited
PhosAgro strictly follows the requirements imposed by Russian securities regulations, as well as rules
for the companies traded on the LSE. The Company publicly discloses all required information to shareholders
and investors in a timely manner through authorised newswires, the corporate website, PhosAgro’s official disclosure
page on the Interfax portal, and at the LSE webpage.
Settlement date
3 May 2017
24 January 2018
23 January 2020
Principal outstanding, USD
500,000,000
500,000,000
500,000,000
Guarantors
Apatit, PhosAgro-Cherepovets
Apatit
Apatit
Corporate website
Official disclosure
PhosAgro’s official
disclosure page
on the Interfax portal
The Company’s page
on the LSE website
RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS
At PhosAgro, we are committed
to transparency and consistency,
and maintain an ongoing dialogue
with the investor community
through a variety of communication
channels and with involvement
of the Company’s senior
management and independent
directors.
• We keep the market abreast
of the Company’s performance
by publishing quarterly operational
and financial results that
are made available to investors
via press releases, presentations,
conference calls and webcasts.
On top of that, we take
every opportunity to answer
investors’ questions and gather
feedback from market players
by participating in industry
and regional investment
conferences.
• Regular NDRs allow us to expand
our investor base through
meetings arranged outside of key
financial market centres.
• A well developed Eurobond
programme helps reinforce
the Company’s position
in the public debt market
while ensuring the lowest cost
of funding.
In 2019, the Company held over 240
meetings with Russian and foreign
investors. In 2020, despite all
the COVID-19 restrictions, we managed
to maintain the same number
of online meetings and conference
calls with major global, European,
and Russian investors, including
Fidelity, BlackRock, J.P. Morgan Asset
Management and more.
In 2020, the Company to conduct
its first-ever ESG investor survey
and plans to make it a regular exercise
going forward. All respondents
confirmed that ESG was
an integral part of their investment
philosophy and a relevant factor
in their investment decision-making.
The survey covered 31 investors,
six of whom were also interviewed.
All respondents confirmed
their commitment to the UN Principles
for Responsible Investment (PRI)
and SDGs and said they viewed climate
change as a high-priority issue.
For more information
on our initiatives
and their accompanying
presentations, please
visit the Calendar section
of the Company’s official website.
SHARE CAPITALPHOSAGRO INTEGRATED REPORT 2020 50.4%
increase in free cash
flow in 2020
Financial
statements
In 2020, PhosAgro’s cash flow hit a high of
RUB 42.5 bln, buoyed by the consistently
strong sales and more efficient working
capital management.
Independent Auditors’ Report
To the Shareholders and Board of Directors of PJSC “PhosAgro”
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 2020, 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 2020,
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 International Code of Ethics
for Professional Accountants (including International Independence Standards) (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.
PJSC “PhosAgro”
Independent Auditors’ Report
Page 2
260/
261
Valuation of deferred tax assets
Please refer to the Note 18 in the consolidated financial statements.
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.
The Group regularly considers possible
options for utilization of deferred tax
asset and assesses recoverability based
on the most likely utilization option. The
recovery of the deferred tax assets also
depends on achieving sufficient taxable
profits in the future.
The assessment of the recoverability of
tax losses depends on the projected
profitability of the Group, which is formed
on the basis of planned sales volumes
and prices
for sold products and
expected inflation rates and exchange
rates.
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.
Our audit procedures included the following:
We considered the Group’s assessment of
possible options for the utilization of deferred
tax asset and its assessment of the likelihood
of those options.
We tested the accuracy of the taxable profits
forecast model used
the
recoverability of deferred tax assets.
to estimate
the appropriateness of
We evaluated
management’s
and
assumptions
key
estimates used by management to assess the
likelihood of generating sufficient
future
taxable profits to support the recognition of
deferred tax assets, taking into account
external market indicators such as trends in
prices for chemical fertilizers, inflation rates
and exchange rates.
Using KPMG tax specialists, we considered
the appropriateness of the application of
relevant tax legislation by the Group, in
losses,
the utilization of
relation
including analysis of the most likely option for
their utilization.
tax
to
Key Audit Matters
Other Information
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.
Audited entity: PJSC “PhosAgro”
Registration number in the Unified State Register of Legal Entities:
No. 1027700190572.
Moscow, Russia
Independent auditor: JSC “KPMG”, a company incorporated under the Laws of
the Russian Federation, a member firm of the KPMG global organization of
independent member firms affiliated with KPMG International Limited, a private
English company limited by guarantee.
Registration number
No. 1027700125628.
in
the Unified State Register of Legal Entities:
Member of
the Self-regulatory Organization of Auditors Association
“Sodruzhestvo” (SRO AAS). Principal registration number of the entry in the
Register of Auditors and Audit Organizations: No. 12006020351.
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.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 PJSC “PhosAgro”
Independent Auditors’ Report
Page 3
PJSC “PhosAgro”
Independent Auditors’ Report
Page 4
262/
263
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.
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, actions taken to eliminate threats or safeguards
applied.
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
18 February 2021
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME FOR 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
264/
265
Revenues
Cost of sales
Gross profit
Administrative expenses
Selling expenses
Taxes, other than income tax, net
Other expenses, net
Operating profit
Finance income
Finance costs
Foreign exchange (loss)/gain, net
COVID-19 related expenses
Profit before tax
Income tax expense
Profit for the year
Attributable to:
Non-controlling interests1
Shareholders of the Parent
Other comprehensive income/(loss)
Note
2020
RUB Million
6
8
9
10
11
12
13
13
30(b)
14
253,879
(133,335)
120,544
(17,828)
(39,588)
(2,962)
(2,512)
57,654
975
(5,455)
(25,070)
(1,434)
26,670
(9,749)
16,921
(11)
16,932
2019
RUB Million
248,125
(136,224)
111,901
(16,476)
(38,121)
(2,384)
(3,269)
51,651
1,458
(4,271)
12,346
-
61,184
(11,776)
49,408
59
49,349
Items that will never be reclassified to profit or loss
Actuarial losses
28
(28)
(133)
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 interests1
Shareholders of the Parent
Basic and diluted earnings per share (in RUB)
25
2,345
2,317
19,238
(11)
19,249
131
(1,129)
(1,262)
48,146
59
48,087
381
The consolidated financial statements were approved on 18 February 2021:
A.A. Guryev
Chief executive officer
A.F. Sharabaiko
Deputy CEO for Finance and International Projects
1.
Non-controlling interests are the minority shareholders of the subsidiaries of PJSC “PhosAgro”
Assets
Property, plant and equipment
Advances issued for property, plant and equipment
Right-of-use assets
Catalysts
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
Actuarial losses
Foreign currency translation reserve
Equity attributable to shareholders of the Parent
Equity attributable to non-controlling interests
Total equity
Liabilities
Loans and borrowings
Lease liabilities
Defined benefit obligations
Deferred tax liabilities
Non-current liabilities
Loans and borrowings
Lease liabilities
Trade and other payables
Current liabilities
Total equity and liabilities
Note
31 December 2020
RUB million
31 December 2019
RUB million
15
16
17
18
19
20
21
22
23
24
26
27
28
18
26
27
29
220,031
7,835
7,335
2,292
1,621
556
7,462
948
199,459
13,006
6,891
2,376
1,567
519
8,214
1,636
248,080
233,668
311
32,636
32,887
8,460
74,294
322,374
372
7,494
88,887
(717)
9,581
105,617
129
105,746
103,824
4,268
945
11,196
120,233
55,316
1,927
39,152
96,395
322,374
251
29,405
31,061
8,236
68,953
302,621
372
7,494
111,054
(689)
7,236
125,467
170
125,637
96,736
4,701
857
10,278
112,572
36,839
1,543
26,030
64,412
302,621
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 CONSOLIDATED STATEMENT OF CASH FLOWS
FOR 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR 2020
266/
267
2020
RUB
million
2019
RUB
million
Note
57,654
51,651
Attributable to shareholders of the Parent
RUB Million
Share
capital
Share
premium
Retained
earnings
Actuarial
losses
Foreign currency
translation
reserve
Attributable to
non-controlling
interests
Total
Balance at 1 January 2019
372
7,494
93,951
(556)
8,365
195
109,821
Cash flows from operating activities
Operating profit
Adjustments for:
Depreciation and amortisation
8, 9, 10
26,626
23,931
Loss on disposal of property, plant and equipment and intangible assets
12
209
611
Operating profit before changes in working capital and provisions
(Increase)/decrease in inventories and catalysts
(Increase)/decrease in trade and other receivables
Increase 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
84,489
76,193
(1,843)
(345)
12,020
1,593
2,764
5,398
94,321
85,948
(6,462)
(10,550)
(4,121)
(3,842)
83,738
71,556
Acquisition of property, plant and equipment and intangible assets
(40,878)
(42,656)
Loans repaid/(issued), net
Proceeds from disposal of property, plant and equipment
Payments for settlement of financial instruments
Finance income received
Other payments
Cash flows used in investing activities
Cash flows from financing activities
Proceeds from borrowings, net of transaction costs1
Repayment of borrowings
Early eurobond partial redemption fees
Dividends paid to shareholders of the Parent
Dividends paid to non-controlling interests
Leases paid
Other payments
Proceeds from settlement of derivatives, net
Cash flows used in financing activities
Net (decrease)/ increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Effect of exchange rates fluctuations
147
37
42
653
(84)
86
-
637
(1,220)
(1,267)
(41,219)
(43,284)
26
26
13
24
63,520
48,725
(66,182)
(42,698)
(292)
-
(38,852)
(32,244)
(30)
(84)
27
(1,951)
(1,937)
(249)
-
-
112
(44,036)
(28,126)
(1,517)
146
8,236
9,320
1,741
(1,230)
Cash and cash equivalents at 31 December
23
8,460
8,236
1.
Transaction cost RUB 170 million for 2020 [RUB 0 million for 2019]
Total comprehensive income
Profit for the year
Actuarial losses, note 28
Foreign currency translation
difference
Transactions with owners
recognised directly in equity
Dividends to shareholders
of the Parent
-
-
-
-
-
-
-
-
-
-
-
-
49,349
-
-
-
(133)
-
49,349
(133)
(32,246)
(32,246)
-
-
Balance at 31 December 2019
Balance at 1 January 2020
372
372
7,494
111,054
(689)
7,494
111,054
(689)
Total comprehensive income
Profit for the year
Actuarial losses, note 28
Foreign currency translation
difference
Transactions with owners
recognised directly in equity
Dividends to shareholders
of the Parent, note 24
Other
-
-
-
-
-
-
-
-
-
-
-
-
-
16,932
-
-
-
(28)
-
16,932
(28)
(38,850)
(249)
(39,099)
-
-
-
-
-
(1,129)
(1,129)
-
-
7,236
7,236
-
-
2,345
2,345
-
-
-
59
49,408
-
-
(133)
(1,129)
59
48,146
(84)
(32,330)
(84)
(32,330)
170
125,637
170
125,637
(11)
16,921
-
-
(28)
2,345
(11)
19,238
(30)
(38,880)
-
(249)
(30)
(39,129)
Balance at 31 December 2020
372
7,494
88,887
(717)
9,581
129
105,746
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR 2020
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.
The Company’s key shareholders are two Cyprus entities holding approximately 44% of the Company’s ordinary
shares in total. 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.
(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.
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.
Since the beginning of 2020, the COVID-19 virus has become a global pandemic. Together with other factors, this has
resulted in a sharp decrease of the stock market indices, which, on the backdrop of simultaneous oil price collapse,
led to depreciation of the Russian Rouble. PhosAgro was one of the first companies in Russia to start introducing
measures to combat the spread of the virus among its employees. The Group provided protective equipment, medical
supplies, testing kits and other essentials to the communities where it operates. The Group has developed plans
for mitigating the impact on its business and has reviewed the economic environment; the demand for the Group’s
products; its supply chain; its available bank facilities; and the possible effects on its cash flow and liquidity position,
including consideration of debt covenants. Management has considered events and conditions that could give
rise to material uncertainties and concluded that the range of possible outcomes does not cast significant doubt
over the Group’s ability to continue as a going concern.
268/
269
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) Going concern
Note 30 to the consolidated financial statements includes the Group’s objectives, policies and processes for managing
its capital; its financial risk management objectives; details of its financial instruments; and its exposures to credit risk
and liquidity risk.
The Group has considerable financial resources together with long-standing relationships with a number of customers
across different geographic areas. The excess of current liabilities over current assets would be resolved by raising
of new long-term borrowings, please see the Note 30 (d). As a consequence, the directors believe that the Group is well
placed to manage its business risks successfully.
The directors remain confident that the Group has adequate resources to continue in operational existence
for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual
financial statements.
(c) Basis of measurement
The consolidated financial statements are prepared on the historical cost basis except for the financial assets
measured at fair value.
(d) 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, EUR
and other currencies.
(e) 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 2020 were translated at the closing exchange rate of RUB 73.8757 for USD 1
(31 December 2019: RUB 61.9057 for USD 1);
• Profit and loss items for 2020 were translated at the average exchange rate for the appropriate month for USD 1:
January
February March
April
May
June
July
August
September October
November
December
61,7823
63,8836
73,3183
75,2321
72,6187
69,2239
71,2853
73,7998
75,6621
77,5924
77,0462
74,0563
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.
Profit and loss items for three months ended 31 March 2019, 30 June 2019, 30 September 2019 and 31 December 2019
were translated at the average exchange rates RUB 66.1271, RUB 64.5584, RUB 64.5685 and RUB 63.7192 for USD 1
respectively;
• 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.
The translation from EUR into RUB, where applicable, was performed as follows:
• Assets and liabilities as at 31 December 2020 were translated at the closing exchange rate of RUB 90.6824 for EUR 1
(31 December 2019: RUB 69.3406 for EUR 1);
• Profit and loss items for 2020 were translated at the average exchange rate for the appropriate month for EUR 1:
January
February March
April
May
June
July
August
September October
November December
68,7249
69,7001
81,0512
81,9481
79,0550 77,9624
81,3800 87,3414
89,2870
91,2900
91,0875
90,0734
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 Profit and loss items for three months ended 31 March 2019, 30 June 2019, 30 September 2019 and 31 December
2019 were translated at the average exchange rate RUB 75.1715, RUB 72.5210, RUB 71.8329 and RUB 70.5414 for EUR 1
respectively;
• 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.
(f) 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)(iii) – estimated useful lives of property, plant and equipment;
• note 18 – recognition of deferred tax assets: availability of future taxable profit against which carry-forward tax
losses can be used.
(g) Adoption of new and revised standards and interpretations
The following amended standards became effective from 1 January 2020, but did not have any material impact
on the Group:
• Amendments to the Conceptual Framework for Financial Reporting (issued on 29 March 2018 and effective
for annual periods beginning on or after 1 January 2020).
• Definition of a business – Amendments to IFRS 3 (issued on 22 October 2018 and effective for acquisitions
from the beginning of annual reporting period that starts on or after 1 January 2020).
• Definition of materiality – Amendments to IAS 1 and IAS 8 (issued on 31 October 2018 and effective for annual periods
beginning on or after 1 January 2020).
• Interest rate benchmark reform - Amendments to IFRS 9, IAS 39 and IFRS 7 (issued on 26 September 2019
and effective for annual periods beginning on or after 1 January 2020).
• COVID-19-Related Rent Concessions Amendment to IFRS 16 (issued on 28 May 2020 and effective for annual periods
beginning on or after 1 June 2020).
(h) New standards and interpretations not yet adopted
A number of new standards and interpretations have been issued that are mandatory for the annual periods
beginning on or after 1 January 2021 or later, and which the Group has not early adopted, but is in process of assessing
the impact on the Group’s consolidated financial statements.
• IFRS 17 “Insurance Contracts” (issued on 18 May 2017 and effective for annual periods beginning on or after
1 January 2023).
• Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for annual periods
beginning on or after 1 January 2023).
• Classification of liabilities as current or non-current – Amendments to IAS 1 (issued on 23 January 2020
and effective for annual periods beginning on or after 1 January 2022).
• Classification of liabilities as current or non-current, deferral of effective date – Amendments to IAS 1 (issued
on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023).
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271
• Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the Conceptual
Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs
2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual periods
beginning on or after 1 January 2022).
• Interest rate benchmark (IBOR) reform – phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (issued
on 27 August 2020 and effective for annual periods beginning on or after 1 January 2021).
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently to all periods presented in these consolidated
financial statements.
(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 measured at FVOCI 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.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 (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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273
(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.
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.
(e) Financial instruments
Non-derivative financial instruments
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.
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.
(ii) Subsequent expenditure
Expenses in connection with ordinary maintenance and repairs are recognised in the consolidated statement of profit
or loss and other comprehensive income 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 of property, plant and equipment
are capitalised and depreciated on a systematic basis.
(iii) 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
Plant and equipment
Fixtures and fittings
12 to 17 years;
4 to 15 years;
3 to 6 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.
The Group financial assets are classified in the following measurement categories based 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;
and
• 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:
Tangible fixed assets acquired after the date of adoption of IFRS, are depreciated over the following useful lives:
• they are held within a business model whose objective is achieved by both collecting contractual cash flows
Buildings
Plant and equipment
Fixtures and fittings
10 to 60 years;
5 to 35 years;
2 to 25 years.
and selling financial assets; and
• 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”).
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 (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.
(h) Leases
As a lessee
Applying IFRS 16 for all leases (except as noted below), the Group:
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275
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.
(g) Impairment
Financial assets
The Group recognises loss allowances for expected credit loss (ECLs) on financial asset measured at amortised cost
and debt investments measured at fair value through other comprehensive income (“FVOCI”). The 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.
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.
• Recognises right-of-use assets and lease liabilities in the consolidated statement of financial position, initially
measured at the present value of future lease payments;
• Recognises depreciation of right-of-use assets and interest on lease liabilities in the consolidated statement of profit
or loss and other comprehensive income; and
• Separates the total amount of cash paid into a principal portion (presented within financing activities) and interest
(presented within operating activities) in the consolidated statement of cash flows.
The Group determines its incremental borrowing rate by obtaining interest rates from various external financing
sources and making certain adjustments to reflect the terms of the lease and type of the asset leased.
Lease payments included in the measurement of the lease liability comprise the following:
• fixed payments;
• variable lease payments that depend on the rate;
• amounts expected to be payable under a residual value guarantee.
Lease liability is measured at amortised cost using the effective interest method. It is revalued when there is a change
in future lease payments arising from adjusted interest rate, extension or termination option and other events.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets.
For short-term leases (lease term of 12 months or less) and leases of low-value assets the Group has opted
to recognise a lease expense on a straight-line basis as permitted by IFRS 16. This expense is presented within cost
of sales, administrative expenses and selling expenses in the consolidated statement of profit or loss and other
comprehensive income.
(i) 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.
(ii) Dividends
Dividends are recognised as a liability in the period in which they are declared.
(j) 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.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 (k) 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.
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.
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.
(l) 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.
(m) 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.
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(n) 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 be entitled
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. 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 selling
expenses.
(o) Finance income and costs
Finance income comprises interest income, dividend income, gain on the financial assets at FVTPL, gain arising
from operations with foreign currency, unwind of discount of financial assets, share of profit of associates 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, loss on the financial assets at FVTPL, bank fees, securitisation
fees, loss arising from operations with foreign currency, discount of financial assets, share of loss of associates
and foreign currency losses. 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, gains and losses arising from operations with foreign currency, securitisation fees,
share of profit and losses of associates are reported on a net basis.
(p) 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.
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.
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.
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.
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.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 (q) 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.
(r) 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.
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:
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.
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
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.
(s) 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.
• 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.
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.
Fair values have been determined for measurement and / or disclosure purposes based on the methods described
in notes 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.
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279
Segment capital expenditure is the total cost incurred during the year to acquire property, plant and equipment.
(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.
(c) Other financial liabilities not measured at fair value
The fair values of other financial liabilities, which are mainly loans and borrowings and 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.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 5 SEGMENT INFORMATION
Segment information of the Group as at 31 December 2019 and for the year then ended is as follows:
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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 Cherepovets, Balakovo and Volkhov, and production and distribution of apatite
concentrate extracted from the apatite-nepheline ore, which is mined and processed in Kirovsk;
• Nitrogen-based products segment includes mainly production and distribution of ammonia, ammonium nitrate
and urea on the factory located in Cherepovets.
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.
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.
Segment information as at 31 December 2020 and for the year then ended is as follows:
RUB million
Segment revenue and profitability
Phosphate-based
products
Nitrogen-based
products
Other
operations
Total
Segment external revenues,
203,561
38,701
11,617
253,879
thereof:
Export
Domestic
Cost of sales
Gross segment profit
Certain items of profit or loss
Amortisation and depreciation
Total non-current segment assets1
Additions to non-current assets1
135,506
68,055
(106,240)
97,321
(20,545)
169,287
43,678
31,530
7,171
(16,489)
22,212
(5,558)
56,613
4,356
1,771
168,807
9,846
85,072
(10,606)
(133,335)
1,011
120,544
(523)
(26,626)
5,379
231,279
784
48,818
RUB million
Segment revenue and profitability
Phosphate-based
products
Nitrogen-based
products
Other
operations
Total
Segment external revenues,
201,248
37,882
8,995
248,125
thereof:
Export
Domestic
Cost of sales
Gross segment profit
Certain items of profit or loss
Amortisation and depreciation
Total non-current segment assets1
Additions to non-current assets1
The analysis of export revenue by regions is as follows:
135,220
66,028
(111,086)
90,162
(17,521)
144,680
37,084
31,100
6,782
(16,609)
21,273
(5,723)
60,645
5,587
1,098
7,897
167,418
80,707
(8,529)
(136,224)
466
111,901
(687)
(23,931)
4,968
210,293
963
43,634
Europe
South America
India
Africa
North America
CIS
Asia
Australia
2020
RUB million
2019
RUB million
66,516
41,915
21,623
12,336
12,287
10,512
3,519
99
72,372
34,836
14,153
9,509
19,397
13,634
3,477
40
168,807
167,418
1.
Total non-current segment assets include property, plant and equipment, intangible assets, right-of-use assets and catalysts.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 6 REVENUES
9 ADMINISTRATIVE EXPENSES
Phosphate-based products
Sales of chemical fertilisers
Sales of apatite concentrate
Sales of nepheline concentrate
Sales of other phosphate-based products and services
Nitrogen-based products
Other
7 PERSONNEL COSTS
Cost of sales
Administrative expenses
Selling expenses
8 COST OF SALES
Depreciation
Materials and services
Salaries and social contributions
Natural gas
Potash
Repair expenses
Chemical fertilisers and other products for resale
Transportation of phosphate rock
Electricity
Ammonia
Sulphur and sulphuric acid
Fuel
Drilling and blasting operations expenses
Ammonium sulphate
2020
RUB million
2019
RUB million
203,561
201,248
Salaries and social contributions
167,718
25,877
1,090
8,876
38,701
11,617
165,110
25,799
1,136
9,203
37,882
8,995
Professional services
Depreciation and amortisation
Other
253,879
248,125
10 SELLING EXPENSES
Expenses linked to basis of delivery, inc.
Freight, port and stevedoring expenses
Russian Railways infrastructure tariff and operators’ fees
Custom duties
Materials and services
Other fixed expenses, inc.
Salaries and social contributions
Depreciation and amortisation
Materials and services
11 TAXES, OTHER THAN INCOME TAX, NET
Property tax
Mineral extraction tax
Land tax
Environment pollution payment
VAT included in expenses
Using water objects payment
Other taxes
2020
RUB Million
2019
RUB Million
(13,807)
(11,249)
(3,484)
(12,744)
(9,300)
(2,662)
(28,540)
(24,706)
2020
RUB million
2019
RUB million
(23,743)
(19,537)
(13,807)
(12,342)
(12,253)
(10,134)
(9,102)
(8,134)
(6,311)
(4,802)
(4,360)
(3,885)
(3,168)
(1,757)
(21,368)
(20,138)
(12,744)
(12,627)
(13,691)
(10,119)
(6,683)
(8,641)
(6,204)
(4,095)
(9,165)
(4,849)
(2,323)
(3,577)
(133,335)
(136,224)
282/
283
2020
RUB million
2019
RUB million
(11,249)
(1,929)
(1,368)
(3,282)
(9,300)
(1,963)
(1,378)
(3,835)
(17,828)
(16,476)
2020
RUB million
(33,368)
(19,208)
(11,466)
(1,484)
(1,210)
(6,220)
(3,484)
(1,515)
(1,221)
2019
RUB million
(32,892)
(18,372)
(11,441)
(1,898)
(1,181)
(5,229)
(2,662)
(1,185)
(1,382)
(39,588)
(38,121)
2020
RUB million
2019
RUB million
(1,397)
(919)
(258)
(174)
(129)
(44)
(41)
(558)
(954)
(301)
(171)
(294)
(38)
(68)
(2,962)
(2,384)
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 12 OTHER EXPENSES, NET
14 INCOME TAX EXPENSE
2020
RUB million
2019
RUB million
The Company’s applicable corporate income tax rate is 20% (2019: 20%).
Social expenditures
Loss on disposal of property, plant and equipment and intangible assets
Accrual of contingent liabilities
Increase in provision for bad debt
Increase in provision for inventory obsolescence
Other income, net
(2,570)
(209)
(119)
(114)
(18)
518
(2,661)
(611)
(62)
(106)
(19)
190
Current tax expense
Origination and reversal of temporary differences, including change in unrecognised assets
(2,512)
(3,269)
Reconciliation of effective tax rate:
284/
285
2020
RUB million
2019
RUB million
(8,045)
(1,704)
(9,749)
(9,724)
(2,052)
(11,776)
13 FINANCE INCOME AND FINANCE COSTS
Interest income
Dividend income
Unwind of discount on financial assets
Share of profit of associates (note 17)
Gain from operations with derivatives
Other finance income
Finance income
Interest expense
Bank fees (incl. early eurobond partial redemption fees)
Provision for bad debt on financial investments
Securitisation fees
Write off of equity securities
Other finance costs
Finance costs
Net finance costs
2020
RUB million
2019
RUB million
338
242
60
37
-
298
975
484
4
68
13
700
189
1,458
(4,268)
(3,457)
(517)
(503)
(141)
-
(26)
(5,455)
(4,480)
(209)
(45)
(175)
(150)
(235)
(4,271)
(2,813)
Profit before tax
Income tax at applicable tax rate
Deferred tax assets decrease
(Under)/over provided in respect of prior years
Unrecognised tax liability on profit from associates
Non-deductible items
Change in unrecognised deferred tax assets
Effect of tax differences in foreign jurisdictions
Reduction in tax rate
Tax incentive
2020
RUB million
%
RUB million
26,670
(5,334)
(4,800)
(9)
7
(871)
-
317
716
225
100
(20)
(18)
-
-
(3)
-
1
2
1
61,184
(12,237)
-
4
3
(1,174)
15
337
1,276
-
2019
%
100
(20)
-
-
-
(2)
-
1
2
-
(9,749)
(37)
(11,776)
(19)
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 15 PROPERTY, PLANT AND EQUIPMENT
During 2020, the Group capitalised borrowing costs in the amount of RUB 1,220 million (2019: RUB 1,283 million)
in the value of property, plant and equipment using the weighted average interest rate of 3.20% per annum.
286/
287
Land and
buildings
Plant and
equipment
Fixtures
and fittings
Construction
in progress
Total
As at 31 December 2020, the balance of the construction in progress account includes the accumulated costs
related to
At 1 January 2019
76,252
144,648
13,324
44,602
278,826
Recognition of ROU asset on initial application of IFRS 16
-
(4,262)
-
-
(4,262)
Adjusted cost at 1 January 2019
76,252
140,386
13,324
44,602
274,564
in Cherepovets:
• Development programm of production facilities for sulphuric acid in the amount of RUB 2,211 million;
• Development of transport infrastructure station Cryolite in the amount of RUB 1,832 million;
RUB Million
Cost
Additions
Transfers from right-of-use assets (note 16)
Transfers
Disposals
Other movements
At 1 January 2020
Additions
Transfers from right-of-use assets (note 16)
Transfers
Disposals
Other movements
At 31 December 2020
Accumulated depreciation
At 1 January 2019
2,493
-
16,582
(779)
(66)
5,826
4,245
17,203
(2,623)
(108)
94,482
164,929
1,757
-
4,013
16
10,653
25,253
(2,425)
(6,425)
138
175
2,517
26,696
37,532
• Development programm of ammonia production facilities in the amount of RUB 1,336 million;
-
-
(182)
(10)
15,649
2,477
-
-
(242)
16
-
4,245
(33,785)
-
(518)
(4,102)
-
(184)
36,995
312,055
37,590
45,837
-
(35,906)
(79)
-
16
-
(9,171)
329
• Development programm of production facilities for extraction of phosphoric acid and fertilizers
in the amount of RUB 949 million;
• The construction of ammonium sulphate plant in the amount of RUB 328 million.
in Kirovsk:
• Kirovsk mine extension and modernization in the amount of RUB 10,758 million;
• The construction of apatit-nepheline beneficiation plant in the amount of RUB 1,769 million;
• The development of Rasvumchorrskiy mine in the amount of RUB 1,610 million.
in Volkhov:
• Construction of production facilities for sulphuric acid in the amount of RUB 1,357 million;
104,605
187,961
17,900
38,600
349,066
• Development of monoammonium phosphate production in the amount of RUB 1,127 million;
(16,949)
(67,562)
(8,084)
Recognition of ROU asset on initial application of IFRS 16
-
991
-
Adjusted depreciation at 1 January 2019
(16,949)
(66,571)
(8,084)
Transfers from right-of-use assets (note 16)
-
(1,033)
-
Depreciation charge
Disposals
Other movements
At 1 January 2020
(5,469)
(16,010)
(1,732)
638
6
2,522
(72)
152
6
(21,774)
(81,164)
(9,658)
Transfers from right-of-use assets (note 16)
-
(8)
-
Depreciation charge
Disposals
Other movements
At 31 December 2020
(5,945)
(17,552)
(1,862)
2,289
(25)
6,343
97
234
(10)
(25,455)
(92,284)
(11,296)
• Construction of filtering station of production facilities for extraction of phosphoric acid
in the amount of RUB 809 million;
• Construction of communication lines in the amount of RUB 800 million;
• Сonstruction of a storage tank for liquid ammonia in the amount of RUB 558 million.
in Balakovo:
• Development of NPK production facilities in the amount of RUB 331 million;
• Development of ammonium sulphate production facilities in the amount of RUB 161 million;
• Construction of vacuum system for the production of phosphoric acid in the amount of RUB 141 million.
-
-
-
-
-
-
-
-
-
-
-
-
-
(92,595)
991
(91,604)
(1,033)
(23,211)
3,312
(60)
(112,596)
(8)
(25,359)
8,866
62
(129,035)
Net book value at 1 January 2019
59,303
77,086
Net book value at 1 January 2019 adjusted of IFRS 16
59,303
73,815
Net book value at 1 January 2020
Net book value at 31 December 2020
72,708
83,765
79,150
95,677
5,240
5,240
5,991
6,604
44,602
186,231
44,602
182,960
36,995
199,459
38,600
220,031
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 16 RIGHT-OF-USE ASSETS
The Group has the following types of right-of-use assets as at 31 December 2020: railway wagons, production
equipment, offices. The leases typically run for a period of 5 years, with an option to renew the lease after that date.
Buildings
Plant and equipment
Total
5,863
5,822
(51)
-
6,000
5,958
(124)
(11)
Amounts recognised in profit and loss
Depreciation expense on right-of-use assets
Interest expense on lease liabilities
Expenses relating to short-term leases
Expenses relating to leases with variable payments
Amounts recognised in statement of cash flows
Principal lease payments (note 27)
Interest lease payments (note 27)
(4,245)
(4,245)
Expenses relating to short-term leases
7,389
1,934
(32)
3
(16)
7,578
2,080
(55)
28
(16)
Expenses relating to leases with variable payments
17 INVESTMENTS IN ASSOCIATES
9,278
9,615
The movement in the balance of investments in associates is as follows:
288/
289
2020
RUB million
2019
RUB million
1,624
485
618
476
(1,951)
(485)
(618)
(476)
(3,530)
759
236
587
375
(1,937)
(236)
(587)
(375)
(3,135)
(991)
(654)
5
-
1,033
(607)
(1,545)
17
(1)
8
(991)
(759)
28
2
1,033
(687)
(1,624)
34
(11)
8
Balance at 1 January
Share in profit for the period
Balance at 31 December
Carrying values of the Group’s investments in associates are as follows:
JSC Khibinskaya Teplovaya Kompaniya
(2,128)
(2,280)
JSC Giproruda
4,872
6,782
7,150
5,009
6,891
7,335
JSC Soligalichskiy izvestkovyi kombinat
2020
RUB million
2019
RUB million
519
37
556
506
13
519
31 December 2020
RUB Million
31 December 2019
RUB Million
463
62
31
556
435
63
21
519
RUB million
Cost
At 1 January 2019
New lease contracts and modification of existing lease contracts
Disposals
Currency translation
Transfers to property, plant and equipment (note 15)
At 1 January 2020
New lease contracts and modification of existing lease contracts
Disposals
Currency translation
Transfers to property, plant and equipment (note 15)
At 31 December 2020
Accumulated depreciation
At 1 January 2019
Depreciation
Disposals
Currency translation
Transfers to property, plant and equipment (note 15)
At 1 January 2020
Depreciation
Disposals
Currency translation
Transfers to property, plant and equipment (note 15)
At 31 December 2020
Net book value at 1 January 2019
Net book value at 1 January 2020
Net book value at 31 December 2020
137
136
(73)
(11)
-
189
146
(23)
25
-
337
-
(105)
23
2
-
(80)
(79)
17
(10)
-
(152)
137
109
185
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 Summary financial information for associates is as follows:
(b) Movement in temporary differences during the year
Total assets
Total liabilities
Net assets
Revenue
Profit/(loss)
for the year
2020
RUB Million
RUB Million
RUB Million
RUB Million
RUB Million
JSC Khibinskaya Teplovaya Kompaniya
JSC Giproruda
JSC Soligalichskiy izvestkovyi kombinat
1,303
140
575
2,018
(450)
(14)
(321)
(785)
853
126
254
439
55
568
1,233
1,062
5
(4)
47
48
RUB million
Property, plant and equipment
and intangible assets
Other long-term assets
Current assets
Liabilities
Tax loss carry-forwards
Unrecognised deferred tax assets
Total assets
Total liabilities
Net assets
Revenue
Profit/(loss)
for the year
Net tax (liabilities)/assets
(3,734)
(1,704)
2019
RUB Million
RUB Million
RUB Million
RUB Million
RUB Million
JSC Khibinskaya Teplovaya Kompaniya
JSC Giproruda
JSC Soligalichskiy izvestkovyi kombinat
1,605
161
598
2,364
(809)
(33)
(381)
(1,223)
796
128
217
1,141
494
99
581
1,174
27
6
(3)
30
18 DEFERRED TAX ASSETS AND LIABILITIES
(a) Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following items:
RUB million
Property, plant and equipment and
intangible assets
Other long-term assets
Current assets
Liabilities
Tax loss carry-forwards
Unrecognised deferred tax assets
RUB Million
2020
2020
2020
2019
2019
2019
19 OTHER NON-CURRENT ASSETS
Assets
Liabilities
Net
Assets
Liabilities
Net
Net tax (liabilities)/assets
(2,064)
(2,052)
Property, plant and equipment and intangible assets
383
(12,390)
(12,007)
(12,007)
64
692
1,610
5,962
(55)
(78)
63
(9)
(215)
(1,465)
-
(11,927)
(2,186)
(8)
677
1,822
7,427
(55)
19
108
1,077
(1,055)
(15)
31 December
2020
Recognised in
profit or loss
Recognised in other
comprehensive
income
Reclassification
31 December
2019
Recognised in
profit or loss
Recognised in other
comprehensive
income
Reclassification
1 January
2019
290/
291
1 January
2020
(11,927)
(8)
677
1,822
7,427
(55)
-
-
-
-
-
-
-
(2,064)
(2)
9
24
3
-
-
34
3
-
(10)
-
-
-
(7)
23
(9,767)
-
-
-
-
-
23
(27)
579
745
8,482
(40)
(28)
31 December 2020
RUB million
31 December 2019
RUB million
716
592
148
732
(1,240)
948
653
602
218
673
(510)
1,636
Loans issued to third parties, at amortised cost
Financial assets, at fair value
Loans issued to employees, at amortised cost
Other long-term assets
Provision for loans issued to third parties and other long-term assets
Other long-term assets
Current assets
Liabilities
Tax loss carry-forwards
Unrecognised deferred tax assets
Tax assets/(liabilities)
Set off of tax
115
1,322
1,921
5,962
(55)
(51)
(630)
64
692
(311)
1,610
-
-
5,962
(55)
129
43
1,067
1,826
7,427
(55)
(12,056)
(11,927)
(51)
(390)
(4)
-
-
(8)
677
1,822
7,427
(55)
9,648
(13,382)
(3,734)
10,437
(12,501)
(2,064)
(2,186)
2,186
-
(2,223)
2,223
-
Net tax assets/(liabilities)
7,462
(11,196)
(3,734)
8,214
(10,278)
(2,064)
The deferred tax assets on tax loss carry-forwards relate to the Russian entities. Due to amendments to the Russian
tax legislation, starting from 1 January 2017, tax losses for Russian tax purposes carried forward existing
as at 31 December 2020 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 Group and the Group’s tax position.
The forecast is reviewed at each reporting date to ensure that the related tax benefit will be realised.
As at 31 December 2020, no deferred tax liability for taxable temporary differences of RUB 19,984 million has been
recognised (31 December 2019: RUB 57,156 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%.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 292/
293
2020
RUB Million
2019
RUB Million
(258)
(618)
78
5
(37)
(29)
-
-
(128)
(369)
-
15
73
42
305
5
(80)
(258)
31 December 2020
RUB Million
31 December 2019
RUB Million
4,432
4,023
5
8,460
2,506
5,724
6
8,236
20 OTHER CURRENT INVESTMENTS
The movements in provision for doubtful accounts are as follows:
Interest receivable
Loans issued to employees, at amortised cost
Loans issued to third parties, at amortised cost
Dividend receivable
Loans issued to related parties, at amortised cost
Provision for doubtful accounts
21 INVENTORIES
31 December 2020
RUB million
31 December 2019
RUB million
134
125
48
41
-
(37)
311
118
80
105
-
2
(54)
251
31 December 2020
RUB million
31 December 2019
RUB million
Balance at 1 January
Use of provision
Reversal of provision
Reclassification (from)/to non-current assets
Foreign currency translation difference
Written off provision through trade receivables
Disposal of trade receivables through provision
Increase in provision for bad debt
Balance at 31 December
See note 30 (c) for the analysis of overdue trade accounts receivable.
Raw materials and spare parts
12,394
11,723
23 CASH AND CASH EQUIVALENTS
Finished goods:
Chemical fertilisers
Apatite concentrate
Other products
Work-in-progress:
Chemical fertilisers and other products
Chemical fertilisers and other products for resale, purchased from third parties
Other goods for resale
Other goods
Provision for obsolescence
22 TRADE AND OTHER RECEIVABLES
Trade accounts receivable
VAT and other taxes receivable
Advances issued
Income tax receivable
Deferred expenses
Receivables from employees
Other receivables
Provision for doubtful accounts
12,010
711
376
4,902
2,292
95
77
(221)
32,636
10,837
443
273
4,491
1,778
63
-
(203)
29,405
31 December 2020
RUB million
31 December 2019
RUB million
15,820
10,285
5,537
479
117
22
996
(369)
32,887
14,375
10,214
4,865
1,286
99
20
460
(258)
31,061
Call deposits
Cash in bank
Petty cash
The most significant balances of cash and cash equivalents were held in banks with “BBB” credit rating.
24 EQUITY
(a) Share capital
Number of shares unless otherwise stated
Shares on issue at 31 December 2020 RUB 2.5 par value
Shares authorised for additional issue at 31 December 2020, RUB 2.5 par value
Shares on issue at 31 December 2019, RUB 2.5 par value
Shares authorised for additional issue at 31 December 2019, RUB 2.5 par value
Ordinary shares
129,500,000
994,977,080
129,500,000
994,977,080
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 (b) Dividend policy
The Group’s dividend policy is based on the following principles:
• striking an effective and reasonable balance between the payment of dividends and reinvestment of profit in further
development;
• ensuring transparency and predictability of dividend payments as a way to boost the Company’s investment case.
Amount of such payment is subject to approval of the General Shareholders’ Meeting, based on recommendations
provided by the PhosAgro Board of Directors. The Board of Directors’ recommendations depend on such factors
as the Company’s earnings for the reporting period and its financial position. To calculate the amount of dividend
payments, the Board of Directors considers the Company’s consolidated free cash flow for the reporting period
(quarter, six months, first nine months or year) under IFRS. A decision on the payment of an interim dividend
is made at the General Shareholders’ Meeting within three months of the end of the relevant reporting period.
The term for dividend payments is determined by the General Shareholders’ Meeting and must not exceed 60 days
from the date of the resolution to pay the same. Holders of PhosAgro GDRs are also entitled to receive dividends
in respect of the underlying shares, subject to the terms of their Depositary Agreements.
In accordance with dividend policy, the Board of Directors shall seek to make sure that the amount of distributed
dividends ranges from 50% to over 75% (subject to the Company’s leverage ratio) of the Company’s consolidated
free cash flow for the respective period under IFRS. At the same time, the amount of declared dividends shall not be
lower than 50% of net profit for the relevant period under IFRS adjusted by the amount of unrealized exchange rate
difference.
(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 Standards. As at 31 December 2020, the Company had cumulative retained earnings of RUB 18,057 million
(31 December 2019: RUB 8,689 million).
Proposed by the Board of Directors in
Approved by shareholders in
Amount per share
RUB
Amount of dividends
RUB million
26 LOANS AND BORROWINGS
This note provides information about the contractual terms of the Group’s loans and borrowings. For more
information about the leases, see note 27. For more information about the Group’s exposure to foreign currency risk,
interest rate risk and liquidity risk, see note 30.
294/
295
Current loans and borrowings
Unsecured bank loans
Loan participation notes
Interest payable
Bank commission (short-term)
Non-current loans and borrowings
Loan participation notes1,2,3
Unsecured bank loans
Bank commission (long-term)
31 December 2020
RUB million
31 December 2019
RUB million
28,326
25,857
1,137
(4)
36,225
-
621
(7)
55,316
36,839
73,876
30,159
(211)
103,824
159,140
61,906
34,951
(121)
96,736
133,575
The breakdown of the loans and borrowings denominated in different currencies is as follows:
Total dividends approved during the reporting period
November 2019
February 2020
May 2020
August 2020
November 2020
January 2020
May 2020
June 2020
September 2020
December 2020
48
18
78
33
123
6,216
2,331
10,101
4,273.5
15,928.5
38,850
USD-denominated
EUR-denominated
RUB-denominated
The maturity of the loans and borrowings is as follows:
25 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
129,500,000
129,500,000
Profit for the year attributable to shareholders of the Parent, RUB million
Basic and diluted earnings per share, RUB
16,932
131
49,349
381
2020
RUB million
2019
RUB million
Less than 1 year
1-2 years
2-3 years
3-4 years
4-5 years
More than 5 years
31 December 2020
RUB million
31 December 2019
RUB million
129,794
20,018
9,543
159,355
101,853
31,850
-
133,703
31 December 2020
RUB million
31 December 2019
RUB million
55,320
12,182
40,859
3,921
40,859
6,214
36,846
41,124
9,960
34,190
3,237
8,346
159,355
133,703
1.
2.
3.
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 26,514 million (31 December 2019: RUB 33,211 million).
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 38,763 million (31 December 2019: RUB 33,843 million).
In January 2020 the Company’s SPV issued a USD 500 million 5-year Eurobond with a coupon rate of 3.05%, which is listed on the Irish Stock Exchange,
with the fair value at the reporting date of RUB 38,534 million. Management believes that the fair value of the Group’s other loans and borrowings
approximates their carrying amounts.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 296/
297
31 December 2020
RUB Million
31 December 2019
RUB Million
323
622
945
332
525
857
Reconciliation of liabilities arising from financing activities:
28 DEFINED BENEFIT OBLIGATIONS
Loans and borrowings
(excluding interest
payable)
Lease liabilities
Total
142,823
1,094
143,917
Pension obligations, long-term
Post-retirement obligations other than pensions
RUB million
Balance as at 1 January 2019
Changes from financing cash flows
Impact of IFRS 16
Cash inflows
Cash outflows
Accrual, set-off of liabilities
Amortisation of bank commission
Foreign exchange gain
Total changes from financing cash flows
Balance as at 1 January 2020
Changes from financing cash flows
Cash inflows
Cash outflows
Accrual, set-off of liabilities
Amortisation of bank commission
Foreign exchange loss
Total changes from financing cash flows
Balance as at 31 December 2020
27 LEASES
RUB million
Balance as at 1 January 2019
New lease contracts and modification of existing lease contracts
Interest expense on lease liabilities
Principal lease payments
Interest lease payments
Effect of foreign currency translation reserve
Balance as at 1 January 2020
New lease contracts and modification of existing lease contracts
Interest expense on lease liabilities
Principal lease payments
Interest lease payments
Effect of foreign currency translation reserve
Balance as at 31 December 2020
-
48,725
(42,698)
-
51
(15,947)
(9,869)
132,954
63,520
(66,182)
-
83
27,628
25,049
158,003
1,738
1,738
-
48,725
(1,937)
(44,635)
5,412
5,412
-
51
(63)
(16,010)
5,150
(4,719)
6,244
139,198
-
63,520
(1,951)
(68,133)
1,887
-
15
1,887
83
27,643
(49)
25,000
6,195
164,198
The Group has defined benefit plans at JSC “Apatit”, including all the branches, and PhosAgro Trading SA which stipulate
payment of a lump sum allowance to employees who have a specified period of service in these companies upon
their retirement. All the defined benefit plans are unfunded. The movement in the present value of the defined benefit
obligations is as follows:
Defined benefit obligations at 1 January 2019
Benefits paid
Current service costs and interest
Past service costs
Actuarial loss in other comprehensive income
Defined benefit obligations at 1 January 2020
Benefits paid
Current service costs and interest
Past service costs
Effect of foreign currency translation reserve and foreign exchange differences
Actuarial losses in other comprehensive income
Defined benefit obligations at 31 December 2020
The key actuarial assumptions used in measurement of the defined benefit obligations are as follows:
RUB Million
630
(104)
129
69
133
857
(74)
98
(1)
37
28
945
Total
2,832
5,412
236
Discount rate
Future pension increases
31 December 2020
31 December 2019
6.4%
3.5%
6.4%
3.9%
1,094
1,608
68
Lease liability without
subsequent asset
buyout
Lease liability with
subsequent asset
buyout
1,738
3,804
168
(776)
(168)
(9)
4,757
94
295
(1,242)
(296)
14
3,622
(1,161)
(1,937)
(68)
(54)
1,487
1,793
190
(709)
(189)
1
(236)
(63)
6,244
1,887
485
(1,951)
(485)
15
2,573
6,195
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 29 TRADE AND OTHER PAYABLES
The Group has the following foreign-currency-denominated financial assets and liabilities:
31 December 2020
RUB million
31 December 2019
RUB million
31 December 2020
RUB Million
31 December 2019
RUB Million
298/
299
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
Dividends payable
Other payables
12,230
4,777
12,406
4,029
3,675
1,000
210
-
5,602
39,152
12,121
4,728
7,160
2,970
2,526
207
97
2
947
26,030
30 FINANCIAL RISK MANAGEMENT
(a) Overview
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.
(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.
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.
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.
Group companies in Russia
USD denominated
EUR denominated
USD denominated
EUR denominated
Current assets
Receivables
Cash and cash equivalents
Other current investments
Non-current liabilities
Non-current loans and borrowings
Сurrent liabilities
Current loans and borrowings
Payables
439
366
73
-
(97,319)
(97,319)
(33,457)
(32,475)
(982)
(130,337)
28
5
23
-
(6,716)
(6,716)
(14,094)
(13,302)
(792)
(20,782)
2,593
530
2,063
-
(84,277)
(84,277)
(18,147)
(17,576)
(571)
(99,831)
250
5
222
23
(12,580)
(12,580)
(20,177)
(19,270)
(907)
(32,507)
31 December 2020
RUB Million
31 December 2019
RUB Million
Foreign Group companies
USD denominated
EUR denominated
USD denominated
EUR denominated
Non-current assets
Other non-current assets
Current assets
Receivables
Cash and cash equivalents
Other current investments
Сurrent liabilities
Payables
-
-
1,596
970
543
83
(2)
(2)
1,594
-
-
916
560
356
-
(171)
(171)
745
534
534
591
326
206
59
(10)
(10)
1,115
-
-
1,120
866
254
-
(298)
(298)
822
31 December 2020
RUB Million
31 December 2019
RUB Million
Total
USD denominated
EUR denominated
USD denominated
EUR denominated
Non-current assets
Other non-current assets
Current assets
Receivables
Cash and cash equivalents
Other current investments
Non-current liabilities
Non-current loans and borrowings
Сurrent liabilities
Current loans and borrowings
Payables
-
-
2,035
1,336
616
83
(97,319)
(97,319)
(33,459)
(32,475)
(984)
(128,743)
-
-
944
565
379
-
(6,716)
(6,716)
(14,265)
(13,302)
(963)
(20,037)
534
534
3,184
856
2,269
59
(84,277)
(84,277)
(18,157)
(17,576)
(581)
(98,716)
-
-
1,370
871
476
23
(12,580)
(12,580)
(20,475)
(19,270)
(1,205)
(31,685)
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020
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 14,878
million, before any tax effect (2019: would have increased/(decreased) the Group’s profit for the year by RUB 13,040
million). This analysis assumes that all other variables, in particular interest rates, remain constant. The analysis
is performed on the same basis for 2019.
The foreign exchange loss recognized in profit or loss of RUB 25,070 million (RUB 12,346 million of foreign exchange
gain for the comparative period) resulted from the (depreciation) appreciation of the Russian Rouble against major
currencies during the reporting and comparative periods.
Foreign currency translation differences
In addition, the net assets of the Group’s foreign subsidiaries denominated in USD, EUR and other currencies amount
to RUB 16,760 million as at the reporting date (31 December 2019: RUB 15,235 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 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:
Fixed rate instruments
Other non-current assets
Other current investments
Long-term borrowings
Short-term borrowings
Lease liabilities
Variable rate instruments
Long-term borrowings
Short-term borrowings
31 December 2020
RUB Million
31 December 2019
RUB Million
259
4,605
(94,498)
(53,027)
(7,122)
363
2,693
(87,285)
(33,610)
(7,214)
(149,783)
(125,053)
(9,537)
(2,293)
(11,830)
(9,572)
(3,236)
(12,808)
At 31 December 2020, a 1% increase/(decrease) in LIBOR/EURIBOR would have decreased/(increased) the Group’s profit
and equity by RUB 118 million (31 December 2019: RUB 128 million).
300/
301
(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 2020, the Group’s maximum exposure to credit risk is represented by the carrying amount of its
financial assets and amounted to RUB 26,189 million (31 December 2019: RUB 24,720 million).
As at 31 December 2020, the Group’s financial assets measured at amortised cost amounted to RUB 25,597 million (31
December 2019: RUB 24,118 million).
As at 31 December 2020, the Group’s financial assets measured at fair value amounted to RUB 592 million (31 December
2019: RUB 602 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. In response to the COVID-19 pandemic, the risk management committee has also been
performing more frequent reviews of sales limits for customers in regions and industries that are severely impacted.
The Group is monitoring the economic environment in response to the COVID-19 pandemic and is taking actions to limit
its exposure to customers that are severely impacted. 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 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.
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk
of loss (including but not limited to external ratings, audited financial statements, management accounts and cash flow
projections and available press information about customers) and applying experienced credit judgement. Credit risk
grades are defined using qualitative and quantitative factors that are indicative of the risk of default and are aligned
to external credit rating definitions from agencies.
Exposures within each credit risk grade are segmented by geographic region and industry classification and an ECL
rate is calculated for each segment based on delinquency status and actual credit loss experience over the past years.
These rates are multiplied by scalar factors to reflect differences between economic conditions during the period
over which the historical data has been collected, current conditions and the Group’s view of economic conditions
over the expected lives of the receivables.
The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers,
which comprise a very large number of small balances. Loss rates are calculated using a ‘roll rate’ method
based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll
rates are calculated separately for exposures in different segments based on the following common credit risk
characteristics – geographic region, age of customer relationship.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 The analysis of overdue trade and other receivables is as follows:
The following information shows the carrying amount of trade receivables for the reporting period that was
transferred and derecognised and the cash proceeds received.
302/
303
RUB Million
Not past due
Past due 0-90 days
Past due 91-180 days
Past due 181-365 days
More than one year
31 December 2020
31 December 2019
Gross carrying
amount
Impairment loss
allowance
Gross carrying
amount
Impairment loss
allowance
14,860
951
391
32
582
16,816
(4)
(4)
-
(8)
(228)
(244)
13,234
884
139
318
260
14,835
(1)
-
-
-
(102)
(103)
Starting from 2019 the Group sells without recourse trade receivables to a bank for cash proceeds. These trade
receivables are derecognised from the statement of financial position, because the Group transfers substantially
all of the risks and rewards - primarily credit risk and late payment risk. The amount of cash proceed received
on transfer is recognised in cash and cash equivalents. The arrangement with the bank is such that the customers
remit cash directly to the Group and the Group transfers the collected amounts to the bank. The receivables
are considered to be held within a held-to-collect business model consistent with the Group’s continuing recognition
of the receivables.
Trade receivables transferred to the bank
Associated cash inflow
Associated cash outflow
Net-off with other payables
Other non-cash operations
31 December 2020
RUB Million
31 December 2019
RUB Million
14,897
2,362
(3,894)
12,535
63
11,696
6,646
(1,314)
5,050
474
Payables to the bank as at 31 December 2020 amounted to RUB 5,460 million (31 December 2019: RUB 748 million)
are presented within other payables. Receivables from the bank as at 31 December 2020 amounted to RUB 537 million
(31 December 2019: RUB 474 million) are presented within trade receivables.
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 33).
The Group’s policy is to provide financial guarantees only to the subsidiaries or related parties.
(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 maintains several lines of credit
in various Russian and international banks.
At the end of 31 December 2020 the Group’s current liabilities excess over current assets by RUB 22,101 million.
To ensure timely obligations fulfilment the Group plans to raise additional long-term borrowings in the upcoming year.
The table below illustrates the contractual maturities of financial liabilities, including interest payments, which
are converted at the closing exchange rates, where applicable:
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 31 December 2020
RUB Million
Carrying
value
Contractual
cash flows
0-1
year
1-2
yrs
2-3
yrs
3-4
yrs
4-5
yrs
> 5
yrs
Unsecured bank loans
58,485
62,304
29,599
13,052
4,543
4,402
4,258
6,450
Interest payable
Leases
Loan participation notes
Trade and other payables
Financial guarantees issued
for associates and related parties
1,137
6,195
99,733
18,042
340
1,137
1,137
-
-
-
7,122
2,336
2,109
1,477
1,021
-
161
109,470
29,463
2,585
38,794
1,127
37,501
18,042
18,042
360
283
-
77
-
-
-
-
-
-
-
18
-
-
-
183,932
198,435
80,860
17,823
44,814
6,550
41,920
6,468
-
-
-
-
-
RUB Million
Unsecured bank loans
Interest payable
Leases
Carrying
value
Contractual
cash flows
0-1
year
1-2
yrs
2-3
yrs
3-4
yrs
4-5
yrs
> 5
yrs
31 December 2019
71,176
621
6,244
75,983
37,689
11,240
10,782
3,780
3,654
8,838
621
621
-
-
-
-
7,214
1,944
1,824
1,674
1,104
668
Loan participation notes
61,906
68,323
2,452
33,294
1,222
31,355
Trade and other payables
Financial guarantees issued
for associates and related parties
13,167
726
13,167
13,167
-
804
366
438
-
-
-
-
-
-
-
153,840
166,112
56,239
46,796
13,678
36,239
4,322
8,838
(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.
31 COMMITMENTS
The Group has entered into contracts to purchase plant and equipment for RUB 29,421 million (31 December 2019:
RUB 43,603 million).
32 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.
304/
305
(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.
The tax authorities have the power to impose fines and penalties for tax arrears. A tax year is generally open
for review by the tax authorities during three subsequent calendar years. Currently the tax authorities are taking
a more assertive and substance-based approach to their interpretation and enforcement of tax legislation.
Current Russian transfer pricing legislation requires transfer pricing analysis for the majority of cross-border
intercompany and major domestic intercompany transactions. Starting from 2019, transfer pricing control,
as a general rule, is applied to domestic transactions only if both criteria are met: the parties apply different tax rates,
and the annual turnover of transactions between them exceeds RUB 1 billion.
The Russian transfer pricing rules are close to OECD guidelines, but have certain differences that create uncertainty
in practical application of tax legislation in specific circumstances. A very limited number of publicly available transfer
pricing court cases in Russia does not provide enough certainty as to the approach to applying transfer pricing
rules in Russia. The impact of any transfer pricing assessment may be material to financial statements of the Group,
however, the probability of such impact cannot be reliably assessed.
Russian tax authorities may review prices used in intra-group transactions, in addition to transfer pricing audits. They
may assess additional taxes if they conclude that taxpayers have received unjustified tax benefits as a result of those
transactions.
Russian tax authorities continue to exchange transfer pricing as well as other tax related information with tax
authorities of other countries. This information may be used by the tax authorities to identify transactions
for additional in-depth analysis.
The Group 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 the tax liabilities based on its
interpretations of applicable Russian tax legislation, official pronouncements and court decisions. However,
the interpretations of the tax authorities and courts including the interpretation of Group’s planed transactions could
differ and the effect on these consolidated financial statements, if the tax authorities are successful in enforcing
their interpretations, could be significant.
(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.
(d) Compliance with covenants
The Group is subject to certain covenants related primarily to its loans and borrowings. Non-compliance with such
covenants may result in negative consequences for the Group including growth in the cost of borrowings
and declaration of default.
The Group was in compliance with covenants at 31 December 2020 and 31 December 2019.
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 34 SIGNIFICANT SUBSIDIARIES
306/
307
2020
RUB million
2019
RUB million
Subsidiary
Country of
incorporation
31 December 2020
Effective ownership
(rounded)
31 December 2019
Effective ownership
(rounded)
Apatit, JSC (including Balakovo, Volkhov and Kirovsk branchs)
Russia
Mekhanik, LLC
NIUIF, 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 Polska Sp.z o.o.
PhosAgro Deutschland GmbH
PhosAgro France SAS
PhosAgro Balkans
UAB PhosAgro Baltic
PhosAgro Balkans SRL
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Russia
Cyprus
Singapore
Switzerland
Cyprus
Switzerland
Poland
Germany
France
Serbia
Lithuania
Romania
PhosAgro South Africa Proprietary Limited
South Africa
Logifert Oy
Bulk Terminal Kotka Oy
Finland
Finland
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%
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%
-
-
100%
100%
33 RELATED PARTY TRANSACTIONS
(a) Transactions and balances with associates
(i) Transactions with associates
Sales of goods and services
Other income, net
Interest income
Purchases of goods and services
(ii) Balances with associates
Trade and other receivables
Trade and other payables
26
1
-
(561)
32
2
1
(527)
31 December 2020
RUB million
31 December 2019
RUB million
16
(12)
41
(18)
(iii) Financial guarantees
The Group issued financial guarantees to banks on behalf of associates amounting to RUB 340 million (31 December
2019: RUB 726 million).
(b) Transactions and balances with other related parties
(i) Transactions with other related parties
Sales of goods and services
Dividend income
Interest income
Interest expenses
Other expenses, net
Purchases of goods and services
(ii) Balances with other related parties
Short-term loans issued, at amortised cost
Trade and other receivables
Trade and other payables
2020
RUB million
2019
RUB million
686
203
-
-
(53)
(115)
352
-
3
(1)
(61)
(2,005)
31 December 2020
RUB million
31 December 2019
RUB million
-
14
(237)
2
7
(123)
The balances and transactions with related parties are usually unsecured and denominated in RUB.
(iii) Financial guarantees
The Group has not issued financial guarantees to banks in favour of other related parties as at 31 December 2020
and 31 December 2019.
(c) Key management remuneration
The remuneration of the Board of Directors and key management personnel amounted to RUB 3,351 million (2019:
RUB 2,462 million).
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 35 SEASONALITY
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, however several maintenance activities undertaken
at the Group’s production facilities may not be evenly spreaded.
36 SUBSEQUENT EVENTS
Starting from 1 January 2021 the rate for mineral extraction tax (note 11) will change from 4% to 14%. Management
estimates the amount of the tax due for 2021 at RUB 3,623 million. The estimate for 2021 is based on an assumption
that the volumes extracted and the costs of extraction will remain unchanged compared to 2020.
Starting from 1 January 2021 the rate for income tax paid for dividends due to shareholders in Cyprus will change
from 5% to 15%.
308/
309
MANAGEMENT
RESPONSIBILITY
STATEMENT
The Company’ 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.
standards during the preparation
of the integrated report.
A draft of this integrated report
was reviewed and pre-approved
at PhosAgro’s Board of Directors
meeting on 14 April 2021. On 25 May
2021, it will be submitted for approval
to the Annual General Meeting
of Shareholders.
The Company was guided by GRI
standards, as well as the principles
of the ISO 26000 and AA 1000
The consolidated financial statements
for the year ended 31 December
2020 were approved by the Board
of Directors on 18 February 2021.
Andrey A. Guryev
Chairman of the Management Board
and Chief Executive Officer
of PJSC PhosAgro
FINANCIAL STATEMENTSPHOSAGRO INTEGRATED REPORT 2020 63%
PhosAgro’s employee loyalty
and satisfaction index in 2020
Additional
information
The Company constantly works to bring
more value to its employees, focusing on
personnel development, human rights and
social security programmes. PhosAgro’s
employee loyalty and satisfaction index
increased from 30% in 2013 to 63% in 2020.
312
320
329
333
334
336
338
Shareholder engagement
GRI content index
Independent Limited
Assurance Report
ESG content index
SASB content index
Glossary
Contacts
STAKEHOLDER
ENGAGEMENT
Stakeholder engagement is key
to our success. A stakeholder
is a person or organisation
that has an interest in what
we do. Stakeholders also include
persons or organisations that
may be affected by our activities
or can influence our business
decisions.
APPROACH TO STAKEHOLDER
ENGAGEMENT; IDENTIFYING
AND SELECTING
STAKEHOLDERS
102-42
102-43
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.
Working in complex markets and geographies around
the world 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 where we operate
and ensure that we comply with all applicable regulatory
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.
ADDITIONAL INFORMATION
312/
312/313
313
LIST OF STAKEHOLDER GROUPS; KEY TOPICS
AND CONCERNS RAISED
102-40
102-44
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
How we interact
• 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
• To increase our access to a variety of
• Corporate website
capital market instruments
• A dedicated in-house investor
• 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
relations team
• The interests of our shareholders
are represented by seven
independent non-executive
directors on the Board of
Directors
>240 online meetings and conference calls
with investors and analysts amid COVID-19 restrictions
Key topics and activities in 2020
In 2020 amid COVID-19 restrictions,
we managed to hold over 240 online
meetings and conference calls with
investors and analysts
Four investment conferences
were attended and three non-deal
roadshows with Company management
conducted in key financial market
centres (London, Frankfurt, Stockholm)
along with numerous conference calls
as part of virtual conferences and
NDRs
Four conference calls and webcasts for
analysts and investors were organised
in order to discuss the Company’s
financial results
Successful USD 500 million Eurobond
issue following the Company’s intensive
DCM marketing campaign
120 publications were made in line with
Russian disclosure regulations via the
Interfax Corporate Disclosure Centre
More than 50 press releases were
distributed via the UK regulatory news
service
Value created
Dividends
RUB 38.9 bln
in 2020
ADDITIONAL INFORMATION
314/
314/315
315
Regional governments and local communities
Why we interact
How we interact
Key topics and activities in 2020
• To ensure that we act as a good
• We implement environmental
• Assisting regions in combating the COVID-
neighbour
programmes
19 pandemic, including:
• 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
• We implement cooperation agreements
with regional governments based on
regional development needs
• We support social and sporting
organisations
• We sponsor PhosAgro Classes
and PhosAgro Schools to promote
advanced chemistry education for
schoolchildren
• We offer university scholarships and
organise recruitment programmes
aimed at encouraging children to study
chemistry
• We implement the Healthy and
Educated Children of Russia
programme
• We encourage the development of
sport in the regions where we operate
• We organise 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
• We run programmes to protect the
socio-economic rights of veterans, and
providing material assistance to World
War II veterans and members of their
families
• Participating in key events in the
regions where we operate, including
competitions, ratings, awards, forums
• the construction of a 400-bed infectious
disease centre in the Saratov region
• the programme to provide healthcare
institutions across our footprint
with personal protective equipment,
ventilators and other medical equipment
during the pandemic
• financing the launch of and purchasing
equipment for PCR laboratories
• providing free hot meals for medical staff
on the coronavirus frontline
• supporting online education efforts
across our footprint during the pandemic
• running the #WeTogether volunteer
campaign
• signing cooperation agreements between
PhosAgro and the governments of the
Leningrad, Saratov, Murmansk, and
Vologda regions
• extending the Synergy of Growth project
aimed at supporting small and medium-
sized businesses in the Vologda region
• developing the road network in Volkhov,
Cherepovets and Balakovo
• the Company’s project to install a station
for continuous automatic air quality
control in Volkhov won a prize at the 13th
Awards for Russian Leaders in Corporate
Philanthropy
• supporting local sports teams, including
Severyanka volleyball club, Avtodor
basketball club, Proton-Saratov volleyball
club, Kovrovets motorball club, Turbina
2016 speedway team
PhosAgro was awarded the Gold
Medal as Industry Stewardship
Champion for its responsible
approach to production at the
2020 IFA Strategic Forum
• Launching the Agro Class project in
cooperation with Voronezh Secondary
School No. 102 and the Voronezh
State Agricultural University
• Leveraging our Green Planet centre
in Cherepovets to hold online museum
events, workshops, intellectual games
and excursions for children
• Events dedicated to the 75th
• Assisting 20 non-governmental
organisations of labour and war
veterans and charitable organisations
in Cherepovets, Kirovsk and Balakovo
as part of the Connecting Generations
project
• Signing a charitable donation
agreement as part of our cooperation
with the Russian Chess Federation
anniversary of the end of World War II:
• Supporting the Mendeleev Chemical
Students Competition
• Teaming up with the Russian
Academy of Sciences, the MSU
Faculty of Chemistry, and the Ivanovo
State University of Chemistry and
Technology
• the construction of a unique Wall of
Memory memorial in Cherepovets
• the renovation of the Obelisk memorial
site in Balakovo
• the renovation of the Novooktyabrsky
memorial in Volkhov
• Providing charitable assistance in
building and rebuilding orthodox holy
sites both in Russia and abroad, as well
as rebuilding and aiding 26 churches
• Building a climbing wall and a rope park
in the village of Kadui, Vologda region
• Developing the Bolshoi Vudyavr ski
area and opening a hockey school in
Kirovsk
• Renovating the Greco-Roman
wrestling centre in the village of Bykov
Otrog, Saratov region
• Opening three sports grounds and a
skate park in Volkhov
• Holding the Volhov Run
Value created
Payments to regional and
municipal budgets in Russia
Charitable giving and community and
infrastructure investment
RUB 10.6 bln
in 2020
RUB 3.2 bln
in 2020
International organisations
Employees and trade unions
102-13
102-41
Why we interact
How we interact
Key topics and activities in 2020
Why we interact
How we interact
Key topics and activities in 2020
316/
317
• Active participation
• Davos 2020 World Economic Forum PhosAgro is a permanent fixture in the
• To address community
needs, including social
or environmental
concerns
• To discuss the most
in the work of global,
national and regional
organisations and
industry associations
important issues from
experts’ point of view
• Implementation of
common programmes
• Support of major
national, regional, and
international initiatives
promoting sustainable
development goals
• 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
forum (Metals&Mining panel)
• Membership in the European Sustainable Phosphorus Platform (ESPP)
• Green Chemistry for Life, a joint grant programme by PhosAgro, UNESCO
and IUPAC. It is designed to provide financial support and scientific
guidance for young scientists doing research in emerging Green Chemistry
technologies
• IUPAC Summer School on Green Chemistry was held online for the first time,
with more than 200 postgraduates and young scientists and about 40
professors and teachers from 25 countries participating in the sessions
• International Fertilizer Association (IFA) PhosAgro was awarded the Gold
Medal as Industry Stewardship Champion for its responsible approach to
production at the 2020 IFA Strategic Forum
• Our membership in the association enables us to influence decisions
and changes in the mineral fertilizer industry, with PhosAgro’s experts
participating in the work of IFA’s Committees on Agriculture, Safety, Health
and Environment, International Trade, and Communications and Public
Affairs
• Association of Economic Cooperation with African States (AECAS)
PhosAgro’s joining AECAS in 2020 will help boost trade between Russia and
Africa
• Our membership in the association is useful both in terms of further
promoting Russian mineral fertilizers in Africa and securing markets in the
countries where we operate
• Participation in the BRICS Business Forum’s panel discussion on Agricultural
Biotechnology in BRICS: Food Security and Sustainability
• Participation in the Global Compact Network Russia
• United Nations Global Compact Confirming PhosAgro’s status as the
UN Global Compact LEAD company enables us to improve our business
reputation on the global arena, increase our competitive advantage,
enhance public confidence in our Company, strengthen partnerships, and
take part in UN initiatives and projects
• Participation in an online conference as part of UN Climate Week
• Participation in Safer Phosphates, a global campaign bringing together eco-
efficient fertilizer producers
• Participation in the UN Food and Agriculture Organization (FAO)
• Participation in the project for Development of Sustainable Agriculture
through the Implementation of the Global Soil Doctors Programme and the
Creation of the Global Soil Laboratory Network (GLOSOLAN)
• 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
• We negotiate collective agreements
• In 2020, PhosAgro ranked 15th on
with trade unions that address issues
such as working conditions and
compensation for employees at each
of our production enterprises (usually
for a three-year period, covering
100% of the employees of Apatit, its
branches and standalone business
units)
• We involve trade unions in the
development of PhosAgro’s workplace
health and safety programmes
the list of Russia’s top 50 employers
compiled by Forbes and won the 1st
place in the Region category of the HR
Brand Award, a top-tier nationwide
competition in personnel management
• The Volkhov branch of Apatit won
the regional contest of corporate
programmes called Healthy Work
Environment for the Best Corporate
Health Programme at a Large
Enterprise
• We collaborate extensively with
• In 2020, all of PhosAgro’s production
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
• We implement employee development
programmes, including our Talent Pool
Programme
• We conduct employee surveys, make
presentations and 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
sites entered into new collective
agreements to enhance and
harmonise social benefits which will
remain in effect until 2023
• Providing financial support to trade
unions
• Standing commission in place for
collective bargaining
• Charity festivals and social projects in
the cities hosting our production sites
• Annual tenders to select social service
providers
• Corporate Sports Games (Spartakiads)
• Health and Leisure social programme
aimed at strengthening our people’s
health and preventing occupational
diseases
• Corporate housing programme
• Programme to improve social and
working conditions under the auspices
of social services and trade unions
• Annual events to mark the Day of
Older Persons
• Paid health resort tours for employees
of pre-retirement age and working
pensioners in line with the new
requirements of the pension legislation
• In 2020, 99% of PhosAgro employees
received professional training
• Mentoring programme in progress
• Introducing a training system for
recruitment professionals
• Implementing new solutions in
personnel management, including
employee potential assessment
• Monthly information sessions for
employees and other employee
communications
Value created
Value created
Participation in the project for Development of Sustainable Agriculture
aimed at enhancing the farmers’ skills and launching soil laboratories in
Africa, Asia, Latin America and the Middle East
USD 1.2 mln
in 2020
average salary across Apatit and its
branches in 2020
training expenses in 2020
RUB 96.4
+10,4% y-o-y
RUB 200 mln
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020 Business partners: customers
Business partners: suppliers and contractors
Why we interact
How we interact
Key topics and activities in 2020
Why we interact
How we interact
Key topics and activities in 2020
318/
319
• To optimise procurement procedures
with emphasis on greater efficiency
and transparency
• Participation in conferences and
exhibitions, holding meetings and
negotiations
• To create a level playing field for all
prospective contractors through
uniform requirements and fair bid
evaluation
• To establish long-term relationships
with suppliers
• Procurement announcements
• Compliance with the Company’s Code
of Ethics
• Implementing a green procurement
system
• Developing the Code of Conduct
for Counterparties, which governs
sustainability-related aspects of
counterparty relationships
• Developing ESG criteria to evaluate
suppliers and contractors, which
results in an individual counterparty
rating. Re-engineering procurement
• Building strong, trustful and mutually
beneficial relationships with our
partners
• Holding procurement tenders on
a proprietary electronic bidding
platform compliant with Russian laws
• To provide agricultural producers
• Continuous communication with
with high-quality mineral fertilizers at
competitive prices
• To preserve the health of future
generations and soil fertility by using
eco-efficient mineral fertilizers
customers – farmers, distributors
and business partners, including
those in related areas – in both the
domestic and international markets
• Development of in-house agronomic
• To establish business partnerships built
service
on mutual trust and respect
• Partnerships with research institutes
• Development of new solutions to
meet market needs
• Membership in industry organisations
such as the International Fertilizer
Association and the Russian
Association of Fertilizer Producers,
and hosting joint events with them
• To ensure a shared understanding of
obligations and expectations from the
partnership
• To ensure sustainable growth of sales
markets
• To increase crop yields in Russia
and abroad by developing complex
nutrition systems and efficient farming
practices
• To promote the responsible and
rational use of mineral fertilizers, i.e.
green agriculture
• PhosAgro presented its green labelling
for Russian mineral fertilizers at the
85th International Green Week 2020
in Berlin
• The Company participated in the
Golden Autumn 2020 exhibition to
discuss the Green Standard for
Russian-made agricultural products
• PhosAgro partnered with the Russian
Academy of Sciences to hold an on-site
applied research conference titled
Global Food Security: Challenges and
Solutions in Barybino, with an area of
44 ha where guests could take a foray
into innovative solutions and cutting-
edge farming technologies
• The Company acted as the general
partner of the All-Russian Field Day in
the Bryansk region, where it presented
a range of new NPK fertilizers, including
ammonium sulphate introduced
in 2020
• PhosAgro launched its YouTube
channel named PhosAgro Pro Agro,
which features the Company’s
agronomic service specialists and
invited experts discussing advanced
technologies and effective plant
nutrition systems
• Holding training events for farmers,
distributors and sales managers
(over 60 workshops and conferences
annually)
• Creating a knowledge base focusing on
the efficiency and benefits of PhosAgro
fertilizers (over 150 trials per year)
• Advertising portfolio expansion
• New presentation materials for clients
Value created
Total procurement
in 2020
RUB 104.1 bln
Local procurement
in 2020
RUB 23.5 bln
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020 GRI CONTENT INDEX
102-55
List of material topics and deadlines for providing information
Code
GRI Indicator
Comment
Page number (or link)
GRI 102
Overview
1
102-1
102-2
102-3
Organisational Profile
Name of the organisation
Activities, brands, products, and services
Location of headquarters
102-4
Location of operations
102-5
102-6
102-7
102-8
102-9
102-10
Ownership and legal form
Markets served
Scale of the organisation
Information on employees and other workers
Supply chain
Significant changes to the organisation and its
supply chain
102-11
Precautionary principle or approach
4
23
341
20-21
4
20-21
26, 119, 253
119
115
115
In its activities, the Company is guided by the Precautionary Principle.
It involves the analysis of possible negative impact on the environment
during operational planning and development of new products,
including application of risk management methodology.
As part of the corporate risk management system, the Company
monitors the risk of negative environmental impact. The materiality
and risk appetite of this risk are reassessed on a regular basis in
accordance with the criteria established in the Company. Such risk
factors as changes in production plans and production technology,
accidents and incidents involving process equipment, engaging
contractors who do not have necessary environmental management
competencies, commissioning of new production facilities, etc. are
taken into account.
In accordance with statutory requirements and the Company’s
approved regulations, measures are implemented to prevent the
risk of excessive environmental impact. In particular, the Company
carries out continuous industrial and environmental monitoring using
its own resources and by engaging external expert organisations and
supervisory bodies, conducts scientific research to justify pollutant
discharge standards, upgrades purification systems, etc. The
environmental management system of the Company’s business units
is certified in accordance with ISO 14001.
102-12
102-13
List of externally-developed economic,
environmental and social charters, principles,
or other initiatives to which the organisation
subscribes, or which it endorses
List of the main memberships of industry or
other associations, and national or international
advocacy organisations
2
Strategy
102-14
Statement from senior decision-maker
102-15
Key impacts, risks, and opportunities
3
Ethics and Integrity
105, 117, 149
316, 326
38
72
Code
GRI Indicator
Comment
Page number (or link)
320/
321
102-16
102-17
Values, principles, standards and norms of
behaviour
Internal and external mechanisms for seeking
advice on ethical and lawful behaviour and matters
related to organisational integrity
4
Governance
102-18
Governance structure
102-19
102-20
102-21
102-22
Process for delegating authority for economic,
environmental, and social topics from the highest
governance body to senior executives and other
employees
Executive-level responsibility for economic,
environmental, and social topics
Consulting stakeholders on economic,
environmental, and social topics
Composition of the highest governance body and
its committees
102-23
Chair of the highest governance body
102-24
102-25
102-26
102-27
102-28
Nomination and selection processes for the highest
governance body and its committees
Processes for the highest governance body
to ensure conflicts of interest are avoided and
managed
Highest governance body’s and senior executives’
roles in the development, approval, and updating
of the organisation’s purpose, value or mission
statements, strategies, policies, and goals related
to economic, environmental, and social topics
Measures taken to develop and enhance the
highest governance body’s collective knowledge of
economic, environmental and social topics
Processes for evaluating the highest governance
body’s performance with respect to governance of
economic, environmental, and social topics
102-29
Identifying and managing economic, environmental,
and social impacts
102-30
Effectiveness of risk management processes
102-32
102-33
102-35
Highest governance body’s role in sustainability
reporting
Process for communicating critical concerns to the
highest governance body
Remuneration policies for the highest governance
body and senior executives
102-36
Process for determining remuneration
5
Stakeholder Engagement
102-40
List of stakeholder groups
102-41
Collective bargaining agreement management
102-42
Basis for identification and selection of
stakeholders
102-43
Approach to stakeholder engagement
102-44
Key topics and concerns that have been raised
through stakeholder engagement
12, 242
242
202
196
196
196
206
194
208
244
203
208
209
205, 220-229
238
4-5
220-229
247-249
248
312-319
317
5, 312-319
312
5-9, 312-319
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020 Code
GRI Indicator
Comment
Page number (or link)
Code
GRI Indicator
Comment
Page number (or link)
322/
323
6
Reporting Practice
102-45
Entities included in the consolidated financial
statements
102-46
Defining report content and topic boundaries
102-47
List of material topics
102-48
Restatements of information
102-49
Changes in sustainability reporting / Significant
changes in the list of material topics
102-50
Reporting period
102-51
Date of most recent previous sustainability report
102-52
Reporting cycle
260
4-5
5
The Report does not contain any restatements of information
given in previous reports
4
4
The Company does not have a separate report on sustainable
development. Information on sustainable development is included
in the integrated report.
The Company does not have a
separate report on sustainable
development. Information on
sustainable development is included in
the integrated report.
102-53
Contact point for questions regarding the report
102-54
Claims of reporting in accordance with the GRI
Standards
This Report has been prepared in
accordance with the GRI Standards:
102-55
GRI content index
This document
102-56
External assurance
GRI 201
Economic Performance
201-1
201-2
201-3
Direct economic value generated and distributed
Financial implications and other risks and
opportunities due to climate change
Defined benefit plan obligations and other
retirement plans
GRI 202 Market Presence
202-1
202-2
Ratios of standard entry level wage by gender
compared to local minimum wage
Proportion of senior management hired from the
local community
GRI 203
Indirect Economic Impact
203-1
Infrastructure investments and services
supported
203-2
Significant indirect economic impacts
GRI 204
Procurement Practices
204-1
Proportion of spending on local suppliers at
significant locations of operation
GRI 205
Anti-Corruption
205-1
205-2
205-3
Operations assessed for risks related to
corruption
Communication and training about anti-corruption
policies and procedures
Confirmed incidents of corruption and actions
taken
4
337
4-5
320
4
87
78
327
124
125
189
126, 189
113
76, 243
244
245
GRI 207
Tax
207-4
Country-by-country reporting
GRI 302
Energy
103
Management approach
302-1
Energy consumption within the organisation
302-3
Energy intensity
302-4
Reduction of energy consumption
GRI 303 Water and Effluents
103
Management approach
303-1
Responsible water consumption
303-2
Management of water discharge and related
impacts on water resources
303-3
Water withdrawal
303-4
Water discharge
303-5
Water consumption
GRI 304
Biodiversity
103
Management approach
304-2
Significant impacts of activities, products, and
services on biodiversity
304-3
Habitats protected or restored
GRI 305
Emissions
103
Management approach
305-1
Direct (Scope 1) GHG emissions
305-2
Energy indirect (Scope 2) GHG emissions
305-4
GHG emissions intensity
305-5
Reduction of GHG emissions
In 2020, the Company paid RUB 16,958 mln in the Russian
Federation. The Group is in compliance with tax laws in the
countries where it operated. The amount of taxes paid outside of
Russia is immaterial.1
176
179
179
177
168
168
Effluents are treated until standard permissible discharge and
temporarily permitted discharge rates are reached as required by
permits to discharge pollutants into the environment (water bodies)
issued by a relevant authority for each discharge.
171
172-173
172
174
174-175
174-175
156
161
161
163
163
305-6
Emissions of ozone-depleting substances (ODS)
The Company does not use ozone-depleting substances on an
industrial scale
305-7
Nitrogen oxides (NOX), sulphur oxides (SOX),
and other significant air emissions
GRI 306
Affluents and Waste
103
Management approach
306-1
Total water discharge by quality and destination
157
164
All waste water discharged by the Company is treated to standard
and is processed at the Company’s wastewater treatment
facilities. There was no unplanned waste water discharge in 2020.
306-2
Waste by type and disposal method
165
306-3
Significant spills
There were no significant spills
306-4
Transport of hazardous waste
The Company performs no cross-border shipping of waste
deemed hazardous under the terms of the Basel Convention
GRI 307
Environmental Compliance
1.
This information was disclosed on all entities that are part of the same group as Apatit and PhosAgro
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020 Code
GRI Indicator
Comment
Page number (or link)
Code
GRI Indicator
Comment
Page number (or link)
324/
325
GRI 405
Diversity and Equal Opportunity
103
405-1
Management approach
Organisation’s governance bodies and main
employee categories by gender, age group,
minority groups and other indicators of diversity
GRI 406
Non-Discrimination
103
Management approach
GRI 407
Child Labour
103
Management approach
GRI 408
Forced Labour
103
Management approach
GRI 410
Security Practices
103
Management approach
GRI 412
Human Rights Assessment
103
Management approach
GRI 413
Local Communities
103
413-1
Management approach
Operations with local community engagement,
impact assessments, and development
programmes
GRI 417
Marketing and Labelling
103
417-1
Management approach
Requirements for product and service information
and labelling
117
119, 122
117
117
117
137
245
181
180
30
30, 45, 88
Apatit has programmes for interaction
and support of local communities in
place. The project to assess the results
of interaction with local communities
was initiated by the Company in 2020,
but due to the onset of the pandemic,
it was not possible to implement the
project.
103
307-1
Management approach
Non-compliance with environmental laws and
regulations
GRI 308
Supplier Environmental Assessment
103
Management approach
308-2
Negative environmental impacts in the supply chain
and actions taken
GRI 401
Employment
103
401-1
401-2
Management approach
New employee hires and employee turnover
Benefits provided to full-time employees that are
not provided to temporary or part-time employees
401-3
Parental leave
GRI 402
Labour/Management Relations
103
Management approach
GRI 403
Occupational Health and Safety
103
403-1
403-2
Management approach
Occupational health and safety management
system
Hazard identification, risk assessment, and incident
investigation
403-3
Occupational health services
403-4
Worker participation, consultation, and
communication on occupational health and safety
403-5
Worker training on occupational health and safety
403-6
Promotion of worker health
403-7
Prevention and mitigation of occupational health
and safety impacts directly linked by business
relationships
403-8
Workers covered by an occupational health and
safety management system
403-9
Work-related injuries
403-10
Work-related ill health
GRI 404
Training and Education
103
Management approach
404-1
Average hours of training per year per employee
404-2
404-3
Programmes for upgrading employee skills and
transition assistance programmes
Percentage of employees receiving regular
performance and career development reviews
In 2021, following a court proceeding,
the Company was imposed a RUB
7,914,517.36 fine. The decision may
be appealed by both parties in
accordance with the established
procedure; as at the date of this
report, the Company had no final
information on the fine amount. The
actual result will be disclosed in the
2021 Report.
149
153
108
154-155
117
121
Benefits established by collective bargaining agreements apply to
all employees of Apatit, its branches and standalone business units
and do not depend on the status or conditions of employment.
328
124
134
136
138
137
141
142
143
143
138
144
145
126
127
126
128
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020 GRI CONTENT INDEX: ADDITIONAL INFORMATION
Coverage of defined benefit pension plan obligations, RUB mln
Issuer’s participation in banking groups, banking holdings, holdings and associations
201-3
102-13
НGroup, holding, or association
Membership
Russian Union of Industrialists and Entrepreneurs
(RSPP)
since 2016
Issuer’s role (position) and functions in the
organisation
member of the RSPP. Promoting RSPP goals set out
in the association’s charter and resolutions of its
management bodies
National Global Compact Network on
Implementation of Responsible Business Principles
in Business Practice
since 2019
member of the association. Promoting goals set
out in the association’s charter and resolutions of
its management bodies
Association of Economic Cooperation with African
States (AECAS)
since 2020
member of the AECAS. Promoting AECAS
goals set out in the association’s charter and
resolutions of its management bodies
326/
327
Actual performance of
the employee benefit
obligations (RUB million)
Region
Employee benefit obligations
Vologda region
Current value of employee benefit obligations (private benefit coverage for newly
retiring employees)
Retirement-related obligations (other
than employee benefit obligations)
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
TOTAL:
Leningrad
region
Current value of employee benefit obligations (private benefit coverage for newly
retiring employees)
Retirement-related obligations (other
than employee benefit obligations)
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
TOTAL:
Murmansk
region
Current value of employee benefit obligations (private benefit coverage for newly
retiring employees)
Retirement-related obligations (other
than employee benefit obligations)
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
TOTAL:
Saratov region
Current value of employee benefit obligations (private benefit coverage for newly
retiring employees)
Retirement-related obligations (other
than employee benefit obligations)
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
TOTAL:
TOTAL
Current value of employee benefit obligations (private benefit coverage for newly
retiring employees)
Retirement-related obligations (other
than employee benefit obligations)
Payment of retirement benefits
Merit benefit plans
Financial aid for retired former employees
TOTAL:
Estimate
17.758
17.982
16.769
52.509
Estimate
1.475
0.000
5.164
6.639
Estimate
32.704
0.000
18.575
51.279
Estimate
1.552
0.000
2.387
3.939
Estimate
53.489
17.982
42.895
114.366
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020
Return to work and retention rates of employees who took parental leave, by gender, people
401-3
Region
Vologda region
Vologda region
Vologda region, total
Saratov region
Saratov region
Saratov region, total
Leningrad region
Leningrad region
Leningrad region, total
Murmansk region
Murmansk region
Murmansk region, total
Moscow region
Moscow region
Moscow region, total
Grand total
Gender
Employees
on leave
Employees
on leave
Employees
who returned
after leave
as at 31
December
1 January to
31 December
1 January to
31 December
F
M
F
M
F
M
F
M
F
М
260
3
263
49
49
36
36
216
5
221
12
12
581
362
3
365
62
62
52
52
289
8
297
16
16
792
87
87
11
11
13
13
62
62
1
1
174
328/
329
INDEPENDENT LIMITED
ASSURANCE REPORT
To the management of Public Joint Stock Company
“PhosAgro”:
• preparing, measuring and reporting of the Selected
Information in accordance with the Reporting Criteria;
and
INTRODUCTION
We have been engaged by the Management of Public Joint
Stock Company “PhosAgro” (hereinafter – the “Company”)
to provide limited assurance on the selected information
described below and included in the Integrated annual
report of the Company for the year ended 31 December
2020 (hereinafter – the “Integrated annual report”).
The Integrated annual report represents information
related to the Company and its subsidiaries (hereinafter
together – the “Group”).
• the accuracy, completeness and presentation
of the Selected Information.
OUR RESPONSIBILITIES
We are responsible for:
• planning and performing the engagement to obtain
limited assurance about whether the Selected
Information is free from material misstatement,
whether due to fraud or error;
SELECTED INFORMATION
We assessed the qualitative and quantitative
information specified in Appendix 1 to this report, that
is disclosed in the Integrated annual report and referred
to or disclosed in the GRI content index of the Integrated
annual report (hereinafter – the “Selected Information”).
• forming an independent conclusion, based
on the procedures we have performed
and the evidence we have obtained; and
• reporting our conclusion to the management
of the Group.
The scope of our assurance procedures was limited
to the Selected Information for the year ended 31
December 2020 only. We have not performed any
procedures with respect to earlier periods or any
other items included in the Integrated annual report
and, therefore, do not express any conclusion thereon.
REPORTING CRITERIA
We assessed the Selected Information using
relevant criteria, including reporting requirements,
in the respective GRI Sustainability Reporting Standards
102, 202, 203, 205, 302, 303, 304, 305, 306, 307, 401, 403,
404 and 413 (hereinafter – the “GRI Standards”) published
by the Global Reporting Initiative (GRI) (hereinafter –
the “Reporting Criteria”). We believe that the Reporting
Criteria are appropriate given the purpose of our limited
assurance engagement.
RESPONSIBILITIES OF THE MANAGEMENT
OF THE GROUP
The management of the Group is responsible for:
• designing, implementing and maintaining internal
control relevant to the preparation of the Selected
Information that is free from material misstatement,
whether due to fraud or error;
• establishing internal methodology, including objective
reporting criteria, and guidelines for preparing
and reporting the Selected Information in accordance
with the Reporting Criteria;
This report, including our conclusion, has been prepared
solely for the management of the Group in accordance
with the agreement between us, to assist management
in reporting on the Group’s sustainability performance
and activities. We permit this report to be disclosed
in the Integrated annual report, which will be published
on the Company’s website1, to assist management
in responding to their governance responsibilities
by obtaining an independent limited assurance report
in connection with the Selected Information. To the fullest
extent permitted by law, we do not accept or assume
responsibility to anyone other than the management
of the Group for our work or this report.
PROFESSIONAL STANDARDS APPLIED
AND LEVEL OF ASSURANCE
We performed a limited assurance engagement
in accordance with International Standard on Assurance
Engagements 3000 (Revised) “Assurance Engagements
other than Audits and Reviews of Historical Financial
Information”, issued by the International Auditing
and Assurance Standards Board. A limited assurance
engagement is substantially less in scope than
a reasonable assurance engagement in relation
to both the risk assessment procedures, including
an understanding of internal control, and the procedures
performed in response to the assessed risks.
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.
1.
The maintenance and integrity of the Company’s website is the responsibility of management; the work carried out by us does not involve consideration
of these matters and, accordingly, we accept no responsibility for any changes that may have occurred to the reported Selected Information or Reporting
Criteria when presented on the Company’s website.
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020
• performed limited substantive testing on a selective
basis of the Selected Information to check that data
had been appropriately measured, recorded, collated
and reported.
REPORTING AND MEASUREMENT
METHODOLOGIES
Under the GRI Standards there is a range of different,
but acceptable, measurement and reporting techniques.
The techniques can result in materially different reporting
outcomes that may affect comparability with other
organisations. The Selected Information should therefore
be read in conjunction with the methodology used
by management in preparing the Integrated annual
report, described therein, and which the Group is solely
responsible for.
OUR CONCLUSION
Based on the procedures we have performed
and the evidence we have obtained, nothing has
come to our attention that causes us to believe, that
the Selected Information for the year ended 31 December
2020 has not been prepared, in all material respects,
in accordance with the Reporting Criteria.
27 April 2021
Moscow, Russian Federation
A.Y. Fegetsyn,
certified auditor (licence no. 03-001436),
AO PricewaterhouseCoopers Audit
OUR INDEPENDENCE AND QUALITY CONTROL
We have complied with the independence and other
ethical requirements of the International Code of Ethics
for Professional Accountants (including International
Independence Standards) issued by the International
Ethics Standards Board for Accountants (IESBA Code),
which is founded on fundamental principles of integrity,
objectivity, professional competence and due care,
confidentiality and professional behaviour, and the ethical
requirements of the Auditor’s Professional Ethics Code
and Auditor’s Independence Rules that are relevant
to our limited assurance engagement in respect
of the Selected information in the Russian Federation.
We have fulfilled our other ethical responsibilities
in accordance with these requirements.
Our firm applies International Standard on Quality
Control 1 and accordingly maintains a comprehensive
system of quality control including documented policies
and procedures regarding compliance with ethical
requirements, professional standards and applicable legal
and regulatory requirements.
WORK DONE
We are required to plan and perform our work
in order to consider the risk of material misstatement
of the Selected Information. In doing so, we:
• made enquiries of the Group’s management,
including the Sustainability Reporting team and those
with responsibility for Sustainability Reporting
management and group reporting;
• conducted interviews of personnel responsible
for the preparation of the Integrated annual report
and collection of underlying data;
• performed analysis of the relevant internal
methodology and guidelines, gaining an understanding
and evaluating of the design of the key structures,
systems, processes and controls for managing,
recording, preparing and reporting the Selected
Information;
Audited entity:
Public Joint Stock Company “PhosAgro”
Independent auditor:
AO PricewaterhouseCoopers Audit
Certificate of inclusion in the Unified State Register
of Legal Entities issued on 5 September 2002
under registration № 1027700190572
Taxpayer Identification Number 7736216869
Registered by the Government Agency Moscow Registration
Chamber on 28 February 1992 under Nо. 008.890
Record made in the Unified State Register of Legal Entities
on 22 August 2002 under State Registration Number
1027700148431
55/1 building 1, Leninsky prospect, Moscow, 119333, Russian
Federation
Taxpayer Identification Number 7705051102
Member of Self-regulated organization of auditors
«Sodruzhestvo»
Principal Registration Number of the Record in the Register
of Auditors and Audit Organizations – 12006020338
330/
331
SELECTED INFORMATION SUBJECT TO LIMITED ASSURANCE PROCEDURES
GRI Standard
102-8
102-49
202-1
202-2
203-1
302-1
302-3
303-3
303-4
303-5
Information on employees and other workers
Changes in reporting
Ratios of standard entry level wage by gender compared to local minimum wage
Proportion of senior management hired from the local community
Infrastructure investments and services supported
Energy consumption within the organization
Energy intensity
Water withdrawl
Water discharge
Water consumption
304-3
Habitats protected or restored
305-1
305-2
305-5
305-7
Direct (Scope 1) GHG emissions
Energy indirect (Scope 2) GHG emissions
Reduction of GHG emissions
Nitrogen oxides (NOX), sulfur oxides (SOX), and other significant air emissions
Emissions by unit of product
306-1
Water discharge by quality and destination
Water discharge by unit of product
306-2
Waste by type and disposal method
Waste by type of hazard (I-IV)
306-4
307-1
401-1
401-2
403-1
403-2
403-3
403-4
403-5
403-6
403-7
403-8
403-9
Total weight of hazardous waste, with a breakdown by the following disposal methods
Transport of hazardous waste
Non-compliance with environmental laws and regulations
New employee hires and employee turnover
Benefits provided to full-time employees that are not provided to temporary or part-time employees
Occupational health and safety management system
Hazard identification, risk assessment, and incident investigation
Occupational health services
Worker participation, consultation, and communication on occupational health and safety
Worker training on occupational health and safety
Promotion of worker health
Prevention and mitigation of occupational health and safety impacts directly linked by business relationships
Workers covered by an occupational health and safety management system
Work-related injuries
403-10
Work-related ill health
404-1
404-2
404-3
413-1
Average hours of training per year per employee
Programs for upgrading employee skills and transition assistance programs
Percentage of employees receiving regular performance and career development reviews
Operations with local community engagement, impact assessments, and development programs
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020
SASB CONTENT INDEX
Code
Activity metric
EM-MM-000.B
Total number of employees, percentage contractors
Environmental
332/
333
Page number/
Comment
119
RT-CH-110a.1
Gross global Scope 1 emissions, percentage covered under emissions-limiting regulations
161-163
EM-MM-110a.1
RT-CH-110a.2
EM-MM-110a.2
RT-CH-120a.1
EM-MM-120a.1
RT-CH-130a.1
EM-MM-130a.1
RT-CH-140a.1
EM-MM-140a.1
RT-CH-140a.2
EM-MM-140a.2
RT-CH-140a.3
Discussion of a long-term or short-term strategy or plan to manage Scope 1 emissions,
emissions reduction targets, and an analysis of performance against those targets
Air emissions of the following pollutants: (1) CO, (2) NOx (excluding N2O), (3) SOx, (4) particulate
matter (PM10), (5) mercury (Hg), (6) lead (Pb), (7) volatile organic compounds (VOCs), and (8)
hazardous air pollutants (HAPs)
161-163
156
(1) Total energy consumed, (2) percentage grid electricity, (3) percentage renewable, (4) total
self-generated energy
178-179
(1) Total water withdrawn, (2) total water consumed, percentage of each in regions with High
or Extremely High Baseline Water Stress
168-173
Number of incidents of non-compliance associated with water quality permits, standards, and
regulations
168-173
Description of water management risks and discussion of strategies and practices to mitigate
them
75, 168-173
RT-CH-150a.1
Amount of hazardous waste generated, percentage recycled
EM-MM-150a.1
Total weight of tailings waste, percentage recycled
EM-MM-150a.2
Total weight of mineral processing waste, percentage recycled
EM-MM-160a.1
Description of environmental management policies and practices for active sites
EM-MM-160a.3
Percentage of (1) proved and (2) probable reserves in or near sites with protected
conservation status or endangered species habitat
RT-CH-410b.1
(1) Percentage of products that contain Globally Harmonized System of Classification
and Labeling of Chemicals (GHS) Category 1 and 2 Health and Environmental Hazardous
Substances, (2) percentage of such products that have undergone a hazard assessment
164-167
164-167
148
174-175
167
RT-CH-410b.2
Discussion of strategy to (1) manage chemicals of concern and (2) develop alternatives with
reduced human and/or environmental impact
162-165
RT-CH-540a.1
Process Safety Incidents Count (PSIC), Process Safety Total Incident Rate (PSTIR), and Process
Safety Incident Severity Rate (PSISR)
RT-CH-540a.2
Number of transport incidents
138
140
ESG CONTENT
INDEX 1
Code
ESG Indicator
Page number
Code
ESG Indicator
Page number
Environmental
E1
E2
E3
E4
E5
E6
E7
E8
E9
Greenhouse gas emissions
Emissions intensity
Total energy consumption
(direct and indirect)
Energy intensity
Water used by type of
generation
Water use
Environmental management
Climate risk management
/ board of directors and
management
Climate risk management /
middle management
160-163
160-163
179
179
178
168
150
79, 162, 203, 238
TCFD Report 2020
79, 162, 203, 238
TCFD Report 2020
E10
Climate risk mitigation
79
TCFD Report 2020
Social
S1
S3
S4
S5
CEO pay ratio
Staff turnover
Gender pay ratio
Employee turnover
249
121
120-123
121
S6
S7
S8
S9
S10
Gender diversity
Share of temporary
employees
Occupational health and
safety
Child and forced labour
Human rights
Governance
G1
G2
G3
G4
G5
G6
G7
G8
G9
Board of Directors diversity
Board of Directors
independence
Incentive compensation to
the management
Collective bargaining
Code of conduct for suppliers
Ethics and anti-corruption
Confidentiality of personal
data
ESG reporting
ESG disclosure
G10
External assurance
117
145
134
117
117
201
208
124, 247
317
109
242
241
332
196
329
1.
ESG Reporting Guide 2.0 Nasdaq
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020 Code
Activity metric
Page number/
Comment
Social
EM-MM-210a.3
Discussion of engagement processes and due diligence practices with respect to human rights,
indigenous rights, and operation in areas of conflict
313
RT-CH-210a.1
Discussion of engagement processes to manage risks and opportunities associated with
community interests
EM-MM-210b.1
Discussion of process to manage risks and opportunities associated with community rights
and interests
EM-MM-210b.2
Number and duration of non-technical delays
EM-MM-310a.2
Number and duration of strikes and lockouts
RT-CH-320a.1
(1) Total recordable incident rate (TRIR) and
(2) fatality rate for
(a) direct employees and
(b) contract employees
72, 180
72, 180
40, 42-44
119
144-145
RT-CH-320a.2
Description of efforts to assess, monitor, and reduce exposure of employees and contract
workers to long-term (chronic) health risks
72, 145
Governance
EM-MM-510a.1
Description of the management system for prevention of corruption and bribery throughout
the value chain
106, 242
EM-MM-510a.2
Production in countries that have the 20 lowest rankings in Transparency International’s
Corruption Perception Index
The Company has
no production
facilities in
countries ranked
among the 20
most corrupt
nations in the
Corruption
Perceptions
Index published
by Transparency
International.
RT-CH-530a.1
Discussion of corporate positions related to government regulations and/or policy proposals
that address environmental and social factors affecting the industry
151, 196
For more information on GHG emissions and climate risks, see the TCFD
Report 2020, Climate-Related Financial Disclosures
334/
335
GLOSSARY
AN – ammonium nitrate
ANBP – apatite-nepheline
beneficiation plant
ANSES – French Agency for Food,
Environmental and Occupational
Health & Safety
ASF – African swine fever
ATG – atmosphere gauge (unit
of pressure)
EMERCOM – Ministry for Civil
Defence, Emergencies and Elimination
of Consequences of Natural Disasters
IUPAC – International Union of Pure
and Applied Chemistry
ESG – environmental, social,
and governance
IYPT 2019 – International Year
of the Periodic Table
JSC – joint-stock company
ESPP – European Sustainable
Phosphorus Platform
kg – kilogram
EU – European Union
KPI – key performance indicator
FAO – Food and Agriculture
Organisation
kWh – kilowatt-hour
BAT – best available technique
LSE – London Stock Exchange
bln – billion
Capex – capital expenditure
Ccl44 – carbon tetrachloride
Cd – cadmium
CDA 2 – nationwide programme
to modernise the electricity industry
CDP – Carbon Disclosure Project
GDP – gross domestic product
GDR – global depositary receipt
LTIFR – lost time injury frequency
rate
GLONASS – Global Navigation Satellite
System
MAP – monoammonium phosphate
MCP – feed monocalcium phosphate
GLOSOLAN — Global Soil Laboratories
Networks; supporting the GLOSOLAN
by developing research capacities
and strengthening the Regional Soil
Laboratories Networks (RESOLAN)
mg – milligram
mln – million
CIS – Commonwealth of Independent
States
GSP – Global Soil Partnership
GRI – Global Reporting Initiative
CJSC – closed joint-stock company
H2SO4 – sulphuric acid
CO2 – carbon dioxide
HR – human resources
MOP – muriate of potash
MS – management system
MW – megawatt
NH3 – ammonia
COVID-19 – сoronavirus disease 2019,
the pandemic caused by severe acute
respiratory syndrome coronavirus 2
(SARS-CoV-2)
DAP – diammonium phosphate
DCDA – Double Contact Double
Absorption
HSE – health, safety and environment
NIUIF – Samoilov Scientific
Research Institute for Fertilizers
and Insectofungicides
IFA – International Fertilizer
Association
NO2 – nitrogen dioxide
IFRS – International Financial
Reporting Standards
NPK – nitrogen-phosphorus-potas-
sium fertilizer
IMF – International Monetary Fund
OJSC – open joint-stock company
DROZD – Educated and Healthy
Children of Russia programme
IPCC – in-pit crushing and conveying
at the Vostochny mine
OPEC – Organisation of the Petroleum
Exporting Countries
EBITDA – earnings before interest,
taxes, depreciation and amortisation
IRR – internal rate of return
P2O5 – phosphoric pentoxide
IT – information technology
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020 PhosAgro Group – PJSC PhosAgro
and its subsidiaries
PJSC – public joint-stock company
PwC – PricewaterhouseCoopers
Rostekhnadzor – Federal Service
for the Supervision of Environment,
Technology and Nuclear Management
TTF – Title Transfer Facility
UDT – thermal treatment facility
RSPP – Russian Union of Industrialists
and Entrepreneurs
UN – United Nations
R&D – research and development
RUB – Russian rouble
UNESCO – United Nations Educational,
Scientific and Cultural Organisation
RAFP – Russian Association
of Fertilizer Producers
SDG – UN Sustainable Development
Goal
USA – United States of America
RAS – Russian Accounting Standards
SMEs – small and medium-sized
enterprises
USD – United States dollar
VAT – value-added tax
REACH – Registration, Evaluation,
Authorisation and Restriction
of Chemicals
SO2 – sulphur dioxide
VOC – volatile organic compound
STPP – sodium tripolyphosphate
WHO – World Health Organisation
Rospotrebnadzor – Federal Service
for Surveillance on Consumer Rights
Protection and Human Wellbeing
Strategy to 2025 – PhosAgro’s
Development Strategy to 2025
Rosstandart – Federal Agency
on Technical Regulating
and Metrology
t – metric tonne
ths – thousand
336/
337
CONTACTS
102-3
102-53
Investor Relations
Andrey Serov
Head of Investor Relations
Tel.: +7 (495) 231 31 15
Email: ir@phosagro.ru
Corporate Secretary
Sergey Samosyuk
Address
PJSC PhosAgro
Tel.: +7 (495) 232 96 89, ext. 27 12
Email: ks@phosagro.ru
55/1 Leninsky Prospekt, bldg. 1,
Moscow 119333, Russia
Tel.: +7 (495) 232 96 89
Fax: +7 (495) 956 19 02
Depositary
Auditor
Citigroup Global Markets
Deutschland AG
Frankfurter Welle Reuterweg 16
60323 Frankfurt, Germany
JSC KPMG
Naberezhnaya Tower Complex,
10 Presnenskaya Naberezhnaya,
Moscow 123112, Russia
Tel.: +7 (495) 937 44 77
Fax: +7 (495) 937 44 00/99
Website: www.kpmg.ru
44/1 Myasnitskaya St.,
Moscow 101990, Russia
Tel.: +7 (495) 737 53 53
Fax: +7 (495) 737 53 47
Website: www.fbk.ru
20 B. Balkansky Lane, bldg. 1,
Moscow 129090, Russia
Tel.: +7 (495) 617 01 01
Fax: +7 (495) 680 80 01
Email: reestr@aoreestr.ru
Website: www.aoreestr.ru
Auditor
LLC FBK
Registrar
JSC Reestr
Contacts for employees
and potential employees
Contacts for media
Dmitry Borodich
HR and Social Policy Director
Tel.: +7 (495) 231 31 15
Email: info@phosagro.ru
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
Sergey Kudryashov
Head of Sustainable Development
Department
Tel.: +7 (495) 231 27 47
Email: info@phosagro.ru
ADDITIONAL INFORMATIONPHOSAGRO INTEGRATED REPORT 2020