DRIVING SUSTAINABLE soil fertility Integrated report 2022 contents COMPANY PROFILE 8 Key highlights 10 Key events in 2022 12 Our mission and values 15 Business model 18 Geographical footprint 20 27 Stakeholder engagement 30 Material topics Investment case and credit ratings STRATEGIC REPORT 36 Chairman’s statement 40 CEO’s statement 43 Business environment 46 Market overview 51 Strategy 70 Strategic risks 1 2 PERFORMANCE REVIEW 84 Financial performance 92 Operational performance 100 Customers and product management 112 Research and education 130 Supply chain 142 People development 168 Industrial safety 190 Environmental review 234 Contributing to local communities 3 4 ABOUT THIS REPORT For the interactive version of the report, please visit our website at: phosagro.com Appendices (stand-alone document) APPENDICES 332 The consolidated financial statements 374 Management responsibility statement 375 Independent limited assurance report 381 GRI content index 395 SASB content index 397 TCFD Recommendations 398 Glossary 400 Contacts SHARE CAPITAL 320 Ownership structure 321 Share performance 322 Debt management 323 Analyst coverage 323 Dividend policy 326 Relationship with shareholders and investors 329 Information disclosure CORPORATE GOVERNANCE 254 Chairman's statement 256 Corporate governance framework 260 Corporate governance structure 267 General Meeting of Shareholders 267 Board of Directors 290 Executive bodies 292 Remuneration report 296 Corporate controls 303 Ethical practices 6 5 4 About this report GRI 2–1, 2–2, 2–3 Boundaries and standards GRI 2–5 It is our pleasure to welcome you The Company maintains The report was approved with the following requirements and the Business Reporting on of the Group and PhosAgro’s stake to the 2022 Integrated Annual Report an annual reporting cycle, by PhosAgro’s Board of Directors and recommendations: the SDGs action platform; in these subsidiaries are presented (the “Report”) of PJSC PhosAgro with the previous report released on 20 April 2023 (Minutes dated • the Bank of Russia’s Regulation • The Social Charter of the Russian in the Group’s IFRS consolidated (PhosAgro). PhosAgro is a vertically on 29 April 2022. The Report 20 April 2023). No. 714-P dated 27 March 2020 Business sponsored by the financial statements for 2022. This Report complies Sustainable Development Goals, responsibility. The key subsidiaries integrated Russian company and one highlights how we integrate ESG of the world’s leading producers principles into everything we do. of phosphate-based fertilizers. The Company’s financial reporting follows the annual cycle too. 2022 has already made history, but the challenges it set for PhosAgro Group and the entire mineral fertilizer industry are still vitally relevant. In response to them, we strive to increase production and ensure uninterrupted supplies of high-grade and eco- efficient fertilizers, which we make in the most efficient ways possible, both economically and environmentally, by consistently reducing the share of non- renewable resources along with our carbon footprint. The principles of environmental and social responsibility remain our key priority. It is impossible to succeed alone in preventing the global threat of hunger and ensuring global food security. That is why we are doing our utmost to maintain and develop partnerships with Russian and international organisations as part of the global sustainability agenda. Together we can achieve much more for sustainable soil fertility. In this Report, we did our best to share how we contribute to consistent and steady progress towards these goals across various areas of our activities. on Disclosure of Information Russian Union of Industrialists and by the Issuers of Issue-Grade Entrepreneurs. Securities; Among other changes, economic environment developments • the Bank of Russia's Letter The Company takes into account led to changes in the Group No. 06–52/2463 On Corporate and implements global and national structure, as described in note Governance Code dated best practices in sustainable 29 to the consolidated financial 10 October 2014; development. • the Bank of Russia's Letter statements, and affected a number of elements of the consolidated On the Disclosure in the Annual The Company has reported financial statements. Report of a Public Joint- in accordance with the GRI and SASB. Stock Company of a Report Appropriateness of the selected on Compliance with the Principles qualitative and quantitative For more information, see page 375 and Recommendations of the Code of Corporate information disclosures prepared The boundaries of the Group under the related GRI Standards companies covered in this Report Governance No. IN-06–28/102 has been assured by Joint-Stock differ from those in consolidated dated 27 December 2021; Company Technologies of Trust – Audit financial statements when it • the UK Corporate Governance (Technologies of Trust – Audit JSC) comes to specific non-financial Code; in accordance with the International disclosures. To ensure compliance • the Bank of Russia’s Information Standard on Assurance Engagements with the materiality principle, Letter on Recommendations (ISAE) 3000 (Revised), Assurance we determined such boundaries on Disclosure by Joint-Stock Engagements Other than Audits in a way that this Report describes all Companies of Non-Financial or Reviews of Historical Financial material aspects of PhosAgro Group. Information Pertaining to Their Information. The Auditor's Report Activities No. IN-06–28/49 dated and the GRI Content Index are both The data disclosed in this Report 12 July 2021; available in the appendices to this includes information on: • the Listing Rules of the Moscow Report. Exchange and the London Stock Exchange; Financial results in the Report have Boundary 1 – PhosAgro and companies that are part • the AA 1000 and ISO 26000 been disclosed based on the IFRS of the group to which PhosAgro standards; consolidated financial statements belongs (the scope of disclosure • CDP – Carbon Disclosure Project of the Group for 2022 audited in IFRS consolidated financial standards; by Technologies of Trust – Audit JSC statements). • The Value Reporting Foundation; in accordance with the International • the Task Force on Climate-related Standards on Auditing. Financial Disclosures, TCFD; Boundary 2 – Apatit, including its branches and standalone business • Reference Performance This Report provides insight units. Indicators of the Russian Union into the performance of parent of Industrialists and Entrepreneurs company PhosAgro and its (RSPP), and the MOEX–RSPP subsidiaries (hereinafter jointly Responsibility and Transparency, referred to as “PhosAgro Group”, and Sustainability Vector indices. the “Group”, or the “Company”) • UNCTAD’s Guidance on Core across their operations, while also Indicators for Entity Reporting offering information on corporate on Contribution Towards governance and corporate Implementation of the For more information on specific disclosures and their boundaries used in this Report, see the GRI Indicator section on page 380 4 5 Strategic reportPerformance reviewCorporate governanceShare capitalAppendicesCompany profile FOSTERING collaboration As one of the world’s leading mineral fertilizer producers, PhosAgro has a special responsibility for ensuring food security. But we cannot achieve this goal alone. With this in mind and in full compliance with the UN Sustainable Development Goals, we place close and trusting collaboration with a wide range of partners at the heart of our business philosophy. 1 E L I F O R P Y N A P M O C 8 Key highlights 10 Key events in 2022 12 Our mission and values 14 Business model 18 Geographical footprint 20 Investment case and credit ratings 27 Stakeholder engagement 30 Material topics 6 7 In December 2021, the International Fertilizer Association confirmed PhosAgro’s status as an Industry Stewardship Champion for its responsible and sustainable approach to production. This award goes to companies committed to continuous improvement, transparency and best HSE practices. PhosAgro is the first Russian company chosen by the UN Food and Agriculture Organization (FAO) to run a global soil protection initiative. In 2022, PhosAgro and FAO launched the Russian Soil Laboratory Network (RUSOLAN). over 800 labs in the global network For more information, see page 21 For more information, see page 10 Key highlights FINANCIAL HIGHLIGHTS OPERATIONAL HIGHLIGHTS SUSTAINABLE DEVELOPMENT HIGHLIGHTS Revenue, RUB bln Output by key product, kt 2022 2021 2020 569.5 420.5 253.9 2022 2021 2020 11,073 10,585 10,234 Adjusted net profit, RUB bln Sales by key product, kt 2022 2021 2020 182.3 130.5 42.0 2022 2021 2020 11,097 10,434 10,138 Dividend payments, RUB bln 2022 2021 2020 142.1 72.3 38.9 Pollutant emissions, kg per tonne of finished and semi-finished products GHG emissions (Scope 1), kg of СO2-eq. per tonne of finished and semi-finished products Waste water discharge into surface water bodies, m3 per tonne of products and semi-finished products 2022 2021 2020 0.793 0.801 0.892 2022 2021 2020 133.1 135.5 143.6 2022 2021 2020 5.27 5.31 5.57 Share of recycled and decontaminated hazard class 1–4 waste, % Employee satisfaction and loyalty, % Average annual training hours per employee, hour 2022 2021 2020 99.8 95.1 79.5 2022 2021 2020 38.8 39.1 37.6 2022 2021 2020 LTIFR (own staff) per 1 mln man-hours Workplace fatalities (corporate staff) 2022 2021 2020 0.32 0.85 0.52 2022 2021 2020 69 57 63 1 0 0 i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 8 9 COMPANY PROFILE Key events in 2022 • PhosAgro and the Food and Agriculture Organisation of the United Nations (UN FAO) launched the Russian Soil Laboratory Network (RUSOLAN). • Permission was granted to retain the GDR programme. • PhosAgro Board of Directors elected the new Management Board. May June • Agreements on the development of education were made with the Ministry of Science and Higher Education and the Ministry of Agriculture of the Russian Federation. • PhosAgro signed partnership agreements with the governments of the Vologda and Murmansk regions. • A trilateral agreement on expanding cooperation with the Russian Academy of Sciences and the Mendeleev Russian Chemical Society was signed at the St Petersburg International Economic Forum. • PhosAgro and Aeromax signed an agreement to cooperate on regional digital transformation projects in the agricultural industry using remotely piloted aircraft systems. • An Educational Centre opened at Voronezh State Agricultural University. • PhosAgro Group became first in Russia to achieve certification under the Vitality Leaf international environmental standard. • The Balakovo Branch completed the upgrade of phosphate fertilizer capacities. • Mikhail Rybnikov was appointed CEO of PhosAgro. • An Educational Centre opened at Saratov State Vavilov Agrarian University. March January April • Cooperation agreements were signed with the governments of the Saratov and Leningrad regions. • An Educational Centre opened at Orel State Agrarian University. February The first 400 t batch of ore from Kirovsky mine’s new +10 m level was delivered to the beneficiation plant. • Shareholders elected the new Board of Directors. • PhosAgro launched the second in-house mineral fertilizer distribution centre in Tatarstan which became the 29th logistics centre of PhosAgro-Region (PhosAgro Group), Russia's largest mineral fertilizer distribution network. July August Consumers were introduced to ApaSil, an adaptogen, growth enhancer, and natural immunity inducer based on bioavailable silicon, the flagship product in PhosAgro's summer 2022 product line. PhosAgro’s shares were included in theBlue Chip Index, indicator of the most liquid Russian shares on the Moscow Exchange. September October • PhosAgro-START personnel development and talent pool training programme was launched. Independent director Victor Cherepov was elected Chairman of PhosAgro’s Board of Directors. • • PhosAgro was awarded the highest ranking in the Russian Business Anti-Corruption Rating by the Russian Union of Industrialists and Entrepreneurs. • An Educational Centre opened at Kursk State Agricultural Academy. • PhosAgro received a letter of appreciation from the Minister for the Development of the Russian Far East and the Arctic for its active participation in the Clean Arctic environmental project. • Products of Apatit's Balakovo Branch were awarded the 21st Century Sign of Quality (platinum award). • PhosAgro Group companies won the 5 Stars. Leaders in the Chemical Industry nationwide industry competition held by the Russian Chemists Union. • The Russian Quality Agency (Roskachestvo) confirmed that PhosAgro’s products meet the requirements of the Green One label. • PhosAgro Group passed an inspection for product compliance with the Vitality Leaf international environmental standard. • PhosAgro Group offered a new agricultural service – integrated soil fertility monitoring – to farmers in southern Russia. November December • PhosAgro joined the UN Global Compact’s CEO Water Mandate, a global commitment platform for corporate water stewardship. • PhosAgro’s products earned an Environmental Quality Label from the Brazilian Association of Technical Standards. • Educational Centres opened at Ryazan State Agrotechnological University and Penza State Agrarian University. i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 10 11 COMPANY PROFILE Our mission and values As one of the world’s leading mineral fertilizer producers, PhosAgro assumes a special responsibility for global food security. We offer high-quality, eco-efficient fertilizers, supply them and train farmers how to apply them in the most sustainable manner. Global presence Organic growth and development Healthy lifestyles and occupational health and safety Eco-efficiency Social responsibility Innovation and digital transformation Caring for Earth fertility for prosperous lives OUR mission OUR vision 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 Reliability We always honour our obligations and are a reliable partner Improvement and innovation Development is ongoing at PhosAgro, with every procedure relentlessly improved and refined Safety We promote and share a safety culture within the Company to ensure safe working conditions Ethics We support human integrity, fostering moral standards and ethics, spiritual values, dedication at work, and respect for family values OUR values i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 12 13 COMPANY PROFILE Navigator on UN SDGs 17 UN SDGs are the most important benchmark in our making both strategic and day- to-day management decisions. Committed to the Company’s mission and values, which are underpinned by our Strategy to 2025, we look to contribute to, and monitor the progress against, the targets of our eleven priority UN SDGs. Target 2.4 Our key programmes: • Product development programme to 2030; Targets 3.4 and 3.9 Our key programmes: • Safety culture improvement programme; • Improvement of the product • Social benefits and employee mix; guarantees; • Programme to develop digital • Minimising pollutant services for farmers. For more information, see pages 56, 100, 112 emissions per unit of output. For more information, see pages 56, 142, 168, 190, 234 Target 9.1 Our key programmes: • Logistics infrastructure development programme; • Our Favourite Cities programme; • Process Mining development. For more information, see pages 63, 130, 234 Target 11.3 Our key programmes: • Our Favourite Cities programme; • Promoting entrepreneurship. For more information, see page 234 Target 4.4 Targets 6.1 and 6.3 Targets 8.3, 8.5 and 8.8 Targets 13.1 and 13.2 Target 15.1 Our key programmes: Our key programmes: Our key programmes: Our key programmes: Our key programmes: • Developing PhosAgro School • Water Strategy; and DROZD projects; • Cooperation with universities and Russian and international R&D centres; • Promoting retraining and professional development. For more information, see pages 112, 142, 168, 234 • Participation in international initiatives (the CEO Water Mandate and Water Resilience Coalition) ; • Water Use Optimisation Programme at the Cherepovets site of Apatit. For more information, see page 190 • Comprehensive production development programme; • Incentives and rewards system; • Green procurement programme and ESG assessment of suppliers; • Our Favourite Cities programme; • Safety culture improvement programme. For more information, see pages 65, 130, 142, 168, 234 The Company is among the most highly- engaged participants of the world’s largest corporate sustainability initiative. The UN first named PhosAgro a Global Compact LEAD company in 2019. Making a positive impact Minimising the negative impact Energy Efficiency Programme; • Comprehensive programmes • • Ongoing carbon farm project in the Vologda region; • Use of green electricity to make agrochemical products; • Construction of a heat and power plant at the Volkhov site; • Green procurement programme and ESG assessment of suppliers; • Application improvement. For more information, see pages 56, 57, 112, 130, 190 to assess and preserve biodiversity at the Cherepovets site and the Volkhov and Kirovsk branches of Apatit; • Partnership with UN FAO in advancing sustainable farming; • Carbon farm project in the Vologda Region run jointly with the Russian Academy of Sciences to arrange, among other things, for the regional monitoring of GHG emissions. For more information, see pages 57, 112, 190 For more information on SDGs, see the Commitment to UN Goals section of the Company’s website E L I F O R P Y N A P M O C i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 14 15 Target 12.4 Our key programmes: • • • Programme to promote circular economy elements, including the use of phosphogypsum in farming and other industries; Reduction of natural gas consumption in production processes; As part of its Water Strategy, the Company is running initiatives to boost water use efficiency and reduce water consumption and waste water discharge; • Green procurement programme and ESG assessment of suppliers; • Construction of a heat and power plant at the Volkhov site. For more information, see pages 57, 63, 65, 112, 130, 190 Targets 17.16 and 17.17 Our key programmes: • Cooperation with universities and Russian and international R&D centres; • Collaboration with UN organisations (FAO, UNESCO, IUPAC); • Driving growth of sales markets; • Joining efforts with the governments and municipal authorities in the Russian regions in which the Company operates. For more information, see pages 100, 112, 234 Business model PhosAgro Group’s business model is based on the simple idea that we must better than our competitors understand the ever-changing customer needs and respond to them quicker using a wide product range, large distribution network and robust logistics. This requires flexible high-tech production facilities, high self- sufficiency in quality raw materials, deep vertical integration and, most importantly, continuous feedback from end customers and analysis of our product performance. All this helps PhosAgro Group maintain a low cost position in the industry, while also ensuring top quality and unique eco- efficiency of its fertilizers. We leverage our competitive advantages and seek to meet the highest operational standards throughout our product lifecycle. For more information on the Company’s Strategy to 2025 see the Strategic Report section on page 51 WE use Market and technology insights Management, production and sales competencies Energy and water Mineral resources and materials Partner, supplier and customer relationships Public and private infrastructure Finances PhosAgro Group’s competitive advantages Target 2.4 We operate the industry’s largest research centre at Samoilov Scientific Research Institute for Fertilizers and Insectofungicides, Russia’s oldest of its kind. Wide product range Ultra-modern product offering 57 fertilizer grades of all types 8% share of grades developed in the last five years in total sales of our chemical products For more information, see page 100, 112 Target 12.4 Apatite-nepheline ore of magmatic origin, which is unique in terms of quality and safety and does not have as much cadmium or other heavy metal content as would be dangerous for health, with a reserves-to- production ratio (RPR) of 60 years (including off-balance reserves) High vertical integration, % of self-sufficiency Phosphate rock(cid:19) Ammonia Sulphuric acid Ammonium sulphate 100 76 92 51 For more information, see page 92, 100 Targets: 12.4 3.9 15.1 6.3 8.3 Large-scale upgrade and construction programmes in Cherepovets, Volkhov and Balakovo Strong commitment to reducing emission intensity and waste water discharges, and improving energy efficiency 2022 production, % growth vs 2021 Apatite and nepheline concentrate Phosphate fertilizers Nitrogen fertilizers For more information, see page 92, 190 12.0 mt +2.0 % 8.2 mt 2.6 mt +4.2 % +5.6 % Targets: 13.1 13.2 17.16 17.17 WE secure Service model for customers: our product is a combination of a fertilizer and our agronomic expertise, all available in a digital environment. Sustainable soil fertility Basis for making safe food products New research and technological innovations Well-paid jobs and social benefits Educational initiatives and upskilling opportunities Large-scale purchases of local products and services Consistent tax payments and local community development Contribution to international programmes addressing global challenges Sustainably high returns on investment PhosAgro’s agronomic service: training, agronomic advice and support for customers: Results of 48 agronomic trials published at www.phosagro.ru 42 dedicated exhibition events For more information, see page 57, 100 Digitalisation of sales and customer services: 47,000+ regular users of PhosAgro's digital ecosystem mobile app downloads 36,000 1.884 up 29% year-on-year online fertilizer purchase orders via AgroResult online platform and mobile application Targets: 2.4 12.4 Growth in fertilizer volumes to a record 11 mt up 6.8% year-on-year Largest sales network in Russia 33 distribution centres in Russian regions For more information, see page 18, 92 Target 9.1 High railway throughput capacity at production sites: 25.85 mt Reliable delivery: a large Company's own fleet of railcars and port terminals on key export routes For more information, see page 18, 62 E L I F O R P Y N A P M O C i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 16 17 LOGISTICSSALESAPPLICATIONPROCESS AND PRODUCT DEVELOPMENTMINERAL RESOURCESPRODUCTION Geographical footprint GRI 2–1, 2–6 PhosAgro Group's eco-efficient mineral fertilizers and feed phosphates are sold all over the world via an extensive distribution network relying on the Groups’s robust logistics infrastructure. Key subsidiaries • Apatit, JSC (including Balakovo, Volkhov, and Kirovsk branches) • 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 • PhosAgro-Sibir, LLC 71regions of operation Murmansk 1 Kirovsk Kotka (Finland) 4 Volkhov St Petersburg 5 2 Cherepovets Ust-Luga Moscow Ryazan Nizhny Novgorod Minsk (Belarus) Orel Lipetsk Saransk Kazan Kursk Tambov Belgorod Penza Voronezh Volgograd Samara Yekaterinburg 3 Bykov Otrog Rostov-on-Don Krasnodar Stavropol Astana (Kazakhstan) Our key production facilities (including mining and processing assets), port terminals and a research centre are located in Russia. A flexible business model, well-thought- out production and sales strategy, and deep knowledge of customer preferences help us maintain a strong position across the main fertilizer markets, primarily in Russia and other premium markets. Upstream and downstream R&D Novosibirsk Barnaul Krasnoyarsk Distribution PhosAgro Group’s network of sales offices is the largest in Russia. The Group’s quality products are available to farmers across the globe. Logistics With a ca. 8 mtpa port transhipment capacity across key export routes, the Company can ensure a reliable supply to foreign customers and guarantee timely delivery against its contractual obligations. 1 KIROVSK BRANCH 2 APATIT 3 BALAKOVO BRANCH 4 VOLKHOV BRANCH 5 R&D Ussuriysk Kirovsk, Murmansk region is the world’s leading producer of high-grade phosphate rock and Russia’s only producer of nepheline concentrate. It develops six Khibiny deposits: Kukisvumchorr, Yukspor, Apatitovy Cirque, Rasvumchorr Plateau, Koashva and Njorkpahk. Cherepovets, Vologda Region is Europe’s biggest producer of phosphate-based fertilizers, phosphoric and sulphuric acids, as well as one of Russia's leading manufacturers by NPK, ammonia and ammonium nitrate output. Bykov Otrog, Saratov region focuses on phosphate-based fertilizers (a leading producer in Europe) and feed phosphates (a leading producer in Russia, and the country’s only manufacturer of monocalcium phosphate feed grade). Volkhov, Leningrad region is Russia’s only producer of sodium tripolyphosphate and one of Russia’s leading producers of mineral fertilizers. Cherepovets, Vologda region PhosAgro Group runs Samoilov Scientific Research Institute for Fertilizers and Insectofungicides, Russia’s only research centre specialising in this area and one of the largest in Europe. Founded in 1919, this institute paved the way for the country’s strong mineral fertilizer industry. For more information on our geographical footprint, visit the Company’s website i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 18 19 COMPANY PROFILE Investment case and credit ratings 1 A global producer of high-quality phosphate-based fertilizers PhosAgro is Europe’s largest producer of phosphate-based fertilizers1 and a top 5 global producer of DAP/MAP2 by capacity. Customer focus Certification Our products Stewardship Champion A netback-driven sales model with a global presence. for compliance with international standards testifies to the highest quality of our products and management efficiency throughout their life cycle: • • • ISO 9001:2015 ISO 14001:2015 ISO 45001:2018 • GMP+ B2 • GMP+ B1 • GMP+ B4 are compliant with Regulation (EC) No. 1907/2006 concerning the Registration, Evaluation and Authorisation of Chemicals (REACH). The Company is also taking all necessary steps to keep the registrations in line with new requirements. One of our achievements in 2022 is the certification of fertilizers in accordance with Regulation (EU) 2019/1009 of the European Parliament and of the Council, which sets out the rules for accessing the EU fertilizer market. PhosAgro has an Industry Stewardship Champion status assigned by the International Fertilizer Association (IFA). It is attached to companies that have been certified to meet the Protect & Sustain standard and actively participate in IFA research on safety, environment, energy efficiency and CO2 emissions. Our production technologies meet the highest global standards. 1 By total production capacity for DAP/MAP/NP/NPK/NPS. 2 Monoammonium phosphate / diammonium phosphate i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 20 21 COMPANY PROFILE 2 Unique resource base and sector-leading margins Unique mineral resource base Important food safety factor Wide range of ready-to-use solutions for farmers The mine life, including off- balance reserves, is estimated at around 60 years. Thanks to its magmatic origin, phosphate rock mined on the Kola Peninsula boasts exceptional purity. Our in-house R&D function and cooperation with Russian and international R&D centres enables us to develop and launch new fertilizer grades in a prompt manner in order to deliver the crop nutrient solutions our customers need. PhosAgro Group's position on global DAP production cost curve, production, kt Source: CRU Industry Cost Curves 2022, PhosAgro 10,000 20,000 30,000 PhosAgro Group's position on global urea production cost curve, production, kt Source: CRU Industry Cost Curves 2022, PhosAgro 40,000 80,000 120,000 160,000 Share of PhosAgro Group’s supplies in the key sales markets (share of compound and complex fertilizers in the region’s total imports), 2022 estimates, % 45 24 15 12 Russia (share of total supplies) Europe Africa Latin America One of the global leaders in the production of major types of fertilizers by profitability No. 1 World's producer of high- quality phosphate rock (P2O5 content at 39% and above) globally In 2022 PhosAgro topped Expert RA’s ranking with its highest ESG transparency level among Russian chemical companies No. 1 in terms of urea and mineral fertilizer capacity concentrated at one production facility (Apatit, Cherepovets) in Europe Self-sufficiency 100% in phosphate rock, in major inputs: • • 76% in ammonia, • 92% in sulphuric acid The only Russian and one of the leading European producers of monocalcium phosphate feed grade and the NP 11-37 liquid complex fertilizer One of the highest margins in the phosphate segment i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 22 23 COMPANY PROFILE 3 Eco-efficient fertilizers PhosAgro was the first Russian company to be certified to GOST R 58658–2019, a national standard for products with improved characteristics which introduced the world’s most rigorous limits on heavy metals and arsenic content. This allows PhosAgro to mark its products with a special Green One label. The Company also successfully completed voluntary Vitality Leaf certification. This ISO 14024-compliant framework was designed to assess a product’s environmental safety throughout its lifecycle, including mining and processing of raw materials, their delivery to the plant, storage, transportation and use of finished products, and packaging recycling. Additionally, PhosAgro made a Green Label environmental claim asserting that the product is free from dangerous cadmium concentrations harmful to human health and soils. The Group’s product packaging also has a pictogram from the EU regulations, which is used to inform consumers of safe fertilizers in terms of heavy metals content with cadmium content not exceeding 20 mg/kg P2O5. In December 2022, the Group’s Cherepovets, Volkhov and Balakovo production sites and phosphate rock mining and beneficiation facility in Kirovsk successfully passed a certification audit by the Brazilian Association of Technical Standards (ABNT). 4 Sound capital allocation in highly effective investment projects Investment projects may get with the CAPEX/EBITDA target, a go-ahead subject to their and a comfortable net debt / EBITDA high, compliance with the BAT covenant headroom. and sustainability criteria along Breakdown of CAPEX2, RUB bln ctual) 21 (a 0 2 2022 (actual) 53.2 2 0 2 3 5 7 . 1 ( p l a n ) 41.9 27.0 24.1 0.0 3 10.8 2.2 4 . 0 1.1 2 9 . 0 2 4 . 2 Non-industrial construction Maintenance Investment projects i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 24 25 1 Associação Brasileira de Normas Técnicas. 1 CAPEX excluding capitalised repairs. COMPANY PROFILE 5 Well-balanced corporate governance Stakeholder engagement Statement of the Chairman of the Strategy and Sustainable Development Committee 4 (40%) independent directors on the Board of Directors board committees 3 meeting on a regular basis In March 2022, in the wake Also, as a result of the sanctions ratings today cannot adequately of sanctions against Russia, against the country, international reflect the Company’s ESG practices. Sustainable development lifecycle is instrumental in providing Our ability to listen and the international rating agencies ESG rating agencies scaled down remains the cornerstone the most complete and well- understand, be quick in our Standard & Poor’s, Moody’s and Fitch their engagement with Russian PhosAgro is currently making efforts of PhosAgro's strategy, and we structured information about response, and effectively withdrew both the sovereign credit companies, including PhosAgro. to obtain credit and ESG ratings from intend not only to maintain, the Company’s performance, while work with a wide range of ratings and the credit ratings of all Hence, PhosAgro’s international ESG Russian rating agencies. but also to reinforce our maintaining a balance between stakeholders is key to the Russian corporate issuers, including PhosAgro. This move was not related to a change in the creditworthiness External ESG assessment 2020 2021 2022 of the companies and had no impact on PhosAgro’s ability to service its bank and public debt. At the time of the withdrawal, PhosAgro’s credit ratings were as follows: Standard & Poor’s – BBB-, Moody’s – Baa3, Fitch – BBB-. Throughout 2022, the Company continued to service its bank loans in a timely manner and took a number of steps to continue servicing Eurobonds in the new regulatory environment. Thus, the Company once again confirmed its high credit quality. Сorporate transparency rating WWF Environmental Transparency Rating for Mining and Metal Companies Responsibility and Transparency index Sustainable Development Vector index Disclosure of UN SDG integration rating n/a n/a 14 B B B А А 8↑ A↑ A↑ A↑ А А+↑ 7↑ А А А focus on ESG integration the interests of diverse stakeholder approach we use in doing in our corporate governance groups. and current operations. Aware business. It provides a solid foundation for delivering on that full and timely reporting I would also like to highlight strategic SDGs. is key to achieving this goal, the external recognition of our we place a strong emphasis efforts. PhosAgro's Integrated on preparing relevant reports. Annual Report 2021 won the Grand Prix of the Moscow For the second year running, we Exchange's 25th Annual Report are making disclosures in line Competition as the best report with the TCFD recommendations. of companies with a capitalisation This methodology, also used of over RUB 200 bln. This is our first in this Report, enables us reward of this kind, and we highly to cover a wide range of steps appreciate such a high recognition we take across such areas of our efforts by the investment as environmental protection, community. We are doing our best social responsibility and corporate to make sure our reporting complies governance. A disclosure with the highest standards going approach focused on a product’s forward. Alexander Sharabaika Chairman of the Audit and Sustainable Development Committee of the Board of Directors i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 26 27 COMPANY PROFILE Approach to stakeholder engagement; identifying and selecting stakeholders GRI 3–1, 2–29, SASB EM-MM-210a.3 For us, engagement customers, raise awareness among to be constructive, open with stakeholders begins when farmers about modern agricultural and principled. Thus, we work we realise our common goals practices and techniques, work hard to build partner relationships and interests. A stakeholder with researchers to present in the towns where we operate is a person or organisation that ambitious innovative projects and ensure that we strictly comply has an interest in what we do. connecting science and business with all applicable regulatory Stakeholders also include persons and, most importantly, make requirements. or organisations that may be affected informed practical choices by our activities or can influence our to improve economic, social PhosAgro’s framework business decisions. and environmental conditions where for stakeholder engagement Understanding stakeholder views of corporate governance. the Company can make a difference. management covers all tiers facilitates many processes. It helps In our engagement with our us develop new products for our stakeholders, we strive Generated and distributed direct economic value, RUB mln GRI 201–1 Item Stakeholder 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 Wide range of stakeholders Suppliers and contractors Employees and trade unions PAYMENTS TO PROVIDERS OF CAPITAL payments to shareholders payments to creditors Investment and finance community Tax expenses and other payments to government: including income tax expense Regional governments and local communities 2020 254,854 242,262 11,617 975 0 2021 422,459 404,849 15,639 1,971 0 2022 573,966 551,037 18,490 4,439 0 (247,254) (363,715) (520,253) (193,263) (28,540) (250,101) (32,781) (320,792) (51,567) (2,570) (3,378) (9,314) (38,852) (4,132) (11,007) (8,045) (72,260) (4,335) (37,019) (31,073) (142,111) (4,558) (52,792) (41,465) ECONOMIC VALUE RETAINED 7,600 58,744 53,713 Employees and trade unions For more information, see page 142 Investment and finance community, including investors, shareholders and ESG rating agencies For more information, see page 326 Regional governments and local communities For more information, see page 234 Consumers For more information, see page 100 Our key stakeholders: Suppliers and contractors For more information, see page 130 International organisations For more information, see page 128 Research community For more information, see page 112 Business and industry associations For more information, see page 126 Feedback You can send your comments and proposals regarding corporate reporting to ir@phosagro.ru or esg@phosagro.ru. Feedback from shareholders and other stakeholders helps PhosAgro improve reporting transparency and quality. i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 28 29 COMPANY PROFILE Material topics GRI 2–14, 2–29, 3–1, 3–2 Defining material topics: approach and steps we took into account the scale To illustrate our approach to impact in particular, as part of the provided of an actual and potential assessment, let us look at the GRI training are highly relevant. impact and the nature 404 Training and Education. For this of the assessed topic with due topic, we rated the impact as high Our work to define material topics regard to industry specifics. at every stage of the value chain resulted in a materiality list based With the application of our due to an important role our highly on the entire range of stakeholder In October 2022, PhosAgro for the chemicals industry drafted so Following the analysis of topics products seen as an important qualified staff plays along the way interests and opinions related approved the revised version far, the list of topics was expanded deemed material in 2020, 2021 stage in value creation, we paid from product development to sales. to the Company’s disclosures. of the Regulations on Collecting, to include additional aspects reflecting and 2022, we found out that their attention both to the Company's As regards the application stage, we Following the analysis, we selected Processing and Presenting the specific nature of the Company's materiality had largely changed due impact on the end consumer assume that the customer gets a 2-in-1 22 material topics to be disclosed Non-Financial Reporting Data operations, including SASB to changes in assessment approaches. and to customer needs, product, including a fertilizer and our in this Report and ranked in accordance with GRI standards, recommended disclosures. expectations and requirements service expertise (training, agronomic them according to their priority including the GRI Universal Standards Our strategy and risk experts analysed with regard to our products advice and support). Hence, relevant for the Company. updated in 2021. The Regulations The Company looked into topics the list of topics, compared them and practices. competencies and skills acquired, include GRI-compliant data collection for each GRI Topic Standard and rated against our strategic priorities and risk forms for the Report and establish them from 0 to 3 based on the opinion profile and assessed their impact the approach to defining material of the investment and finance on PhosAgro's value chain. topics based on double materiality. community, including rating This approach relies on the review agencies, and feedback from the key of the impact that social, economic, stakeholders. In 2022, PhosAgro Group 1. The impact of material aspects on our value chain from mine regulatory and governance and/or relied on the stakeholder survey from to plate (for more information, environmental factors or aspects have 2021, having first checked its relevance on the Company and vice versa. by reviewing communications received via the PhosAgro Hotline see the Business Model section on page 16) was rated as high, medium or low. When assessing The new way of materiality assessment or ir@phosagro.ru over the year. the degree of impact on processes resulted in several changes We included topics rated above 1 under our control such as product to the 2022 disclosures, in particular in the list of material topics proposed development and manufacturing, a more extensive list of material for disclosure. topics. With no GRI sector standard purchase and mining of mineral resources, logistics and sales, IDENTIFYING THE SOURCE OF DATA for selecting material topics and assessing respective impacts 1 Review of material topics from the perspective of the corporate strategy, risks, opportunities and the Company's business model Surveys of internal stakeholders Survey of investors' opinions on material topics Review of material topics as per the SASB industry standard Analysis Analysis of global and local ESG ratings, rankings and standards and prioritising of the UN SDGs Survey of external stakeholders, including review of complaints and queries received by the PhosAgro Hotline Key changes in 2022 reporting that deserve a special mention 1. Material topics disclosed in the 2021 Annual Report are still relevant in 2022. 2. We performed a dynamic assessment (change in relevance year-on-year). 3. We carried out a double materiality assessment 4. Under the new GRI 3 standard, we identified five new material topics: • 206 Anti-competitive behaviour, • 402 Labour/management relations, 5. 44 GRI indicators (39 of which relate to the 22 material topics listed on page 32 below) underwent external independent audit by Technologies of Trust – Audit JSC, providing limited • 405 Diversity and equal assurance. opportunity, of the Company's impact on the aspect and vice versa. • 410 Security practices, and • 414 Supplier social assessment. For more information, see the GRI Content Index section on page 380. SHORT-LISTING material topics 2 APPROVING THE FINAL LIST of material topics 3 Assessment Assessment Checking of each topic's materiality: • • for the Company and its stakeholders (including investors); from the perspective of industry standards and ratings Materiality assessment of negative and positive impacts and assessing materiality of each impact in the value chain Assessment of each topic's materiality on a scale from 0 to 3 the selected topics for relevance to information users and against expert opinions Approving the final list of material topics by the Strategy and Sustainable Development Committee i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 30 31 OUR APPROACH TO SELECTING 2022 MATERIAL TOPICSCOMPANY PROFILE Impact on the value chain P r o d u c t i o n , c l i m a t e r i s k s S o c i a l r i s k s E n v i r o i n H f e R , h c t i o e a s l t h n u m e n t a l, r e g u l a t o r y C li m a t e , e n r e v i r g u o l a n t m r i s k s d i s a n e a d s s e a s f e r i s t y , k s S t r a p r o j e t e c g i c t, s a p l a n n R elate d risks c n ti o i n c r e g , p n d s, i it, c n r o o r e y n t a r i s k l, u t e d u s r r e r e n c c ti o y a s t r ris k n , t e, s Prod uct develop m ent Mineral resources Productio n Logistics Sales Applicatio n E c o n o m i c p e Impact degree High Medium Low a n c e 3 0 5 G RI 2 01 UN SDGs S t r a t e g i c p l a n n i n g , H R , b u s i n e s s p r o c r i e s s k s s s a n c t i o n s r i s k s H R r i s k s G, S E d n a s G D S n o r e v i l e d o t e r u l i a F s k s ri s n o i t c n a s e, t a m cl i , n o i t p u r r o c y, t i d o m m o C s k s i r s n o i t c n a s s k R ris H s k y ris r to ula g al, re t n e m n viro n E ks ntal ris s, G D n S e er o m n eliv viro n G e S d E n a ailure to d F n risks ptio orru C E n v i r o n m e n t a l , r e g u l a S o c i a l , H R r i s k s t o r y r i s k s W a t e r a n d w a s t e w a L o c a l c O c c u L a b o u r / m M a r k e t a n a r e g l e a t m i o e n n t s E m p l o y m e n p r e s e n c e D i v e r s i t y o p p o r a n d t u n i t y e q u a l s e c i t c a r p t n e m e r u c o r P c i m o n o c e t c e r i d n I s t c a p m i 4 0 5 2 0 2 204 203 n tio a c u d d e n g a ainin r T y sit r e div Bio 404 304 ntal e m n n viro nt plier e e m s s e s s a p u S 308 205 o t p a t i o m m E t n e e r r 4 0 2 4 0 1 n a a n l d h e s a a f l t e h t y W a E m i s s t e u g n y 3 0 3 2 0 3 i t i e s 4 1 3 3 0 4 r f o r m s i o n s 6 3 0 n ptio orru nti-c etitive m ur nti-co avio p A A h e b 2 0 6 2 0 7 Taxes 4 1 0 P d r o e d v M e u i n l c o t p P r o e r a l m e L o d u c S a l e g i s t i c s t i o n r e s o n t u r c e s A s p p li c a t i o n Security practices M ark etin g a n d la b ellin g S u p plier so cial assess m e nt 1 4 4 4 1 7 nal risks utatio Rep Tax risks Inform ation and econo mic Failure to d eliver o n S D G s a n d E S G security risks m o dity C o m risks i c g e t a r t S t r o p e r e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 32 33 COMPANY PROFILE MEETING the growing demand T R O P E R I 2 C G E T A R T S In November 2022, the world’s population exceeded eight billion people and may hit the ten billion mark by 2050. In this context, the use of fertilizers is one of the most promising ways to avert the global threat of hunger, and constructive cooperation between international organisations, governments, fertilizer producers and consumers is critical to maintaining resilient and reliable global fertilizer production and supply chains. Despite normal temporary fluctuations, the long-term growth in global demand for mineral fertilizers has been steady. In Russia and the CIS, consumption grew by 6% in 2022. Building on PhosAgro's contribution to meeting this growing demand, we further increased production in 2022. 4.6% y-o-y growth in PhosAgro's mineral fertilizer production Boosting supplies to the rapidly grow- ing markets of Latin America is one of our key priorities. In 2022, PhosAgro Group products were certified in Brazil and earned the Environmental Quality Label from the Brazilian Association of Technical Standards. For more information, see page 65 For more information, see page 57 4 Chairman’s statement 6 CEO’s statement 9 Business environment 12 Market overview 17 Strategy 36 Strategic risks 34 35 Chairman’s statement PhosAgro Group has stood strong boasting unprecedented flexibility: even under these circumstances, we were able to ramp up supplies, primarily to markets in friendly countries. RUB 63 bln earmarked for investment The past year has offered Russian businesses unprecedented challenges: the rules and mechanisms of international Consistently strong corporate governance Sticking to strategic priorities trade, including those In 2022, PhosAgro’s corporate has been streamlining its production In the year’s turbulent environment, In 2022, the Company invested for fertilizers and agricultural governance framework changed. and governance structure: not only have we not abandoned over RUB 63 bln (including capitalised commodities, no longer work I took on the role of the Chairman the local regulatory framework, investment in development, but repairs) with another RUB 250 bln as they used to. PhosAgro Group, of the Board of Directors. This monitoring and control systems, we have planned record investments earmarked for investment a supplier to farmers around is an honour and a great challenge communications and accountability in projects that will fuel our growth, over the next five years. the globe, was forced to adapt for me, and I want to express my across the Group. This helped us support self-sufficiency in feedstock quickly to the new normal. gratitude to colleagues for their trust. withstand the challenges of the past and, of course, create jobs Despite all the trade restrictions And we did it. year. Despite all the risks and external and contribute to the development of 2022, the Company was able It is my conviction that people limitations pressing on the business of the regions where we operate. to route its supplies to other markets We have been working hard are PhosAgro Group’s most valuable environment, we strived to remain to make sure that farmers asset. in the priority domestic market open and transparent to a wide range of stakeholders. In our and globally have access to our I believe it is our team that helped view, it is a reliable indicator high-quality and eco-efficient keep the quality of PhosAgro’s of strong corporate governance fertilizers, which is exactly what corporate governance consistently and sustainable development the Company was created for. high through all the headwinds of the Company. of 2022. Year after year, the Company In 2022, we continued with our Strategy to 2025, which focuses on increasing production and raising our status as a low-cost producer of eco- efficient fertilizers. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 36 37 STRATEGIC REPORT Strengthening new business relationships in a short period of time. While the Brazilian Association of Technical certification body to develop Laboratory Network (RUSOLAN), generation facilities at our chemical Academy of Sciences, we have maintaining our leading position Standards. PhosAgro’s Cherepovets, and harmonise common which was integrated into the Global plants are largely powered kicked off a project to create in the priority domestic market, Volkhov and Balakovo production criteria for evaluating fertilizers Soil Laboratory Network (GLOSOLAN) by sulphuric acid production a carbon farm, an area designed we have also cemented our business sites and its phosphate rock mining is an important milestone towards that includes over 800 laboratories steam. A similar generating facility to monitor and absorb greenhouse relationships with a number and beneficiation facility in Kirovsk mutual recognition of ecolabels in more than 150 countries. was launched in Volkhov in 2022 gases. In autumn 2022, the first part of friendly countries. successfully passed a certification for mineral fertilizers and setting as part of an investment project of the carbon farm was deployed Specifically, Russia and Brazil audit by ABNT. uniform market requirements in the two countries based To support the green agenda, to build a new plant and cover 90% as part of the project and around Apatit mining and processing plant of its electricity needs. 110,000 coniferous and deciduous reached a new level in bilateral The joint project accomplished on the existing Vitality Leaf continues to increase the use of green trees were planted on an area trade this year: our products earned by PhosAgro Group, ABNT international system standard. electricity for its agrochemical In a joint effort with the government of around 100 ha. an Environmental Quality Label from and the Ecological Union products. Our in-house power of the Vologda region and the Russian Sustainability at the heart of PhosAgro’s business GRI 2-22 Forging ahead The investments we have pursuing for over 20 years up for the free trade of PhosAgro made over many years is to ensure the reliable and seamless Group’s eco-efficient fertilizers and the professionalism of our team supply of eco-efficient fertilizers around the world for the benefit Our absolute priority is to operate training programmes at these For example, at the UN Climate are yielding tangible results. I am and therefore contribute to food of people and global food security. with the widest possible educational institutions for young Change Conference (COP27), range of stakeholders in mind. talent the Company needs. we joined the Business Declaration confident that we will continue security in Russia and in some to forge ahead to new heights 100 countries around the world. We collaborate closely with farmers, for Climate Resilient Water, Sanitation, and new records in 2023, all the more local communities in the regions Apart from our charitable and Hygiene (WASH). The Declaration so because not only the Company In 2022 and 2023, this challenge of operation, and domestic market initiatives in the area of social was drafted by the Water needs this. players. PhosAgro continues and environmental development, Resilience Coalition, a UN Global becomes particularly urgent as sanctions hit the global business to run joint humanitarian we are closely integrating Compact platform, together We recognise our responsibility arena, and unconscionable and educational projects in concert the sustainability principles into our with the WASH4Work alliance towards a wide range compliance from financial, logistics, with international organisations. business model, which has become to help achieve the Clean Water of stakeholders, including farmers and insurance companies may We also actively cooperate the key element of PhosAgro Group’s and Sanitation and Climate Action UN all over the world. Our ultimate goal disrupt established processes. with academic organisations overall strategy and is successfully Sustainable Development Goals. that we have been successfully In 2023, we will continue to stand Victor Cherepov, Chairman of the Board of Directors of PJSC PhosAgro and institutions of higher embedded into our corporate and secondary vocational education governance framework and our day- As part of a joint project between offering training in relevant to-day operations. and related professions. This has brought to life highly successful PhosAgro and the UN Food and Agriculture Organisation, we launched the Russian Soil l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 38 39 STRATEGIC REPORT CEO’s statement RUB 267 bln adjusted EBITDA The year of 2022 will certainly go down in the history of Russia’s business as one of the most challenging years even compared to the period of the COVID-19 pandemic. We were, too, affected by a number of sanctions, the disruption of international ties and supply chains that had developed over years of cooperation. It was in this year that I assumed the position of CEO, and I am grateful for the trust of our shareholders and team, and for the coordinated and professional work of each and every member of the management team. I am also grateful to my predecessor, Andrey A. Guryev, whose stewardship made PhosAgro one of the globally recognised leaders and the industry’s most efficient players. In 2022, this came in handy more than ever before. Throughout the year, we were dealing with the key challenge of maintaining access to PhosAgro Group’s eco- efficient fertilizers for farmers around New records were registered in 2022. A significant portion of our offering consists the world for the sake of global In 2022, in spite of all the external of newest fertilizer grades developed food security. Artificial barriers challenges, the Company’s team over the past five years, including The top priority for our team was to ensure seamless operations at all of our production sites, deliver fertilizers on time, and take care of our employees and their families. existing investment projects and targeted programmes. Most of these goals seem relevant and realistic, even in the new Projects we are proud of impeded this in every way possible, managed to set a new production two in the reporting year. external environment. Putting the new +10 m level but we continued to do our utmost record: the concerted efforts of our to eliminate the restrictions on free entire team increased PhosAgro Once again, the past year trade in vital agricultural commodities Group’s agrochemical output was a record year for us in terms In the reporting year, we allocated more than at the Kirovsky mine into operation is the most ambitious of our key investment projects. Early in 2022, from Russia. In the extremely by almost 5% year-on-year to a record of not only operating but also RUB 63 bln (including capitalised we started to pilot the new level of our investment programme in 2022. One of the main initiatives in this project was the upgrade of the SK-20 sulphuric acid unit increasing its monohydrate capacity from the current 760 ktpa to 1.1 mtpa. It will make us more independent of external suppliers and more self-sufficient in the scarce raw material – high-quality sulphuric acid. This investment project boosted phosphate rock processing and helped us launch the production of complex NPK fertilizers in Balakovo. Over the next five years, we plan to invest around RUB 250 bln in developing and maintaining our production capacities, of which nearly RUB 67 bln (including capitalised repairs) will be invested in 2023 – a 6% increment over the record high investment made in 2022. Sustainable development and food security As we discuss PhosAgro Group’s performance in the past year, I challenging environment of 2022, 11.1 mt. Thus, we managed to meet financial performance. Adjusted repairs) for the development and in February the first batch cannot but mention our sustainability our commercial and logistics growing demand in our priority EBITDA was up by 39% compared to and maintenance of production of ore was already available efforts and achievements. We have divisions exemplified total dedication domestic market reliably. 2021, reaching a record of RUB 267 facilities, a third more than in 2021. for beneficiation. The new level once again proved that we are able and impeccable professionalism. bln. EBITDA margin also improved, We are building new production will not only enable us to replace to combine strong operating However, you need to understand One of PhosAgro Group’s primary hitting 46.9% vs 45.7% in the previous facilities, upgrading and expanding the levels being shuttered but and financial performance with social that while much has been achieved, objectives is to offer a wide range year. existing ones, bolstering their vertical even to increase the mine’s overall and environmental commitments. there is still a long way to go before of high-quality fertilizers to farmers. obstacles to Russian fertilizers With our in-house R&D function, are lifted and a global humanitarian we continue expanding our offering catastrophe is prevented. to meet the needs of farmers in line with the principles of sustainable PhosAgro’s team manages to cope development. And we are able to do Investments in the future integration and self-sufficiency output in order to reach the targets in technology and feedstock. All in line with the Strategy to 2025. We more than doubled our support this enables us not just to ramp up This project is the champion for social and charitable projects production, but to do so in the most by the number of bleeding-edge in the regions of operation, with flexible and cost-efficient way technologies and solutions applied. some RUB 11 bln spent in this possible taking full advantage realm. PhosAgro implemented with the new challenges in a short this quickly. In 2022, our portfolio n 2022, we continued to make of existing market environment Another key project for PhosAgro initiatives set to improve the quality space of time, not just keeping expanded to 57 agrochemical grades, steady progress towards and delivering a sustainably high Group is to develop Balakovo branch, of the urban environment, education, the business stable but reaching new including all types of fertilizers the goals set out in our Strategy return on our investments. where we completed the third phase healthcare, youth policy, and sports. highs. and feeds. Two of these grades to 2025, including running l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 40 41 STRATEGIC REPORT On top of that, we strongly support Leaf standard in November 2022. at level 10 of the Kirovsky mine traditional cultural and spiritual PhosAgro became the first company on stream by the end of the year. values. in the country’s fertilizer industry In Cherepovets, we plan to bolster to be granted the right to use this phosphate rock processing; By and large, the sustainability international label a year earlier. in Balakovo we intend to complete principles are firmly incorporated into our business model, as our We also ranked among projects designed to boost feed phosphates and sulphuric acid primary goal is to supply our eco- the companies with the best output, and to kick off phase 3 of our efficient fertilizers to farmers around social and charitable programmes production site creating a flexible the globe and in the local priority in the Russian Leaders in Corporate MAP/DAP/NPS/NPK fertilizer market. Philanthropy 2022 competition production scheme. Business environment SASB EM-MM-210b.2 December 2021 – present On 1 December 2021, Russia’s export quotas for nitrogen- based and complex fertilizers came into effect fertilizers), Russia’s government extended until the end of August, resolved to restrict exports and then until the end of 2022. of nitrogen-based and complex The quotas for nitrogen-based fertilizers for six months starting and complex fertilizers were set from 1 December 2021. The quotas at slightly above 8.3 mt and 5.9 mt We used the best available a coalition of major grantmakers For more than 20 years of our in the domestic market and, fertilizers were approved at 5.9 mt Ministry of Industry and Trade organised by the Donors Forum, As a way to prevent shortages for nitrogen-based and complex respectively. In 2023, the Russian technologies to implement in Russia. all the investment projects and programmes in 2022, and our sustainability efforts do not go unnoticed by the expert community. Outlook history, we have remained true to our mission of supplying eco- efficient PhosAgro Group fertilizers to farmers around the world, including the priority Russian In November 2022, the Russian will continue to pursue the Strategy contribution to global food security. Quality Agency (Roskachestvo) to 2025 by increasing capacity confirmed that PhosAgro Group’s and upgrading production facilities. PhosAgro Group’s strength lies We have big plans for 2023. PhosAgro market, and making a meaningful consequently, to slow down and 5.35 mt respectively. Later on, extended the quotas until 31 May the growth of food prices amid rising the urea export quota was raised 2023, with the quotas for nitrogen- gas prices (with gas used extensively by 280 kt. When the initial effective based and complex fertilizers coming in the production of nitrogen-based period expired, the quotas were first in at 7.3 mt and 5 mt respectively. February – March products meet the requirements in its employees, shareholders, Ban on Russian vessels entering Western suppliers of equipment The USA introduced a sanction of the Green One label. In 2021, We plan to ramp up our state-of-the- and partners alike. Thank you UK ports and other logistical and industrial solutions halted their the Company was the first business art phosphate fertilizer production for your confidence in the course in Russia to take assessment site in Volkhov to its design capacity, the Company has chosen to follow. restrictions On 1 March 2022, the UK operations in Russia. In February–March 2022, many waiver for Russian fertilizers The Office of Foreign Assets Control (OFAC) of the US Treasury for compliance with the standard and it will become an innovative enabling us to use this ecolabel. industry leader for years to come. By a wide margin, PhosAgro’s This will help us increase not only fertilizers comply with the world’s the output of finished products, but most stringent limits on heavy also the processing of phosphate metals and arsenic content rock – the main raw material in fertilizers, which are introduced for fertilizers. by Russian national standard GOST R 58658-2019. We will continue with our ambitious programme to develop We also passed an inspection our raw material base in Kirovsk, for product compliance where we intend to bring with the Ecological Union’s Vitality the second start-up facility Mikhail Rybnikov, Chief Executive Officer of PJSC PhosAgro passed a bill fully blocking Western suppliers of equipment published a new general licence, access to the nation’s ports and industrial solutions resolved which removed Russian mineral for all vessels related to Russia. to close shop in Russia. Among fertilizers from possible sanctions. On 4 March 2022, Denmark’s them were Caterpillar, Metso, The US authorities classified Maersk stopped accepting Epiroc, Sandvik, Komatsu, Hitachi Russian fertilizers as strategic bookings for the shipment and others. The economic sanctions supplies required to prevent of essential goods from the ports imposed by the USA and EU shortages of chemical products of Novorossiysk, St Petersburg complicated exports of dump essential for the agricultural and Kaliningrad. trucks from respective countries industry. to Russia, while also contributing The London Stock Exchange to the shortage of components suspended trading (engines, gearboxes) and spare parts. in PhosAgro’s global depositary receipts The London Stock Exchange The three largest container- shipping lines halted cargo suspended trading in depositary receipts issued by Russian bookings from Russia On 1 March 2022, the world’s three companies, including PhosAgro. largest container shipping lines – According to the LSE, this move Switzerland’s Mediterranean Shipping was designed to maintain orderly Company (MSC), Denmark’s Maersk markets in light of the market and France’s CMA CGM – suspended conditions. cargo bookings from Russia. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 42 43 STRATEGIC REPORT April September November The EU approved the fifth The fifth sanctions package Poland approved sanctions The European Commission The US Department of Treasury The UK authorises financial sanctions package As part of its new sanctions also imposes a ban on imports against 15 individuals of potassium chloride from Belarus and 35 legal entities from package, the EU restricted through Russia (“anti-circumvention imports of fertilizers from Russia. measure against potash imports The restrictions do not apply from Belarus”). to the execution until 10 July Russia The sanctions apply to a number of Russian companies, including PJSC Gazprom, PJSC NOVATEK, 2022 of contracts concluded As part of its fifth package PJSC Acron, PJSC PhosAgro before 9 April 2022. Starting from of sanctions against Russia, the EU and others. 10 July, the EU also introduced closed off its ports for Russian- the following one-year quotas flagged vessels starting from for Russian fertilizer imports: 16 April 2022. The ban also applies 837.57 kt for potassium chloride, to the vessels that changed their and 1,577.8 kt for complex Russian flag or their registration after and other potassium-containing 24 February 2022. fertilizers. June July Russia became the largest The USA issued a general supplier of phosphate fertilizers to India From April to June 2022, Russia shipped 350 kt licence to authorise Signing of the grain deal The grain deal was signed transactions related to Russian on 22 July 2022. Russia fertilizers The OFAC authorised and Ukraine entered into the grain export agreement authorised Russian and State Department services for the supply fertilizer supplies The European Commission issued an updated guidance to make it clear that EU companies are allowed to offer transportation and insurance support to Russian fertilizers encourage major US banks to continue transactions with certain Russian companies The US Departments of Treasury and State of Russian fertilizers The UK Government issued a general licence that permits the provision of financial services for the supply urged creditors to continue of Russian fertilizers offering their key services to third countries. The UK (USD settlements, payment officials emphasised that transiting to third countries. transfers, trade financing, the licence is only applicable etc.) to Russian companies to the shipments of fertilizers exempted from certain aspects for agricultural needs. December As part of its ninth sanctions package, the EU authorised the unfreezing of assets belonging to Russian businessmen engaged in production of fertilizers and chemicals Under the ninth sanctions package, certain EU of sanctions, for example, such companies as PJSC Gazprom and PJSC PhosAgro. January 2023 member states were allowed Russia introduced duties Pan-African Parliament to unfreeze the assets of Russian businessmen engaged in production on fertilizer exports effective until the end of 2023 Starting from 1 January 2023, Bureau Resolution In January 2023, the Pan- African Parliament Bureau of diammonium phosphate transactions with Russia related separately by executing of fertilizers and chemicals, Russia imposed export duties adopted a resolution to India, thus becoming the largest supplier of phosphate fertilizers in the Indian market amid the sanctions imposed by Western countries. to the supplies of agricultural individual documents commodities, fertilizers, with Turkey and the United medicines and medical devices. Nations. Furthermore, Russia and representatives The USA rejected duties of the United Nations Secretariat on nitrogen-based fertilizers met in Istanbul on 22 July from Russia The US International Trade 2022 to sign a Memorandum of Understanding on promoting Commission (ITC) recognised Russian food products that imports of urea ammonium and fertilizers to the world nitrate (UAN) solutions from markets. On 17 November 2022, Russia and Trinidad and Tobago the grain deal was extended did not hurt American producers. for a period of 120 days. The investigation was launched in summer 2021 after a petition from CF Industries Holdings, the nation’s largest producer of said fertilizers. if this was needed strictly on all types of mineral fertilizers on the impact of sanctions to bankroll shipments of food to be charged at a rate of 23.5% on food security in Africa. and fertilizers. of the price above USD 450 per The resolution urges to create tonne. with an immediate effect a Fact-Finding Mission New Common Agricultural to assess the impact Policy On 1 January 2023, the New of current sanction- related fertilizer shortages Common Agricultural Policy and to address themselves of the European Union to the relevant governments came into effect. This Policy and institutions responsible will be key to securing for the shortages. the future of EU’s agriculture and forestry, as well as achieving the objectives of the European Green Deal. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 44 45 STRATEGIC REPORT Market overview Estimate of changes in consumption by region, mt nutrient In 2022, amid complications Direct and indirect sanctions Persisting restrictions in the global geopolitical situation, against mineral fertilizer on fertilizer exports from the international fertilizer market producers in Russia and Belarus, China, which have been faced a number of challenges that which until then accounted had a predominantly negative for a total of 23% (49.4 mt) in place since late 2021 as a way to make sure impact on the fertilizer industry of global trade volumes (global the domestic market remains and farmers as the end consumers. exports). well-supplied. The key negative drivers include: Disruptions in natural gas As a result of all of the above, supplies and a marked rise global prices for fertilizers in global prices for natural gas and other energy surged, especially in 1H 2022, reaching levels above record sources. Natural gas is the key highs for some of the fertilizer raw material component types. in the production of nitrogen- based fertilizers, and a strong The spike in global prices rise in natural gas costs, made fertilizers less affordable especially in Europe, caused (fertilizer/crop price ratio), production capacities dampening demand to be scaled down and closed. for them. East Asia Southeast Asia South Asia Middle East Latin America North America Africa CIS Europe (1.9) (0.7) (1.0) (0.2) (2.2) (2.7) (1.0) 0.4 (2.7) (4%) (4%) (3%) (4%) (7%) (10%) (12%) (12%) 6% Nitrogen-based fertilizers, N Phosphate-based fertilizers, P₂O₅ Potash fertilizers, K₂O Phosphate rock and phosphate-based fertilizer market Phosphate rock prices, FOB Morocco (31–33% P2O5), USD/t Preliminary estimates by consulting agencies and industry analysts1 suggest that in 2022, global was most pronounced in Europe (down by 2.7 mt nutrient, or 12%, y-o-y), North America (down consumption of mineral fertilizes by 2.7 mt nutrient, or 10%), stood at 192 mt nutrient, a reduction and Latin America (down by 2.2 mt of 6%, or 13 mt nutrient, against nutrient, or 7%). In Africa and Asia, 2021. Consumption of nitrogen- consumption dropped by 12% based fertilizers was down by 3 mt and 3–4% respectively. of N (–3%) to 111 mt; for phosphate fertilizers, it shrank by 3 mt of P2O5 (–6%) to 47 mt, and for potash fertilizers, consumption fell by 6.0 mt of K2O (–15%) and reached 35 mt. In the CIS, there was price control on our priority market, an uptick by 0.4 mt, or 6%, Global fertilizer consumption estimates, mt nutrient 2022 2021 2020 2019 2018 192 205 201 192 192 202 mt –7% vs 2021 global production of phosphate rock in 2022 (according to preliminary estimates) 350 300 250 200 150 100 against 2021 on the back of export Nitrogen-based fertilizers restrictions imposed against Phosphate-based fertilizers In terms of geography, consumption Russian and Belarusian products Potash fertilizers of mineral fertilizers declined across and refocusing of export supplies all regions except for the CIS (not towards the domestic market. including Ukraine). The reduction 1 Hereinafter based on data by CRU, Argusmedia, Profercy; expert estimates of industry analysts in Russian and international media. Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec The reduction was driven by weaker with other African nations. Russia, with changes in price indices conditions in the markets Latin America and the Middle East in phosphate-based fertilizer markets. for phosphoric acid, mineral fertilizes saw no major changes in their In 1Q–3Q 2022, prices for the key types and industrial phosphates seen phosphate rock production volumes. of phosphate rock were growing in 2022. The most significant decline steadily before price correction kicked in phosphate rock production came Pricing in the phosphate rock market in, following the trend for phosphate- from China and Morocco, along has the traditional time lag associated based fertilizers. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 46 47 STRATEGIC REPORT According to preliminary estimates, was due to concerns over a seasonal global production of complex shortage of fertilizers after export phosphate-based fertilizers (DAP + restrictions were imposed by the key MAP) in 2022 reached 55 mt, a 6 mt supplying nations (direct or indirect (10%) reduction y-o-y that reflects sanctions against products from temporary weakening of demand Russia and Belarus; China’s for mineral fertilizers in general limitations on exports to benefit in 2022. The bulk of the production the domestic market). In 2H 2022, decline was seen in China, Morocco, global prices for phosphate fertilizers and the USA. Global production saw correction amid weaker demand of complex NPK fertilizers is also in the key importing markets, expected to go down by 5–7 mt including Brazil, USA, and Europe. to 92 mt in 2022. Global trade in DAP/MAP in 2022 Global DAP/MAP prices in 2022, FOB Baltic, USD/t was down by 5 mt, or 17%, to 25 mt y-o-y. The most significant drop in DAP/ MAP imports was seen in Europe and North and South America, with the trend only partially offset by higher DAP imports to India. Global imports of NPK fertilizers shrank by 2 mt to 16 mt, driven mainly by Europe and Africa’s weaker demand for import. In 1H 2022, phosphate-based fertilizer prices reached record highs of USD 1,200–1,300 per tonne (CFR)1 in sales markets, which 1,400 1,200 1,000 800 600 400 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 25mt –17% vs 2021 global trade in DAP/MAP in 2022, according to preliminary estimates Global NPK (15:15:15) prices in 2022, FOB Baltic, USD/t 900 800 700 600 500 400 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 1 CFR (Cost and Freight) Nitrogen-based fertilizer market In 2022, the global fertilizer market According to preliminary estimates, In 2022, the global urea market was under pressure from surging global production of urea expanded remained highly volatile, with price and persistently high natural by 4 mt (2%) to 175 mt in 2022. Lower fluctuations between all-year highs gas prices in Europe, which output in Western and Eastern and lows reaching as much as 100% caused a reduction in domestic Europe (down by 3–4 mt) was offset and above. Changes in the urea production of nitrogen-based by production ramp-up in Africa, pricing environment reflect fertilizers in Europe and contributed North America and Asia (up the natural gas market volatility, to their substitution with imports. by over 7 mt combined), including importer concerns over potential The launch of new facilities in West by new capacity launches in Nigeria, reductions in urea exports from Africa and Southeast Asia, coupled India, and Brunei. with increased utilisation of existing Russia, and irregularities in seasonal demand from the key sales markets capacities in countries with their Global urea trade volumes in 2022 of South Asia and Latin America. own cheap raw materials (natural stayed virtually flat at some 53 mt. gas), managed to offset lower A 2.5 mt uptick in imports of urea production volumes in Europe to Europe was offset by weaker and other regions with high energy import demand seen in Latin America costs. and Asia. Global urea prices in 2022, FOB Baltic, USD/t 175 mt +2% vs 2021 global production of urea in 2022 (according to preliminary estimates) 1,000 800 600 400 200 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 48 49 STRATEGIC REPORT Potash fertilizer market The key driver in the potash fertilizer Preliminary estimates show The downward trend in export supply market was the introduction global production of potassium drove up prices for potassium chloride of sanctions against exports chloride to drop by 10 mt (14%) in 1H 2022, causing them to reach of potassium chloride from Russia to 61 mt, with global trade as much as 1,000 USD/t and above. and Belarus. in this fertilizer also going down High potassium chloride prices made These two nations account of lower shipments f rom Russia driving a reduction in demand for around 40% of global production and Belarus. and global price correction in 2H 2022. by 10 mt (18%) on the back the fertilizer less affordable for farmers, and exports. Potassium chloride prices in 2022, FOB Baltic, USD/t 61mt –14% vs 2021 global production of potassium chloride (according to preliminary estimates) 1,000 800 600 400 200 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Strategy Strategy to 2025 In 2022, PhosAgro continued to make Despite the changing external Our record-high production of 11.1 mt good progress towards the goals environment, we consider most of mineral fertilizers and other of its Strategy to 2025 approved objectives of the Strategy to 2025 chemical products in the reporting by the Company’s Board of Directors to be relevant and achievable year is an important milestone along in 2019. and continue to implement respective this journey. projects and programmes. Reduced emissions and water use, increased waste recycling Zero workplace incidents and injuries Contribution to the UN Sustainable Development ESG Sustainability principles are deeply integrated in all of the Strategy to 2025 aspects Increasing sales in priority markets • Expansion of the foothold in premium markets • Higher share of premium fertilizer brands in the sales mix Boosting logistics efficiency • Alignment of production and sales • Reduction of per unit transportation costs • Developing port infrastructure Operational efficiency and production growth • Capacity expansion • Higher self-sufficiency in feedstock • Stronger operating efficiency For more information, see page 56 For more information, see page 62 For more information, see page 65 l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 50 51 STRATEGIC REPORT Capital investments New promising projects A disciplined approach to CAPEX The minimum project IRR of 15% Annual CAPEX budget of up to 50% of EBITDA More efficient working capital management Breakdown of CAPEX1, RUB bln Expenditures 2020 (actual) 2021 (actual) 2022 (plan) 2022 (actual) 2023 (plan) Investment projects Maintenance Non-industrial construction Total 23.8 10.4 2.1 36.3 30.0 10.8 1.1 41.9 23.6 27.6 2.0 53.2 24.1 27.0 2.2 53.2 24.2 29.0 4.0 57.1 CAPEX funding in 2020–20231, RUB bln Details of key investment projects in 2022, RUB bln 2020 (actual) 2021 (actual) 2022 (actual) Despite the changes in the external uncertainty. We continue reviewed scenarios, and aim environment, in 2022 we continued to greenlight those high-potential to promote further development to develop an updated Strategy projects that offer significant in line with the Company’s strategic to 2030, however, this exercise economic and environmental priorities – progressive production will take us longer than expected benefits, meet the criteria adopted growth, innovative and ESG-compliant due to dramatically increased by the Board of Directors as part products and processes, and operating of the Strategy to 2025 for the key efficiency. Project Construction of crushing and delivery unit No. 4 (CDU- 4) at the Rasvumchorrsky mine (Kirovsk) Completion 2022 Targets >100% IRR Ore delivery from underground up to mt 3.5 of ore per year Investments RUB 0.8 bln Status Completed successfully. In August 2022, CDU-4 was commissioned at the Rasvumchorrsky mine for ore delivery from underground 21.2 ESG agenda 6.3 5.3 2.5 1.9 5.2 Development of the Volkhov branch of Apatit (phase 3 – construction of a unit to produce water soluble MAP) Construction of +10 m level at the Kirovsky mine Development of the Vostochny mine, Koashvinsky open pit and Njorkpahk deposit (Kirovsk) Development of the Balakovo branch of Apatit (phase 2) Other key projects 36.3 41.9 53.2 CAPEX2 84.3 192.1 266.9 Adjusted EBITDA 43% 22% 20% CAPEX / adjusted EBITDA 1 Excluding capitalised repairs. 2 Key investment projects excluding capitalised repairs. Addressing climate issues, environmental efficiency, energy impact. In 2022, we created a methodology for incorporating the Company's environmental footprint through specific initiatives. and resource saving is integral the carbon price into the system to the Company’s Strategy for evaluating the climate impact Stable and successful home regions to 2025. Every addition to our as a factor in our final investment are a key driver of PhosAgro Group's production capacities is designed decisions. This methodology sustainable development. We to employ the best available was approved in early 2023. In 2020, implement our social investment techniques and operated in strict the Board of Directors completed strategy through promoting efficient compliance with the applicable the integration of PhosAgro’s and successful cooperation with a sustainability standards. PhosAgro's climate and environmental broad range of partners. As a reliable framework for assessing agendas into its business strategy long-term partner, we create stable promising investment projects by approving Climate and Water and well-paid jobs for local people, is based, among other criteria, strategies that set measurable, provide good education and place on their potential environmental achievable targets for reducing regular orders with local businesses. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 52 53 STRATEGIC REPORT Strategic goals Targets — 2025 / Status — 2022 Increasing sales in priority markets Expansion of the foothold in premium markets Sales volume mt: Russia and the CIS 3.7 mt / 2.6 mt American countries 3.5 mt / 2.7 mt Number of distribution and logistics centres 35/33 Total storage capacity >650 kt /821 kt Liquid complex fertilizer storage capacity 62 kt / 74 kt Operating efficiency and production Capacity expansion Phosphate rock production 11.1 mt / 10.9 mt Phosphate rock processing 8.4 mt / 8.7 mt Mineral fertilizer and feed phosphate production 11.6 mt/ 10.8 mt Boosting logistics efficiency Reduction of transportation costs Alignment of production and sales Increased reliance on own rolling stock. Use of innovative railcar fleet Rail infrastructure throughput at key production sites: 28.3 mtpa / 25.9 mtpa Target achieved or exceeded Progress Higher share of premium fertilizer brands in the sales mix Share of complex fertilizers (NPK/NPS/PKS) in total output 43.1% (5 mt) / 33.5% (3.7 mt) Maintaining high feedstock self-efficiency Ammonia Sulphuric acid Ammonium sulphate 76% / 76% 91% / 92% 75% / 51% Progress Stronger operating efficiency Implementation of organizational development projects in line with the BAT and sustainability criteria Progress l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 54 55 STRATEGIC REPORT Project Completion Investments RUB 3.0 bln. Status Completed successfully Construction of a heat and power plant in Volkhov 2022 Targets Power to be generated in 2023: 249 mln kWh , including 205 mln kWh generated through the utilisation of sulphuric acid production steam GHG emissions to be reduced by 77 kt of CO2-eq. per year In 2022, the Volkhov branch successfully completed a project to build a new sulphuric acid facility with a heat and power plant. The commissioning of a heat and power plant using process steam from the new sulphuric acid facility will help to reduce both the cost of purchasing electricity from third-party suppliers and greenhouse gas emissions. The new heat and power plant leverages the most efficient environmental protection technologies and solutions. In particular, it uses cooling towers with a prefabricated metal basin raised above the ground, allowing its integrity to be monitored and preventing hidden water leaks into the ground. The water treatment system relies on a state-of-the-art treatment technology based on reverse osmosis. As part of the HPP project, we also upgraded the site’s storm water collection and treatment system, which now includes an additional treatment unit used to bring the make-up water quality in line with the water circulation cycle requirements. This makes it possible to supply water to the HPP and sulphuric acid production facility while maintaining the closed water circulation cycle of the entire site, eliminating the discharge of waste water into water bodies. Increasing sales in priority markets PhosAgro Group is successfully increasing the profitability of its sales by active involvement in the most high-margin markets and through boosting sales of premium mineral fertilizer grades, primarily complex fertilizers. Sales of mineral fertilizers and feed phosphates, kt 2022 STRATEGY TO 2025 10,954 2,571 Russia and the CIS 2,239 Europe 2,651 American countries 3,493 Other 11,555 3,700 Russia and the CIS 3,100 Europe 3,500 American countries 1,255 Other Targets 2.4, 12.4, 15.1 Promoting and raising awareness about best farming practices and developing the service model Targets 2.4, 13.1, 13.2 Producing mineral fertilizers with micronutrients which enhance the quality of soils as natural sinks of СO2 and help adapt to climate change Targets 2.4, 12.4 Expanding sales of eco- efficient mineral fertilizers and developing innovative plant nutrition systems l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 56 57 STRATEGIC REPORT to maintain premium margins Progress towards our targets Mineral fertilizer and feed phosphate sales mix, kt Expansion of the foothold in premium markets despite largely diverting its exports to new markets amid restrictions The ongoing expansion of storage The strategic flexibility of PhosAgro’s on fertilizer supply from Russia and logistics capacities in Russia production and logistics capabilities imposed by several countries is in line with our strategy. achieved in previous years as a result due to geopolitical reasons. We also of a robust investment programme, remain strongly committed to our has enabled the Company home market. Distribution centres Total storage capacity, kt Liquid complex fertilizer storage capacity, kt 2020 (actual) 2021 (actual) 2022 (actual) Strategy to 2025 29 679 52 31 765 66 33 821 74 35 >650 62 From 2018 to 2022, a total additional services totalled almost for dual fertilizer grades continued of over RUB 3.2 bln was invested RUB 160 mln. in the development of the Russian to prevail in 2022 due to the superior growth of the markets historically Urea / AN / AS MCP APP NPK/PK/PKS MAP/DAP Total Share of complex fertilizers, % 2020 (actual) 2021 (actual) 2022 (actual) Strategy to 2025 2,286 379 200 3,887 3,203 9,955 39.0 2,495 405 206 3,586 3,565 10,257 35.0 2,551 349 111 3,670 4,272 10,953 33.5 2,620 472 213 4,980 3,270 11,555 43.1 l e fi o r p y n a p m o C Innovative products developed by PhosAgro Fertilizers with micronutrients, kt Sales of fertilizers introduced over the last five years from 2018 to 2022 exceeded RUB 37.3 bln, or 8% of total sales of the Company’s chemical products. The Company’s ability to maintain a high share 2023 2022 2021 1 533,3 1 329,6 1 691,1 1 554,1 environmental and biologicall performance. Research carried out jointly by PhosAgro and the Russian State Agrarian University – Moscow Timiryazev Agricultural Academy proved a significant increase in the uptake of nitrogen and other key nutrients from coated fertilizers, higher grain yields, improved crop quality, and better physical properties of the fertilizers. Unlike polymer coatings developed by other companies, the coatings regional network. In 2022, In 2023, the Company plans focused on these types of fertilizers. of new grades relies on the strong 20201 the number of the network’s to focus on further expanding The flexibility of our production distribution centres increased the distribution network, developing assets enables us to respond swiftly to 33, while the total storage existing and launching new logistics to changes in the market demand, R&D capabilities of NIUIF and PhosAgro Innovation Centre and the flexibility of production Actual Plan capacity exceeded 800 kt, including centres in key agricultural regions while maintaining full capacity capacities achieved through Biological and biologised mineral used by PhosAgro do not lead 74 kt for the transhipment of Russia, enhancing the service utilisation. of liquid mineral fertilizers (a new offering, and creating a unified a fundamental overhaul in recent years. All of these give PhosAgro fertilizers PhosAgro Innovation Centre also to the release of microplastics and are therefore not harmful record for Russia). We also system of chemical soil analysis Following significant changes a competitive edge and help focuses on developing innovative to the environment. Based focused on making efficient capabilities within its distribution in the geopolitical and business the Company meet the growing biostimulants and biologised mineral on the results of our research, use of our packaging capacities, network. To this end, we are building environment, PhosAgro will demand for specific grades that fertilizers under the Green One label in 2022 we received a patent with the packaging volume doubling an in-house fleet of vehicles revise its strategic sales targets are best suited to certain crops, soils, for eco-friendly agricultural products. for the invention “A Method in 2022. equipped with soil samplers at our for the share of products sold and farming practices. to Produce Slow and Controlled- distribution centres to enable GPS- in premium markets and the share With limited soil resources Release Fertilizers”, prepared PhosAgro is successfully developing based chemical soil analysis. of premium brands in total sales, its service model. In 2022, PhosAgro- Region launched commercial as part of its updated Strategy to 2030. service operation of its grain facilities at the distribution centre in Kalach Higher share of premium fertilizer brands (Voronezh region). At the end of the year, the service revenue from As the Company forecasted in its 2021 integrated report, demand Fertilizers with micronutrients Fertilizers with micronutrients and significant population growth, related publications and presented biotechnology is one of the most reports at several international can be accumulated by plants effective solutions to ensuring global scientific and technical conferences. and are considered one of the most food security by boosting crop yields Two grades of coated fertilizers potent ways to combat malnutrition without damaging ecosystems. are now pending registration and reduce nutrient deficiencies. The Company has maintained a significant share of such fertilizers Coated fertilizers The Company is developing fertilizers and the preparatory process to launch their commercial production is underway. in its total product mix in recent coated with a monocalcium years and expects it to grow further phosphate and dicalcium phosphate from 12% in 2022 to 13.6% in 2023. mixture and boasting improved 1 Including additional fertilizers e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 58 59 STRATEGIC REPORT PhosAgro’s digital ecosystem In 2022, the Field Trials section We made significant efforts on our website became an important element to improve the efficiency of online communication with potential In 2022, the target audience had of communication with our employees. In particular, from January customers in the domestic market. to March 2022, we redesigned over 10 million interactions It features 48 trials performed the Career section of our website in more than 20 regions of Russia and upgraded its content, and was visited by some 20,000 adding separate pages for each users, up tenfold compared to 2021. of the vacancies and launching online promotion. As a result, the Career section's audience grew by 136% and the Company hired 650 employees engaged via this online channel, a fifteenfold increase y-o-y with PhosAgro’s digital ecosystem. As at the end of the year, the number of active users of PhosAgro’s digital services exceeded 47,000, including: 914 active personal accounts registered with the Russia/CIS online trading platform; more than 30,000 active users of the AgroResult mobile app (each user makes three settlements on average); more than 17,000 subscribers to the Pro Agro communications platform (YouTube, VK, Zen). The following results were achieved as part of the Russia/CIS online trading platform promotion: conversion from visit to order for the Russia/ CIS online trading platform in 2022 increased from 3% to 3.7%; a total of 1,884 online fertilizer purchase orders were registered (up 29% y-o-y). To further improve our Agro Over the past year, we released Calculator, we introduced 11 playlists and arranged recommendations in 2022 a number of blogger for seasonal nutrition systems endorsements. covering sunflower and spring barley, while also completing integration with Cropwise (Syngenta). In 2022, we launched the full version of the AgroResult mobile app featuring a fertilizer catalogue, a product card, a shopping cart, biometric authentication (face and fingerprint recognition), order history, etc. On top of that, the app was added to the Huawei and Xiaomi app stores. In 2022, we launched the Pro Agro communication platform, which includes an agronomic YouTube channel, a VK community and a Zen channel. User statistics subscribers >17 thousand and nearly 14 mln views show that in 2.5 years we were able to create a popular agronomic chan- nel highlighting PhosAgro’s expertise in plant nutrition systems. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 60 61 STRATEGIC REPORT Boosting logistics efficiency Amid the sanctions pressure finished products transportation • higher cost efficiency, as corporate and artificially imposed restrictions volumes totalled 23.2 mt, up railcars are cheaper in use than of non-market nature, the key focus 3% against 2021. Rail shipments third-party rolling stock; of PhosAgro’s logistics operations are also subject to key measures • positive environmental effect, shifts to ensuring uninterrupted aimed at improving the reliability as the use of innovative rolling supplies of the Company’s products of product deliveries and reducing stock with higher cargo to consumers in Russia and abroad. transportation costs. Ensuring tonnage per railcar and train This means meeting the set delivery a secure supply is a top priority reduces the negative impact deadlines and preventing the risks for us. of shipping delays and the products being seized or blocked. PhosAgro In 2019–2021, we significantly on the environment per tonne of cargo. also seeks to achieve the maximum increased reliance on our own rolling As part of the fleet renewal cost efficiency of its logistics stock, buying mostly innovative programme in 2022, we signed operations in these conditions. railcars with a higher capacity contracts for the delivery, Reduction of transportation costs and longer run life. Increased reliance in 2023, of 400 mineral on PhosAgro’s own rolling stock hoppers, 65 tank cars and 6,000 means: specialised containers intended • enhanced safety of operation for the use in seaports. Further and more reliable supplies, acquisition of various types Rail transport accounts for the most as PhosAgro’s production of rolling stock in 2023–2027 will part of the Company’s domestic and logistics processes are less be based on a robust analysis shipments (ca. 99%). In 2022, dependent on third-party services; of the Company’s actual needs. Other areas of focus to ensure securing tariff preferences The share of long trains (more transportation security for the shipment of liquid sulphur than 56 cars per train) on all and optimise transportation costs and sulphuric acid; transportation routes was 46% in 2022 included: in 2022, up 4 p.p. compared signing contracts with key of receiving subsidies for export in this area is associated transhipment ports on new transportation of industrial with the transition to 100-car terms; products by rail in the period trains, which will help boost verifying the possibility to 2021. Further potential from 2022 to 2024 according economic efficiency and safety developing mutually to the Decree of the Government of the Company’s shipments, beneficial terms and concluding of Russia No. 1347 On State while also further reducing Support of Russian Industrial the environmental impact per agreements with Russian Organisations in Order tonne of cargo. Railways to co-finance to Compensate Expenses the development of transport for Transportation of Industrial infrastructure at railway Products dated 28 July 2022. stations adjacent to Apatit’s production sites: Volkhov branch – final stage, Balakovo branch – planning stage; Target 12.4 Managing chemicals and wastes wisely throughout their life cycle, including transportation Target 9.1 Developing rail infrastructure and contributing to the development of local communities through our value chain Enhancing port network, along with offering employment opportunities, developing infrastructure and implementing social investment programmes Alignment of production and sales transportation. Thanks to our investment programmes, we have been able to expand throughput Rail infrastructure throughput capacity to or above target levels capacity at the Company’s over the last three years. fertilizer hubs is critical to efficient Cherepovets Volkhov As the Kryolite station has come on stream, long trains (71 railcars and longer vs the standard 56) now run along the Apatity– Cherepovets–Ust-Luga–Apatity loop. With this loop, created under an ambitious joint project with Russian Railways, long trains accounted for ca. 73% of PhosAgro Group’s 2022 transportation volumes along this route. The decision to electrify the Kryolite railway station enabled PhosAgro to stop using diesel locomotives, thus securing positive economic and environmental effects. Balakovo In 2022, due to an upgrade in Balakovo we continued planning the development of infrastructure that would facilitate shipments of a new feedstock and allow for increased transportation of finished products. It is planned that the throughput capacity of the Balakovo site’s railway infrastructure will increase from the current 6.7 mtpa to 9 mtpa by 2025, which exceeds the target set in the Strategy to 2025. In 2022, the rail infrastructure throughput capacity at the Volkhov site was ramped up to 3.8 mtpa from 2.64 mtpa as at the end of 2021. The project is on schedule, with the first stage already completed. We have reached an agreement with Russian Railways to co-finance the construction of public infrastructure as part of the second stage. Progress towards our targets of rail infrastructure throughput, mtpa Cherepovets site Balakovo branch Volkhov branch 16.5 15.4 15.4 15.2 12.0 8.0 6.7 6.7 6.7 6.7 3.8 3.8 3.8 2.6 1.6 Strategy to 2025 2022 (actual) 2022 (plan) 2021 (actual) 2020 (actual) l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 62 63 STRATEGIC REPORT Developing port infrastructure In addition to developing logistics and sales infrastructure across Russia, our priority market, we are working to increase the reliability and efficiency of our exports by both reducing transportation costs and providing state-of-the-art transhipment capacities. Our strategic aim is to develop and maintain a balanced port sales infrastructure in terms of costs and reliability, capable of handling at least 8 mtpa of fertilizer exports. To achieve this target, in 2022 the Company revised a number of transhipment contracts covering the required export volumes and effective through 2025. As of today, we have basically secured the required transhipment capacities in line with the 8 mtpa target. The ports key to PhosAgro’s operations are located in the North- West of Russia. These include European Sulphur Terminal and Petrolesport in the Leningrad region and St Petersburg, and Murmansk Bulk Terminal in Murmansk. The Company also uses a terminal in Kotka, Finland. We rely on specialised terminals and their equipment designed to mitigate the environmental impact. Operational efficiency and production growth Progress towards our targets Despite short-term volatility In order to respond to stronger concerns, mineral fertilizer demand demand, PhosAgro focuses is set to demonstrate solid growth on expanding capacities to produce in the long term. its key products. Delivery our production targets, mt 2020 (actual) 2021 (actual) 2022 (plan) 2022 (actual) 2023 (plan) Strategy to 2025 2.4 7.6 2.4 7.9 2.5 8.3 2.5 8.2 10.5 10.7 10.5 10.9 7.3 8.0 8.4 8.7 2.5 8.4 11.0 8.9 2.6 8.9 11.1 8.4 Production of nitro- gen-based fertilizers Production of phos- phate fertilizers and feed-grade MCP Production of phos- phate rock In-house processing of phosphate rock Higher self-sufficiency in feedstock of the Company’s needs for raw materials required for phosphate Strong vertical integration mineral fertilizers, we are ramping is PhosAgro’s major competitive up the production of other key advantage. With our phosphate commodities, thus increasing our rock reserves covering 100% self-efficiency in feedstock. Feedstock self-efficiency Ammonia, % Production, mt Consumption, mt Sulphuric acid, % Production, mt Consumption, mt Ammonium sulphate1, % Production, mt Consumption, mt 2020 (actual) 2021 (actual) 2022 (plan) 2022 (actual) 2023 (plan) Strategy to 2025 83 2.0 2.4 93 6.8 7.3 60 0.3 0.5 76 1.9 2.5 95 7.4 7.8 60 0.3 0.5 79 1.9 2.4 91 7.7 8.5 100 0.7 0.7 76 2.0 2.6 92 7.9 8.6 51 0.3 0.6 77 2.0 2.6 93 8.1 8.7 58 0.3 0.5 76 1.9 2.5 91 7.8 8.6 75 0.7 0.9 1 Failure to meet the self-sufficiency target for ammonium sulphate is due to the fact that part of the sulphate output (165 kt in 2022) is sold as a commercial product rather than used for processing into compound mineral fertilizers as per the scenario adopted in the Strategy to 2025. Capacity expansion Target 12.4 Making eco-efficient products in line with sustainability requirements and maximising the use of production waste in further processes Target 8.3 Maintaining and developing existing operations and creating innovative facilities l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 64 65 STRATEGIC REPORT Implementation of high-priority projects Project Development of the Volkhov branch of Apatit (phase 3 – construction of a unit to produce water soluble MAP) Investments IRR 18% Total Completion 2023 Targets Water soluble MAP output of 43.5 ktpa RUB 33.7 bln incl. soluble MAP: RUB 2.9 bln Status Phase 3 (construction of a water soluble MAP facility) start-up operations commenced in December 2022, with the first product batch received in January 2023. Project Increase in output of feed- grade monocalcium phosphate (MCP) by 53 ktpa (Balakovo) Completion 2023 Targets Increase in feed phosphates output by 53 ktpa Investments IRR 17% RUB 3.3 bln Status Upgrade of wet-process phosphoric acid unit No. 4 (WPA-4) was completed. Work to upgrade the mineral salts unit (MSU) is in progress. Investments IRR n/a RUB 6.6 bln Status Contracts for the supply of main process equipment were signed; construction and installation work is underway and slated for completion in 4Q 2023. Project Project Upgrade of the SK-20 sulphuric acid technological system with replacement of the contact process unit (Balakovo) Completion 2023 Targets Increase in sulphuric acid output by 350 ktpa Capacity ramp-up of the Am-3 unit to 107% (Cherepovets) Completion 2022 Targets Increase in ammonia output by 53 ktpa Investments IRR 28% RUB 0.9 bln Status In May 2022, the target capacity of 2,350 t/day was achieved. In 3Q 2022, the entire set of works was completed. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 66 67 STRATEGIC REPORT Operating efficiency improvements At PhosAgro, we are implementing a whole range of projects and initiatives to improve our technologies and organisational approaches and streamline production processes. In 2022, three projects were successfully implemented by the Company to improve the performance of Apatit’s business units. They covered all of the PhosAgro’s production sites and produced an overall economic effect of ca. RUB 1. 8 bln in the reporting year. Economic effect in 2022 RUB 1,772.6mln Kirovsk Volkhov Cherepovets Balakovo Completion 2021–2022 Key project initiatives • Increasing phosphoric acid output by reducing unscheduled shutdowns • Reducing end-to-end phosphate rock losses • Ensuring stringent compliance with preventive maintenance schedules at ANBP-2 and ANBP-3 Completion 2021–2022 Key project initiatives • Introducing production culture monitoring across all business units • Reducing scheduled • preventive maintenance hours by an average of 20% Implementing tools aimed at improving operational efficiency: punchlists, problem-solving boards, equipment checklists, etc. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 68 69 STRATEGIC REPORT Strategic risks Risk appetite In pursuing its goals, the Company’s risks and also the Company is guided by risk as part of approving its strategy, appetite, or the level of risk budget and investment it deems acceptable. Risk programme and considering other appetite is an integral part matters within the Board’s scope of strategic and operational of authority. Risk appetite is then decision-making. The Board reflected in the Company's specific of Directors defines the overall procedures and key performance risk appetite when reviewing indicators. Strategic risks The Company aims to identify terms and conditions to sell and use opportunities that open its products. At the same time, up in the market as a result the Company’s business model of changes in the external is designed in a way that strikes environment. The Company an optimal balance between quickly responds to the changing sustainable development operating landscape and targets and operational efficiency. priority markets that offer the best Production risks The Company aims to minimise a safe working environment unscheduled downtime is the Company’s absolute priority. in production while at the same The Company makes every effort time making sure that its processes to minimise the negative impact and end product quality meet all of its production processes applicable requirements. Creating on the environment and climate. 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. Financial risks As a reliable borrower, FX risk. We are not ready to take the Company seeks to raise on credit risk related to our funding on the most attractive counterparties: in our relations terms available in the market. with them, we either seek The Company’s core operations to secure terms and conditions are FX-linked, so we use natural we see as most beneficial to us hedging methods to manage our or use risk transfer strategies. Operational risks The Company aims to prevent projects, the Company works any disruptions to its business to deliver against strategic processes and IT infrastructure priorities and key performance performance and to also secure indicators while factoring maximum protection from cyber in potential deviations as a result threats and fraud. When planning of changing external factors. and implementing its investment Regulatory risks The Company aims to remain in order to minimise any non- 100% compliant with all applicable compliance risk. In addition to laws statutory regulations, including and regulations, the Company those related to taxation. operates in line with corporate As part of industry associations, values and ethical principles the Company is involved so as to minimise potential in developing regulatory initiatives reputational damage. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 70 71 STRATEGIC REPORT KEY RISKS ASSOCIATED WITH PHOSAGRO’S ACTIVITIES № Risk Description Risk mitigants h g H i i m u d e M w o L t c a p m I 2 4 10 1 17 18 6 21 15 3 7 11 19 9 8 13 12 14 16 5 20 22 Low Probability Medium High STRATEGIC RISK FINANCIAL RISK PRODUCTION RISK 1 Strategic planning risk 2 Failure to deliver on SDGs 3 Social risk 4 HR risk 19 Climate risk 20 Infectious disease risk 21 Sanctions risk 16 Credit risk 17 Currency risk 18 Commodity risk 22 Interest rate risk 5 6 Production risk Health and safety risk 7 Environmental risk REGULATORY RISK OPERATIONAL RISK 10 Tax risk 8 Project risk 13 Regulatory risk 9 Business processes and systems risk 14 Corruption risk 11 Information security risk 15 Reputational risk 12 Economic security risk 1 Strategic planning GRI 201, 202 2 Failure to deliver on ESG and sus- tainable develop- ment goals GRI 203, 308, 414 Risk associated with the adoption of an incorrect strate- gic decision and ensu- ing management decisions, resulting from an erroneous assessment of internal and external factors that have an impact on the Company’s prospects for devel- opment and its abil- ity to achieve strategic objectives Risk factors include failure to set ESG tar- gets and Sustainable Development Goals (SDGs) or update them in a timely man- ner, as well as the lack of resources and pro- cesses necessary to achieve these tar- gets and goals 3 Social GRI 413, 401 Risk of an adverse social environ- ment in the regions of operation The Company actively monitors both inter- nal and external factors that could impact the strategy. PhosAgro also takes a system- atic approach to assessing the potential costs and benefits of new strategic projects to facilitate and improve the decision-mak- ing process. PhosAgro started updating its strategy to 2030 to reflect the latest changes in the external and internal environments. The Board of Directors’ Sustainable Development Committee helped set and prioritise SDGs and strategic ESG targets. To achieve the same, PhosAgro developed and is successfully implementing the low- carbon transition plan, the Climate Strategy, the Water Strategy, the Energy Efficiency Programme, and other initiatives. Significant work done in this area has enabled the Company to materially improve its ratings and become a leader in ESG. It should be noted that a result of certain geopolitical developments, a number of ESG rating agencies suspended their operations in Russia. For more information on the Company’s activities and indicators in this area, see the Navigator on UN SDGs section on page 14 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 proactive 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 regions where the Company operates. Sustainable development in the regions of operation is one of the key goals the Company pursues in its community activities. For more information on the Company’s activities in this area, see the Contributing to Local Communities section on page 234 Risk appetite Change in the risk high medium low up flat down Key indicators / risks materialised / changes in the risk Downside deviations of actual strategic perfor- mance from targets. Geopolitical developments cause greater uncertainty and as a result increase this risk.. l e fi o r p y n a p m o C Downside deviations of actual ESG and SDG per- formance from targets. No material risk events occurred. Downside deviations of actual ESG performance (social dimension) from targets. No material risk events occurred. e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 72 73 STRATEGIC REPORT № Risk Description Risk mitigants 4 HR GRI 401, 402, 403, 404, 405 Developments and decisions related to the hiring, develop- ment and retention of employees 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, the Company has introduced an online personnel appraisal system along with additional motivational arrangements. For more information on the Company’s activities in this area, see the People Development section on page 142 Key indicators / risks materialised / changes in the risk Personnel turnover and skill mismatch. No material risk events occurred. 5 Production GRI 201, 302 Technical/industrial disruptions of produc- tion processes result- ing in unscheduled equipment downtime PhosAgro seeks to ensure uninterrupted operation of machinery and reduce unscheduled equipment downtime. To that end, the Company invests in the construc- tion and upgrade of equipment and carries out preventative maintenance and major overhauls by relying on backup equipment and a reserve pool of components, accesso- ries and spare parts. The Company’s insurance programme cov- ers the risk of production disruptions. Unscheduled equipment downtime. No material risk events occurred. 6 Health and safety GRI 403 Risk associated with injuries, occupa- tional illnesses, acci- dents and incidents at production facilities, and non-compliance with statutory require- ments in the realm of health and safety Workplace injuries and other incidents. 2022 saw some risks mate- rialise in terms of workplace injuries. The Company care- fully investigated each acci- dent, with remedial action plans developed to prevent their recurrence. PhosAgro enforces health and safety in workplaces in line with applicable laws and global best 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 activities are defined in its health and safety documents. For more information on the Company’s indicators in this area, see the Health and Safety Review section on page 168 Key indicators / risks materialised / changes in the risk Exceeding maximum per- missible levels of negative environmental impact. No material risk events occurred. № Risk Description Risk mitigants 7 Environmental GRI 303, 304, 305, 306, 308 Risk of actual and potential environmen- tal damage resulting from the Company’s operations The Company has put in place the Environmental Policy, the Water Strategy, 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 implements projects to address all the main areas of environmental impact (water use, greenhouse gas and other emissions, waste, biodiversity). 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 minimisation goals and performance in line with applicable laws and as part of global initiatives. Assessment of environmental factors, including potential scarcity of water and other natural resources, is integrated into PhosAgro's overall risk management system. For more information on the Company’s activities in this area, see the Environmental Review section on page 190 l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 74 75 STRATEGIC REPORT № Risk Description Risk mitigants 8 Project GRI 201 Risk associ- ated with delays and budget over- runs in construction and upgrade projects, along with failure to deliver project effi- ciency targets PhosAgro strives to adhere to approved pro- ject budgets and schedules and to take a unified implementation approach lev- eraging a variety of project management tools. All projects go through a multi-step review and approval process. For large-scale and strategically important projects, dedi- cated project management offices are set up. The Company regularly monitors pro- gress against project budgets and deadlines. Key indicators / risks materialised / changes in the risk Downside deviations of actual project efficiency indicators from targets. No material risk events occurred. That said, geopo- litical developments of 2022 caused deviations related to shipments of imported equipment. The Company sets up its business pro- cesses in a way that makes sure such risk is mini- mised, including by rely- ing on import substitution efforts. 9 Business processes and systems GRI 402 Inefficiency or disrup- tion of the Company’s business processes, including risks related to counterparties and supply chain PhosAgro seeks to maximise efficiency of all its business processes and systems. Business process efficiency reviews are con- ducted on a regular basis to identify poten- tial bottlenecks and develop and implement efficiency improvement initiatives. The Company strives to minimise the risk of disruptions in supplies of key materials and feedstock. To that end, PhosAgro uses multi-stage ten- der procedures and enters into long-term contracts with its most reliable suppliers. In addition, it continuously works to optimise the logistics infrastructure and ensure suffi- cient rolling stock. The Company also moni- tors its IT infrastructure on an ongoing basis and carries out a number of initiatives to mit- igate risks associated with business process disruptions caused by technological factors or cyberattacks. Downside deviations of actual business process indicators (by focus area) from targets. No material risk events occurred. That said, geopolitical developments of 2022 caused deviations related to shipments of imported materials, use of software, and performance of logistics infrastructure outside of Russia. The Company sets up its business processes in a way that makes sure such risk is minimised, including by relying on import substitution efforts. № Risk Description Risk mitigants 10 Tax GRI 207 Potential claims lodged by tax author- ities in response to the Company’s fail- ure to correctly file tax returns or pay taxes in due time PhosAgro complies with tax legisla- tion in the countries where it operates. The Company tracks all changes (includ- ing the planned ones) in tax laws, analyses the law enforcement practices, and seeks clarifications from the government on taxes. In addition, law and accountancy experts are engaged to advise on the administration of applicable tax laws. The Company also has a tax monitoring system in place to quickly identify and minimise tax risks in coordina- tion with the Federal Tax Service. Key indicators / risks materialised / changes in the risk Tax claims. No material risk events occurred. 11 Information security GRI 410 Losses incurred on the Company’s property and assets as a result of unau- thorised access to its information sys- tems or disclosure of confidential data Unauthorised disclosure of confidential data, unauthorised access to IT systems. No material risk events occurred. PhosAgro implements a number of ini- tiatives to prevent unauthorised access to its information systems and disclosure of confidential data. A wide variety of tech- nical and software solutions, including those based on encryption, are used to control access to information resources and sys- tems. Access rights are granted to spe- cific 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’s Board of Directors adopted the Information Security Policy. 12 Economic security GRI 410 Losses incurred on the Company’s property and assets as a result of eco- nomic crimes com- mitted by employees or third parties, including fraud and theft The Company takes steps to prevent poten- tial damage to its property and assets as a result of economic law infringements, including, in particular, by introducing access authorisations to the Company’s administra- tive and production facilities, clearly differ- entiating 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. Theft and fraud incidents. No material risk events occurred. l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 76 77 STRATEGIC REPORT № Risk Description Risk mitigants 13 Regulatory GRI 303, 304, 305, 306 Untimely receipt/ extension of licences; legislative changes that might bring about higher cost of doing business, restrictive poli- cies by regulators, weaker equity story of the Company and/ or adverse transfor- mation of the com- petitive landscape PhosAgro is in full compliance with appli- cable laws. To make sure it gets timely updates on potential legislative changes, the Company closely tracks initiatives of leg- islators, the government and regulators, and takes part in discussing such initiatives and drafting relevant recommendations in partnership with professional associa- tions. The Company prepares and submits documents in due time to receive or extend licences required for its business. Key indicators / risks materialised / changes in the risk Deviations related to regulatory compliance. No material risk events occurred. 14 Corruption GRI 204, 205 15 Reputation GRI 206 Corrupt practices, conflicts of interest. No material risk events occurred. Stakeholder confidence. No material risk events occurred. Losses resulting from non-compliance or inadequate com- pliance with applica- ble anti-corruption laws by the Company or its employees (pen- alties levied against the Company by gov- ernment authorities and other damages) Damage caused to the Company’s business reputation as a result of mis- leading or defam- atory information or allegations about the Company made publicly available, leakages of confi- dential information, and breaches of busi- ness ethics on the part of the Company's employees PhosAgro makes sure its facilities and part- ners fully comply with applicable anti-cor- ruption laws. To that end, it provides training in combating corruption and adminis- trating the anti-corruption law, and pro- motes zero tolerance towards corruption among the Company’s employees and part- ners. 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-corrup- tion laws. The Company is a member of the Anti- Corruption Charter of Russian Business. In its operations, PhosAgro demonstrates commitment to transparency by disclosing all relevant material facts and circumstances. The Company has adopted an informa- tion policy and a media engagement policy. Information about the Company is availa- ble 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 (social) 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 integ- rity, good judgement, fair play and partner- ship and designed to support the Company’s success. Key indicators / risks materialised / changes in the risk Overdue accounts receivable, provision for bad debt. No material risk events occurred. Adverse changes in exchange rates. No material risk events occurred. № Risk Description Risk mitigants 16 Credit GRI 201 Financial losses caused by the failure of buyers, commercial contractors and other financial counter- parties to fulfil their financial obligations to the Company in full and on time 17 Currency GRI 201 Financial losses arising from unfa- vourable changes in FX rates against the Company’s base currency PhosAgro has approved policies on man- aging credit risks to institutionalise a num- ber of credit risk mitigation techniques, including deliveries against full or par- tial prepayments with full or partial insur- ance of credit risks, use of letters of credit, and factoring (securitisation) of accounts receivable. Providing advance payments to suppliers and contractors is only consid- ered 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 com- panies that boast a high level of finan- cial 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 consoli- dated financial statements on page 371 In the context of oil price volatility and fluc- tuations 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 nat- ural 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 posi- tions 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 consoli- dated financial statements on page 369 l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 78 79 STRATEGIC REPORT № Risk Description Risk mitigants 18 Commodity GRI 204, 417 Losses associated with unfavourable changes in the mar- ket prices for mineral fertilizers and other products or a hike in prices for key feed- stock and equip- ment sourced by the Company Given the volatility in prices for its main products, the Company constantly seeks to streamline its sales structure in terms of the fertilizer grade offering based on mar- ket priorities, as a way to maximise mar- gins. PhosAgro also continues to increase the share of sales to end consumers, improve production efficiency and offer its custom- ers add-on services such as packaging, blending and storage. To reduce its feed- stock and equipment expenses, PhosAgro invites multiple suppliers to take part in ten- ders, enters into long-term supply con- tracts and develops lasting relationships with its suppliers. Key indicators / risks materialised / changes in the risk Adverse changes in product and feedstock prices. No material risk events occurred. However, potential correction in mineral fertilizer prices following their strong growth in 2022 contributes to a moderate increase in this risk. 19 Climate GRI 203, 302, 305 Risks associated with changes in natu- ral processes or phe- nomena amid climate change (physical fac- tors) or with political, economic, financial or other decisions made by govern- ments, multilat- eral organisations, financial institu- tions, or producer or consumer asso- ciations or other NGOs to curb climate change by reduc- ing GHG emissions through carbon regu- lations or restrictions on the use of fossil fuels or non-renew- able energy (transi- tional factors) Processes to identify and assess climate change risks are being set up through- out the value chain and form an integral part of the Company’s risk management and internal control framework. The Board of Directors approved PhosAgro’s Climate Strategy, the key elements of which are analysis of climate risks and oppor- tunities, scenario analysis, 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 pro- grammes; an internal energy efficiency pro- gramme, and communication with energy suppliers to improve the climate profile of energy supplies (Scope 2); and a supplier and customer engagement plan and sup- plier ESG ratings (Scope 3). Thanks to these actions, the Company has improved its ratings for climate disclosure and sustainable development. Adverse deviations resulting from climate impacts (by focus area). In 2022, there were abnormal weather events. However, at this stage it is quite difficult to assess the extent to which these were caused by climate change. In any case, the Company did not incur any significant losses associated with these natural phenomena. At the same time, potential changes related to transition climate factors contribute to higher exposure to this risk. № Risk Description Risk mitigants 20 Infectious diseases GRI 403 Risks associated with the outbreak and spread of infec- tious diseases that pose a threat to busi- ness continuity 2022 saw further spread of a newly dis- covered coronavirus (COVID-19) around the world. At the same time, complications associated with this disease became consid- erably less severe. The Company took a set of measures to pre- vent mass infection and to support vac- cination among its employees and local communities in its regions of operation (jointly with government agencies). Thanks to these measures, the Company man- aged to minimise the negative impact of COVID-19 (in its active stage) on its opera- tions, ensure business continuity and deliver on its business targets. The Company’s suc- cessful experience of COVID-19 response and the procedures it has established help react to further developments associated with COVID-19, as well as to other infectious disease outbreaks. Key indicators / risks materialised / changes in the risk Confirmed cases, business process disruptions. The number of confirmed cases among the Company's employees in 2022 generally follows overall trends in the Company’s regions of operation. By quickly developing and putting in place anti-COVID-19 response measures, the Company ensured business continuity and delivered on its targets. 21 Sanctions GRI 201, 202, 203, 204 Foreign sanc- tions imposed on the Group’s companies The global nature of international economy creates a background for various sanctions to be imposed on the Russian economy and the Company’s operations by individ- ual countries or their groups. The Company’s flexible business model helps minimise any negative impact of such sanctions or restrictions. Losses associated with sanctions. In 2022, geopolitical developments caused this risk to materialise. By quickly developing and putting in place response measures, the Company ensured business continuity and delivered on its targets. 22 Interest rates GRI 201 The Company borrows money to finance its investment pro- gramme and working capital requirements, including via float- ing 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. PhosAgro closely monitors and manages its fixed-to-floating debt ratio to mitigate interest rate risk. Losses associated with changes in interest rates. No material risk events occurred. For more information on the Company’s activities and indicators in this area, see the Financial Risk Management. Interest Risk section of the Notes to the consoli- dated financial statements on page 370 l e fi o r p y n a p m o C e c n a m r o f r e P i w e v e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 80 81 STRATEGIC REPORT ACHIEVING shared goals PhosAgro is a major taxpayer and employer in its regions of operation. Fully aware of our responsibility for the sustainable social and economic development of local communities, we have more than tripled our support for social and charitable projects in the reporting year. 203 % y-o-y increase in social investments PhosAgro is a successful and thriving business. But what's more, we are at the heart of an extensive network of diverse economic, environmental and social ties and partnerships. This is why we can celebrate our achievements together with our shareholders, contractors, employees, local communities and consumers of our products in Russia and all over the world. 3 I W E V E R E C N A M R O F R E P 84 Financial performance 92 Operational performance 100 Customers and product management 112 Research and education 130 Supply chain 142 People development 168 Industrial safety 190 Environmental review 234 Contributing to local communities Efficient use of resources, including water, is an integral part of our strategy. In 2022, PhosAgro joined the UN Global Compact’s CEO Water Mandate, a global commitment platform for corporate water stewardship. –1 % reduction in water withdrawal per tonne of products 82 83 For more information, see page 234 For more information, see page 224 Financial performance Key external drivers of financial results 39% growth in adjusted EBITDA Other drivers of PhosAgro's strong financial performance in 2022 along with an increase in sales and competitive cost levels include: Fertilizer affordability issues caused on the global market by supply disruptions and an increase in raw materials prices In the reporting year, we Adjusted free cash flow increased commitments to the holders faced multiple challenges, by 81% to more than RUB 141 bln of bonds recorded both in Russia many of which were by all as a result of both improved sales and abroad. means unprecedented. margins and strong working capital Despite these headwinds, our management. high production efficiency and a balanced financial policy PhosAgro’s strong y-o-y performance along with the favourable pricing contributes to ensuring its robust environment on global markets financial stability. As at 31 December helped the Company deliver 2022, our net debt / adjusted strong financial results. EBITDA ratio was 0.68x, way below the 2x threshold that we consider Increased fertilizer production comfortable. Importantly, it and sales spurred a revenue rise continued to decline throughout in excess of 35% y-o-y. Revenue 2022 (down from 0.8x at the end growth outpaced the increase of 2021 and 1.8x in December 2020). in production costs, which were up by circa 23% y-o-y. With investors’ confidence in our production and financial strategy With these drivers in place, and the management team, the Company was able PhosAgro successfully held a vote to increase adjusted EBITDA among its Eurobond holders by 39% y-o-y, while adjusted net to amend the relevant issuance profit improved by 40%. documentation so as to continue honouring its public debt Alexander Sharabaika Deputy CEO for Finance and International Projects Growth of global crop prices underpinned in part by stronger demand for forage crops, which itself was partially caused by the recovery of hog production in China after the swine flu epidemic in 2018–2019 Growth of supplies to Asian countries especially to India, due to stronger government support for agriculture (increase in subsidies) and favourable weather conditions 84 85 Restrictions on exports of phosphate-based fertilizers from China to bolster domestic supply and introduction of fertilizer export quotas in Russia Company profileCorporate governanceShare capitalAppendicesPERFORMANCE REVIEWStrategic report Revenue analysis Revenue for 2022 grew by 35.4% y-o-y Higher average sales prices and amounted to RUB 569.5 bln. on global markets and a shift The growth was associated in the sales mix towards a greater with increased sales volumes share of higher-margin fertilizers, driven by higher mineral fertilizer which are consistently popular output. A large-scale programme among farmers, also contributed to upgrade existing production to the revenue increase. facilities and build new ones helped the Group achieve a significant improvement in equipment productivity. RUB 569.5 bln revenue for 2022 Financial and operational highlights Item 2020 2021 2022 Δ 2022/2021, % FINANCIAL HIGHLIGHTS, RUB MLN Revenue Adj. EBITDA1 Adj. EBITDA margin Net profit Adj. net profit2 Adj. free cash flow3 253,879 84,280 33.2% 16,921 41,991 42,519 420,488 192,117 45.7% 129,674 130,512 77,857 569,527 266,947 46.9% 184,714 182,297 141,024 31.12.2020 31.12.2021 31.12.2022 Net debt 12M net debt / adj. EBITDA SALES VOLUME, KT Phosphate-based fertilizers and feed phosphates Nitrogen-based fertilizers Total fertilizers Other products Total fertilizers and other products 156,875 1.86 7,669 2,286 9,955 184 10,139 Revenue breakdown by key product, RUB bln Item Phosphate and nitrogen-based products Other Total 2020 242.3 11.6 253.9 153,718 0.80 180,338 0.68 7,762 8,403 2,495 10,257 177 10,434 2021 404.9 15.6 420.5 2,551 10,954 144 11,097 2022 551.0 18.5 569.5 35.4 39.0 1.2 42.4 39.7 81.1 17.3 (15.6) 8.3 2.3 6.8 (18.8) 6.4 Δ 2022/2021, % 36 19 35 1 2 3 Adjusted EBITDA is calculated as operating profit adjusted for depreciation and amortisation less foreign exchange gain or loss from operating activities. Adjusted net profit means net profit less net foreign exchange gain or loss from operating and financing activities. Adjusted free cash flow is calculated as cash flows from operating activities less cash flows from investing activities, adjusted for the outflow of cash and cash equivalents as result of a loss of control over foreign subsidiaries. Operating costs analysis Cost of sales, RUB mln Item 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 Customs duties Freight, port and stevedoring expenses Russian Railways and operators’ fees Other Total 2020 23,743 40,937 8,134 10,134 3,168 19,501 35,514 4,802 4,360 12,253 12,342 1,757 13,807 6,311 3,885 9,333 1,482 19,128 11,452 1,111 2021 24,812 47,084 9,105 11,373 3,486 23,120 63,534 14,277 17,707 16,574 12,635 2,341 15,286 6,740 5,578 12,725 2,483 28,587 10,728 1,250 2022 26,979 54,178 11,610 12,002 3,217 27,349 108,323 19,550 40,798 27,418 14,226 6,331 19,667 6,754 6,459 15,599 1,420 16,382 12,647 610 166,703 218,807 269,018 Δ 2022/2021, % 8.7 15.1 27.5 5.5 (7.7) 18.3 70.5 36.9 130.4 65.4 12.6 170.4 28.7 0.2 15.8 22.6 (42.8) (42.7) 17.9 (51.2) 22.9 In 2022, cost of sales grew by 22.9% Despite the higher costs, PhosAgro y-o-y to RUB 269 bln, mainly remains one of the industry's most on the back of higher sales volumes efficient players and leads the pack and increased prices for key globally in terms of production costs. feedstocks. The main way we ensure effective cost control is by sourcing the key Raw materials costs added 70.5% inputs and materials from domestic y-o-y and amounted to RUB 108 bln suppliers. as a result of a significant increase in the global prices for all key inputs, including sulphur and sulphuric acid, potassium, ammonium sulphate and natural gas. RUB 269 bln cost of sales for 2022 86 87 Company profileCorporate governanceShare capitalAppendicesPERFORMANCE REVIEWStrategic report Adjusted EBITDA Adjusted EBITDA in 2022 vs actual 2021, RUB bln 2022 FX rates Costs Fertilizer prices Sales 2021 266.9 (20.3) (83.3) 158.9 19.5 192.1 Adjusted EBITDA to adjusted FCF conversion in 2022, RUB bln Adjusted EBITDA Adj. WC Tax paid Interest paid OCF ICF FCF 266.9 0.4 (16.9) (41.8) (5.3) 203.3 (62.3) 141.0 In 2022, the Company’s adjusted EBITDA grew to a record high of RUB 266.9 bln up by 39% y-o-y Adjusted EBITDA margin for the reporting period grew to 46.9% Adjusted free cash flow Capital investments (including capitalised repairs) for the year and raw material base in Kirovsk, developing production capacities amounted to RUB 63 bln in Balakovo, and maintaining and were mainly focused around production facilities across all process completing the construction stages, from mining and processing of a large production facility of raw materials to producing in Volkhov, developing the ore finished products. In 2022, the Company’s adjusted free cash flow reached RUB 141 bln up by 81.1% y-o-y In 2022, lobbying spending stood at RUB 5,1 mln Loans and borrowings breakdown by rate type as at 31 December 2022, % Loans and borrowings breakdown by currency as at 31 December 2022, % Debt Net debt as at 31 December 2022 increased y-o-y to RUB 180.3 bln. At the 2022 year-end, our net debt to adjusted EBITDA ratio went down to 0.68x from 0.8x as at 31 December 2021, primarily thanks to EBITDA growth. Our commitment to maintaining high credit quality and ensuring timely debt servicing continues to be a priority for the Company. 96 4 Fixed rate Floating rate 71 23 6 USD-denominated RUB-denominated EUR-denominated Debt maturity profile, RUB bln Item Unsecured bank loans Eurobonds1 Interest payable Total debt 2023 44.6 35.2 1.1 80.9 2024 23.2 – – 23.2 2025 3.7 35.2 – 38.9 2026 10.7 – – 10.7 2027 2028 2.1 – – 2.1 – 35.2 – 35.2 Total 84.3 105.6 1.1 191.0 Tax policy GRI 3-3, 207–1, 207–2, 207–3 In 2022, PhosAgro’s Board and Promotion Agreements of Directors approved the Company’s and Special Investment Contracts. Tax Strategy. Our approach to taxation was developed Our approach to tax management, in accordance with the Company’s participation in shaping government Strategy to 2025 and combines tax policy, and organisational social responsibility for developing arrangements pertaining and maintaining the well-being to the exercise of tax functions of regions across PhosAgro’s at PhosAgro is described footprint, minimising tax in the Company’s Tax Strategy. litigation risks, and maximising the use of the Company’s leverage toolkit stipulated by law for actively investing companies, in particular Investment Protection The full text of the Tax Strategy is available on the Company's website 1 Eurobond debt amount does not include the bank fee of RUB 220 mln. 88 89 Company profileCorporate governanceShare capitalAppendicesPERFORMANCE REVIEWStrategic report Country-by-country reporting, RUB mln GRI 207–4 20% the Company’s income tax rate in 2022 and 2021 Tax jurisdiction Unrelated party revenue Revenue from intra- group transactions with other tax jurisdictions Profit/(loss) before income tax Income tax paid (cash basis) Income tax accrued1 Statutory tax rate2 Average headcount, people Tangible assets other than cash and cash equivalents Total empoyee renumeration Intra-group oans received Russia Switzerland Cyprus Poland Germany France Serbia Lithuania Romania South Africa Finland Brazil Singapore Total 2021 131,527 221,961 0 14,916 10,423 15,833 4,752 9,838 4,681 6,452 105 0 0 2022 2021 2022 440,639 250,534 106,420 2021 11,877 96,268 63,188 27,436 112,008 0 8,088 7,446 7,045 2,020 1,598 4,050 2,343 29 0 0 8 0 0 0 230 0 0 0 0 0 0 4 0 0 0 58 0 0 0 0 0 0 (598) 7,253 6,381 10,887 2,060 5,075 1,213 4,046 (7) (86) (55) 2022 157,360 57,850 (4,243) 4,943 5,242 5,541 1,063 1,038 1,916 1,643 (2) (42) (13) 2021 28,471 2022 41,393 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 29,875 39,932 20.00% 20.00% 18,198 19,846 274,386 320,961 34,039 55,318 67,069 103,233 137 0 59 7 0 (1) 28 5 79 12 (5) 13 331 2 48 2 5 1 26 0 0 3 0 0 742 0 84 60 93 89 31 6 85 12 (5) 0 764 2 235 129 94 65 0 63 12.05% 12.50% 12.05% 12.50% 19.00% 19.00% 32.27% 32.27% 26.50% 25.00% 15.00% 15.00% 15.00% 15.00% 16.00% 16.00% 174 28.00% 28.00% 3 4 0 20.00% 20.00% 34.00% 34.00% 17.00% 17.00% 32 28 15 7 6 12 4 5 2 1 7 3 36 30 15 7 6 14 4 7 2 1 7 3 4,725 14 1,705 466 578 1,443 7 1,019 338 677 2 7 0 0 0 0 0 0 0 0 0 0 0 0 1,723 201 121 97 85 54 67 25 18 8 58 25 528 57 55 33 58 28 20 14 10 2 32 8 0 2,237 0 0 0 337 0 0 502 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 420,488 569,527 313,961 133,918 160,055 232,297 28,806 41,811 31,073 41,465 285,368 320,961 36,522 56,163 70,146 103,233 For the list of tax jurisdictions where the entities included in the Group’s consolidated financial statements are resident for tax purposes, and the details of taxes payable in each jurisdiction, please see page 394. In March 2022, the Group lost control over all of its foreign subsidiaries, therefore the 2022 figures for these companies in the table above are presented for the period before the loss of control. 1 Reasons for the difference between corporate income tax accrued on profit/loss and the tax due if the statutory tax rate is applied to profit/loss before tax are as follows: intercompany transactions elimination, provisions accrued in accordance with IFRS (mostly allowance for expected credit losses), reduction in tax rate for certain Russian and foreign entities items which are not deductible or assessable for taxation purposes, and other differences. 2 For the Russian tax jurisdiction, an average statutory tax rate is used. 90 91 Company profileCorporate governanceShare capitalAppendicesPERFORMANCE REVIEWStrategic report Operational performance Product portfolio PhosAgro is the largest producer of liquid nitrogen-phosphorus fertilizers in Russia 2022 was a new record year This production flexibility is the result our production capacities. for PhosAgro in terms of of a number of successful investment In 2023, these investments will hit output and sales. Compared projects, including MAP production RUB 67 bln. to 2021, agrochemical output at the Volkhov site reaching its full increased by 4.6% to 11.1 mt, capacity. while shipments to customers Safety at our production sites remains our absolute priority. We expanded by 6.8% to 11 mt. In 2022, nitrogen-based fertilizer reduced LTIFR from 0.81 in 2021 output grew by 5.6% y-o-y, outpacing to 0.38 in the reporting year, In our key segment of production of phosphate-based with the Cherepovets site team phosphate-based fertilizers, we fertilizers. The granulated ammonium delivering the best LTIFR of 0.12, demonstrated annual production sulphate segment demonstrated more than three times lower than growth of above 4% for the the most impressive growth of more the Company's overall result. third year running. The market than two times thanks to expanded environment caused us to make capacities to produce this very serious changes to our product popular product. Production of urea, mix. In our key DAP/MAP grades the nitrogen segment's core product, and NPS, we improved the went up by 2.7% to 1.7 mt. 2021 performance by 16.1% and 78.6% respectively, while NPK In 2022, we allocated a record and APP output was down by RUB 63 bln (including capitalised 17.9% and 45.3% respectively. repairs) to upgrading and expanding Alexander Gilgenberg, General Director of Apatit Industrial products КАРБАМИД (МОЧЕВИНА) МАРКА Б ГОСТ 2081-2010 N,% не менее 46,2 СИСТЕМА МЕНЕДЖМЕНТА СЕРТИФИЦИРОВАНА ПО СТАНДАРТАМ ИСО 9001, 14001, 45001 МАССА НЕТТО: 1000 КГ OUR CUSTOMERS are at the heart of our business In 2022, our portfolio was expanded to 57 agrochemical grades, including all types of fertilizers and feeds. Two of these grades were registered in 2022. A significant portion of our offering consists of newest fertilizer grades developed over the past five years, including two in the reporting year. Industrial phosphates Sodium tripolyphosphate Feed additives Feed grade urea Feed grade monocalcium phosphate Mineral fertilizers Nitrogen-phosphorus and complex fertilizers Nitrogen-phosphorus and complex fertilizers with micronutrients Nitrogen-based fertilizers Liquid complex fertilizers Concentrates • High-grade phosphate rock • Syenite alkali aluminium concentrate • Nepheline concentrate Phosphogypsum • Phosphogypsum for road construction • Phosphogypsum for farming 92 93 Company profileCorporate governanceShare capitalAppendicesPERFORMANCE REVIEWStrategic report Upstream and downstream SASB RT-CH-000.A Upstream Currently, the Company is shifting its resource base emphasis from Kirovsk Branch of Apatit mines reserves for open-pit mining apatite-nepheline ore at six fields to a higher share of underground of the Khibiny deposits in Russia’s mining reserves. In the reporting Murmansk region using both year, the share of open-pit mining underground and open-pit mining came in at 78.3%. methods. PhosAgro Group’s feedstock reserves are of igneous In 2022, total apatite-nepheline origin, which means that they do ore production rose by 3% to 39.51 not have concentrations of toxic mt (compared to 38.45 mt heavy metals. The Company’s in 2021). This increase was due phosphate rock is extremely rich in P2O5. The mineral resource base (including off-balance reserves) to the commissioning of new capacities at the Kirovsky mine (+10 m level of the Kukisvumchorr at one of the world’s richest deposits deposit) and the Rasvumchorrsky is expected to last for about 60 years. mine (CDU-4). The slight y-o-y decrease in balance reserves corresponds to the volume of ore mined. 39.51 mt total apatite-nepheline ore production in 2022 PhosAgro Group’s ore reserves as at 1 January 2023 Deposit Kukisvumchorr Yukspor Apatitovy Cirque Rasvumchorr Plateau Koashva Njorkpahk Total Balance reserves, kt (A+B+C1+C2) Average P2O5 content, % 347,146 456,620 86,565 85,878 254,963 55,979 1,287,151 14.14 13.81 13.69 10.67 17.24 14.11 14.37 In 2022, the Company also proceeded with its investment project to develop +10 m level at the Kirovsky mine. The project envisages the construction of two crushing and delivery units for ore drawing, a haulage level and a water drainage, enhancement of the Kirovsky mine’s ventilation system, as well as further level development until 2035. RUB 36.1bln the project’s budget 1Q 2022 First start-up facility commissioned 1.5 mt of ore production volume in 2022 4Q 2023 Second start-up facility expected to be launched 94 95 Company profileCorporate governanceShare capitalAppendicesPERFORMANCE REVIEWStrategic report Furthermore, the Company proceeded with its Vostochny mine development project seeking to intensify open- pit mining. The investment project focuses on purchases of self-propelled machinery, including dump trucks, excavators and auxiliary machinery, with fleet renewal helping to increase the equipment’s technical availability and utilisation ratios. Additionally, the project involves relocation of infrastructure facilities and expansion of the beneficiation plant's production capacity. 4.5 mtpa of ore ore output achieved at the Njorkpahk open pit 7 mtpa of ore ore output scheduled to be reached at the Koashvinsky open pit by 2030 RUB 33.4 bln project CAPEX 8.5 mtpa of ore total ore production at the Vostochny mine Chemical production Feedstock Production volume, kt Item Ammonia Phosphoric acid Sulphuric acid Ammonium sulphate Total 2020 1,970.3 2,716.8 6,815.6 293.9 2021 1,931.1 2,952.0 7,352.2 259.0 2022 1,985.3 3,199.4 7,920.2 322.6 11,796.6 12,494.3 13,427.6 Δ 2022/2021, % 2.8 8.4 7.7 24.6 7.5 In 2022, the production of phosphoric acid In 2022, sulphuric acid production as the key feedstock used in phosphate fertilizers grew by 8.4% y-o-y and reached mt 3.2 on the back of earlier production unit upgrades and increased equipment utilisation efficiency. was up by 7.7% year-on-year to mt 7.9 driven by the ramp-up to full capacity of the new unit in Cherepovets and the commissioning and reaching the design capacity of a new unit at the Volkhov site. Ammonia output also rose by 2.8% y-o-y to 1,985.3 kt driven by the completion of the capacity expansion project at ammonia production unit No. 3 of the Cherepovets site. This project helped increase daily output to 2,350 t. On top of that, we remain committed plants of TGC-1. In the reporting year, to the active implementation green electricity supplies to the plant of our sustainable development totalled 300 million kWh. Thus, about strategy. For example, in 2022 17.8% of the plant’s output is covered the mining and processing plant by green electricity. of Apatit continued sourcing energy generated by the hydroelectric power +2% y-o-y vs 2021 12 mt production of phosphate rock and nepheline concentrate Ore processing Production volume, kt Item Phosphate rock Nepheline concentrate (incl. syenite concentrate) Total 2020 10,541.4 1,159.4 11,700.8 2021 10,675.5 1,123.1 11,798.6 2022 10,855.7 1,175.8 12,031.5 Δ 2022/2021, % 1.7 4.7 2.0 96 97 Company profileCorporate governanceShare capitalAppendicesPERFORMANCE REVIEWStrategic report Phosphate-based fertilizers of MAP production at the Volkhov site, and the higher demand In 2022, the production of phosphate for bicomponent fertilizers in 2022. fertilizers and feed phosphates grew by 4.2% y-o-y to 8.2 mt NPS production in 2022 surged helped by increased output by 78.6% y-o-y to 1 mt, while of phosphoric acid. the output of NPS and APP dropped by 17.9% and 45.3% respectively The output of DAP/MAP fertilizers due to the interchangeability of increased by 16.1% to 4.2 mt. phosphate fertilizer grades available The rapid growth rates of DAP/MAP in the product mix and considering fertilizers was due to the launching the overall market requirements. and ramp-up to full capacity Phosphate-based fertilizer and feed phosphates production, kt 8.2 mt production of phosphate- based fertilizers and feed phosphates Item DAP/MAP NPK NPS APP MCP PKS Total 2020 3,164.4 2,840.3 928.9 205.8 392.1 46.4 2021 3,610.7 3,111.3 561.6 208.6 390.6 10.8 2022 4,191.9 2,553.8 1,003.1 114.0 361.6 – 7,577.9 7,893.6 8,224.4 Δ 2022/2021, % 16.1 (17.9) 78.6 (45.3) (7.4) – 4.2 Nitrogen-based fertilizers of this unwaveringly popular fertilizer more than doubled y-o-y to reach In 2022, production in the nitrogen 165.4 kt. The production of urea grew segment went up by 5.6% y-o-y by 2.7% to 1,688.2 kt, while the output to 2.55 mt. As the Company of ammonium nitrate in 2022 saw completed its investment project a slight planned decrease to 693 mt. to ramp up granulated ammonium sulphate capacities, the output 2.55 mt production in the nitrogen segment Nitrogen-based fertilizers production, kt Item Ammonium nitrate Urea Ammonium sulphate Total 2020 691.5 1,679.1 31.7 2,402.3 2021 694.8 1,643.2 74.1 2,412.1 2022 693.0 1,688.2 165.4 2,546.6 Δ 2022/2021, % (0.3) 2.7 123.2 5.6 Sales In 2022, PhosAgro increased total to meet the growth in demand fertilizer sales by 6.8% y-o-y to hit by boosting the production of MAP an all-time high of 11 mt. in 2022 after launching a new facility at the Volkhov site. Sales of phosphate fertilizers and feed phosphates in 2022 In the nitrogen segment, sales amounted to 8.4 mt, up 8.2% y-o-y. were up by 2.3% year-on-year, primarily The increases came on the back due to a high seasonal demand of strong demand for these fertilizers and the availability of fertilizers in the Asian markets. We were able for end users. 8.4 mt sales of phosphate- based fertilizers and feed phosphates Sales by key product, 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 Market outlook 2020 3,151.8 1,159.0 4,310.8 3,203.4 2,924.6 912.2 200.3 378.6 49.8 2021 2,677.6 1,125.2 3,802.8 3,564.5 3,011.1 566.8 206.3 405.2 8.5 2022 2,041.2 1,176.4 3,217.6 4,272.2 2,660.7 1,008.8 111.6 349.1 – 7,668.9 7,762.4 8,402.4 618.6 1,649.0 18.1 2,285.7 9,954.6 93.3 90.4 183.7 798.0 1,616.3 80.2 2,494.5 10,256.9 94.4 82.9 177.3 661.6 1,741.8 147.4 2,550.8 10,953.2 48.6 95.4 144.0 Δ 2022/2021, % (23.8) 4.6 (15.4) 19.9 (11.6) 78.0 (45.9) (13.8) – 8.2 (17.1) 7.8 83.8 2.3 6.8 (48.5) (15.1) (18.8) In 1Q 2023, the nitrogen-based The prices of phosphate-based a significant import drop in 2022 fertilizer market faced an oversupply fertilizers have plateaued for now. are expected to provide support as a result of high carry-over stocks Higher seasonal activity in South for the pricing environment. (in Europe, North and South America). America (primarily in Brazil) This continues to pile downward in 1Q 2023 coupled with revival pressure on prices. in the domestic US market after 98 99 Company profileCorporate governanceShare capitalAppendicesPERFORMANCE REVIEWStrategic report Customers and product management AREA, STRATEGIC GOALS AND METRICS KEY PROJECTS AND RESULTS OF 2022 Target 2.4 Providing expert support to agricultural producers and advancing a customised product offering Promoting the responsible and rational use of mineral fertilizers, i.e. green agriculture Optimising the mineral nutrition of crops with the use of PhosAgro Group's products and publishing trial data Establishing business partnerships built on mutual trust and respect Targets 17.16 and 17.17 Ensuring a shared understanding of obligations and expectations from the partnership Driving sustainable growth of sales markets Stable development of sales markets Results of 48 agronomic trials published on the Company's website (phosagro.ru) 4,395 calculations made using PhosAgro's agro calculator in 2022 AgroResult app downloaded by >36,000users ~10 mln interactions with PhosAgro’s digital ecosystem, up more than twofold y-o-y The trial results were featured in research publications and the book titled Trial Outcomes 2022, with the trial data also demonstrated at conferences and webinars Customers reported high satisfaction with the performance PhosAgro's staff promptness of request handling and quality of support and consultations: 98.6% 100 101 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Strategy We carry out PhosAgro’s strategic and globally important mission To provide consumers of supplying safe and eco-efficient with safe, eco-efficient, fertilizers for the agricultural industry and quality innovative to ensure food security in Russia products and services, and across the world. We believe the Company's Strategy that tackling global problems is only to 2025 has identified possible through open dialogue, the following focus areas Developing innovative products that meet customer requirements and enable farming with due consideration of environmental factors, soil and crop requirements, the climate agenda and the need to reduce greenhouse gas emissions in the value chain. cooperation, and building synergies between all stakeholders. This approach is at the heart of our interaction with customers. We are committed to the responsible use of our products making sure they are safe for people and the environment. Product life cycle management at PhosAgro is in full compliance with applicable Russian and international standards and regulatory requirements. We seek to minimise any potential negative impact of our products on safety, health and the environment throughout the value chain, from product development to the end of its life cycle. Advancing digital technology in agriculture to boost crop yields and quality in the near term, including by raising consumer awareness of innovations in agricultural production. Enhancing PhosAgro’s competitive strengths as one of the world's leading suppliers of eco-efficient phosphate fertilizers for farmers. Expanding PhosAgro Group’s involvement in programmes to protect human health and the environment, ensure food security and combat soil degradation. Developing circular economy and increasing rates of recycling, including the use of by-products from PhosAgro Group's facilities. Management approach GRI 3-3 • accurate traceability of materials, PhosAgro Group’s vertically An open dialogue with customers elements and substances from integrated business model is a key helps us understand their product development to the end competitive advantage. PhosAgro’s expectations and requirements of life cycle; upstream assets benefit from for our products, services • open and transparent information extensive and high-quality resource and the management system, about the properties and quality base boasting unmatched purity. as well as their vision of future of products for customers Our downstream assets are located products. This valuable and other stakeholders; close to key mineral resources used information creates a solid • open dialogue with stakeholders in fertilizer production. At PhosAgro foundation for the Company’s regarding their expectations Group, we have a product further strategic growth and new and satisfaction with the Group’s management framework that relies product development. PhosAgro products and services; on the assessment of product life Group's responsible production • integration into the quality cycle. It covers all production facilities management framework is based management and environmental and stages of product life. management systems. on the following principles: • compliance with Russian and international standards and regulations; Product management framework • Regulations and other • Elaboration of production • Marketing products meeting requirements requirements and opportunities customer requirements • Expectations of stakeholders • PhosAgro’s strategic initiatives, • Product research and development and cooperation and joint research projects with research institutes • Ensuring production safety and product use in compliance with regulatory and other requirements • Drafting documents • Registration tests and receipt of permits • Taking into account customer feedback Information support • • Digital services for customers 102 103 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report requirements for the end product, by an independent firm to maintain objectives: System for planning and defining criteria for product development PhosAgro Group’s quality initiatives, performing internal management system defines audits, updating records, collecting processes that ensure traceability and providing input data for review of the criteria of product safety, by top management to improve quality and conformance governance across the board. Planning is an important with stakeholder requirements element of PhosAgro Group’s and expectations throughout Every year, the quality the product life cycle to comply and environmental management with the stringent quality systems undergo an external audit management system. Planning involves complex and comprehensive research to determine a set of criteria for the development of a future product, including: stakeholder requirements from ore and material selection their compliance with ISO 9001, to end product research. ISO 14001 and other standards. The systems are supported Interaction with customers by internal and external audits and product safety are closely that help promptly reveal areas related issues regularly discussed for improvement and introduce by the Board of Directors’ best practices into management committees and submitted systems. and opinions about to the Board of Directors products and services; for consideration. Development of products and manufacturing processes market expectations, Each facility has designated is implemented in partnership requirements and trends; staff members responsible with Samoilov Scientific for internal control and support Research Institute for Fertilizers of the quality and environmental and Insectofungicides regulatory requirements management systems, which (NIUIF), Russia's only institute applicable to activities includes implementing targeted specialising in this area. and products; innovative methods and technologies of production, including those aimed at ensuring greater safety of the product and its manufacturing processes for humans and the environment; opportunities for implementing the circular economy principles and contributing to UN SDGs. Risks and opportunities The Company has a risk management system in place to identify and mitigate product related risks in cooperation with customers. The following strategic risks, in particular, affect our product and customer related Risks specific to the Group's operations are listed below: The Company develops corrective measures as necessary and unlocks opportunities, including voluntary certification, to mitigate those risks. Below you can find more information about what we do on this front. 7 environmental risk; 9 risk related to business processes and systems; 13 regulatory risk. For more information, see the Strategic Risks section on page 70 Risks associated with chemicals management and product safety 1 2 Risks associated with ensuring ethical research and production principles Risks associated with customer satisfaction 3 Regulatory environment and management of risks associated with chemicals PhosAgro Group facilities ensure timely receipt of all necessary licences for their activities to strengthen public confidence in the safety of their operations and products. All types of fertilizers are registered in Russia. PhosAgro Group is committed to minimising hazardous substances in its activities. We ensure full transparency with respect to the chemicals we use and the content and properties of our products. 104 105 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Regulations and certain requirements applied to mineral fertilizers in Russia We tap our extensive knowledge base and technologies to design products that are safe for the environment and people. In strict compliance with the regulations, all PhosAgro products undergo the necessary environmental and toxicological tests as part of their registration process before being marketed to our customers. Mineral fertilizers produced by PhosAgro Group are subject to mandatory state registration of agrochemicals by the Russian Ministry of Agriculture. All grades of PhosAgro Group’s mineral fertilizers registered in Russia passed a mandatory examination for compliance: • toxicological and hygienic – in Erisman Federal Research Centre of Hygiene; • biological – in Pryanishnikov Institute of Agrochemistry; • environmental – in Rosprirodnadzor and Lomonosov Moscow State University; • sanitary and epidemiological standards – in Rospotrebnadzor. We are committed to the ethical principles of animal welfare and seek to avoid using animals for research. This issue is addressed at the highest level by the Company’s Board of Directors. In 2021, we revised our Code of Ethics to state our position on this matter. In line with the Code of Ethics, PhosAgro Group does not conduct experiments on animals, except as required by law; when conducting an expert examination of fertilizers, the main method of evaluating information on the toxicity and hazard of a multi-component substance to animals is to analyse information from national and international databases, as well as information on previously registered fertilizers. Currently, there are very few alternatives to animal research that are recognised by the government. We are doing our best to expand the range of allowed research methods and reduce experiments on animals. Regulations and certain requirements applied to mineral fertilizers by the European Union, REACH, and SVHC PhosAgro Group's products exported to EU customers have been registered pursuant to Regulation (EC) No. 1907/2006 concerning the Registration, Evaluation and Authorisation of Chemicals (REACH). For companies, REACH conformity means greater responsibility for assessing the risks associated with the use of chemicals and providing users with relevant safety information. Companies producing or importing 10 tonnes or more of hazardous substances per year are required to submit not only technical data, but also a chemical safety assessment (CSA). All information on such substances is communicated by PhosAgro Group in full to the regulators. Pursuant to the above Regulation, Apatit’s products contain no substances which are subject to restrictions on their sales in the European Union. We produce ammonium nitrate (AN) CAS 6484-52-2 EC No. 229- 347-8, which is subject to para 58, Annex XVII of REACH. However, it does not apply if a fertilizer conforms to specifications defined in Annex I and Annex IV to Regulation (EU) 2019/1009 of the European Parliament and of the Council. To assess conformity, samples of ammonium nitrate are sent quarterly to the Inspectorate Estonia AS lab for detonation resistance and oil retention tests. The results are formalised by a protocol for compliance with the requirements of Annex I and Annex IV of Regulation (EU) 2019/1009. In addition, para 30 of Annex XVII to REACH lists substances specified in Part 3 of Annex VI to Regulation (EC) No. 1272/2008 and classified as toxic to reproduction, Category 1A/1B. These include sodium tetraborate, which is on the list of Substances of Very High Concern (SVHC) and is classified as a reproductive toxicant, Category 1В, but the restrictions only apply to individual concentrations in the mixture above 4.5%. We produce NPK fertilizers with boron that contain sodium tetraborate at a concentration of 2–3%. Therefore, the special concentration level as defined in Part 3 of Annex VI to Regulation (EC) No. 1272/2008 is not reached. Thus, PhosAgro Group faces no restrictions under Annex XVII of Regulation No. 1907/2006. The quality and safety of mineral fertilizers produced by the Company is confirmed by state registration certificates, declarations of conformity, and safety data sheets. 0.2 mg per kg average cadmium content in PhosAgro Group's phosphate- based fertilizers 60 mg per kg single level of maximum cadmium n fertilizers, according to EU regulation According to expert reviews, new fertilizer grades of PhosAgro Group are effective and environmentally and toxicologically safe. The products are properly classified, labelled and packaged in accordance with Regulation (EC) No. 1272/2008 (Classification, Labelling and Packaging Regulation, CLP Regulation) and Regulation (ЕU) 2019/1009. All types of manufactured fertilizers have safety data sheets (SDS). PhosAgro Group's unique phosphate-based fertilizers have perfectly low cadmium average content (0.2 mg per kg), making them among the safest in the world. On 5 June 2019, the European Council and European Parliament approved the EU Regulation 2019/1009 (Fertilizing Products Regulation, FPR) on fertilizers, establishing new EU-wide rules for CE-marked fertilizers (also known as EU Fertilizing Products). The regulation provides for reducing cadmium content in EU fertilizers, by introducing a single cap at 60 mg per kg of P₂O₅ and banning inorganic fertilizers in the EU with a cadmium content above that cap starting from 16 July 2022. Going forward, the regulation provides for gradual reduction of cadmium content to 20 mg per kg of P₂O₅. The plans of cutting the cap to 40 mg per kg of P₂O₅ have been already announced. At the same time, the French Agency for Food, Environmental and Occupational Health & Safety (ANSES) has already issued recommendations for a cadmium content in inorganic phosphate- based fertilizers of less than 20 mg per kg of P₂O₅. Thus, PhosAgro Group's phosphate-based fertilizers are well within EU requirements for cadmium content, which is reflected in our product slogan: pure minerals for healthy lives. In 2022, in line with Regulation (EU) 2019/1009, Apatit’s mineral fertilizers were successfully certified by an independent notified body in the area of fertilizer certification in the EU, making it possible for the fertilizers to be CE-marked. 106 107 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Voluntary ESG certification of products Key initiatives in 2022 GRI 2-28, 417-1 On top of that, the Company has a certificate under the Ecological Union’s Vitality Leaf standard and the right to use the internationally recognised eco-label on its products. All agrochemicals of PhosAgro Group have been certified under the GOST R 58658–2019 national standard, which has introduced the world’s most rigorous limits on heavy metal and arsenic content, allowing the Company to use the Green One eco-label. ISO 9001 14001 45001 Both certificates were confirmed in 2022. Independent assessment results are a testament to the unique eco-efficiency of PhosAgro Group’s products. Also, the Company made a Green Label environmental claim, asserting that the Group’s products are free from dangerous cadmium concentrations capable of harming soils. In addition, our products are labelled with an EU pictogram developed under Regulation (EU) 2019/1009 and ensuing rules for voluntary labelling of safe fertilizers in terms of heavy metals content. In 2022, PhosAgro was the first with a special focus on conformity Russian mineral fertilizer producer to Brazilian requirements to win strong recognition in Brazil, for the production, storage one of the world’s major agricultural and transportation of fertilizers. markets, where our products obtained the Environmental The Brazilian standard contains Quality Label. As part of mutual strict limits on levels of arsenic recognition of eco-labels, Brazilian and heavy metals, which experts reviewed the life cycle PhosAgro Group mineral of the Company's products, fertilizers are fully compliant with. This comprehensive assessment included production, environmental and social criteria, such as: energy efficiency and use of recycled materials and energy resources; use of best available technologies; customer service in terms of providing reliable information on the properties and optimal use of the mineral fertilizers. Throughout 2022, PhosAgro Customers enjoy our digital information and competencies Group maintained a strong focus services, which are complementary of PhosAgro Group experts. on activities that help make to PhosAgro Group’s core products PhosAgro Innovation Centre information about the Company's and allow us to expand consumer provided extensive expert support products and services more opportunities, including by offering to consumers during the year. accessible. faster access to the relevant 108 109 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Consumer survey Ensuring customer satisfaction Customers reported high satisfaction is a major priority for PhosAgro (score 5 or 4) with the performance During this survey customer satisfaction was assessed using the following indicators: Group. In order to obtain unbiased of PhosAgro's staff (promptness quality of the products data on the performance of our of request handling and quality supplied; quality management system, collect of support and consultations), comments, and quickly act on them, rating it 98.6%, up from the 2021 we regularly monitor customer level. Positive results also came packaging (design, durability, moisture satisfaction levels. We also take for the quality and packaging protection); on board feedback from existing of PhosAgro Group’s products and potential customers regarding (satisfaction levels rated at 97% product range; our products and carefully review and 98.6% respectively). performance of PhosAgro’s staff in terms of promptness of request handling and quality of support and consultations. 98.6% of consumers highly appreciated the performance of PhosAgro Group's staff all the proposals and comments we receive in order to better meet our customer needs, expand our product range, acquire new customers and tap into new sales markets. The data obtained serves as the basis for the annual assessment of customer satisfaction. In late 2022 and early 2023, PhosAgro Group carried out yet another survey of consumer opinion. This time, the Company polled its Russian customers using a questionnaire in Microsoft Forms, which focused on customer satisfaction and loyalty aspects. The questionnaire relied on a qualitative evaluation using a scale from 1 (not satisfied at all) to 5 (completely satisfied). Whenever customer satisfaction is not rated at 5, respondents are asked to explain the reasons and provide comments to PhosAgro. Satisfaction with product range, % Satisfaction with product quality, % 63 18 15 4 score 5 score 4 score 3 score 1 89 7 4 score 5 score 4 score 3 Perfomance of PhosAgro's staff (promptness of request handling and quality of support and consultations), % Packaging (design, durability, moisture, protrction), % 93 7 score 5 score 4 89 11 score 5 score 4 Most of the customers praise: excellent product quality; timely supplies; strong skills of the staff responsible for support and consultations. The survey showed that customers gave a high appraisal of PhosAgro Group’s products using the above criteria. Degree of consumer satisfaction, % 2022 2021 2020 95 96 94 110 111 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Research and education AREAS, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 IMPROVEMENT OF PRODUCTION PROCESSES Target 12.4 High-quality and eco-efficiency of our products, including a process for the development of new products that respects safety and the environment throughout its life cycle IMPROVEMENT OF THE PRODUCT MIX Target 2.4 Promotion of sustainable farming practices, development of new fertilizer grades for broader access to best practices in farming APPLICATION IMPROVEMENT Targets 13.1, 13.2 Target 15.1 Soil safety, biodiversity conservation, fertility growth and lower GHG emissions in production and throughout the product’s life cycle: from mine to plate COOPERATION WITH UNIVERSITIES AND RUSSIAN AND INTERNATIONAL R&D CENTRES Target 4.4 Targets 17.16, 17.17 Implementation of a comprehensive phased programme to support sustainable agricultural practices and support young scholars in running sustainable development projects • Reduction of natural gas consumption • in production processes Improvement of the nepheline concentrate processing technology • Phosphogypsum processing technologies • Development of water-soluble fertilizers • Development of inorganic coatings to improve performance and reduce nitrogen loss • Development of biologised fertilizers • Manufacturing of the new product – ApaSil • Production of phosphates and purified phosphoric acid • Development of an in-house catalyst for sulphuric acid and liquid sulphur dioxide production • Research into an integrated approach to plant nutrition and N2O emissions in a grain-grass crop rotation • Phosphogypsum application research 91.6 kt of phosphogypsum sold • PhosAgro Group's carbon farm project in the Vologda region 2,751 t of CO2 estimated volume of carbon dioxide absorbed by plant biomass per 200 ha) • Cooperation across a range of areas related to the climate agenda and low-carbon transition plan • Continuation of the Green Chemistry project • Continuation of the Summer Schools on Green Chemistry international project involving 150 students and young scholars, 30 professors and lecturers from 45 countries • A project to run cooperation programmes with universities 112 113 Company profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Strategy Management approach The Company's innovations in fertilizer fertilizers while also working hard Our Strategy to 2025 envisages Our innovation, product The Group actively cooperates and technologies in partnership production are a sustainable to minimise the environmental efforts to increase the share development and education with the Ministry of Agriculture, with research institutions development driver in agriculture impact of mineral fertilizer application of innovative products, develop management system is seamlessly the Russian Academy of Sciences, in Russia and abroad. The NIUIF and make a meaningful contribution and production. In doing so, technology and production, and ramp integrated into our quality federal research centres, universities, and PhosAgro Innovation Centre to strengthening cooperation for food the Company relies on Russian up potential for cooperation management system, which innovation funds, and international bring together world-class security. and international experience with stakeholders and partners is aligned with ISO 9001:2015. R&D organisations (University researchers, engineers, and experts and leading research and production in the area of innovation and research. of Belgrade and Brazil's Federal from various areas. PhosAgro Group seeks to ensure practices. efficient and safe agricultural production and develops innovative Another important focus under this strategy is to ensure efficient production and its compliance with high standards for environmental responsibility, safety, and circular economy principles. PhosAgro Group runs the Samoilov University of Lavras). Scientific Research Institute for Fertilizers and Insectofungicides PhosAgro Innovation Centre (NIUIF), Russia's only institute was established in 2018 specialising in this area. to create cutting-edge products Furthermore, the Company has a competence centre focusing on the following areas: promotion of core assortment in other countries (including registration tests); on-demand expertise for related business units; writing/editing agrochemical materials; monthly reviews on cadmium and other pollutants; participation in educational programmes. An important focus for PhosAgro Research and education fall Development Committee Group is close work with reputable within the remit of the Technical of the Board of Directors. These international organisations to provide Development Department matters are subject to an annual broad support to humanitarian and are discussed at the meetings review by the Board of Directors. and research-intensive projects. of the Strategy and Sustainable 114 115 Company profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Risks and opportunities Among other things, the following strategic risks affect our research and educational objectives: 1 strategic planning risk; 13 regulatory risk; 19 climate risk. For more information, see the Strategic Risks section on page 70 The Group develops corrective measures as necessary and unlocks opportunities, including import substitution, to mitigate those risks. Below you can find more information about what we do on this front. 2 Risks specific to the Company's operations are listed below: Non-compliance of products’ manufacturing process and their use with carbon footprint standards 1 And other environmental aspects associated with the adoption of the European Green Deal (primarily the From Farm to Fork Strategy) and potential similar restrictions in other markets. Insufficient environmental friendliness of production processes Inability to ensure full compliance of plant nutrition systems with specific farming practices 3 Performance Investments in R&D activities and development of new products, RUB mln 2022 2021 2020 2,026.3 1,416.8 1,845.9 Reduction of natural gas Pilot tests are running consumption in production in the production of various processes NIUIF experts work to reduce fertilizer grades: NPK 10-26-26, 15-15-15 and NPS 20-20(14). natural gas consumption in technological processes and associated GHG emissions at existing MAP/DAP, NPS and NPK fertilizer production facilities. Measures related to a better use of the reaction’s heat in tubular reactors, for example for heating the coolant in a drum drier or a drum dryer granulator are a promising way to boost the energy efficiency of fertilizer production. In particular, a scheme to install a tubular reactor in a drum drier at the Cherepovets mineral fertilizer production unit was introduced in 2022. In the long term, the measures taken will ensure: savings in per unit consumption of natural gas: the actual savings range from 10% to 20%, and there is potential to increase this level up to 30% vs the baseline; reduction of GHG emissions by up to 20% (potentially up to 30% vs the baseline); higher productivity with an up to 10% reduction in natural gas consumption for some grades vs the baseline. 4 Inability to accommodate customers’ expectations of advisory support regarding the use of our products RUB 2,026.3mln of investments in R&D and development of new products in 2022 116 117 IMPROVEMENT OF PRODUCTION PROCESSESCompany profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Environmental R&D, including recycling and elements of circular economy Improvement of the nepheline The process is based on a patented NIUIF also continued its technical PhosAgro Group's product fertigation and hydroponic digestible by plants (mixtures concentrate processing resource and energy-saving analysis of potentially setting mix expanded to 57 grades systems. Application of water- of monocalcium phosphate technology The NIUIF team is improving technology developed by NIUIF up a production site processing to produce the most popular phosphogypsum and carbon of agrochemicals of all types soluble fertilizers also increases and dicalcium phosphate in 2022. By 2030, PhosAgro water use efficiency and reduces with different proportions the technology for hydrogen products: dioxide and manufacturing Group plans to complete unproductive loss of nutrients, of these components) sulphate treatment of Kola • ammonium sulphate solution crystalline ammonium sulphate, work on and gear up thus mitigating the negative on granules was developed nepheline concentrate to be used in the production technical calcium carbonate for the introduction of 70 new impact on the environment. to slow down granule dissolution with production of aluminium of NS and NPS fertilizers and its derivatives. CAPEX products, which will include Due to the properties of in the soil and help synchronise hydroxide and by-products. on the site; for the Cherepovets facility will biological decomposers monopotassium phosphate the release of nutrients from Compared to the current sintering • technical calcium fluoride be estimated in the first half of organic matter, crop protection solutions, the risk of leaf burn the fertilizer with the needs technology, this method boasts to be used in the cement a lower metal intensity, higher industry as a flux to reduce energy efficiency, and lower the calcination temperature of 2023. This technology will also reduce CO2 emissions. carbon dioxide emissions. On top of that, the ability to process nepheline concentrate of clinker mixture and improve cement quality. using the technology under The method for producing development will reduce ammonium sulphate solution the country's dependence by co-processing phosphogypsum on imported bauxites. and fluosilicate acid is classified as promising and is described Phosphogypsum processing in the Russian Reference Document technologies In late 2022, we decided to build ITS 2-2019 "Production of Ammonia, Mineral Fertilizers and Inorganic a facility at the Balakovo Acids". Branch to process by-products: fluosilicate acid (not used In 2022, NIUIF together in production) obtained with the Balakovo branch at the stage of absorption of Apatit filed an application of fluorine-containing to include the ammonium gases during concentration sulphate solution and technical of extracted phosphoric calcium fluoride production acid in vacuum-evaporating technology in co-processing installations, and dihydrate of phosphogypsum and fluosilicate phosphogypsum to produce acid in the list of advanced a solution of ammonium sulphate technologies for the purpose and technical calcium fluoride of Special Investment Contracts with a capacity of 20 ktpa in terms of 100% H2SiF6. Design and engineering documents for the construction of the facility are under development. (SPIC 2.0); the application was approved by an expert organisation in December. products; mineral fertilizers and leaf curl during foliar feeding of plants. with controlled and prolonged is much lower, making spraying The novelty of the research release, liquid and solid fertilizers at high solution concentrations consists in creating fertilizers with microelements; feed possible. In addition, as a with delayed and controlled additives with non-protein result of the special properties release of nutrients without nitrogen sources and biological of the solutions, the use the use of expensive components; growth enhancers, of monopotassium phosphate and environmentally unfriendly adaptogens, amino acids. does not pose problems polymer coatings. The overall focus of these in saline or alkaline soils. developments is biologicalisation The acidic reaction of urea of agriculture and reduction phosphate solution prevents of the environmental impact clogging of drip lines, and when of chemicals in intensive it is absorbed by soil, it increases farming, which will bolster crop the availability of nutrients yields and mitigate climatic to plants and facilitates leaching and environmental impact. of sodium ions from the root Development of new fertilizers system. The use of an acidic component with urea can reduce ammonia losses, especially on alkaline soils. Development of water-soluble Development of inorganic fertilizers NIUIF continues research into the development of technologies for making coatings to improve performance and reduce nutrient loss In 2022, NIUIF team conducted completely water-soluble research on making fertilizers fertilizers in the form of crystalline with stronger agrochemical products. In 2022, research and environmental performance involved products such as water- based on mineral fertilizer soluble monopotassium grades produced by PhosAgro phosphate and water-soluble Group (urea, NPK fertilizers, urea phosphate. This type NPS fertilizers and ammonium of fertilizers provides for the most nitrate). effective use of nutrients thanks A method o f coating to their application methods: of inorganic compounds 118 119 IMPROVEMENT OF THE PRODUCT MIXCompany profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Currently, there is no commercially available technology for the production of such fertilizers in Russia. The strengths of PhosAgro Group's innovations are: use of inorganic compounds digestible by plants as a coating material, so that the final product contains additional amounts of plant-available nutrients; controlled rate of nutrient release; no negative environmental impact of the new fertilizer coatings; higher agrochemical performance. The increased agrochemical of nitrogen uptake from coated performance of the new fertilizers fertilizer increased by 20–22% has been proven in vegetation and yield increased by up to 10%. and microplot trials. In vegetation Researchers noted enhanced trials, rate of nitrogen uptake from physical and mechanical coated fertilizers rose by up to 29%, P2O5 by up to 28%; K2O – by up to 20%; wheat grain yield increased by up properties of the fertilizer (a 60–70% reduction in caking, an increase in the static strength to 26%; and yield quality improved. of granules). In field microplot trials, rate Rate of nutrient uptake from NPK fertilizer (vegetation trials), % Rate of nitrogen uptake (vegetation trials), % N P2O5 K2O 58 61.5 66.7 9.5 10.9 14.1 35 40 42 +6.0% +14.9% +11.9% +28% +14.0% +20.8% Urea NP(S) 16:20(12) NPK 15:15:15 24 30.9 30.5 +28.9% +27.2% 57 0 64 +11.8% 58 61.5 66.7 +6.0% +14.9% No coating 0.05 mm thick 0.1 mm thick No coating 0.05 mm thick 0.1 mm thick This innovation is fully By 2025, we plan to design in line with the principles and build a pilot plant of green chemistry and in line with a capacity of 5–7 t/h. This with the International Code will enable us to bring our of Conduct for the Sustainable Use coating capabilities as close and Management of Fertilizers (FAO) as possible to our production for the production and application capacities, with production of mineral fertilizers. at the Company's facilities potentially set up going forward. In 2023, further efforts are planned in this area, including the registration of such fertilizers and market research to analyse market demand for these products. Development of biologised plant respiration, decomposition fertilizers In 2022, PhosAgro Group, of crop residues and straw. Thus, higher yields with lower aggregate Production of mineral fertilizers with micronutrients, kt together with the Russian biomass of plants for comparable State Agrarian University – doses of fertilizers is the indicator Moscow Timiryazev Agricultural that determines a smaller carbon Academy, conducted the first footprint of mineral fertilizers. tests of the impact of mineral fertilizers and their biologised The tests also revealed a prominent counterparts on the climatic role for micronutrients in increasing footprint of products. The climatic root biomass, which could footprint of crop production potentially be used to "conserve" includes nitrous oxide emissions carbon in the soil. In 2023, we plan from soil resulting from to scale up the tests to cover nitrogen conversion processes microplot trials and to study in mineral and organic fertilizers the carbon footprint of mineral as well as carbon emissions from fertilizers more extensively. 2022 20211 20201 1,329.6 1,691.1 621.3 1 For grades registered as fertilizers with micronutrients in 2020, production output since 2021 is presented. No. Fertilizer Crop yield, g/chamber Increase vs the control Extra yield resulting from biologisation CO2 footprint, g/chamber Decline resulting from biologisation 1 2 3 Control (no fertilizer) NPK(S) 8:20:30(2) Bio-NPK(S) 8:20:30(2) NPK(S) 15:15:15(10) Bio-NPK(S) 15:15:15(10) 4 DAP NP 18-46 Bio-DAP bio-NP 18-46 MAP NP 12-52 Bio-MAP bio-NP 12-52 Urea N 46.2 Bio-urea bio-N 46.2 5 6 average g/chamber 15.5 21.7 22.0 20.7 21.0 21.7 22.5 22.3 23.7 21.1 21.4 – 6.2 6.5 5.2 5.5 6.2 7.0 6.8 8.2 5.6 5.9 % – – 1.4 – 1.5 – 3.7 – 6.3 – 1.4 average 54.7 82.4 77.8 77.9 74.6 71.7 71.5 76.3 74.5 72.0 68.1 % – – 6.9 – 5.6 – 3.8 – 8.1 – 3.2 120 121 Company profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Other innovative products Manufacturing of a new product – ApaSil In 2022, the Company Production of phosphates food grade sodium and potassium Developing in-house catalyst In the reporting year, as part liquid sulphur dioxide is no and purified phosphoric acid In 2022, NIUIF experts started phosphates from PhosAgro's own purified phosphoric acid. Given that comprehensive research these high-quality substances are not for sulphuric acid and liquid of a project for vanadium sulphuric longer supplied from abroad. sulphur dioxide production In 2022, the NIUIF, Russia's leading acid catalysts, our experts prepared the required inputs and estimated In 2022, the NIUIF made research of a technology for producing sodium produced in Russia and are imported, research centre specialising costs for the feasibility study to obtain and assess the quality continued to develop products and potassium phosphates used the launch of local production will in sulphuric acid production of 900 ktpa in-house production of samples. The outcomes show with innovative features. as food additives and comparable contribute to import substitution technologies, focused on two very of such catalysts for PhosAgro that the product is sufficiently In particular, we have marketed in quality to those from the leading and food security. relevant areas in the new economic Group's needs. In 2023, pure and compliant ApaSil, a product designed global suppliers. The research seeks landscape – creating in-house we plan to use the input data with the applicable domestic for seed pre-treatment to obtain the most popular additives – On top of that, the NIUIF is currently production of high-performance to develop design documents standard. The NIUIF and foliar application on a wide disodium pyrophosphate (E450(i)), developing a solution for food grade vanadium sulphuric acid catalysts for the production unit. plans to continue rollout range of agricultural crops sodium pyrophosphate (E450(iii)), phosphoric acid to be purified and launching a new production and development of technical and ornamental plants on all sodium tripolyphosphate (E451(i)), through solvent extraction using process for liquid sulphur dioxide. The NIUIF also continued efforts solutions for a 20 ktpa pilot- types of soils. Field trials sodium hexametaphosphate (E452(i)) organic extractants. This product Before 2022, domestic consumers to introduce a patented process scale production in 2023 in different regions, on different and dipotassium phosphate (E340(ii)) has not been produced in Russia purchased these products mainly for obtaining liquid sulphur dioxide with subsequent adjustment soils and crops have shown vital for the meat, fish, dairy, bakery this way and has been imported from foreign producers, whose exit by burning sulphur under oxygen of parameters and equipment that ApaSil helps plants cope and other food industries. The work from Kazakhstan, China and other from the Russian market brought deficiency condition. Widely used operation. This project will help with the stresses associated will continue into 2023 and will markets. We plan to use our own about major challenges as well as new in the Russian petrochemical, pulp fully meet Russia's demand with drought, soil salinity serve as a basis for developing key purified phosphoric acid to produce opportunities for local R&D. and paper, glass and wine industries, for liquid sulphur dioxide. and fungal diseases. technical solutions to produce high-margin feed phosphates. 122 123 Company profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Phosphogypsum application A data analysis and target market research Phosphogypsum is a valuable review has identified eight focus areas for selling phosphogypsum. by-product of the production Currently, we can cover three of mineral fertilizers. It includes, of them: among other things, such • agriculture; elements as calcium, sulphur, • road construction; phosphorus, zinc, silicon, • cement production. magnesium, copper, which are important for the soil. After identifying new applications, The use of phosphogypsum the Company more than doubled enhances the soil structure, phosphogypsum sales for the year its water and air permeability, and achieved a more than 20 times improves leaching highly soluble increase compared to 2021 and 2019 salts, and shapes favourable respectively. conditions for the development of soil biota. Phosphogypsum In 2022, we sold 91.6 kt makes it possible to increase of phosogypsum, including 43.3 kt productivity of arable lands for agriculture, 45.3 kt for road and reduce the cost of crop construction and 2.6 kt for cement production. The International production, while also expanding our Fertilizer Association (IFA) customer base. For more information, see the Environmental Review section on page 190 recognised PhosAgro’s production of improved phosphogypsum and its use in agriculture as a best practice. In November 2021, we made a decision to merge all our phosphogypsum-related operations into one project. Project goals by 2026: Improving sales volumes; Reducing phosphogypsum accumulations at dump sites; Increasing phosphogypsum recycling rates. In 2022, we sold 91.6 kt of phosogypsum Research as part of PhosAgro's The coniferous seedlings grew from Agricultural Academy carbon farm project in the Vologda seeds of native trees. region To combat climate change in the long run and study CO2 compensation and absorption In Cherepovets and Vologda regions, we set up 100 ha trial stations 100 km rotation at the farming station. away from each other to study According to the research, researched plant nutrition systems and N2O emissions in five-year grain-grass crop of our carbon emissions by various carbon sequestration abilities balanced mineral fertilization, ecosystems, we started building of perennial forage grasses cultivated soil liming as necessary a carbon farm. using a variety of fertilization and organic fertilizer application schemes. In Vologda region, deliver excellent yields The project's main objective forage grasses are the basic crop and reduce GHG emissions. is to accumulate knowledge with the greatest GHG absorption Importantly, the effects and expertise in cooperation potential. with the research community and study CO2 absorption by various crops (forage grasses, grain Together with scientists of the Russian Academy of Sciences, cereals and pulse crops), young we are doing research at 48 coniferous and deciduous forests, agricultural sites of spontaneous are calculated for a five-year cycle. In particular, liming done in the first year will result in soil carbonate decomposition and higher CO2 emissions, but based on a once in five years and agricultural sites with varying vegetation to find the ways application, the research shows organomineral nutrition regimes. of returning abandoned lands a definite increase in yields to agricultural uses, study from limed fields coupled In 2022, we planted 24 types of forest agricultural practices with reduced with decreasing average carbon with various mixes of deciduous GHG emissions and carbon farming, footprint per product unit. (willow, birch and aspen) and obtain precise measurements and coniferous (fir and pine) of the carbon footprint from crops We plan to complete the project trees at a 100 ha plantation near grown for food. the Cherepovets site. In total, the plantation accommodated 79,800 deciduous and 28,800 coniferous young seedlings. Young deciduous trees cultivated In the first year of trial, we estimated CO2 absorption by plant biomass per 200 ha of land at 2,751 t. to create the carbon farm in 2026, with the most effective CO2 storage vegetation systems to be selected based on obtained data and further research to enable us to verify the results specifically for the Vologda region As part of the project, the Company internationally and use them through microclonal propagation and the Russian State Agrarian to scale up and fully implement grow fast and cannot propagate. University – Moscow Timiryazev the initiative by 2028. In total, the plantation accommodated deciduous and 79.8 thousand 28.8 thousand coniferous young seedlings 124 125 APPLICATION IMPROVEMENTCompany profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Cooperation in innovation Partner Partnership goals Key results in 2022 Our strategy for innovating and helping students, teachers and farmers to develop profession competencies relies on partnerships with the leading agricultural universities and R&D centres. Russian Academy of Sciences (RAS) Cooperation across a range of areas related to the climate agenda and low- carbon transition plan • We set up the carbon farm, planted • Further progress in implementing other young trees and purchased the required equipment as part of the relevant project. projects involving leading Russian scientists to develop and promote innovative products: – biotechnologies and feed additives developed; – new biomineral fertilizers tested and registered; – a pipeline of new promising projects built. RAS Pushchino Biological Research Centre Partnership in promoting basic sciences and research in microbiology, biotechnologies, gene and cell engineering, photobiology, soil and environmental management, and physicochemical biology • PhosAgro was an official partner of the 25th Pushchino school- conference of young scientists called Biology – the Science of the 21st Century. The event saw the first PhosAgro awards distributed for the best research projects and practices in implementing R&D in three categories – soil management, agroecology and plant biology. Over a thousand young scientists from all over Russia and beyond took part in the conference. Partner universities Creating PhosAgro’s nationwide educational network across 30 agricultural universities in Russia Institute of Chemistry and Sustainable Development at Mendeleyev University of Chemical Technology and the UNESCO Chair of Green Chemistry for Sustainable Development Partnership in promoting basic sciences and research in chemistry and related fields to further sustainable development globally More than 200 online lectres were held for 30 agricultural universities; The lectures brought together 22,700 students and teachers from across Russia and the CIS. • The lectures covered multiple themes, including agrochemistry and agronomy, crop production, innovations and digitalisation in agriculture, economics, law and responsible farming. • Capabilities for conducting scientific experiments were set up at PhosAgro Educational Centre’s Phyto-Class of the Moscow Timiryazev Agricultural Academy. • Vocational profiling organised jointly with teachers of the Moscow Timiryazev Agricultural Academy was made available to school students. • An N.P. Laverov scholarship • A series of webinars was organised programme was established for young scientists from Mendeleyev University of Chemical Technology who do research in ecology, environmental management, new materials and substances. The scholarship is granted to the 20 best students and postgraduates. for Bachelor's and Master's students at the UNESCO Chair of Green Chemistry for Sustainable Development at Mendeleyev University of Chemical Technology. The focus areas were aligned with the UN’s 17 Sustainable Development Goals. 126 127 Company profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report International humanitarian projects GRI 2-28 In line with our strategic goals, of biodiversity conservation, we support young scholars and their environmental well-being projects addressing the challenges and the circular economy. PhosAgro runs multiple humanitarian projects focused on building a modern education and science framework. Partner Project and goals Key results in 2022 Partner Project and goals Key results in 2022 UNESCO Green Chemistry for Life, a joint grant programme by PhosAgro, UNESCO and IUPAC Financial support and scientific guidance for young scholars doing research in emerging Green Chemistry technologies to address environmental challenges and ensure sustainable use of natural resources International Competence Centre for Mining Engineering Education under the auspices of UNESCO The Centre is based at St Petersburg Mining University and plays an important role in implementing the UN Sustainable Development Goals, such as improving the quality of education, combating climate change, and protecting and restoring ecosystems • Contracts in green chemistry research were awarded to the seventh round winners from Africa, Asia, Europe and Latin America. • Over the nine years of the programme's existence, its International Scientific Jury considered more than 800 applications from young scientists repre- senting 125 countries. More than 40 scholars from 29 countries received grants. • A member of the Centre's Steering Committee, PhosAgro actively participates in professional cer- tification of experts for compliance with interna- tional mining engineering requirements. • We took part in the International Forum for the 50th Anniversary of the Convention Concerning the Protection of the World Cultural and Natural Heritage (Conference on Nature Management and Preservation of the World Natural Heritage). • Our experts shared their experience in educational projects at the international forum dedicated to major subsoil use challenges which hosted over 900 young scientists from 57 universities of Europe, Asia, Africa and Latin America. IUPAC Summer Schools on Green Chemistry project run jointly by PhosAgro, IUPAC and Green Sciences for Sustainable Development Foundation IUPAC's educational initiative supported by PhosAgro to improve the qualifications of young scholars engaged in green and innovative chemistry research globally with a view to promoting technological innovations and breakthroughs • The fifth Summer School session called Chemistry Addressing UN-17 Sustainable Development Goals took place, with PhosAgro's personal awards estab- lished for young researchers for the best projects in green chemistry. More than 150 postgradu- ates and young scientists and about 30 profes- sors and teachers from 45 countries participated in the session. UN Food and Agriculture Organisation (FAO) Development of Sustainable Agriculture through the Implementation of the Global Soil Doctors Programme and the Creation of the Global Soil Laboratory Network (GLOSOLAN) Promoting sustainable soil management among farmers and expanding the Regional Soil Laboratory Network (RESOLAN) in Africa, Latin America and the Middle East; achieving environmental and social well-being by raising awareness of soils to inform sustainable farming decisions • Since the start of the project in 2018, a total of five training sessions have been held, bringing together over 600 young specialists and 60 teach- ers from 75 countries. • Since 2018, PhosAgro's total contribution to the pro- ject has reached USD 2.4 mln. Over this period, FAO has created the Global Soil Laboratory Network (GLOSOLAN) of more than 800 laboratories in 150 countries. • PhosAgro, FAO Liaison Office for the Russian Federation, Eurasian Soil Partnership, the Russian State Agrarian University – Moscow Timiryazev Agricultural Academy and the Diplomatic Academy of the Russian Ministry of Foreign Affairs coorgan- ised an international forum dedicated to the global challenges of the 21st century to food systems and environmental safety. • PhosAgro also financed the opening of the Russian Lounge at the FAO headquarters, which is set to become the key venue for receiving high-level delegations from the UN Member States. International Fertilizer Association (IFA) As a core member of the IFA, PhosAgro contributes to the association by providing expert advice on a wide range of topics United Nations Global Compact European Sustainable Phosphorus Platform (ESPP) As a Global Compact Lead company, PhosAgro contributes to the initiative by providing expert advice on a wide range of topics • The Global Compact Lead status makes it possible to engage in the discussion of the international agenda while actively liaising with other international organisations and contributing to the development of new business approaches, regulations and standards globally. • Contributing to the UN Sustainable Development Goals through projects implemented by the Company as a responsible producer of environmentally friendly and efficient mineral fertilizers committed to food security, environmental safety and human health protection • Enhancing global partnerships for sustainable development • Articulating an expert point of view on major issues on the global agenda • Participating in global initiatives aimed at addressing today’s global challenges Partnership on the European political, scientific and technical agenda for the sustainable use of phosphate resources Fostering knowledge exchange, experience transfer and professional networking in phosphorus management; promoting dialogue between market participants, stakeholders and regulators; removing regulatory barriers; effecting communication through newsletters, website, conferences and publications • • In the reporting year, PhosAgro's experts sat on IFA’s International Committees on Agriculture, Safety, Health and Environment, International Trade, and Communications and Public Affairs. IFA recognised PhosAgro’s agricultural use of improved phosphogypsum certified in Russia as a best practice for this multi-component product. • We retain our status of a Global Compact Lead company and are actively involved in the alliance's initiatives. • PhosAgro demonstrated its commitment to the UN Global Compact by vigorously support- ing Climate Ambition Accelerator and CEO Water Mandate initiatives to combat climate change and ensure the efficient use of water resources and their protection. • At the UN Climate Change Conference (COP27), we joined the Business Declaration for Climate Resilient Water, Sanitation, and Hygiene (WASH) supported by 26 leading global companies and 15 expert organisations committed to the care- ful use of water resources. • PhosAgro Group participated in the European Sustainable Phosphorus Conference that brought together several hundreds of representatives of business, stakeholders, regional and national authorities. At the event, we presented our best practices of phosphogypsum application in road construction. Safer Phosphates, an international alli- ance of environmen- tally friendly fertilizer producers Partnership in protecting human health and agricultural ecosystems from contamination with heavy metals • OPERA Research in partnership with Safer Phosphates and Euractiv pan-European media network organised a webinar on the soil health for sustainable agriculture. The event attracted more than 100 participants from among the scien- tific and business community, experts and NGOs. 128 129 Company profileCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Supply chain AREA, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 PROCUREMENT FUNCTION DEVELOPMENT Target 12.4 • Establishing into long-term relationships for the supply of inventory – long-term agreements – consignment warehouses – online shops Target — 30% purchased range • Further development of category strategies • Lower reject rate ESG EVALUATION OF SUPPLIERS Targets 8,3, 12.4 and 13.2 • Maintaining an ESG evaluation coverage of at least 50% of counterparties that participated at least 30% of procurement volume from the evaluated counterparties in the procurement • Audits • Updating the information provided by counterparties as part of the ESG survey, if more than a year has elapsed since the information was provided DIGITAL TRANSFORMATION Target 9.1 • Process Mining development • Introducing new robotic solutions 20% procurement from SMEs 17% procurement from local suppliers The category strategies cover: 15 raw material categories 16 categories of materials and equipment 2 categories of work and services 54% of suppliers covered by ESG evaluation to 35% rise in procurement from evaluated suppliers 82 technical audits of potential suppliers of materials and equipment were carried out 49 suppliers (60%) were recommended for cooperation based on the environmental and social assessment criteria included in the technical audit form Setting up an ESG training system for suppliers Mutual improvement agreement for services, raw materials, and inventories Training materials are available on the Company's official website in the Procurement section • Process Mining, an innovative method of data analysis and business process optimisation to manage procurement. • SCOUT system to verify and monitor the integrity of suppliers. • Further development and implementation of an automated procurement workstation. 130 131 About CompanyCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Strategy PhosAgro’s procurement system of the Company’s sustainable including our environmental Management approach GRI 3-3 seeks to ensure that the Group’s development. In 2022, our and social assessment of suppliers, The main objective of procurement Interaction with suppliers relies The Company's procurement subsidiaries receive the required procurements of goods and services as well as anti-corruption is to ensure that the Company's on full transparency in decision- process uses the following resources, materials, and services reached almost RUB 214 bln. mechanisms, directly promote needs for equipment, materials, making, market and formula pricing, business solutions and tools of adequate quality in full Thousands of our suppliers sustainable values across the Russian and services are met in a timely and long-term relationships. to improve its efficiency. and at reasonable prices. However, and contractors benefit directly from business community. These values there is much more to the principles these investments, and so do their are the bedrock of our business and business processes underlying employees, who have to provide philosophy. We work to ensure that manner, in full and at the best possible prices. The Company operates a convenient open system for the procurement our procurement activities. for their families. We contribute our procurement activities have The Group is committed of goods and services. Procurement We believe that running a supply to the public budget at various a strong positive impact on all our to establishing and maintaining procedures are competitive, 1 Category management: the development chain in an efficient and responsible levels. But what is more important stakeholders. business relationships and information on the needs and implementation manner is the cornerstone is that the tools that we employ, RUB 214 bln. total procurement of goods and services with companies that operate for materials, equipment or services of category strategies can in line with high ethical standards is published on PhosAgro's EBP. and combat corruption. Therefore, To participate in the bidding, significantly reduce costs, increase reliability of supply any supplier that registers suppliers have to sign up and read and improve economic on the Company's electronic the regulations. Evaluation efficiency. bidding platform (EBP) must and selection of a supplier are set read and understand the above out in the Company's procedures. regulations. Procurement activities The Company's procurement activities are governed by: • Procurement Policy; • Anti-Corruption Policy; • Code of Ethics; • Code of Conduct for Counterparties. The Company has an anti-fraud and anti-corruption system in place. PhosAgro seeks to minimise the risks of doing business with suppliers that might be involved in corruption. To this end, the Company has set up a corporate hotline for suppliers and other stakeholders to report on potential irregularities. For the link to the registration form, main regulations, the EBP registration instructions and step-by-step guide, see the Procurement section of the Company's official website. For information about the hotline, see the registration page of PhosAgro’s electronic bidding platform. 2 IT solutions: • Process Mining, an innovative method of data analysis and business process optimisation to manage procurement; • SCOUT system to verify and monitor the integrity of suppliers. The system helps to minimise the existing risks and losses by introducing a uniform auditing standard, monitor the condition of suppliers in real time and respond to changes in a timely manner. 3 Robotisation of processes 132 133 About CompanyCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Efficient structure Procurement management structure The past year saw significant changes to the structure of the Procurement Department aimed at both improving its overall efficiency and adapting to new economic realities. The Procurement Department Level Organisational unit Key responsibilities BOARD OF DIRECTORS LEVEL Board of Directors Strategy and Sustainable Development Committee of the Board of Directors • Setting strategic priorities in procurement; • review of the executive management's procurement reporting. is responsible for: COMPANY MANAGEMENT LEVEL • strategic sourcing of raw materials and services; • operational procurement; • project-based procurement; • local procurement; • alternative procurement (including strategic sourcing of materials and equipment procurement); • supply chain management; • planning and analysis. In order to assess performance, increase employee engagement and motivation, the Department has established KPIs in line with the Company's business objectives to evaluate the extent to which the Department's objectives have been achieved and processes streamlined. The performance of the Company's procurement function is subject to annual review by PhosAgro's Board of Directors. Procurement Department management Director (Supervisor, officer-in-charge) of the Department • Organising the overall operation, allocation of functions, business development strategies, definition of methodologies and procedures for the uninterrupted supply of tangible assets. Deputy Director • Meeting the Company’s needs Department Director Head of Division for equipment and materials, controlled materials, and services in a timely manner, in full and at the best possible prices; OPERATIONAL LEVEL Operational staff of the Procurement Department Heads of units and working groups Specialists • Apatit's warehouse inventory management; • day-to-day functioning of the Department; • supervising operations of the Department's structural units, allocation of functions; • developing a strategy for re-engineering of business processes in the Department, etc. • Managing operations of subordinate business units, selecting and deploying staff, determining the relevance of their work; • improving the skills of the subordinate staff, creating a favourable social and psychological climate in the team, fostering and maintaining corporate relations; • organising and directly supervising the compliance of the subordinate staff with regulations; • acting in accordance with the requirements of the management system, contributing to its improvement within their remit, etc. • Meeting the Company’s needs for equipment and materials, controlled materials, and services in a timely manner, in full and at the best possible prices; • professional development and upskilling. Challenges of 2022 Geopolitical factors had substitution of goods in signed supply chains in place, and took a significant impact on PhosAgro deals. In addition, banking a number of steps to improve Group's supply chains in 2022. operations with foreign suppliers the Department's operational The US, EU, Japan, and a number became more complicated. efficiency. The timely and successful of other countries ceased To respond to these challenges, action enabled us to adapt the supply of equipment. Many PhosAgro introduced structural to the new conditions in a short contracts had to be renegotiated changes in the Procurement space of time, restore the continuity with amendments to deadlines, Department, organised alternative of supply to our operations, prices and payment terms, procurement with a shift and maintain an appropriate level logistics routes and, in many cases, in geographic priorities and new of supply stability. Risks and opportunities The following strategic risks affect 14 Corruption our procurement objectives (for more information, see the Strategic Risks 18 Commodity risk section): The Group develops corrective measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information 21 Sanctions risk about what we do on this front. For more information, see the Strategic Risks section, p. 70 Procurement-specific risks are: 2 Suppliers’ failure to perform, changes in the product range or late delivery of raw materials, commodities, and equipment Violations of ESG principles by suppliers, including breach of human rights, use of child and forced labour, non-compliance of products with environmental standards, etc. Quality of raw materials, commodities, and equipment, dissatisfaction of the internal customer 1 3 134 135 About CompanyCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Key results in 2022 Cost budget in 2022 Breakdown of procurement costs RUB 213.9 bln. the Company’s total procurement costs >50% of procurement costs are related to raw materials and fuel 17% 57% 26% Materials and equipment Raw materials and fuel Work and services The Company’s procurement costs offices of the Russian Union Agency in Cherepovets, in 2022 totalled RUB 213.9 bln, of Industrialists and Entrepreneurs as well as at exhibitions and strategy of which raw materials and fuel and the Urban Development sessions. accounted for 57%. GRI 204-1 One of PhosAgro’s top procurement priorities is to cooperate with small- Share of local procurement, % Share of procurement from other suppliers, % and medium-sized enterprises (SMEs), primarily in the regions where the Company’s key assets are located. In the existing political and economic environment, we view active development of this cooperation benefiting all parties to be even more important. In 2022, as part of the Synergy of Growth agreement signed in 2020 between the government of the Vologda region, Apatit, Severstal and Urban Development Agency coordinating business development in Cherepovets, we published detailed information on the Company’s need for import- substituting products on Electronic 17 19 2022 2021 23 2020 2022 Business Cooperation, an information 2021 platform, to identify opportunities for local producers to make and supply these products. PhosAgro also regularly participates in online and offline meetings held in the regional 2020 83 81 77 2022 2021 2020 2022 2021 2020 20 13 14 18 23 13 23 14 27 21 35 11 80 87 86 82 77 87 77 86 73 79 65 89 Apatit Balakovo branch of Apatit Volkhov branch of Apatit Kirovsk branch of Apatit Apatit Balakovo branch of Apatit Volkhov branch of Apatit Kirovsk branch of Apatit Procurement in 2022, RUB mln Number of suppliers in procurement in 2022 2022 2021 2020 SMEs Imports Total Service procurement No. KPI 1 2 3 4 Average number of tender participants in the reporting period Tender price reduction in the reporting period, % Holding tenders on time, % Bidders’ motivation assessment with respect to procurement quality Commodity procurement No. KPI 1 2 3 Timeliness of procurement, % Reject rate at incoming control, % Commodity price control index, % Raw materials procurement No. KPI 42,143.2 5,914.8 213,910.7 29,918.4 4,389.3 150,006.7 20,203.7 2,878.5 104,069.3 2,478 72 3,511 SMEs Imports Total Scale Actual Worst Critical Target 3 5 90 3.5 5 7 95 4.5 7 12 100 5 4 10 99 5 Scale Actual Critical Target Challenge 87 5 1.05 90 3 1 93 2 0.95 89 6 0.93 Scale Actual Critical Target Challenge 1 Raw materials procurement index 1.05 1 0.95 0.79 136 137 About CompanyCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report Supplier ESG evaluation In 2020, based on the principles for assessing the Company’s supplier shares these principles. of sustainable development set and suppliers’ performance An individual supplier rating is based forth in the Code of Conduct to ensure sustainability and reliability on the checklist. for Counterparties, PhosAgro in order to benefit our consumers. developed a system to evaluate It includes questions on compliance We believe that making suppliers suppliers against ESG criteria relying with the principles of environmental aware of the Company’s system on the Sustainable Procurement and social responsibility guiding of values will contribute to a more Indicators checklist. The checklist PhosAgro’s operations. The completed responsible and sustainable business is part of an overall framework checklist confirms that the Company’s culture in the long run. To raise awareness of the existing evaluation system and of the need to complete the checklist, training materials on engaging with suppliers in sustainable development were published on the official PhosAgro website. Environmental assessment indicators show that 33% of suppliers have an innovative and forward-looking environmental policy and contribute to the protection of the environment. Technical audits have not identified any counterparties failing to comply with recognised standards with regard to environmental impact. Supplier environmental assessment in 2022 GRI 308-1, 308-2 No. Indicators 1 2 3 4 Number of rated suppliers Number of rated suppliers producing raw materials, fuel, energy, and commodities Number of rated suppliers producing raw materials, fuel, energy, and commodities that have an environmental management system certified to comply with ISO 14001 or a similar standard Share of rated suppliers producing raw materials, fuel, energy, and commodities among counterparties that have an environmental management system certified to comply with ISO 14001 or a similar standard, % 2022 1,888 847 276 33 Key ESG evaluation indicators All categories of suppliers were assessed for environmental impact. Suppliers with an The indicators for 2022 are based environmental management on the total number of suppliers system certified to comply with taking part in procurement ISO 14001 or a similar standard and the number of rated suppliers. accounted for 33% of evaluated This methodology will apply producers of raw materials, fuel, to future periods as well. energy, and commodities. No. Indicators 1 2 3 4 Number of suppliers that participated in the evaluation on PhosAgro’s EBP Number of suppliers taking part in procurement Number of rated suppliers Share of rated suppliers, % Total procurement, RUB bln Procurement from rated suppliers, RUB bln ESG evaluation coverage by procurement volume, % Average supplier rating (on a 100 point scale), points 2022 4,574 3,511 1,888 54 213.9 74.8 35 62 Number of suppliers that participated in the evaluation on PhosAgro’s EBP 2022 2021 4,574 3,031 Number of rated suppliers 2022 2021 1,888 1,046 ESG evaluation coverage by procurement volume, % 2022 2021 35 24 Average supplier rating (on a 100 point scale), points 2022 2021 62 54 33% of the evaluated suppliers in the key category have a certified environmental management system in place 138 139 About CompanyCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report 39 % of suppliers exhibit proactive and responsible behaviour towards occupational safety The results show that more than Some 39% of suppliers in the stated half of suppliers share PhosAgro’s categories exhibit proactive commitment to equal opportunity and responsible behaviour towards policies, do not tolerate harassment occupational safety and ensure or other disrespectful behaviour compliance with international towards employees and adopted standards set to control working a zero-tolerance stance on child conditions and mitigate occupational labour. and industrial risks. Technical audits have not identified any counterparties failing to comply with recognised standards with regard to environmental impact Supplier social assessment in 2022 GRI 414-1, 414-2 No. Item Number of rated suppliers 1 2 3 4 Number of rated suppliers in the categories “Producers of raw materials, fuel, energy, and commodities”; “Logistics services”; “Construction and installation, repairs” Number of rated suppliers in the above categories that have an occupational health and safety management system certified to comply with ISO 45001 (OHSAS 18001), or a similar system Share of rated suppliers in the above categories that have an occupational health and safety management system certified to comply with ISO 45001 (OHSAS 18001), or a similar system, % Number of rated suppliers taking part in procurement that adopted a zero-tolerance policy on child labour* Share of rated suppliers in the above categories that adopted a zero-tolerance policy on child labour, % Number of rated suppliers in the categories “Producers of raw materials, fuel, energy”, “Commodity producers and intermediaries”; “Logistics services”; “Construction and installation, repairs” Number of rated suppliers in the above categories that adopted a zero-tolerance policy on discrimination Share of rated suppliers in the above categories that adopteda zero-tolerance policy on discrimination, % Number of rated suppliers in the categories “Producers of raw materials, fuel, energy”, “Commodity producers and intermediaries”; “Logistics services”; “Construction and installation, repairs” Number of rated suppliers in the above categories that adopted a zero-tolerance policy on forced labour Share of rated suppliers in the above categories that adopted a zero-tolerance policy on forced labour, % Result 1,888 1,174 452 39 1,091 58 1,524 831 55 1,524 856 56 140 141 About CompanyCorporate governance Share capitalAppendices PERFORMANCE REVIEW Strategic report People development AREA, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 ANNUAL EMPLOYEE SURVEY • Maintaining employee satisfaction and loyalty at no less than 65% by 2025 Target 3.4 Target 8.3 69% employee satisfaction and loyalty 87% share of employees who praised the management’s performance 70% employee engagement TRAINING AND EVALUATION • Increasing average annual training hours per employee to 123 hours by 2025 Target 4.4 99.8 hours average annual training hours per employee • Promoting retraining and professional development • Investing in future talent INCENTIVES AND REWARDS • Motivating the staff to increase productivity and deliver strong operating results, retaining qualified talent Target 8.3 • Training future top managers from among internal candidates SOCIAL BENEFITS AND EMPLOYEE GUARANTEES Target 3.4 Target 8.3 and 8.8 INCLUSIVE ENVIRONMENT • Building an inclusive environment for disabled people, adapting workplaces and municipal infrastructure to their needs, and employing more such people depending on business requirements Target 8.5 and 8.8 GENDER EQUALITY • Providing all employees with opportunities for professional and career growth Target 8.5 and 8.8 RUB 272 mln invested in employee training We keep rolling out a virtual teaching package and a distance learning system over 400 people hired as part of career guidance and youth engagement initiatives Over 37% of High-Potential Graduates employed by the Company were promoted and included in the talent pool Average salary increased by 18.7% RUB 132,110 Company's average monthly salary 10 mentors selected from among current top managers 50% more investments in social programmes for employees 89% satisfaction with the social benefits offered We organised a job fair for disabled people We streamlined cooperation with employment centres to facilitate the employment of disabled people 21.5% of women among managers of all levels 16% of women in the Company’s Top 40 Talent Pool (6 out of 38) 34% of women in the Company’s total headcount 142 143 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Strategy Our key asset is talented, professional, and committed employees that share our corporate goals and values. The Company’s entire HR framework is geared towards recruiting, supporting and motivating employees to achieve the most ambitious goals. To this end, we provide a wealth of opportunities to enhance skills and knowledge, take consistent efforts to foster a culture of safety, equality and respect, and offer competitive salaries and social benefits. 2022 accolades • A top 100 Russian employer according to hh.ru • Gold status in the 2022 rating of Russia's best employers from Forbes • Winner among industrial companies according to Delovoy Peterburg • Grand Prix of the national competition of youth employment best practices in the category Best Practices in Preserving the Region's Youth Talent Potential • Two employees recognised as winners of the Engineer of the Year contest • Three employees named Russia's Professional Engineers • The Company's employees received 17 state awards, including one medal of honour for labour achievements from the Russian President Management approach GRI 3-3 To deliver on our objectives, we: implement a remedial action plan called Growth Area based on the annual employee survey results; develop and implement e-learning modules on blue- collar jobs, occupational safety, and managerial skills; leverage an innovative approach to professional training (virtual reality simulators, 3D models, production training grounds for improving workplace safety skills, among other things); draft and put in place online training courses on personal competencies; develop a system of corporate libraries, guidelines, and knowledge management at large; introduce succession and training support tools such as mentoring, coaching and supervision; assess the application of skills acquired by the staff involved in real business operations and project activities. We rely on a robust performance Integrated HR management framework management system that covers all levels – from individual employees to the Company as a whole – to ensure PhosAgro's sustainable growth in line with its goals. New-generation employees are aware of how important personal and professional growth is as it is a key to success and self-fulfilment in the constantly changing world. For many, high remuneration is no longer the main incentive, with self-fulfilment coming to the forefront if the Company invests heavily in developing the skills and competencies which will be in demand going forward. This is why we place a strategic emphasis on supporting our people's drive for self-improvement. We seek to create the right environment for them to fully unlock their potential. Organisational unit Key responsibilities THE BOARD OF DIRECTORS Remuneration and Human Resources Committee MANAGEMENT HR and Social Policy Department OPERATIONS Local human resources and social policy departments • Supervision over the introduction and implementation of the Company’s remuneration policies and various incentive programmes; • performance appraisal in respect of executive bodies and key executives, including the assessment of their performance against the targets set forth in the incentive programme; • succession planning for executive bodies and other key executives • Strategic development of HR processes; • development and implementation of process methodology; • optimisation, automation, and digitalisation of HR processes; • functional management of HR services in the regions • Implementation of the Personnel Management Policy; • recruitment for vacant and key positions; • organisation and implementation of initiatives for occupational training and competency building; • development and management of an incentive framework; • social support for the Company’s employees in accordance with the collective bargaining agreement 144 145 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report GRI 2–30 We negotiate collective bargaining agreements with trade unions that address issues such as working conditions and compensation for employees at each of our production sites (usually for a three-year period, covering 100% of the employees of Apatit, its branches and standalone business units). Share of employees covered with collective bargaining agreements, % 2022 2021 2020 100 100 100 100% employees covered with collective bargaining agreements HR management principles The reporting year saw a new version of the UK Modern Slavery Act Transparency Statement approved, which discloses contributions towards the UN SDGs and the Company's social projects to combat violations of human rights. Over the last three years, over 19,000 employees received additional training in human rights and corporate ethics. All relations between PhosAgro and its employees are regulated by the Labour Code of the Russian Federation and comply with the requirement to provide employees with a timely notice of material changes in employment terms, thus respecting human rights. PhosAgro's Personnel Management Policy has the following key areas: • organisational change management system; • personnel attraction and recruitment system; • personnel training • and development system; incentives and rewards system; • social benefits system; • corporate communication system; • working hours and leisure; respect for human rights • and non-discrimination. Non-discrimination policy and human rights PhosAgro is committed to respecting employees' rights as required by the International Bill of Human Rights and the ILO Declaration on Fundamental Principles Our goal is to keep our working environment free from discrimination based on nationality, gender, age, faith or other grounds as required by the applicable laws. and Rights at Work, including zero We consider unacceptable discrimination, not using child or any restriction of employee rights or The Code of Ethics In our operations, we seek forced labour, respecting their right freedoms, whether at workplace or to maintain an impeccable to exercise freedom of association in any other job-related environment. reputation and comply with ethical and collective bargaining, business practices. PhosAgro and creating a safe and favourable Since 2013, we have conducted adopted a Code of Ethics in 2014 working environment for both its annual employee surveys enabling and updated it in 2021. It applies to all own employees and the employees each employee to give feedback employees and is the Company’s of its contractors, which are also on the performance of the Company primary document that clearly expected to comply with such and its management. Throughout defines our corporate culture, requirements and regulations. the history of such surveys, we have rules and regulations for collective PhosAgro Group appreciates or reports of violations of human business and social relationships, and encourages diversity among rights. This clearly indicates that and interactions with other its employees. We provide equal all obligations to PhosAgro’s staff stakeholders. When agreeing not received any negative feedback behaviour within the Company, opportunities for them to unlock are respected and met. their potential and do not tolerate any restriction of a person's or a group's natural rights and freedoms or any conduct violating privacy of our employees. Any decisions regarding promotion, hiring, remuneration, benefits or compensations are based solely on the employee’s qualifications, performance, skills and experience assessed impartially and fairly. We expect our employees to treat their colleagues and everybody else, including customers, suppliers and other stakeholders, with due professionalism, respect and fairness. 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. The Code outlines our common values and underpins our success, helping us avoid unjustified risks, maintain long-term business growth, strengthen our position in the Russian and foreign markets, and increase the Company’s value for shareholders and other stakeholders. 146 147 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report 88employees number of disabled people employed by PhosAgro in 2022 Inclusive environment In 2022, the Group employed 88 employees with disabilities (according to the average headcount). We believe we must exercise an individual approach when hiring people with special needs, and we are aware of our responsibility to create an inclusive environment for them. The Company honours all its obligations related to the employment of the disabled The Company’s key production as required by applicable laws. sites are located in the Murmansk, In addition, we rely on job quotas Vologda, Leningrad, and Saratov in hiring the disabled, support regions. As a major contributor and provide an expert opinion to the local economy and one at Abilympics, a competition of the largest employers in these for the promotion of disabled regions, PhosAgro has a significant people’s professional expertise, positive impact on social take an active part in job fairs development and welfare across its for the disabled, and sign workplace geography. lease agreements with other companies. Going forward we plan to expand our practices of building an inclusive space. In developing our production and creating new jobs, we seek to prioritise local residents when filling our vacancies. > 90% of on-site employees are hired locally. Open communication channels GRI 2–25, 2–26 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 corporate newspapers, information sessions for the staff and management, a corporate portal, a hotline, and official social media accounts of our branches. 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. We keep introducing popular cutting-edge technologies in corporate communications. These include personal accounts for employees, a corporate mobile app with self-service options, and a chatbot, along with new capacities we added to our corporate portal, online training platforms, automated HR management system, and many more. Risks and opportunities The following strategic risks affect 3 Social our HR management objectives: 4 HR For more information, see the Strategic Risks section on page 70 The Company develops corrective measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information 20 Infectious diseases about what we do on this front. Risk areas specific to HR management 2 Compliance with human rights and ethical standards Workforce sufficiency, competence and development Provision of competitive incentives and social support to staff 1 3 148 149 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Recruitment As part of its comprehensive The Company works continuously recruitment approach, PhosAgro to improve its recruitment processes. continuously monitors the labour In 2022, we completed the first market in Russia to attract skilled stage of recruitment automation staff and efficient managers to ensure faster communication with work experience at leading with candidates and customers, national and global companies, while also reducing the time it takes always determined to be one step to fill vacancies and minimising ahead of the curve. the labour inputs along the way. Our recruitment efforts We also set up a recruitment centre are underpinned by a consistent to enhance the process across all our career guidance model, which sites. prioritises engagement with school and university students. If two or more candidates qualify for a job, we are more likely to pick the one who is either: • a young talented professional (a programme for attracting, mentoring and upskilling high- potential university graduates); • an employee included in our talent pool (a programme for those looking to develop professional and managerial competencies for career growth). 2 1 3 PhosAgro Schools The PhosAgro Schools projects focuses on cooperation with schools across our footprint. By creating the right environment at schools, we help guide graduates in their career choices. In 2022, we engaged with six schools across our geography. Collaboration with secondary vocational institutions As part of our collaboration with secondary vocational institutions, we seek to create a pipeline of skilled employees with relevant competencies who are competitive in the labour market, acquainted with allied professions, and have what it takes to pursue career opportunities for their further employment with the Company. Cooperation with universities Cooperation with universities serves to fill the most relevant jobs by attracting and retaining talented graduates. Today, the Company actively collaborates with 24 universities that offer courses relevant to its core activities. 21.5% of women among managers of all levels 16% of women in the Company’s Top 40 Talent Pool 34% of women in the Company’s total headcount Share of women taking part in corporate programmes, % High-Potential Graduates 36 38 2022 2021 Corporate training initiatives 33 2022 30 2021 Gender equality To enhance women’s social security in accordance with the applicable laws, the Company: • 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; • provides women, at their request, with a parental leave until the child reaches the age of three; • 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 facility, as well as that of women having children up to three years of age and single mothers having children up to 18 years of age. Participation of women in internal thematic events • Superfinals of the Young Manager – 2022 competition – 9 men, 3 women. • Superfinals of the Mentor of the Year – 2022 corporate contest – 10 men, 3 women. 150 151 KEY AREASCompany profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report 2022 metrics and highlights GRI 2–7, SASB EM-MM-000.B Breakdown of employees by gender, region, types of employment and employment contracts1, number of employees Region Permanent employees Temporary employees Number of employees (headcount)2 Part-time employees Full-time employees Average headcount1 of PhosAgro Group, people 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 Men Women Murmansk region, total Men Women Vologda region, total Men Women Saratov region, total Men Women Leningrad region, total Men Women Moscow, total Men Women Other, total Men Women Total 5,585 2,107 7,692 3,086 2,404 5,490 1,244 619 1,863 728 480 1,208 218 177 395 570 197 767 11,431 5,984 17,415 5,623 2,161 7,784 3,252 2,516 5,768 1,282 649 1,931 830 540 1,370 209 164 373 571 215 786 6,238 2,321 8,559 3,721 2,755 6,476 1,594 740 2,334 1, 100 637 1,737 194 147 341 557 249 806 478 131 609 70 216 286 30 50 80 43 46 89 4 7 11 8 10 18 11,767 6,245 13,404 6,849 633 460 18,012 20,253 1,093 1 Due to expansion of the disclosure scope, the 2020 and 2021 data for the Vologda region, Leningrad region and other regions was recalculated to ensure the comparability of information. 2 Headcount as at the end of the reporting period. The headcount includes employees with an employment contract. 485 142 627 70 221 291 50 61 111 93 66 159 2 2 4 10 10 20 710 502 1,212 529 168 697 105 234 339 63 85 148 117 72 189 2 3 5 7 7 14 823 569 6,063 2,238 8,301 3,156 2,620 5,776 1,274 669 1,943 772 525 1,297 222 184 406 578 207 785 6,108 2,303 8,411 3,322 2,737 6,059 1,332 710 2,042 923 606 1,529 211 166 377 581 225 806 12,065 6,443 12,477 6,747 1,392 18,508 19,224 6,767 2,489 9,256 3,826 2,989 6,815 1,657 825 2,482 1,217 709 1,926 196 150 346 564 256 820 14,227 7,418 21,645 4 9 13 1 4 5 1 8 9 1 0 1 1 0 1 3 9 12 11 30 41 1 10 11 1 3 4 2 7 9 0 0 0 0 1 1 3 10 13 7 31 38 5 13 18 1 12 13 3 11 14 2 1 3 0 0 0 3 10 13 14 47 61 6,059 2,229 8,288 3,155 2,616 5,771 1,273 661 1,934 771 525 1,296 221 184 405 575 198 773 6,107 2,293 8,400 3,321 2,734 6,055 1,330 703 2,033 923 606 1,529 211 165 376 578 215 793 2022 6,762 2,476 9,238 3,825 2,977 6,802 1,654 814 2,468 1,215 708 1,923 196 150 346 561 246 807 12,054 6,413 18,467 12,470 6,716 19,186 14,213 7,371 21,584 1 Calculated using the period average methodology by adding up headcounts for each calendar day of any given period and dividing the sum of these headcounts by the number of calendar days in the period. 2 The ratio of mineral fertilizers, phosphate rock, nepheline concentrate and syenite alkali aluminium concentrate produced to the average headcount of Apatit, including its branches and standalone business units. 3 Due to expansion of the disclosure scope, the 2020 and 2021 data was recalculated to ensure the comparability of information. For the key personnel turnover indicators by age, gender and region, see page 396. 2022 2021 2020 19,846.1 18,320.9 17,891.0 Productivity2, t per person 2022 2021 2020 1,763 1,874 1,889 The decrease in productivity due to the growth of the Company's headcount as a result of bringing equipment repair and maintenance functions back in-house, with a view to improving the quality and efficiency of the work. Key personnel turnover indicators3, people GRI 401–1 2022 2021 2020 5,747 3,384 4,033 3,285 3,313 2,954 9.8% 11.6% 8.3% Total joiners Total leavers 152 153 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report GRI 405–1 Personnel breakdown, % Age Average headcount, % 2020 2021 2022 Men Women Men Women Men Women EMPLOYEES BY GENDER AND AGE Under 30 years 30–50 years Above 50 years EMPLOYEES BY CATEGORY Blue-collar employees White-collar employees Managers EMPLOYEES BY EDUCATION Higher Basic vocational General Secondary vocational 10.5 45.6 9.1 43.1 11.6 10.5 25.0 0.17 10.4 29.6 5.6 23.7 5.6 14.8 17.1 3.0 20.0 0.04 3.3 11.5 10.1 45.5 9.3 42.3 12.0 10.6 25.3 16.59 10.5 12.5 5.5 23.9 5.7 14.9 17.2 3.0 20.3 5.11 3.6 6.1 10.9 45.5 9.3 42.7 12.6 10.5 25.4 16.66 10.2 13.5 5.5 23.2 5.6 14.5 16.9 2.9 19.7 5.02 3.6 6.0 Annual employee survey and social benefits offered), with 87% of employees appraising For ten years now, the Company has the management’s decisions. been conducting annual Growth Area employee surveys which These results reflect positive serve as a basis for subsequent changes in the Company remedial action plans designed and the effectiveness of corrective to address employee concerns. actions based on the outcomes In 2022, the Company collected of the annual Growth Area surveys. 13,773 completed survey We plan to continue surveying our questionnaires (with the headcount employees on an annual basis going standing at approximately forward, while also arranging pulse 19,800 employees). The employee survey on dedicated subjects more satisfaction and loyalty index frequently. came in at 69% (up 12 p.p. y-o- y). This is a very good result The aggregate satisfaction for a chemical and mining company and loyalty index demonstrated 69% +12 p.p. to 2021 aggregate employee satisfaction and loyalty index with a complex organisational significant growth to reach its structure. The engagement level all time high (since 2013 when Employee satisfaction and loyalty index, % came in at 70% (up 11 p.p. y-o-y the Company’s first started due to the high assessment measuring these metrics). of the Company’s stability 2025 target 2022 2021 2020 65 69 57 63 Training and evaluation PhosAgro’s management seeks to attract highly skilled professionals and young talents, with heavy emphasis placed on providing professional development opportunities, promoting professional growth and encouraging production Training expenses, RUB ‘000 Training expenses per employee, RUB ‘000 2022 2021 2020 271,872 235,216 199,684 2022 2021 2020 21.0 13.6 11.8 initiatives and in-house expertise. and enactment of management initiatives for improving process We offer a wide range of training efficiency. formats for our people, including Our corporate training framework relies on the following principles: in-person training, on-the-job In 2022, we continued to enhance alignment training, internships and online the expertise of professionals education. The COVID-19 responsible for the assessment pandemic came as a challenge of candidates and employees as part from the perspective of ensuring of recruitment and development employee training, development processes. We actively use and assessment continuity, but also psychometric assessment tools as a growth driver. The use of remote by leveraging the potential of new training capabilities became possible automated solutions and services due to the implementation of new introduced in 2021. These tools automated solutions and services are applied in full compliance which facilitate qualitative employee with the regulations on their use assessment, prompt identification approved by the Company. of personnel management risks, In 2022, the number of employees who completed various types of training programmes reached 11.551employees +16.4% to 2021 The average annual number of training hours per employee exceeded 99.8 hours +4.9% to 2021 with the Company’s strategy; assessing and prioritising actual training needs of various staff categories to build appropriate processes; planning, coordination, quality and efficiency audit; introducing the most advanced and efficient training and development methods and tools from an economic and methodological perspective; developing new formats; using an individual approach to young talent; proactively identifying and developing new leaders to succeed current ones. 154 155 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report GRI 404–1 Average annual training, hours per employee Item Average annual training hours per employee BREAKDOWN BY GENDER Women Men BREAKDOWN BY EMPLOYEE CATEGORY Managers White-collar employees Blue-collar employees Additional information on employee training Item Number of employees trained Average annual hours of mandatory training per employee Average annual hours of optional training per employee Total investments in training, RUB '000 Annual training investments per employee, RUB '000 Women Men 2020 2021 2022 Change 2022 to 2021, % 79.5 56.2 84.4 69.44 39.59 92.10 2020 7,276 n/a n/a 199,684 11.8 10.9 12.3 95.1 75.0 96.6 83.18 61.71 103.97 2021 9,926 81.6 13.6 235,216 13.6 12.9 14.0 99.8 86.5 107.1 113.0 85.4 104.0 2022 11,551 85.1 14.7 271,872 21.0 20.4 21.3 4.9 15.4 10.8 35.8 38.3 0.1 Change 2022 to 2021, % 16.4 4.34 8.20 15.6 53.8 57.9 52.1 In 2022, we continued to improve our corporate training programme by rolling out remote educational on occupational health and safety, and repairs of rotating equipment. We also provide our employees and development tools introduced with opportunities for self- during the pandemic, leveraging development by giving them digital technologies and creating access to our corporate electronic mixed training formats. library and online training platform. The Company promotes a remote training system, creates online courses and upgrades technical In 2022, the Company partnered with Eduson, an educational platform, enabling its employees capabilities by introducing computer to complete over 17,000 courses simulators, and implementing VR and more than 2,600 tests. technologies to support the learning process. The remote training system counts over 250 courses, while the VR library offers 12 programmes PhosAgro’s staff can also read and download business, professional and fiction books from Alpina’s online library. Our remote training system counts over 250 courses Our employees completed over 17 thousand Eduson сourses GRI 404–2 The Company seeks to promote motivation and delegation The main objective of training the greatest possible number of powers, conflict settlement, is to prepare the next generation of internal candidates from the talent project management, effective of top-notch managers. pool to PhosAgro’s executive roles. communications, etc.). Our programmes aim to identify We are creating an environment employees who have proved their In 2021, the Company started to use conducive to an active experience efficiency in current positions mentoring as a vehicle for promoting and knowledge sharing and have what it takes to expand participants of the Top 40 Talent by promoting the culture of coaching the scope of responsibilities and move Pool programme. Senior managers and mentorship. In 2022, a number up to executive roles. The Company (mentors) share their experience of Top 40 Talent Pool participants offers a wide range of training and knowledge with the participants took on the role of mentors and development opportunities in an attempt to build a next- themselves to coach middle and line to help such employees achieve these level management culture, while managers from the talent pool. goals. talent pool members get a chance to learn the secrets of successful Both talent pool development The talent pool programmes management from executives. programmes and employee include a variety of training options training initiatives seek to develop for talent pool members helping The Top 40 Talent Pool programme competencies required for progress them to develop managerial offers opportunities to develop against the Company’s goals and professional competencies, managerial competencies, pursue and strategic projects and preventing and to boost personal and business individual training at leading business personnel shortages. In 2023, we skills (analysis and decision-making, schools, and benefit from mentoring will continue our efforts to expand leadership, workflow management, support and personalised assistance. the talent pool. Rules of effective management One of the Company's focus areas in training and development is to improve management culture. In 2022, PhosAgro set up the Rules of Effective Management project to train and support its managers. The purpose of the initiative is to strengthen management culture while also establishing and applying uniform rules for the supervisor-subordinate relationship to make staff interaction more effective. The Rules of Effective Management help the Company's employees in their managerial activities, laying down the fundamental principles of building effective communication between a supervisor and a subordinate, which in turn bolsters employee loyalty and engagement. Status The project was successfully completed in the pilot units (Ammonia-1, Ammonia-2 and Ammonia-3) and will be rolled out across other units of Apatit. In 2022, four management practices were introduced in the pilot units: • Stand-Up/Shift Meeting, • Setting Targets, • Feedback, • Performance Discussion. 156 157 TALENT POOL PROGRAMMESCompany profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report In addition to the earlier developed capabilities, in 2022 the Company unveiled: A tool to create online courses for nine job-specific competencies, including guidelines on developing the teaching package, a template of terms of reference for creating a programme, a template course presentation, didactic materials for teaching in-house developers, and recommendations on incentives for in-house developers; 100% of content required for distance learning theoretical courses on job-specific competencies covering four pilot professions. Virtual teaching package In 2022, we kept rolling out a virtual teaching package and a distance learning system to automate training and development processes. This was needed because of: • transition to remote work; • demand for a specific range of professions; • a large number of employees to be trained in various jobs; • employees’ aspirations for self-learning and keeping their knowledge up to date. The virtual teaching package includes: 1. A matrix of 24 corporate, job-agnostic and job- specific competencies; 2. Teaching packages for 15 corporate and job-agnostic competencies; 3. Ten distance learning courses for corporate and job-agnostic competencies. Target by 2026 is to achieve 100% coverage of most in-demand professions by distance learning theoretical courses Furthermore, during 2022 a personal account developed for the distance learning system was available for pilot running at all sites. The personal account features: • mandatory multi-sectioned courses; • courses to develop additional competencies; • process flowcharts; • student atlases, etc. Lessons learned from the operation of the personal account will be used to automate HR management processes. Going forward, we plan to roll out the project and achieve 100% coverage of the 59 most popular professions by theoretical courses in the distance learning format by 2026. Mentoring The programme’s key objectives are to: Create a system to accumulate and transfer expertise and experience acquired in the Company to help new hires develop their skills 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 In 2022, 13 mentors took part in the Mentor of the Year super final PhosAgro Group is committed communication support to facilitating the successful and methodological assistance onboarding of new employees. to mentors. We have developed In 2022, the Company continued its check lists and guidelines Mentoring programme: new hires for mentors, and post information are overseen by mentors – seasoned about mentors on stands, hold employees who teach professional meetings with them in business skills and provide feedback, support, units, and they are featured and assistance in onboarding. in the corporate media. To organise the mentoring On top of that, PhosAgro process, we identified a pool holds the annual Mentor of mentors (over 1,500 people so of the Year corporate contest far). The selection criteria include set to develop mentoring, qualifications and professional make it more prestigious, experience; perception by the team; raise employee awareness, organisational and training skills; and encourage and recognise and motivation to share experience mentors' personal contribution and knowledge. to the development of new hires. In 2022, 13 mentors from different In the course of the programme, assets of the Company took part we developed and approved in the Mentor of the Year super the mentor’s competence model. final. Potential mentors have their competences assessed and take In the coming year, we part in corporate development will continue to improve programmes to learn more about the mentoring programme personnel development and training to raise the quality of personnel approaches. training, reduce the turnover rate among new employees, To promote the mentoring and boost employee loyalty programme, the Company provides and engagement. 158 159 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report More than 100 graduates of 2022 have been admitted to higher educational institutions, with St Petersburg Mining University enjoying the highest popularity among them (25 students). Since 2015, over 900 graduates of PhosAgro Classes have been enrolled in higher educational institutions, with technical careers gaining more traction among them every year. In September 2022, 125 new students started their 10th grade programme at PhosAgro Classes, marking the tenth admission round since the project launch. For more information on the educational programme, please see the Contributing to Local Communities section on page 234 To assess HR management and make effective decisions in this area, we continuously monitor employee performance metrics and analyse the structure of staff costs, labour productivity, along with the performance of social, training, and other programmes. Percentage of employees receiving regular performance and career development reviews, % GRI 404–3 Category Managers White-collar workers Blue-collar workers Total by gender 2020 2021 2022 Men Women 1.02 0.63 0.37 2.03 0.18 0.61 0.05 0.84 Men 1.49 0.93 2.06 4.48 Women Men Women 0.20 0.66 1.00 1.87 1.63 0.96 5.11 7.70 0.19 0.69 0.76 1.63 Personnel evaluated in 2022, people Volkhov branch Apatit (Cherepovets) Kirovsk branch Balakovo branch 37 4 20 3 51 17 36 12 28 46 31 1 119 5 65 34 421 19 20 3 11 6 160 62 Men Women Men Women Men Women 132 154 663 262 Total 212 24 124 89 663 99 Managers White-collar workers Blue-collar workers PhosAgro Classes PhosAgro Schools We continue to implement the PhosAgro Schools career guidance project. Since 2013, the Company has invested over RUB 800 mln in it, including RUB 600 mln spent on renovations and equipment. In 2022, funding for the project increased 2.5 fold compared to 2021 (reaching more than RUB 260 mln), the funds were used, among other things, to further develop schools in Kirovsk and Apatity (Murmansk region). PhosAgro Schools not only develop educational and research auditoria and labs, but also implement career guidance projects to introduce the Company and its corporate culture to students, teachers, and parents. Since 2019, 83 participants of the PhosAgro Class programme who graduated from dedicated universities have been hired by PhosAgro units, including 30 in 2022, to take engineering positions. Some 34 graduates of PhosAgro Classes are expected to be employed by the Company in 2023, with over 100 more by 2025. 160 161 INVESTING IN PHOSAGRO GROUP'S FUTURE TALENTPERSONNEL ASSESSMENTCompany profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report In 2022, 75 students were admitted to the Cherepovets College of Chemistry and Technology Collaboration with technical colleges Our collaboration with technical colleges covers: PhosAgro has been implementing a school–college/university–facility career guidance model to train highly skilled workers since 2013. The Company has been consistently partnering with technical colleges across its footprint, including: • setting up testing grounds and labs for students to acquire hands-on experience using real equipment; running internship programmes at PhosAgro’s facilities with mentors; • • Kirovsk branch of Murmansk Arctic State University (Murmansk region); • Cherepovets College of Chemistry and Technology. In 2022, around 200 students were trained for and received some of the key blue-collar jobs at the Company. • supporting undergraduate and graduate thesis research; • organising and engaging students in sports, educational, and research initiatives, competitions, Olympiads. PhosAgro also supports a 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 2022, the college also took part in Professionalism, a federal project set to “reload” vocational education. PhosAgro is providing financial support for an internship-focused training programme for the professions: Inorganic Production Operator and Installation, Maintenance, and Operation of Industrial Equipment. In 2022, as part of cooperation with PhosAgro under a federal programme, the Cherepovets College of Chemistry and Technology was the only educational institution of the chemical industry cluster to make it the Top 10 clusters of the Professionalism project, demonstrating a high level of performance. Collaboration with universities As part of the school–college/ university–facility educational model, the Company has built a system of cooperation with universities to provide high- quality and affordable education and support 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); • offers scholarships to the most • talented students (based on exam results); invites university students to take a tour of one of the Company's facilities; • offers students a job in one of the Company’s popular specialisations after they graduate; • allocates money for repair and equipment of chemistry laboratories at dedicated universities. We have cooperation agreements and roadmaps with many universities. High-Potential Graduates For the recent 10 years, the Company has been running the High-Potential Graduates programme based on its cooperation with universities. The initiative fosters contact with graduates wishing to work at PhosAgro. The High-Potential Graduates corporate programme offers a competitive salary, as well as relocation and housing support. Each new hire is supervised by an experienced mentor. Number of people recruited to the High-Potential Graduates programme 2022 2021 2020 80 80 71 In 2022, 80 young professionals were recruited by the Group's entities. This brings the total number of graduates who have joined the Company since the launch of the university engagement programme to 554 people. ~ 400 of these employees are still with PhosAgro today, pursuing careers in such areas as mineralogy, geology, hydraulic engineering, chemistry, thermal energy and electricity generation, rail transport, open- pit and underground mining, and mine surveying. Of the programme participants still employed at PhosAgro as at December 2022, > 37% had received promotions and had been included in our talent pool, and many of them had successfully completed the projects assigned to them upon recruitment. In 2023, we plan to “reload” and transform the High- Potential Graduates programme into a corporate PhosAgro-START programme. The programme’s main objectives will be to build a talent pool for key positions within the Company and to identify career paths for young talented professionals to prepare future executives and set up a pool of internal experts. 162 163 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Incentives and rewards Our robust system of rewards Due to the nature of our operations, Our regulations on labour relations, is aligned with the Company’s there are generally more male remuneration and social benefits performance and motivates employees than female ones. cover all employees and underpin all employees to improve their At PhosAgro, we believe that the principle of equitable performance in order to achieve professionalism, sustainably strong remuneration and rewards. our business goals. The purpose performance and adherence We comply with the principle of the incentives and rewards to corporate values are prerequisites by implementing a remuneration system is to incentivise staff in order for and the only guarantee of career framework that offers equal pay to increase productivity and deliver growth. strong operating results, as well as to retain qualified talent. to employees in equivalent positions, regardless of their gender. GRI 405–2 Correlation of the standard entry-level wage and remuneration of women and men Region Vologda region Saratov region Leningrad region Moscow Murmansk region Other Total: GRI 202–1 Difference in remuneration of men and women 2020 1.56 1.43 1.58 3.90 1.52 0.91 1.62 2021 1.59 1.41 1.69 3.54 1.52 0.86 1.61 2022 1.64 1.49 1.70 4.90 1.54 0.89 1.71 Ratios of standard entry-level wage by gender compared to local minimum wage1 Region 2020 2021 2022 Vologda region Leningrad region Murmansk region Saratov region Moscow Men Women Men Women Men Women 1.00 1.28 1.00 1.00 3.32 1.16 1.35 1.00 1.00 1.53 1.18 1.33 1.00 1.06 2.30 1.18 1.17 1.00 1.04 1.32 1.21 1.20 1.00 1.02 1.98 1.21 1.24 1.00 1.05 1.30 1 Significant regions of operation are those with the Company's main production facilities, maximum headcount, and governance structures. Our system ensures: Implementation of incentive programmes using a transparent system of KPIs to calculate managerial rewards Decent pay Implementation of incentive programmes to motivate blue-collar employees to deliver against their targets Availability of financial and non- financial rewards Availability of benefits for certain employee categories Adherence to global best practices on benefit packages Employee coverage by social programmes 164 165 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report GRI 202–2 Proportion of senior management1 hired from the local community2 in significant regions of operations, % Average 61 61 62 47 22 92 80 36 48 22 92 63 44 52 25 91 64 40 2022 2021 2020 Vologda region Leningrad region Moscow Murmansk region Saratov region • In 2022, we implemented major projects worth over RUB 300 mln to improve working conditions at our facilities Social benefits and employee guarantees GRI 401–2 We provide comprehensive social support to our employees, and every year we increase funding for voluntary health insurance, financial assistance and corporate housing programmes. Collective Bargaining Agreements provide for a range of relevant benefits as part of the government programme to support families, mothers, and children. Recreational summer health resorts and specialised excursions are organised for employees' children on an annual basis. All children of employees between the ages of 0 and 14 receive New Year presents. PhosAgro provides employees with vouchers to local and southern health resorts and corporate health resorts. Employees and their family members, as well as veterans, have access to corporate health resorts at a reduced price. In the reporting period, wages Average monthly pay, RUB and salaries grew for all categories of staff as a result of the 3–4% wage indexation on 1 September 2021 and 12% wage indexation on 1 February 2022, along with targeted pay reviews and incentive programmes. 2022 2021 2020 2019 132,110 111,288 92,442 83,770 Wage indexation on 1 February 2022 12% A range of social support measures Employees can also seek In 2022, we implemented major and leisure activities are available psychological, financial, and legal projects worth over RUB 300 mln to the Company’s veterans, assistance and receive advice to improve working conditions and a corporate retirement plan on an active lifestyle, including at our facilities. For example, repairs is in place. the use of telemedicine. Healthy were carried out on lounge, shower eating programmes are being and meeting rooms, staircases, introduced and a nutritionist and corridors in administrative is available to employees. and production facilities. 1 Senior management include managers at level N, N-1, N-2 (CEO, heads of functions, director for production, chief engineer 2 of a company (branch), director of a subsidiary and affiliate, adviser to the CEO). The governance levels of managerial positions are determined by an order. In accordance with the generally accepted concept, which describes a person or a group of persons living in a certain territory regardless of ethnic and cultural composition, local community means employees whose region (area) of registration is the same as the region of the facility's location. Social investment, RUB mln Programme Financial aid to employees Recreation, rehabilitation, health resort treatment, and VHI programme 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) 2020 2021 2022 Change 2022 to 2021,% 48.26 225.93 85.599 67.51 84.64 72.34 151.94 64.7 359.52 302.12 76.46 227.71 134.22 188.55 66.3 506.21 390.128 88.47 227.14 186.44 233.13 2.5 40.8 29.1 15.7 –0.3 38.9 23.6 25.5 166 167 Total 736.22 1,353.28 1,697.82 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Industrial safety AREA, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 WORK-RELATED INJURIES Target 3.4 Target 8.8 • • • fostering a safety culture and adhering to the highest occupational health and safety standards reducing workplace injuries by 10% annually zero fatalities, and reducing the number of incidents by 10% annually TRANSPORT SAFETY Target 3.4 • reducing risks of traffic accidents OCCUPATIONAL DISEASES Target 3.4 • paying special attention to disease prevention and health improvement among the employees of all production sites; • providing employees with access to high-quality affordable healthcare EMPLOYEE TRAINING Target 4.4 Target 8.8 improving safety competencies • • keeping employees motivated to stay safe and protect others Total injuries down 51% – from 41 to 20 Severe injuries down 67% – from 3 to 1 – from 37 to 18 Minor injuries down 51% 0 incidents 0 fires 0 accidents 0 traffic accidents with injuries or major damage 0 fatalities caused by occupational diseases Occupational disease record down 50% from 30 to 15 10.8 thousand Company employees passed health and safety training and knowledge checks, including an ad-hoc one around 80% of the total headcount1 1 Apatit, including its branches and standalone business units. 168 169 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Strategy Management approach All employees of PhosAgro to implement our Health and Safety practices. We apply continuous Group and its contractors need Strategy, which defines key focus efforts to identify and reduce health to go back from work to their areas and target initiatives to reduce and safety threats to PhosAgro loved ones in perfect health. This the risks associated with various Group employees, contractors is the underlying principle of all operations. and visitors to the Company’s sites. our efforts to ensure safe, healthy and comfortable workplace PhosAgro Group is consistently The Company’s relevant goals conditions. improving its safety culture, and objectives, both strategic employee responsibility and day-to-day, are based on huge Our Strategy to 2025 focuses and awareness, hazard identification volumes of data derived from on fostering a safety culture procedures and danger prevention internal and external audits, GRI 403-1, 3-3 Health and safety management system We pay special attention to making our health and safety system compliant with applicable laws and the highest international standards. To this end, we have introduced a multi-tier health and safety management system involving managers of all levels. Organisational unit Key responsibilities BOARD OF DIRECTORS Strategy and Sustainable Development Committee MANAGEMENT • Sets strategic priorities and develops relevant policy • Reviews executive management's health and safety reporting Executive bodies • Define and oversee the health and safety policy • Review all on-site incidents involving people and machinery on a weekly basis and adhering to the highest measures by putting managers inspections, incident investigations, In 2008, the Company introduced OHS Department • Supervises OHS management functions across occupational health and safety at all levels in charge and studying employee recommendations standards. In 2022, we continued and applying best health and safety and feedback. an integrated health and safety management system in line with BS OHSAS 18001. In 2021, Apatit’s Cherepovets site was certified and in 2022 successfully audited for compliance with ISO 45001:2018. the Group’s companies to implement OHS policies and strategies • Collects data and prepares OHS reports for the Strategy and Sustainable Development Committee • Cooperates with external consultants to implement the best practices of OHS management • Conducts audits and inspections at the Company’s sites • Oversee OHS policies and strategies at respective production sites • Develop and implement effective response measures following internal and external audits and accident investigations • Draft and improve, as part of the committees' activity, programmes to join efforts of the employer, employees and trade unions in ensuring health and safety OPERATIONS Heads of production sites Local OHS Committees 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 170 171 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report GRI 403-3 GRI 403-4 Occupational health functions play For better OHS communication a key role in ensuring safety at our with employees, we have adopted Local health and safety committees facilities. the Regulations on the OHS progress. The latter can also address As part of these workstreams health their questions and proposals and safety committees consider directly to the management the following topics: and the health and safety function. • “Golden Rules” of OHS; Meeting agendas comprise nine workstreams Communication System. Pursuant Since 2014, health and safety All resolutions are documented • Safety Culture Transformation Accident/incident Their main objectives are: to the Regulations, the OHS committees have been functioning in minutes of the meetings. In 2022, Project; investigation • taking steps to ensure workers’ communication system is divided at the Group’s companies. They compliance with health and safety into internal and external are both an integral part of our OHS health and safety committees held 35 meetings and adopted • OHS leadership; • OHS motivation; Occupational health requirements; communications, and provides management system and a form 560 resolutions. • effective OHS communications; • monitoring workers’ compliance for a feedback procedure: of employee participation in it. Workers are represented • contractors' safety; Industrial safety with OHS laws and regulations, • regular OHS meetings at business In their work, these committees at committee meetings by heads • PPE effectiveness; the Collective Bargaining units and enterprises; rely on the principles of social or representatives of local unions. • trade union report. Road traffic safety Agreement, OHS agreement • OHS meetings at production sites, partnership. As part of their activities, and other internal regulations; departments and facilities; health and safety committees draft • preventing workplace injuries, • union and union committee and improve programmes to join occupational diseases and work- meetings (for feedback from efforts of the employer, employees related illnesses and improving OHS officers); and trade unions in ensuring health workplace conditions; • corporate e-mail; and safety. • advising workers on, and raising • corporate periodicals; In 2022, we revised our regulations their awareness about, • local health and safety on health and safety committees, occupational health and safety; committees; with meetings to be held • studying and disseminating best • employee loyalty surveys; on a monthly basis according OHS practices and promoting • OHS questionnaires. to the new version. At meetings, occupational health. Internal OHS communication information exchange and reporting Apart from applicable laws, these is achieved through: are multilateral, as both health activities are regulated by: • health and safety SOPs • local health and safety and safety functions and local unit committees; heads report on health and safety at the facility (shop) level; • management meetings • production SOPs; and conferences to discuss • worker health and safety the health and safety performance instructions; • corporate standards; • process regulations; of our enterprises; regular OHS meetings in departments, on production sites • accident management action and at facilities; plans, etc. • health and safety bulletin boards, posters and other visuals; • corporate television (screens), intranet site, e-mail; • corporate periodicals; • education by OHS officers (including one-on-one meetings, training, mentoring, supervision, etc.). 35 held in 2022 health and safety committee meetings 560 resolutions adopted Safety assessments and audits Developmentof health and safety management Safety projects (programmes, initiatives) Education and training Fire safety 172 173 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Improving contractor safety practices Measures to ensure safety of contractors’ employees was due to due to an increase time limits, and gaps that can The following strategic risks affect measures as necessary and unlocks Risks and opportunities GRI 403-2 The Group develops corrective OHS-specific risks are: in the number of audits conducted be eliminated at no additional cost our OHS objectives: temporarily working at our as part of the continuous state are addressed immediately. production and other facilities supervision of hazardous production are an integral component of our facilities of hazard class 1, with Apatit The Company has a procedure OHS strategy. They include having 17 such facilities. for drafting, submitting the selection of contractors based and reviewing reports on internal on a health and safety qualification We also run internal audits and external OHS audits. assessment, briefings, and training conducted by our OHS departments The results of all internal to contractor employees, along and directorate, managers and external assessments with relevant compliance audits. and employees exercising production and audits are recorded ESG assessment is a major factor H&S control. in the Safety and Instructions (Shift Assignments) management in contractor selection. After external and internal audits, systems for further analysis, gap 4 HR risk; 6 health and safety risk; 20 infectious disease risk. For more information, see the Strategic Risks section on page 70 For more information, see the Supply Chain section on page 130 Internal and external industrial safety audits In line with statutory requirements, PhosAgro Group is subject to scheduled external audits by Russian 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), the Ministry for Civil Defence, Emergencies and Elimination of Consequences of Natural Disasters (EMERCOM), etc. We may also engage consulting companies, or international associations of which the Group is a member to conduct additional external audits of compliance with international standards, or as part of a special assessment of workplace conditions. In 2022, state supervisory authorities carried out 189 audits at Apatit and its managed companies. The higher number of audits (up from 132 in 2021) the Company issues orders identification and elimination and instructions outlining remedial monitoring. We also submit all action plans and establishing relevant reports to state supervisory the deadlines and responsible bodies and statistical agencies persons. Identified breaches in accordance with the Russian are remedied within the agreed laws. 189 safety audits conducted by state supervisory authorities at Apatit in 2022 opportunities to mitigate those risks. Below you can find more information about what we do on this front. Occupational risks of the Group’s business units, including occupational disease risks 1 2 Safety culture risks, including OHS communications and safety incentives Risks of OHS-related regulatory changes 3 174 175 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report SASB RT-CH-320a.2 and Instructions (Shift Assignments) The Company has a formal We are constantly working to assess management systems. Both systems procedure for addressing workplace and mitigate risks. We perform risk include a Risk Management module. hazards. When a hazard is identified, assessment and identify material The module enables internal check employees are required to suspend risks using our dedicated proprietary list-based OHS assessment at all work and report it to their supervisors methodology. Following hazard units of Apatit. The module’s new directly or via the Public Scrutiny identification and risk assessment, underlying principles help enhance mobile app (on an anonymous the unit’s OHS officer compiles a List production H&S control, while basis if necessary). The supervisor of Occupational Risks, which is then its new functions facilitate operation, uses the report to assess the risk used as a basis for the Company’s monitoring and analysis. and develop a remedial action plan. List of Material Occupational Risks. 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 worker health and life. For better OHS efficiency, and to automate and streamline the relevant processes, we have introduced and now use the Safety Risk assessment takes into account the following aspects: degree of personnel exposure; impact on personnel; frequency of occurrence; compliance with the applicable regulatory and other OHS requirements. 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 as defined by the Russian laws developed; training sessions and drills held in 2022: test alerts – 125 • • fire training sessions – 666 • evacuation drills – 96 • oil spill drills – 48 joint fire drills • with EMERCOM – 2 Apatit’s programme for developing gas and mine rescue, fire-fighting and prevention activities for 2019–2022 completed; a targeted programme for upgrading Apatit’s fire safety systems in 2023–2025 developed. 176 177 in November 2022 OHS remote monitoring system was introduced Case study Roll-out of the OHS remote monitoring system at the Cherepovets site of Apatit Starting from 2021, Apatit’s Cherepovets site (fluosilicate acid storage facility of the aluminium fluoride shop) participates in Rostechnadzor’s experiment to roll out an OHS remote monitoring system under Russian Government Decree No. 2415 On Experimental Roll-out of the Industrial Safety Remote Monitoring System dated 31 December 2020. The experiment provides for the development of stand- alone remote monitoring technology for hazardous production facilities, and a relevant legal framework. As assumed, the technology will improve the overall reliability and monitoring efficiency of safety systems, and help reduce the associated paperwork and bureaucracy. The pilot operation of the OHS remote monitoring system began in November 2022, with the process of data transmission to the Automated Information System of Rostekhnadzor currently being configured. Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Key results in 2022 The significant increase in OHS The initiatives implemented and skills of PhosAgro employees Work-related injuries resulting from falls and contact • reviewing the structure GRI 403-9, SASB RT-CH-320a.1, RT-CH-540a.1 with moving and rotating objects and functions of occupational and equipment. The main causes health, industrial safety and fire expenses is attributable to the rise by the OHS Department responsible for operating all types In 2022, the Company continued of work-related injuries in 2022 safety services with a focus in prices for personal protective and transport departments of transport, and introducing various to perfect its health and safety were poor work organisation, on enhancing control equipment on the Russian to mitigate traffic accident technical solutions to mitigate risks management system and made violations of labour and industrial and preventive work; market, as well as the expansion risks includes drafting internal of traffic accidents. Examples of such significant progress in improving discipline, and personal negligence • selecting and appointing highly of OHS training programmes regulations to ensure safe operation solutions in 2022 include optical workplace safety. The total number of the injured parties. for employees and changes of motor vehicles, self-propelled projections of pedestrian crossings of work-related injuries, both minor qualified leaders to key positions in occupational health, industrial in the approach to organising such machines and rail transport, implemented at the Volkhov and major, significantly reduced The Company plans to continue safety and fire safety services; training as a result of the growing performing targeted and full- branch and visualisation systems across the Company's facilities implementing its safety • developing and implementing number of training programmes scope inspections of vehicles used for dangerous zones installed on self- in 2022, with 20 injuries reported improvement strategy by leveraging a system of incentives motivating due to the adoption of Russian by our contractors, subsidiaries, propelled machines at the Kirovsk compared to 41 in 2021. Of these new safety tools and modern all categories of employees Government Resolution No. 2464 enhancing the competencies branch. On the Procedure for OHS Training and Checking the Knowledge of OHS Requirements dated 24 December OHS expenses, RUB mln 2021. Transport safety SASB RT-CH-540a.2 From 2020 to 2022, PhosAgro Group was able to reduce the total number of traffic accidents by 71% from 45 accidents in 2020 to 13 accidents in 2022 2022 2021 2020 Apatit Kirovsk branch Balakovo branch Volkhov branch Traffic accidents at Apatit and its branches Total 13 37 45 10 3 19 18 29 16 Total 4,977 3,841 3,029 1,545 2,002 983 447 1,397 1,770 471 203 884 1,593 402 150 2022 2021 2020 Road Rail injuries, five occurred to contractor comprehensive solutions for safe working practices; employees, eight to PhosAgro’s and approaches that have already • developing and updating own staff and seven to employees proven effective, including: e-courses to educate employees of subsidiaries and affiliates • senior management’s leadership in corporate health and safety (compared to 16, 17 and 8 in 2021, and commitment to health requirements; respectively). We were deeply and safety; • integrating corporate health saddened by the fatality involving • allocating sufficient funding and safety requirements our employee which occurred to ensure occupational, industrial into the work of contractors; at the production site of Apatit’s and fire safety; • digitalising data management Kirovsk branch in December 2022. • knowing and applying processes to support high- The investigation has been international and domestic best quality analysis and effective completed. We have thoroughly practices; management decision-making. analysed the circumstances • improving the internal incident of the fatality and communicated investigation process to identify conclusions and recommendations and eliminate root causes; on preventive measures, • implementing project solutions including a range of technical and targeted programmes and organisational steps, to improve workplace safety; to the management and employees • providing employees of the facility. This tragedy clearly with modern and effective shows the importance of further personal and collective protective improving safety practices. equipment; Most of the injuries reported in 2022 • involving blue-collar workers (OHS were related to chemical burns officers) in directly managing incurred while handling hazardous health and safety in their business substances, as well as fractures units; 178 179 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report LTIFR1, per 1 mln of hours worked Work-related injuries over the past three years Item Employees, including Apatit Kirovsk branch of Apatit Balakovo branch of Apatit Volkhov branch of Apatit Employees + staff of external contractors (including subsidiaries, affiliates and managed companies) Fatalities as a result of work-related injury, per 1 mln of hours worked Item Employees Staff of external contractors (including subsidiaries, affiliates and managed companies) Severe injuries (excluding fatalities), per 1 mln of hours worked Item Employees Staff of external contractors (including subsidiaries, affiliates and managed companies) Work-related injuries2, per 1 mln of hours worked Item Employees Staff of external contractors (including subsidiaries, affiliates and managed companies) 2020 0.52 0.42 0.47 0.48 1.37 0.69 2020 0 0.08 2020 0.21 0.33 2020 0.52 0.90 2021 0.85 0.40 1.18 0.00 2.28 0.81 2021 0 0.03 2021 0.05 0.07 2021 0.85 0.82 2022 0.32 0.12 0.22 0.80 0.88 0.38 2022 0.05 0 2022 0 0.04 2022 0.36 0.44 Number of hours worked by the Company’s employees and staff of external contractors Item Employees Staff of external contractors (including subsidiaries, affiliates and managed companies) 2020 2021 2022 19,091,953.05 19,893,115.33 22,196,069.58 24,359,432.13 29,207,298.96 27,194,133.46 1 Lost time injury frequency rate, excluding fatalities. 2 Including fatalities. Branches Minor injuries Severe injuries Fatal injuries Total Apatit (Vologda region) Balakovo branch Volkhov branch Kirovsk branch Subsidiaries and affiliates External contractors 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 2 – 2 2 7 5 3 – 4 9 7 14 1 2 2 2 6 5 1 1 – 2 6 2 – – – 1 1 1 – – – – 1 – – – – – – 2 – – – – – 1 – – – 1 – – 3 1 2 4 13 9 3 – 4 10 8 16 1 2 2 3 7 5 Worker training on occupational health and safety GRI 403-5 Our e-courses are easy to understand • implementation of the railway since they are made in the form transport safety management of illustrated slides with key system at Apatit and its branches. highlights on them. In particular, In 2022, 10,800 employees of the Company1 (around 80% of the total headcount) passed health we offer an e-course on corporate Whenever required, the courses OHS standards. It is followed developed earlier are updated by tests to check the knowledge following changes in the law and understanding of the standards and the Company’s internal and safety training and knowledge and requirements. regulations. checks, including an ad-hoc one (vs 7,800 employees in 2021). In 2022, we developed and rolled In 2022, we updated the following out four e-courses on the key e-courses: PhosAgro keeps working to improve occupational health and safety • Occupational Health and Safety OHS competencies and knowledge regulations: Golden Rules; of its staff. Employees • procedure for occupational safety • working at heights; of the Company undergo online audits using check lists; • contractor safety requirements; and in-person training arranged • course in the Safety • investigation and communication at our PhosAgro Education Centre. and Instructions (Shift of occupational health and safety Assignments) management accidents/incidents; systems for beginners; • management of contractors’ • procedure for operations organisational and technical in a confined space; documents. 10.8 thousand employees underwent health and safety training and knowledge check 1 Apatit, including its branches and standalone business units. 180 181 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report In 2022, 7,200 employees All our employees, from managers of the Company (54% of the total to blue-collar staff, receive headcount) completed 13 e-courses occupational health and safety in occupational safety. briefing and training as required by the Russian laws. Furthermore, Apart from that, PhosAgro Education the employees of the Company Centre organises OHS training, and some contractors are offered including that in basic fire safety a number of additional courses. and electrical safety, industrial safety pre-certification sessions, and drills To improve OHS training and remind in the Vysota training centre. employees about workplace safety, PhosAgro Education Centre creates animated videos. 100% of employees covered by the health and safety management system in 2022 7.2 thousand employees completed 13 e-courses in occupational safety GRI 403-8, 403-1 In 2022, our health and safety management system covered 100% of the Company’s employees. All our employees (executives together with blue- and white- collar staff) take OHS training as required by the national laws, as well as additional training. The minimum required training is provided to each and everyone, including all visitors and contractors as part of the introductory briefing. Raising awareness about OHS To keep our employees well- In 2022, check lists were developed for the following topics: • Rules for Working in Winter / Safe Driving and Walking in Winter; • Safe Use of Stairs / Flights of Stairs; • Golden Rules; • Correct Use of PPE; • OHS Motivation; • Learn the Occupational Safety Rules; • Disease Prevention; • Control of Briefings for Each Shift; • Safe Earthworks; • Occupational Safety at Low Temperatures, etc. in 2022 an illustrated Incident Almanac was developed In 2022, in order to draw attention things. In particular, the Company of the Company's employees established the following KPIs to incidents, an illustrated Incident with regard to OHS: Almanac was developed. This • LTIFR covering all staff categories, is a printed handbook describing including contractors; all incidents in 2021 shown • zero fatalities among all employee as animations. This format clearly categories, including contractors; In 2021, pilot business units of Apatit illustrates the circumstances • timely implementation of action launched briefings for each shift. of incidents, draws attention to their items from improvement notices This initiative was rolled out at all causes and actions to prevent similar issued by supervisory authorities; business units in 2022. incidents in future. • industrial safety indicator; • zero industrial accidents. The key objectives of such briefings are: • revising industrial dangers/ hazards, OHS requirements (as set Changes to labour safety promotion programmes The Company has developed OHS promotion programmes to maintain each PhosAgro employee’s interest out in the Company’s internal Senior executives (CEOs in ensuring their own safety informed about our safety measures, regulations, OHS guidelines, of the Company and its business and the safety of those around PhosAgro constantly develops and updates OHS check lists, presentations and other visual materials that emphasise the crucial information employees must rely on in various situations, including working on particular assignments, in order to stay safe. Raising awareness about occupational health and safety, each month the Company issues check lists on the month’s topic. technical and operational units, as well as their direct them, as well as to encourage documents), and safe work subordinates) recognise the employees to take initiative practices; the importance of OHS and implement OHS improvements. • fostering leadership skills among and are committed to safety mid-level managers; and ready to take necessary In 2022, we revised the employee • developing managers’ managerial decisions. Since 2014, labour safety promotion regulations, communication skills. PhosAgro has had a system of KPIs including the addition of a new that uses uniform standards incentive programme, Best Public linking the size of management Scrutiny User, which provides remuneration to the efficiency for quarterly cash bonuses of OHS measures, among other to employees who show initiative. 1 Apatit, including its branches and standalone business units. 182 183 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Best OHS Employe Safety Ideas CEO's OHS Achievement Award Best OHS Business Unit RUB 15,000 RUB 10,000 RUB 5,000 RUB 30,000 RUB 5,000 for every idea implemented RUB 125,000 RUB 50,000 for teams participating in the super final RUB 100,000 Once a quarter Once a quarter Once a year Once a year Employee labour safety promotion regulations Best Public Scrutiny User RUB 15,000 Once a quarter A new programme since 2022 aimed at: • engaging employees in the Public Scrutiny system (InSight mobile app); • showing leadership and commitment to occupational safety among employees of Apatit and its branches by “submitting improvement ideas” or “reporting hazardous situations”. 15,000 ₽ The employee incentive system receives more financing and is improved on an annual basis, RUB 2022 2021 2020 2,339,090 2,063,218 445,000 Apart from that, the existing promotion programme includes: individual incentive programmes : • Best OHS Employee • Safety Ideas • Best Public Scrutiny User collective incentive programmes : • CEO’s OHS Achievement Award • Best OHS Business Unit GRI 403-10 Number of employees diagnosed with occupational diseases Branches Apatit Kirovsk branch of Apatit Volkhov branch of Apatit Balakovo branch of Apatit Total 2020 2021 2022 0 23 0 0 23 4 26 0 0 30 1 14 0 0 15 In 2020–2022, there were no fatalities caused by occupational diseases. Promotion of worker health GRI 403-6, 403-7, GRI 403-10 contests is the Russian Organisation of High Social Efficiency. The participation of PhosAgro’s PhosAgro places a strong facilities starts at the regional emphasis on disease prevention, health improvement, and high- quality affordable healthcare and prevention for the employees of all its production sites. stage with submissions made in the category For Promoting a Healthy Lifestyle at Industrial Organisations. The benefits include: health resort (rehabilitation) treatment at corporate resort centres in our regions of operation and countrywide; In 2022, the Company continued services of outpatient The Company takes part in the Health 360 programme run by the Russian Chemists Union introducing employee support programmes (mental health support, online advice clinics and health posts (including those available 24/7) at the Company’s to promote annual health self- for personal circumstances, etc.) production sites, operated assessments based on a dedicated and programmes to promote health by corporate medical questionnaire. and well-being (telemedicine, centres and private healthy diets, emotional unwinding, and state-run healthcare In addition, PhosAgro is a frequent etc.). participant in contests aimed facilities; at promoting and shaping best All employees who have signed treatment (expensive, practices for safe operations an employment contract dental, medical and healthy lifestyles. One of such with the Company benefit from counselling) at healthcare long-term voluntary health insurance (VHI) covering a broad range of risks. facilities in our regions of operation and countrywide. 184 185 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report and examinations of staff involved employee’s emotional stress, kicked based on employee surveys, PhosAgro’s facilities have corporate levels of competitions, including in potentially hazardous and/ off in 2021 at the Balakovo branch. review of complaints, and canteen fitness centres, which include game Russian national. In 2021, PhosAgro started a pilot project to use a traffic light labelling system for foods as a way to promote healthy dieting among employees. Also since 2021, we have been providing and broadcasting cooking workshops. As part of preventive care and health promotion efforts for PhosAgro's employees and veterans in 2022, the Company purchased 2,670 vouchers for them to go to health resort facilities. In 2022, employees and their families received 947 free vouchers under the Wellness programme, with partial coverage of travel expenses 2,670 vouchers to health resorts purchased by the Company in 2022 for employees and veterans of the Employee Mental Health Support programme, the Company offers meetings in persons, online interviews, and comprehensive events such as webinars and training sessions to reduce conflicts in teams, improve their psychological resilience, and increase performance levels. Starting from 2022, psychological support is provided by in-house psychologists to employees of Apatit, its branches facility, the fitness centre is attended and subsidiaries. by an average of 3,000 people per month; on days of mass To promote traditional classes, attendance has reached spiritual values, improve social up to 250 visits per day since 2019 and psychological climate (excluding periods when COVID-19 to and from the recreation facility. cases were on the rise). Employees of the Company and their family members as well as veterans have year-round access to corporate health resorts at a An annual sports contest (Spartakiad) is held for employees in 18 types of sports. Teams in the team, and enhance emotional well-being, the Company does a lot to help build and reconstruct Orthodox churches. Those employees whose children reduced price. in football, volleyball and other sports are involved in the DROZD project represent the Company in various halls, gyms and swimming pools and are available to employees on a daily basis. Pools offer classes in water aerobics and swimming lessons, both very popular among Since 2020, the Cherepovets facility provides free psychological support to employees, with in-house psychologists available to them employees. At the Cherepovets for counselling and advice. As part tests. (Educated and Healthy Children of Russia) annually take part in several joint training sessions and sports contests held among families. At the DROZD sports facilities, our employees can work out and get ready for GTO (Ready for Labour and Defence) fitness RUB 2.2 bln allocated towards the programme to improve social and working conditions Health insurance contracts are signed annually as part of long- term cooperation with the SOGAZ insurance company. On-site clinics can provide accident and emergency care and specialist advice from a therapist, endocrinologist, neurologist, ophthalmologist, dentist and other doctors. PhosAgro also has mobile medical teams and organises screening sessions for its employees. The Company's facilities take part in federal level prevention campaigns, such as a high-profile all-Russian campaign called Cancer Watch: as part of it, 16 doctors of the National Medical Research Radiological Centre examined over 300 employees of PhosAgro’s Cherepovets facility. PhosAgro’s production sites organise initial and regular check-ups Psychological Relief Room, another project aimed at reducing and advice to employees, and all meals are assessed each quarter or dangerous activities. Going forward, the project will attendance levels. Employees can Since 2010, the Company has been running a programme to improve social and working conditions by conducting annual scheduled repairs in all buildings housing social be extended to other facilities. comment on the quality of meals in a real-time mode by completing Starting from 2022, employees of all a survey available in corporate PhosAgro facilities have access to Telemed, a telemedicine service offered by SOGAZ. Furthermore, canteens via a QR code. On top of that, we have a dedicated working group that attends all and sanitary facilities, canteens, Apatit's Balakovo branch continues of Apatit’s sites to assess food and workplaces. In 2010–2022, PhosAgro invested over RUB 2.2 bln in the programme. piloting the Doctor Nearby project run by DOCTIS, and collaboration is ongoing between Apatit and its quality and canteen conditions. As part of healthcare initiatives, staff canteens provide nutrition according branches with the DobroService to Diet No. 10 targeting patients platform offering online counselling with cardiovascular diseases. In 2022, the Company made further progress on its Occupational Health and Preventive Healthcare Programme by focusing on making workplaces more comfortable and putting in place break rooms. on critical issues. In 2022, the Company introduced changes to its menu of dietary and health meals provided As regards workplace comfort, to employees working in harmful standard terms of reference conditions. Quality of the meals were developed for the purchase is subject to regular control of chairs for structural units, in cooperation with the trade union. and a list of best models was compiled following their tests Every day, canteens at the Company's at structural units and polls at Apatit facilities serve up to 600 people. and its branches. The Company has a nutritionist on site to provide information Every day, canteens at the Company's facilities serve up to 600 people 186 187 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Target programme Programme results: As part of the programme: • improved training facilities and equipment of gas/mine rescue and fire-fighting units; • enhanced quality of hands-on training for young hires; • achieved compliance with gas, • mine, fire rescue, and personnel training regulations; re-equipped gas/mine rescue and fire-fighting units, new equipment and machinery purchased. Apatit's target programme for developing gas and mine rescue, fire-fighting and prevention activities for 2019–2022. In 2022, Apatit's target programme for developing gas and mine rescue, fire-fighting and prevention activities for 2019– 2022 was completed at all of Apatit’s branches. Total funds allocated for the programme stood at approximately RUB 237 mln • headcount of the respective business units increased by 92 people, to 456 people • purchased: – equipment – 447 units, – machinery – 17 units, – gear – 579 units; • a new fire brigade station was created at the Kirovsk branch of Apatit; two buildings were renovated to accommodate a gas rescue squad. • Participated in personnel training initiatives — 396 people To maintain and replicate this standard across all its units, the Company established the Transformation Centre, which implements tools to help achieve the project’s goals. These tools include leadership visits, standard operating procedures, audits of hot work, gas hazardous and underground construction work, etc. In 2022, following an audit of the corporate work permit systems in place at the Cherepovets facility and Volkhov branch, PhosAgro resolved that a target model system must be developed, along with an assessment methodology (both are expected to be completed in 2023). Case study Transformation of safety culture and OHS management system Since 2021, we have been running a three-year project called "Transformation of Safety Culture and OHS Management System". Project goals: • transforming the safety culture and developing OHS leadership; • developing, adapting and ensuring the sustainability of best practices in the field of safety culture and OHS management improvements; learning how to arrange and carry out works associated with high OHS risks; • • ensuring the sustainability of our performance and the relevance of our management system over the next five years; reaching stage 3.1 as per Bradley curve (in 2021, we were at stage 2.2). • The project covers key business units of Apatit, entities under management, subsidiaries and affiliates, and third-party contractors engaged by our production sites. In 2022, the project delivered its first results, with the level of safety for higher-risk activities improving by 30% and remaining unchanged throughout the year. 188 189 Company profileCorporate governanceShare capital AppendicesPERFORMANCE REVIEWStrategic report Environmental review AREA, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 CLIMATE Targets 12.4, 13.1, 13.2 Climate action and minimisation of GHG emissions 2028: gross emissions of СО2-eq. Scope 1 – 4,175.5 kt Scope 2 – 794.7 kt 2028: Scope 1 emissions – 109.1 kg of СО2-eq. of СО2-eq./t ENERGY EFFICIENCY Targets 12.4, 13.1 Minimisation of Scope 2 GHG emissions to 794.7 kt of СО2-eq. as part of the Energy Efficiency Programme WASTE Waste recycling Target 12.4 2025: 40% of hazard class 1–4 waste recycled and decontaminated Targets 3.9, 12.4, 13.1 AIR Minimisation of air emissions 2025: pollutant emissions 0.80 kg/t WATER Targets 3.9, 6.3, 12.4 Responsible water use 2025: water withdrawal 2025: waste water discharge into surface waters 4.16 m3/t 5.16 m3/t BIODIVERSITY Preservation of biodiversity in regions of PhosAgro Group’s operation at a level securing sustainability Targets 3.9, 15.1 Gross emissions: Scope 1 4,909 kt of СО2-eq. Scope 2 821.6 kt of СО2-eq. Scope 1 emissions of СО2-eq. 133.1 kg 1 of СО2-eq./t • Climate Agenda project • Contracting TGC-1 as a supplier of green energy generated by HPPs • Assessing the impact of the carbon border adjustment mechanism on the Company’s operating expenses Low-carbon transition plan • • Сo-processing of phosphogypsum and carbon dioxide Self-sufficiency in electricity supplies 42.9% 18% of the mining and processing plant’s output covered by green electricity • Upgrade of the lighting system to LED Construction of a heat and power plant with a 34 MW exhaust gas turbine and a water treatment system (Volkhov) 38.8% of hazard class 1–4 waste recycled and decontaminated2 • Enhanced ore processing (Kirovsk) • Use of phosphogypsum • Implementation of phosphogypsum conversion at Balakovo branch Pollutant emissions 0.79 kg/t3 • Installation and upgrade of gas recovery equipment in upgraded and new shops (Volkhov) • Dust suppression of dusty surfaces (Kirovsk) • Project of upgrading the process to return synthesis and purge gas to the fuel gas system without sending ammonia-containing gases to burners of the steam superheater • Second stage of water use optimisation programme (Cherepovets) • Collection and treatment of seepage water from ANBP-2 tailing dump Waste water discharge into surface waters 5.27 m3/t4 Water withdrawal 6.42 m3/t5 • Development of comprehensive programmes to protect biodiversity (Cherepovets, Volkhov, Kirovsk) • Release of young fish and larvae into water bodies across the Company’s regions of operation y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 190 191 1 The indicator was calculated as the ratio of the Scope 1 gross emissions under GRI 305-1 to the total output of finished and semi-finished products. 2 The Group specific disclosure was calculated as the ratio of class 1–4 waste recycled and decontaminated to the total volume of class 1–4 waste. 3 The Group specific disclosure was calculated as the ratio of total pollutant emissions discharged into the atmosphere to the total output of finished and semi-finished products. 4 The Group specific disclosure was calculated as the ratio of waste water discharged into surface water bodies, including mine and pit waters, to the total output of finished and semi-finished products. 5 The Group specific disclosure was calculated as the ratio of total water withdrawal to the total output of finished and semi-finished products. PERFORMANCE REVIEW Strategy SASB EM-MM-160a.1, RT-CH-410b.2 At PhosAgro, we attach much importance to environmental protection and safety, as well as climate risk management, putting every effort into all of these areas to secure the Company’s sustainable development and well- being of the regions across its geography. Our Strategy to 2025 is designed to observe strict compliance with legislative environmental responsibility standards and practices aimed at minimising the impact of the Company’s operations throughout the whole life cycle of a fertilizer, from mine to food products. We strive to produce fertilizers Based on the assessment results, we mapped out six strategic focus areas of environment protection, including: Climate Energy efficiency Waste Air Water Biodiversity Since 2020, we have been implementing the Climate Strategy based on PhosAgro’s vision and consumption waste from our operations, we are now implementing a range of projects aimed at minimising waste generation and increasing the share of recycled waste. In the scope of the strategic objectives to minimise air emissions, PhosAgro is running a programme to re-equip production facilities and cut pollutant emissions. In addition, in 2020, we adopted the Water Strategy to minimise our impact on water bodies by means of lean treatment of resources: less water withdrawal and waste water discharge. As part of the Strategy, we assessed water use risks and opportunities, including in a safe and eco-friendly manner, and expertise in GHG emissions potential scarcity of water resources, thus contributing to the sustainable management. The document reviews set targets for water withdrawal agricultural development worldwide. climate risks and opportunities and waste water discharge Committed to continuous extensively, setting targets for GHG and designed a detailed action plan improvement, the Company keeps emissions and presenting the low- for each site to achieve the targets. working to lessen the environmental carbon transition plan. impact of its production operations and across the value chain. The key priorities set out The Company acts on the Energy Efficiency Programme designed to ensure compliance PhosAgro sticks to its biodiversity management system comprising the assessment of potential impact, interaction with a wide in PhosAgro’s Environmental Policy with the Climate Strategy range of stakeholders, are careful use of natural resources and the Energy Efficiency as well as monitoring and reporting and reduction of the environmental and Energy Saving Policy tightly practices. footprint. integrated into the Company’s Strategy to 2025. We believe that our requirements We had a comprehensive assessment of our operations, determining key focus areas of such impact, both direct and indirect, and weighed Strategy to 2025 also seeks to minimise waste generation substantially. Having developed should be uniform both for us and our partners engaged in PhosAgro’s projects. Everything we require of ourselves equally it against the UN Sustainable a system for accumulating applies to our counterparties Development Goals (UN SDGs). and analysing data on production and is enshrined in the Code of Conduct for Counterparties. Management approach GRI 3-3 Effective environmental Traditionally, we put a special with the Environmental Policy management is key to PhosAgro’s focus on environmental matters and the Company’s internal long-term sustainability and stand in unconditional support regulations. and indicative of the Company’s of the vulnerable and rare habitats commitment to run a socially across our geography, leaving responsible business, balancing them intact and carefully treating its obligations to a wide range natural systems and resources. Our of stakeholders. operations undergo a stringent assessment for compliance For PhosAgro’s Environmental Policy, see the Company's website We adopted a unified approach to environmental management that relies on Company-wide control A unified management system Environmental compliance Putting Strategy to 2025 into action and compliance with the Company’s environmental policies are overseen by the Strategy and Sustainable Development Committee that regularly reports on the Company’s progress to the Board of Directors. The Environmental Protection Department exercises executive control over the Company’s environmental activities. The consistency of PhosAgro’s activities aimed at environmental protection and strengthening of the Company’s environmental performance results from continuous development of the environmental management system that was recertified according to ISO 14001 in 2022. Our environmental management system relies on strict compliance with applicable laws and regulations. y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 192 193 PERFORMANCE REVIEW Environmental management system Environmental management framework Unit Management approach BOARD OF DIRECTORS LEVEL Board of Directors Strategy and Sustainable Development Committee GROUP MANAGEMENT LEVEL Department of Ecology and Environmental Management of JSC Apatit OPERATIONAL LEVEL Environmental Control and Management Service Officers in charge of environmental protection Defines the Company’s environmental policy and sets strategic goals to ensure environmental protection and reduce the negative impact of its operations • Maintains and regularly assesses PhosAgro’s internal sustainability regulations and monitors their development, relevance, quality and efficiency, as well as compliance with applicable laws and internal sustainability objectives • Engages with key stakeholders and fosters healthy and sustainable communities across all regions of operation • Prepares recommendations to the Board of Directors on determining the Company’s strategic sustainability objectives Is responsible for general management, organisation and coordination of efforts to continuously enhance environmental management Fulfils commitments to the ongoing environmental improvement and reduction of the environmental footprint • 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. Our environmental management system is integrated with the Company’s overall management framework and is a key element in our approach to managing environmental responsibility In 2022, the environmental management system was recertified across the Company's production sites and was found to be in full compliance with ISO 14001. The full text of the certificate is available on the Company's website PhosAgro’s environmental management system embraces all management levels and all stages of the product’s life-cycle, from R&D to manufacturing and product application by customers. This approach ensures uniform management requirements across all aspects of the Company’s operations. The facilities have also put in place a procedure to manage internal 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. Our strategic environmental conservation regulations. To that None of PhosAgro’s enterprises protection goals are set out end, the Company has developed uses ozone-depleting substances in the Company’s Strategy to 2025, an internal and external control in the production process. A small climate and environmental agendas framework, which includes internal and their achievement is included audit and external compliance in the KPIs of managers and senior reviews, a reporting system designed amount (not more than 250 kg/year) of carbon tetrachloride (CCl4) is used for some laboratory testing. executives. in accordance with legislative requirements, and a staff training We do not undertake cross-border Compliance system. hazardous waste transportation and our production sites are not Environmental compliance is key All our facilities that have an adverse situated in protected areas. Hence, to running a responsible business. environmental impact are included there are no significant restrictions in dedicated state registers, on our operations. PhosAgro's environmental with relevant categories assigned management practices ensure our to them. PhosAgro has all necessary compliance with the applicable permits in place for each of these environmental and nature facilities. Spending on environmental protection, RUB mln Item 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 Total 2020 4,825.3 3,120.4 174.6 0.02 2021 5,510.3 4,168.8 178.4 4.258 2022 6,534.6 2,396.7 192.6 2.464 8,120.3 9,860.7 9,126.4 The slight decline in expenses in The Company took steps to remedy construction projects, resulting 2022 was due to the fact that the the harm caused by an emergency in Apatit being held administratively bulk of CAPEX associated with in 2019 by committing RUB 2,274,000 liable under Articles 8.1 and 8.2 of the the Company's key environmental to the reproduction of aquatic Code of Administrative Offences of investment project, the aluminium biological resources in 2022. the Russian Federation and required fluoride production upgrade in to pay a penalty of RUB 190,000. Cherepovets, was incurred in In 2022, local bodies of the 2021. In 2022, a considerable part Federal Service for Supervision of investment projects with an of Natural Resources carried out environmental impact were at the nine unscheduled audits of Apatit, design stage. including six audits of class 1 capital y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 194 195 PERFORMANCE REVIEW Environmental impact payments, RUB mln Risks and opportunities ATMOSPHERE MPE TPE O-limit AQUATIC ENVIRONMENT SPD TPD O-limit WASTE Limit O-limit Total Over-limit Share of over-limit in total payments, % 2020 2.901 0 0 2.165 0 169.487 0 174.553 0 0 2021 2.440 0 0.018 3.886 0 172.091 0 178.416 0.018 0.01 2022 2.797 0 2.355 4.864 0 182.606 0 192.620 2.355 1.22 In 2022, over-limit payments includes external and internal audits accounted for 1.22% of total of the environmental management environmental impact payments. system (EMS), activities to monitor An over-limit payment was calculated and paid and assess the Company's performance, including due to exceeding the permissible by a wide range of stakeholders, emission limit for nitrogen oxides and the analysis and assessment by one of the emission sources of the Company’s performance at the Cherepovets facility. by the Company’s management. Nevertheless, the increase in the These efforts enable the Company Company's environmental impact to work out corrective action plans payments in 2022 was 8%, while and proposals on how to develop the statutory indexation rate for and improve the EMS. environmental impact payments in 2022 was set at 10%, which points Stakeholder engagement is essential to the effectiveness of our efforts to for the Company’s planning. Public reduce emissions. hearings are a legitimate and effective Assessment, analysis, and monitoring mechanism for establishing dialogue with stakeholders using a discussion platform to express their opinions and make suggestions on the initiatives under consideration. Continuous improvement is inherent This mechanism has a positive impact in our environmental management. on the decision-making process The Company identifies areas and improves its efficiency. Engaging for improvement by reviewing the general public and a wide array its management system using of stakeholders in discussion plays an effective mechanism, which an important role and helps ensure that all points of view are considered. PhosAgro public hearings coverage Number of public hearings 2022 2021 2020 12 15 13 The list of public hearings is available on the Company's website When assessing the Company’s performance, much attention is paid to the analysis of ESG ratings and investor feedback Environmental risk management The environmental protection risks The Company develops corrective is an integral part of the Company's include: risk governance framework. The following strategic risks affect our environmental protection objectives: measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information about what we do on this front. Non-compliance with the existing environmental impact regulations 1 7 environmental risks; 13 regulatory risks; 19 climate risks. For more information, see the Strategic Risks section on page 70. 2 Failure to achieve energy efficiency targets y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 196 197 PERFORMANCE REVIEW Climate SASB RT-CH-110a.2 / EM-MM-110a.2 Our targets 2022 highlights Reduce total GHG emissions (Scope 1, 2, 3) by 14% by 2028 vs 2018 Reduce GHG emissions per tonne of finished and semi-finished products (Scope 1) by 31% by 2028 vs 2018 Scope 1 emissions 4,909.0 kt of CO2-eq. Reduction of specific Scope 1 emissions 2.4 kt of CO2-eq. per tonne of finished and semi-finished products by 2021 18% of phosphate rock and nepheline concentrate. We organised a “pilot site” of circa 650 ha of a carbon farm as part of a carbon footprint compensation project in the Vologda region. Gross and specific GHG emissions (Scope 1 and 2) across the Group, СО2-eq. Indicator Gross GHG emissions (Scope 1), kt Gross GHG emissions (Scope 2), kt Specific GHG emissions (Scope 1), kg/t 2018 2020 2021 2022 4,624.6 4,856.5 4,775.8 4,909.0 924.1 150.5 978.3 143.6 893.3 135.5 821.6 133.1 2028 4,175.5 794.7 109.1 PhosAgro has LEAD status Starting from 2021, PhosAgro The Company’s representatives under the UN Global Compact publishes an annual TCFD report are members of climate change and is a participant of the Climate fully addressing the climate and sustainable development Ambition, an initiative launched aspects of its operations, strategy, task and expert groups instituted under the UN Global Compact. risks, opportunities, governance, by government authorities and non- In 2021, the Company partnered performance, and metrics. governmental organisations, with CGI Russia (Climate Governance In June 2021, PhosAgro publicly and are actively engaged Initiative), an organisation declared support for the TCFD in discussions on current global established by the World Economic and its recommendations. challenges. Forum to raise awareness and boost efficiency of boards of directors with respect to climate change. The organisation assists in developing climate strategies and implementing them, as well as integrating the climate change agenda into day-to-day and long-term business decisions. The full text of our 2020 TCFD report is available on the Company's website Strategy and management approach and investment decisions, as well as in its day-to-day and financial planning. The Company develops and takes systemic GRI 3-3 business management. In 2022, measures to reduce its carbon we developed mechanisms footprint and closely interacts The Company focuses on climate to integrate the internal carbon price with partners across its value change in line with the double into the evaluation of investment chain (suppliers and consumers) materiality principle. On the one projects and introduced them and other stakeholders in Russia hand, it identifies and assesses in early 2023. The Company has and worldwide. the impact of its operations identified, assessed, and prioritised on climate all along the value chain climate risks, establishing their PhosAgro's Climate Strategy from extraction of raw materials short, medium and long term was adopted in 2020. to consumption of finished products. consequences for its production It is a comprehensive document On the other hand, it projects how and business processes. We make setting out the Company's climate climate change affects PhosAgro's our strategic plans and day-to- policy in the face of growing climate business, strategy, and financial day management decisions change and uncertainty. planning. with full awareness of the nature and extent of climate impact Climate matters feature prominently (both environmental and political) in PhosAgro Group’s strategic on the Company’s business, strategy, Main principles of PhosAgro’s Climate Strategy • Setting up targets to minimise • GHG emissions in line with the Science Based Targets initiative; using climate scenario analysis Integrating climate risks into the comprehensive risk management framework for investment and day-to-day business activities • Focusing not only on technology-related measures, but also on proper organisation and management, as well as changes in the social and personnel policy • in the effort to reduce GHG emissions Identifying not only risks, but also attractive climate-related investment opportunities and making long-term plans for them • Promoting awareness of the Company's climate initiatives and plans, as well as cooperation in specific areas. The Strategy has set the following goals: • to minimise GHG emissions while increasing output; • • • • to improve energy efficiency and environmental performance of the key production processes; to reduce energy and carbon intensity per unit of output; to enter into new emerging markets for green products; to retain and expand the existing market niches by ensuring PhosAgro’s competitive edge in terms of energy and carbon intensity. y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 198 199 PERFORMANCE REVIEW PhosAgro is currently focused The Company's experts continued on creating particular Apart from that, the following to explore options for absorbing metrics reflecting the impact has been developed as part greenhouse gases in order to select the most suitable ones. In 2022, we launched the Carbon Footprint Compensation project aimed at absorbing (compensating for) GHG emissions, with a carbon footprint compensation farm being set up in the Vologda region. Its pilot site was organised in 2022. Low-carbon transition plan The low-carbon transition plan is based on the specialised research data and seeks to support economic development of PhosAgro that builds on the priority of keeping GHG emissions to a minimum. It is implemented to ensure that the GHG emission reduction targets are delivered across all scopes. of climate action in production of the project: and management processes on financial indicators. The Company has analysed the impact of the carbon border adjustment mechanism (CBAM) on PhosAgro’s operating expenses. The new mechanism will cover Russian industrial products, including, most likely, mineral fertilizers. Given the uncertainties rules for using the internal carbon price; guidelines and methodology for calculating the carbon footprint of products (validated by a reputable international certification body); as to the emission scopes a procedure for cooperation across the value chain involving suppliers, customers, and other stakeholders; a mechanism for the transition to low- carbon energy sources and acquisition of green energy. the CBAM will apply to, the ability to account for PhosAgro’s individual emission levels, and the changing carbon dioxide prices, we have determined the estimated ceiling and floor of the mechanism’s impact on the Company’s financial performance in 2023–2030. Actions to deliver the Climate Strategy The Climate Agenda project was implemented to create the climate action management system and push forward the low- carbon transition plan. In 2022, we developed technical and technological initiatives to reduce direct GHG emissions with due regard to their economics. To this end, we engaged one of the global leaders among consulting firms. Risks and opportunities GRI 201-2 footprint and reduced flows of ecosystem services; lower resilience of infrastructure Opportunities O1 – boosting PhosAgro Group’s appeal as an environmentally PhosAgro identifies its climate and communications and climatically responsible supplier risks and opportunities taking due to increasing climatic effects. of products with a positive climate account of climate change. profile. The process is influenced by physical (changes in natural processes R3 – PhosAgro Group’s failure to comply with regulations reducing or phenomena) and transitional its negative environmental footprint O2 – improved logistics driven by the new export opportunities (changes in the policy and regulation (following the adoption of the carbon amid shortened seasonal freeze-up with a view to fulfilling low-carbon border adjustment mechanism). of rivers and lakes due to climate transition) factors of various nature. change. Risks R1 – disruptions in production processes and logistics operations due to increasing acute climatic R4 – deterioration of the Company’s sustainability reputation. R5 – increased costs and losses (as a result of customers’ failure O3 – new financial products that open up new sources of cheaper funding (such as green bonds) for companies that embraced effects and other climate-related to meet their obligations, rising prices environmental and climate factors. for feedstock, materials and services, sustainability. R2 – flaws in supply chains, construction design, health higher borrowing rates) and shrinking revenues (as a result of a decline in sales, customers, countries and safety; negative environmental and regions of operation). Climate scenario analysis The Company views climate scenario PhosAgro assessed the impact to bring about low-carbon of climate-related risks transition, putting in place analysis as a tool to make its climate and opportunities on its operations mechanisms of a low-carbon strategy resilient to uncertainties under two climate change scenarios: economy that will slow down and risks related to climate change. global warming of 2°С and 4°С. physical climate-related impacts In line with that, we adopted The key features of the scenarios are: going forward; climate scenarios and determined • 2°С scenario is expected to result • 4°С scenario is expected to result respective scenario parameters that in stringent climate policy in less stringent climate policy are most probable and significant measures that will increase measures as compared to the 2°С for the Company in the short, market volatility (goods, services, scenario, triggering faster physical medium and long term. finances, etc.). This is projected climate-related changes. y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 200 201 PERFORMANCE REVIEW PhosAgro identified projected changes in climate risks and opportunities under the adopted climate scenarios based on risks, opportunities, scenario parameters, and time frames. In doing so, the Company focused on its operations, strategy, and financial planning. Climate risk priority map 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 Process description The Company’s climate risk management forms an integral part of its comprehensive risk management system (RMS), with all its elements embedded in PhosAgro’s existing structure. The RMS relies on the Company’s Risk Management and Internal Control Policy and other internal policies and procedures, as well as the applicable Russian and international standards. R2 R3 R4 R1 R5 Emerging Manageable Relevant Immaterial Manageable Manageable h g H i i m u d e M w o L y t i l a i r e t a M Key initiatives in 2022 Focus areas Introduce HR actions to support the implementation of PhosAgro’s Climate Strategy, including additional training to improve staff competence and raise staff awareness in climate change Climate-related risk and opportunities R1, R2, O1 Description and results Our employees took part in webinars dedicated to sustainable development and corporate climate responsibility. Include climate metrics in incentive schemes of employees R2, O1 Establish a task group on reduction of GHG emissions and negative effect of climate change on the efficiency of management and production processes R1, R2, R3, O1 Develop a set of technological measures to mitigate the negative impact of production processes on climate R1, R2 We have continued to develop climate KPIs; they are planned to be aligned with the parameters of investment projects aimed at minimising and offsetting GHG emissions. By implementing the Climate Agenda project we took forward thoroughly researched and technically feasible proposals to reduce the Company's climate footprint, minimise risks and maximise opportunities related to growing climate change impacts (technology, equipment, energy generation, operations, etc.). Technical and technological initiatives to reduce direct GHG emissions were developed and accepted for implementation and are now pending approval at a meeting on investment feasibility at Apaptit. To, we engaged one of the global leaders among consulting firms. A plan of interaction with value chain participants was developed and adopted for implementation (company-customer and supplier-customer interactions). Climate impact matters and the risks and opportunities arising from climate change were integrated into trainings, matters disclosed in the reports, data book, and considered by the Board committee and Board of Directors, which helps to embed this topic into PhosAgro's culture. Immaterial Low Probability Immaterial Medium Amenable High We identify, assess, and manage up and down the value chain. The assessment is done quarterly. climate risks within our Climate risk management process Covered time horizon(s) – short-term, comprehensive risk management is baked in the company-wide risk medium-term, long-term. framework. Covered value management processes. chain stages – direct operations Approve a comprehensive plan of interaction with value chain participants Harmonise strategic documents (the Company's Development Strategy to 2025), financial planning and other policies and procedures with the low-carbon transition strategy and plan Arrange for identification, assessment, management and monitoring of climate-related risks Factor in climate change impacts in industrial engineering projects to build new facilities and upgrade transport infrastructure R1, R2, R3, R4, R5, O1, O2, O3 R1, R2, R3, R4, R5, O1, O2, O3 R1, R2, R3, R4, R5, O1, O2, O3 Climate change risks were integrated into PhosAgro’s risk management framework. R1, R2 At present, there is no need to proceed with this initiative. Reference documents used in engineering provide a sufficient margin of safety, with no factors driving accelerated climate changes observed. y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 202 203 PERFORMANCE REVIEW Focus areas Support R&D developments related to the use of low-carbon energy and low-carbon production Explore options for GHG capture and select the most efficient ones to be employed by the Company Climate-related risk and opportunities R3, R4, R5, O1 Introduce regular climate-related reporting in accordance with Russian and international standards Introduce an automated system to collect and process primary climate data R3, R4, O1 R3, R4, O1 Collaborate with international organisations and join climate initiatives R4, O1 Description and results In 2022, NIUIF developed, patented, tested and prepared for state registration in 2023 several grades of coated fertilizers with a low carbon footprint. In 2021, the Russian Academy of Sciences, PhosAgro, and the Vologda region signed a cooperation agreement to monitor climate change and minimise the environmental impact. The project envisages efforts in low-carbon transition, including regional monitoring of GHG emissions. Promising methods of farming focused on emissions prevention and carbon sequestration by soils will be developed and implemented in Russia. New forests and fields will be planted and created in the Vologda region to capture and store carbon. Their capacity is estimated at 0.7 mt of CO2 per year. We organised a “pilot site” in a carbon farm in 2022. Since 2020, the Company has been preparing climate reports in line with the TCFD standards. GHG emission reporting for 2021 was verified for the first time. Introducing a software solution for automated collection of input data and calculation of GHG emissions (total volumes by site and product). Guidelines for assessing products’ carbon footprint were developed and validated by a reputable international certification body. The Company participates in Climate Ambition, an initiative launched under the UN Global Compact; teams up with Climate Governance Initiative Russia; supports the TCFD; and takes part in task and expert groups of government authorities and non- governmental organisations. Plans for 2023 Focus areas Climate-related risk and opportunities Description, current status, and expected outcomes Implement a set of technological measures to mitigate the negative impact of production processes on climate R1, R2 R3, R4, R5, O1 R1, R2, O2 Prepare feasibility studies (business projects) for innovative climate- resilient products based on carbon dioxide utilisation. Develop production in high-potential areas Reduce the negative impacts of climate change on operational processes such as disruptions in transportation of products and raw materials, increased water consumption for production needs, increased volume of waste water, product dusting, failures to use equipment in accordance with operating instructions and failures to create proper workplace conditions. In 2021–2022, technical and technological initiatives to reduce direct GHG emissions were developed as part of the PhosAgro Climate Agenda project. In 2023, management decisions are expected to be made on their implementation, including the development of relevant business plans. Diversifying production to facilitate expansion into new markets and improve the climate-related performance on the back of new products better meeting consumer needs and having a positive climate profile. Mitigating climate change risks for the Group's operating processes. Work is in progress to assess the risks and identify actions needed to manage them. A detailed description of climate risks and opportunities, in 2022 remained virtually unchanged and is presented in the TCFD report on the Company’s website y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 204 205 PERFORMANCE REVIEW of global anthropogenic emissions, in order to keep global temperature rise below 2°C by 2100. PhosAgro’s climate metrics are aligned with the goals of the Climate Strategy approved by its Board of Directors. The Company is working to expand and enhance the quality of climate-related measurements. Most metrics are locked on targets which are aligned with the goals of the Climate Strategy and other commitments of the Company. The metrics are monitored and reported annually to stakeholders. The Company’s primary focus is on GHG emissions (carbon dioxide CO2, methane CH4 and nitrous oxide N2O) in all three Scopes (1, 2, and 3). We calculate greenhouse gas emissions in accordance with the international guidelines: • 2006 IPCC Guidelines for National Greenhouse Gas Inventories; • The Greenhouse Gas Protocol: Scope 2 Guidance; • The Greenhouse Gas Protocol: • A Corporate Accounting and Reporting Standard (Revised Edition); ISO 14064-1 – Specification with Guidance at the Organisation Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals. Calculations are based on global warming projections of the IPCC report “Climate Change 2021: The Physical Science Basis”. The Company's efforts include end- to-end monitoring of raw data (Scopes 1, 2 and 3) and analysis of supply chain participants’ data (Scopes 2 and 3). The targets are set in line with minimum qualitative and quantitative criteria based on RCP 2.6, a representative concentration pathway for reduction Direct (Scope 1) GHG emissions, СО2-eq. GRI 305-1, 305-4, SASB RT-CH-110a.1 / EM-MM-110a.1 Assets Gross emissions of the Kirovsk branch, kt GHG emissions of the Kirovsk branch, kg per tonne of finished and semi-finished products Gross emissions of the Balakovo branch, kt GHG emissions of the Balakovo branch, kg per tonne of finished and semi-finished products Gross emissions of the Volkhov branch, kt GHG emissions of the Volkhov branch, kg per tonne of finished and semi-finished products Apatit (Vologda region), gross emissions, kt GHG emissions of Apatit (Vologda region), kg per tonne of finished and semi-finished products Total gross emissions, kt 20201 655.7 56.3 225.3 36.9 155.6 250.7 20211 665.8 56.7 238.0 39.4 155.2 135.0 2022 690.9 57.7 236.6 41.5 191.5 71.8 3,820.0 3,716.7 3 790.0 247.0 227.7 229.1 4,856.5 4,775.8 4,909.0 Indirect (Scope 2) GHG emissions, СО2-eq.1GR I 305-2, 305-4 GRI 305-2, GRI 305-4 Assets Gross emissions of the Kirovsk branch, kt GHG emissions of the Kirovsk branch, kg per tonne of finished and semi-finished products Gross emissions of the Balakovo branch, kt GHG emissions of the Balakovo branch, kg per tonne of finished and semi- finished products Gross emissions of the Volkhov branch, kt GHG emissions of the Volkhov branch, kg per tonne of finished and semi-finished products Apatit (Vologda region), gross emissions, kt GHG emissions of Apatit (Vologda region), kg per tonne of finished and semi- finished products Total gross emissions, kt Total GHG emissions, kg per tonne of finished and semi-finished products Calculation of other indirect GHG emissions 2020 2021 2022 723.9 62.2 51.1 8.4 66.0 106.2 137.3 8.9 978.3 28.9 622.52 53.0 45.3 7.5 80.1 69.7 145.4 8.9 893.3 25.3 588.22 49.1 51.9 9.1 44.6 16.7 136.9 8.3 821.6 22.3 GRI 305-3 Category GHG emissions, t of СО2-eq. Share in total other indirect emissions, % 2020 2021 2022 Purchased goods and services 3,118,660 1,963,324 2,425,375 Fuel- and energy-related activities not included in Scope 1 or Scope 2 328,501 407,740 350,275 Processing of sold products 764,119 704,402 720,223 Use of sold products 9,075,575 9,035,283 9,768,958 2020 23.47 2.48 5.75 68.30 2021 16.21 3.37 5.82 74.60 2022 18.28 2.64 5.43 73.65 Total 13,286,855 12,110,749 13,264,831 100.00 100.00 100.00 Scope 3 greenhouse gas emissions identified them to be the most were calculated for the above significant emission sources categories after an expert review for the Company. Scope 3 GHG emissions, СО2-eq. GRI 305-3, 305-4 Category Total gross emissions of production assets, kt Total GHG emissions of production assets, kg per tonne of finished and semi- finished products 2020 13,286.9 392.7 2021 12,110.7 343.6 2022 13,264.8 359.8 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A Total GHG emissions, kg per tonne of finished and semi-finished products 143.6 135.5 133.1 1 Greenhouse gas emissions were calculated in line with the Guidelines for Climate Impact Management of PJSC PhosAgro and other 1 Preparation of an inventory of greenhouse gas emissions as part of developing the Guidelines for Climate Impact Management of PJSC PhosAgro and other Group Entities identified new sources of emissions, resulting in a recalculation of data for 2020–2021 for consistency. Group Entities (using the IPCC methodology). Energy indirect GHG emissions (Scope 2) are related to production of electricity and heat brought in from third parties to meet the Company’s needs. In 2022, we changed our approach to calculating Scope 2 GHG emissions related to electricity consumption. In 2020–2021, the methodology relied on emission factors defined by the International Energy Agency (IEA), while starting 2022, we use the energy indirect GHG emission factor for the First Synchronous Zone of the Russian Energy System defined by the Trading System Administrator of the Wholesale Electricity and Capacity Market 206 207 2 Including electricity from renewable energy sources. METRICS AND TARGETSPERFORMANCE REVIEW GRI 305-5 The reduction in emissions was and, consequently, their total We have chosen 2018 as the base primarily driven by the Energy carbon intensity. Excluding the year for calculations because it was Efficiency Programme and above all production growth effect, Scope 3 the Company’s first GHG inventory the heat and power plant project at GHG emissions decreased by 427.4 year, and given the need to set GHG the Volkhov branch. reduction targets for all three scopes kt vs 2018 thanks to the reduction of emissions per unit of finished and based on the available emission For energy indirect (Scope 2) semi-finished products (by 3%). data. In 2018, GHG emissions were emissions, the reduction was 7.8 as follows: direct GHG emissions kg/t (or 25.9%) vs the 2018 level; the The values of Scope 3 GHG emissions (Scope 1) – 4,624.6 kt of CO2-eq., effect for total Scope 2 emissions for 2020 and 2021 differ from the indirect GHG emissions (Scope 2) – excluding the production volume data previously provided by the 924.1 kt of CO2-eq., and other growth stood at 287 kt compared Company in its CDP questionnaires indirect GHG emissions (Scope 3) – to the base year. The reduction for respective periods. The main 11,413.8 kt of CO2-eq. was achieved thanks to the green reason for such changes are electricity procured by the Kirovsk adjustments made to the calculation In 2022, Scope 1 GHG emissions branch of Apatit, as well as energy methodology following approval of declined by 17.3 kg/t, or 11.5%, vs 2018. efficiency initiatives. the Guidelines for Climate Impact In 2022, the reduction in total Scope Management of PJSC PhosAgro and 1 GHG emissions thanks to lower Total Scope 3 GHG emissions were other Group Entities. Furthermore, emissions per unit of finished and up by 1,851 kt in 2022 vs 2018, or the value for 2021 was adjusted due semi-finished products excluding by 16.2%, reflecting increased to a technical error identified in the the production volume growth product shipments and higher Use of Sold Products category as part totalled 638.9 kt vs the base year. consumption of input resources of a verification process. List and description of existing metrics introduced for the monitoring of performance under the climate strategy Metric Gross global emissions (Scopes 1 and 2) per currency unit of total revenue (GRI 305-4)1, t of CO2-eq. / USD mln Gross global emissions (Scope 1 and 2) per FTE (GRI 305-4)3, t of CO2-eq. / FTE Electricity purchased per unit of finished and semi-finished products, ‘000 kWh / t Energy efficiency improvement costs, RUB mln Share of feedstock suppliers providing necessary input data on GHG emissions (Scope 3), % 20202 1,654.8 326.1 0.068 10,500.0 4.0 20212 993.1 309.4 0.066 17.4 2.7 2022 693.5 288.8 0.062 3,044.1 7.5 Energy efficiency Our target Reduce Scope 2 GHG emissions to 794.7 kt of СО₂-eq. by 2028 2022 highlights Consumption of all types of energy resources per tonne of finished and semi- finished products came in at 2.33 GJ/t In 2022, the consumption of all types of energy resources per tonne of finished and semi-finished products decreased by 1.27% to 2.33 GJ/t. The reduction was underpinned by the implementation of the Company’s Strategy to 2025 and Energy Efficiency Programme. The decrease in per unit energy consumption vs the data disclosed in reports for the previous years and recalculation of values for comparable periods were due to the application of a new energy resource accounting methodology. Scientifically justified changes in the accounting methodology that will be described in more detail in this section could be introduced thanks to the implementation of the first stage of the project to analyse and upgrade the energy management system. These changes enabled PhosAgro to enhance the transparency and completeness of information disclosed to stakeholders with respect to the consumption of energy resources (for example, natural gas) typical for the Company and mineral fertilizer industry. This unlocks new opportunities for developing a more nuanced understanding of all types of energy resources consumed by the Company. The Company will continue delivering on the project, as it will 1 The indicator was calculated as the ratio of the sum of Scope 1 and 2 gross emissions under GRI 305-1 and GRI 305-2 respectively to PhosAgro Group revenue according to consolidated financial statements converted into USD mln at monthly average USD/RUB exchange rates. 2 Preparation of an inventory of greenhouse gas emissions as part of development of the Guidelines for Climate Impact Management of PJSC PhosAgro and other Group Entities identified new sources of emissions, resulting in a recalculation of data for 2020–2021 for consistency. 3 The indicator was calculated as the ratio of the sum of Scope 1 and 2 gross emissions under GRI 305-1 and GRI 305-2 respectively to the total number of full-time employees under GRI 2-7. help PhosAgro achieve its energy efficiency and GHG emission minimisation goals. The reporting year saw PhosAgro’s self-sufficiency in electricity increase by 2.6% to 42.9% The key driver in 2022 was the completion of construction and the ramp-up of the heat and power plant in Volkhov to its design capacity. Going forward, the Company will continue developing in-house power generation. We started testing a solar power generation technology at the Company’s facility in Balakovo to assess the viability of a further scale-up for the industrial solution leveraged since 2021. The tests will run until 3Q 2023. y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 208 209 PERFORMANCE REVIEW Strategy and management approach GRI 3-3, 302-4 In 2022, PhosAgro continued to follow the Climate Strategy The Energy Efficiency and Energy Saving Policy sets out approved by the Board of Directors, the following key goals: the Energy Efficiency and Energy Saving Policy, and the Energy Efficiency Programme, which are tightly integrated into the Company’s Strategy to 2025. continuously improving energy efficiency; using energy resources in a sustainable and efficient manner; streamlining the energy management process for all types of operating activities. The Company pays particular attention to energy efficiency risks. 1 A sufficient and reliable energy supply is a material aspect and major concern 2 Risk of Scope 2 GHG emissions to be included in carbon regulation for us. We thoroughly explore all opportunities to transition to renewable in the EU and other jurisdictions. The Company’s energy efficiency energy: among other things, directly affects Scope 2 in 2022, we purchased electricity generated by hydroelectric power GHG emissions, which poses a potential risk, for example after full- plants on the Kola Peninsula. scale implementation of carbon border adjustment mechanisms. 3 Market availability of electricity from renewable energy sources. The Company continuously monitors the market to ensure a sufficient supply of electricity from renewable energy sources. The initiatives set out in the Energy Efficiency Programme are aimed at improving energy efficiency, developing energy management at each production site, and achieving strategic objectives in the following focus areas: in-house power generation through utilisation of sulphuric acid production steam; ; In 2022, we implemented comprehensive energy efficiency projects at all of our increase in the share of renewable energy sources; sites. introduction of technologies aimed at loss reduction and energy savings (e.g. LED lighting, frequency converters, less heat energy losses). Key initiatives in 2022 PROJECT Balakovo Installation of frequency converters on chemically treated water pumps Balakovo Upgrade of the lighting system to LED at wet-process phosphoric acid sections 3 and 4 Volkhov Construction of a heat and power plant with a 34 MW high- efficiency electric turbine and a water treatment system at Apatit’s Volkhov branch Kirovsk Upgrade of drum drier sections, with thermal insulation replaced, stage 1 (four drum driers out of seven) Cherepovets Upgrade of the lighting system to LED at the pyrite cinder storage facility Initiatives planned for 2023 PROJECT Kirovsk Upgrade of the Rasvumchorrsky mine’s compressor station Kirovsk Upgrade of the lighting system to LED at ANBP-2 of Apatit’s Kirovsk branch Kirovsk Upgrade of drum drier sections, with thermal insulation replaced, stage 2 (three drum driers out of seven) Cherepovets Optimisation of the heat supply system at the production site Cherepovets Use of circulating water to cool feed water pumps DESCRIPTION AND RESULTS EXPENDITURES, RUB MLN COMPLETION Reduced electricity consumption Reduced electricity consumption 1.8 2.0 Replacement of third-party electricity supply with in-house generation through utilisation of sulphuric acid production steam 3,018.0 Reduced heat losses from drum drier surface and lower per unit consumption of fuel oil 7.0 Reduced electricity consumption 15.3 4Q 4Q 2Q 3Q 4Q DESCRIPTION AND RESULTS EXPENDITURES, RUB MLN COMPLETION Lower cost of compressed air production as a result of reductions in per unit electricity consumption A 4.8 mln kWh reduction in annual electricity consumption, lower maintenance and repair costs Reduced heat losses and per unit consumption of fuel oil in concentrate drying Ca. 2.5 mln kWh of annual reduction in electricity consumption Reduced river water consumption with no discharges into the sewer system 105.7 48.9 7.0 8.0 10.6 2Q 2Q 4Q 4Q 4Q y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 210 211 PERFORMANCE REVIEW In 2022, the volume of carbon- free electricity used in the production of phosphate rock at the Kirovsk branch grew to 300 mln kWh. As a result, green electricity from hydroelectric power plants supplied under an agreement with TGC-1 covers 17.8% of the plant’s output The energy efficiency metrics are used to monitor the Company’s progress towards its energy efficiency improvement target and are set forth in PhosAgro’s Energy Efficiency Programme and Action Plan, which helps keep track of electricity generation and consumption, energy intensity, etc. The energy efficiency metrics are based on PhosAgro’s raw data and are calculated in accordance with the approved statistical methodologies. The Company prepares its energy efficiency reports in accordance with the GRI 302: Energy 2016 standard. In 2022, the Company’s production facilities were 42.9% self-sufficient in terms of electricity needs, which is 2.6% more than in 2021. In absolute terms, the electricity generated by PhosAgro went up by 150 mln kWh year-on-year, driven by the commissioning of new power generating facilities at the Volkhov branch. Total electricity consumption grew by 115 mln kWh year-on-year, which is attributable to the commissioning of new production facilities at the Volkhov branch. In 2023, the share of electricity generated in-house is likely to further increase due to the ramp-up to design capacity of the heat and power plant in Volkhov. PhosAgro’s energy consumption GRI 302-1, 302-3, SASB RT-CH-130a.1 / EM-MM-130a.1 Item ELECTRICITY Purchased electricity, including Purchased from renewable sources Purchased per unit of finished and semi- finished products HEAT ENERGY Purchased (in hot water) Supplied (in hot water) Exhaust steam NATURAL GAS As feedstock for ammonia production As fuel, etc. Total Consumption per unit of finished and semi- finished products2 Unit Total for production facilities 2020 2021 2022 mln kWh mln kWh ‘000 kWh / t '000 Gcal '000 Gcal '000 Gcal mln m3 mln m3 mln m3 '000 m3 / t 2,300.77 - 0.068 374.54 200.78 8,091.16 1,953.86 746.02 2,699.88 0.022 2,326.63 299.00 0.066 438.22 161.23 8,538.81 1,926.10 730.12 2,656.22 0.021 2,303.26 300.00 0.062 352.07 187.49 8,923.70 1,968.06 771.72 2,739.781 0.021 Item LNG Consumption FUEL OIL Consumption HEATING OIL Consumption DIESEL FUEL Consumption PhosAgro Group's energy consumption, GJ3 GRI 302-1, 302-3 Item Internal use of electricity Internal use of heat energy Internal consumption of natural gas (excluding gas consumed as feedstock during production processes) Internal consumption of LNG Internal consumption of fuel oil Internal consumption of heating oil4 Internal consumption of diesel fuel Total internal consumption Total energy consumption per unit of finished and semi-finished products, GJ/t5 Unit Total for production facilities 2020 2021 2022 t t t t 2,273.4 2,951.57 2,380.30 146,785.8 151,291.8 152,895.5 725.50 779.4 766.4 53,054.25 55,695.87 58,276.73 2020 8,282,776 34,603,584 29,094,927 123,673 6,473,253 33,518 2,419,273 81,031,004 2.40 2021 8,375,878 36,910,017 28,474,611 160,565 6,671,968 36,008 2,539,731 2022 8,291,723 38,050,823 30,097,257 129,488 6,742,692 35,407 2,657,419 83,168,778 86,004,809 2.36 2.33 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 1 Calculations of total energy consumption include only gas consumed as fuel, whereas gas consumed as feedstock for ammonia production is provided for illustrative purposes and excluded from further calculations of total energy consumption (in GJ), as it is not used as an energy resource. 2 Starting 2022, the Company excludes natural gas used as feedstock for ammonia production from the calculation of per unit energy consumption. Based on the principle of comparability, the data for 2020–2021 was recalculated using the new methodology.. 3 To convert energy consumption values into joules, the coefficients on the Berkeley Institute (USA) website were used (https://w.astro. berkeley.edu/~wright/fuel_energy.html). 4 Starting 2022, the Company calculates consumption of heating oil (in J) using a ratio of 46.2, whereas previously it used a ratio of 44. Based on the principle of comparability, the data for 2020–2021 was recalculated using the new methodology. 5 Starting 2022, the Company calculates total and per unit energy consumption excluding natural gas used as feedstock for ammonia production, as well as heat and electricity produced by the Company for its own consumption. Based on the principle of comparability, the data for 2020–2021 was recalculated using the new methodology. 212 213 METRICS AND HIGHLIGHTSPERFORMANCE REVIEW In 2022, the Company initiated with ISO 50001:2018. Based of energy (electricity, heat, a project to define a set of metrics on the work completed to date, natural gas, fuel oil, petrol, LNG, in energy consumption and energy the Company has introduced certain and heating oil). The Company efficiency to benchmark amendments to its disclosure, uses natural gas both as fuel its performance against leading including in terms of natural gas and as feedstock in ammonia peers in the mining, chemical, consumption. and fertilizer production industries. production. In ammonia synthesis processes, part of the natural gas The next step, which is also The project showed that is sent to the reactor to be used underway in 2022–2023, is detailed in its reporting, the Company as chemical feedstock to produce analysis of the Company’s energy is guided by international standards, hydrogen; however, natural gas management system and review which require aggregation of data is also used for energy needs as fuel of gaps in terms of compliance based on total consumption (see the chart below). Waste Target 2022 highlights Increase in the share of recycled and decontaminated hazard class 1–4 waste to 40% by 2025 38.8% of hazard class 1–4 waste recycled and decontaminated Use of natural gas in ammonia synthesis Boiler furnace Air process needs Flue gases Natural gas Boiler furnace energy needs Gas mixture Ammonia Heat Reactor Synthesis converter As a result, for its 2022 reporting, The change in the methodology a review to make sure the changes the Company decided to split caused us to recalculate our energy in natural gas presentation the total amount of natural gas consumptions values for the previous approach does not compromise previously used in calculations periods on a retrospective basis. our calculations of GHG emissions of total and per unit energy in ammonia production. consumption, so that GRI 302 Still, given the link between data reporting does not include natural of GRI standards and the use gas that acts as chemical feedstock of energy consumption data in GHG in ammonia synthesis. emission calculations, we carried out Strategy and management approach GRI 3-3, 306-1 The management system covers: consumer properties and going • an inventory of resources that to waste; are used to manufacture products • identification of activities and become waste afterwards; and processes that generate PhosAgro’s Development Strategy • data on the amount of waste significant amounts of waste. to 2025 stipulates an increase generated from our own in the share of recycled hazard class operations, including future waste PhosAgro’s waste management 1–4 waste to 40%. in the form of products or their is monitored on a regular basis part provided to customers; and discussed by the Strategy Having developed a system • waste characteristics; and Sustainable Development for accumulating and analysing • properties that limit or prevent Committee before being data on production the recycling (recovery) communicated to the Board and consumption waste from of the material or product or limit of Directors. our operations, we are now its useful life; implementing a range of projects • continuous monitoring of aimed at reducing waste generation and increasing the share of recycled waste. known and potential negative characteristics of certain materials to prevent them from losing their y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 214 215 PERFORMANCE REVIEW Key initiatives in 2022 GRI 306-2 In 2021, we rolled out a Company-wide project to reduce the accumulation of phosphogypsum at dump sites by promoting it in various areas In 2022, a decision was made to go ahead with an investment project for the Balakovo branch of Apatit. The unit is designed to process by-products of wet-process phosphoric acid – concentrated fluosilicate acid and dihydrate phosphogypsum – to produce a solution of ammonium sulphate and technical calcium fluoride. The key process stages are as follows: fluosilicate acid is neutralised by ammonia liquor with dihydrate phosphogypsum. With an excess of phosphogypsum, the reaction results in calcium fluoride, silica gel, and a solution of ammonium sulphate. The resulting pulp is then filtered, technical-grade calcium fluoride is washed with water to remove ammonia sulphate and then sent to open air storage, and ammonia sulphate solution is neutralised with sulphuric acid to pH=4.5–5 and sent to the phosphate fertilizers unit to make granulated ammonium sulphate. Enhanced ore processing mechanisms PhosAgro and the Kola Science Centre of the Russian Academy of Sciences have signed a long-term cooperation agreement to implement a project for improving the processing of hard-to- process apatite-nepheline ores. The agreement prioritises joint projects focused on novel production technologies. One of the outcomes of the cooperation with the Kola Science Centre is the resolution to set up a joint research centre to study key industrial ores, identify optimal mineral liberation and selective flotation modes, conduct technological and mineralogical 3D mapping of ore reserves, as well as select and develop efficient and eco-friendly flotation reagents. These benefits include: reduction in litter moisture content to 13% Reduction in levels of ammonia released into the air of poultry houses (day 28–35) by 6–8% The use of phosphogypsum helps alter quality indicators of poultry litter: • an 8–11% increase in the level of nitrogen in litter; • a 2–3x rise in the level of calcium in litter For more information about the project, see the Research and Education section on page 125. Promotion of phosphogypsum In April 2022, PhosAgro launched project to sell phosphogypsum as a commercial product in seven areas of application: • ameliorant for farming; • ground for road surface • • • • • dressing and soil reinforcement; litter in poultry and livestock farming; reduction in soil salinity and contamination in urban areas; recultivation of unauthorised landfills and lands contaminated with oil products; raw material for the cement industry; raw material for construction materials (gypsum blocks, construction blocks, and construction mixtures).. For this project, PhosAgro Group created a sales unit focused on phosphogypsum and tasked with R&D in each of the areas of its application, obtaining regulatory and technical documents, and promotion and sales of phosphogypsum accordingly. Our project to promote phosphogypsum as a chemical ameliorant agent in agriculture first saw light in February 2021. Its aim is to reduce the accumulation of phosphogypsum at dump sites across our production sites by promoting its agricultural use on saline soils as an ameliorant and source of sulphur, phosphorus and micronutrients. In 2021–2022, over 50 trials were conducted to apply phosphogypsum in agriculture as an ameliorant for acidic, neutral, alkali and sodic soils. Based on the trials, extra yield averaged between 15% and 35% depending on the crop. Aside from better yields, all commercial products also demonstrated a reliable increase in quality indicators. As part of the project, PhosAgro established a preparation and loading hub for bulk phosphogypsum and remodelled a railway to ensure its supply to farmers in other regions. In 2022, we were able to ship phosphogypsum in gondola cars and make deliveries to the Moscow, Tambov, Smolensk, Astrakhan and Volgograd regions and the Republic of Tatarstan. Experiments were conducted to use phosphogypsum as poultry litter in floor housing of broilers. The results showed benefits of using phosphogypsum in the amount of 10–30% of the litter volume. y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 216 217 PERFORMANCE REVIEW SASB RT-CH-150a.1 Share of recycled and decontaminated hazard class 1–4 waste1, % Target 2025 2022 2021 2010 40.0 38.8 39.1 37.6 The reporting year saw a decline in the share of recycled and decontaminated hazard class 1–4 waste following a slight change in the ratio of recycled waste to waste disposed of, generated by an increased volume of repairs and cleaning of process equipment. Waste generation by hazard class, t GRI 306-3, RT-CH-410b.1 Waste hazard class 1 2 3 4 5 Total 2020 6.48 7.61 1,070.64 180,439.54 132,492,537.10 132,674,061.36 2021 5.63 3.86 1,698.52 192,698.46 132,227,604.70 132,422,011.17 2022 (actual) 4.22 0.39 1,436.71 195,057.45 120,229,530.98 120,426,029.77 The reduction in class 5 waste generation was due to increased use of overburden as a backfilling material at the Kirovsk branch. Waste by type and disposal method, t1 GRI 306-4, GRI 306-5 Disposal method 2020 2021 2022 PhosAgro Group's waste reused internally 21,877,032.2 19,203,406.7 27,753,191.6 Hazardous waste Non-hazardous waste Total waste landfilled Hazardous waste Non-hazardous waste Including landfilled at the Company’s waste disposal facilities Hazardous waste Non-hazardous waste Third-party recycled Hazardous waste Non-hazardous waste Third-party decontaminated Hazardous waste Non-hazardous waste Third-party processed Hazardous waste Non-hazardous waste 51,632.9 74,266.9 74,456.8 21,825,399.3 19,129,139.8 27,678,734.8 110,776,483.1 112,392,381.5 93,400,262.0 113,597.1 119,050.2 120,688.6 110,662,885.9 112,273,331.3 93,279,573.4 110,771,883.1 112,386,304.7 93,390,463.8 109,096.9 113,463.9 110,976.1 110,662,786.2 112,272,840.8 93,279,487.7 52,377.7 16,402.3 35,975.4 262.4 262.4 0 1,590.9 6.4 1,584.5 72,278.0 1,432.2 70,845.8 332.5 332.5 0 2,756.7 2.2 2,754.5 63,040.9 1,449.9 61,591.0 299.8 263.1 36.7 2,880.6 45.1 2,835.5 Disposal of beneficiation waste and overburden at Apatit’s Kirovsk branch, t SASB EM-MM-150a.1, EM-MM-150a.2 Apatite-nepheline ore processing waste (tailings) Reused Landfilled at waste disposal facilities 2020 2021 2022 2020 2021 2022 12,015,508.0 12,535,665.7 13,065,273.3 12,947,652.0 13,483,863.3 12,865,355.7 Rocks and overburden mix 6,625,514.0 3,360,586.0 11,276,148.0 89,454,699.0 90,494,219.0 72,281,414.0 Waste generation, t per tonne of finished and semi-finished products Production site Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total 2020 10.4 0.9 0.031 0.4 3.9 2021 10.3 0.9 0.003 0.4 3.8 Waste generation (hazard class 1–4), kg per tonne of finished and semi-finished products Production site Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total 2020 0.3 16.7 27.0 3.8 5.4 2021 0.5 21.3 0.6 3.6 5.5 2022 9.1 0.9 0.001 0.4 3.3 2022 0.8 21.1 0.5 4.0 5.3 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 218 219 1 The Group specific disclosure was calculated as ratio of class 1–4 waste recycled and decontaminated to the total volume of class 1–4 waste. 1 Hazardous means hazard class 1–4 waste; non-hazardous means hazard class 5 waste. METRICS AND HIGHLIGHTSPERFORMANCE REVIEW Air Our targets 2022 highlights 23.7% reduction in emission intensity by 2025 vs 2018 to 0.8 kg per tonne of products and semi- finished products The 2025 target to reduce GHG emissions was achieved. Pollutant emissions, kg per tonne of products and semi-finished products 0.793 down ~1% vs 2021 RUB3,916 mln invested throughout the duration of the Clean Air Initiative, including RUB 315 mln in 2022 Strategy and management approach GRI 3-3 reduce its environmental the Company implemented impact, PhosAgro is running a number of projects that helped a programme to re-equip reduce emissions by 20% in 2022 production facilities and cut vs 2017, despite an annual rise PhosAgro has developed pollutant emissions. in production output and launch and now maintains an emissions of new capacities. management process that includes PhosAgro takes part assessment of planned activities, in the government’s Clean Air quality in sanitary protection discussion of relevant matters Air initiative, which aims areas near the Company’s with a wide range of stakeholders, to drastically reduce air pollution production sites complies as well as monitoring and disclosing in major industrial cities across with applicable hygienic pollutant emissions. To effectively Russia. As part of the initiative, requirements. Key initiatives in 2022 Apatit’s Cherepovets site implemented four out of five planned activities as part of the Clean Air initiative. Activities Upgrade of the SK-600/3 sulphuric acid plant Deployment of new tailing gas pre- heating equipment for the UKL-7 plant Upgrade of technological system No. 3, block 2.70 at the mineral fertilizer production site Technical upgrade of the low- capacity absorption unit, blocks 7.00 and 7.01 at the mineral fertilizer production site Catalyst replacement at contact process units of the SK-600/1 and SK-600/2 technological systems Status completed completed Environmental efficiency, t Year Actual expenditures, RUB mln 892 105 2018–2019 2,733.225 2019 10.975 completed 62.3 2020 776.62 completed 402.6 2021–2022 321.84 in progress 665 t reduction achieved in sulphur dioxide emissions (partial catalyst replacement at SK-600/2 and SK-600/1) 2021–2024 125.58 PROJECTS IN ADDITION TO THE COMPREHENSIVE PLAN’S ACTIVITIES Unit to recover ammonia from residual and synthesis gases of the first and second ammonia production lines Upgrade of the process to return synthesis and purge gas to the fuel gas system without sending ammonia-containing gases to burners of the steam superheater at the first ammonia production line Design and expert reviews (implementation scheduled until end of 2024) implemented 268 2022–2025 1.747 effect to be determined in 2023 2022 5.594 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 220 221 PERFORMANCE REVIEW At the Volkhov branch, the key activities of 2021–2022 fertilizers unit, along with a revamp • chemical stabilisation for dusty of gas recovery equipment. surfaces on service roads of tailing to reduce the negative impact The impact will be assessed in 2023. dumps: on the environment, including air, were implemented as part of an investment project to develop the Volkhov site: technical solutions On an annual basis, Apatit’s Kirovsk branch runs activities to minimise dust emissions from tailing dumps • – at ANBP-2 across 141 ha, • – at ANBP-3 across 50.7 ha; • biological stabilisation using hydroseeding for dusty surfaces to reduce per unit emissions of beneficiation facilities. In 2022, of dam slopes and beach area of and concentrations of pollutants the following work was completed: tailing dumps: at the sanitary protection zone • chemical stabilisation using • – at ANBP-2 across 3.19 ha, boundaries near residential areas binding agents (PSKh-18 • – at ANBP-3 across 33.597 ha; were provided for back at the stages and DUSTBIND) for dusty surfaces of new construction and upgrades. in the beach area of tailing dumps: • search for an optimal anti-dusting The considerable reduction in per • – at ANBP-2 across 631.1 ha, agent, with pilot tests held unit emissions confirms that we have • – at ANBP-3 across 410 ha; for nine new samples. chosen the right approach. In 2022, the Balakovo branch completed the second stage • chemical stabilisation using binding agents (bitumen emulsion) for dusty surfaces in the of technical upgrade at technological beach area of tailing dumps: systems 5 and 6 of the phosphate • – at ANBP-2 across 2.6 ha; Pollutant emissions, kg per tonne of finished and semi- finished products1 Target 2025 2022 2021 2020 0.800 0.793 0.801 0.892 1 The Group specific disclosure was calculated as the ratio of pollutant emission to the output of products and semi-finished products. GRI 305-7, SASB RT-CH-120a.1 / EM-MM-120a.1 NOx, SOx and other significant air emissions, t Pollutants TOTAL Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total SOLIDS Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total SULPHUR DIOXIDE Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total CARBON MONOXIDE Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total NITROGEN OXIDES (NOX AS NO2) Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total HYDROCARBONS (W/O VOCS) Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total VOLATILE ORGANIC COMPOUNDS (VOCS) Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total OTHER GASEOUS AND LIQUID POLLUTANTS Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total 2020 2021 2022 10,003.4 7,286.2 1,068.9 11,830.7 30,189.0 5,148.6 429.5 461.7 917.3 6,957.1 3,104.0 4,432.1 180.8 3,367.2 11,084.0 711.1 870.0 92.4 1,573.5 3,247.0 1,012.2 746.9 283.1 2,540.0 4,582.1 8.0 2.6 0.0 38.1 48.7 19.0 340.1 4.6 2.2 365.8 0.5 465.1 46.2 3,392.6 3,904.3 10,120.3 6,876.0 1,165.8 10,065.3 28,227.4 4,939.8 425.8 528.6 1.055.1 6,949.3 3,308.2 3,975.4 206.7 3,029.2 10,519.5 777.0 933.1 115.3 1,274.8 3,100.2 1,067.8 760.7 207.6 2,401.8 4,437.9 8.0 2.6 0 38.1 48.7 19.0 340.7 5.0 2.0 366.7 0.5 437.7 102.6 2,264.3 2,805.1 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 222 223 10,141.3 7,323.8 1,575.0 10,193.5 29,233.6 5,011.1 497.1 234.9 771.7 6,514.8 3,373.4 4,227.2 320.5 3,770.9 11,692.0 798.1 949.4 106.3 1,324.2 3,178.0 931.2 765.1 330.7 2,491.9 4,518.9 8.0 2.6 0 38.1 48.7 19.0 340.0 6.2 2.8 368.0 0.5 542.4 576.4 1,793.9 2,913.2 METRICS AND HIGHLIGHTSPERFORMANCE REVIEW Water RT-CH-140a.2 / EM-MM-140a.2 Our targets Reduce water withdrawal by 29.3% by 2025 vs 2018 to 5.16 m3 per tonne of products and semi-finished products Reduce the discharge of waste water into surface water bodies by 31.1% by 2025 vs 2018 to 4.16 m3 per tonne of products and semi-finished products Strategy and management approach GRI 3-3, 303-1 Water is an essential resource all PhosAgro production sites for the Company. There is no are located in areas with low shortage of water sources or moderate fresh water scarcity. in the regions where our facilities However, access to clean water are based. According to the Water is a major issue facing the world. Risk Atlas and Water Risk Filter, 2022 highlights Water withdrawal1 6.42 m³/t down 0.93% vs 2021 Waste water discharge into surface waters2 5.27 m³/t down 0.75% vs 2021 Risks and opportunities Going forward, we plan to improve To mitigate these risks, in 2020 SASB RT-CH-140a.3 The main risks related to water consumption are water quality deterioration in water bodies across PhosAgro’s footprint and the Company’s non- compliance with statutory requirements for limiting negative impact on water bodies. PhosAgro has implemented closed- waste water management we adopted and started by focusing on maximum reuse implementing a Water Strategy that of water through closed-loop seeks to reduce water consumption water recycling systems and better and discharge and improve waste treatment of effluents discharged water quality. into water bodies in addition to ongoing monitoring of water The strategy is implemented at all bodies in the regions of operation. PhosAgro sites, and we regularly The regulatory risks include whether they are sufficient tightened waste water quality and effective enough to achieve our requirements, as well as restrictions targets. analyse these measures to determine loop water recycling systems on the amount of water consumed at its sites in Volkhov and Balakovo and discharged into both water To identify the impact to reuse water in production processes. bodies and centralised waste water systems. There were no incidents of non-compliance associated with water quality permits, standards, and regulations. of the Company's operations on water bodies, we monitor these bodies in accordance with adopted programmes by engaging our own certified laboratory and external certified laboratories. 1 The Group specific disclosure was calculated as the ratio of total water withdrawn to the total output of products and semi-finished products. 2 The Group specific disclosure was calculated as the ratio of the volume of waste water discharged into surface water bodies, including mine and pit waters, to the total output of products and semi-finished products. y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 224 225 PERFORMANCE REVIEW Key initiatives in 2022 At the Cherepovets site, we completed the first stage of the water use optimisation programme as part of our production upgrade initiative for 2022–2025 Phosphate facility 1. Engineering documentation developed for the project named The Technical Upgrade of a Water Treatment Station in a Utility and Drinking Water Supply System with Arrangements Made to Dehydrate Sludge Water at the Phosphate Facility of Apatit. 2. Pilot tests completed and core technical solutions developed for the technical upgrade of an acidic waste water treatment station, with the drafting Nitrogen facility: 1. Work started to design a saline waste water treatment unit. The designer of the saline waste water facilities is NIUIF. at the Phosphate Facility of Apatit. The documentation is expected to be completed in 1Q 2023. 5. Implementation of the Water Use Optimisation Programme at the Cherepovets site of Apatit as part of the production upgrade initiative for 2022–2025. of engineering documentation underway. 3. A base case design developed for the project named A Waste Water Treatment Unit with a Source Water Capacity of at Least 400 m3/h at the Phosphate Facility of Apatit. The general designer responsible for the facility’s design (construction, networks, auxiliary systems) is NIUIF. 4. The development of engineering documentation is underway for the project named A Saline Waste Water Sewerage 2. As part of the Electricity at a heat and power Generation Based on the System plant and chemical water of Chemical Water Treatment treatment concentrate. This (Heat and Power Plant) initiative, led to the reduction of waste the Volkhov branch successfully water discharged into sanitary piloted the reuse of effluents protection zones by 135 tonnes resulting from boiler blowdown per hour. Water withdrawal, m3 per tonne of products and semi- finished products1 Discharge of waste water into surface water bodies, m3 per tonne of products and semi-finished products2 Target 2025 2022 2021 2020 5.16 6.42 6.48 6.70 Target 2025 2022 2021 2020 4.16 5.27 5.31 5.57 Total water withdrawal by source, ‘000 m3 GRI 303-3, SASB RT-CH-140a.1 / EM-MM-140a.1 Indicators SURFACE WATER Total water withdrawal from surface sources, including: process water drinking water (internal use) drinking water (for supplies to third parties) mining and pit waters drainage water rainwater GROUND WATER Water withdrawal from ground-water sources Total water received from third-party suppliers, including: process water received from suppliers water from municipal supply (internal use) water from municipal supply (for supplies to third parties) waste water from other waste water discharge systems Total 2020 2021 2022 170,862 59,081 995 399 104,475 3,312 2,600 2,832 52,898 28,443 8,138 17 16,300 226,592 175,943 60,747 1,193 557 107,633 3,170 2,642 2,912 49,600 28,373 9,126 47 12,054 228,456 182,276 62,164 1,187 632 111,751 2,401 4,142 3,357 51,240 28,644 8,400 32 14,164 236,873 Measurement of total and specific water withdrawal including and excluding mining and pit waters Indicators 2020 2021 2022 Total water withdrawal, including mining and pit waters, ‘000 m3 226,592 228,456 236,873 Specific water withdrawal, including mining and pit waters,2 m3 per tonne Total water withdrawal, excluding mining and pit waters, ‘000 m3 Specific water withdrawal from surface sources, excluding mining and pit waters,3 m3 per tonne 6.70 122,117 3.61 6.48 120,823 3.43 6.42 125,122 3.39 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 1 The Group specific disclosure was calculated as the ratio of total water withdrawn, including mining and pit waters, to the total output of products and semi-finished products. 2 The Group specific disclosure was calculated as the ratio of the total volume of waste water discharged into surface waters to the total output of finished and semi-finished products. 3 The Group specific disclosure was calculated as the ratio of total water withdrawn, excluding mining and pit waters, to the total output of products and semi-finished products. 226 227 METRICS AND HIGHLIGHTSPERFORMANCE REVIEW Water consumption includes both and the size of the catchment mining and pit waters. The volume area. It tends to increase of mining and pit waters depends with the development of new on the intensity of precipitation horizons. Total water discharge by source, ‘000 m3 GRI 303-4 Indicators WATER DISCHARGE INTO SURFACE WATER BODIES Total water discharge into surface water bodies, including: mining and pit waters drainage water waste water from other waste water discharge systems SUPPLIES TO THIRD PARTIES Total water supplies to third parties including: 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 2020 2021 188,455 104,475 3,312 15,901 4,147 3,314 399 417 17 187,012 107,633 3,171 11,673 4,222 3,238 381 557 47 Total 2022 194,447 111,751 2,401 13,782 4,406 3,219 523 632 32 Total 192,602 191,234 198,853 Measurement of total and specific waste water discharge including and excluding mining and pit waters Indicators Total water discharge into surface water bodies, including mining and pit waters, ‘000 m3 Specific water discharge into surface water bodies, including mining and pit waters,1 m3 per tonne Total water discharge into surface water bodies, excluding mining and pit waters, ‘000 m3 Specific water discharge into surface water bodies, excluding mining and pit waters,2 m3 per tonne 2020 188,455 2021 187,012 2022 194,447 5.57 5.31 5.27 83,980 79,379 82,696 Treated effluents (reused in the production cycle) Asset Total, mln m3 Share of reused water, % Water consumption, ‘000 m3 GRI 303-5 Indicator Total water withdrawal (all sources) Total water discharge (all sources) Water consumption Water discharge in 2022, mln m3 GRI 303-4 Indicator 2020 240.4 88 2020 226,592 192,602 33,990 WASTE WATER DISCHARGE INTO SURFACE WATER BODIES Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total 2020 173.7 0 0 14.8 188.5 DISCHARGED WITHOUT TREATMENT (% OF TOTAL WATER DISCHARGE) Kirovsk branch Balakovo branch Volkhov branch Apatit (Vologda region) Total 0 0 0 0 0 2021 244.7 87 2021 228,456 191,234 37,222 2021 173.9 0 0 13.1 187.0 0 0 0 0 0 2.48 2.25 2.24 Waste water discharge at Apatit KIROVSK BRANCH Discharge 1 Discharge from ANBP-3 Discharge 2 Discharge from ANBP-2 Discharge 3 Rainwater at ANBP-2 Discharge 4 Mining waters of the combined Kirovsky, Central and Rasvumchorrsky mines Receiving water body Zhemchuzhnaya River Belaya River Belaya River Lake Bolshoi Vudyavr Discharge 5 Mining waters of the Koashva and Njorkpahk open pits Lake Kitchepahk Discharges 6, 9 Waters of water-lowering wells of the Vostochny mine Vuonnemyok River APATIT (VOLOGDA REGION) Effluents from the phosphate facility Effluents from the nitrogen facility Rybinsk Reservoir Rybinsk Reservoir 1 The Group specific disclosure was calculated as the ratio of waste water discharged into surface water bodies, including mining and pit waters, to the total output of products and semi-finished products. 2 The Group specific disclosure was calculated as the ratio of waste water discharged into surface water bodies, excluding mining and pit waters, to the total output of products and semi-finished products. 2022 241.7 86 Total 2022 236,873 198,853 38,020 2022 180.0 0 0 14.4 194.4 0 0 0 0 0 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 228 229 PERFORMANCE REVIEW Biodiversity Target 2022 highlights Preservation of biodiversity in regions of PhosAgro Group’s operation at a level securing sustainability Over 1.2 million juvenile fish of various species and pike larvae were released into water bodies across PhosAgro’s geographies in 2019–2022 Strategy and management approach GRI 3-3 conducts an environmental resources. In 2020, the Company impact assessment (EIA) based started developing comprehensive on the results of engineering biodiversity protection programmes and environmental surveys. in partnership with research The Company’s Environmental Policy Assessment of the local flora, fauna institutions. The effort is aimed sets forth PhosAgro’s obligations and landscapes, as well as research, at assessing and restoring to preserve biodiversity, natural analysis and consideration of public environmental conditions landscapes and habitats across attitudes towards biodiversity across the Company’s footprint its footprint and prevent its projects protection are integral to our EIA and establishing its priorities from causing any harm to the same. procedures. in protecting biodiversity based on indicator species monitoring. Before building any new For a number of years, the Company production facilities or renovating has been working to preserve existing ones, PhosAgro biodiversity and replenish biological Key initiatives in 2022 GRI 304-3, SASB EM-MM-160a.3 Comprehensive biodiversity protection programmes were implemented at the Volkhov branch, one of the Kirovsk branch’s facilities and Apatit’s Cherepovets production site. Kovdozero Reservoir, Murmansk region Whitefish 11,502 Kirovsk Lake Ladoga, Leningrad region Volkhov Cherepovets Whitefish 1,584 Rybinsk Reservoir, Vologda region Pike 42,340 Balakovo Volgograd Reservoir, Saratov region 187,222 juvenile fish of various species and pike larvae were released into water bodies across the Company’s geographies in 2022 Sheksna Reservoir, Vologda region Sterlet 3,000 Sukhona River, Vologda region Sterlet 11,743 Saratov Reservoir, Saratov region Carp 28,151 Zander 28,064 Sterlet 5,601 Silver carp Carp 30,237 25,000 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A GRI 304-2, SASB EM-MM-160a.3 In 2022, the Cherepovets facility completed research of flora The research revealed that the area’s The field and desktop studies proved wildlife includes endemic European that none of the plants or animals and fauna within the footprint and Siberian species and is typical found in the reviewed area of pyrite cinder storage facility No. of the Vologda region. are included in the Vologda region’s 1–3 (System for Hydraulic and Dry Stacking of Pyrite Cinder). Red Data Book or in the Red Data Book of the Russian Federation. 230 231 GRI 304-3PERFORMANCE REVIEW As part of the efforts to develop of the Kirovsky mine includes Water ecosystems within biodiversity protection over 900 species of fungi, lichens, the footprint of the Kirovsky mine programmes, the Company mosses and vascular plants, exhibit relatively high taxonomic joined forces with Kolsky as well as 135 species of birds diversity due to a wide range Research Centre of the Russian and 11 species of mammals. of conducive factors. The efforts Academy of Sciences The realm of lichens and plants to take stock of fish fauna within to conduct a comprehensive within the footprint of the Kirovsky the footprint of the Kirovsky environmental study of the area mine is amazingly diverse mine led to the identification within the footprint of Apatit’s Kirovsky mine. The researchers walked over 150 km of trails and idiosyncratic, which is a reason of four fish species. Lake Bolshoi enough to develop designated Vudyavr currently fits the habitat initiatives for protecting the unique requirements for these species, and completed 62 geobotanical flora of the Khibiny Mountains. as it offers ample food supplies descriptions. The total The diversity of bird and mammal for both salmonids (brown trout, distance walked to take species was strongly affected Arctic char) and European smelt. stock of the endemic birds and disturbed by human activities and mammals exceeded 121 in the area. Their incidence in natural As part of the programme km. The study of hydrobionts habitats corresponds to standard for environmental monitoring was carried out at three incidence in slightly disturbed areas of biome (flora and fauna), stations and lasted from July and predictably enough shows the Volkhov branch researched until September. signs of structural transformation an area within the sanitary in populations inhabiting areas protection zone. The research revealed that impacted by humans. the biome of terrestrial ecosystems within the footprint The study of the area within the footprint of Apatit’s Volkhov branch revealed that structure of animal species across the reviewed biotopes is typical for the region in question. A total of 52 bird species were found to live within the facility’s footprint and in adjacent areas. Investment in biodiversity protection programmes, RUB mln 13.7 11.4 4.1 5.3 2022 2021 2020 2019 GRI 304-3 Juvenile fish released into water bodies across PhosAgro’s geographies Water body SARATOV REGION Volgograd Reservoir Saratov Reservoir LENINGRAD REGION Lake Ladoga Nakhimovskoye Lake MURMANSK REGION Umba River Kovdozero Reservoir VOLOGDA REGION Sukhona River Sheksna Reservoir VOLOGDA AND YAROSLAVL REGIONS Rybinsk Reservoir YAROSLAVL REGION Gorky Reservoir Total 2020 2021 2022 45,911 26,393 2,116 – 4,000 – – – 654,400 6,500 739,320 55,838 28,151 – 28,715 5,000 – 22,933 3,500 – – 144,137 60,838 28,151 1,584 – – 11,502 11,743 3,000 70,404 – 187,222 y n a p m o C l e fi o r p i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 232 233 METRICS AND HIGHLIGHTSPERFORMANCE REVIEW Contributing to local communities PROGRAMMES, STRATEGIC GOALS AND METRICS KEY PROJECTS AND HIGHLIGHTS OF 2022 OUR FAVOURITE CITIES • Improving the quality of urban environment and promoting sustainable development of the cities where we operate: Kirovsk, Cherepovets, Balakovo, and Volkhov. Target 8.3 Target 9.1 78 mprovement projects completed Specific activities: support for entrepreneurs in the form of interest-free loans or grants; implementation of the Arctic Entrepreneurship Library project Target 11.3 Target 17.17 EDUCATION • Attracting educated, motivated and skilled young talent to innovative Russian facilities, including those of PhosAgro. • Effective combination of high-quality education and physical training to facilitate moral and ethical development and promote health of the younger generation. • SPIRITUAL REVIVAL • Preservation and promotion of orthodox values, spiritual ideas, benevolence and respect for our legacy and motherland. CONNECTING GENERATIONS • Preserving the history of the nation, industry, or facility for all generations; supporting continuity of generations, inclusive traditions, respect for the older generation, veterans, and vulnerable population groups. PROMOTION OF SPORTS • Supporting Russian sports at the international, national and regional levels, and promoting sports in regions where the Group operates. Target 3.4 Target 4.4 Target 3.4 Target 3.4 Target 4.4 Задача 11.3 Target 3.4 Number of DROZD students increased by 11.3% Number of DROZD students who are children of the Company’s employees increased by 49.9% 83 graduates of PhosAgro Classes started their career with the Company after completing higher education Total number of events rose by 3.5% Total number of offsite activities was up by 20.2% Implementation of a project to restore the wooden church of Dormition of the Most Holy Mother of God (17th century) in Nelazskoye (Cherepovets District) Support for a project to develop the Russian Orthodox Centre in Singapore 5,794 events held by career guidance and exhibition centre Laboratory of Safety, an interactive multimedia exhibition, created Completion of a project to restore mosaic icons of the Holy Trinity Cathedral in Balakovo Repair and provision of equipment for the spiritual and educational centre of the Cathedral of the Life-Giving Trinity (Volsk, Saratov region) 175 initiatives created to provide targeted support and assistance to veterans, senior citizens, and vulnerable population groups Total financial support came close to RUB 466 mln l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 234 235 PERFORMANCE REVIEW Strategy Our strategy is focused on long-term social responsibility practices social and economic development implemented by our production The Company’s Charity Policy programmes in the regions, cities, facilities, this partnership towns and rural communities is perfectly tailored to meet today’s in which our key production units challenges and relevant stakeholder operate. expectations. We place a high priority on historical All our programmes and initiatives continuity: as a successful enduring involving social investments partner of local communities are aligned with the goals in which we operate, we and objectives set in the Group’s are committed to promoting their Strategy to 2025 and contribute to its sustainable development. While successful implementation. hinging upon long-established identifies the following key areas of social investments: • education; • sports and a healthy lifestyle; • social and spiritual aspects; • medicine and healthcare. We implement regional development projects with a special focus on: respecting the interests of, and open communication with, all stakeholders; investments in social and infrastructure development initiatives; charitable support of local population and communities; improving educational potential of the regions and promoting sports and a healthy lifestyle. External recognition In 2022, PhosAgro Group once again ranked among businesses with the best social and charitable programmes in the Russian Leaders in Corporate Philanthropy competition. These long- standing awards for socially responsible businesses are organised by the Donors Forum, a coalition of major grantmakers in Russia. In 2022, a total of 60 companies enrolled in the competition, with 39 making it into the final ranking and PhosAgro included in the A+ Leaders category along with eight other companies with the highest score. Showcased by the Cherepovets facility, the Laboratory of Safety exhibition won a social programme award as the Best Programme Contributing to the Achievement of UN Sustainable Development Goals to Ensure Health, Healthy Lives, and Well-Being to Promote Sustainability. Management approach GRI 3–3 Our social investment programmes and the involvement of Company • are based on public benefit priorities representatives in the work of local To ensure transparent and mostly rely on opportunities legislative and representative and effective corporate to partner with regional and local bodies and government authorities government authorities, local to setting up community communities, non-governmental liaison offices and other venues organisations, including non- for meetings with people. profit organisations established by the Company to this end, educational institutions and other Key policies and regulations governance, the Group has developed a framework of internal regulations governing charity and sponsorship, including: • Code of Ethics; • Charity Policy; stakeholders. All of the Group’s social • Government Relations investment projects and initiatives Policy; We implement our social investment are implemented in accordance strategy through promoting with the requirements of the Federal • Policy for Managing Community Social efficient and successful cooperation Law on Charitable Activities Programmes; with a broad range of partners and Charitable Organisations, • Regulations on Managing in line with the highest international and other applicable laws sustainable development standards. and regulations. The key principle underlying our interaction with local communities is a meaningful dialogue through a variety of communication channels, from public hearings For more information on community social programmes, please visit the Company’s website Community Social Programmes; • Assessment Criteria for Community Social Programmes. Management of social investment programmes Organisational unit Key responsibilities CORPORATE LEVEL OF PHOSAGRO GROUP Management Board Chief Executive Officer Deputy CEO • Annual budget consideration and approval • Decisions on participation in social and charitable initiatives • General coordination of activities related to charity, sponsorship and community Office for External Communications investment • Collection and analysis of feedback and other relevant information on ongoing projects • Organisation of public hearings and sociological surveys • Information support OPERATIONS Government Relations Department • Regular communication with business partners Information Policy Department • Project and programme management HR and Social Policy Department • Preparation of proposals on the basis of feedback Social Development Departments • Initial consideration of new applications Commission for Social Issues and Charity l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 236 237 PERFORMANCE REVIEW Performance assessment and feedback the evolution of public priorities Group. Building on that, in 2022 we related to social and economic reviewed our internal documents GRI 413–1 development. We focus heavily on evaluating In 2021, we partnered to develop and approve criteria and procedures for the assessment of community social programmes. the results of our social investment with the Donors Forum to run The sets of criteria for each of them programmes. Assessment criteria an exhaustive stakeholder survey are available on the Company’s include both objective data and evaluate charity programmes website. Our 2022 performance and stakeholder views, thus ensuring and projects implemented for some of the key criteria is shown comprehensive performance in the regions of our footprint below for each specific programme. assessment and monitoring and supported by PhosAgro The Company uses the following channels to liaise with stakeholders: involvement in the work of regional and municipal legislative and representative authorities; interaction with religious and faith leaders; organising and running city-wide public events (the Company’s corporate holidays, city celebrations, sports competitions, tree planting, release of young fish, etc.); participation in meetings public hearings and festivals of regional and local government authorities; interaction with community groups (veterans, pensioners, NGOs, and volunteers); of charity projects; partnership ties in implementing projects such as DROZD, PhosAgro Schools, projects run with colleges, universities, hospitals, sports clubs/teams, and charity foundations (including in the form of surveys, polls, and social listening on social networks and in the mass media); interaction through social networks and mass media (publications on social projects and handling questions asked by stakeholders); establishment of subsidiaries to promote non-core activities that have economic influence on the sustainable development of local communities; interaction with recipients of targeted support. We also collect a considerable hearings on various aspects; Also, the Company’s employees have amount of data used for analysing and public meetings organised been elected to various regional the effectiveness of our social at public sites. As an example, and local legislative bodies. Our investment programmes from in Volkhov, the Company with support work in these bodies provides us the ongoing stakeholder feedback, from its government relations team with information on the most urgent including corporate newspapers, TV started holding regular meetings issues faced by local authorities. broadcasts, and social networking. with local residents to discuss various We include them in the agenda Local residents in communities where matters at a local community centre. of joint working groups which discuss we operate voice their grievances The first meeting was held in 2022, the methods and mechanisms and comments using the Company’s with the Company’s social projects for addressing the issues. website; social networks; liaison presented and showcased to local offices of deputies who are also residents. the Company’s employees; public For information on other feedback mechanisms, see the description of specific projects. Risks and opportunities SASB RT-CH-210a.1, EM-MM-210b.1 Our social investment objectives Social investment specific risks are listed below: are affected among other things by the following strategic risks: 1 3 4 15 social risk; HR risk; reputational risk. The Company develops corrective measures as necessary and unlocks opportunities to mitigate those risks. Below you can find more information about what we do on this front. For more information, see the Strategic Risks section on page 70 Insufficient regulation of social investment management processes 3 And economic development Performance evaluation of social investment programmes Evolution of public priorities of social 2 l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 238 239 PERFORMANCE REVIEW 2022 metrics and highlights PhosAgro Group makes an extensive and diverse contribution to the social Social spending by area in 2022, % Social spending by area in 20211, % and economic development of local communities in the regions of our presence: we pay taxes to local budgets, create stable and well- paid jobs for local people, and place regular orders with local businesses. As a responsible long-term partner, we also allocate significant funds to support local communities, contribute to charitable causes and develop infrastructure. Stable and successful home regions are a key driver of PhosAgro Group's sustainable development. 51.62 36.13 5.36 4.30 2.15 0.42 0.02 Educational projects (net of renovation of educational institutions) Infrastructure facilities, including renovation of educational institutions Churches Sports Nationwide projects Organisations of veterans and disabled people Membership fees 59.76 13.97 11.91 9.67 3.36 1.27 Infrastructure facilities, including renovation of educational institutions Sports Churches Educational projects (net of renovation of educational institutions) Nationwide projects Organisations of veterans and disabled people 0.06 Membership fees Charitable giving and community and infrastructure investment1, RUB ‘000 GRI 203–1 Allocations1 Contributions to charities, NGOs and research institutions (not related to the organisation’s commercial research and development) Funds allocated to support community infrastructure (recreational facilities, etc.) Direct spending on social programmes, including arts and educational activities 2020 616,149 2021 742,048 2022 3,083,504 1,895,758 1,992,825 3,749,281 637,419 832,965 3,986,468 Total 3,149,326 3,567,838 10,819,253 1 In 2022, the Company revised the methodology for calculating the indicator and excluded expenses incurred under sponsorship agreements. Based on the principle of comparability, the data for 2021 and 2020 was recalculated accordingly. Key social investment programmes GRI 203–2 OUR FAVOURITE CITIES Improving the quality of urban environment and promoting sustainable development of the cities where we operate: Kirovsk, Cherepovets, Balakovo, and Volkhov. Our Favourite Cities initiative municipality based on the results Partnership and ongoing meaningful is implemented under social of comprehensive social surveys dialogue with stakeholders allow us and economic partnership and identification of major social to fine-tune our social programmes agreements signed problems and development potential to better align them with focuses with the authorities and is financed of the territories. of regional development and invest in line with the Company's social policy for a particular more efficiently. Promoting entrepreneurship The Company traditionally supports a range of initiatives aimed at promoting entrepreneurship. In 2022, a competitive corporate-city project Making Our City Better Together! was established in Cherepovets, which included training for potential participants representing small private businesses to help them learn the rules of applying for the project. The initiative is implemented in cooperation with regional and local government authorities, non- governmental organisations and civil society. In Kirovsk, Murmansk region, the project of the Kirovsk Tourism and Entrepreneurship Development Agency (formerly Khibiny Business Development Centre), a project supported by the Company, is underway. Its main activities include providing new and existing entrepreneurs with training and grant support awarded on a competitive basis. The Kirovsk Tourism and Entrepreneurship Development Agency assists in obtaining regional and federal grants through the Regional Small Business Support Fund and other grant providers. In addition, 2022 saw the implementation of the Arctic Entrepreneurship Library project. Results of supporting entrepreneurship in the Murmansk region in 2021–2022: 279 new jobs created; 17 new LLC and sole traders as well as 14 self- employed persons registered; 12 project initiatives launched, including seven completed; government support totalling RUB 10 mln received by eight entrepreneurs; status of Russian Arctic Zone residents granted to seven entrepreneurs; three entrepreneurs in the process of registering as Russian Arctic Zone residents; 849 hotline consultations for businesses conducted. l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 240 241 PERFORMANCE REVIEW Our Favourite Cities programme Key criteria and metrics Total improvement projects completed (including repairs and reconstruction of social and healthcare facilities, educational institutions and roads) Residents' initiatives (applications submitted) including those implemented with the Company's support Share of external co-financing, % Number of partners involved (including local residents for reconstruction/construction of infrastructure facilities, including leisure and sports facilities) Number of city-wide events organised by the Company 2022 78 3 3 48 139 101 Vologda region sports school in Balakovo. According to a sociological survey In November 2022, the first Initiated by a group of locals, conducted in the reporting year stage of the Northern Ring Road the project became a successful and feedback collected in social was inaugurated in Cherepovets. example of involving the public networks, residents of the Leningrad The project was completed and businesses of Balakovo in social region are generally satisfied with funding from regional development. The project’s total cost with urban improvements currently and municipal budgets and financial stood at RUB 10.6 mln. The sports taking place in the region. support from PhosAgro Group ground is the only one in the island and Severstal. A quadripartite part of Balakovo with this level co-financing agreement of equipment. was concluded, making it the first Murmansk region The key project in 2022 Federal District by the Russian Results of a 2022 sociological • 81% of respondents are happy Mountains national award. All survey: with the condition of sports of the resort’s sports facilities • about 77% of the respondents infrastructure; are certified by the International Ski positively evaluated changes • about 63% consider the town Federation (FIS). in the appearance of Kirovsk; to be a tourist attraction; • about 57% of those surveyed • level of healthcare, housing, positively rated the safety and utilities are areas and quality of roads; for improvement. EDUCATION Healthy, educated and professionally trained population is a critical driver of any region's social and investment attractiveness. Since its establishment, PhosAgro Group has been deeply involved in the development of human potential in the regions of its operation, in particular, by helping to address the outflow of young people from small towns. major public-private partnership According to a sociological survey was PhosAgro's co-financing education support programme project in the Vologda region. conducted in the reporting year of the overhaul of the street and road along the school–college/ In addition to financial support The Company invested RUB 171.6 mln and feedback collected in social network in Kirovsk. The main university–enterprise pathway, we and assistance in building in the road construction. networks, residents of the Balakovo objective of the project is to improve implement career guidance projects renovations provided to the schools, municipal district are generally traffic safety in the town for schoolchildren. In the field the project offers advanced According to a sociological survey satisfied with the urban by enhancing road infrastructure, of personnel training, we cooperate programmes in natural sciences, sporting opportunities than other conducted in the reporting year improvements currently taking place among other things in order with educational institutions economics, and management. schools; schools. 32% of students consider PhosAgro Schools prestigious and enjoy the educational process. 23% say that PhosAgro Schools increase their chances to join the Company. 8% say that PhosAgro Schools offer more PhosAgro Schools of the school–college/university– As part of our unique multi-stage enterprise track. and feedback collected in social in the region. networks, residents of the Vologda region are generally satisfied with urban improvements Leningrad region currently taking place in the region. In 2022, a concept to further boost Kirovsk's appeal for tourists. In addition, the access to the Kirovsky mine was improved, reducing travel time and increasing the safety of our employees and all in the cities and towns where we According to an annual survey • degree of parents’ and students’ operate, as well as in Moscow, of PhosAgro Schools students: satisfaction with the level St Petersburg, Ivanovo, Kazan and more. • almost half of the students – 49% – say that PhosAgro Schools give them more chances of teaching at PhosAgro Schools is quite high: 90% of students say they are satisfied with the teaching of almost all Comments of city residents for the development of the Kirov residents of the Kukisvumchorr Covering all levels of education, this regarding the need to maintain public garden in Volkhov was drawn neighbourhood (about programme supports promising and opportunities to enter subjects. improved areas in due state up, featuring new locations for active 5.000 people). future professionals at each stage a specialised university than other are taken into account when and passive recreation activities, creating PhosAgro Group's an alley with information and history We participate in a public- municipal programmes and charitable initiatives. boards, an amphitheatre, outdoor private partnership to develop chess tables, a stage and even the Khibiny tourist cluster, including Saratov region an urban vegetable garden. the Bolshoi Vudyavr Ski Resort. The initiative to create a vegetable In particular, the construction garden/greenhouse with corporate of the second stage of an artificial In 2022, Apatit provided financial design where PhosAgro Group’s snowmaking system on the resort's support to build a sports ground fertilizers will be used to grow northern slope continued in 2022. and install professional sports agricultural products won the second In November 2022, Bolshoi equipment in a Balakovo public place at the Young Manager – 2022 Vudyavr was named the best garden garden near the Olympic corporate competition. ski resort in the Northwestern School College University Career with PhosAgro l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 242 243 PERFORMANCE REVIEW Satisfaction with various aspects of PhosAgro Schools (296 people surveyed), % Graduates enrolment outcomes from 2015 to 2022, people Availability of state-of-the-art specialised laboratories Course schedule Comfort in classrooms and other areas Relationships with classmates Events organised by PhosAgro for children Relationships with teachers Equipment and materials for the teaching process 85 90 94 96 96 97 94 988 868 517 181 Total graduates Graduates admitted to universities Technical cources Employer-sponsored technical education Programme of cooperation with Russian agricultural universities level with the opening of nine for 30 agrarian universities in Russia new centres in the country’s key and the CIS. A total of 22,700 students agricultural regions. Today, PhosAgro and teachers attended the lectures, At PhosAgro, we believe that Group's educational centres operate which covered topics such the development of education at Russian State Agrarian University: as agrochemistry and agronomy, in the agribusiness sector is a crucial • Moscow Timiryazev Agricultural crop production, innovation factor in supporting and enhancing Academy, and digitalisation of agriculture, the robust growth that Russian • Saratov State Agrarian University, economics, law, and responsible agriculture has been delivering • Urals State Agrarian University; farming. in recent years. We are focused • St. Petersburg State Agrarian on fostering the right conditions University; Capabilities for conducting for that by developing professional • Kursk State Agricultural Academy, scientific experiments were set competencies of students and teachers at agricultural • Belgorod State Agricultural up at PhosAgro Educational University, Centre’s Phyto-Class of Moscow universities, as well as of agricultural • Kuban State Agrarian University, Timiryazev Agricultural Academy, producers and agro-industrial • Orel State Agricultural University, including those for students’ thesis technology service providers. • Voronezh State Agricultural projects. In addition, the Company Vocational schools and universities We provide the country's leading Since 2013, PhosAgro has been Federation Council Committee University, together with Timiryazev Academy implementing a comprehensive on Science, Education and Culture The main mechanism for this • Penza State Agrarian University work to provide career guidance programme of cooperation in Kirovsk, the committee is the consolidation of resources • Ryazan State Agrotechnological to schoolchildren, organise lectures technical universities with funds with the Cherepovets College recommended that the Russian within PhosAgro Group's Education University. of Chemistry and Technology Government take into account Centres at Russia's leading and conferences, additional professional education courses, for equipment and supplies and participate in adapting (CCCT), where the Group supports the Company's experience in training agricultural universities. In 2022, In 2021–2022, PhosAgro's Education open days with major employers educational programmes to the needs activities of a specialised department skilled engineers and workers using the programme reached a new Centres held over 200 online lectures and meetings for young scientists of modern production facilities. of the Ivanovo State University the school–college–university– Students of PhosAgro Group's partner of Chemistry and Technology providing enterprise educational pathway vocational schools and universities training for students and employees when creating the Professionalism are offered internships at the Company, of PhosAgro's facilities. and the most promising students federal project and education and production clusters in key get employment opportunities In February 2022, following an offsite industries such as chemical, light at the Group's facilities. meeting held by the Russian industry, metallurgy, etc. Graduates of PhosAgro Сlasses hired by PhosAgro Group companies, people Employment of CCCT graduates by the Company's facilities, people 2022 2021 2020 2025 plan 2024 plan 2023 plan 2022 2021 2020 9 9 10 2 8 9 5 4 5 9 2 2 206 128 107 108 74 53 Apatit Kirovsk branch of Apatit Volkhov branch of Apatit Balakovo branch of Apatit For more information on PhosAgro Schools, see the People Development section on page 161 l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 244 245 PERFORMANCE REVIEW In addition, DROZD established ten DROZD project results, people Sports achievements of students in 2022, people DROZD (Educated and Healthy Children of Russia) non-sports clubs as well as hobby groups for popular science, patriotic and preliminary military training, DROZD, a unique corporate fitness, Media School, robotics, etc. project, addresses the social issues associated with keeping children busy outside school hours in the cities and towns where PhosAgro operates. The Company has taken on a significant share of responsibility for their upbringing, education, and sporting development, so that parents can work comfortably knowing that their children have everything they need for their intellectual and physical development. In 2022, DROZD was presented at the Best Practices in Promoting Physical Culture and Sports session of Russia – Country of Sports, the X International Sports Forum. In 2022, raised funds accounted The project is a comprehensive for 23% of the project's total funding, system of multi-faceted long-term which demonstrates the popularity interactions with children aged of DROZD and confirms keen 4 to 18 that harmoniously combines interest in the project from local sports, spiritual, and patriotic residents and regional authorities. education. To facilitate the DROZD programme, operators (independent Surveys show a growing number non-profit organisations) have of positive reviews, in particular been established in four cities from parents regarding where PhosAgro operates: DROZD- the organisation of recreational Balakovo (Saratov region), DROZD- and sports activities (e.g. summer Cherepovets (Vologda region), camps in the Vita health resort DROZD-Khibiny (Kirovsk, Murmansk in Anapa and the annual awards region) and DROZD-Volkhov ceremony of the Best DROZD (Leningrad region). students). An important fact is that more than 50% of DROZD In 2022, the project covered students who took part in the survey more than 7,000 children appreciated the quality and level (including 170 physically disabled of equipment in the gyms. According and handicapped ones) who to a parent survey, almost 50% practised more than 20 athletic of parents expect DROZD sports disciplines in 70 sports classes. clubs to improve their children's Over 50% of the students passed health. There was a considerable various levels of the GTO fitness increase in the number of parents tests, with 29% of the children interested in their children's sporting with disabilities at the DROZD- achievements. Cherepovets site passing the tests under the GTO Without Borders project. More than 40% of the students are winners and runners-up in sporting events at the municipal, regional, and federal levels. 2022 2021 7,263 2,797 +11.3 % +49.9 % 6,524 1,866 Total number of students Children of PhosAgro Group employees Finance, RUB mln 2022 2021 147.2 44.6 121.7 39.2 Funding from Apatit Funds raised Number of participants in public events, corporate festivals, and celebrations staged by independent non- profit organisations in 2022, people 39,840 people 6,372 9,573 17,545 6,350 Balakovo Volkhov Khibiny Cherepovets Winners and runners-up of international competitions Winners and runners-up of national competitions Winners and runners-up of regional competitions Winners and runners-up of municipal competitions Candidate masters of sports Masters of sports DROZD Village project In 2022, the DROZD Village project (running since 2016) was awarded in the Sports for Everyone, Best Organiser of Physical Culture and Sports in Rural Areas categories, according to the National Sports Award. The project covers twelve villages in the Saratov region and offers more than 500 rural students an opportunity to do sports. Necessary infrastructure is created in rural locations, sports clubs are opened and mass sports events are held. More than 30 sports clubs are available to DROZD Village students for sports activities free of charge. 10 71 1,158 3,406 13 2 An important feature of the project is continuous health monitoring based on the Health Navigator methodology. It helps teachers and parents to adapt educational activities as closely as possible to specific requirements of a child’s body. 3,716 Number of children monitored 16.9 Average health index of all children monitored, at the beginning of the reporting period 17.1 Average health index of all children monitored, at the end of the reporting period l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 246 247 PERFORMANCE REVIEW SPIRITUAL REVIVAL CONNECTING GENERATIONS The main objective of the programme is to preserve and promote orthodox values, spiritual ideas, and respect for our legacy and motherland. The main goal of the programme is to preserve memory of the history of the nation, industry, or facility for all generations; traditions of respect for the older generation, veterans, and vulnerable population groups. The programme has been underway The restoration of the unique mosaic since 2001 and is implemented icons of the Holy Trinity Cathedral in cooperation with the Russian in Balakovo, which began in 2018, Orthodox Church, regional and local was completed in 2022. In June, government authorities, non- the Sign mosaic on the north side governmental organisations and civil of the building was consecrated. Also, society. in 2022, work began on the Calvary mosaic panel, which will be placed The Company organises biannual on the west side of the church. pilgrimage tours to the relics of St Such was the intention of Fyodor Nicolas the Wonderworker for Russian Schechtel, a prominent architect believers. PhosAgro Group supports of the early 20th century, and now the project to develop the Russian his ideas are to be brought to life Orthodox Centre in Singapore. by the outstanding Russian mosaic The Group provides assistance artist Igor Lavrenenko. In addition, to the exarchate of the Russian in 2022 PhosAgro financed Orthodox Church in Southeast Asia. the restoration of the cathedral's fence. With the Company's organisational support, the restoration of a church of Dormition of the Most Holy Mother of God (built in 1694) in the Nelazskoye village, a unique monument of wooden architecture, is underway. PhosAgro also helped renovate and equip the spiritual and educational centre of the Cathedral of the Life-Giving Trinity (Volsk, Saratov region). Career Guidance and Exhibition Centres project and an interactive garden where Total number of attendees students can watch educational Career guidance and exhibition videos on cell life and structure centres are located in all of the four and do lab experiments. There key cities across our footprint are panoramic cinemas offering and represent a combination career guidance and educational of a modern multimedia corporate films, sensor tables with geographic museum and an innovative data on minerals and countries and interactive popular science around the world, and sensor centre offering advanced booths to test professional aptitude. programmes in chemistry, biology, The centres are very popular and related professional training. with schoolchildren for being The centres are equipped with virtual the place to learn about different 2022 2021 2020 85,544 241,034 66,540 578,651 24,189 400,090 Offline Online and physical science laboratories professions and a major attraction Number of events designed to prepare a variety for teenagers combining cultural of chemical compounds, multimedia entertainment and intellectual microscopes with 50.000x power, pastime. 2022 2021 2020 5,794 5,313 363 Participants: • Museum and exhibition centre for interactive education of Apatit in Kirovsk; • Fifteenth Element, a museum and exhibition centre in Volkhov; • Green Planet, a centre for interactive education in Cherepovets; • Academy of Fertility, a museum and exhibition centre in Balakovo. l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 248 249 PERFORMANCE REVIEW Security Agents • security and safety training society and show how to avoid In 2022, PhosAgro continued courses developed for different them; a unique project for schoolchildren categories (including children); • a travelling safety exhibition Targeted Assistance project In Kirovsk and Apatity, we provide A combination of targeted assistance support to six non-governmental to public organisations and support organisations, including a volunteer which was initiated • the first issue of Security Agents, developed; in 2023, the exhibition for volunteer initiatives in the regions centre for the Group's pensioners. by the Cherepovets facility a magazine for teenagers (12+), will travel across Cherepovets of operation. and enlisted the support of Apatit's published, and three more issues and the Vologda region, Volkhov We also support four local non- Economic Security Department are slated for 2023; and Balakovo; The programme supports 24 non- governmental organisations and the Ministry of Internal Affairs’ • Security Agents, a media school, • project experience was rolled governmental organisations in Balakovo and Volkhov, respectively. Office in Cherepovets. set up, seeking to provide out at PhosAgro's Balakovo of labour and war veterans, an in-depth insight into security and Volkhov sites of Apatit. as well as a number of charities. The Company’s volunteers Other areas of work with veterans include: • financial aid; • health resort treatment; • mass cultural events, excursions, entertainment. The project achieved the following and safety issues and promote results: safe behaviour; • Laboratory of Safety, an interactive • five episodes of The Kislov Family, multimedia exhibition, created; a cartoon for children (6+), filmed to reveal the problems of modern For more information on the Security Agents project, see the Ethical Practices section on page 310 The Agents of Safety project received prizes at two federal competitions: • winner in the Best Museum Event category for the project in the Corporate Museum competition; • winner as the Best Programme Contributing to the Achievement of UN Sustainable Development Goals to Ensure Health, Healthy Lives, and Well-Being to Promote Sustainability in the Russian Leaders in Corporate Philanthropy competition. organised 175 events to provide and prepare them for independent In particular, PhosAgro supports assistance to veterans, the elderly, life outside the institution), ten non-governmental organisations and vulnerable social groups in 2022. as well as environmental initiatives. in Cherepovets, including Members of the youth organisation In the Name of Good charity, Apart from that, the volunteers' also help an animal shelter. Another the Cultural and Recreational activities include interaction important area of volunteer activity Centre in the Northern Microdistrict, with orphanages (in particular, is assistance to the Company’s and veteran organisations. making friends with children, veterans, primarily those who helping them to socialise are single. PROMOTION OF SPORTS Support for Russian sports at the international, national and regional levels, and promoting sports in regions where the Group operates. We believe that supporting the first steps of young athletes in the cities of our presence is just as important as contributing to the success of record holders. Apart from DROZD, the Company provides assistance to 21 sports organisations at the federal, regional, and municipal levels. In 2022, total support for sports projects amounted to nearly RUB 466 mln PhosAgro's support at the federal level went to: • Russian Olympians Foundation: • Russian Rhythmic Gymnastics Federation; • Russian Cross-Country Skiing Federation; • Russian Chess Federation; • Russian Rugby Federation; • Moscow Rhythmic Gymnastics Federation; Academy of Fertility, a museum and exhibition centre in Balakovo. The Company's support at the regional level went to: • Proton Volleyball Club; • Avtodor Basketball Club (Saratov region); • Turbina speedway team (Saratov region); • Severyanka Volleyball Club (Vologda region). The Company also continued to support local organisations: youth sports schools, sports associations and clubs. l e fi o r p y n a p m o C i c g e t a r t S t r o p e r e t a r o p r o C e c n a n r e v o g l a t i p a c e r a h S i s e c d n e p p A 250 251 PERFORMANCE REVIEW MAINTAINING best practices 4 E T A R O P R O C E C N A N R E V O G We believe it is important to continue to be guided by best practices in this essential area and to make sure all our internal standards and procedures are aligned with both Russian statutory requirements and the most reputable national and global guidelines. 254 Chairman's statement 256 Corporate governance framework 260 Corporate governance structure 266 General Meeting of Shareholders 266 Board of Directors 290 Executive bodies 292 Remuneration report 296 Corporate controls 302 Ethical practices 252 253 Last year, PhosAgro saw major reshuffles in its Board of Directors composition. Maintaining a meaningful share of independent directors on the Board remains a key priority for us. 4 ndependent directors currently on PhosAgro's Board of Directors We engage in ongoing and consistent efforts in the area of anti-corruption. We have the Anti-Corruption Policy and Code of Ethics in place, run anti-corruption control of our procurement activities, and work to prevent conflict of interest and train our employees as needed. А1 PhosAgro was awarded the highest ranking in the Russian Business Anti- Corruption Rating by the Russian Union of Industrialists and Entrepreneurs For details, see page 267 For details, see page 312 Chairman's statement 70% of directors elected to the Board in June 2022 were newcomers. 2022 saw unprecedented challenges in the production and economic activities, which could not but have an immediate effect on the Company’s corporate governance practices. In spring 2022, the London Stock debt commitments to the holders with the Corporate Governance for 2021 in line with the regulator’s of the management team and its Exchange suspended trading of bonds recorded both in Russia Code recommended by the Bank recommendations and examined contribution to the strong results in global depositary receipts and abroad. issued by Russian companies, of Russia. The directors also the action plan developed based delivered by the Company assessed progress made on the self-assessment findings. in 2022, while also continuing including PhosAgro. The introduced The newly elected Board of Directors in the reporting year against to support the management restrictions affected the shareholders’ continues to work actively. We rights to manage PhosAgro, receive have streamlined the structure dividends, and dispose of securities of committees by reducing previously approved corporate The 2023 external assessment in implementing the Strategy governance improvement initiatives of the Board’s performance in 2022 to 2025. and reviewed a similar action plan confirmed that activities of the Board In early March, Andrey A. Guryev issued by PJSC PhosAgro. As a result their number from six to three for 2023. resolved to step down as the CEO of disruptions in the settlement and reviewing the scope of their of Directors and its committees comply with the Corporate of PhosAgro and to resign infrastructure, PhosAgro also could responsibilities. We have also shifted We paid particular attention Governance Code recommended from the Company’s Board not pay interest on the previously the focus of the Board of Directors to the recommendations by the Bank of Russia and the Listing of Directors. Furthermore, issued Eurobonds. the Board of Directors lost and its committees by placing a particular emphasis on anti-crisis Xavier Rolet, its Chairman In this challenging environment, we management efforts. and independent director, demonstrated utmost commitment Andrey G. Guryev, Deputy to our obligations. For example, The Board of Directors continues Chairman, and Irina Bokova, in May 2022 the Company obtained to be actively engaged in embedding Chair of the Sustainable a permit to proceed with its GDR best practices into all aspects published by the Bank of Russia Rules of the Moscow Exchange. in December 2021 to encourage boards of directors of public joint- The Board of Directors reaffirms stock companies to consider ESG the Company’s commitment factors and sustainable development in their activities1. Among other things, in the reporting year to the highest standards of corporate governance and will continue to focus closely on health Victor Cherepov, Chairman of the Board of Directors of PJSC PhosAgro Development Committee under programme. In 4Q 2022, PhosAgro of PhosAgro's operations, including the Strategy and Sustainable and safety, sustainable development, the Board of Directors. 70% held a vote among its Eurobond its corporate governance. In 2022, Development Committee climate change and the global of directors elected to the Board holders to amend the issuance the Board of Directors took of the Board of Directors reviewed challenges facing the agricultural in June 2022 were newcomers. documentation in such a way note that the practices applied as to continue honouring its public by PhosAgro are strongly aligned results of the self-assessment industry. PhosAgro’s directors conducted by the Board of Directors commend the performance 1 Bank of Russia’s Information Letter No. IN-06–28/96 dated 16 December 2021 On Recommendations for Boards of Directors of Public Joint-Stock Companies to Consider ESG Factors and Sustainable Development Issues. 254 255 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Corporate governance framework Corporate governance principles PhosAgro sees its commitment to the highest corporate governance standards as key to building a transparent, responsible and trustworthy governance framework to ensure further growth and sustainable financial strength. PhosAgro's corporate governance principles, structure, practices and procedures are set forth in its Charter and Corporate Governance Code. Provisions of PhosAgro's Corporate Governance Code do not contradict the Corporate Governance Code recommended by the Bank of Russia’s Letter dated 10 April 2014 (the “CGC”) and the UK Corporate Governance Code. For the full text of PhosAgro's Charter, please visit our website For the full text of PhosAgro's Corporate Governance Code, please visit our website Basic principles of the Company's Corporate Governance Code Accountability Equality Transparency Responsibility Sustainable development governance GRI 2–12, 2–13 Our governance framework for sustainable development (SD) relies on a number of internal and external drivers. Internal drivers The Company’s mission and values supported by our Corporate Strategy External drivers Stakeholder expectations and the global community’s requirements for the maturity of the Company’s SD governance framework The six main components of the sustainable development governance system are listed in the Sustainable Development section on the official website 256 257 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review 2022 initiatives GRI 2–14 Documentation support Approval of: • • • the Inside Information Regulations as amended the Regulations on the Information Policy as amended the transparency statement under the UK Modern Slavery Act as amended • • • • the Terms of use of the PhosAgro hotline as amended the Regulations on the Board of Directors as amended the Regulations on the Strategy and Sustainable Development Committee of the Board of Directors the Tax Strategy Business processes and organisation • Establishing the Strategy and Sustainable Development Committee of the Board of Directors to vest it with the majority of functions previously pertaining to three dissolved committees of the Board of Directors: the Strategy Committee, the Environmental, Health and Safety Committee, and the Sustainable Development Committee • Strengthening the sustainability management function at the corporate headquarters and the enterprises • Comprehensive regulations on interaction in preparing non-financial reporting drafted and implemented • Extending certificates of compliance with requirements of ISO 9001, ISO 14001, ISO 45001, and GMP+ FSA • Surveying the opinions of the Company and its stakeholders with respect to the material topics under GRI 2021 IT • Update of the reporting year’s environmental and social achievements on the Sustainability page of the Company’s official website • Maintenance of the Public Scrutiny application designed to report occupational health violations Project management • List and coverage of sustainability key performance indicators (KPIs) expanded • Expansion of analytics under the automated system evaluating suppliers against ESG criteria • List of initiatives pursuing individual UN SDGs-related targets updated Competencies and people • Mandatory training • Participation in major in various areas (for example, cybersecurity, climate change, human rights, etc.) included in the sustainability training framework international and Russian initiatives (RSPP, CGI, ESG Alliance, UN Global Compact, IFA) maintained Performance review and reporting • Procedure for preparing • Procedure for the Strategy integrated annual reports drafted and approved. CEO appointed as chair of the working group in charge of the integrated annual report • Analysis of global and local ESG ratings and rankings • Taking into account stakeholders’ opinions (inside and outside the Company) and Sustainable Development Committee to monitor the Company’s sustainability projects developed • TCFD, GRI, CDP, The Value Reporting Foundation recommendations for reporting implemented 258 259 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Corporate governance structure Structure of corporate governance and sustainability management GRI 2–9 Administrative reporting Functional reporting Functional relationship GENERAL MEETING OF SHAREHOLDERS Review Committee Board of Directors Board of Directors committees: • Audit Committee • Remuneration and Human Resources Committee • Strategy and Sustainable Development Committee Chief Executive Officer Collective executive body (Management Board) Corporate governance assessment When assessing the quality Committee of the Board of Directors Following a review of the corporate of the Company's corporate and approval by the Board governance quality assessment, governance, the recommendations of Directors, and forms a part the Board of Directors approved of the Corporate Governance Code of the Company’s annual report. the CGC compliance report for 2022 (the "CGC") and the UK Corporate and issued a positive assessment Governance Code (UK CGC, In February 2023, the Audit of compliance with the CGC FRC, 2018) are adopted as best Committee of the Board recommendations. Furthermore, practices. The actual compliance of Directors reviewed the results the Board of Directors praised with the CGC is measured of the improvement plan progress against the 2022 Corporate on an annual basis and disclosed implementation in 2022, analysed Governance Practice Improvement in a dedicated report (report the developments of the degree Plan, and approved the improvement on compliance with the principles of compliance with the CGC plan for 2023. and recommendations principles, as well as the assessment of the Corporate Governance Code, of the disclosure quality to explain hereinafter the “CGC Report”), which non-compliance or partial is subject to review by the Audit compliance. Over the past three years, PhosAgro has demonstrated a high level of compliance with the CGC recommendations. CGC section Total number of matters Full compliance Partial compliance Non-compliance 2020 2021 2022 2020 2021 2022 2020 2021 2022 1. Shareholders' rights 2. Board of Directors 3. The Company's Corporate Secretary 4. Remuneration 5. Risk governance and internal control 6. Information disclosure 7. Material corporate actions Total Percentage of compliance with CGC principles 13 36 2 10 6 7 5 79 11 33 2 5 6 7 3 67 85 11 32 2 8 6 5 5 69 87 11 30 2 8 6 7 5 69 87 2 3 4 2 11 14 1 4 2 2 9 11 1 5 2 8 10 1 1 1 1 1 1 1 1 2 3 Internal Audit Department Legal and Corporate Governance Department Corporate Secretary Compliance with CGC principles at PhosAgro and other Russian companies, % Functional departments in sustainable development • Ecology and Environmental • Marketing and Development, Management • Human Resources and Social Policy • Technical Development, Capital Construction and Repairs, Samoilov Scientific Research Institute for Fertilizers and Insectofungicides (NIUIF) Innovations, NIUIF • Procurement • Project Management • Economic departments • Risk Management and Internal Control Sustainable Development Department Full compliance Partial compliance Non-compliance 2022 2021 2020 2019 78 77 78 87 87 85 84 2022 2021 2020 2019 17 17 16 10 11 14 15 2022 2021 2020 2019 5 6 6 3 1 1 1 PJSC PhosAgro Russian public joint-stock companies1 PJSC PhosAgro Russian public joint-stock companies PJSC PhosAgro Russian public joint-stock companies 260 261 1 Based on the Bank of Russia's annual reviews of corporate governance practices in Russian public companies Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review For every case of partial compliance or non-compliance, PhosAgro specifies the measures taken to mitigate the associated risks in the CGC Report. In 2021, the quality of PhosAgro's disclosure to explain the non-compliance (partial non-compliance) with the recommendations of the Code, according to the Bank of Russia, improved from 69 to 76%, while the average level in the Russian Federation declined from 63% to 59%. Degree of disclosure to explain non-compliance (partial non-compliance) with CGC principles at PhosAgro and other Russian companies, % 20211 2020 2019 76 59 69 63 77 63 PJSC PhosAgro Russian public joint-stock companies Results of implementing the CG improvement plan developed and approved by the Board of Directors in the analysis of the 2021 CGC Report Review and approval of the tax strategy The document was approved by the Board of Directors on 3 November 2022 Amendments to the information policy detailing the process for providing data on shareholder requests Amendments to the Regulations on the Remuneration and Human Resources Committee reflecting the conditions (events) for reviewing the compensation policies The document was approved by the Board of Directors on 3 November 2022 Amendments not approved. The Company proceeded from the fact that the responsibility to regularly revise the policy, which is specified in the Regulations on the Remuneration and Human Resources Committee of the Board of Directors, implies ensuring that it is updated and meets the current needs of the Company Return to the practice of individual assessment of the Board members when assessing the Board performance in general It was resolved to refrain from individual assessments for the purposes of the Board’s 2022 performance assessment ADDITIONAL MEASURES IMPLEMENTED Expanding the scope of the annual reports to include the Board of Directors’ viability statement, the going concern assumptions, consideration given to key stakeholders’ voice in the Board's discussions and decision-making, information about significant external appointments of the Board members Expanding disclosure on the remuneration system as a whole, the KPI system and their alignment with the strategy Updating PhosAgro Hotline Regulations Updating the Regulations on the Board of Directors and Regulations on committees of the Board of Directors Updating PhosAgro’s Inside Information Regulations Underway since April 2021 Underway since April 2021 The document was approved by the Board of Directors on 18 August 2022 The document was approved by the Board of Directors on 18 August 2022 The document was approved by the Board of Directors on 3 November 2022 Updating the Board's Modern Slavery Act Transparency statement The document was approved by the Board of Directors on 20 December 2022 Key actions approved by the Board of Directors upon review of the 2022 CGC Report which are aimed at improving the governance quality in 2023: upon the re-election of the Remuneration and Human Resources Committee in 2023, the Board of Directors will seek to staff the Remuneration and Human Resources Committee with independent directors only; as part of the next amendments made to the Regulations on the Remuneration and Human Resources Committee (presumably in 2023), a clause on conditions (events) for reviewing the compensation policies will be introduced; in 2023, the Company will resume the practice of assessing each Board member individually, as part of the evaluation of the quality of the work of the Board of Directors. 1 The most recent year assessed by the Bank of Russia. 262 263 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Changes in self-assessment as regards compliance with corporate governance principles Old status New status Comments Criterion 1 is partially complied with. A notice on one of the three General Meetings of Shareholders held in 2022 was published 27 days (not 30 days) before the Meeting date. This was due to the necessity to align the General Meeting’s agenda with Article 42 of Federal Law No. 208-FZ On Joint-Stock Companies dated 26 December 1995 based on the Bank of Russia’s improvement notice, which was received after the Board of Directors approved the agenda. Hence, a new Board meeting had to be convened to amend the net profit distribution item of the General Meeting’s agenda by specifying the applicable net profit distribution period. That said, PhosAgro did not breach the shareholder notification timeframe in accordance with Article 52 of the same Federal Law. Going forward, PhosAgro will seek to respect applicable timeframes for serving (publishing) General Meeting notices as required by laws and the Corporate Governance Code. Formally speaking, the criterion is not complied with, as PhosAgro’s Charter does not provide for online ballot completion on the website. However, the vast majority of the Company’s shareholders hold their shares through nominee shareholders (with the exception of only 24 out of 231,000 shareholders, or less than 0.01%) and can take advantage of remote voting by instructing their nominees accordingly (proxy voting) and thus freely exercise their voting rights in a simple and convenient way. Going forward (for example, if the number of shareholders who do not use nominee shareholding services increases drastically), PhosAgro may once again consider an option of electronic voting. In the reporting year, explanations on the proposed net profit distribution procedure (including the amounts paid as dividends and profits allocated for the Company’s own needs) and its conformity with PhosAgro’s dividend policy were included in the materials for the General Meeting of Shareholders. No. 1 Number and brief description of the principle 1.1.2. Publishing of a general meeting notice on the company’s website at least 30 days prior to the date of the general meeting of shareholders 2 3 1.1.5. Ability for shareholders to freely exercise their rights to vote 1.2.1. A transparent and clear mechanism for determining the amount of dividends and payment thereof Full compliance Partial compliance Non-compliance No. 4 Number and brief description of the principle 2.3.2. Availability of information on nominees to the company’s board of directors to shareholders 5 2.8.2. Performance of the remuneration committee Old status New status Comments The criterion is partially complied with, as the shareholders were not provided with the findings of an assessment completed by the Board of Directors or its Remuneration and Human Resources Committee to determine whether the professional qualifications, experience and skills of nominees to the Board of Directors meet the current and potential needs of PhosAgro. This was due to the short period of time left between the repeated final date for submitting agenda proposals in the run-up to the Annual General Meeting of Shareholders and proposals on nominees to the Company’s Board of Directors, on the one hand, and the date of the Board meeting convened to review these proposals, on the other hand. In 2023, the shareholders will be provided with the findings of an assessment completed by the Board of Directors or its Remuneration and Human Resources Committee to determine whether the professional qualifications, experience and skills of nominees meet the current and potential needs of PhosAgro. Going forward, the Company will also seek to make this information available to the shareholders in the run-up to the General Meetings of Shareholders focusing on the election of Board members. Criterion 1 was not complied with, as one of the members of the Remuneration and Human Resources Committee does not meet the independence requirements. The Committee was drawn from the members of the newly elected Board of Directors. The directors were selected based on their experience, professional background, skills and knowledge so that they could best meet the Committee’s goals and objectives. Once the General Meeting of Shareholders elects new members of PhosAgro’s Board of Directors in 2023, the Board will seek to staff the Remuneration and Human Resources Committee with independent directors only. Criterion 2 was not complied with to the extent that the Remuneration and Human Resources Committee is chaired by a director who does not meet the independence requirements. However, the director’s competencies, professional experience and dedicated skills enable him to run the Committee in the most efficient manner. Upon the re-election of the Remuneration and Human Resources Committee in 2023, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee. Criterion 3 was not met with respect to the failure to define in the Company’s internal documents the conditions (events) upon the occurrence of which the Remuneration and Human Resources Committee of the Board of Directors considers the revision of PhosAgro’s policy on remuneration of the Board members, members of executive bodies, and other key executives. The Company proceeded from the fact that the responsibility to regularly revise the policy, which is specified in the Regulations on the Remuneration and Human Resources Committee of the Board of Directors, implies ensuring that it is updated from time to time and meets the current needs of PhosAgro. As part of the next amendments made to the Regulations on the Remuneration and Human Resources Committee or upon approval of a new version of the Regulations (presumably in 2023), a clause on conditions (events) for reviewing the compensation policies will be introduced. 264 265 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review No. 6 Number and brief description of the principle 2.8.5. Composition of committees of the Board of Directors 7 8 9 2.9.1. Evaluation of the quality of the work of the Board of Directors 6.3.1. Providing shareholders with access to information at their requests 6.3.2. Providing shareholders with access to information at their requests Full compliance Partial compliance Non-compliance Old status New status Comments General Meeting of Shareholders Criterion 1 was not complied with to the extent that the Remuneration and Human Resources Committee is chaired by a director who does not meet the independence requirements. However, the director’s competencies, professional experience and dedicated skills enable him to run the Committee in the most efficient manner. Upon the re-election of the Remuneration and Human Resources Committee in 2023, the Board of Directors will seek to elect an independent director as the Chairman of the Remuneration and Human Resources Committee. Criteria 1 and 3 were fully complied with. Criterion 2 was not met with respect to the failure to conduct individual assessment of each member of the Board of Directors in 2021 (for 2020) and 2022 (for 2021). Individual assessment of each Board member was deemed irrelevant by the Remuneration and Human Resources Committee, as 70% of directors working at the Board starting July 2022 were newcomers. In this context, the Board of Directors did not see any risks in failing to complete individual assessments for each member of the Board. In 2023, the Company will resume the practice of assessing each Board member individually, as part of the evaluation of the quality of the work of the Board of Directors. Relevant amendments were added to PhosAgro’s internal documents (the Regulations on the Information Policy). Relevant amendments were added to PhosAgro’s internal documents (the Regulations on the Information Policy). The activities of PhosAgro's the Annual General Meeting The reporting year also saw two supreme governing body – of Shareholders was held in absentia extraordinary General Shareholders’ the General Shareholders' Meeting – to elect new members of the Board Meetings convened to vote are governed by the Regulations of Directors and Review Committee, on declaration (payout) of interim on the General Meeting determine the Board of Directors’ dividends. of Shareholders.In June 2022, remuneration, and resolve on other matters within the Meeting’s remit. Full text of PhosAgro’s Regulations on the General Meeting of Shareholders is available on the official website of the Company Board of Directors The Board of Directors plays a key direction and make key decisions. and agenda and structure role in PhosAgro's corporate Throughout the year, the Board of committees. The Board's governance system. Its activities focused on maintaining responsibility to the government, are governed by the Regulations the continuous operation shareholders, employees, on the Board of Directors. of the Company's production assets, communities in the regions supporting established supply chains of PhosAgro’s footprint and other In 2022, amid significant changes and building new ones. The Board stakeholders for the Company's in the operating environment, of Directors of PJSC PhosAgro operational, financial, environmental the Board of Directors continued underwent notable changes and social performance remained to set the Company's strategic both in terms of its composition unchanged. Report on compliance with the principles and recommendations of the Corporate Governance Code (stand-alone document) Full text of PhosAgro’s Regulations on the Board of Directors is available on the official website of the Company 266 267 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Strategy and global challenges Ongoing tasks In 2022, we continued to develop our strategic goals in functional areas when approving the Strategy Key activities undertaken project management at PhosAgro follow-up on the 2022 budget updated Strategy to 2030 despite such as sales, logistics, production, in the context of the main by the Board of Directors in 2022 Group subsidiaries; utilisation; the changing external environment, environmental protection scenarios considered. These criteria included: • appointment and evaluation • determining whether Phosagro’s but given the serious rise in the level and climate change, occupational include sustainable production • assessment and quarterly of the performance of PJSC corporate culture is aligned of uncertainty, this will take longer health and safety, and personnel growth, introduction of innovative than expected. development. and sustainable products and processes, and stronger monitoring of the risk management process; PhosAgro's CEO and Management with its mission, values Board; and strategy, as well as assessing • assessment and quarterly • oversight over management and monitoring the corporate The Board traditionally paid In addition, the focus of the Board operating efficiency. monitoring of subsidiary activities relations with shareholders, culture; great attention to monitoring during the year was on approved with a focus on workplace health investors and other stakeholders; • performance, work plans, progress in the implementation projects that, though not part The Board also reviewed a number and safety, industrial safety • monitoring the implementation and budget of the Internal Audit of the Strategy to 2025, including of the Strategy to 2025, meet of investment initiatives that form and environmental protection; of priority areas of PhosAgro’s Department; a detailed review of progress towards the criteria adopted by the Board the basis for the Strategy to 2030 • assessment of compliance activities in 2022 and determining • quarterly review and approval and can be integrated into it in line with developments in the markets. Sustainable development and corporate governance GRI 2–14 In July 2022, the new Board of the Company's operations During 2022, as part of the action of Directors resolved to establish as environmental protection, plan to implement the ESG agenda a Strategy and Sustainable occupational health and safety in the Company's practices, Development Committee, which and energy efficiency. Regulations the Board of Directors adopted a tax confirms its understanding on the Board of Directors and its strategy and updated a number of the key role of sustainability committees were updated to set out of internal documents on anti- principles in defining the Company's the new functionality and structure corruption activities, shareholder strategy, as well as their importance of the committees. relations, and handling of insider in managing such aspects information. Information technologies and information security In the reporting year, the Board dealt with three groups of IT-related and other advanced technical solutions in line with PhosAgro's in the Russian Federation due to the imposition of sanctions. Board issues. In addition to the traditional IT strategy, as well as analysed members, along with Company assessment of information security the Company's preparedness employees, received information threat prevention, the Board heard to replace software products security training on Kaspersky ASAP, a report on the development of cloud that are no longer supported Apatit's corporate platform. with the Inside Information priority areas of its activities of financial statements; Regulations; for 2023; • convening General Meetings • assessment of the quality • reviewing PJSC PhosAgro’s budget of Shareholders of PJSC PhosAgro. of investment and organisational for 2023, as well as quarterly Participation in the Board meetings meetings 12 of the Board of Directors in 2022 agenda items 77 considered a total in 2022 In 2022, the Board of Directors held twelve meetings (two of them by absentee voting) and considered a total of 77 agenda items. The number of items considered by the Board of Directors in 2022 grew compared to 2020 (70) and decreased compared to 2021 (91). Meetings of the Board of Directors 2022 2021 2020 10 2 7 1 8 3 In-person meetings Absentee meetings 268 269 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Participation in the Board meetings before the election of new members of the Board of Directors (before 30 June 2022) Prospects v e y r u G . A y e r d n A v e y r u G . G y e r d n A a v o k o B a n i r I 3/6 4/6 4/6 0/0 0/0 Board of Directors Audit Committee Strategy Committee Remuneration and Human Resources Committee 1/1 Risk Management Committee Environmental, Health and Safety Committee Sustainable Development Committee 0/0 1/1 1/1 Participation in the Board meetings after 30 June 2022 v o n a v I r o t c V i h k y v o g u r K i r u Y v o k o L i j o r i S 5/5 5/5 5/5 Board of Directors Audit Committee Remuneration and Human Resources Committee 2/2 Strategy and Sustainable Development Committee S172 statement t d e v t s d u b m O n e v S 6/6 2/2 0/0 1/1 i h c v e k h s a P a i l a t a N 6/6 1/1 s e d o h R s u c r a M 6/6 2/2 s r e g o R s e m a J 6/6 2/2 1/1 i v o k n b y R l i a h k M i l t e o R . R r e v a X i 6/6 3/6 0/0 1/1 0/0 1/1 v o n o r a h S y e r d n A 6/6 2/2 1/1 0/0 i v o n o d o R n a v I 5/5 2/2 2/2 i h c v e k h s a P a i l a t a N r e d n a x e A l v e n z e e S l 5/5 5/5 i v o k n b y R l i a h k M i i a k a b a r a h S r e d n a x e A l 5/5 5/5 v o p e r e h C r o t c V i 5/5 2/2 v o n o r a h S y e r d n A 5/5 2/2 2/2 2/2 2/2 2/2 The Company's development remained in force in Russia. In the face of unprecedented scenarios are reviewed by the Board At the same time, the restrictions levels of realisation of these risks, of Directors when approving its caused by international sanctions the Company ensures uninterrupted Strategy. The strategic planning and supply chain disruptions made operation of all its production sites, cycle adopted by the Company is five it difficult for the Company to deliver timely supply of fertilizers and care years. its products to its traditional markets. for its employees and their families. Since 2019, the Board of Directors The Company is adversely affected to cope with the new challenges has been considering a contingency by the termination of operations in a short space of time, not just plan to prepare for critical in Russia by some Western keeping the business stable, but changes in the external operating suppliers of equipment, reaching new highs. environment such as possible services and technology, restrictions on our supplies to key as well as by difficulties in making Based on the foregoing, the Board PhosAgro Group's team manages markets. payments. of Directors finds it reasonable to believe that the Company will, For the Group, 2021 was marked When approving the Strategy without any reservations, be able by the countervailing duties imposed to 2025, the Board of Directors to continue its operations and meet on Russian and Moroccan producers also weighed the associated all its obligations as they fall due in the US market, the agreement strategic risks and regularly reviews while the Strategy to 2025 is in force. among Russian producers them as part of the strategy of mineral fertilizers to put a cap implementation monitoring. Risk on prices in the domestic market, management maps were drawn as well as the introduction of quotas for each risk, containing a detailed and export licences in Russia. description along with mitigants and probability, materiality and risk In 2022, countervailing duties appetite estimates. and the supply quota system For more information on our strategic risks, see the Strategic Report section on page 70. According to Section 172 For the members of PhosAgro’s of Directors reviews feedback “Duty to promote the success Board of Directors, these from stakeholders on aspects of the company” of the UK standards mean that the Group’s of the Company’s operations that Companies Act 2006, PhosAgro’s stakeholders should be interacted are material to them. Board of Directors acts in good faith with responsibly and that their for the benefit of the Company interests should be respected Such feedback is used both to promote its success, taking to the maximum extent possible. to identify topics and indicators into account possible long-term to be disclosed in PhosAgro consequences of its decisions At least once a year, the Strategy Group's non-financial reporting for the society and the environment, and Sustainable Development and to determine mechanisms as well as the interests Committee (until 2022, for engagement with the Company's of the Company’s employees the Sustainable Development stakeholders, including at the Board and other stakeholders. Committee) of the Board level. 270 271 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Composition of the Board of Directors Board of Directors: gender split, % Board of Directors: place of residence, % Before the election of new Board members (before 30 June 2022) Before the election of new Board members (before 30 June 2022) After 30 June 2022 After 30 June 2022 GRI 2–9, 405-1 The General Meeting of Shareholders annually elects ten members of the Board of Directors by cumulative voting: the nominees with the highest number of votes are elected. The composition of the Board of Directors should be balanced in terms of the qualifications, expertise and business skills of its members. Board members should have a recognised, including among investors and shareholders, good business reputation and no conflicts of interest with the Company. 80 90 Men 20 10 Women 50 100 Russian Federation 40 10 0 0 Europe Southeast Asia Board of Directors: independence, % Board of Directors: age % Board of Directors: length of continuous service, % Before the election of new Board members (before 30 June 2022) Before the election of new Board members (before 30 June 2022) After 30 June 2022 After 30 June 2022 Before the election of new Board members (before 30 June 2022) After 30 June 2022 10 10 70 40 20 50 Non-executive directors Independent directors Executive directors 40 40 10 10 50 20 20 10 Above 60 years 50–60 years 40–50 years Under 40 years 0 50 50 70 20 10 <3 years 4–7 years >7 years Key competencies of Board members GRI 2–17 Key competencies (based on professional experience) t n e m e g a n a m l e n n o s r e P g n i r e e n g n e i e c n a n r e v o g e t a r o p r o C i i g n n m d n a y r t s i m e h C n o i t a v o n n i d n a y g e t a r t S t i d u a d n a e c n a n F i t n e m e g a n a m k s i R e t a r o p r o c d n a w a L e c n a n r e v o g Board members since 5 July 2022 Status Victor Cherepov Chairman, independent Victor Ivanov Independent Natalia Pashkevich Andrey Sharonov Independent Independent Ivan Rodionov Non-executive Yuri Krugovykh Executive Alexander Sharabaika Alexander Seleznev Executive Executive Siroj Loikov Executive Mikhail Rybnikov Executive 1 Including competencies in environment, health and safety. l i e b a n a t s u s d n a n o i t a r e p o o c l a n o i t a n r e t n I 1 ) G S E ( t n e m p o e v e d l % , t s e r e t n i y t i u q E none 0.0013 none none 0.0064 none none none none 0.0258 272 273 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Role of independent directors The Board of Directors’ assessment Independent directors make four out of ten Board members The assessment is based a valuable contribution are independent. Until 30 June 2022, on the criteria set out in PhosAgro's to the Board’s decision-making independent directors chaired five Regulations on the Board as their opinions rely solely out of the Board's six committees; of Directors, Clause 2.4 of the CGC, on professional skills and expertise, after the election of new directors, Clause 2 of Appendix 2 (2.18) as well as a comprehensive study one of the three committees and Appendix 4 of the Listing Rules of the matter. Their position is chaired by an independent of the Moscow Exchange and Clause is unbiased, independent and free director. from the influence of other members 10 of the UK Corporate Governance Code (FRC, 2018). In 2022, four of the Board and PJSC PhosAgro's The independence of Board of the Board members (Victor management, and they are primarily members and nominees is assessed Ivanov, Natalia Pashkevich, Victor focused on improving PhosAgro's biannually by the Remuneration Cherepov and Andrey Sharonov) performance. Since 1 July 2022, and Human Resources Committee. were recognised as independent. D&O1 liability insurance The company has been taking liability for third-party losses incurred for all independent non-executive out D&O liability insurance every in the exercise of duties by directors directors by USD 2 mln. Apart year since 2012. Under the current and officers of PhosAgro is covered from directors' liability, the above insurance contract (insurance period up to USD 50 mln in rouble contract includes the liability from 1 June 2022 to 31 May 2023), equivalent, with a liability extension of the Company's officers. Assessment of the Board of Directors GRI 2–18 In accordance with the CGC recommendations, PhosAgro assesses the performance of its Board of Directors on an annual basis, with external experts engaged Approach to the Board of Directors’ assessment The Board assessment methodology is based on international best and the Corporate Secretary. Detailed questionnaires were circulated among directors to assess the performance of the Board and its committees. The findings for this purpose once in three practices, CGC recommendations were supplemented by comments years. In January 2023, IDA – and the Listing Rules of the Moscow and feedback from Board members ESG and sustainable development 3.5 Role of the Board of Directors 4,0 3.5 Composition and structure of the Board of Directors 3.2 Corporate Secretary assessment 3.6 Chairman of the Board of Directors 3.6 3,0 2,0 1,0 0,0 Organisation of activities of, and changes in, the Board of Directors 3.5 Effectiveness of the Board of Directors 3.3 Liaising with committees 3.5 3.4 Strategy and risks 3.3 Senior management engagement 3.1 External stakeholder engagement Association of Professional Directors Exchange, and has been and management during individual The external assessment confirmed of the Board of Directors, In line with the CGC conducted an external assessment agreed with the Chairman interviews. As part of the assessment, that the Board and its committees interaction with committees, recommendations and international of the Company's Board of Directors. of the Remuneration and Human the number of the Board’s focus were functioning in accordance the role of the Board Chairman, best practice, PhosAgro will Resources Committee areas under review was increased to eleven. Each of them received a fairly high score. with the recommendations the performance of the Corporate continue organising annual of the CGC and the Listing Secretary, and the Company's self-assessment of the Board Rules of the Moscow Exchange. ESG and sustainability activities of Directors and an external Corporate governance practices were noted as highly effective. independent assessment every in such areas as the organisation of activities and operation three years to ensure the continued development and improvement of PhosAgro's corporate governance practices. 274 275 1 Directors & Officers Liability Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Members of the Board of Directors as at 31 December 2022 Information on the members of the Board of Directors GRI 2–11 For information on Xavier R. Rolet, Irina Bokova, Andrey G. Guryev, Andrey A. Guryev, Sven Ombudstvedt and Marcus Rhodes who all left the Board of Directors in March and July 2022 please see the 2021 integrated Annual Report of PJSC PhosAgro on the Company’s website Victor Cherepov Alexander Sharabaika Chairman of the Board of Directors at PhosAgro since 3 October 2022, independent director Year of election: 2022 Date of birth: 15 January 1951 Deputy Chairman of the Board of Directors at PhosAgro since 5 July 2022, Deputy CEO for Finance and International Projects at PhosAgro Year of election: 2022 Date of birth: 25 February 1977 Professional experience 2018 – Pr. – AB Energo, Member of the Board of Directors 2022 – Pr. – PhosAgro, Chairman of the Board of Directors, Chairman of the Audit Committee 2018 – Pr. – NPF BLAGOSOSTOYANIE, Member of the Board of Directors 2022 – Pr. – Kashira Steel Structures and Boiler Building Plant, Member 2016 – Pr. – Krasnoyarskii Kotelnyi Zavod, Member of the Board of the Board of Directors of Directors 2022 – Pr. – Kompaniya Ust-Luga, Member of the Board of Directors 2016–2020 – Public Council under the Ministry of Health of the Russian 2005–2021 – Russian Union of Industrialists and Entrepreneurs, Executive Vice President, Managing Director of the Department of Relations with Regional and Industrial Associations 2002 – Pr. – State University of Management, Head of the Department of Healthcare and Sport Industry Management Professional experience 2017–2019 – Apatit, Member of the Management Board Education 2022 – Pr. – PhosAgro, Deputy Chairman of the Board of Directors 2019 – Pr. – PhosAgro, Deputy CEO for Finance and International Projects 2017–2018 – PhosAgro, Member of the Board of Directors 2015 – Pr. – PhosAgro-Region, Member of the Management Board 2018–2022 – PhosAgro, Member of the Management Board 2014–2019 – PhosAgro, Director for Economic Affairs and Finance Belarus State Economic University, Degree in Finance and Credit University of Nottingham (UK), Bachelor's degree in Finance Moscow School of Management SKOLKOVO, Executive Coaching for the Development of Leaders, Project Management 2021 – Pr. – RC Novotrans, Advisor of Directors Federation, Member of the Board Education 2017 – Pr. – Apatit, Advisor to the CEO (part-time) 2021 – Pr. – Russian Union of Industrialists and Entrepreneurs, 2015 – Pr. – Pharmaceutical and Medical Industry Investors Club, Karaganda State Medical Institute, Degree in General Medicine Vice President for Social Policy President and Labour Relations School of Medicine, Boston University School of Public Health, USA 2020 – Pr. – Public Council under the Ministry of Health of the Russian Federation, Deputy Chairman of the Board of Directors 2019 – Pr. – NPF BLAGOSOSTOYANIE, Chairman of the Human Resources and Remuneration Committee, Member of the Strategic Planning Committee 2010–2022 – Machine-Building Factory of Podolsk, Member MD, Professor, Member of the Board of Directors of the Russian Academy of Medical and Technical Sciences, Member 2010 – Pr. – National Medical Chamber, Member of the Council of the International Academy of Energy Information Sciences for Professional Qualifications in Healthcare 2008 – Pr. – Federal Compulsory Health Insurance Fund, Member of the Management Board Victor Ivanov Member of the Board of Directors at PhosAgro since 5 July 2022, independent director Year of election: 2022 Date of birth: 17 January 1943 Professional experience 2022 – 2023 – PhosAgro, Member of the Board of Directors, Member of the Remuneration and Human Resources Committee 2017 – Pr. – Reatex, Member of the Board of Directors 2017 – Pr. – AgroChimInvest, Chairman of the Board of Directors Education 2013 – Pr. – Pigment, Member of the Board of Directors 2012 – Pr. – Russian Chemists Union, President Tomsk Polytechnic Institute, Degree in Chemical Process Engineering Academy of National Economy under the USSR Council of Ministers 276 277 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Natalia Pashkevich Member of the Board of Directors at PhosAgro, independent director Year of election: 2017 Date of birth: 5 November 1939 Professional experience 2017–2022 – PhosAgro, Member of the Board of Directors, Member 1999 – Pr. – St Petersburg Mining University, First Vice Rector 2022 – Pr. – PhosAgro, Member of the Board of Directors of the Environmental, Health and Safety Committee 2021 – Pr. – Priority 2030 Strategic Academic Leadership Programme, 2009 – Pr. – National Research University, Head of the development Head of the programme programme Education Leningrad Mining Institute, Degree in Mining Engineering and Economics, PhD in Economics, professor 2016–2022 – SKOLKOVO Endowment Fund, Director 2014 – Pr. – MC NefteTransService, Chairman of the Board of Directors Education 2016–2022 – Association for the Development of Moscow 2014 – Pr. – Sovcomflot, Member of the Board of Directors Ufa Aviation Institute, Degree in Aviation Instrument Making School of Management SKOLKOVO, (independent director), Member Institute of Socio-Political Research Managing Director of the Innovative Development under the Russian Academy and Technical Policy Committee of Sciences, PhD in Sociology 2016–2021 – Moscow School of Management SKOLKOVO, President 2015 – Pr. – Sovcomflot, Chairman of the Audit Committee, Member of the Compensation Committee 2015–2018 – VTB Bank, Member of the Supervisory Council 2014–2022 – International Business Leaders Forum, Chairman of the Board of Trustees 2014–2019 – NOVATEK, independent director, Chairman Russian Academy of Public Administration under the President of the Audit Committee, Member of the Russian Federation, Degree of the Remuneration and Nomination in Law Committee 2009–2020 – National Research University Higher School Moscow School of Management SKOLKOVO, Executive Coaching for the Development of Executives, of Economics, Professor (part-time) Top Management Teams at the School of Finance of the Faculty and Organisations of Economic Sciences Andrey Sharonov Member of the Board of Directors at PhosAgro, independent director Year of election: 2017 Date of birth: 11 February 1964 Professional experience 2021–2022 – Sberbank, Vice President 2022 – Pr. – PhosAgro, Member of the Board of Directors, Member 2020 – Pr. – Foundation for Development 2019–2022 – Rosseti, Member of the Board of Directors (independent director), Member of the Personnel and Remuneration of the Audit Committee, Member of the Centre for Elaboration Committee Professional experience Ivan Rodionov Member of the Board of Directors at PhosAgro from 5 July 2022 to 27 March 2023, non-executive director Year of election: 2022 Date of birth: 30 November 1953 2014–2022 – AgroGard-Finance, Member of the Board of Directors 2003–2021 – National Research University Higher School of the Remuneration and Human and Commercialisation of New Resources Committee, Member Technologies (Skolkovo Foundation), of the Strategy and Sustainable Member of the Board of Directors, Development Committee Chairman of the Human Resources 2018 – Pr. – Medicina, Chairman of the Board of Directors 2022–2022 – PhosAgro, Chairman of the Board of Directors and Compensation Committee 2017–2022 – PhosAgro, Member of the Board of Directors, Member 2019 – Pr. – En+ Group, independent non-executive director, Member of the Audit Committee, Member of the Remuneration and Human 2022 – Pr. – ESG Alliance, CEO of the Audit Committee, Chairman Resources Committee, Member 2021 – Pr. – Profilum, Chairman of the Board of Directors of the Corporate Governance of the Sustainable Development and Nominations Committee Committee 2022 – Pr. – PhosAgro, Member of the Board of Directors, Chairman of the Remuneration and Human 2012 – Pr. – Interdepartmental Analytical Centre, Member of Economics, Professor (part-time) Resources Committee, Member of the Board of Directors Education of the Audit Committee 2017–2020 – IBS IT Services, Member of the Board of Directors 2009–2021 – IC RUSS-INVEST, Member of the Board of Directors Higher education in Economics, Lomonosov Moscow State University, PhD in Economics, professor 278 279 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Alexander Seleznev Yuriy Krugovykh Member of the Board of Directors at PhosAgro since 5 July 2022, Member of the Board of Directors at PhosAgro since 5 July 2022, Chief of Staff for the CEO Year of election: 2022 Date of birth: 6 July 1984 First Deputy CEO Year of election: 2022 Date of birth: 29 May 1955 Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors 2019 – Pr. – PhosAgro, Chief of Staff for the CEO 2019–2022 – PhosAgro, Member of the Management Board Education 2015–2019 – PhosAgro, Head of Investor Relations Bauman Moscow State Technical University, Degree in Comprehensive Information Security of Automated Systems Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors 2022 – Pr. – PhosAgro, Member of the Management Board 2015 – Pr. – Apatit, Deputy CEO for Information Policy (part-time) Education 2013 – Pr. – PhosAgro-Region, Member of the Management Board Moscow University for the Humanities, Degree in History Siroj Loikov Mikhail Rybnikov Member of the Board of Directors, First Deputy CEO of PhosAgro Year of election: 2022 Date of birth: 9 September 1972 2017–2018 – Apatit, Human Resources and Social Policy Director Education 2017–2018 – Apatit, Member of the Management Board Tashkent State University of Economics, International Economic Relations Member of the Management Board, Member of the Board of Directors and CEO at PhosAgro since 11 March 2022 Year of election: 2022 Date of birth: 30 November 1975 Professional experience 2022 – Pr. – PhosAgro, CEO 2022 – Pr. – PhosAgro, Member of the Board of Directors, Member 2018–2020 – PhosAgro, First Deputy CEO 2013–2022 – PhosAgro, Member of the Management Board 2018–2019 – Apatit, Member of the Management Board 2013–2018 – PhosAgro, Managing Director (part-time) 2015–2018 – PhosAgro, Human Resources and Social Policy Director University of Nottingham (UK), Bachelor's degree in Business of the Management Board, Member of the Strategy Committee, Member 2017–2018 – Apatit, CEO, Chairman of the Management Board Education Professional experience 2022 – Pr. – PhosAgro, Member of the Board of Directors 2020 – Pr. – PhosAgro, First Deputy CEO 2020 – Pr. – Apatit, Advisor to the CEO (part-time) 2015–2018 – Korporativnoe pitanie (Corporate Nutrition), Member 2018–2020 – PhosAgro, Deputy CEO of the Board of Directors 2018–2020 – Apatit, Deputy CEO (part-time) 2015–2017 – PhosAgro-Cherepovets, Human Resources and Social 2018–2019 – PhosAgro-Region, Deputy CEO for Human Resources (part-time) 2017–2018 – Tirvas, Member of the Board of Directors Policy Director, Member of the Management Board 2013–2022 – PhosAgro, Member of the Management Board 2013–2017 – Izumrud, Member of the Board of Directors Management Moscow School of Management SKOLKOVO, Executive Coaching for the Development of Leaders, Project Management of the Sustainable Development Committee 2016–2022 – PhosAgro, Member of the Board of Directors, Chairman Lomonosov Moscow State University, Master’s degree in Economics 2021–2022 – PhosAgro, Deputy CEO of the Environmental, Health Moscow School of Management 2020–2021 – PhosAgro, Managing Director and Safety Committee, Member SKOLKOVO, Executive Coaching of the Strategy Committee, Member for the Development of Executives, of the Sustainable Development Leadership In Action 2018 – Pr. – NIUIF, Member of the Board of Directors 2018 – Pr. – Apatit, Advisor to the CEO (part-time) Committee 2016 – Pr. – PhosAgro-Region, Member of the Management Board 2015–2017 – PhosAgro-Cherepovets, CEO, Chairman of the Management Board 280 281 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Corporate Secretary Committees of the Board of Directors The Corporate Secretary and interests, and support provided The operating procedures is responsible for day-to-day to the Board of Directors to ensure its of the Corporate Secretary interactions with the shareholders, efficient performance. The Corporate are governed by the Regulation coordination of the Company’s Secretary is appointed by the Board on the Corporate Secretary approved efforts to protect shareholder rights of Directors. by the Company’s Board of Directors. For more information, please visit the Company’s website Sergey Samosyuk Year of appointment: 2016 Date of birth: 1 October 1976 Professional experience 2016 – Pr. – PhosAgro, Corporate Secretary Achievements 2022 – Pr. – PhosAgro, Advisor to the Deputy CEO for Sales, Marketing and Logistics (part-time) Education 2020 Director of the Year National Award for the best corporate governance directors / corporate St Petersburg State University secretaries. 2021 – Pr. – AgroGard-Finance, Member of the Board of Directors of Economics, Degree in Engineering and Economics 2021 – Pr. – Giproruda, Member of the Board of Directors St. Petersburg University, Degree in Law 2017 – Pr. – Apatit, Advisor to the CEO (part-time) National Research University Higher School of Economics, Executive MBA 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 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 new Board of Directors at its meeting on 5 July 2022 (Minutes w/o No. dated 6 June 2022) set up three committees: Audit Remuneration and Human Resources Strategy and Sustainable Development 282 283 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Information on committees’ performance Audit Committee The Committee’s activities are governed by the Regulations on the Audit Committee. For more information, please visit the Company’s website Committee members as at 31 December 2022 First and last name Position Victor Cherepov Ivan Rodionov Andrey Sharonov Committee Chairman, independent director Committee member, non- executive director Committee member, independent director Key highlights in 2022 periods. That said, the reporting In the reporting year, the Committee year saw Committee members In 2022, the Committee expanded • review of the external auditor plan All additional services related its scope to include the review for the assurance of 2022 financial and unrelated to audit were duly focused on the quality, reliability consider such initiatives to improve of the key investment projects statements; approved by the audit partner, and timeliness of financial and non- reporting perception and increase as regards reporting capital • approval of the plan and budget, as well as by the Chairman financial corporate reporting. its reliability and accuracy as drafting expenditures in financial statements, and assessment of the Internal of the Audit Committee, an audit and assurance policy, ISAE and procurement reporting in 2022 Audit Department's performance; with due regard to appropriate The prevailing uncertainty had 3000-based external assurance an impact on preparations (full instead of limited assurance) of financial statements, with changes and an independent assurance to the Group's structure bringing of metrics in compliance with TCFD about the readjustments recommendations. The high quality of the accounting system, processes of our 2021 non-financial reporting and reporting. as assessed by the Board of Directors was confirmed by expert opinion on the back of import substitution. • analysis of the Company's independence considerations. Ongoing tasks in 2022 During the reporting period, compliance with Russian and European legislation on the protection and use the Audit Committee held five of insider information; in-person meetings, where 30 • review of compliance matters were considered, mainly with the CGC; in the following areas: • discussion with legal and tax Based on the 2022 results, and numerous awards received at • analysis, review and discussion department heads about ongoing The Committee’s statistics the Committee is happy to report national competitions. including in person / via video Matters 5 6 5 30 35 27 an invariably high quality of financial reporting and observance The Committee initiated drafting of previously established release the Company's Tax Strategy which deadlines, despite a significant seeks to articulate PhosAgro's transformation of the Company's stance on operational principles operations. and strategic goals in taxation, and inform key stakeholders of the Company's annual financial and operating issues that may have an impact on financial statements. performance based on the IFRS consolidated financial statements, including reasons for changes External auditor The Committee's approach as compared to the previous to the assessment periods and obtaining a clear of the independence understanding of the disclosures; and effectiveness Non-financial reporting is becoming thereof. The Committee discussed • review of quarterly IFRS of the external audit process, increasingly important on its the draft tax strategy twice agenda, with ESG disclosures during the year, and the Board condensed consolidated financial as well as to the appointment or statements, along with ensuring reappointment of the external Victor Cherepov, Chairman of the Audit Committee discussed at several meetings of Directors approved it in August the adequacy of disclosures; auditor is comprehensively described during the year. In particular, 2022 based on the Committee's the Committee made a detailed recommendations. Tax matters analysis of non-financial disclosure were a special focus area • review and discussion in the External Auditor Selection of the results of the annual and Cooperation Policy of PJSC audit and quarterly reviews PhosAgro approved by the Board trends and reviewed the quality and featured twice on the meeting by the external auditor of Directors in April 2021. and completeness of ESG reporting agenda. in accordance with RAS and IFRS; 2022 2021 2020 in 2021 as compared to previous For more information, please visit the Company’s website 284 285 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Remuneration and Human Resources Committee The Committee’s activities are governed by the Regulations on the Remuneration and Human Resources Committee For more information, please visit the Company’s website Committee members as at 31 December 2022 Committee member Position Ivan Rodionov Committee Victor Ivanov Andrey Sharonov Chairman, non- executive director Committee member, independent director Committee member, independent director Key highlights in 2022 • review of workforce composition The Committee focused in companies belonging on the following: to PhosAgro Group as regards • assessment of professional skills, diversity, gender equality independence, engagement and inclusion; and important external • best practice guidance nominations or appointments and analysis following to the Board of Directors; • performance assessment of the Company’s executive the appraisal of the Board of Directors’ performance. bodies, other key employees, Both when initially assessing Industry Investors Club, Novotrans, Krasnoyarskii Kotelnyi Zavod, AB Energo, Kompaniya Ust-Luga, Kashira Steel Structures and Boiler Building Plant, and others. • Victor Ivanov: Russian Chemists Union, AgroChimInvest, Reatex, Pigment. • Andrey Sharonov: ESG Alliance, Sovcomflot, MC NefteTransService, Profilum, En+ Group, Medicina, and the Corporate Secretary; nominations to the biannual Board and others. • assessment of the incentive of Directors and subsequently system for the members when finalising its composition, of executive bodies and other key the Committee decides which employees; reasons should disqualify members The Committee’s statistics • assessment of social from serving on it. Including in person Matters 3 4 5 12 16 14 2022 2021 2020 and employee training programmes, including the progress towards While preparing the shareholder information for the Annual General a sustainability target approved Meeting, the Committee, among in the Strategy to 2025 – other factors, analysed the effect the number of employee training of important external nominations hours; of independent directors on their • review of the outcomes ability to duly discharge their following the annual staff loyalty responsibilities as tPhosAgro's Board and satisfaction survey, including members. progress towards a sustainability target approved in the Strategy Independent directors’ external to 2025 – integrated employee nominations as at 31 December 2022: loyalty index; • Victor Cherepov: Russian • analysing the alignment Union of Industrialists of the Company's goals, values and Entrepreneurs, State and strategy with its corporate University of Management, culture; Pharmaceutical and Medical • Natalia Pashkevich: St. Petersburg Mining University The Committee found that 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. Ivan Rodionov, Chairman of the Remuneration and Human Resources Committee from 5 July 2022 to 27 March 2023 286 287 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Strategy and Sustainable Development Committee GRI 2–16 The Committee’s activities are governed by the Regulations on the Strategy and Sustainable Development Committee For more information, please visit the Company’s website Committee members as at 31 December 2022 Key highlights and performance in 2022 and ESG metrics, including those set in the Climate and Water In terms of environmental areas of the Company's climate The Committee reviewed protection, the reporting period saw agenda. The reporting year saw matters related to stakeholder Committee member Alexander Sharabaika Mikhail Rybnikov Andrey Sharonov Position Committee chairman, executive director Committee member, executive director Committee member, independent director In 2022, the sustainability strategies approved in 2020, against an ongoing decline in environmental the completion of the project engagement, identification of management framework underwent the Strategy. the most significant changes ever. In July, the new Board Based on the 2022 results, of Directors decided to establish we are happy to announce the Strategy and Sustainable that we are firmly on track Development Committee and vested towards the Strategy to 2025 it with the majority of functions goals in production and sales impact per product unit. We take and a number of important results material topics to be disclosed consistent efforts to reduce such delivered. impact and achieve the desired in the 2021 integrated Annual Report, and the Report’s overall environmental effect. The Company The new Committee continued concept and standards we relied also designed biodiversity protection the dissolved Sustainable on when preparing it. Also, after programmes for its Cherepovets, Development Comittee's work analysing the quality of disclosure Volkhov and Kirovsk sites. to monitor and regularly update and feedback regarding the previously pertaining to the three as well as in social and environmental the action plan to improve ESG 2021 integrated Annual Report, previously existing committees: domains. the Strategy Committee, We made strong progress ratings. We consider this practice the Committee gave a positive in improving energy efficiency. to be effective in terms of developing appraisal of the Company’s non- the Environmental, Health and Safety The key achievements include In 2022, similarly to the last few years, and prioritising organisational financial disclosure practices. The Committee’s statistics Committee, and the Sustainable a more than 50% reduction in total consumption rates for major energy and technical sustainability 2 14 Including in person Matters Development Committee. injuries with LTIFR (Lost Time Injury resources showed a steady decline. measures, and intend to maintain Following proposals received Frequency Rate) per 1 million hours this approach going forward. from the Board of Directors The decision was underpinned at 0.32 for in-house staff and 0.38 by the awareness of the key role for in-house and contractor staff. sustainability plays in defining There was also a 67% reduction The Committee continued as part of the self-assessment, to monitor and regularly update The Committee paid due the Committee invited other the Energy Efficiency Programme. attention to the Bank of Russia's Board members to discuss such the Company's strategy, as well as its in injury severity among in-house Approved in 2020, it covers all our recommendations on integrating items as agricultural challenges paramount importance in managing staff. As regards other positive such aspects of the Company's results in 2022, the Company operations as environmental successfully implemented long-term projects and initiatives designed ESG and sustainability practices and trends and PhosAgroGroup's to reduce energy consumption. into the Company's operations sustainability innovations. (letter dated 16 December protection, occupational health programmes, and its management As the Board of Directors approved 2021). Its members separately We also remained focused and safety and energy efficiency. and the Board of Directors the Climate Strategy in December considered the results of the Board on regulatory compliance, maintained a strong focus on health 2020 and the low-carbon transition of Directors' self-appraisal as regards reviewing, among others, As a successor to the Strategy and safety, including prevention Committee, the new Committee of emergencies, incidents, fires focused on monitoring and traffic accidents. the progress against the Strategy to 2025 approved in 2019. We completed the first stage Following the Board of Directors' of the three-year Safety Culture recommendations issued upon Transformation Project to 2024 approval, the Committee regularly seeking to achieve the safety plan was put into action, monitoring the evaluation of ESG practices draft laws, which are yet of activities specified in these in accordance with the Bank to be considered and approved.. documents remained an important of Russia's recommendations, item on the Committee's agenda. and approved an action plan That said, the Committee placed a special emphasis on monitoring Sustainability reporting and overseeing the climate and disclosure supervision to further strengthen them. checks such actual metrics culture level of 3.1 as per the Bradley project initiated by Apatit's Project were among key agenda items as production volumes, sales curve, and the initiative to improve Execution and Management as well. in priority markets, expansion the safety of high-risk operations. Department to centralise all of sales and transport infrastructure Alexander Sharabaika, Chairman of the Strategy and Sustainable Development Committee 288 289 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Executive bodies Breakdown and number of matters considered 2022 2021 2020 4 4 6 4 8 4 Revision and approval of PhosAgro’s quarterly and annual budgets Review of operating and financial reports In charge of PhosAgro’s day-to- day operations are two executive bodies accountable to the Board of Directors: • the collegial body (Management Board) and • the sole executive body (CEO). In 2022, the Management Board held four meetings and reviewed eight items most of which were related to the budget discipline. Number of Management Board meetings 2022 2021 2020 8 10 12 At least twice a year (after the end of the previous calendar year and on election of a new Management Board), the CEO submits a report on the performance of PhosAgro's executive bodies to the Board of Directors for review and approval. We ensure that the executive management focuses on PhosAgro Group's strategy and long-term sustainable business development for the benefit of our shareholders and other stakeholders by linking executive remuneration to the Company's goals and values, as well as ESG KPIs. For more information, see page 292 Changes in the Management Board composition The following changes were elected: Mikhail Rybnikov, was approved at three. Since that to the Management Board Yuriy Krugovykh, Siroj Loikov, date and as at 31 December 2022, took place in 2022. On 11 March Alexander Seleznev, Alexei Sirotenko, members of the Management Board 2022, the following members and Alexander Sharabaika. are Mikhail Rybnikov, Alexei Sirotenko of the Company's collective In May 2022, the number and Dmitry Morozov. executive body (Management Board) of Management Board members Information on members of the Management Board For information on Andrey A. Guryev and Sergey Pronin, who all left the Board of Directors in March 2022, please see the 2021 integrated Annual Report of PJSC PhosAgro on the Company’s website Mikhail Rybnikov Member of the Management Board, Member of the Board of Directors and CEO at PhosAgro since 11 March 2022 Year of election: 2022 Date of birth: 30 November 1975 For more information on Mikhail Rybnikov, please see page 86. Alexei Sirotenko Member of the Management Board, Deputy CEO of PhosAgro for Corporate and Legal Affairs, Legal Affairs Director at Apatit Year of election: 2013 Equity interest / Stake of ordinary shares: None Date of birth: 3 January 1969 Professional experience Education 2017 – Pr. – Apatit, Legal Affairs Director 2013 – Pr. – PhosAgro, Member of the Management Board Lomonosov Moscow State University, Degree in Jurisprudence, Lawyer. 2017–2019 – Apatit, Member of the Management Board 2010 – Pr. – PhosAgro, Deputy CEO for Corporate and Legal Affairs (part-time) Key competencies • Law and corporate governance 2015–2017 – PhosAgro-Cherepovets, Legal Affairs Director, Member of the Management Board Dmitry Morozov Member of the Management Board, Advisor to the CEO of PhosAgro Year of election: 2022 Equity interest / Stake of ordinary shares: None Date of birth: 5 June 1964 Professional experience Education 2022 – Pr. – PhosAgro, Member of the Management Board 2019–2022 – PhosAgro, Director for Economic Affairs 2022 – Pr. – Apatit, Director for Economic Affairs 2015–2019 – PhosAgro, Director for Economic Affairs and Finance 2022 – Pr. – PhosAgro, Advisor to the CEO (part-time) Moscow State Institute of International Relations (Russia), Degree in International Economic Relations as an Economist for International Economic Relations Key competencies • • Strategy and innovation Finance and audit 290 291 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Remuneration report GRI 2–19, 2–20 Board of Directors remuneration When deciding on the Board conditions and shall be sufficient remuneration. The existing amounts remuneration ranges from of fixed and variable components of the Company’s CEO, a number composition, the General Meeting to enable the Company to attract, and rules for determining and paying 30% to 150% of the annual base of remuneration. of Shareholders approves the amount motivate and retain highly skilled remuneration and compensation salary and depends on the level of indicators are used, which aim to improve the efficiency and the rules for determining professionals to help drive the future to the Board members were approved of the position held and the functional KPIs for each senior manager are set of investments and sales, control and paying remuneration growth and performance. by the General Meeting area of the manager. annually and take into account costs, and reduce employee injury and compensation to the Board of Shareholders on 30 June 2022. The Remuneration and Human metrics related to operational rates for the Company and its The amount of additional ensures an effective proportion To assess the performance members. The Board remuneration At the same time, the Company shall be in line with current market avoids higher-than-necessary Resources Committee of the Board efficiency and individual contribution contractors. of Directors, during its annual to the corporate growth and strategic evaluation of the incentive system, performance. The report on the voting results of PhosAgro’s General Meeting of Shareholders dated 30 June 2022 is available on the Company's official website Board of Directors remuneration, RUB Full name of the member of the Board of Directors: Sven Ombudstvedt James Rogers Marcus Rhodes Andrey Sharonov Xavier Rolet Irina Bokova Ivan Rodionov Victor Cherepov Victor Ivanov Total 2020 2021 2022 peers. 27,111,960.00 22,593,300.00 22,593,300.00 13,555,980.00 27,111,960.00 22,593,300.00 – – – 26,561,520.00 22,134,600.00 22,134,600.00 13,280,760.00 26,561,520.00 22,134,600.00 – – – 135,559,800.00 132,807,600.00 12,171,879.00 10,143,232.50 10,143,232.50 14,418,297.00 5,717,786.80 5,115,232.97 9,581,287.50 12,746,475.00 5,748,772.50 85,786,195.77 manufacturers and PhosAgro's EV/EBITDA. EV/ EBITDA reflects investors' estimate of the Company's fair market value and its investment case. The goal is to increase the spread. In addition, KPIs of N-1 level managers include indicators that help benchmark the Company’s performance against industry 1 Change in spread between average EV/ EBITDA of public phosphate fertilizer 2 Excess of PhosAgro's ROIC – WACC spread over the average ROIC – WACC spread of public peers. The indicator reflects how much higher the Company's return on investment is than the cost of capital (equity and debt), and how efficient the Company's investments are compared to other companies in the industry. The goal is to increase the indicator. Remuneration of the management Remuneration principles of the incentive system, evaluating of additional tasks, as determined Values of the CEO KPIs in the range of minimising the risks arising on the nature of a particular its effectiveness and, if necessary, by the Board of Directors of base case / target / challenge, from incentivising excessively risky manager's focus area with due The Company's remuneration policy making recommendations for its and the CEO for the reporting as well as their actual values management decisions. regard to their strategic fit. Specific for executive bodies and other improvement. key employees is determined by the Board of Directors based The remuneration due period, as well as the Company's achievement of the EBITDA target. at the end of the reporting period KPI wordings and their weights are approved by the Chairman KPIs of the CEO and N-1 level are established by PhosAgro's KPI of the Board of Directors. Taken managers, including sustainable Committee, taking into account on the recommendations to the Company’s senior executives All KPIs are aligned together, these indicators contribute development indicators, the opinion of the KPI holder of the Remuneration and Human consists of a monthly base salary plus with the Company’s strategic to the achievement of the Company's are cascaded down and decomposed and their immediate supervisor. Resources Committee. additional compensation payable goals defined in its Strategy strategic goals and serve into KPI scorecards of lower-level The Remuneration and Human is linked to achieving the Company’s achievement. both in terms of the Company's themselves and their weights Group were benchmarked against twice a year. Additional remuneration to 2025 and oriented towards their the interests of shareholders management. The indicators In 2022, 307 officers of PhosAgro Resources Committee conducts KPIs and completeness a detailed bi-annual review and quality of accomplishment development and in terms are modified depending 1,717 KPIs. 292 293 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Number of officers holding KPIs by year: 2022 2021 2020 2019 307 280 277 106 Top 3 KPI driven areas Commitment to sustainability 38% of KPIs Expansion of production capacities through improved operational efficiency 33% of KPIs Development in high- potential areas 24% of KPIs As can be seen from the above When determining the amount statistics, PhosAgro Group is focused of additional annual remuneration on sustainable development, for the top management, we look Remuneration of members of executive bodies and the KPI framework includes at the achievement of the EBITDA The amount of remuneration the following indicators: target as an integral indicator and additional compensation due • reduction of unit pollutant of the Company's performance. to PhosAgro’s CEO is regulated emissions to the atmosphere; The managers' performance by a contract between them • share of waste recycling, is adjusted by the percentage and the PhosAgro, which is signed neutralisation and processing; of delivering on the EBITDA target. by the Chairman of the Board • implementation of key social The Company does not provide of Directors. The total remuneration projects; • % of completion for any compensation payable reflects the CEO’s qualifications to managers in case of their and their personal contribution of the programme to improve dismissal or voluntary resignation to PhosAgro's financial results. social and working conditions; or the Company’s takeover or • zero accidents; the change of its owner (golden No loans were extended to members • zero occupational injuries among parachutes). Neither does it of the Board of Directors the Company and contractor use options, pre-determined or the Management Board employees. unconditional bonuses or a clawback as at 31 December 2022. mechanism. Remuneration paid to the CEO and six other Management Board members who represent the senior management team, RUB '000 Pay type Total, including salary bonus other types of remuneration fee 2020 1,098,922.60 421,033.0 677,807.1 82.5 0 2021 1,422,622.4 399,548.2 1,023,035.3 78.9 0 2022 1,020,231.4 214,350.2 805,881.2 0 0 External auditor’s remuneration PhosAgro engaged JSC Technologies In 2022, Technologies of Trust – partner, as well as by the Chairman of Trust – Audit to audit its 2022 Audit rendered audit-related of the Audit Committee IFRS consolidated financial services to the Company for a total of PhosAgro's Board of Directors, statements. The actual remuneration of RUB 3 mln, net of VAT. Also, with due regard to appropriate paid to the auditor for this during 2022, other contracts independence considerations. service stood at RUB 36.0 mln, were concluded for the provision net of VAT and overhead costs; of non-audit services to PhosAgro The actual remuneration for 2021, the amount paid was in the amount of RUB 2.3 mln, of Unicon to audit PhosAgro’s RAS also RUB 36.0 mln. net of VAT. All additional services, accounting statements for 2022 related and unrelated to audit, was RUB 683,700, net of VAT, up 10% were duly approved by the audit year-over-year. 294 295 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Corporate controls GRI 2–12 Risk management and internal control The risk management and internal over the financial and business the status and effectiveness control framework is a set operations of the Company. of risk management initiatives. of organisational measures, methods, The monitoring results serve practices and standards of corporate The Annual General Meeting as a basis for the relevant proposals culture. It also embraces actions of Shareholders held in June 2022 issued by the Commission taken by the Company to strike elected the following members to executive bodies and the Board Organisational structure of the risk management and internal control framework the right balance between value to the Review Committee: of Directors. Audit Committee Board of Directors Review Committee Executive bodies (Management Board and CEO) Internal Audit Department Risk Management and Internal Control Department Other structural departments growth, profitability and risks, • Lusine Agabekyan, Deputy support sustainable development, Head of Group Financial Control and ensure efficient operations, and Management Reporting protection of its assets, compliance at PhosAgro; Following the audits, the Internal Audit Department provides the Board of Directors and executive with applicable laws and internal • Ekaterina Viktorova, Deputy Head bodies with recommendations documents, along with timely of Treasury at PhosAgro; and reports, including, among other and accurate reporting. • Olga Lizunova, head of unit things, the assessment of the current The Board of Directors defines the key principles of, and approaches to, risk management and internal (functional in other areas), status, reliability and effectiveness budgeting office, Economics of the corporate governance, risk Department at Apatit. management and internal control framework. controls, oversees the Company's The Review Committee’s executive bodies, and performs goals, objectives and powers other key functions, including are outlined in the Regulations setting the overall risk appetite on Review Committee of PhosAgro The Risk Management and Internal Control Department is charged with the general supervision and reviewing material risks as approved by the General Meeting of risk management, including and ways to manage them. of Shareholders on 12 May 2011. related activities, and consolidated reporting to the Board of Directors The Board's Audit Committee focuses on assessing and making The Committee endorsed PhosAgro’s and executive bodies. financial statements for 2022, proposals to improve the risk with its report dated 28 February management and internal controls. 2023 included in the materials On top of that, its members for the shareholders to prepare As part of their duties, heads of other organisational units are responsible for building, supervise the preparation of accounting (financial) statements and the measures taken to prevent fraudulent behaviour of the Company's employees or third for the Annual General Meeting documenting, implementing, of Shareholders. monitoring and developing the risk management and internal control The executive bodies establish and maintain an efficient risk framework in their respective functional areas. The framework parties. management and internal control requires the Company's employees The Review Committee elected by the General Meeting framework. to identify and assess relevant risks and efficiently implement To this effect, they have set up the controls and risk management of Shareholders exercises control a Risk Commission that monitors initiatives. Administrative reporting Functional reporting For the full text of PhosAgro's Regulations on Review Committee, please visit our website 296 297 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Risk management Audit of business processes governance. The Internal Audit by holding regular trainings, which In 2022, PhosAgro’s risk control framework. The Board • analysis of key risk indicators; Department also conducted focus on sourcing data from management and internal of Directors reviewed the results • development of corrective actions; The audit plan along with the an IT audit of the automated information systems and further control framework continued of the framework’s independent • follow-up control and review. budget of the Internal Audit process control system. The audits processing and visualising it. We will performing strongly thanks to timely external assessment, which showed Department for the calendar year were followed by proposals to improve continue these efforts in 2023. identification and assessment that it was on par with those adopted In addition, in 2022, the Company is subject to review, discussion efficiency of procurement processes, of risks, as well as development by the industry’s leading companies, rearranged a number of risks and approval by the Audit Committee streamline the approach to inventory and implementation of risk including: in different focus areas, including management measures. • compliance with applicable the continuity of procurement, and the Board of Directors. Audits management and improve are performed at the Company level, cooperation between business Self-assessment and external assessment On a quarterly basis, the Board regulatory requirements; logistics, and software and IT as well as at specific subsidiaries units. The management developed The internal audit quality is assured of Directors reviewed reports • adoption of most of the leading infrastructure operation, on the back and their standalone business and approved corrective action through regular external independent on the management of PhosAgro's risk management practices such of geopolitical developments. units. In addition, the Internal plans, with the progress monitored assessments and self-assessment. key risks. PhosAgro’s executives as alignment with the Company’s paid special attention to managing development strategy, risk Plans for 2023 these key risks. The Risk Commission appetite, key risk indicators, Audit Department monitors by the Internal Audit Department. the effectiveness and efficiency An external independent assessment of corrective actions taken The 2023 audit plan includes audits takes place once every three years. continuously monitored the status automation and robotisation PhosAgro Group looks to maintain by the management following of personnel management, cash The latest one was conducted in late of risk management activities and, in risk management, and further develop the existing the audit, and reports to the Audit and CAPEX management. It also 2021 by PwC. when necessary, initiated changes as well as integration elements of its risk management Committee on a quarterly basis covers an IT audit of sales units, review to improve those related to key risks. into the Company’s incentive framework based on the best and to the Board of Directors annually. of the IT strategy alignment and audit In late 2022, the Internal system and governance practices, while also taking framework. into account the changing external Development of the risk management and internal control framework in 2022 The reporting year saw both the production sites and PhosAgro Group as a whole complete a full- The Company is making year cycle of risk management a consistent effort to develop its and internal control, including: risk management and internal • ongoing risk monitoring; Internal audit and internal factors. For information on key risks and risk management, see the Strategic Report section on 70 Revision and approval of PhosAgro’s quarterly and annual budgets Review of operating and financial reports PhosAgro’s Internal Audit and Economic Security Departments, Audits Department assists the Company’s and the Company management. executive bodies and the Board of Directors in improving Internal audit goals, objectives the management of business and powers are outlined processes and enhancing in the Internal Audit Policy the internal control and risk as approved by the Board of Directors management framework. In doing on 18 May 2021. The Company’s this, it uses a risk-oriented approach internal audit procedure is set out and works closely with the Risk in the Internal Audit Guidelines. 2022 2021 2020 5 15 4 16 6 16 Management, Internal Control Scheduled Unscheduled For the full text of PhosAgro's Internal Audit Policy, please visit our website In 2022, the Internal Audit Department fully met the annual action plan. The audits covered PhosAgro of ESG targets. Team development Audit Department held a self- assessment of its compliance with the International Standards for the Professional Practice of Internal Group’s business processes related In order to achieve the strategic Auditing and the Institute of Internal to the procurement of goods, goals in internal audit, we continue Auditors’ Code of Ethics. The self- works and services, inventory working to develop and diversify assessment showed the Department’s management and corporate the competencies of our team full compliance with all applicable standards and requirements. Awards In April 2023, the Expert Council of the 10th Internal Auditor of the Year national competition named PhosAgro's Internal Audit Department a winner in the Internal Audit Service of the Year category. 298 299 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review External audit Inside information A key element of the Audit of the non-audit services does between the audit team PhosAgro has adopted the Inside First and foremost, these include The audit conducted by the Internal Committee’s operations is ongoing not call into question the ability and the Chairman of the Audit Information Regulations compliant the limitations on the use Audit Department in 2021 interaction with external auditors and development to perform the audit service Committee held prior independently and impartially. to the Committee meetings. of recommendations for the Board The Committee’s assessment with the Russian laws and the EU of inside information and trading identified no material violations Market Abuse Regulation (MAR). in the Company’s securities. of the applicable laws and the Inside Depending on the group, Information Regulations. In January of Directors regarding the choice of the auditor’s independence PhosAgro’s auditor performs In accordance with its provisions, an insider may be prohibited 2022, following the 2021 audit and approval of auditors. When is also significantly influenced the audit of its financial and business the Corporate Secretary Office keeps from such transactions or obliged an action plan was adopted selecting an auditor, we evaluate by the auditor’s internal operations in compliance a list of insiders, persons discharging to notify PhosAgro or obtain its to improve engagement the following factors in addition procedures for controlling with Russian laws and regulations managerial responsibilities (PDMR) consent for such transactions. Every with insiders and inside information to the cost of their services: • composition of the audit the impartiality and professional and the agreement signed ethics of the auditor's staff, with the Company. The auditor and persons closely associated quarter, the Corporate Secretary management. The plan was fully with them (PCA). The Regulations Office checks the list of shareholders implemented in the reporting year. team (in terms of experience including requirements is approved by the Company’s define the scope of responsibilities to identify transactions that may and qualifications), which should for periodic rotation of the audit General Meeting of Shareholders. for each insider group, which have been executed in breach In 2022, the Board of Directors ensure that the statements partner, training arranged in this The Company engaged JSC the Corporate Secretary Office of such limitations. The checks approved a revised version are audited within acceptable area and the use of specialised Technologies of Trust – Audit (10 from time to time communicates showed that in 2021 and 2022 of the Inside Information deadlines and with adequate software to perform the respective Butyrsky Val, Moscow, Russia) to respective persons. no changes were made Regulations. quality; audits; to audit its 2022 IFRS financial • the auditor’s independence • balance between the benefits statements. evaluated based on a variety of long-term cooperation of factors, including assessment with the auditor and the need The Company’s 2021 RAS accounting of the scope of non-audit services provided to us for a fresh look at PhosAgro's statements were audited by JSC financial statements Unicon (8 Preobrazhenskaya by the candidate company and preparation procedures; Ploshchad, Preo 8 Business Centre, during the relevant periods. Each • the auditor’s performance Moscow, Russia). offer from the current auditor over the previous period. for non-audit services requires The Committee may form The approach to assessing external confirmation by the audit partner its opinion on the quality audit’s independence and efficiency, to make sure there is no risk of the external auditor’s work as well as appointment and to independence and is submitted during in-person Committee re-appointment of the external to PhosAgro's Audit Committee meetings, where the external auditor is set out in the External for consideration and approval. auditor’s mandatory participants Auditor Selection and Cooperation The Committee consents are a manager and the partner, Policy of PhosAgro as approved by the to the shareholding structure as a result of transactions unreported by insiders. For the full text of the Inside Information Regulations, please visit our website Information security GRI 3-3 to the contract only if the scope as well as during meetings Board of Directors on 14 April 2021. The Information Security Policy information security. Its adoption need to respond to the hazards For the full text of the External Auditor Selection and Cooperation Policy of PhosAgro, please visit our website) For more information on the auditors, their selection procedure and independence evaluation, please see the Company’s semi-annual reports, as well as the respective section of this Report that discusses the Audit Committee’s activities on page 284 and in the Remuneration Report and the Remuneration Report. is the Company’s fundamental ensues from the risks and hazards and minimise the risks. document defining the general faced by the Group companies provisions and principles for ensuring in their operations and the respective For more details, please see PhosAgro's Information Security Policy 300 301 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review The Policy states high priority of the department, helped avoid in the Company’s information of information security activities information security incidents systems); and sets up its key principles. They in 2022 and in previous periods that • ensured compliance cover the target setting and planning could have caused tangible material with statutory requirements of information security activities, or reputational damage. by adopting 55 internal as well as their implementation, Based on the results of the 2021 regulations; quality management and process assessment, a description • enhanced SCADA information improvement. The above of the target state and a respective security; Ethical practices GRI 2–23, 2–24 Values, principles, standards and norms of behaviour principles define the contents roadmap were also prepared • improved access control PhosAgro Group has a well-deserved By consistently implementing To ensure PhosAgro Group's of the lower-level documents by one of the world's leading processes; reputation of a reliable business this approach for years, PhosAgro observance of ethical practices such as the Information Security expert companies. The proposed • improved information security partner, attractive employer, was able to become a company and generally recognised business Framework and other internal measures were included monitoring processes; responsible taxpayer, and partner operating to the highest global standards, the Company put documents covering respective in the 2022–2023 action plans; • improved vulnerability to the Russian government standards in human rights, industrial in place an anti-fraud and anti- issues. This set of documents reflects information security issues management processes. and regions where the Company safety, environmental protection, corruption system covering all modern solutions and best practices are submitted for consideration in information security. by the Board of Directors every Ensuring information security six months. In 2022, the Company is the responsibility of each did the following to implement employee. To this end, the Group the roadmap: regularly holds events to raise employees' awareness of information • raised awareness: over 11,000 employees completed information security issues and develop security courses on the corporate practical skills to deal with modern Kaspersky Automated Security threats. This, together with the use Awareness Platform (ASAP); of modern information security the training continues to cover tools and well-coordinated work 100% of users who have accounts In 2022, the Group received the national Silver Dagger Award having won in the Digital Transformation and Information Security category. The Company outperformed the competition with its unique solution offering a comprehensive approach to cybersecurity based on Kaspersky Unified Monitoring and Analysis Platform (KUMA). All employees of the Economic Security Department receive training Security personnel who completed human rights training, % in terrorism prevention and the main GRI 410–1 goals and principles of PhosAgro Group Code of Ethics. 2022 2021 2020 100 100 100 operates. The trust that our anti-corruption, etc. We recognise areas of operation. On top of that, investors, employees, customers, that it is hardly possible to fully Group companies adopted a set contractors and authorities place eliminate ethical risks in a large of corporate, legal, information in the Company is underpinned and diverse organisation that has and educational measures by the high ethical standards that an almost global presence. We to build a shared corporate we have adhered to since PhosAgro’s believe that by adhering to our culture underpinned by high inception. ethical principles and standards we ethical standards and maintain minimise unnecessary risks, maintain an atmosphere of trust, mutual We take an integrated approach our business reputation and keep respect and integrity among to business ethics; in other words, we ourselves on track to achieve our believe that ethical considerations ambitious production and financial employees. PhosAgro and all of its subsidiaries approved anti-corruption are intrinsic to all aspects of our targets for the benefit of PhosAgro’s standards with the obligation operations, from procurement shareholders and other stakeholders. to comply with anti-corruption and teamwork to safety and trade. We systematically analyse risks in this Management approach area and develop and implement rules included in the Collective Bargaining Agreement for 2020– 2023 and employment contracts measures to manage them. PhosAgro Group does its best with employees. All initiatives to eliminate corrupt practices, while are running as part of the effective To achieve the above, we need also enhancing and protecting its anti-corruption plan. to ensure that our ethical principles business reputation as an honest, and standards are clearly defined open and bona fide company and communicated to employees among shareholders, potential and counterparties. We also need investors, partners, employees, to have relevant legal, organisational and counterparties. Elimination and informational mechanisms of any possible occurrences in place to support and, more bearing the signs of corruption importantly, monitor compliance or potential conflict of interest, with these principles and standards, and strengthening the commitment which should also be overseen of PhosAgro Group’s employees at the highest corporate governance to the highest ethical standards level. are at the forefront of the Group's activities. 302 303 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Ethical standards and norms of behaviour The principles and standards of ethical behaviour when working at and with PhosAgro are set out in relevant policies and other internal documents listed below. These are regulatory documents all the Group's managers, officers and employees must comply with. Employees who have violated them are subject to the respective sanctions, including social condemnation, public censure through publication in the media, full or partial withholding of bonuses, and – if the employee’s action (omission) bears signs of a disciplinary offence – disciplinary measures also apply to such employee pursuant to the applicable labour and employment laws. The following internal policies and procedures governing the compliance of the Company with the key principles and standards of ethical conduct are currently in effect: SASB RT-CH-530a.1 Code of Ethics The Code outlines the key principles and rules of ethical business conduct underlying the corporate culture of PhosAgro Corporate Governance Code The Code defines the main principles of and approaches to corporate governance Code of Conduct for Counterparties The Company may refuse to cooperate with suppliers or business partners discriminating their own or subcontractors’ employees or using forced labour Anti-Corruption Policy 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 Apatit's Procurement Policy The Policy defines the goals, key principles, roles and employee responsibilities in procurement UK Modern Slavery Act Transparency Statement The Act outlines the Company’s actions to prevent all forms of modern slavery and human trafficking within PhosAgro and its supply chain 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 Business Presents and Representation Expenses The Regulations set out the procedure for receiving presents by the Company’s employees, as well as making them on behalf of the Company. The Regulations substantiate and detail the formation, structure, and documentation of representation expenses Government Relations Policy The Policy establishes the principles, areas, purpose and objectives of PhosAgro interaction with public authorities and officials Regulations on Internal Checks Regulations on Inspections Charity Policy 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 regulations PhosAgro Hotline Regulations The Regulations 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 The Policy sets out the key principles and areas for providing charitable support on behalf of and through the funds of the Company Personnel Management Policy The Policy sets forth the Company’s and its management’s adherence to high ethical standards of transparent and fair business aimed at building the image of an employer attractive for the best professionals Regulations to Ensure Compliance with Anti-Corruption Laws as Part of Legal Support Process The Regulations outline goals and objectives for legal support of the Company’s business processes and transactions involving a high risk of corruption 304 305 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Operations assessed for risks related to corruption Informing, advising, and training employees When building an effective anti- For this purpose, the Group prohibitions and restrictions corruption policy, it is of utmost has defined lists of corruption- and measures to prevent and resolve importance to understand prone functions and positions. conflicts of interest. These standards what corruption offences The activities of the officials are set out in internal regulations. employees may be inclined occupying the positions to commit depending on their included in the list are under PhosAgro Group seeks to identify positions, what business processes special control of the Economic and assess corruption risks are most likely to involve Security Department and heads on a regular basis using a three- the commission of such offences, of the relevant business units step procedure to update the list what ways or schemes are available in terms of their compliance of functions and positions exposed for committing them and what with high ethical standards to such risks. Over the last three years GRI 205–2 PhosAgro Group offers ongoing training programmes to educate employees on anti-corruption in order to minimise the risk of their involvement in corrupt practices. To this end, the Group has put in place a robust training system to prevent any and all corrupt practices, mitigate possible harm, and eliminate the consequences consequences they may lead to. and requirements of internal (2020–2022) the Company identified thereof. documents on anti-corruption, no corruption risks that are highly including compliance with related likely to materialise. Training methodology Corruption risk identification Identification of corruption offences that may be committed by Group employees and detection of business processes (critical points) where such misconduct is possible Corruption risk analysis Identification of ways that can be potentially used to commit a corruption offence, depending on the specifics of the Group’s business processes (corruption schemes), persons who may be involved in corruption, and business processes’ vulnerabilities Assessment of materiality of corruption risks Assessment of the probability of a corruption offence at a specific stage of a business process and the potential damage to PhosAgro Group in case an employee (employees) commits (commit) a corruption offence PhosAgro's Board of Directors system in accordance is monitored by line managers receives regular reports with PhosAgro’s Risk Management on the basis of, among other things, on the progress of anti-corruption and Internal Control Policy. the Risk Management Regulations. initiatives and the performance In addition, the process of identifying of the anti-fraud and anti-corruption risks and preventing wrongdoings Organisational and informational mechanisms PhosAgro Group has a well-designed and counterparties are kept of potentially unethical and corrupt set of tools in place to ensure abreast of and trained in ethical behaviour are effectively reported that the Group's employees business practices and that cases to relevant officers and units. Target audience Managers and white-collar workers of all levels, including employees of branches and standalone business units Goals and objectives Provide employees with updated information on laws and regulations on detecting and combating corruption in business entities. Help students develop an anti-corruption attitude, learn about methods of combating corruption and conflicts of interests and master relevant skills. Help students acquire knowledge of the causes and preconditions for corruption and practices of identifying and counteracting such cases Benefits of online training Educational materials (presentations, tests) accurately reflect the potential issues of corruption at PhosAgro Group companies. The training process does not disrupt core business activities Training results Upon completion of the anti-corruption training, an employee shall have an understanding of the theory of counteracting corruption in the Group; factors, causes, essence and consequences of corruption; Russian anti-corruption laws and regulations, as well as internal regulations of the Company; responsibility for failure to comply with anti- corruption practices To train and inform employees, on the corporate intranet portal. and the established system of anti- PhosAgro Group annually The themes of the courses corruption standards. develops anti-corruption courses depend on the responsibilities with final tests, which are posted of business units (employees) 306 307 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Completed training programmes Training period Completed programmes 2020 2021 2022 Preventing and Resolving Conflict of Interest Main Goals and Principles of the PhosAgro Group Code of Ethics Principles of the PhosAgro Hotline PhosAgro Group Anti-Corruption Policy Employees are tested on training outcomes; the regulations provide for mandatory additional training for employees who have demonstrated poor performance Main Goals and Principles of the PhosAgro Group Code of Ethics To implement anti-corruption section on anti-corruption, which Every new employee receives measures, PhosAgro’s Economic contains CEO’s message about training on the basic requirements Security Department drafts the need to strictly comply of the Anti-Fraud and Anti- an annual training plan, according with established anti-corruption Corruption Policy, the Code to which employees are informed standards, as well as copies of Ethics, Regulations on Conflict from time to time about existing of internal documents aimed of Interest and on PhosAgro internal regulations on anti- corruption, anti-corruption standards, at preventing corruption (the Anti- Hotline by watching a respective Corruption Policy, Code of Ethics, video and putting their signature responsibility for failure to comply Regulations on Conflict of Interest in briefing log to confirm the above. with them, as well as amendments and on PhosAgro Hotline). Internal Employees’ job descriptions and additions to them. documents are supplemented stipulate their obligation to comply The Company’s management serves by methodological materials with anti-corruption standards as the key communication channel (handouts, presentations), which and PhosAgro Group’s internal to emphasise the importance explain in easy terms the anti- regulations, as well as to receive of compliance with the established corruption policy, standards respective training. When employees anti-corruption measures. of conduct, responsibility, perform functions involving a high PhosAgro Group’s employees and provide examples of corruption- risk of corruption, those responsible and counterparties have free prone situations that employees may for the implementation of the Anti- and easy access to information encounter in the course of their Corruption Policy additionally about the Company’s anti- employment. corruption practices. PhosAgro’s official website features a special explain to them the Russian laws and the Group’s internal policies on anti-corruption. Total number and share of members of the governance body, employees and business partners familiarised with the Company's Anti-Corruption policy and procedures, by region Total number of members of the governance body Share of members of the governance body, % Total number of employees Share of employees, % Total number of business partners Share of business partners, % '20 177 335 74 110 '21 '22 '20 177 427 74 172 283 888 87 266 28 31 32 28 '21 28 31 32 31 Saratov region Murmansk region Moscow region Leningrad region '22 33 '20 '21 '22 '20 '21 '22 609 609 852 34 2,564 2,564 2,621 39 35 86 502 82 502 225 770 59 61 45 58 59 61 45 58 67 66 61 65 '20 130 121 '21 89 95 '22 '20 '21 '22 104 100 100 100 71 100 100 100 1,087 707 903 504 898 100 100 100 487 100 100 100 Vologda region 447 478 943 29 32 28 3,028 2,767 33,346 80 81 72 186 181 167 100 100 100 Other Total 132 32 1,902 408 68 1,292 1,208 1,401 100 100 100 1,143 1,328 2,599 29 30 32 8,691 6,524 8,222 60 62 68 3,523 2,980 3,128 100 100 100 Total number and share of members of the governance body and employees trained in anti-corruption measures, by region Total number of members of the governance body Share of members of the governance body, % Total number of employees Share of employees, % Saratov region Murmansk region Moscow region Leningrad region Vologda region Other Total '20 177 335 74 110 447 '21 177 335 74 110 447 '22 234 718 68 209 910 102 1,143 1,328 2,241 '20 80 80 80 80 89 81 '21 80 80 80 80 89 87 '22 83 81 78 79 97 77 86 '20 609 '21 609 '22 747 2,564 2,564 2,275 86 502 3,028 1,902 82 502 181 636 2,767 3,206 335 '20 80 81 78 80 89 '21 87 82 80 81 90 8,691 6,524 7,380 86 89 '22 88 87 80 83 96 82 90 308 309 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Security Agents December 2022 saw the second festival held as part of Security Agents, Russia's unique initiative run by PhosAgro and the Vologda Regional Office of the Russian Ministry of Internal Affairs. The project seeks to train children in security and observance of ethical standards. The participants learn about security operations, cybersecurity, rules of conduct in public places, and healthy lifestyle. The festival was attended by the Company management together with the representatives of the Vologda Regional Office and Kaspersky Lab. From June 2021, the project organisers have given over 470 classes to more than 5,000 children, including those of the Company's employees, school students, children without parental care placed in dedicated centres, and teenagers assigned to the Juvenile Liaison Office. In 2022, its geography expanded to include Volkhov (Leningrad region) and Balakovo (Saratov region). Tools to notify the relevant PhosAgro Group's executives of any instances of misconduct and corrupt practices GRI 2–25, 2–26 Tool Obligation Communication Confidentiality and protection Advice PhosAgro Hotline Description Any Company employee, as well as any member of the Board of Directors, 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. This also applies to any inducement to corruption or violations showing signs of corruption committed with respect to other employees, counterparties or other parties interacting with the Group. 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, as well as other internal regulations of the Group companies A person who has submitted a notice/report is guaranteed confidentiality of the information received, as well as such person’s personal data. PhosAgro takes steps to protect the employee who has notified the employer’s representative (employer) of any actual or potential violation of law and the Company’s internal regulations that may pose a threat to the Group’s interests. PhosAgro’s Code of Ethics formalises the right of each employee, if they have any questions relating to anti-corruption compliance or any concerns as to the rightness of their actions the actions of other employees, counterparties, or other parties interacting with the Company, to seek advice or assistance from their immediate supervisors or, if need be, the relevant business units of the Company. The Hotline operates to improve the efficiency of measures taken to prevent fraud, corruption, theft, and conflict of interest, as well as to mitigate the compliance and reputational risks resulting from violation of professional and ethical standards by the PhosAgro Group’s employees. There are three ways to report to the Hotline: by phone at +8 8202 59 32 32, e-mail at help@phosagro.ru and regular mail at the following address: Economic Security Department, 75 Severnoye Highway, Cherepovets, Vologda region, 162622, Russia. To ensure free access to the Company’s Hotline, all existing communication chanels are posted on PhosAgro’s website. PhosAgro Hotline To improve the timeliness and effectiveness of measures aimed at preventing ethical violations, including corruption, discrimination, human rights violations, etc., the Company created the PhosAgro Hotline portal. Any employee or other stakeholder can use PhosAgro 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. 2022 2021 2020 110 6 119 3 134 2 Total reports received by PhosAgro Hotline Reports related to corruption Reports received by PhosAgro Hotline by category 2020 2021 2022 41 Other (non-compliance with sanitary and epidemiological rules or internal regulations) 32 Violations of law and tender procedures 30 HSE 20 External fraud 5 2 2 2 0 Reputational risk Internal fraud Conflicts of interest Non-compliance with the Code of Ethics Violations of human rights 53 25 16 Other (non-compliance with sanitary and epidemiological rules or internal regulations) External fraud Violations of law and tender procedures 16 HSE 3 3 3 0 Reputational risk Internal fraud Non-compliance with the Code of Ethics Violations of human rights 37 27 20 9 6 5 4 2 0 Other (non-compliance with sanitary and epidemiological rules or internal regulations) Violations of law and tender procedures Fraud in foreign and domestic markets HSE Non-compliance with the Code of Ethics Workplace conditions Theft Confidential information Violations of human rights PhosAgro’s Internal Audit Hotline, actions taken, the results Committee provides this information Department reports on a quarterly of audits and measures to address to members of PhosAgro's Board basis to the Audit Committee on all violations of the Group’s ethical of Directors. reports received by the PhosAgro standards. The Chairman of the Audit 310 311 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Anti-corruption GRI 3-3 in public associations, which is seen the business community We consider it unacceptable as a guarantee of compliance and the government to forge for PhosAgro Group's executives with Article 13.3 of Federal Law No. the social, economic, and employees at all levels 273-FZ On Combating Corruption and industrial policy, remove to take advantage of their dated 25 December 2008: official position in a way that is in conflict with corporate or national interests. To prevent fraud and corruption, PhosAgro has 1. The Anti-Corruption Charter of the Russian Business adopted by the RSPP. As part of self-assessment of special administrative hurdles, improve the business and investment climate, and promote entrepreneurship. In December 2022, PhosAgro participated Acquainting business partners with PhosAgro Group’s anti-corruption standards and procedures SASB EM-MM-510a.1 The Group is committed As a result, 100% of counterparties to establishing and maintaining wishing to engage in business business relationships with the Company are introduced with companies that operate to the applicable internal in line with high ethical standards regulations of the Company during and combat corruption. the registration at the electronic PhosAgro recognises that corruption bidding platform. risks can arise not only within, We have improved the registration but also outside the Company, process at the electronic bidding put in place its Anti-Corruption anti-corruption programmes in the nationwide interactive primarily when interacting platform (PhosAgro's official website Policy together with a system and practices implemented campaign held in furtherance with counterparties, including – Procurement – Tenders – Supplier covering the entire range of its by the Company and covering not of the National Anti-Corruption business partners, suppliers, Registration Form). Every potential activities, and set up a commission only internal activities, but also Plan for 2021–2024. contractors, etc. supplier of goods or services on fraud, corruption, and conflicts relations with business partners of interest. The Company seeks and the state, procurement 5. The Russian Union to identify and assess corruption through public auctions, risks on a regular basis to keep financial control, staff training track of functions and positions and development, cooperation of Industrialists and Entrepreneurs. As a member of the RSPP, PhosAgro exposed to such risks. PhosAgro’s with law enforcement agencies, participates in the annual Anti- interested in establishing a business PhosAgro Group has approved relationship with PhosAgro Group a procedure for incorporating is required to read the relevant an anti-corruption clause internal regulations (the Company’s and a clause of good faith in every Anti-Corruption Policy, Code contract signed by the parties; of Ethics, Anti-Fraud and Anti- management regularly reviews PhosAgro regularly completes Corruption Rating assessing these clauses contain clear Corruption Policy of Apatit, Code reports on the progress surveys using the portal compliance with best business and detailed rules and procedures of Conduct for Counterparties, of anti-corruption initiatives of the Chamber of Commerce conduct practices both in Russia aimed at preventing corruption, etc.), and familiarise themselves and the performance of the anti- and Industry of Russia. fraud and anti-corruption system. and globally. As part of the 2022 rating, PhosAgro was awarded In addition, we make an ongoing effort to build a culture of zero Business adopted by the RSPP. Having joined the Social as a “Company with Extremely Strong Anti-Corruption 2. The Social Charter of the Russian the A1 score and designated including special management with information on PhosAgro’s procedures, requirements Hotline. Only after becoming for counterparties, rules of special aware of these standards may anti-corruption control and audit, they proceed with the registration measures to prevent conflicts at the electronic bidding platform. tolerance to corruption underpinned Charter of the Russian Credentials and Extremely Low of interest and commercial bribery, This helps to ensure that all by high ethical standards, Business, PhosAgro formalised Corruption Risks”. and compensation for material potential counterparties seeking as well as maintain an atmosphere the responsible approach it takes damage. of trust, mutual respect and integrity to ESG and its commitment To counteract corruption, we among employees. to best practices in corporate cooperate successfully with state PhosAgro Group’s participation in collective efforts to combat corruption The Company’s Anti-Corruption social responsibility. and local government authorities and non-governmental organisations 3. The Anti-Fraud Working Group based on the principles of the Russian Association of partnership, mutual respect, of Fertilizer Producers (RAFP), which has developed initiatives trust and professionalism. We have entered into a number Policy is implemented in accordance to combat wrongdoings of long-term agreements with applicable anti-corruption committed by unidentified on preventing and detecting crime, laws and international conventions persons using brands of major as well as helping to build security (including the UN Convention mineral fertilizer producers. infrastructure through the creation against Corruption and Russian anti-corruption laws). To prevent and combat corruption, PhosAgro Group cooperates with business 4. The Chamber of Commerce and Industry of Russia (CCI). The CCI membership implies of police stations at PhosAgro Group’s production sites. Joint activities are widely covered in the corporate media. communities and participates engaging in a dialogue between to do business with PhosAgro Group are familiar with the applicable standards. Total number of business partners registered Общее количество at the electronic bidding деловых партнеров, platform and acquainted прошедших регистрацию with the anti-corruption на ЭТП и ознакомившихся standards с антикоррупционными стандартами 2022 2021 2020 3,128 2,980 3,523 Share of business partners in this category, % Доля деловых партнеров данной категории, % 2022 2021 2020 100 100 100 312 313 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Incidents of corruption identified and actions taken Internal investigations into reported corrupt behavior Number of internal investigations into various failures to comply with the internal regulations 2022 2021 2020 Including corruption-related 2022 2021 2020 35 52 52 4 3 2 GRI 205–1 GRI 205–3 In 2022, 35 internal investigations to apply anti-corrosion coating were launched to identify failures to structures and buildings at In 2022, four criminal cases section at Apatit who received illegally received RUB 250,000 were initiated, including two cases RUB 201,000 in exchange from the Company’s contractors. in complying with the internal Apatit’s phosphate and nitrogen against employees of Apatit (there for engaging in wrongdoing Further investigation revealed regulations. Four of the completed facilities. As a result of this investigations were related failure, Apatit incurred losses to corruption and fraud and had of RUB 1,000,000; to do with: • illegal transfer by the Company’s • illegal receipt of RUB 800,000 counterparties of RUB 604,000 by the contractor’s manager to the head and chief expert in exchange for facilitating the signing of the as-built of the environmental control unit at Apatit’s Volkhov branch report on cabling at the Kriolit in exchange for deliberate railway station. As a result of this wrongdoing on their part. offence, Apatit incurred losses As a result of this offence, Apatit of RUB 10,999,700; incurred losses of RUB 87,707,800. • illegal receipt of RUB 201,000 by the head of the MFPU section The internal investigations led at Apatit in exchange for exercising to the initiation of a disciplinary their official powers for the benefit action against one employee, of a contractor; and termination of contract are three employees listed in the case for the benefit of a contractor; two more offences committed records whose employment • on 12 July 2022, a criminal case by the criminal case subjects contracts were terminated): was opened in accordance with a view to receiving illegally • on 25 April 2022, a criminal case with Article 204, Part 7 was opened in accordance (“Commercial Bribery”) RUB 170,000 and RUB 184,000. This brought the total amount with Article 204, Part 7 (“Commercial Bribery”) of the Russian Criminal Code of illegally received funds against the head and chief expert to RUB 604,000. of the Russian Criminal Code of the environmental control unit against the head of the MFPU at Apatit’s Volkhov branch who PhosAgro Group’s commitment to the anti- corruption standards 1 PhosAgro made a public commitment to report to the relevant law 2 is evidenced by the fact enforcement authorities PhosAgro will not impose any sanctions on employees who reported to law that it cooperates with law any cases of corruption (signs enforcement authorities • a contractor’s failure to fulfil its with three other employees. enforcement authorities: of corruption) the Group (its any actual or potential obligations under a contract employees) may become corruption incidents Confirmed incidents of corruption and actions taken GRI 205–3 Total number of confirmed corruption cases Total number of confirmed incidents resulting in the dismissal of employees or initiation of a disciplinary action against them on corruption charges Total number of confirmed incidents resulting in the termination of contracts with business partners or a failure to renew them due to corruption-related offences Total number of public court actions2 taken against an organisation or its employees on corruption charges 2020 2021 2022 2 2 1 1 2 2 11 1 4 3 2 2 aware of. that they became aware of in the course of their employment. 1 The Company updated the 2021 data: in 2021, the Company disqualified one business partner who wanted to participate in bidding procedures worth over RUB 400 mln on the grounds that it was not considered trustworthy because of its failure to comply with anti-corruption standards. All corruption-related cases are included in the official statistics of law enforcement agencies. 2 314 315 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review Conflicts of interest GRI 2–15 Antitrust measures GRI 3-3, 206–1 PhosAgro’s Code of Ethics PhosAgro places a strong emphasis on Fraud, Corruption and Conflicts The Company has approved trade producers. The respective on charges of anti-competitive and Regulations on Conflict on timely prevention, identification of Interest. As a result of this review, policies for the sale of phosphate documents are designed to ensure behaviour or breach of applicable of Interest require employees and resolution of potential conflicts recommendations were drafted rock (Apatit’s Marketing Policy compliance with antitrust laws, antitrust and trust laws, or to report any potential or actual of interest. The Company puts in place on amending job descriptions, for Domestic Sales of Phosphate while also mitigating risks associated any similar lawsuits settled in 2020– conflicts of interest to their line verification procedures to be carried revisiting the organisational Rock) and for the sale of certain with anti-competitive behaviour. 2022 to which the Company could manager or an anti-corruption out when personnel decisions and staff structure and transferring fertilizer grades to agricultural There are no pending lawsuits filed be identified as a party. officer. are made and responsibilities employees to other business units. As part of the work to develop are distributed and requires all In order to prevent potential conflicts a framework for preventing, candidates to report personal interest, of interest, five notices were served identifying and resolving conflicts if any, at the time they are offered on respective managers. In one of interest, three designated collegial employment with the Company of the reviewed cases, the conflict advisory bodies were established: and regularly from then onwards. of interest (at PhosAgro-Region) 1. the Commission on Conflict proved to be unsubstantiated. The respective documents are available in the Buyers section of the Company’s official website of Interest between Employees of PhosAgro chaired by the CEO; The Company did not identify any conflicts of interest related 2. the Commission on Fraud, Corruption and Conflicts of Interest at Apatit (to streamline anti-corruption efforts across to membership in the Board of Directors; joint ownership with suppliers and other stakeholders; controlling shareholders; related parties and their relations, the Company’s production units); transactions and outstanding balances. 3. the Commission on Fraud, Corruption and Conflicts of Interest at PhosAgro-Region (to act for PhosAgro–Region In 2022, the Company reviewed 15 cases of potential conflict of interest, including nine of them and its subsidiaries. at a meeting of Apatit’s Commission Identification, prevention and settlement of conflicts of interest in the actions of PhosAgro Group’s employees Total number of conflicts of interest pertaining to joint ownership with suppliers and other stakeholders Total number of conflicts of interest pertaining to controlling shareholders Total number of conflicts of interest pertaining to related parties and their relations, transactions and outstanding balances. Total number of conflicts of interest pertaining to membership in the Board of Directors Total number of potential conflicts of interest Number of conflicts of interest considered at the meeting of the Commission on Fraud, Corruption and Conflicts of Interest 2020 2021 2022 0 0 0 0 12 5 1 0 0 0 10 5 0 0 0 0 15 9 Non-discrimination policy and human rights GRI 2–23 We do our best to keep the working In 2022, the Board of Directors including in an executive role. environment at the Group’s and the Remuneration and Human In 2020–2022, there were no facilities free from restrictions Resources Committee paid special employee reports or complaints based on nationality, gender, age, attention to human rights focusing about violations of labour practices, faith or other grounds as required on staff diversity and equality human rights, or discrimination. by the applicable laws. At PhosAgro of genders. The discussions held Group, any decisions regarding by these bodies led to the key promotion, hiring, remuneration conclusion that every employee who or benefits are based solely works dutifully and has professional on the employee’s qualifications, skills and competencies may apply performance, skills and experience. for any position within the Group, 316 317 Company profileShare capitalAppendicesCORPORATE GOVERNANCE Strategic reportPerformance review STRENGTHENING our partnerships 5 We appreciate the partnership that we have with our securities holders and are committed to open, full and timely communication with them while also taking into account any feedback they may have. L A T I P A C E R A H S In 2022, PhosAgro paid dividends of RUB.1,563 per ordinary registered uncertified share PhosAgro’s shares are among the most liquid Russian securities and in September 2022 were included in the Blue Chip Index of the Moscow Exchange. An indicator of the market for Russia’s most liquid and well performing shares, the index is based on prices of transactions for shares of the 15 leading issuers. For details, see page 324 For details, see page 321 318 319 268 Ownership structure269 Share performance270 Debt management271 Analyst coverage271 Dividend policy273 Relationship with shareholders and investors202 Information disclosure Share capital Ownership structure Share performance The authorised capital of PhosAgro As at 31 December 2022, there The register of holders of PhosAgro’s PhosAgro’s shares are traded symbol PHOR. On 3 March 2022, Citigroup Global Markets as at 31 December 2022 amounted were no shareholders in PhosAgro securities is maintained by Joint-Stock to RUB 323,750,000 consisting with a stake of more than 5%, Company Reestr. of 129,500,000 ordinary shares beyond those already disclosed with a par value of RUB 2.5 per share. by PhosAgro in this Report. Shareholding structure (list of shareholders that hold 5% and more of PhosAgro’s authorised capital) As at 31 December 2020 Shareholder Adorabella Limited Chlodwig Enterprises Vladimir Litvinenko Other shareholders Total As at 31 December 2021 Shareholder Adorabella AG Chlodwig Enterprises AG Vladimir Litvinenko Other shareholders Total As at 31 December 2022 Shareholder MKOOO Adorabella MKOOO Chlodwig Enterprises Tatyana Litvinenko Other shareholders Total For more information on Reestr, please visit the Company's website Number of shares % of issued and outstanding shares 30,234,162 26,302,400 27,174,815 45,788,623 129,500,000 23.35 20.31 20.98 35.36 100.00 Number of shares % of issued and outstanding shares 30,234,162 26,302,400 27,174,815 45,788,623 129,500,000 23.35 20.31 20.98 35.36 100.00 Number of shares % of issued and outstanding shares 30,234,162 26,302,400 26,674,815 46,288,623 129,500,000 23.35 20.31 20.60 35.74 100.00 on the A1 quotation list of the Moscow Exchange under the ticker symbol PHOR trading in the Company’s GDRs Deutschland AG acts was suspended. as the depositary for the Company’s GDR programme. (ISIN: RU000A0JRKT8). Shares of PhosAgro are included in the following indices Global depositary receipts (GDR; of the Moscow Exchange: three GDRs represent one share) • MOEX Russia; are admitted to listing on the London • RTS. Stock Exchange under the ticker Tickers Stock exchange Moscow Exchange Bloomberg PHOR RU London Stock Exchange PHOR LI Reuters PHOR.MM PHORq.L ISIN RU000A0JRKT8 US71922G3083 US71922G4073 Codes for Global Depositary Receipts Under Regulation S Under Regulation S Under Rule 144A CUSIP ISIN Common code SEDOL RIC 71922G308 US71922G3083 065008939 0B62QPJ1 PHOSq.L 71922G407 US71922G4073 065008939 0B62QPJ1 PHOSq.L 71922G100 US71922G1004 065008939 0B5N6Z48 GBB5N6Z48.L Share performance on MOEX in 2022 10,000 8,000 6,000 4,000 2,000 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 320 321 SHARE CAPITALAppendicesStrategic reportPerformance reviewCorporate governanceCompany profile The key factors affecting PhosAgro's share performance in 2022 Strong demand for phosphate and nitrogen-based fertilizers over the year Logistical challenges associated with shipments from Russia Expensive primary feedstock, including gas and potassium Strong operational and financial performance of the Company High prices for major crops in global markets Low fertilizer stocks in the Company’s key sales markets Approval of multiple sanction packages against Russia No access to trading on the London Stock Exchange since 3 March 2022 and suspension of trading on the Moscow Exchange from 28 February to 23 March 2022 Share performance Item As at 30 December 2020 As at 30 December 2021 As at 30 December 2022 Weighted average trading price of a share on the Moscow Exchange, RUB GDR price on the London Stock Exchange1, USD Market capitalisation, RUB mln 3,156.00 5,857.00 6,390.00 13.64 21.58 – 408,831.50 758,611.00 827,505.00 For more information on our historical share performance, please visit the Company’s website Official market capitalisation data is published on the Moscow Exchange’s website Bonds Borrower Issuer PJSC PhosAgro PJSC PhosAgro PJSC PhosAgro PhosAgro Bond Funding Limited PhosAgro Bond Funding Limited PhosAgro Bond Funding Limited Settlement date 24 January 2018 23 January 2020 16 September 2021 Principal outstanding, USD mln 500 Guarantor(s) JSC Apatit 500 JSC Apatit 500 JSC Apatit For the debt repayment schedule, see the Financial Performance section on page 89 Analyst coverage PhosAgro is covered by analysts from leading Russian and international brokers. Company ATON Alfa Bank BCS Global Markets Renaissance Capital Sberbank CIB Sinara Financial Corporation Arowana Capital Veles Capital Analyst Andrey Lobazov Boris Krasnojenov Kirill Chuyko Boris Sinitsyn Georgiy Ivanin Dmitriy Smolin Elena Sakhnova Elsa Gazizova Dividend policy Tel. +7 (495) 213-03-37 +7 (495) 795-36-12 +7 (495) 213-15-26 +7 (499) 956-45-40 (ext. 4540) +7 (495) 665-56-00 +7 (916) 555-79-97 +7 (495) 287-68-77 +7 (495) 258-19-88 (ext. 599) Debt management The Company uses a conservative approach to leverage and believes the amount and maturity available while striving to ensure that this its investment case, the investment budget shall not exceed 50% PhosAgro is committed to striking for the General Meeting be lower than 50% of adjusted net an effective and reasonable balance of Shareholders on any dividend profit for the year under IFRS. between the payment of dividends payout (declaration), in addition and reinvestment of profit in further to the current financial standing On 2 March 2023, PhosAgro’s development. assessment, the Board of Directors Board of Directors recommended takes into account the relevant that the Annual General Meeting that a comfortable net debt/EBITDA fits into the Group’s long-term of planned EBITDA. Higher transparency provisions of PhosAgro's dividend of Shareholders (AGM) approve ratio should be below 2х or even debt reduction strategy. The choice and predictability of dividend policy whereby the amount the distribution of profits and losses within the range of 1–1.5х in the long of the currency of borrowings The record high capital investments payments are a priority of distributed dividends may of PhosAgro for 2022 and use part run. As at 31 December 2022, is based on the structure and charitable expenses in 2022 did for the Company as it seeks to ramp range from 50 to over 75% (subject of the Company’s net profit for 2022 the Company’s leverage was much of the Company’s revenue, 76% not affect the Company’s leverage, up its growth and strengthen to PhosAgro's leverage ratio) to pay out dividends in the amount lower than that, at 0.68x. of which was in foreign currency which remained comfortably below its investment case. of PhosAgro's consolidated free cash of RUB 465 per each ordinary in 2022. the net debt/EBITDA target. flow for the respective year under registered uncertified share. When determining its borrowing requirements, the Company In line with the investment policy assesses the cost of borrowing from designed to meet PhosAgro's banks and public debt markets, investor obligations and strengthen 1 Trading in PhosAgro’s GDRs on the London Stock Exchange was suspended starting 3 March 2022. All resolutions on the payment IFRS. At the same time, the amount of dividends and the timing of declared dividends should not and amount of such payment are subject to approval of the General Meeting of Shareholders, based on recommendations provided by PhosAgro’s Board of Directors. When preparing recommendations The full text of the Company’s Dividend Policy is available on the Company’s website 322 323 SHARE CAPITALAppendicesStrategic reportPerformance reviewCorporate governanceCompany profile Report on dividends declared and paid , e r a h s r e p d n e d v D i i B U R t n e m y a p e h t n o g n d c e d i i l s r e d o h e r a h S f o g n i t e e M l a r e n e G e h t f o e t a D l t n a v e e r e h t e r e h w t n e m y a p e h t n o n o i t u o s e r l d e t p o d a s a w s d n e d v d f o i i i s e t u n m e h t f o . o N d n a t n e m y a p d n e d v D i i 1 s e m a r f e m i t s d n e d v d f o i i y d o b e c n a n r e v o G B U R , R D G r e p d n e d v D i i 2020 Retained earnings as at 31 March 2020: …as at 30 June 2020 …as at 30 September 2020 78 33 123 …as at 31 December 2020 (based on 2020 results) 63 2021 Retained earnings as at 31 December 2020 (based on 2020 results): 105 …as at 30 June 2021 156 …as at 30 September 2021 234 26 11 41 21 35 52 78 ...as at 31 December 2021 (based on 2021 results)2 390 (no resolution passed) 130 (no resolution passed) 19 June 2020 No later than 7 July 2020/10 August 2020 30 September 2020 No later than 16 October 2020/20 November 2020 14 December 2020 No later than 28 December 2020/18 January 2021 25 May 2021 No later than 8 June 2021/13 July 2021 22 June 2021 No later than 6 July 2021/9 August 2021 13 September 2021 No later than 8 October 2021/29 October 2021 8 December 2021 No later than 21 December 2021/1 February 2022 30 June 2022 No later than 25 July 2022/15 August 2022 2022 Retained earnings as at 30 June 2022 780 260 21 September 2022 No later than 17 October 2022/8 November 2022 9M 2022 FY 2022 318 465 106 155 Extraordinary General Meeting of Shareholders Annual General Meeting of Shareholders 8 December 2022 No later than 9 January 2023/30 January 2023 24 March 2023 No later than 9 January 2023/30 January 20233 1 For nominee holders and trustees who are securities market professionals and are on PhosAgro’s register of shareholders / other persons on PhosAgro’s register of shareholders. 2 The General Meeting of Shareholders did not approve profit distribution for FY 2021, including payment of dividends. 3 Provided that on 24 March 2023, the Annual General Meeting of Shareholders approves the FY 2022 payments recommended by the Board of Directors. Results of the vote held by the Annual General Meeting of Shareholders on the distribution of profits (including payout (declaration) of dividends) and losses of the Company Annual General Meeting of Shareholders of 25 May 2021 FOR 109,197,672 AGAINST 6,704 ABSTAINED 0 Annual General Meeting of Shareholders of 30 June 2022 FOR 38,088,321 AGAINST 56,540,778 ABSTAINED 0 Annual General Meeting of Shareholders of 24 March 2023 FOR 94,790,985 AGAINST 0 ABSTAINED 0 For more information on the Company’s dividend payment history, please visit the Company’s website 324 325 SHARE CAPITALAppendicesStrategic reportPerformance reviewCorporate governanceCompany profile Relationship with shareholders and investors To raise investor awareness of the Company’s potential value and long-term sustainability To update investors on PhosAgro’s strategic priorities and progress we have made To attract a wider pool of investors to improve liquidity, share price and borrowing costs Strong engagement programme To increase our access to a variety of capital market instruments To clarify the Company’s contribution to the UN Sustainable Development Goals To provide transparency on how our corporate governance systems work To generate new ideas through a dialogue with investors At PhosAgro, we are committed releases, presentations, conference A well-developed Eurobond to transparency and consistency, calls and webcasts. On top of that, programme helps reinforce and maintain an ongoing dialogue we take every opportunity to answer PhosAgro's position in the public debt with the investor community investors’ questions and gather market, while also ensuring the lowest through a variety of communication feedback from market players cost of funding. channels and with involvement by participating in conference calls. of the Company’s senior management In 2022, the Company continued and independent directors. In 2022, the Company did not to stay in touch with retail conduct its ESG investor survey investors by holding conference We keep the market abreast due to the macroeconomic challenges, calls with the assistance of major of the Company’s performance but it plans to reinstate this practice Russian brokers. by publishing quarterly operational in 2023. The survey is expected and financial results that are made to be conducted every two years. available to investors via press The first survey took place in 2020. Why we interact Four main purposes for which PhosAgro interacts with the investment community Each building on each other Facilitating an ongoing exchange of information Ensuring greater business transparency 1 Provide investment community with reliable and relevant information on the key aspects of the Company’s operations, its development plans and long-term goals. 2 Identify risks and opportunities for the Company as seen from the perspective of members of the investment community after they have analysed the provided information. 3 Communicate investor feedback to the management to form the internal position and tweak/ work out a development strategy that would mitigate major risks and unlock the Company’s potential. Monitor the progress against the Company’s development strategy and present its results to the public. 4 326 327 SHARE CAPITALAppendicesStrategic reportPerformance reviewCorporate governanceCompany profile How we interact The Company interacts with the investment community in a variety of ways. Surveys Meetings of Shareholders Surveys of the Company’s perception by different investor categories, including ESG-oriented groups. Annual General Meetings of Shareholders and formal reporting. Roadshows Communication with members Corporate website Virtual non-deal roadshows covering general topics for broader investor audiences and deal roadshows relating to Eurobond offerings and ESG disclosures, etc. One-on-one calls One-on-one calls with investors. Selective communication with members of the analyst community to raise their awareness of the Company’s operations. Interaction with agencies Interaction with credit and ESG rating agencies. Online conferences Online investor conferences. Press releases Regulatory press releases. Corporate website of the Company. Investor relations team A dedicated in-house investor relations team. Key topics and outcomes in 2022 In 2022, closer contacts PhosAgro's proactive approach of the Company to communication with debt with shareholders, debt market players guaranteed investors and analysts (primarily the success of a vote held among in the form of online meetings) Eurobond holders to amend were of critical importance the issuance documentation due to the impact of external with a view to ensuring continuous challenges. debt repayment in the changing regulatory environment. For more information on our initiatives and their accompanying presentations, please visit the Calendar section of the Company's official website 85 publications were made in line with Russian disclosure regulations via the Interfax Corporate Disclosure Centre > 50 press releases were distributed via the UK regulatory news service Information disclosure In its declarations and disclosures, information to shareholders PhosAgro strictly follows and investors in a timely manner the requirements imposed through authorised newswires, by Russian securities regulations, the corporate website, as well as rules for the companies PhosAgro’s official disclosure traded on the LSE. The Company page on the Interfax portal, publicly discloses all required and on the LSE webpage. PhosAgro’s official disclosure page on the Interfax portal Disclosure on the Company's official website The Company's page on the official LSE website Financial calendar for 2023 Financial results disclosure 4Q and FY 2022 3 March 2023 1Q 2023 19 May 2023 (TBC) 2Q and 6M 2023 11 August 2023 (TBC) 3Q and 9M 2023 10 November 2023 (TBC) 328 329 SHARE CAPITALAppendicesStrategic reportPerformance reviewCorporate governanceCompany profile ADDITIONAL information 6 L A N O I T I D D A N O I T A M R O F N I 330 331 104 The consolidated financial statements114 Independent limited assurance report122 GRI content index138 SASB content index156 TCFD recommendations190 Glossary193 Contacts The consolidated financial statements Independent Auditor’s Report Joint-Stock Company “Technologies of Trust – Audit” (“Technologies of Trust – Audit” JSC) White Square Office Center, 10 Butyrsky Val, Moscow, Russian Federation, 125047 www.tedo.ru T: +7 (495) 967 6000, F: +7 (495) 967 6001 Independent Auditor’s Report To the Shareholders and Board of Directors of Public Joint Stock Company “PhosAgro”: Qualified opinion In our opinion, except for the effects of the matter described in the Basis for qualified opinion section of our report, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Public Joint Stock Company “PhosAgro” (the “Company”) and its subsidiaries (together – the “Group”) as at 31 December 2022, and the Group’s consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRS). What we have audited The Group’s consolidated financial statements comprise: • • • • • the consolidated statement of profit or loss and other comprehensive income for 2022; the consolidated statement of financial position as at 31 December 2022; the consolidated statement of cash flows for 2022; the consolidated statement of changes in equity for 2022; and the notes to the consolidated financial statements, which include significant accounting policies and other explanatory information. Basis for qualified opinion The Group has not disclosed segment information as required by IFRS 8, Operating Segments for the year ended 31 December 2022 and for the comparative period. Considering the significant volume of undisclosed segment information required by IFRS 8, Operating Segments, presenting this undisclosed information in our audit opinion is not practicable. We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Independence We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of the Auditor’s Professional Ethics Code and Auditor’s Independence Rules that are relevant to our audit of the consolidated financial statements in the Russian Federation. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. In addition to the matter described in the Basis for qualified opinion section, we have determined the matters described below to be the key audit matters to be communicated in our report. www.tedo.ru Key audit matter How our audit addressed the key audit matter Effect of changes in current economic situation on the consolidated financial statements of the Group Refer to Notes 1 (b) and 29 to the consolidated financial statements of the Group In 2022, there were significant changes in the economic environment in which the Group operates, commodity and financial markets demonstrated increased volatility. The imposition of the restrictive measures against a number of Russian entities led to the restricted access to European and USA financial markets and a risk that USD- denominated coupon payments on the Group’s Eurobonds will not reach the final debt securities holders through foreign paying agents. Among other changes, economic environment developments led to changes in the Group structure, as described in note 29 to the consolidated financial statements, and affected a number of elements of the consolidated financial statements. We focus on this matter due to significance of potential impact of changes in the economic environment in which the Group operates on its consolidated financial statements and significant management’s judgement required in respect of certain transactions and balances. We performed the following audit procedures in respect of this key audit matter: • We performed inquiries of management in respect of how the changes in current economic environment have affected the Group and its financial performance measures. • We tested compliance with debt covenants under the Group’s loan obligations, received documents in respect of changes made in 2022 in debt securities repayment mechanism and terms of service of Eurobonds. We confirmed that loan obligations of the Group denominated in foreign currency were fulfilled timely and in full amount. • We have analysed terms of sales contracts to identify new non- standard sales terms, performed detailed testing of the supporting documents and received on a sample basis a third party confirmation to ensure sales revenue is recognised properly and in correct period in the consolidated financial statements. • We performed analytical procedures of revenues by main products, including comparison with market prices to ensure that changes in the Group revenue are in line with market trends. • We tested changes in the Group structure, in particular we: - - - - - analysed the agreement and key terms of the transaction for disposal of foreign subsidiaries of the Group; assessed and challenged management conclusions relating to loss of control by the Group; assessed reasonableness of management assumptions applied for estimation of fair value of the Group’s 5% investment in Phosint Limited; examined accounting transactions for disposal of these companies in the consolidated financial statements of the Group; analysed management’s calculation of allowance for expected credit losses in respect of receivable accrued as a result of disposal. • We assessed reasonableness of the following key assumptions used by management for calculation of allowance for expected credit losses in respect of trade and other receivables: credit rating of the debtor, probability of default and loss given default. • We analysed events after the reporting date for existence of circumstances which could have significant adverse effect on the consolidated financial position and consolidated financial performance of the Group. 2 332 333 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile www.tedo.ru www.tedo.ru Other matter – Materiality and Group audit scope Other information Overview Materiality Group scoping Materiality Overall Group materiality: Russian Roubles (“RUB”) 11,615 million, which represents 5% of profit before tax. • We conducted audit work at all significant reporting units in the Russian Federation and abroad. • Our audit scope addressed 94% of the Group’s revenues and 94% of the Group’s absolute value of underlying profit before tax. As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls including, among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud. The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements. Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, if any, both individually and in aggregate on the consolidated financial statements as a whole. Management is responsible for the other information. The other information comprises the Integrated annual report for 2022 and the Company’s Securities issuer’s report for the 12 months ended 31 December 2022 (but does not include the consolidated financial statements and our auditor’s report thereon), which are expected to be made available to us after the date of this auditor’s 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. When we read the Integrated annual report for 2022 and the Company’s Securities issuer’s report for the 12 months ended 31 December 2022, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. 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. Overall Group materiality RUB 11,615 million (2021: RUB 8,003 million) Auditor’s responsibilities for the audit of the consolidated financial statements How we determined it 5% of profit before tax Rationale for the materiality benchmark applied We chose profit before tax as the benchmark because, in our view, it is the benchmark against which the performance of the Group is most commonly measured by users, and is a generally accepted benchmark. We chose 5% which is consistent with quantitative materiality thresholds used for profit- oriented companies in this sector How we tailored our Group audit scope We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates. Our group audit was focused on the significant components in the Russian Federation and abroad. For components which are individually financially significant we performed an audit of their complete set of financial information. The audit work for the significant components in the Russian Federation and abroad was performed by the group auditor. We also included information systems and tax specialists in our group audit team. By performing the above procedures at the components, combined with additional procedures at the Group level, we have obtained sufficient and appropriate audit evidence regarding the consolidated financial statements of the Group as a whole. 3 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 auditor’s 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. 334 335 4 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile www.tedo.ru Consolidated Statement of Profit or Loss and Other Comprehensive Income for 2022 • 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 auditor’s 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 auditor’s 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 to 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 auditor’s 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 certified auditor responsible for the audit resulting in this independent auditor’s report is A.Y. Fegetsyn. 2 March 2023 Moscow, Russian Federation A.Y. Fegetsyn is authorised to sign on behalf of the general director of Joint-Stock Company “Technologies of Trust – Audit” (Principal Registration Number of the Record in the Register of Auditors and Audit Organizations (PRNR) – 12006020338), certified auditor (PRNR – 21906101957) RUB million Revenues Cost of Group products sold Cost of products for resale Gross profit Administrative and selling overhead expenses Taxes, other than income tax, net Other expenses, net Foreign exchange loss from operating activities, net Operating profit Gain from revaluation of financial assets measured at fair value Finance income Finance costs Note 6 7 8 9 10 17 11 11 Foreign exchange gain/(loss) from financing activities, net 28(b) COVID19 related expenses Profit before tax Income tax expense Profit /(loss) for the year Attributable to: Non-controlling interests1 Shareholders of the Company Basic and diluted earnings per share (in RUB) Other comprehensive loss Items that will never be reclassified to profit or loss Actuarial losses Items that may be reclassified subsequently to profit or loss Foreign currency translation difference Foreign currency translation difference reclassified to profit or loss upon loss of control over foreign subsidiaries Actuarial losses reclassified to profit or loss upon loss of control over foreign subsidiaries Other comprehensive loss for the year Total comprehensive income/(loss) for the year Attributable to: Non-controlling interests1 Shareholders of the Company The consolidated financial statements were approved on 2 March 2023: 12 23 26 29 2022 569,527 (253,419) (15,599) 300,509 (42,403) (11,327) (9,371) (9,068) 228,340 - 4,439 (11,967) 11,485 - 232,297 (47,583) 184,714 52 184,662 1,426 (276) (2,929) (6,302) 61 (9,446) 175,268 52 175,216 2021 420,488 (206,082) (12,725) 201,681 (27,845) (5,946) (3,449) (307) 164,134 1,193 778 (5,044) (531) (475) 160,055 (30,381) 129,674 (23) 129,697 1,002 (36) (350) - - (386) 129,288 (23) 129,311 M.K. Rybnikov Chief executive officer A.F. Sharabaiko Deputy CEO for Finance and International Projects The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 5 to 37. 336 337 5 1 Non-controlling interests are the minority shareholders of the subsidiaries of PJSC “PhosAgro” Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Consolidated Statement of Financial Position as at 31 December 2022 Consolidated Statement of Cash Flows for 2022 RUB million Note 2022 2021 RUB million ASSETS Property, plant and equipment Advances issued for property, plant and equipment Other non-current assets Deferred tax assets Non-current spare parts Right-of-use assets Intangible assets Catalysts Investments in associates Non-current assets Trade and other receivables Inventories Cash and cash equivalents VAT and other taxes receivable Other financial assets Income tax receivable Current assets Total assets EQUITY Share capital Share premium Retained earnings Actuarial losses Foreign currency translation reserve Equity attributable to shareholders of the Company Equity attributable to non-controlling interests Total equity LIABILITIES Loans and borrowings Deferred tax liabilities Lease liabilities Defined benefit obligations Non-current liabilities Loans and borrowings Trade and other payables VAT and other taxes payable Lease liabilities Income tax payable Dividends payable Current liabilities Total equity and liabilities Note 31 December 2022 31 December 2021 CASH FLOWS FROM OPERATING ACTIVITIES 13 17 16 14 15 20 19 21 18 22 24 16 25 26 24 27 25 274,522 237,444 9,270 8,546 7,903 5,125 4,277 2,099 1,965 592 314,299 75,741 39,349 13,356 12,565 210 93 141,314 455,613 372 7,494 190,664 (968) - 197,562 158 197,720 109,784 17,820 1,660 1,050 130,314 80,974 39,412 5,632 1,276 203 82 127,579 455,613 13,237 2,058 9,499 4,698 6,955 1,756 2,049 569 278,265 48,526 41,177 21,710 15,013 216 540 127,182 405,447 372 7,494 148,193 (753) 9,231 164,537 106 164,643 157,081 12,937 3,459 952 174,429 12,710 41,754 6,397 2,178 3,334 2 66,375 405,447 Operating profit Adjustments for: Depreciation and amortisation Loss on disposal of property, plant and equipment and intangible assets Operating profit before changes in working capital and provisions Increase in inventories, catalysts and non-current spare parts Decrease/(increase) in trade and other receivables1 (Decrease)/increase in trade and other payables1 Cash flows from operations before income taxes and interest paid Income tax paid Finance costs paid Cash flows from operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of property, plant and equipment and intangible assets Cash and cash equivalents disposed as a result of loss of control over foreign subsidiaries Loans issued Borrowing cost capitalised paid Advances issued for right-of-use assets Finance income received Proceeds from disposal of financial assets measured at fair value through profit or loss Other Cash flows used in investing activities CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from borrowings, net of transaction costs Repayment of borrowings Dividends paid to shareholders of the Company Lease payments 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 Cash and cash equivalents at 31 December 228,340 164,134 29,539 429 258,308 (12,308) 7,498 (3,131) 250,367 (41,811) (5,275) 203,281 (63,021) (36,729) (3,130) (976) (850) 3,783 1,778 159 27,676 198 192,008 (10,855) (38,667) 17,490 159,976 (28,806) (4,945) 126,225 (47,951) - - (1,141) - 583 - 141 (98,986) (48,368) 57,171 (23,926) (142,111) (1,429) (110,295) (6,000) 21,710 (2,354) 13,356 61,622 (50,081) (72,260) (1,950) (62,669) 15,188 8,460 (1,938) 21,710 7, 8 10 29 18 13 17 24 24 22 25 21 The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 5 to 37. The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 5 to 37. 1 Changes in trade and other receivables and changes in trade and other payables include effect of foreign exchange differences from operating activities 338 339 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Consolidated Statement of Changes in Equity for 2022 RUB million Attributable to shareholders of the Company l a t i p a c e r a h S i m u m e r p e r a h S i d e n a t e R i s g n n r a e l a i r a u t c A s e s s o l n o i t a l s n a r t e v r e s e r y c n e r r u c i n g e r o F l e b a t u b i r t t A g n i l l o r t n o c s t s e r e t n i - n o n o t l a t o T y t i u q e l a t o T Balance at 1 January 2021 372 7,494 90,757 (717) 9,581 107,487 129 107,616 Notes to the Consolidated Financial Statements for 2022 1. Background (a) Organisation and operations PJSC “PhosAgro” (the “Parent” or the “Company”) is a public joint stock company registered in accordance with Russian legislation. PJSC “PhosAgro” and its subsidiaries (together referred to as the “Group”) comprise Russian legal entities. The Company was registered in October 2001. The Parents’s location is Leninsky prospekt 55/1 building 1, Moscow, Russian Federation, 119333. - - - - 129,697 - - (72,261) - (36) - - - - (350) 129,697 (23) 129,674 (36) (350) - - (36) (350) 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. - (72,261) - (72,261) holding approximately 20.3% of the Parent’s ordinary shares, ILLC Adorabella holding approximately 23.3% of the Parent’s As at 31 December 2022, the Parent’s key shareholders are two entities registered in Russia – ILLC Chlodwig Enterprises TOTAL COMPREHENSIVE INCOME/ (LOSS) Profit/(loss) for the year Actuarial losses, note 26 Foreign currency translation difference TRANSACTIONS WITH OWNERS RECOGNISED DIRECTLY IN EQUITY Dividends to shareholders Balance at 31 December 2021 Balance at 1 January 2022 TOTAL COMPREHENSIVE INCOME/ (LOSS) Profit for the year Actuarial losses, note 26 Foreign currency translation difference Foreign currency translation difference reclassified to profit or loss upon loss of control over foreign subsidiaries, note 29 Actuarial losses reclassified to profit or loss upon loss of control over foreign subsidiaries TRANSACTIONS WITH OWNERS RECOGNISED DIRECTLY IN EQUITY Dividends to shareholders, note 22 - - - - 372 372 - - - - - - 7,494 148,193 (753) 9,231 164,537 7,494 148,193 (753) 9,231 164,537 106 106 164,643 164,643 - - 184,662 (276) (2,929) (2,929) (6,302) (6,302) 61 52 184,714 - - - - (276) (2,929) (6,302) 61 - - - - - 184,662 - - - - - (276) - - 61 - (142,191) - - - - Balance at 31 December 2022 372 7,494 190,664 (968) (142,191) 197,562 - (142,191) 158 197,720 ordinary shares and T.P. Litvinenko holding approximately 21% of the Parent’s ordinary shares. As at 31 December 2021, the Parent’s key shareholders were entities registered in Switzerland – Chlodwig Enterprises AG that held approximately 20.3%, Adorabella AG that held approximately 23.3% and V.S. Litvinenko who held approximately 21% of the Parent’s ordinary shares. As at 31 December 2022 and 31 December 2021, the Parent does not have the ultimate controlling party in accordance with the definitions of control described in IFRS 10 Consolidated Financial Statements. (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 certain characteristics of an emerging market. Its economy is particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue development, and are subject to varying interpretations and frequent changes (note 31). The Russian economy continues to be negatively impacted by ongoing political tension in the region and international sanctions against certain Russian companies and individuals. In 2022 ongoing political tensions intensified as a result of situation with Ukraine, which negatively affected commodity and financial markets and increased volatility, especially in exchange rates. On 24 February 2022 Brent oil prices increased to over USD 100 per barrel, foreign currency exchange rates reached RUB 90.88 per 1 EUR and RUB 80.42 per 1 USD. On 11 March 2022, RUB depreciation reached its maximum level and foreign currency exchange rates The consolidated statement of changes in equity is to be read in conjunction with the notes to, and forming part of, were RUB 132.96 per 1 EUR and RUB 120.38 per 1 USD. Subsequently, these exchange rates strengthened, although they the consolidated financial statements set out on pages 5 to 37. remained volatile during the reporting period. It is not possible to determine how long this increased volatility will last or when the above indicators will revert to previous levels. A number of sanctions have been introduced to restrict Russian entities from having access to European and USA financial markets. Sanctions included access termination to SWIFT international system for several Russian banks which could potentially impact the Group’s ability to transfer or receive funds. As a result of restrictions, there is a risk that USD-denominated coupon payments will not reach the final debt securities holders through foreign paying agents. In October 2022 the Group received approval from Eurobond holders to change debt securities repayment mechanism. These changes are mainly aimed at reducing repayment risks and in providing that payments can be made both through the main paying agent and directly to noteholders. In March 2022, Andrey A. Guryev was included in the European Union sanctions list, followed by his resignation from the Company’s CEO role and his post on the Board of Directors. The future effects of current economic situation and the above measures are difficult to predict. Management’s current expectations and estimates could differ from actual results. Management of the Group 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. 340 341 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile 2. Basis of preparation The resulting foreign exchange difference is recognised in other comprehensive income. (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. 208FZ On consolidated financial reporting. (b) Basis of measurement The consolidated financial statements are prepared on the historical cost basis except for the financial assets measured at fair value. (c) Functional currency The national currency of the Russian Federation is the Russian Rouble (“RUB”), which is the functional currency of the Parent and its subsidiaries. In March 2022, the Group lost control over its 100% foreign subsidiary Phosint Limited (currently PUREFERT LIMITED) owning all the foreign companies of the Group (note 29). Until the disposal, the Group included subsidaries with the functional currency USD, EUR and other currencies. (d) Presentation currency These consolidated financial statements are presented in RUB. All financial information presented in RUB has been rounded to the nearest million, except per share amounts. (e) Use of estimates and judgments The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities. 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 29 – loss of control over foreign subsidiaries previously controlled by the Group and recognition of accounts receivable as a result of their disposal. (f) Adoption of new and revised standards and interpretations • COVID19Related Rent Concessions – Amendments to IFRS 16 (issued on March 31, 2021 and effective for annual periods beginning on or after April 1, 2021). The amendment extended the date of the practical expedient provided by Amendments to IFRS 16 issued on 28 May 2020 from 30 June 2021 to 30 June 2022. The application of the amendment did not have an impact on the right-of-use asset. The following amended standards became effective from 1 January 2022, but did not have a material impact The translation from USD and EUR into RUB, where applicable, was performed as follows: on the Group: Assets and liabilities in USD and EUR as at 31 December 2022 and 31 December 2021 were translated at the following Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018-2020 – • Proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the Conceptual closing exchange rates: Closing exchange rate 31 December 2022 31 December 2021 RUB to USD 1 RUB to EUR 1 70.3375 74.2926 75.6553 84.0695 Profit and loss items of foreign subsidiaries previously controlled by the Group for 2022 (until the Group lost control 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). (g) 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 2023 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. • Sale or contribution of assets between an investor and its associate or joint venture – Amendments to IFRS 10 and IAS 28 over Phosint Limited) and 2021 were converted at the average exchange rate for the appropriate month: (issued on 11 September 2014 and effective for annual periods beginning on or after a date to be determined by the IASB). • IFRS 17 “Insurance Contracts” (issued on 18 May 2017 and effective for annual periods beginning on or after Average exchange rate for the month 2022 2021 1 January 2023). RUB to USD 1 RUB to EUR 1 RUB to USD 1 RUB to EUR 1 • Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for annual periods January February March April May June July August September October November December 75.8837 77.4048 104.0810 85.9393 87.7638 114.7127 - - - - - - - - - - - - - - - - - - 74.2291 74.3842 74.4151 76.0977 74.0438 72.5106 73.9194 73.5942 72.8914 71.4981 72.6024 73.7172 90.5062 89.9403 88.6904 90.8178 89.8856 87.4537 87.3794 86.6334 85.9412 82.9586 82.9339 83.3260 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). • Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). • Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023). • Deferred tax related to assets and liabilities arising from a single transaction – Amendments to IAS 12 (issued on 7 May 2021 and effective for annual periods beginning on or after 1 January 2023). • Transition option to insurers applying IFRS 17 – Amendments to IFRS 17 (issued on 9 December 2021 and effective for annual periods beginning on or after 1 January 2023). • Lease Liability in a Sale and Leaseback Amendments to IFRS 16 – Amendments to IFRS 16 (issued on 22 September 2022 and effective for annual periods beginning on or after 1 January 2024). Equity items arising during the year are recognised at the exchange rate ruling at the date of transaction. • Non-current Liabilities with Covenants – Amendments to IAS 1 (issued on 31 October 2022 and effective for annual periods beginning on or after 1 January 2024). 342 343 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile 3. Significant accounting policies (c) Property, plant and equipment (i) Owned assets The accounting policies set out below have been applied consistently to all periods presented in these consolidated Property, plant and equipment is stated at cost less accumulated depreciation and impairment losses. The cost financial statements. (a) Basis of consolidation (i) Subsidiaries 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 Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working to, variable returns from its involvement with the entity and has the ability to affect those returns through its power condition for their intended use and capitalised borrowing costs. Purchased software that is integral to the functionality over the entity. The financial statements of subsidiaries are included in the consolidated financial statements of the related equipment is capitalised as part of that equipment. 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. Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment. (ii) Loss of control Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling (ii) Subsequent expenditure interests and the other components of equity related to the subsidiary. Any surplus or deficit arising on the loss Expenses in connection with ordinary maintenance and repairs are recognised in the consolidated statement of profit of control is recognised in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest or loss and other comprehensive income as they are incurred. 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. 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 (iii) Acquisitions and disposals of non-controlling interests for capitalizing such items have been met. 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. Expenses incurred in connection with major replacements and renewals of property, plant and equipment are capitalised and depreciated on a systematic basis. 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. (iii) Depreciation (iv) Associates 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, Associates are those enterprises in which the Group has significant influence, but not control, over the financial from the month when an asset is completed and ready for use. Land is not depreciated. 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 The estimated useful lives as determined when adopting IFRS (1 January 2005) for the assets reflected on the statement until the date that significant influence effectively ceases. Dividends received from associates reduce the carrying of financial position at that date are as follows: value of the investment in associates. 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. (b) Foreign currencies Transactions in foreign currencies are translated to the respective functional currencies of the Group entities Buildings Plant and equipment Fixtures and fittings 12 to 17 years; 4 to 15 years; 3 to 6 years. Tangible fixed assets acquired after the date of adoption of IFRS, are depreciated over the following useful lives: Buildings Plant and equipment Fixtures and fittings 10 to 60 years; 5 to 35 years; 2 to 25 years. Management assesses the remaining useful lives in accordance with the current technical conditions of the assets at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign and estimated period during which the assets are expected to earn benefits for the Group. 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 (iv) Capitalisation of borrowing costs to the functional currency at the exchange rate ruling at the date of the transaction. Non-monetary assets and liabilities Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily denominated in foreign currencies that are stated at fair value are translated at the exchange rate ruling at the dates take a substantial time to get ready for intended use or sale (qualifying assets) are capitalised as part of the costs the fair values were determined. Foreign exchange differences arising on translation are recognised in the profit or loss. of those assets. Capitalization of borrowing costs continues up to the date when the assets are substantially ready for their use or sale. 344 345 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile The Group capitalizes borrowing costs that could have been avoided if it had not made capital expenditure on qualifying Financial assets at fair value through other comprehensive income (“FVOCI”). Financial assets are classified assets. Borrowing costs capitalised are calculated at the Group’s average funding cost (the weighted average interest and measured at fair value through other comprehensive income if they meet both of the following conditions: cost is applied), except to the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset. • they are held within a business model whose objective is achieved by both collecting contractual cash flows Where this occurs, actual borrowing costs are capitalised. and selling financial assets; and • their contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest Borrowing costs capitalised are presented as part of cash flows from investing activities in the consolidated statement on the principal amount outstanding. of cash flows. (v) Advances issued for property, plant and equipment A prepayment is classified as non-current when the goods or services relating to the prepayment are expected These financial 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. to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current Financial assets at fair value through profit or loss (“FVPL”). Financial asset that do not meet the criteria for amortised upon initial recognition. (d) Intangible assets (i) Research and development cost or FVOCI are measured at fair value through profit or loss. (f) Securitisation arrangements The Group enters into non-recourse securitization arrangements under which insured trade receivables can be sold Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge to a bank for cash proceeds. 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 all risks and rewards of ownership, except for the amount of security deposit which represents insurance deductible of new or substantially improved products and processes, is capitalised if the product or process is technically amount for the receivables transferred to a bank. A deposit is recognised in trade receivables in the consolidated and commercially feasible and the Group has sufficient resources to complete development. The expenditure statement of financial position of the Group. The Group continues to collect and service the receivables and then capitalised includes the cost of materials, direct labour and an appropriate proportion of overheads. Other development transfers to the bank the collected amounts of the trade receivables sold. Trade receivables are derecognised from the statement of financial position as the Group does not retain substantially 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 The portfolio of trade receivables that can be sold to a bank meets the criteria for “held to collect and sell” business model and such trade receivables are classified and measured at fair value through other comprehensive income. Other intangible assets acquired by the Group are represented by Oracle software, which has finite useful life Cash collected from the customers and not yet transferred to the bank at the reporting date is presented within other and is stated at cost less accumulated amortisation and impairment losses. payables in the consolidated statement of financial position of the Group. Securitization fees are recognised as finance (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 costs. (g) Cash and cash equivalents Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less. Bank deposits held for longer than three months that are repayable on demand within several working days without Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, penalties or that can be redeemed/withdrawn, subject to the interest income forfeited, are classified as cash equivalents cash and cash equivalents, loans and borrowings, and trade and other payables. if the deposits are held to meet short-term cash needs and there is no significant risk of a change in value as a result 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. of an early withdrawal. (h) Inventories Inventories are stated at the lower of cost and net realisable value. The cost of inventory (finished goods and goods The Group financial assets are classified in the following measurement categories based on the Group’s business for resale) for distribution companies is determined on the first-in, first-out (FIFO) basis. The cost of inventories model for managing the financial assets and the contractual terms of the cash flows: financial assets at amortised cost; for production companies is based on the weighted average principle and includes expenditure incurred in acquiring 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 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 production overheads based on normal operating capacity. conditions: Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs • the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; of completion and selling expenses. and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments Spare parts to be used for construction and in repairs capitalised are classified as non-current spare parts. 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. and written-off to the production cost based on the volume of goods produced. Catalysts to be used in production Any gains or losses arising from derecognition are recognised directly in profit or loss. within 1 year are classified as part of inventories Catalysts to be used in production during the period of more than 1 year are classified as part of non-current assets 346 347 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile (i) Impairment Financial assets Lease payments included in the measurement of the lease liability comprise the following: • fixed payments; The Group recognises loss allowances for expected credit loss (ECLs) on financial assets measured at amortised cost • variable lease payments that depend on the rate; and financial assets measured at fair value through other comprehensive income (“FVOCI”). The loss allowances • amounts expected to be payable under a residual value guarantee. are measured on either of the following bases: 12month 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 Lease liability is measured at amortised cost using the effective interest method. It is revalued when there is a change life of a financial instrument. in future lease payments arising from adjusted interest rate, extension or termination option and other events. For trade receivables the Group estimated the expected credit losses for the entire period, applying a simplified Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. 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 For short-term leases (lease term of 12 months or less) and leases of low-value assets the Group has opted factors specific to the debtors, historical credit loss experience and economic environment in which they operate. 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 If, in a subsequent period, the fair value of an impaired financial assets increases and the increase can be related comprehensive income. 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. (k) Share capital (i) Repurchase of share capital Non-financial assets When share capital recognised as equity is repurchased, the amount of the consideration paid, including directly The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed attributable costs, is deducted from equity. 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. (ii) Dividends Dividends are recognised as a liability in the period in which they are declared. (l) Financial liabilities The Group’s financial liabilities comprise trade and other payables, borrowings and bonds which are measured For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates at amortised cost. The Group derecognises a financial liability when its obligation specified in the contract is discharged cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets or cancelled or expires. (the “cash-generating unit”). An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable (m) Employee benefits (i) Pension plans amount. Impairment losses are recognised in the profit or loss. Impairment losses recognised in respect of cash- The Group’s net obligation in respect of defined benefit post-employment plans, including pension plans, is calculated generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units, if any, and then separately for each plan by estimating the amount of future benefit that employees have earned in return for their to reduce the carrying amount of the other assets in the unit (group of units) on a pro rata basis. service in the current and prior periods. That benefit is discounted to determine its present value, and the fair value An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised that have maturity dates approximating the terms of the Group’s obligations. The calculation is performed using of any plan assets, if any, is deducted. The discount rate is the yield at the reporting date on government bonds in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. the projected unit credit method. 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 When the benefits of a plan are improved, the portion of the increased benefit relating to past service by employees that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. is recognised immediately as an expense in the profit or loss. To the extent the benefits vest immediately, the expense ( j) Leases As a lessee Applying IFRS 16 for all leases (except as noted below), the Group: is recognised immediately in the profit or loss. All actuarial gains and losses are recognised in full as they arise in other comprehensive income. • recognises right-of-use assets and lease liabilities in the consolidated statement of financial position, initially (ii) Long-term service benefits other than pensions measured at the present value of future lease payments; The Group’s net obligation in respect of long-term service benefits, other than pension plans, is the amount of future • recognises depreciation of right-of-use assets and interest on lease liabilities in the consolidated statement of profit benefits that employees have earned in return for their service in the current and prior periods. The obligation or loss and other comprehensive income; and is calculated using the projected unit credit method and is discounted to its present value and the fair value • separates the total amount of cash paid into a principal portion (presented within financing activities) and interest of any related assets is deducted. The discount rate is the yield at the reporting date on government bonds that have (presented within operating activities) in the consolidated statement of cash flows. maturity dates approximating the terms of the Group’s obligations. All actuarial gains and losses are recognised in full 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. (iii) State pension fund as they arise in other comprehensive income. The Group makes contributions for the benefit of employees to Russia’s State pension fund. The contributions are expensed as incurred. 348 349 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile (n) Provisions A provision is recognised when the Group has a legal or constructive obligation as a result of a past event, Finance costs comprise interest expense on borrowings, interest expense on lease liabilities, bank fees, interest expense on defined benefit obligations, securitisation fees, increase in provision for bad debts for financial investments, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, share of loss of associates and foreign exchange losses on financing activities. Borrowing costs that are not directly provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using assessments of the time value of money and, where appropriate, the risks specific to the liability. the effective interest method. (o) 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. Foreign currency gains and losses, gains and losses arising from operations with foreign currency, securitisation fees and share of profit and losses of associates are reported on a net basis. (r) Overburden removal expenditure In open pit apatite rock mining operations, it is necessary to remove the overburden and other waste in order to access Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively the economically recoverable resources. enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying of the development of the mining property and amortised over the life of the mine. 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 According to the Group’s approach to stripping, the ore, which becomes accessible after the overburden removal, that is not a business combination and that affects neither accounting nor taxable profit, and differences relating is extracted within no more than four months. Therefore, the stripping ratio (volume of overburden removed to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future. over the volume of resources extracted) is expected to stay relatively constant over the future periods and stripping costs In addition, deferred tax is not recognised for taxable temporary differences arising on the initial recognition of goodwill. incurred during the production phase of the open pit mine are recognised in the profit or loss as incurred. Stripping costs incurred during the pre-production phase of the open pit mine are capitalised as the cost 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 (s) Earnings per share The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. of ordinary shares outstanding during the period, adjusted for own shares held. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against If the number of ordinary shares outstanding increases/ decreases as a result of a share split/ reverse share split, which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced the calculation of the EPS for all periods presented is adjusted retrospectively. to the extent that it is no longer probable that the related tax benefit will be realised. (p) Revenues Revenue from contracts with customers is recognised when control of the goods or services is transferred to a customer. 4. Determination of fair values The amount of revenue recognised reflects the consideration the Group expects to be entitled in exchange for goods When measuring the fair value of an asset or a liability, the Group uses market observable data as far as possible. Fair or services, taking into account any trade, volume and other discounts. Advances received before the control passes values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques to a customer are recognised as the contract liabilities. The amount of consideration does not contain a significant as follows: financial component as payment terms for the majority of contracts are less than one year. No information is provided • Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. about remaining performance obligations as at the reporting date that have an original expected duration of one year • Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or less, as allowed by IFRS 15. (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). Contracts with customers for the supply of goods use a variety of delivery terms. The Group determined that under the terms of the certain contracts for the supply of mineral fertilizers the Group undertakes to provide delivery If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair and the related delivery services after the transfer of control over the goods to the buyer at the loading port. Under value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy IFRS 15, these services are a separate performance obligation, which revenue must be recognised during the period as the lowest level input that is significant to the entire measurement. 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. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. In the revenue disclosure the sales of certain product groups include the proceeds from transportation services. Costs related to rendering of transportation services are mainly represented by logistics costs and included in cost of Group Fair values have been determined for measurement and / or disclosure purposes based on the methods described products sold. (q) Finance income and finance costs Finance income comprises interest income, dividend income, unwinding of discount on financial assets and share of profit of associates and foreign exchange gains on financing activities. Interest income is recognised as it accrues below. When applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability. (a) Financial assets and liabilities measured at amortised cost The fair values of financial assets and liabilities presented by loans issued, trade and other receivables, cash and cash in profit or loss, using the effective interest method. Dividend income is recognised in profit or loss on the date that equivalents, trade and other payables approximate their carrying amounts as at the reporting date. the Group’s right to receive payment is established. 350 351 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile The fair values of Eurobonds are determined for disclosure purposes based on quoted market prices and included in level 1 of the fair value hierarchy. The fair values of loans and borrowings are 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. (b) Financial instruments measured at fair value The fair value of financial assets measured at fair value through profit or loss is determined using valuation techniques and categorised as Level 3 of the fair value hierarchy. 5. 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. This normally results in increase of advances received from local customers 8. Administrative and selling overhead expenses RUB million Administrative overhead expenses: Salaries and social contributions Professional services Depreciation and amortisation Security and fire safety services Other Selling overhead expenses: Salaries and social contributions Depreciation and amortization Materials and services 2022 (37,328) (29,015) (2,386) (1,387) (1,222) (3,318) (5,075) (2,885) (1,173) (1,017) 2021 (21,083) (13,493) (1,971) (1,384) (1,053) (3,182) (6,762) (4,002) (1,480) (1,280) at the year-end. However, the effect of seasonality on the Group’s revenue is partially offset by the fact that the Group Administrative and selling overhead expenses (42,403) (27,845) 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 9. Taxes, other than income tax, net at the Group’s production facilities may not be evenly spreaded. 6. Revenues RUB million Phosphate-based and nitrogen-based products Other Revenues 7. Cost of Group products sold RUB million Production expense for Group goods sold Sulphur and sulphuric acid Potash Materials and services Depreciation Salaries and social contributions Ammonia Natural gas Repair and maintenance expenses Transportation of phosphate rock Electricity Fuel Ammonium sulphate Drilling and blasting operations expenses Logistics expenses for Group goods sold Freight, port and stevedoring expenses Russian Railways infrastructure tariff and operators’ fees Customs duties Other services and materials Cost of Group products sold 2022 551,037 18,490 2021 404,850 15,638 569,527 420,488 2022 2021 (222,360) (163,034) (40,798) (27,418) (27,349) (26,979) (19,667) (19,550) (14,226) (12,002) (11,610) (6,754) (6,459) (6,331) (3,217) (31,059) (16,382) (12,647) (1,420) (610) (17,707) (16,574) (23,120) (24,812) (15,286) (14,277) (12,635) (11,373) (9,105) (6,740) (5,578) (2,341) (3,486) (43,048) (28,587) (10,728) (2,483) (1,250) (253,419) (206,082) RUB million Mineral extraction tax Property tax Land tax Environment pollution payment VAT included in expenses Using water objects payment Other taxes Taxes, other than income tax, net 10. Other expenses, net RUB million Social expenditures Increase in provision for bad debt and expected credit losses allowance Loss on disposal of property, plant and equipment and intangible assets (Accrual)/reversal of contingent liabilities Gain on disposal of inventories Decrease/(increase) in provision for inventory obsolescence Other income, net Other expenses, net 2022 (8,707) (1,890) (226) (207) (162) (58) (77) 2021 (3,605) (1,694) (222) (211) (113) (53) (48) (11,327) (5,946) 2022 (9,314) (539) (429) (32) 276 120 547 2021 (3,378) (125) (198) 2 387 (370) 233 (9,371) (3,449) 352 353 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile 11. Finance income and finance costs RUB million Interest income Unwinding of discount on financial assets Other finance income Finance income Provision for impairment of loans issued (note 18) Discount on extension of payment terms (note 17, 29) Interest expense on borrowings (note 24) Interest expense on lease liabilities (note 25) Bank fees Interest expense on defined benefit obligations Loss from revaluation of financial instruments Securitization fees Increase in provision for bad debts for financial investments Other finance costs Finance costs 12. Income tax expense The Company’s applicable corporate income tax rate is 20% (2021: 20%). RUB million Current tax expense Deferred income tax – origination and reversal of temporary differences, including change in unrecognised assets Income tax expense Reconciliation of income tax: RUB mln Profit before tax Income tax at applicable tax rate Tax effect of items which are not deductible or assessable for taxation purposes Tax effect on receivables recognised from disposal of Phosint Group (note 17) Tax effect on provision for loans issued Tax effect on foreign exchange differences on receivables recognised from disposal of Phosint Group (note 17) Effect of reduction in tax rate Effect of tax rates in foreign jurisdictions Prior years tax adjustments Change in tax incentive Income tax expense 2022 3,818 519 102 4,439 (4,124) (2,777) (4,223) (244) (258) (56) (55) (47) (14) (169) 2021 643 64 71 778 - - (3,910) (395) (221) (48) - (146) (81) (243) (11,967) (5,044) 2022 (41,465) (6,118) 2021 (31,073) 692 (47,583) (30,381) 2022 232,297 (46,459) (2,072) (1,647) (517) (295) 3,289 118 - - 2021 160,055 (32,011) (1,017) - - - 2,163 431 78 (25) (47,583) (30,381) 13. Property, plant and equipment RUB Million Land and buildings Plant and equipment Fixtures and fittings Construction in progress Total Gross book value at 1 January 2021 Additions Transfers to right-of-use assets (note 14) Transfers Disposals Other transfers Gross book value at 31 December 2021 Additions Transfers Disposals Disposal of foreign subsidiaries (note 29) Other transfers Gross book value at 31 December 2022 Accumulated depreciation at 1 January 2021 Transfers to right-of-use assets (note 14) Depreciation Disposals Other transfers Accumulated depreciation at 31 January 2021 Depreciation Disposals Disposal of foreign subsidiaries (note 29) Other transfers Accumulated depreciation at 31 January 2022 Net book value at 1 January 2021 Net book value at 31 December 2021 Net book value at 31 December 2022 104,605 1,529 - 11,760 (1,450) (44) 116,400 3,312 20,246 (1,071) (1,129) 62 137,820 (25,455) - (6,425) 1,263 8 187,961 4,406 (15) 18,110 (6,655) (7) 203,800 14,193 26,198 (6,602) (2,891) 138 234,836 (92,284) 7 (17,703) 6,560 10 17,900 3,031 - - (192) (2) 20,737 3,125 - (358) (101) 11 23,414 (11,296) - (1,852) 179 1 (30,609) (103,410) (12,968) (7,416) (18,528) (1,886) 973 357 (13) 6,270 1,241 59 305 85 (9) (36,708) (114,368) (14,473) 38,600 349,066 34,866 43,832 - (29,870) (15) - (102) (8,399) - (53) 43,494 384,431 47,160 67,790 (46,444) - (209) (8,240) - - (4,121) 211 44,001 440,071 - - - - - - - - - - - (129,035) 7 (25,980) 8,002 19 (146,987) (27,830) 7,548 1,683 37 (165,549) 79,150 85,791 101,112 95,677 100,390 120,468 6,604 7,769 8,941 38,600 220,031 43,494 237,444 44,001 274,522 During the year ended 31 December 2022, the Group capitalised borrowing costs in the amount of RUB 976 million (2021: RUB 1,141 million) in the value of property, plant and equipment using the weighted average interest rate of 2.55% per year (2021: 2.86% per year). As at 31 December 2022, the most significant balances of the construction in progress related to the following investment projects: • Kirovsk branch of Apatit, JSC: Kirovsk mine extension and modernization. As at 31 December 2022, the Group has capitalised expenses of RUB 13,458 million (as at 31 December 2021: RUB 14,045 million); • Kirovsk branch of Apatit, JSC: Rasvumchorrskiy mine extension and modernization. As at 31 December 2022, the Group capitalised expenses of RUB 4,821 million (as at 31 December 2021: RUB 2,667 million); • Kirovsk branch of Apatit, JSC: apatit-nepheline beneficiation plants extension and modernization. As at 31 December 2022, the Group capitalised expenses of RUB 4,575 million (as at 31 December 2021: RUB 2,414 million); • Volkhov branch of Apatit, JSC: MAP facilities construction. As at 31 December 2022, the Group has capitalised expenses of RUB 3,385 million (as at 31 December 2021: RUB 13,362 million); • Balakovo branch of Apatit, JSC: granulated ammonium sulphate facilities construction. As at 31 December 2022, the Group has capitalised expenses of RUB 2,616 million (as at 31 December 2021: RUB 1,862 million); • Apatit, JSC, Cherepovets: ammonia production facilities support and modernization. As at 31 December 2022, the Group has capitalised expenses of RUB 1,724 million (as at 31 December 2021: RUB 1,077 million). 354 355 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile 14. Right-of-use assets 16. Deferred tax assets and liabilities The Group has the following types of right-of-use assets: 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. (a) Deferred tax assets and liabilities by type of temporary difference Deferred tax assets and liabilities are attributable to the following items: Buildings Plant and equipment RUB million Net book value at 1 January 2021 New lease contracts and modification on existing lease contracts Transfers from property, plant and equipment (note 13) Depreciation Disposals Effect of foreign currency translation reserve Net book value at 31 December 2021 Disposal of foreign subsidiaries (note 29) New lease contracts and modification on existing lease contracts Depreciation Disposals Effect of foreign currency translation reserve Net book value at 31 December 2022 185 395 - (100) (20) (8) 452 (246) 60 (78) (67) 27 148 Amounts recognised in the consolidated statement of profit or loss and other comprehensive income: RUB million 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 the consolidated statement of cash flows: RUB million Principal lease payments (note 25) Interest lease payments (note 25) Expenses relating to short-term leases Expenses relating to leases with variable payments Total payments 15. Investments in associates Carrying values of the Group’s investments in associates are as follows: (1,673) (1,773) 7,150 1,087 8 (68) (1) 6,503 (18) (1,118) (1,108) (132) 2 4,129 2022 1,186 244 349 498 2022 (1,429) (244) (349) (498) Total 7,335 1,482 8 (88) (9) 6,955 (264) (1,058) (1,186) (199) 29 4,277 2021 1,773 395 481 524 2021 (1,949) (395) (481) (524) (2,520) (3,349) RUB million 31 December 2022 31 December 2021 Carrying value Share of ownership Carrying value Share of ownership JSC Khibinskaya Teplovaya Kompaniya (Russia) JSC Giproruda (Russia) JSC Soligalichskiy izvestkovyi kombinat (Russia) Total 504 62 26 592 50% 25% 26% 484 59 26 569 50% 25% 26% RUB Million Assets Liabilities Net Assets Liabilities Net Property, plant and equipment and intangible assets Other non-current assets Current assets Liabilities Tax loss carry-forwards Unrecognised deferred tax assets Deferred tax assets/(liabilities) Offset Net deferred tax assets/(liabilities) 104 41 765 1,345 8,578 (55) 10,778 (2,875) 7,903 31 December 2022 31 December 2021 (15,986) (15,882) 375 (13,714) (13,339) (1,199) (1,945) (1,565) - - (20,695) 2,875 (17,820) (1,158) (1,180) (220) 8,578 (55) (9,917) - (9,917) 71 2,449 1,825 6,881 (55) 11,546 (2,047) 9,499 (256) (809) (205) - - (14,984) 2,047 (12,937) (185) 1,640 1,620 6,881 (55) (3,438) - (3,438) The deferred tax assets on tax loss carry-forwards relate to the Russian entities of the Group. Due to the Russian tax legislation, starting from 1 January 2017, tax losses accumulated as at 31 December 2022 can be carried forward without limitation on utilisation period. 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 2022, no deferred tax asset for deductible temporary differences of RUB 18,710 million associated with investments in subsidiaries has been recognised (31 December 2021 no deferred tax liability has been recognised: RUB 714 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 income applicable tax rate is expected to be 0%. (b) Movement in temporary differences during the year RUB million 31 December 2022 Recognised in profit or loss Recognised in other comprehensive income Disposal of foreign subsidiaries 1 January 2022 Property, plant and equipment, right-of-use assets and intangible assets Other non-current assets Current assets Liabilities Tax loss carry-forwards Unrecognised deferred tax assets Net deferred tax (liabilities)/ assets (15,882) (2,288) (1,158) (1,180) (220) 8,578 (55) (904) (2,788) (1,835) 1,697 - (9,917) (6,118) 25 10 37 3 - - 75 (280) (13,339) (79) (69) (8) - - (185) 1,640 1,620 6,881 (55) (436) (3,438) 356 357 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile RUB million 31 December 2021 Recognised in profit or loss Recognised in other comprehensive income Reclassification 1 January 2021 Property, plant and equipment, right-of-use assets and intangible assets Other non-current assets Current assets Liabilities Tax loss carry-forwards Unrecognised deferred tax assets Net deferred tax (liabilities)/ assets 17. Other non-current assets (13,339) (1,331) (185) 1,640 1,620 6,881 (55) (3,438) (243) 1,337 10 919 - 692 1 (6) (7) (2) - - (14) (2) (12,007) - - 2 - - - 64 310 1,610 5,962 (55) (4,116) As at 31 December 2021, financial assets measured at fair value through profit or loss include 9.27% share in a related party JSC “AgroGuard-Finance”. In March 2022, JSC “AgroGuard-Finance” redeemed its shares held by the Group for RUB 1,778 million. During the year ended 31 December 2022, the Group recognised a gain of RUB 1 million on disposal of investment in JSC “AgroGuard-Finance” as part of other expenses, net. The following information shows the movements of the Group’s receivables recognised as a result of Phosint Group disposal during the reporting period: RUB million Balance at 1 January Receivable accrued (note 29) Discount on extension of payment terms (note 29, 11) Unwinding of discount (note 11) Foreign currency translation difference Balance at 31 December 2022 - 12,189 (2,777) 519 (1,477) 8,454 2021 - - - - - RUB million 31 December 2022 31 December 2021 During the reporting period the Group recognised deferred tax liabilities of RUB 1,647 million on receivables Receivable accrued as a result of Phosint Group disposal Provision for receivable accrued as a result of Phosint Group disposal Receivable accrued as a result of Phosint Group disposal, net Long-term accounts receivable Provision for long-term accounts receivable Long-term accounts receivable, net Loans issued to third parties, at amortised cost Provision for loans issued to third parties Loans issued to third parties, at amortised cost, net Loans issued to employees, at amortised cost Financial assets, at fair value through profit or loss Total other non-current assets 8,454 (85) 8,369 58 - 58 38 - 38 69 12 8,546 The movements in provision for impairment of loans issued and long-term accounts receivable are as follows: RUB million PROVISION FOR LOANS ISSUED TO THIRD PARTIES Balance at 1 January Disposal of foreign subsidiaries (note 29) Provision for loans issued to third parties accrued Use of provision Effect of foreign currency translation reserve Balance at 31 December PROVISION FOR LONG-TERM ACCOUNTS RECEIVABLE Balance at 1 January Disposal of foreign subsidiaries (note 29) Provision for long-term accounts receivable accrued Effect of foreign currency translation reserve Balance at 31 December 2022 (561) 625 (1) 1 (64) - (589) 657 - (68) - - - - 677 (589) 88 637 (561) 76 104 1,790 2,058 2021 (605) - (1) - 45 (561) (635) - (1) 47 (589) accrued as a result of Phosint Group disposal. Tax effect on foreign exchange loss from receivables revaluation was RUB 295 million. 18. Other financial assets RUB million 31 December 2022 31 December 2021 Loans issued to employees, at amortised cost Interest receivable Loans issued to third parties, at amortised cost Loans issued to related parties, at amortised cost Provision for doubtful accounts Total other financial assets 101 76 51 - (18) 210 104 140 60 25 (113) 216 In February 2022, the Group provided cash of RUB 3,130 million (USD 40 million) to the investment broker at 0.25% and received securities as a collateral for the funds deposited (reverse repo transaction). As a result of negative economical situation, significant market disruptions to broker cross-border operations led to his liquidity problems and inability to repurchase securities back from the Group. As a result, the Group loan issued under this transaction was fully impaired and loss of RUB 4,124 million was recognised as a part of finance costs. The movements in provision for doubtful accounts and expected credit losses allowance are as follows: RUB million Balance at 1 January Increase in provision for doubtful accounts and expected credit losses allowance Disposal of foreign subsidiaries Effect of foreign currency translation reserve Use of allowance Balance at 31 December 2022 (113) (4,135) 4,235 (11) 6 (18) 2021 (37) (79) - 3 - (113) 358 359 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile 19. Inventories RUB million Raw materials and spare parts 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 Provision for obsolescence Total inventories 20. Trade and other receivables RUB million FINANCIAL ASSETS Trade accounts receivable Other receivables Provision for doubtful accounts and expected credit losses allowance NON-FINANCIAL ASSETS Advances issued Advances issued on custom duties Deferred expenses Receivables from employees Provision for doubtful accounts and expected credit losses allowance Total trade and other receivables 31 December 2022 31 December 2021 15,109 10,388 801 1,379 5,685 5,941 148 (102) 39,349 11,652 22,110 607 291 5,258 1,662 197 (600) 41,177 21. Cash and cash equivalents RUB million Cash in bank Call deposits Petty cash Total cash and cash equivalents 31 December 2022 31 December 2021 7,438 5,911 7 13,356 13,298 8,405 7 21,710 As at 31 December 2022 the most significant cash and cash equivalents balances were held in large Russian banks with high credit ratings, according to independent Russian rating agencies. 22. Equity (a) Share capital As at 31 December 2022 and 31 December 2021, the Company’s share capital consists of 129,500,000 ordinary shares with par value of RUB 2.5 per share. All issued ordinary shares are fully paid. Each ordinary share carries one vote. 31 December 2022 31 December 2021 is 994,977,080, with a par value of RUB 2.5 per share. As at 31 December 2022 and 31 December 2021, the number of ordinary shares authorised for additional issue 61,997 1,479 (482) 8,634 3,901 202 20 (10) 75,741 33,013 822 (339) 14,621 198 199 28 (16) 48,526 (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. Free cash flow is defined as cash flows from operating activities less cash flows from investing activities based on the consolidated statement of cash flows. 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 As at 31 December 2022, the Group has no trade receivables measured at fair value through other comprehensive reporting period. The payment period for dividends payable to a nominal holder or a trustee, which is a professional income (31 December 2021: RUB 3,166 million). As at 31 December 2022, amount of trade accounts receivable measured participant of the securities market, who are registered in the share register, shall be not more than 10 business days. at fair value through profit or loss is RUB 542 million (31 December 2021: RUB 4,885 million). The fair values of these The payment period for dividends payable to other parties registered in the shareholders register shall not exceed receivables approximate their carrying amounts. The movements in bad debt and expected credit losses allowance are as follows: RUB million Balance at 1 January Use of allowance Disposal of foreign subsidiaries Reversal of allowance Effect of foreign currency translation reserve Increase in provision for doubtful accounts and expected credit losses allowance Balance at 31 December See note 28 (c) for the analysis of overdue trade and other accounts receivable. 2022 (355) 223 125 7 (20) (472) (492) 2021 (369) 140 - 10 (3) (133) (355) 25 business days after the date on which the parties entitled to receive dividends are determined. 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 the 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 unrealised 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 financial statements prepared in accordance with Russian Accounting Standards. As at 31 December 2022, the Company had cumulative retained earnings of RUB 65,040 million (31 December 2021: RUB 59,337 million). 360 361 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Proposed by the Board of Directors in Approved by shareholders in Amount per share RUB Amount of dividends RUB million TOTAL DIVIDENDS APPROVED DURING THE REPORTING PERIOD August 2022 November 2022 Total dividends 23. Earnings per share September 2022 December 2022 780 318 101,010.0 41,181.0 142,191.0 Basic earnings per share are calculated based on the weighted average number of ordinary shares outstanding during the year. Basic and diluted earnings per share are the same, as there is no effect of dilution. Weighted average number of ordinary shares in issue Profit for the year attributable to shareholders of the Company, RUB million 2022 2021 129,500,000 129,500,000 184,662 129,697 Basic and diluted earnings per share, RUB 1,426 1,002 24. 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 25. For more information about the Group’s exposure to foreign currency risk, interest rate risk and liquidity risk, see note 28. RUB million 31 December 2022 31 December 2021 CURRENT LOANS AND BORROWINGS Unsecured bank loans Eurobonds Interest payable Bank commission (short-term) Total current loans and borrowings NON-CURRENT LOANS AND BORROWINGS Eurobonds Unsecured bank loans Bank commission (long-term) Total non-current loans and borrowings Total loans and borrowings 44,648 35,169 1,157 - 80,974 70,337 39,667 (220) 109,784 190,758 11,492 - 1,220 (2) 12,710 111,439 45,957 (315) 157,081 169,791 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 27,256 million (31 December 2021: RUB 37,940 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 18,552 million (31 December 2021: RUB 37,726 million). In September 2021, the Company’s SPV issued a USD 500 million 7-year Eurobond with a coupon rate of 2.6%, which is listed on the Irish Stock Exchange, with the fair value at the reporting date of RUB 24,407 million (31 December 2021: RUB 36,140 million). The breakdown of the loans and borrowings denominated in different currencies is as follows: RUB million USD-denominated RUB-denominated EUR-denominated Total The maturity of the loans and borrowings is as follows: RUB million Less than 1 year 1-2 years 2-3 years 3-4 years 4-5 years More than 5 years Bank commission Total Reconciliation of loans and borrowings balances: RUB million Balance as at 1 January Cash inflows Cash outflows Foreign exchange Interest accrued Interest paid Amortisation of bank commission Other turnovers Balance as at 31 December 25. Leases RUB million Balance as at 1 January 2021 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 2021 New lease contracts and modification of existing lease contracts Disposal of foreign subsidiaries (note 29) Interest expense on lease liabilities Principal lease payments Interest lease payments Effect of foreign currency translation reserve Balance as at 31 December 2022 31 December 2022 31 December 2021 135,825 42,805 12,128 190,758 154,288 3,096 12,407 169,791 31 December 2022 31 December 2021 80,974 23,218 38,824 10,688 2,105 35,169 (220) 190,758 2022 169,791 57,171 (23,926) (11,950) 4,223 (4,628) 78 (1) 190,758 12,712 48,760 16,879 41,037 11,320 39,400 (317) 169,791 2021 159,140 61,622 (50,081) (812) 3,910 (3,861) 83 (210) 169,791 Lease liability without subsequent asset buyout Lease liability with subsequent asset buyout Total 3,622 882 223 (1,345) (223) (11) 3,148 (1,431) (290) 106 (730) (106) 34 731 2,573 521 6,195 1,403 172 395 (604) (1,949) (172) (1) 2,489 460 - 138 (395) (12) 5,637 (971) (290) 244 (699) (1,429) (138) (45) (244) (11) 2,205 2,936 362 363 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile 26. Defined benefit obligations RUB million Pension obligations, long-term Post-retirement obligations other than pensions Total defined benefit obligations 31 December 2022 31 December 2021 442 608 1,050 307 645 952 28. 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 Group has defined benefit plans at JSC “Apatit”, including all the branches, which stipulate payment of a lump sum allowance to employees who have a specified period of service in this company upon their retirement. All the defined The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management benefit plans are unfunded. The movement in the present value of the defined benefit obligations is as follows: framework. The Group’s risk management policies are established to identify and analyse the risks faced by the Group, RUB million Defined benefit obligations at 1 January Disposal of foreign subsidiaries Benefits paid Current service costs and interest Past service costs Actuarial loss in other comprehensive income Effect of foreign currency translation reserve and foreign exchange differences Defined benefit obligations at 31 December 2022 952 (194) (101) 103 (1) 276 15 1,050 2021 945 - (132) 123 (15) 36 (5) 952 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. The key actuarial assumptions used in measurement of the defined benefit obligations are as follows: In respect of monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure 31 December 2022 31 December 2021 imbalances. is kept to an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term 10.1% 6.0% 7.5% 4.1% The Group implemented a natural hedge approach (policy) aiming at reducing its exposure to foreign currency risk by means of borrowing in the same currencies in which sales agreements are denominated. The Group has the following net monetary position on financial assets and liabilities denominated in foreign currencies: 31 December 2022 31 December 2021 RUB million 31 December 2022 31 December 2021 Discount rate Future pension increases 27. Trade and other payables RUB million Trade accounts payable including accounts payable for property, plant and equipment and intangible assets Advances received (contract liabilities) Payables to employees Accruals and provisions Other payables Total trade and other payables 15,700 4,294 17,258 4,620 241 1,593 39,412 16,643 5,676 16,379 5,094 209 3,429 41,754 Contract liabilities balance at the beginning of the year was fully recognised in revenue during the reporting period. GROUP COMPANIES IN RUSSIA: Current assets Non-current liabilities Сurrent liabilities Net position of the Group companies in Russia FOREIGN GROUP COMPANIES: Current assets Non-current liabilities Сurrent liabilities Net position of foreign Group companies TOTAL: Current assets Non-current liabilities Сurrent liabilities Total net position USD denominated EUR denominated USD denominated EUR denominated 72,727 (92,131) (46,001) (65,405) - - - - 72,727 (92,131) (46,001) (65,405) 1,242 (9,293) (3,333) (11,384) - - - - 1,242 (9,293) (3,333) (11,384) 1,643 (143,073) (13,563) (154,993) 2,831 - (137) 2,694 4,474 (143,073) (13,700) (152,299) 70 (11,786) (1,712) (13,428) 2,977 (2) (199) 2,776 3,047 (11,788) (1,911) (10,652) 364 365 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Management estimates that a 10% strengthening/(weakening) of RUB against USD and EUR, based on the Group’s total As at 31 December 2022, the Group has no financial assets measured at fair value through other comprehensive income net position in USD and EUR as at the reporting date would have increased/(decreased) the Group’s profit for the year (31 December 2021: RUB 3,166 million). by RUB 7,679 million, before any tax effect (2021: would have increased/(decreased) the Group’s profit for the year by RUB 16,295 million). This analysis assumes that all other variables, in particular interest rates, remain constant. Trade and other receivables The analysis is performed on the same basis for 2021. 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 The foreign exchange gain recognised in profit or loss of RUB 2,417 million (foreign exchange loss of RUB 838 million customers operate, has less of an influence on credit risk. for the comparative period) resulted from Russian rouble appreciation against major currencies during the reporting period (Russian rouble depreciation against major currencies during the comparative period). Management has established a credit policy under which each new customer is analysed individually Interest rate risk 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 Interest rate risk is the risk that changes in interest rates will adversely impact the financial results of the Group. for each customer, which represent the maximum amount of outstanding receivables; these limits are reviewed Management does not have a formal policy of determining how much of the Group’s exposure should be to fixed quarterly. Customers that fail to meet the Group’s benchmark creditworthiness may transact with the Group only or variable rates. However, at the time of raising new loans or borrowings management uses its judgment to decide on a prepayment basis. whether it believes that a fixed or variable rate would be more favourable to the Group over the expected period until maturity. 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 The interest rate profile of the Group’s interest-bearing financial instruments at their carrying values is as follows: and other receivables relate mainly to the Group’s wholesale customers. RUB million FIXED RATE INSTRUMENTS Call deposits and other financial assets Other non-current assets Long-term borrowings Short-term borrowings Lease liabilities Total fixed rate instruments VARIABLE RATE INSTRUMENTS Long-term borrowings Short-term borrowings Total variable rate instruments 31 December 2022 31 December 2021 6,063 107 (107,781) (74,749) (2,936) (179,296) (2,223) (6,225) (8,448) 8,594 181 (154,309) (6,523) (5,637) (157,694) (3,087) (6,189) (9,276) Sensitivity analysis for financial instruments with variable interest rates At 31 December 2022, a 1 percentage point increase/(decrease) in interest rate, with all other variables held constant, would have decreased/(increased) the Group’s profit for the year and equity by RUB 85 million (31 December 2021: RUB 93 million). (с) 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 2022, the Group’s maximum exposure to credit risk is represented by the carrying amount of its financial assets and amounted to RUB 85,116 million (31 December 2021: RUB 57,489 million). As at 31 December 2022, 98 % of the Group’s trade receivables balance are represented by one counterparty. As at 31 December 2021, there are no counterparties with a significant share of trade receivables in the Group’s trade receivables structure. As at 31 December 2022, the Group’s financial assets measured at amortised cost amounted to RUB 84,563 million (31 December 2021: RUB 47,648 million). As at 31 December 2022, the Group’s financial assets measured at fair value through profit or loss amounted to RUB 553 million (31 December 2021: RUB 6,675 million). 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. 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, 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 of counterparties, adjusted with forward-looking factors specific to the debtors and economic environment in which they operate, and historical credit loss experience. Exposures within each credit risk grade are segmented by geographic region classification and an ECL rate is calculated for each segment based on delinquency status and actual credit loss experience over the past years. The credit loss allowance for trade receivables is determined according to provision matrix presented in the table below: RUB Million Loss Rate 0.1-0.5% 1.3% 2.0% 3.0% 5.0% 10.0% 13.8% 18.0% 21.3% 30.0% 60.0% 100.0% Total 31 December 2022 31 December 2021 Gross carrying amount Lifetime ECL Net carrying value Gross carrying amount Lifetime ECL 46,487 844 15,650 - 383 - 29 - 34 - - 49 63,476 (81) (11) (312) - (19) - (4) - (6) - - (49) (482) 46,406 833 15,338 - 364 - 25 - 28 - - - 31,979 - - 460 - 67 - 746 - 21 268 294 62,994 33,835 - - - (14) - (7) - (135) - (6) (162) (15) (339) Net carrying value 31,979 - - 446 - 60 - 611 - 15 106 279 33,496 366 367 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Trade and other receivables include accounts receivable with the following past due periods at the reporing date: The table below illustrates the contractual maturities of financial liabilities, including interest payments, which are converted at the closing exchange rates, where applicable. The amounts disclosed in the maturity table RUB Million 31 December 2022 31 December 2021 are the contractual undiscounted cash flows: Gross carrying amount Lifetime ECL Net carrying value Gross carrying amount Lifetime ECL Net carrying value Not past due Past due 0-90 days Past due 91-180 days Past due 181-365 days More than one year 61,684 1,681 29 34 48 63,476 (406) (18) (4) (6) (48) (482) 61,278 1,663 25 28 – 30,652 2,265 32 68 818 62,994 33,835 (3) (46) (6) (51) (233) (339) The following information shows the movements in the Group’s assets and liabilities under the securitisation arrangement for the reporting period: RUB million Trade receivables transferred to the bank Net-off with other payables Associated cash inflow Associated cash outflow Other non-cash operations 2022 9,717 9,471 246 (3,180) (137) 30,649 2,219 26 17 585 33,496 2021 23,992 15,308 8,684 (3,566) 253 RUB Million 31 December 2022 Carrying value Contractual cash flows 0-1 year 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs Over 5 yrs Loans and borrowings 190,978 202,313 84,567 26,025 40,747 11,829 3,060 36,085 Lease liabilities Trade and other payables 2,936 17,616 3,487 17,616 1,488 17,616 1,026 - 515 - 312 - 113 - 33 - Total 211,530 223,416 103,671 27,051 41,262 12,141 3,173 36,118 RUB Million Carrying value Contractual cash flows 0-1 year 1-2 yrs 2-3 yrs 3-4 yrs 4-5 yrs Over 5 yrs 31 December 2021 Loans and borrowings Lease liabilities Trade and other payables Financial guarantees issued for associates and related parties 170,108 5,637 20,283 75 185,811 16,492 52,628 19,720 43,070 12,526 6,246 2,487 1,856 1,261 318 202 20,283 20,283 75 75 - - - - - - - - 41,375 122 - - Total 196,103 212,415 39,337 54,484 20,981 43,388 12,728 41,497 Payables to the bank as at 31 December 2021 amounted to RUB 3,229 million are presented within other payables. Receivables from the bank as at 31 December 2021 amounted to RUB 854 million are presented within trade receivables. (e) Capital management The Group’s policy is to safeguard the Group’s ability to continue as a going concern, to maintain a strong capital As a result of loss of control over its foreign subsidaries (note 29) previously controlled by the Group, the Group has no base in order to provide investor, creditor and market confidence and to sustain future development of the business. securitization agreements and related payables and receivables balances as at 31 December 2022. The Board of Directors monitors the return on capital invested and the level of dividends paid to shareholders. Current and non-current financial assets There were no changes in the Board’s approach to capital management during the year. 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. The Company and its subsidiaries are subject to externally imposed capital requirements including the statutory Cash and cash equivalents are primarily held with large banks with high credit rating, which provides high-level credit risk limits. All bank account balances and term deposits are not overdue or impaired. Guarantees requirements of the country of their domicile and the bank covenants. 29. Loss of control over foreign subsidiaries For financial guarantees issued the maximum exposure to credit risk is the amount of the commitment (note 32). In March 2022, the Group’s wholly owned foreign subsidiary Phosint Limited owning all the foreign companies The Group’s policy is to provide financial guarantees only to the subsidiaries or related parties. of the Group, increased its share capital which was subscribed by a third party company Negrinio Limited, resulting in dilution of the Group’s stake in Phosint Limited to 5%. (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 The Group performed the analysis of the key attributes and documents of the transaction, and made a conclusion that approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet it lost a control over Phosint Limited as described in IFRS 10, Consolidated Financial Statements. its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. Upon the loss of control, the Group recognised a receivable of RUB 12,189 million with a payment period of three years, derecognised the assets and liabilities of the foreign subsidiaries and reclassified to profit or loss the cumulative amount Typically, the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of the exchange differences relating to the foreign subsidiaries of RUB 6,302 million, previously recognised in other of 30 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances comprehensive income and accumulated in the separate component of equity. The Group recognised the receivable that cannot reasonably be predicted, such as natural disasters. In addition, the Group maintains several lines of credit at present value using a discount rate of 9% per annum and accrued finance costs of RUB 2,777 million. in various Russian and international banks. 368 369 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Summarised amounts of the assets and liabilities in the foreign subsidiaries over which control is lost are presented 31. Contingencies below: RUB million ASSETS Property, plant and equipment Right-of-use assets Other non-current assets Trade and other receivables Cash and cash equivalents Inventories Income tax receivable LIABILITIES Other non-current liabilities Lease liabilities Trade and other payables Income tax payable Other current liabilities Total net assets As at the date of loss of control 2,438 264 722 42,238 36,729 17,147 10 (1,043) (290) (77,938) (1,749) (37) 18,491 (a) Litigation The Group has a number of small claims and litigations relating to regular business activities and small fiscal claims. Management believes that none of these claims, individually or in aggregate, will have a material adverse impact on the Group. (b) Taxation contingencies Russian tax legislation which was enacted or substantively enacted at the end of the reporting period, is subject to varying interpretations when being applied to the transactions and activities of the Group. Consequently, tax positions taken by management and the formal documentation supporting the tax positions may be challenged tax authorities. Russian tax administration is gradually strengthening, including the fact that there is a higher risk of review of tax transactions without a clear business purpose or with tax incompliant counterparties. Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year when decisions about the review was made. Under certain circumstances reviews may cover longer periods. Russian transfer pricing (TP) legislation is generally aligned with the international TP principles developed by the Organisation for Economic Cooperation and Development (OECD), although it has specific features. The TP legislation provides for the possibility of additional tax assessment for controlled transactions (transactions between related parties and certain transactions between unrelated parties) if such transactions are not on an arm’s-length basis. The management has implemented internal controls to comply with current TP legislation. As the Group retained no significant influence over Phosint Limited upon loss of control, it classified the remaining Tax liabilities arising from controlled transactions are determined based on their actual transaction prices. It is possible, 5% share in the company as a financial asset measured at fair value through other comprehensive income with a non- with the evolution of the interpretation of TP rules, that such prices could be challenged. The impact of any such significant fair value at the date of initial recognition and at the reporting date. challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the Group’s operations. The Group didn’t recognize any gain or loss as a result of Phosint Group disposal: RUB million Carrying amount of net assets disposed Foreign currency translation difference reclassified to profit or loss upon loss of control over foreign subsidiaries Receivable accrued as a result of disposal of foreign subsidiaries Result from loss of control over foreign subsidiaries 30. Commitments As at the date of loss of control interpretations of such uncertain areas that reduce the overall tax rate of the Group. While management currently As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time, 18,491 (6,302) 12,189 - estimates that the tax positions and interpretations that it has taken can probably be sustained, there is a possible risk that an outflow of resources will be required should such tax positions and interpretations be challenged by the tax authorities. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the overall operations of the Group. (c) Environmental contingencies The enforcement of environmental regulation in the Russian Federation is evolving and the enforcement posture of government authorities is continually being reconsidered. As at 31 December 2022, the Group had contractual commitments for the purchase of property, plant and equipment The Group is involved in chemical production, which is inherently exposed to significant environmental risks. The Group for RUB 35,181 million (31 December 2021: RUB 29,458 million), including VAT where applicable. 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 during the years ended 31 December 2022 and 31 December 2021. The payment obligations of the Group in respect of coupon payments for Eurobonds are fulfilled when the funds are transferred to the account of the paying agent. 370 371 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile 32. Related party transactions 33. Significant subsidiaries Parties are generally considered to be related if the parties are under common control or if one party has the ability Subsidiary to control the other party or can exercise significant influence or joint control over the other party in making financial and operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. Other related parties include entities controlled by the Company’s key shareholders. The balances and transactions with related parties are usually unsecured and denominated in RUB. (a) Transactions with related parties RUB million Nature of relationship Sales of goods and services Purchases of goods and services Sales of goods and services Other expenses, net Purchases of goods and services Associates Associates Other related parties Other related parties Other related parties 2022 30 (734) 1,089 (85) (246) 2021 26 (585) 968 (60) (224) In 2022, the Company declared dividends in total amount of RUB 91,366 million (2021: RUB 46,824 million) to its shareholders which have significant influence over the Group. (b) Balances with related parties RUB million Trade and other receivables Trade and other payables Trade and other receivables Trade and other payables Short-term loans issued, at amortised cost Nature of relationship 31 December 2022 31 December 2021 Associates Associates Other related parties Other related parties Other related parties 42 (39) 8 (451) - 20 (17) 8 (349) 25 (c) Financial guarantees As at 31 December 2022 the Group does not have any financial guarantees issued to the bank to secure associates’ bank loans (31 December 2021: RUB 75 million). (d) Remuneration of key management personnel and Board of Directors members Remuneration of key management personnel consists of monthly compensation, annual performance bonus contingent on operating results, termination benefits and contributions to the Russian state pension and social funds. The remuneration of the Board of Directors and key management personnel recognised as part of administrative and selling overhead expenses amounted to RUB 16,897 million (2021: RUB 4,147 million). Country of incorporation Effective ownership (rounded) 31 December 2022 31 December 2021 Apatit, JSC (including Balakovo, Volkhov and Kirovsk branches) 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 PhosAgro-Sibir, LLC PureFert Trading AG (PhosAgro Trading SA till 05.09.2022)1 PUREFERT LIMITED (Phosint Limited till 30.08.2022)1 PureFert Logistics AG (PhosAgro Logistics SA till 05.09.2022)1 PhosAgro Polska Sp.z o.o.1 PureFert Deutschland GmbH (PhosAgro Deutschland GmbH till 21.11.2022)1 PUREFERT FRANCE SAS (PhosAgro France SAS till 10.11.2022)1 PUREFERT Balkans d.o.o. (PhosAgro Balkans DOO till 07.09.2022)1 UAB PhosAgro Baltic1 Purefert Balkans S.R.L. (PhosAgro Balkans SRL till 06.10.2022)1 Purefert South Africa Proprietary Limited (PhosAgro South Africa Proprietary Limited till 07.10.2022)1 Logifert Oy1 Bulk Terminal Kotka Oy1 34. Subsequent events Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia Russia Switzerland Cyprus Switzerland Poland Germany France Serbia Lithuania Romania South Africa Finland Finland 100% 100% 94% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 5% 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% On 1 January 2023 Russian government decree entered into force, introducing the customs duties on export volumes of mineral fertilizers during the period from 1 January to 31 December 2023. In March 2023, the Board of Directors proposed paying a dividend of RUB 465 per ordinary share. 1 In March 2022, the Group lost control over its wholly owned foreign subsidiary Phosint Limited owning all the foreign companies of the Group, see note 29 372 373 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Management responsibility statement The PhosAgro management The management report includes The consolidated financial hereby confirms that, to the best a fair review of the development statements for the year ended of its knowledge, the financial and performance of the business 31 December 2022 were approved statements prepared in accordance and the position of the PhosAgro by the Board of Directors with the International Financial and the undertakings included on 03 March 2023. Reporting Standards as issued in the consolidation taken as a whole, by the International Accounting together with a description Standards Board give a true of the principal risks and fair view of the assets, and uncertainties that they face. liabilities, financial position and profit or loss of the Company This Integrated Annual Report and the undertakings included was reviewed and approved in the consolidation taken at PhosAgro’s as a whole. Board of Directors meeting on 20 April 2023. Mikhail Rybnikov Chief Executive Officer and Chairman of the Management Board of PhosAgro Independent limited assurance report GRI 2-5 Joint-Stock Company “Technologies of Trust – Audit” (“Technologies of Trust – Audit” JSC) Joint-Stock Company “Technologies of Trust – Audit” www.tedo.ru (“Technologies of Trust – Audit” JSC) www.tedo.ru White Square Office Center, 10 Butyrsky Val, Moscow, Russian Federation, 125047 White Square Office Center, T: +7 (495) 967 6000, 10 Butyrsky Val, Moscow, F: +7 (495) 967 6001 Russian Federation, 125047 T: +7 (495) 967 6000, F: +7 (495) 967 6001 Independent Auditor’s Limited Assurance Report Independent Auditor’s Limited Assurance Report To the Management of Public Joint Stock Company “PhosAgro”: Introduction To the Management of Public Joint Stock Company “PhosAgro”: We have been engaged by the Management of Public Joint Stock Company “PhosAgro” (hereinafter – the Introduction “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 2022 (hereinafter – the “Integrated We have been engaged by the Management of Public Joint Stock Company “PhosAgro” (hereinafter – the Annual Report”). The Integrated Annual Report represents information related to the Company and its subsidiaries “Company”) to provide limited assurance on the selected information described below and included in the (hereinafter together – the “Group”), unless otherwise stated in the Integrated Annual Report. Integrated Annual Report of the Company for the year ended 31 December 2022 (hereinafter – the “Integrated Annual Report”). The Integrated Annual Report represents information related to the Company and its subsidiaries Selected information (hereinafter together – the “Group”), unless otherwise stated in the Integrated Annual Report. We assessed the quantitative and qualitative information specified in Appendix 1 that is disclosed in the Integrated Selected information Annual Report and referred to or included in the GRI Content Index of the Integrated Annual Report (hereinafter – the “Selected Information”). We assessed the quantitative and qualitative information specified in Appendix 1 that is disclosed in the Integrated Annual Report and referred to or included in the GRI Content Index of the Integrated Annual Report (hereinafter – The scope of our limited assurance procedures was limited to the Selected Information for the year ended the “Selected Information”). 31 December 2022 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. The scope of our limited assurance procedures was limited to the Selected Information for the year ended 31 December 2022 only. We have not performed any procedures with respect to earlier periods or any other items Reporting criteria included in the Integrated Annual Report and, therefore, do not express any conclusion thereon. We assessed the Selected Information using relevant criteria, including reporting requirements in the GRI Reporting criteria Sustainability Reporting Standards 2, 3, 202, 203, 205, 207, 302, 303, 304, 305, 306, 401, 403, 404 and 413 (hereinafter – the “GRI Standards”) published by Stichting Global Reporting Initiative and in the Group’s We assessed the Selected Information using relevant criteria, including reporting requirements in the GRI management methodology as set forth in the criteria defined in the notes to the Group’s specific disclosures in the Sustainability Reporting Standards 2, 3, 202, 203, 205, 207, 302, 303, 304, 305, 306, 401, 403, 404 and 413 Environmental review section of the Integrated annual report (hereinafter – the “PhosAgro Methodology”, and (hereinafter – the “GRI Standards”) published by Stichting Global Reporting Initiative and in the Group’s together with the GRI Standards – the “Reporting Criteria”). We believe that the Reporting Criteria are appropriate management methodology as set forth in the criteria defined in the notes to the Group’s specific disclosures in the given the purpose of our limited assurance engagement. Environmental review section of the Integrated annual report (hereinafter – the “PhosAgro Methodology”, and together with the GRI Standards – the “Reporting Criteria”). We believe that the Reporting Criteria are appropriate Responsibilities of the Group’s management given the purpose of our limited assurance engagement. Management of the Group is responsible for: Responsibilities of the Group’s management • designing, implementing and maintaining internal control relevant to the preparation of the Selected Information Management of the Group is responsible for: that is free from material misstatement, whether due to fraud or error; • designing, implementing and maintaining internal control relevant to the preparation of the Selected Information • establishing internal methodology and guidelines (including the PhosAgro Methodology) for preparing and that is free from material misstatement, whether due to fraud or error; reporting the Selected Information in accordance with the Reporting Criteria; • establishing internal methodology and guidelines (including the PhosAgro Methodology) for preparing and • preparing, measuring and reporting of the Selected Information in accordance with the Reporting Criteria; and reporting the Selected Information in accordance with the Reporting Criteria; the accuracy, completeness and presentation of the Selected Information. • • preparing, measuring and reporting of the Selected Information in accordance with the Reporting Criteria; and Our responsibilities • the accuracy, completeness and presentation of the Selected Information. We are responsible for: Our responsibilities • planning and performing the engagement to obtain limited assurance about whether the Selected Information We are responsible for: is free from material misstatement, whether due to fraud or error; • planning and performing the engagement to obtain limited assurance about whether the Selected Information • forming an independent conclusion, based on the procedures we have performed and the evidence we have is free from material misstatement, whether due to fraud or error; obtained; and forming an independent conclusion, based on the procedures we have performed and the evidence we have reporting our conclusion to the Management of the Group. obtained; and • • • reporting our conclusion to the Management of the Group. 374 375 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile www.tedo.ru www.tedo.ru 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 its governance responsibilities by obtaining an independent auditor’s 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 except where the respective terms are expressly agreed between us in writing and our prior consent in writing is obtained. Professional standards applied and level of assurance We performed our limited assurance engagement in accordance with International Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements other than Audits or 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. Our independence and quality management 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. Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or 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 Group Sustainability Reporting (SR) team and those with responsibility for SR management and Group SR reporting; • • • • conducted interviews of Group’s personnel responsible for the preparation of the Integrated Annual Report and collection and analysis of underlying data; performed analysis of the relevant internal methodology and guidelines (including the PhosAgro Methodology), gaining an understanding of the design of the key structures, systems, processes and controls for managing, recording, preparing and reporting the Selected Information; performed limited substantive testing on a selective basis of the Selected Information to check that data had been appropriately measured, recorded, collated and reported; and reviewed the Selected Information for compliance of the disclosures with the relevant requirements of the Reporting Criteria. 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. 2 Reporting and measurement techniques Under the GRI Standards there is a range of different, but acceptable, reporting and measurement techniques. The techniques, together with the PhosAgro Methodology, 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 for which the Group is solely responsible. Limited assurance 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 2022 has not been prepared, in all material respects, in accordance with the Reporting Criteria. 28 April 2023 Moscow, Russian Federation A. Y. Fegetsyn is authorised to sign on behalf of the general director of Joint-Stock Company “Technologies of Trust – Audit” (Principal Registration Number of the Record in the Register of Auditors and Audit Organizations (PRNR) – 12006020338), certified auditor (PRNR – 21906101957) 376 377 3 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile www.tedo.ru www.tedo.ru Appendix 1 to the Independent Auditor’s Limited Assurance Report dated 28 April 2023 The Selected Information subject to limited assurance procedures and prepared in accordance with the GRI Disclosures and the PhosAgro Methodology, as applicable, is set out below: GRI Disclosure 2-7 2-27 3-1 3-2 3-3 202-1 202-2 203-1 205-3 207-1 207-2 207-3 207-4 302-1 302-3 303-3 303-4 303-5 304-3 305-1 305-2 305-3 305-4 305-5 305-7 306-3 306-4 306-5 401-1 401-2 403-1 403-2 403-3 403-4 403-5 403-6 403-7 Narrative Employees Compliance with laws and regulations Process to determine material topics List of material topics Management of material topics 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 Confirmed incidents of corruption and actions taken Approach to tax Tax governance, control, and risk management Stakeholder engagement and management of concerns related to tax Country-by-country reporting Energy consumption within the organization Energy intensity Water withdrawal Water discharge Water consumption Habitats protected or restored Direct (Scope 1) GHG emissions Energy indirect (Scope 2) GHG emissions Other indirect (Scope 3) GHG emissions GHG emissions intensity Reduction of GHG emissions Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions Waste generated Waste diverted from disposal Waste directed to disposal 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 Work-related ill health 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 403-8 403-9 403-10 404-1 404-2 404-3 413-1 PhosAgro Methodology (the Group’s specific disclosure) Pollutant emissions Waste water discharge Specific water withdrawal Specific water withdrawal Recycled and decontaminated waste Related description Pollutant emissions, kg per tonne of finished and semi-finished products Waste water discharge into surface waters, m3 per tonne of finished and semi-finished products Specific water withdrawal, including mining and pit waters, m3 per tonne of finished and semi- finished products Specific water withdrawal from surface sources, excluding mining and pit waters, m3 per tonne of finished and semi-finished products Share of recycled and decontaminated hazard class 1–4 waste, % 4 378 379 5 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile GRI content index The data disclosed in this Report includes information on: Boundary 1: PhosAgro and companies that are part of the group to which PhosAgro belongs (corresponds to the scope of disclosure in IFRS consolidated financial statements). Boundary 2: Apatit, including its branches and standalone business units. Code GRI Indicator Page number (or link)/Comments Boundary Code GRI Indicator Page number (or link)/Comments Boundary 2 2–1 2–2 2–3 GENERAL DISCLOSURES (2021) Organisational profile Entities included in the organisation's sustainability reporting Reporting period, frequency, and point of contact 4, 18-19 5 4, 400 2–4 Restatements of information In the 2022 Report, the boundary and methodology were revised • The following historical data were revised in the 2022 Report: • calculation methodology for Scope 1 GHG emissions after the inventory had identified new unaccounted sources of emissions (for more information, see GRI 305-1 and GRI 305-4); • the Company revised the methodology for calculating the GRI 203-1 indicator and excluded expenses incurred under sponsorship agreements; • calculation methodology for energy consumption (for more information, see GRI 302-1 and GRI 302-3); • due to the expansion of the disclosure boundary, the personnel data disclosed in GRI 2-7 and GRI 401-1 indicators were recalculated; • for the purposes of 2022 disclosures, the Company changed GRI 401-1 presentation by age group. 2–5 2–6 External assurance 5, 375 Activities, value chain and other business relationships In 2022, we set up new materials and equipment supply chains from China, India and the CIS. We started procuring electrical equipment online from our partner and a large supplier Elektrotekhmontazh, which significantly reduced delivery time. As regards procurement of key raw materials, such as flotation reagents and conditioning mixtures, we refocused from Europe to Asia and substituted a number of imported items with domestic alternatives. Prices for key feedstock are now less dependent on foreign benchmarks and exchange rates. 2–7 Employees 152-153 1 1 2–8 2–9 2–10 2–11 2–12 2–13 2–14 2–15 2–16 2–17 2–18 2–19 2–20 2–21 2–22 2–23 2–24 2–25 Workers who are not employees Not disclosed owing to the confidential nature of this information Governance structure and composition 260, 272-273 Appointment and selection of the supreme governance body Chair of the supreme governance body 276 Role of the supreme governance body in overseeing the impacts 257, 296-297 Delegation of responsibility for impact management 257 Role of the supreme governance body in sustainability reporting 30-31, 258-259, 268 Conflicts of interest Communication of critical concerns Collective knowledge of the supreme governance body Supreme governance body performance assessment Remuneration policies Process to determine remuneration 316 288-289 273 274-275 292-295 292-295 1 1 1 1 1 1 1 1 1 1 1 1 Annual total compensation ratio Not disclosed owing to the confidential nature of this information Statement on sustainable development strategy 38-39 Policy commitments 303-305, 316-317 Embedding policy commitments 303-305 Processes to remediate negative impacts 148, 310-311 1 1 1 1 380 381 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Code GRI Indicator Page number (or link)/Comments Boundary Code GRI Indicator Page number (or link)/Comments Boundary 2–26 Mechanisms for seeking advice and raising concerns 148, 310-311 2–27 Compliance with laws and regulations For the purposes of this disclosure, the Group uses the following materiality criteria: • with regard to fines, the Group determined the amount exceeding RUB 1 mln as a materiality criterion which it deems to be meaningful given the scale of its operations; • with regard to other penalties, the Group assesses their influence on its reputation and ability to continue as a going concern, taking into account the amount of expenses likely to be incurred as a result of such penalties. 2022 saw no violations by the Group of laws and regulations resulting in material fines or penalties. The Group was taking steps to remedy the harm caused by an emergency in 2019 by committing RUB 2,274 thousand to the reproduction of aquatic biological resources in 2022. For information on cases of non-compliance with environmental laws and regulations, see page 195 2–28 2–29 2–30 Membership associations 28-29 Approach to stakeholder engagement Collective bargaining agreements We negotiate collective bargaining agreements with trade unions that address issues such as working conditions and compensation for employees at each of our production sites (usually for a three-year period, covering 100% of the employees of Apatit, its branches and standalone business units). For more information, see page 146 3 3–1 3–2 3–3 MATERIAL TOPICS (2021) Processes to determine material topics List of material topics Management of material topics 30-31 30-33 89, 103, 133,145,171,193,199,210,215,220, 224,230,237,301,312,317 1 1 1 1 2 1 1 1 ECONOMIC PERFORMANCE (2016) 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 28 201 389 1 1 1 Not disclosed owing to the confidential nature of this information 201 201–1 201–2 201–3 201–4 202 202–1 202–2 203 203–1 Financial assistance received from government MARKET PRESENCE (2016) Ratios of standard entry level wage by gender compared to local minimum wage Proportion of senior management hired from the local community INDIRECT ECONOMIC IMPACTS (2016) Infrastructure investments and services supported 164 166 240 203–2 Significant indirect economic impacts 241-251 204 204–1 PROCUREMENT PRACTICES (2016) Proportion of spending on local suppliers at significant locations of operation 136 1 1 A special scope is applied: PhosAgro and Apatit, including its branches and standalone business units A special scope is applied: PhosAgro and Apatit, including its branches and standalone business units. 2 382 383 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Code GRI Indicator Page number (or link)/Comments Boundary Code GRI Indicator Page number (or link)/Comments Boundary 205 205–1 205–2 205–3 206 206–1 ANTI-CORRUPTION (2016) Operations assessed for risks related to corruption Communication of and training in anti- corruption policies and procedures Confirmed incidents of corruption and actions taken 314 307-309 314-315 ANTI-COMPETITIVE BEHAVIOR (2016) Legal actions for anti-competitive behavior, anti-trust, and monopoly practices 317 207 TAX (2019) 207–1 Approach to tax 207–2 207–3 Tax governance, control, and risk management Stakeholder engagement and management of tax-related concerns 89 89 89 207–4 Country-by-country reporting 90-91, 390-391 302 302–1 302–2 ENERGY (2016) Energy consumption within the organisation Energy consumption outside of the organization 302–3 Energy intensity 302–4 Reduction in electricity consumption 302–5 Reductions in energy requirements of products and services 303 WATER AND EFFLUENTS (2018) 212-213 not applicable 212-213 210-211 not applicable 303–1 Responsible water consumption 224-225 303–2 Management of water discharge and related impacts on water resources 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. 303–3 Water withdrawal 303–4 Water discharge 303–5 Water consumption 227 228-229 229 1 1 1 1 1 1 1 1 2 2 2 2 2 2 2 2 2 304 304–1 BIODIVERSITY (2016) Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas 304–2 Significant impacts of activities, products, and services on biodiversity 304–3 Habitats protected or restored 304–4 IUCN Red List species and national conservation list species with habitats in areas affected by operations 305 EMISSIONS (2016) 305–1 Direct (Scope 1) GHG emissions 305–2 Energy indirect (Scope 2) GHG emissions 305–3 Other indirect (Scope 3) GHG emissions 305–4 GHG emissions intensity 305–5 Reduction of GHG emissions 305–6 Emissions of ozone-depleting substances The Group’s operations are not located in protected areas or areas of high biodiversity value outside protected areas. 231-232 231, 233 1 1 The Group’s operations are not located in protected areas or areas of high biodiversity value. The Group’s operations do not pose a threat to endangered animal and plant species listed in the International Union for Conservation of Nature (IUCN) Red List and the Russian Red Data Book 206 207 207 206 208 2 2 2 2 2 The Сompany does not use ozone-depleting substances on an industrial scale 305–7 Nitrogen oxides (NOX), Sulphur oxides (SOX), and other significant air emissions 223 306 WASTE (2020) 306–1 Waste generation and significant waste- 215 related impacts 306–2 Management of significant waste-related 216-217 impacts 306–3 Waste generated 306–4 Waste diverted from disposal 306–5 Waste directed to disposal 218 219 219 SUPPLIER ENVIRONMENTAL ASSESSMENT (2016) New suppliers that were screened using environmental criteria 308–2 Negative environmental impacts in the supply chain and actions taken 139 139 308 308–1 2 2 2 2 2 2 2 2 384 385 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Code GRI Indicator Page number (or link)/Comments Boundary Code GRI Indicator Page number (or link)/Comments Boundary 401 401–1 401–2 EMPLOYMENT (2016) New employee hires and employee turnover Benefits provided to full-time employees that are not provided to temporary or part- time employees 153, 392-393 Benefits established by collective bargaining agreements apply to all employees of Company, its branches, standalone business units and subsidiaries anddo not depend on conditions of employment. 401–3 Parental leave 394 402 LABOR/MANAGEMENT RELATIONS (2016) 402–1 Minimum notice periods regarding operational changes In case of significant changes in labour conditions of employees or their representatives the Company is guided by the applicable Russian laws. For example, organisational or technological changes are communicated to employees no later than two months before they take effect. In case of staff optimisation, the employer shall also send respective notice to employees at least two months in advance or three months in advance if optimisation measures may lead to large- scale dismissals. In these cases and in other circumstances related to material operational changes, the Company shall act in compliance with the Labour Code of the Russian Federation, collective bargaining agreements and internal regulations of PhosAgro Group companies. Collective bargaining agreements negotiated with trade unions also stipulate notification timeframes for changes. In addition to statutory requirements, the Company has drafted and is ready to implement anti-crisis measures, including an employee communication plan (e.g. information sessions for the staff and management), professional and career guidance, psychological aid and all kinds of other support to employees during transition periods. 403 403–1 OCCUPATIONAL HEALTH AND SAFETY (2018) Occupational health and safety management system 403–2 Hazard identification, risk assessment, and incident investigation 403–3 Occupational health services 183 175 172 1 1 1 1 2 2 2 2 2 2 2 2 2 2 403–4 Worker participation, consultation, 172 and communication on occupational health and safety 403–5 Worker training on occupational health 181-183 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 Occupational diseases 185-189 185-189 In 2022, our health and safety management system covered 100% of the Company’s employees. All our employees (executives together with blue and white-collar staff) take OHS training as required by the national laws, as well as additional training (for more information, see page 181). The minimum required training is provided to each and everyone, including all visitors and contractors as part of the introductory briefing. 179-181 In 2020–2022, employees of Apatit, its branches and standalone business units were diagnosed with the following occupational diseases: • • • • • vibration syndrome, stages 1–2, due to lasting workplace exposure to general vibration; chronic bilateral hearing loss due to lasting workplace exposure to noise; cervical and lumbar radiculopathy due to lasting hard workload; muscular tonic syndrome in the lower back due to lasting hard workload (awkward (fixed) working postures); acute irritant poisoning: one-off exposure to ammonia in concentrations exceeding the maximum permissible level as a result of its leakage into the air of the industrial site's process area. For more information, see page 185 386 387 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Code GRI Indicator Page number (or link)/Comments Boundary 404 404–1 404–2 404–3 405 405–1 405–2 410 410–1 413 413–1 TRAINING AND EDUCATION (2016) Average hours of training per year per employee 156 Programmes for upgrading employee skills and transition assistance programmes 157-159 Percentage of employees receiving regular performance and career development reviews 160 DIVERSITY AND EQUAL OPPORTUNITY (2016) Diversity of governance bodies and employees Ratio of basic salary and remuneration of women to men SECURITY PRACTICES (2016) 154, 272 164 Security personnel trained in human rights policies or procedures 302 LOCAL COMMUNITIES (2016) Operations with local community engagement, impact assessments, and development programs 413–2 Operations with significant actual and potential negative impacts on local communities 414 414–1 414–2 417 417–1 417–2 SUPPLIER SOCIAL ASSESSMENT (2016) New suppliers that were screened using social criteria Negative social impacts in the supply chain and actions taken MARKETING AND LABELLING (2016) Requirements for product and service information and labelling Incidents of non-compliance concerning product and service information and labelling Programmes for engagement with local communities, assessment of our operations' impact on local communities, and local community development programmes were implemented across all branches of Apatit, including its branches and standalone business units. The Apatit, including its branches and standalone business units has no operations with significant actual and potential negative impacts on local communities. Significant impacts of the Apatit, including its branches and standalone business units on local communities has been assessed as part of evaluation of UN Sustainable Development Goals impacts. 141 141 108 No such cases registered, not applicable. 417–3 Incidents of non-compliance concerning marketing communications No such cases registered, not applicable. 2 2 2 1 1 1 2 2 2 2 1 GRI Content Index: additional information GRI 201–3 Defined benefit plan obligations and other retirement plans, RUB mln Region Retirement-related obligations (other than employee benefit obligations) Saratov region Payment of retirement benefits Merit benefit plans Financial aid to retired former employees Total Murmansk region Payment of retirement benefits Merit benefit plans Financial aid to retired former employees Total Leningrad region Payment of retirement benefits Merit benefit plans Financial aid to retired former employees Total Vologda region Payment of retirement benefits Merit benefit plans Financial aid to retired former employees Total Total Payment of retirement benefits Merit benefit plans Financial aid to retired former employees Total 2020 1,552 0,000 2,387 3,939 32,704 0,000 18,575 51,279 1,475 0,000 5,164 6,640 17,758 17,982 16,769 52,509 53,489 17,982 42,895 114,366 Actual pension payments 2021 1,620 0,000 7,637 9,257 43,859 0,000 88,877 132,736 0,714 0,000 19,746 20,460 11,006 19,148 73,191 103,344 57,199 19,148 189,451 265,797 2022 2,771 0,000 16,719 19,490 39,206 0,000 148,831 188,038 2,676 0,000 31,647 34,323 13,052 21,383 119,930 154,365 57,705 21,383 317,128 396,215 For the benefit of its former and sports competitions for veterans Chemist's Day, Victory Day, 8th employees, the Company has of various age groups), celebrations of March; established and operates a voluntary of professional and public holidays, • a one-off payment in case non-profit union of pensioners jubilees and wedding anniversaries. of a pensioner's decease; (veterans). As at 1 October 2022, • financial aid associated the union had 10,953 members. Support to union members includes: with expensive treatment or It operates in accordance with collective bargaining • one-off termination allowance; decease of relatives (family • annual financial aid linked members); agreements and an annual to anniversaries (50th birthday • annual paid tours to corporate plan including leisure activities and every five years afterwards), health resorts, including for unemployed pensioners (clubs Day of the Older Persons, for treatment purposes. 388 389 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile GRI 207–4 Tax payments, RUB mln Group Russia Poland Switzerland France Germany Serbia Lithuania Romania Africa Brazil Singapore Cyprus Finland 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 VAT 11,813 20,425 12,520 21,650 (524) (108) (178) (707) (197) (447) Personal income tax (4,298) (7,324) (3,985) (7,199) Social contributions (7,332) (9,902) (6,896) (9,595) MET (3,391) (8,028) (3,391) (8,028) Property tax (1,025) (1,737) (1,023) (1,737) Pollution fees (207) (187) (200) (187) Land tax (229) (226) (229) (226) Water use charges Transport tax Water tax Regular subsoil use fees Other taxes Tax fines and penalties (50) (15) (3) (0) (46) (4) (56) (17) (4) 0 (19) (8) (50) (15) (3) (0) (33) (4) (56) (17) (4) 0 (15) (8) Dividend income tax (1,591) (1) (1,591) (1) (20) (28) 0 0 0 0 0 0 0 0 (0) 0 0 (13) (187) (53) (11) (14) (285) (238) (37) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (0) 0 0 0 0 0 0 (3) (0) 0 (11) (21) 0 0 0 0 0 0 0 0 (1) 0 0 149 (27) (18) 148 (15) (4) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Tax jurisdiction Name of the resident entities Russian Federation PhosAgro, PJSC Apatit, JSC Tirvas, LLC Gornyy tsekh, LLC Teleset, LLC Tsentr stroitelnyh materialov, LLC Aeroport, JSC Korporativnoe pitanie, LLC PromTransPort, LLC Mekhanik, LLC PhosAgro-Region, LLC, PhosAgro-Oryol, LLC, PhosAgro- Belgorod, LLC, PhosAgro-Volga, LLC, PhosAgro-Lipetsk, LLC, PhosAgro-Kursk, LLC, PhosAgro-Don, LLC, PhosAgro- Kuban, LLC, PhosAgro-Stavropol, LLC, PhosAgro-Tambov, LLC, PhosAgro-SeveroZapad, LLC Smart Balk Terminal, LLC NIUIF, JSC Trading House PhosAgro, LLC RBTS PhosAgro, LLC ITS PhosAgro, LLC PhosAgro-Service, LLC PhosAgro-Sibir, LLC (from 01.09.2021) Tirvas OP, LLC (from 16.12.2021) Aeroport Khibiny, LLC (from 29.04.2022) Primary activity of the organization Parent company Core production Social services Capital mining operations Social services Repair services Social services Social services Transportation services Repair services Domestic trader Stevedoring services R&D Trading Service company Service company Service company Domestic trader Social services Social services 35 0 (5) 0 (1) (7) 0 0 0 0 0 (1) 0 0 30 0 (1) (0) (13) (10) 0 (5) (5) (96) (43) (1) (8) 0 (7) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 103 (5) (99) (5) 0 0 0 0 0 0 0 0 0 0 (0) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (16) (10) 0 (0) 0 0 0 (0) 0 0 0 (5) (4) 0 0 0 0 0 0 0 0 (8) (3) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (31) (33) 0 (16) (12) 0 0 0 0 0 0 0 0 (0) 0 0 0 0 0 0 0 0 0 0 0 0 0 (0) (2) (1) 0 (1) 0 0 0 0 0 0 0 0 0 2 (1) 0 0 0 0 0 0 0 0 0 0 0 0 Tax jurisdiction Name of the resident entities Brazil Germany Cyprus Lithuania Poland Romania Serbia Singapore Finland PhosAgro Americas (until 31.03.2022)1 PhosAgro Deutschland GmbH(until 31.03.2022)1 Phosint Trading Limited Ltd (until 31.03.2022)1 Phosint Ltd (until 31.03.2022)1 Okmus Oy(until 31.03.2022)1 UAB PhosAgro Baltic(until 31.03.2022)1 PHOSAGRO POLSKA Sp.z o.o.(until 31.03.2022)1 PhosAgro Balkans SRL Romania(from 01.09.2020 until 31.03.2022)1 Phosagro Balkans d.o.o. Beograd(until 31.03.2022)1 Phosagro Asia Pte Ltd(until 31.03.2022)1 Bulk Terminal Kotka Oy(until 31.03.2022)1 Logifert Oy(until 31.03.2022)1 France Phosagro France SAS(until 31.03.2022)1 Switzerland PhosAgro Trading SA(until 31.03.2022)1 Primary activity of the organization Service company Foreign trader Foreign trader Holding company Holding company Foreign trader Foreign trader Foreign trader Foreign trader Foreign trader Service company Service company Foreign trader Foreign trader PhosAgro Logistics AG(until 31.03.2022)1 Logistics and distribution PhosAsset GmbH(until 31.03.2022)1 South Africa PhosAgro South Africa Proprietary Limited(from 01.11.2020 until 31.03.2022)1 Holding company Foreign trader 1 In March 2022, the Group lost control over all the foreign companies of the Group 390 391 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile GRI 401–1 New hires, people1 2 Region Gender Vologda region Total Saratov region Total Leningrad region Total Moscow Total Murmansk region Total Other Total Men, total Women, total Total Turnover1 2, % Region Vologda region Total Saratov region Total Leningrad region Total Moscow Total Murmansk region Total Other Total Men, total Women, total Total under 30 years 30–50 years above 50 years Share, % M F M F M F M F M F M F 185 131 316 47 21 68 88 36 124 5 2 7 387 113 500 18 12 30 730 315 1,045 288 206 494 79 38 117 129 69 198 29 11 40 886 192 1,078 78 24 102 1,489 540 2,029 19 28 47 21 10 31 17 11 28 10 2 12 51 26 77 33 11 44 151 88 239 14.9 11.0 25.9 4.4 2.1 6.5 7.1 3.5 10.6 1.3 0.5 1.8 40.0 10.0 50.0 3.9 1.4 5.3 71.5 28.5 100.0 Gender under 30 years 30–50 years above 50 years M F M F M F M F M F M F 0.37 0.27 0.64 0.02 0.04 0.06 0.12 0.03 0.15 0.03 0.01 0.04 0.74 0.19 0.93 0.06 0.02 0.08 1.34 0.56 1.90 0.79 0.56 1.35 0.18 0.10 0.28 0.24 0.21 0.45 0.06 0.03 0.09 2.56 0.46 3.02 0.22 0.06 0.28 4.07 1.41 5.48 0.13 0.12 0.25 0.04 0.06 0.10 0.03 0.01 0.03 0.0 0.02 0.02 0.21 0.07 0.29 0.18 0.04 0.22 0.60 0.31 0.91 2020 Total 492 365 857 147 69 216 234 116 350 44 15 59 1,324 331 1,655 129 47 176 2,370 943 3,313 2020 Total 1.29 0.94 2.23 0.24 0.20 0.44 0.39 0.24 0.64 0.09 0.06 0.15 3.52 0.71 4.24 0.47 0.12 0.59 6.00 2.28 8.29 1 For the purposes of 2022 disclosures, the Company changed presentation by age group. Based on the principle of comparability, the data for 2021 and 2020 was recalculated. 2 Turnover takes into account voluntary resignations – part 1.3, article 77 of the Labour Code of the Russian Federation; part 1.7, article 77 of the Labour Code of the Russian Federation and for breach of labour discipline – part 1.5, article 81 of the Labour Code of the Russian Federation; part 1.6a, article 81 of the Labour Code of the Russian Federation; part 1.6b, article 81 of the Labour Code of the Russian Federation, part 1.7, article 81 of the Labour Code of the Russian Federation. under 30 years 30–50 years above 50 years Share, % 284 190 474 68 40 108 117 44 161 4 5 9 364 145 509 16 12 28 853 436 1,289 332 319 651 130 88 218 227 94 321 23 32 55 872 190 1,062 104 41 145 1,688 764 2,452 26 47 73 5 12 17 21 24 45 7 3 10 65 31 96 45 6 51 15.9 13.8 29.7 5.0 3.5 8.5 9.1 4.0 13.1 0.8 1.0 1.8 32.3 9.1 41.3 4.1 1.5 5.6 169 123 292 67.2 32.8 100.0 under 30 years 30–50 years above 50 years 0.57 0.43 1.00 0.15 0.07 0.22 0.30 0.07 0.37 0.02 0.01 0.02 0.95 0.24 1.19 0.06 0.01 0.07 2.04 0.82 2.87 1.35 1.07 2.42 0.36 0.26 0.62 0.57 0.20 0.76 0.07 0.04 0.10 2.57 0.66 3.24 0.38 0.09 0.47 5.29 2.32 7.61 0.11 0.16 0.27 0.04 0.08 0.12 0.04 0.04 0.08 0.01 0.01 0.01 0.21 0.11 0.32 0.28 0.03 0.31 0.69 0.42 1.11 2021 Total 642 556 1,198 203 140 343 365 162 527 34 40 74 1,301 366 1,667 165 59 224 2,710 1,323 4,033 2021 Total 2.03 1.66 3.69 0.54 0.41 0.95 0.91 0.31 1.21 0.09 0.05 0.14 3.73 1.01 4.74 0.72 0.13 0.85 8.02 3.57 11.59 under 30 years 30–50 years above 50 years Share, % 405 197 602 143 65 208 201 68 269 3 3 6 449 161 610 19 13 32 1,220 507 1,727 526 354 880 310 156 466 374 118 492 20 17 37 1,237 287 1,524 98 26 124 2,565 958 3,523 107 50 157 33 26 59 35 18 53 8 2 10 123 47 170 39 9 48 345 152 497 18.1 10.5 28.5 8.5 4.3 12.8 10.6 3.5 14.2 0.5 0.4 0.9 31.5 8.6 40.1 2.7 0.8 3.5 71.9 28.1 100.0 under 30 years 30–50 years above 50 years 0.47 0.31 0.79 0.18 0.07 0.25 0.38 0.10 0.48 0.01 0.01 0.01 0.69 0.24 0.93 0.06 0.01 0.07 1.79 0.74 2.52 0.81 0.72 1.53 0.45 0.21 0.66 0.72 0.19 0.91 0.06 0.05 0.11 2.18 0.57 2.75 0.33 0.07 0.40 4.55 1.81 6.36 0.12 0.09 0.21 0.04 0.06 0.10 0.10 0.05 0.15 0.03 0.01 0.04 0.22 0.09 0.31 0.14 0.02 0.16 0.63 0.32 0.95 2022 Total 1,038 601 1,639 486 247 733 610 204 814 31 22 53 1,809 495 2,304 156 48 204 4,130 1,617 5,747 2022 Total 1.40 1.12 2.52 0.67 0.33 1.00 1.20 0.34 1.54 0.09 0.07 0.15 3.09 0.91 4.00 0.52 0.10 0.62 6.97 2.87 9.84 392 393 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile GRI 401–3 Parental leave in the reporting year Item Employees on parental leave Employees who returned to work after parental leave Employees who returned to work after parental leave and stayed at work 12 months after return Return to work ratio Retention ratio 2020 Total 805 179 F 794 179 165 167 M 11 0 2 2021 Total 832 179 F 818 176 159 159 M 14 3 0 2022 Total 842 200 F 827 198 165 168 M 15 2 3 0.00 100.00 22.54 93.75 22.24 93.82 21.4 0.0 21.5 88.8 21.5 88.8 13.3 100.0 23.9 93.8 23.8 93.9 List of PhosAgro Group companies 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 PhosAgro, PJSC Tirvas, LLC Gorny tsekh, LLC Teleset, LLC 16 17 18 19 PhosAgro-Kursk, LLC PhosAgro-Don, LLC PhosAgro-Kuban, LLC PhosAgro-Stavropol, LLC Tsentr stroitelnyh materialov, LLC 20 PhosAgro-Tambov, LLC Aeroport, JSC Korporativnoe pitanie, LLC PromTransPort, LLC Mekhanik, LLC 21 22 PhosAgro-SeveroZapad, LLC Smart Bulk Terminal, LLC 23 NIUIF, JSC 24 Trading House PhosAgro, LLC Apatit (including Balakovo, Volkhov and Kirovsk Branches), JSC 25 RBTS PhosAgro, LLC PhosAgro-Region, LLC PhosAgro-Oryol, LLC PhosAgro-Belgorod, LLC PhosAgro-Volga, LLC PhosAgro-Lipetsk, LLC 26 27 ITS PhosAgro, LLC PhosAgro-Service, LLC 28 PhosAgro-Sibir, LLC 29 Tirvas OP, LLC 30 Khibiny Airport, LLC SASB content index Code Activity metric RT-CH-000.A EM-MM-000.B ENVIRONMENTAL Production broken down by reporting segments Total number of employees, percentage contractors Page number/ Comment 94-98 152-153 RT-CH-110a.1 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 RT-CH-150a.1 EM-MM-150a.1 EM-MM-150a.2 EM-MM-160a.1 EM-MM-160a.3 RT-CH-410b.1 Gross global Scope 1 emissions, percentage covered under emissions- limiting regulations 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) 206 198 223 (1) Total energy consumed, (2) percentage grid electricity, (3) percentage renewable, (4) total self-generated energy 212-213 (1) Total water withdrawn, (2) total water consumed, percentage of each in regions with High or Extremely High Baseline Water Stress Number of incidents of non-compliance associated with water quality permits, standards, and regulations Description of water management risks and discussion of strategies and practices to mitigate them Amount of hazardous waste generated, percentage recycled Total weight of tailings waste, percentage recycled Total weight of mineral processing waste, percentage recycled Description of environmental management policies and practices for active sites Percentage of (1) proved and (2) probable reserves in or near sites with protected conservation status or endangered species habitat (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 227 224 225 218 219 219 192-193 231 218 RT-CH-410b.2 Discussion of strategy to (1) manage chemicals of concern and (2) develop alternatives with reduced human and/or environmental impact 192 394 395 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Code Activity metric Page number/ Comment TCFD Recommendations SOCIAL EM-MM-210a.3 RT-CH-210a.1 EM-MM-210b.1 EM-MM-210b.2 EM-MM-310a.2 RT-CH-320a.1 RT-CH-320a.2 RT-CH-540a.1 Discussion of engagement processes and due diligence practices with respect to human rights, indigenous rights, and operation in areas of conflict Discussion of engagement processes to manage risks and opportunities associated with community interests Discussion of process to manage risks and opportunities associated with community rights and interest Number and duration of non-technical delays Number and duration of strikes and lockouts (1) Total recordable incident rate (TRIR) and (2) fatality rate for (a) direct employees and (b) contract employees Description of efforts to assess, monitor, and reduce exposure of employees and contract workers to long-term (chronic) health risks 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 GOVERNANCE EM-MM-510a.1 EM-MM-510a.2 Description of the management system for prevention of corruption and bribery throughout the value chain Production in countries that have the 20 lowest rankings in Transparency International’s Corruption Perception Index 28-29 239 239 43-45 No cases 179-181 176 179-181 178 313 The Company does not carry out production in countries that have the 20 lowest rankings in Transparency International’s Corruption Perception Index Indicator CORPORATE GOVERNANCE The Board of Director’s role in monitoring climate-related risks and opportunities The management’s role in assessing and managing climate-related risks and opportunities STRATEGY Description of the climate-related risks and opportunities the organisation has identified over the short, medium, and long term Reported 260 201 201 Description of the impact of climate-related risks and opportunities on the organisation’s businesses, strategy, and financial planning. 199-201 Assessment of the resilience of the organisation’s strategy, taking into consideration different climate- related scenarios, including a 4°C and 2°C scenario 201 CLIMATE RISK MANAGEMENT Description of the organisation’s processes for identifying and assessing climate-related risks Description of the organisation’s processes for managing climate-related risks. Description of integration of processes for identifying, assessing and managing climate-related risks into the general risk management framework METRICS AND TARGET Description of the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management processes Disclosure of Scope 1, Scope 2, and, if appropriate, Scope 3 GHG emissions, and the related risks. Description of the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. 201 201 80 198 198 198 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 305 TCFD-report For more information on GHG emissions and climate risks, see the TCFD report 2020 https://ar2020.phosagro.com/pdf/ar/en/tcfd-pointer.pdf 396 397 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Glossary AN – ammonium nitrate ANBP – apatite-nepheline beneficiation plant ANSES – French Agency for Food, Environmental and Occupational Health & Safety BAT – best available technique bln – billion Capex – capital expenditure CBAM – carbon border adjustment mechanism CCl4 – carbon tetrachloride CDP – Carbon Disclosure Project CIS – Commonwealth of Independent States EMERCOM – Ministry for Civil Defence, Emergencies and Elimination of Consequences of Natural Disasters ESG – environmental, social, and governance ESPP – European Sustainable Phosphorus Platform EU – European Union FAO – Food and Agriculture Organisation GDP – gross domestic product GDR – global depositary receipt GLOSOLAN — Global Soil Laboratories Networks; supporting the GLOSOLAN by developing research capacities kg – kilogram KPI – key performance indicator kWh – kilowatt-hour LSE – London Stock Exchange LTIFR – lost time injury frequency rate MAP – monoammonium phosphate MCP – feed monocalcium phosphate mg – milligram mln – million MOP – muriate of potash CJSC – closed joint-stock company and strengthening the Regional Soil MW – megawatt CO2 – carbon dioxide CO2-equivalent – a conventional unit of measurement used to measure greenhouse gas emissions (including carbon footprint calculations). Laboratories Networks (RESOLAN) GRI – Global Reporting Initiative HR – human resources HSE – health, safety and environment COVID-19 – сoronavirus disease 2019, the pandemic caused by severe IFA – International Fertilizer Association NIUIF – Samoilov Scientific Research Institute for Fertilizers and Insectofungicides NO2 – nitrogen dioxide NPK – nitrogen-phosphorus- potassium fertilizer acute respiratory syndrome coronavirus 2 (SARS-CoV-2) DAP – diammonium phosphate DROZD – Educated and Healthy Children of Russia programme EBITDA – earnings before interest, taxes, depreciation and amortisation IFRS – International Financial Reporting Standards IMF – International Monetary Fund IPCC – Intergovernmental Panel on Climate Change OHS – occupational health and safety OPEC – Organisation of the Petroleum Exporting Countries P2O5 – phosphoric pentoxide PJSC – public joint-stock company IRR – internal rate of return PwC – PricewaterhouseCoopers IT – information technology R&D – research and development IUPAC – International Union of Pure and Applied Chemistry RAFP – Russian Association of Fertilizer Producers SDG – UN Sustainable Development Goal ths – thousand UN – United Nations JSC – joint-stock company RAS – Russian Accounting Standards SME – small and medium enterprise REACH – Registration, Evaluation, Authorisation and Restriction SMEs – small and medium-sized enterprises UNESCO – United Nations Educational, Scientific and Cultural Organisation of Chemicals Rospotrebnadzor – Federal Service for Surveillance on Consumer Rights Protection and Human Wellbeing Rostekhnadzor – Federal Service for the Supervision of Environment, Technology and Nuclear Management RSPP – Russian Union of Industrialists and Entrepreneurs RUB – Russian rouble SASB – Sustainability Accounting Standards Board SO2 – sulphur dioxide USA – United States of America STPP – sodium tripolyphosphate USD – United States dollar VAT – value-added tax VHI – voluntary health insurance VOC – volatile organic compound Strategy to 2025 – PhosAgro Group's Development Strategy to 2025 t – metric tonne Total output of finished and semi- finished products – total output of the Company’s finished and semi- finished products for the reporting period, including mineral fertilizers, animal feed, industrial phosphates and industrial products, phosphate rock and nepheline concentrate. 398 399 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile Contacts GRI 2-1 Investor Relations Auditor Andrey Serov Head of Investor Relations JSC Technologies of Trust – Audit JSC Unicon Tel.: +7 (495) 231 31 15 Business Centre, Moscow 125047, 8 Business Centre, Moscow, Russia 10 Butyrsky Val, White Square 8 Preobrazhenskaya Ploshchad, Preo Email: ir@phosagro.ru Russia Tel.: +7 (495) 967 60 00 Fax: +7 (495) 967 60 01 Website: www.tedo.ru Tel.: +7 (495) 797 56 65 Fax: +7 (495) 797 56 60 Website: www.unicon.ru Corporate Secretary Registrar Sergey Samosyuk Tel.: +7 (495) 232 96 89, ext. 2712 Email: ks@phosagro.ru JSC Reestr 20 B. Balkansky Lane, bldg. 1, Moscow 129090, Russia Tel.: +7 (495) 617 01 01 Fax: +7 (495) 680 80 01 Contacts for employees and potential employees Dmitry Borodich HR and Social Policy Director Tel.: +7 (495) 231 31 15 55/1 Leninsky Prospekt, bldg. 1, Email: reestr@aoreestr.ru Email: info@phosagro.ru Moscow 119333, Russia Tel.: +7 (495) 232 96 89 Fax: +7 (495) 956 19 02 Website: www.aoreestr.ru Contacts for media Sustainability contacts Andrey Podkopalov Director of Information Policy Tel.: +7 (495) 232 96 89, ext. 26 51 Timur Belov Press officer Tel.: +7 (495) 232 96 89, ext. 26 52 Email: pr@phosagro.ru Sergey Kudryashov Head of Sustainable Development Department Tel.: +7 (495) 231 27 47 Email: esg@phosagro.ru 400 401 Strategic reportPerformance reviewCorporate governanceShare capitalADDITIONAL INFORMATIONCompany profile
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