Capital Markets Day - phosagro.ru · SAFETY COMMITTEE Chairman – Igor Antoshin Independent non-executive director ... PHOSAGRO MANAGEMENT 14 Source: PhosAgro BOARD OF DIRECTORS

0

Capital

Markets

Day 24-25 Nov 2014

1

These materials have been prepared by OJSC PhosAgro (PhosAgro) solely for your information and may not be copied, reproduced,

retransmitted or further distributed, directly or indirectly, by any recipient to any other person or published, in whole or in part, for any

purpose or under any circumstances.

These materials have not been independently verified. All information presented or contained in this presentation is subject to

verification, correction, completion and change without notice. None of PhosAgro nor any other person undertakes any obligation to

amend, correct or update this presentation or to provide the recipient with access to any additional information that may arise in

connection with it.

These materials may contain projections and other forward-looking statements regarding future events or the future financial

performance of PhosAgro. You can identify forward-looking statements by terms such as “expect,” “believe,” “estimate,” “intend,” “will,”

“could,” “may” or “might”, or other similar expressions. PhosAgro cautions you that these statements are only statements regarding

PhosAgro's intentions, beliefs or current expectations concerning, among other things, its results of operations, financial condition,

liquidity, prospects, growth, strategies and the fertilizer and mining industry and are based on numerous assumptions and accordingly

actual events or results may differ materially. PhosAgro will not update these statements to reflect events and circumstances occurring

after the date hereof. Factors that could cause the actual results to differ materially from those contained in projections or forward-

looking statements of PhosAgro may include, among others, general economic and competitive environment conditions in the markets

in which PhosAgro operates, market change in the fertilizer and mining industries, as well as many other risks affecting PhosAgro and

its operations. Past performance should not be taken as an indication or guarantee of future results, and no representation or warranty,

express or implied, is made regarding future performance.

These materials do not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation

of any offer to purchase or subscribe for, any securities of PhosAgro in any jurisdiction, nor shall they or any part of them nor the fact of

their presentation, communication or distribution form the basis of, or be relied on in connection with, any contract or investment

decision. No representation or warranty, express or implied, is given by PhosAgro, its affiliates or any of their respective advisers,

officers, employees or agents, as to the accuracy, completeness or fairness of the information or opinions or for any loss howsoever

arising, directly or indirectly, from any use of these materials or their contents. The merit and suitability of any investment in PhosAgro

should be independently evaluated and any person considering such an investment in PhosAgro is advised to obtain independent

advice as to the legal, tax, accounting, financial, credit and other related advice prior to making an investment.

By accepting a copy of these materials, you agree to be bound by the foregoing limitations.

Disclaimer

Introduction

3

4

Presenting team

11 years 11 years

Number of years with PhosAgro assets Number of years in chemicals / fertilizer sector

4

Alexander

Sharabaiko

3 years 9 years

Mikhail Rybnikov

16 years 16 years

Siroj Loikov

3 years 3 years

Irina

Evstigneeva

11 years 11 years

Sergey Sereda

11 years 11 years

1 year* 1 year

Jim Rogers

Independent Director

3 years 21 years

Sven Ombudstvedt

Chairman of the Board of

Directors


Andrey Guryev

CEO and Chairman of the

Management Board

10 years 10 years

Marcus Rhodes

Chairman of the Audit committee


3 years 3 years

Chief Operating Officer

CEO, CJSC PhosAgro AG

First deputy CEO

Deputy CEO for Sales and

Logistics, CJSC PhosAgro AG

Chief Financial Officer Human Resources

Director

Head of Corporate Finance

and Investor Relations

Board members

Management team

Note: (*) joined PhosAgro as a board member from 16 September 2014

Section 1

• Our focus

• Corporate governance

• Sustainable advantages

• Global industry

5

• Who we are and

what we do

• Corporate

governance

principles

• Responsible

business

6

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

7

PhosAgro today Our focus

Key highlights Production

capacity

#1 global producer of high-grade phosphate rock 7.5 mn t

#3 global DAP/MAP producer(1) 3.6 mn t

25 Downstream products in 2014(2)

(MAP/DAP/NPK/NPS/SOP/UREA/AN/MCP) 6.5 mn t

Low emission

and

environmental

pollution

Quality

Resource base

with low

impurities

Integrated

low cost

production

Experienced

people

Optimised

logistics

Value for

customers

Who we are and what we do

Wide

range of

best-quality

fertilizers

Source: IFA, PhosAgro

Note: (1) Excluding Chinese producers

(2) As of 31 October 2014

Moscow

Balakovo

Cherepovets

Kirovsk

Novorossiysk

Baltic

sea

St. Petersburg

Murmansk

Distribution hubs

Export ports

Volkhov

Processing operations

Mining operations Black

sea

8

Corporate governance structure(1)

Note: (1) Board composition from 16 September 2014

BOARD OF DIRECTORS

SVEN OMBUDSTVEDT Chairman, Independent non-executive director

ANDREY G. GURYEV Deputy chairman

MARCUS RHODES Independent non-executive director

IVAN RODIONOV Independent non-executive director

IGOR ANTOSHIN Executive director

ANDREY A. GURYEV CEO, Executive director

ROMAN OSIPOV Executive director

JAMES B. ROGERS

COMMITTEES OF BOARD OF DIRECTORS

AUDIT COMMITTEE Chairman – Marcus Rhodes

STRATEGY COMMITTEE Chairman – Andrey A. Guryev

REMUNERATION AND HUMAN

RESOURCES COMMITTEE Chairman – James B. Rogers

ENVIRONMENTAL, HEALTH &

SAFETY COMMITTEE Chairman – Igor Antoshin

Independent non-executive director

RISK MANAGEMENT

COMMITTEE Chairman – Ivan Rodionov

8

9

Deploy and maintain accounting systems based on ORACLE EBS extension that

enhance monitoring of PhosAgro’s financial and operating performance

Introduction and implementation of new KPI system:

– aligns achievement of PhosAgro targets with management remuneration,

making bonuses dependent on achievement of Company’s goals

– creates substantial motivation for long-term value growth

9

Corporate governance principles – our focus in 2013-2014

Source: PhosAgro

2013 – arranged financing for consolidation of minority stakes and modernisation

programme with:

– debut USD 500 million 5-year Eurobond issue

– USD 200 million SPO

2014 – develop “2020 strategy” based on utilisation of our premium resource base

and sustainable low cost position

Corporate

activities

Evolve

accountability

10

Approval of anti-corruption policy

Review of initiatives to create an integrated HSE management system, in line with the

Company’s business consolidation and optimisation

Formation of the Board’s Risk Management Committee in September 2014

Published PhosAgro’s first sustainability report

Quarterly reporting since 2012

Over 60 RIS releases covering all significant events and regulatory disclosures in 2013

In 2012 we introduced a brand new website, which marked another important step in

the direction of best practices in corporate disclosure

10

Corporate governance principles – our focus in 2013-2014

• More than 600 shareholders

signed for PhosAgro

distribution list

Source: PhosAgro

Transparency

More than 600 investors have signed up for PhosAgro distribution list

1 Eurobond Roadshow, 15 Non-Deal Roadshows, PhosAgro Capital Markets Day in

London (March 2013), 18 conferences

In 2013 we arranged: field trips to Balakovo and Apatit production sites

Equality

Responsibility

11

Our approach to corporate social responsibility

Source: PhosAgro

PROTECTING AND DEVELOPING

OUR PEOPLE

PROTECTING THE ENVIROMENT

OUR KEY

FOCUS

AREAS

THE EFFICIENT USE OF OUR

VALUABLE AND FINITE

RESOURCES

OPERATING IN A SOCIALLY

RESPONSIBLE MANNER

11

12

We manage employee safety through:

Regular workplace risk assessments;

Annual safety seminars;

Training new employees;

Retraining for new safety technologies;

Regular monitoring of the condition of

production equipment.

12 Source: PhosAgro

Creating a safer working environment

Minor Serious Fatal

39

44

36

30 29

3

9

9

5

5

2009 2010 2011 2012 2013

2

2

5

4

Injuries and fatalities due to workplace accidents Safer working environment ensures the sustainability of our business

-25%

We have reduced injuries and fatalities across our business: between 2009

and 2013 total injuries and fatalities declined 25%

13

Source: PhosAgro

Protecting the environment

20

01

20

13

134

Water discharge Emission into the air

13

Electricity consumption

We continue to reduce emissions into the air. From 2012 at our

Cherepovets plant we reduced CO2 emissions by an additional

370 kt utilizing the gas for urea production. At Balakovo our

sulphuric dioxide emissions declined by 23% and ammonia

emissions by 9% in comparison to 2011.

We continue to reduce discharges into surface water.

Our Balakovo plant is the only enterprise in the Russian

fertilizer market to use a closed-cycle drainless water

supply.

m3/t

mn

t

kW

h/t

kg/t

15.4 12.6 12.3 14.4 12.3

0

2

4

6

0

5

10

15

20

2009 2010 2011 2012 2013

Water discharge per unit of production, m3/t

2.5 2.0 2.1 1.8 2.0

0

2

4

6

0.0

1.0

2.0

3.0

2009 2010 2011 2012 2013

Emissions into the air per unit of production, kg/t

mn

t

mn

t

236 215 210 211 211

0

2

4

6

0

100

200

2009 2010 2011 2012 2013Electricity consumption per unit of production, kWh/t

Total PhosAgro production of mineral fertilizers, kt

14

Our risk management framework

PHOSAGRO MANAGEMENT

14 Source: PhosAgro

BOARD OF DIRECTORS

Overall responsibility for management of

financial and non-financial risks

Establishes and monitors performance of risk

management system

Holds management accountable for

implementation of risk management system

AUDIT COMMITTEE

Oversight responsibility over finance

function

Provides recommendations to the

Board on changes and improvements

to the financial risk management system

Implementation of and adherence to

risk management policies

Monitoring and management of risks

relevant to job function

Risk identification and reporting

Operational risk management

INTERNAL AUDIT DEPARTMENT

Regular assessment of the Company’s internal

control and risk management systems

Oversight of compliance of PhosAgro’s

financial and economic operations with

Russian legislation and the Company’s charter

Development of recommendations on strategic

changes to risk management system for Audit

Committee and Board review

RISK

MANAGEMENT

COMITTEE

Operational Production Strategic Financial Reputational Risks

covered

PHOSAGRO MANAGEMENT

Regularly reviews

of risk management

system and policies

Provide recommendations

to the Board on changes

and improvements to the

risk management system

PhosAgro and

the global

fertilizer

industry

15

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

1.8 0.7

3.4 1.0 0.6 1.4

16 Source: IFA, CRU

5

1

2

7

8

3

6

4

1

2

3

Latin America

North America

Russia & CIS

4

5

6 North Africa

Europe

Middle East

2013 MAP/DAP production vs consumption, global trade

in million tonnes of P2O5

Production Consumption

3.7 5.3

0.7 2.0

7

8

South Asia

East Asia

10.8 12.6

World MAP/DAP trade: 9.9 mn t of P2O5

World MAP/DAP demand: 27.8 mn t of P2O5

4.3

2.1

0.3 2.2

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

2013 MAP/DAP regional balances of P2O5, mn t

17 Source: CRU

39%

45%

23%

4%

16% 7%

23%

13% 19%

23%

6%

12% 4%

3% 27%

6%

3%

4%

15%

3%

7%

14%

2%

2% 5%

11%

4%

1% 8%

19%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Consumption Production Export Import

Others Others

North Africa

Others Others

Middle East

Middle East

Middle East

Russia & CIS

Russia & CIS

Russia & CIS

EU

EU

EU

Latin America

Latin America

Latin America

East Asia

South Asia

South Asia

East Asia East Asia

North Africa

North America

North America North America

Import Export Production Consumption

Import Export Production Consumption

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

Country China India Brazil Russia USA

Employment in agriculture, % of total 35 47 15 10 2

Rural population, mn 636 852 30 38 59

Rural population, % of total 47% 68% 15% 26% 19%

Total population, mn 1,375 1,241 197 142 312

Farm Holdings, mn 201 138 5 23 2.2

Value added in agriculture, % of GDP 10 18 6 4 < 1

Arable land per capita, ha 0.1 0.1 0.4 0.8 0.5

Water resources per capita, ‘000 m3/cap 2.1 1.6 42.2 31.5 9.9

P2O5 consumption, mn t 16.7 6.7 4.3 0.6 4.0

P2O5 consumption, % of world total 36% 15% 9% 1% 9%

China: key figures(1)

China is a farming giant in absolute terms

18 Source: World bank, IFA, FAO, CRU

Note:(1) data provided for 2012, unless otherwise stated

Comment

China accounted for 6% of world phosphate rock resources and 36% of world

P2O5 consumption

Chinese population grows with 15 mn babies born annually and net population

growth of 6 mn people (equivalent to the population of Belgium). Belgium

consumes 3,690 kcal/capita/day and GDP is $US 45 k per capita, compared to

2,990 kcal/capita/day and $US 6 k in China

Chinese government focus on food security appears in solid P2O5 capacity

growth, though it will continue at a much slower rate

China is the world’s largest MAP/DAP consumer

Capacity closures outpace new capacity additions

-5,000

0

5,000

10,000

1998-2002 2003-2007 2008-2012 2013F-2017F

Capacity additions, kmt of P2O5

and producer

15,199 16,696

18,075 19,124

33%

35%

38% 38%

0

5,000

10,000

15,000

20,000

25,000

20%

22%

24%

26%

28%

30%

32%

34%

36%

38%

40%

2010 2011 2012 2013

China MAP/DAP capacity, kt of P2O5

% of world MAP/DAP consumption

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

16

28 33

18

7

20

35 40

21

8

0

10

20

30

40

50

Sugar Fresh dairyproducts

Vegetableoils

Poultry meat Beef andveal (cwe)

2013 2020

+6%

0.0

20.0

40.0

60.0

80.0

100.0

Soybeans import, mln t Maize import, mln t

Rice import, mln t Wheat import, mln t

China will continue to increase food imports

19

Note: (*) CRU data, (**) calculated as USDA/IGC data about ag imports multiplied on P2O5 removal rate in kg P2O5 per t of primary crops: wheat - 11.3; rice - 6.4; corn - 6.7; barley - 7;

soybean - 17; palm oil - 2; rapeseed – 9

Source: FAO, CRU

CAGR: 13%

..lead to potential P net imports Growing P intakes of imported food

China: a net P importer on the horizon

Economic growth will affect dietary patterns significantly

0

500

1000

1500

2000

2500

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

China P-balance, kt of P2O5

0

500

1000

1500

2000

2500

3000

3500

4000

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

China fertilizers exports*, kt of P2O5 China agro imports**, kt of P2O5

+5%

+2%

+3%

+1%

mn

t

CAGR

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

1.9

2

2.1

2.2

2.3

1997 2002 2007 2012

Fresh water availability per capita, 1000 m³

China: environmental issues coming to the forefront

Water scarcity, contamination and

pollution

Fertilizer burn

Soil pollution and cadmium

contamination

Tainted rice was discovered in several Chinese provinces

Chinese ag resources deteriorate with limited arable land

20

High

intensity

agriculture

All pollutants

from pesticides

and fertilizers

end up in soil

For

30

years

Chinese farmers use high-intensity agricultural techniques

Polluted

Cadmium

rice (Cd)

Arsenic

rice (As) Lead rice

(Pb)

... and water availability decreases

Source: FAO, Global Times

90

100

110

120

130

1997 2002 2007 2012

Arable land, mn ha

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

21

China exports a significant part of its p-based fertilizers to India ... and India imports correspond with China’s “export window”

Chinese exports go to India

DAP/MAP exports, mn t of P2O5

Source: CRU, FAI, IFA

Half of exports from China and Ma’aden go to India

0.9

2.1

1.7 1.0 0.4

DAP/MAP exports in 2013, mn t of P2O5

Trade volumes, mn t of P2O5

x.x Export volumes, mn t of P2O5

x.x Import volumes, mn t of P2O5

x.x

50% 57% 80% 46%

5% 4% 5%

10%

46% 39%

15% 44%

2.3 2.2

1.6

2.1

2010 2011 2012 2013

India Brazil Others

0

20

40

60

80

100

120

0

200

400

600

800

1000

1200

1400

1600

Feb

-10

Ma

y-1

0

Aug-1

0

No

v-1

0

Feb

-11

Ma

y-1

1

Aug-1

1

No

v-1

1

Feb

-12

Ma

y-1

2

Aug-1

2

No

v-1

2

Feb

-13

Ma

y-1

3

Aug-1

3

No

v-1

3

Feb

-14

Ma

y-1

4

Aug-1

4

No

v-1

4

India DAP imports, kt (lhs)China export duty, % (rhs)

DA

P im

po

rts, kt

Exp

ort

du

ty f

or

DA

P,

%

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

Country India China Brazil Russia USA




Total population, mn 1,241 1,375 197 142 312







India: key figures(1)

Rural population and ag production dominate in India

22 Source: World bank, IFA, FAO, CRU, USDA


Comment

India accounted for 0% of world phosphate rock resources and 15% of world P2O5 consumption

22 mn babies are born annually in India; this is the equivalent of the entire population of Australia. Australia consumes

3,220 kcal/capita/day and GDP is $US 67 k per capita compared to 2,360 kcal/capita/day and GDP of $US 1.5 k in India

Second largest population in combination with scarcity in phosphate resource make India a major importer of phosphates

Large number of farm holdings implies their relative small size: limited access to modern farming and agronomic

technologies result in imbalanced fertilizer application

India is the second largest MAP/DAP consumer

and the world largest DAP importer

5,320 5,074 4,548

3,444 3,585

50% 48%

40%

26% 28%

0

1,000

2,000

3,000

4,000

5,000

6,000

0%

10%

20%

30%

40%

50%

2010 2011 2012 2013 2014E

India MAP/DAP consumption, mn t of P2O5

% of world total DAP imports, P2O5

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

26.7 28.1

29.6 30.2 30.4

32.1

10.5 10.9

10.2 8.9

7.3 7.5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15E

Urea consumption in India, mn t (rhs)

DAP consumption in India, mn t (lhs)

20

30

40

50

2000

2500

3000

1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013

El Nino Wheat Yield (3 year lag) (lhs)Normal P2O5/N ratio (rhs) Current P2O5/N ratio (rhs)

20

25

30

35

40

45

50

55

1500

1700

1900

2100

2300

2500

2700

El Nino Rice Yield (3 year lag) (lhs)

Current P2O5/N ratio (rhs) Normal P2O5/N ratio (rhs)

246 243

378 354

365

433 395 415

364 306 294

247

0

50

100

150

200

250

300

350

400

450

2009/10 2010/11 2011/12 2012/13 2013/14 2014/15

Subsidies for urea, Rs bn Subsidies for P&K fertilizers, Rs bn

India’s subsidy policy: favouring urea leads to unbalanced fertilization

…which lead to increased urea consumption India introduced a new subsidy system in 2010

23

at expense of DAP consumption Utilisation rate of local DAP production capacities

was below 50% in 2013 vs. > 95% for urea

P2O5 : N ratios, wheat yields P2O5 : N ratios, rice yields

Normal P2O5 :N ratio Normal P2O5 :N ratio

Source: IGC, CRU, FAI, USDA, PhosAgro

Whe

at Y

ield

, kg

/ha

P2O

5:N

ra

tio

, %

Ric

e Y

ield

, kg

/ha

P2O

5:N

ra

tio

, %

Rs b

n

DA

P c

on

su

mp

tion

, m

n t

Ure

a c

on

su

mp

tio

n, m

n t

1998 1998

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

222

26

166

19 3

251

31

215

25 4

0

100

200

300

Cereals Sugar Fresh dairyproducts

Vegetableoils

Poultrymeat

2013 2020

+6% India

China Brazil

Russia

1,500

2,000

2,500

3,000

3,500

0 10,000 20,000 30,000 40,000 50,000

India will remain a primary P2O5 importer in the long term

with continuing economic growth Population growth is a key driver for ag production

24

twice faster than world average

which leads to increase food consumption India food consumption is still below average

Source: FAO, CRU, USDA, FAO-OECD outlook

+1%

CAGR

GDP per capita, $US

Fo

od c

onsum

ptio

n, kcal/capita/d

ay

USA

EU

2006-2008

%

mn

t

0

50

100

150

200

250

300

0.0

0.5

1.0

1.5

2.0

2001 2003 2005 2007 2009 2011 2013

World population growth rates, %

India population growth rates, %

Ag production in India, mn t

World median

1.9 2.5 2.5 2.5 2.5 2.5 2.5

4.1

4.9 5.3

6.0 6.2 6.5 6.7

0.0

2.0

4.0

6.0

8.0

2014 2015 2016 2017 2018 2019 2020

World GDP per capita growth rate, %

India GDP per capita growth rate, %

%

+6%

+1%

+2%

mn

t

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

601

1,073 1,448

1,379 1,519

1,171

1,633 1,957

2,097 2,137

0

500

1,000

1,500

2,000

2,500

2009 2010 2011 2012 2013MAP/DAP imports to Brazil, kt of P2O5

MAP/DAP consumption in Brazil, kt of P2O5

Country Brazil China India Russia USA




Total population, mn 197 1,375 1,241 142 312







Brazil: key figures(1)

Brazil is a rising star of world ag production and P consumption

25

Source: World bank, IFA, FAO, CRU


(*) Net export equals ag production exports less ag production imports

Comment

Brazil is the largest ag exporter among developing countries

Brazil accounted for 0.4% of world phosphate rock resources

and 9% of world P2O5 consumption

Agricultural exports are a key driver of Brazil ag production

growth

Growing P consumption is secured by imports

+16% +26% CAGR

-80

-60

-40

-20

0

20

40

60

80

2005 2007 2009 2011

Ag products net exports* from Brazil, $US bn

Ag products net exports from China, $US bn

Ag products net exports from India, $US bn

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

14 15

7 9

7

16 16

8 10

8

0

5

10

15

20

Sugar Fresh dairyproducts

Vegetableoils

Poultrymeat

Beef andveal (cwe)

2013 2020

0

10

20

30

40

50

2000 2002 2004 2006 2008 2010 2012

Soybeans (harvested area), Ha mn

Corn (harvested area), Ha mn

26

37%

30%

23%

8% 6%

27%

39%

50%

17%

7%

Coffee Soybeans Sugar Corn Cotton

% of world's production % of world's exports

Soybeans drive ag production in Brazil Exports are a key driver for ag production growth

Brazil is a top ag exporter among developing counties

mn h

a

Source: USDA, CRU, FAO, FAO-OECD outlook

CAGR: 6%

Domestic food consumption is relatively high

India

China Brazil

Russia

1,500

2,000

2,500

3,000

3,500

0 10,000 20,000 30,000 40,000 50,000

Dietary changes are more important

World median

USA

EU

Fo

od

co

nsu

mp

tio

n, kca

l/ca

pita/d

ay

GDP per capita, $US

mn

t

+2% +4%

+11%

+11%

+10%

CAGR

2006-2008

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

Country Russia China India Brazil USA




Total population, mn 142 1,375 1,241 197 312







Russia: key figures(1)

Russia has abundant ag resources

27 Source: World bank, IFA, FAO, CRU


Comment

PhosAgro dominates domestic phosphate market

Russia accounted for 2% of world phosphate rock resources

and just 1% of world P2O5 consumption

Ample resources provide a good base for ag production growth

Moscow

Balakovo

Cherepovets

Kirovsk

Novorossiysk

Baltic

sea

St. Petersburg

Murmansk

Distribution hubs

Export ports

Volkhov

Processing operations

Mining operations

Distribution hubs opened in 2014

Top 15 regions of NPK and MAP consumption

New branches opened in 2014

Black

sea

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

75

20

53

27

54

10

China

EU

Brazil

USA

India

Russia

Phosphate application rate, kg P2O5/Ha

5.7

5.0

4.2

6.6

2.9

2.0

China

EU

Brazil

USA

India

Russia

Cereals yields, t/ha

Russia: potential for significant ag production growth

28

Growing agriculture land use ... will result in higher yields ...and increased phosphate application rates

Source: FAO, Integer

2009-2012 2009-2012 2009-2012

80%

80%

76%

66%

62%

45%

China

EU

Brazil

USA

India

Russia

Major crops harvested area to arable land ratio, %

40kg 4.4t

Section 2

Strategy to 2020:

Focus on growth and

shareholder returns

Sales

strategy

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

31

2013 Primary phosphate(1) trade flows

Source: IFA, CRU, USITC, CFMW, PhosAgro estimate

Note: (1) - DAP/MAP/NPK/NPKS

(2) – PhosAgro sales volumes

5.0

6.3

7.1

3.2

1.3

2.5

4.0

4.0

World DAP/MAP trade: 21.3 mn t

3.2

3.3

35

35

42

10

20

16

22

16

20

22

x.x

xx Freight costs, $US

x.x Export volumes, mn t

x.x Import volumes, mn t

45

PhosAgro(2)

32

Su

pp

ly –

dem

an

d b

ala

nce

P2O5 : No changes in regional deficits by 2020

Source: IFA; McKinsey demand model; work group analysis

mn t

P2O5

North

Africa

China

Europe

Latin

America

Middle

East

North

America Oceania

2020 2013

2.6 -3.6 6.2

2.2 -0.9 3.1

+7.0 12.0 19.0

4.0 +3.5

0.5

3.8 +3.0

0.8

7.2 +2.4

Capacities Demand

4.9 0.7 -0.6 1.3

5.2

+4.5 0.7

2.6 -4.9 7.4

2.1

-1.2 3.3

+6.3 13.3

5.2 +4.2 1.0

7.1 +2.3

Capacities

Demand

4.9 1.0 -0.4 1.4

South

Asia

(incl.

India)

South

Africa

Southea

st Asia 1.0

-1.0

Capacities

Demand

2.0

5.5 -2.9

8.4

-1.2

Capacities

Demand

2.4 1.2

-4.0 5.8 9.8

Oversupply regions Deficit regions 2020 2013

0.4 -0.1 0.5 0.4 -0.3

0.7

32

19.6

33

Key drivers of P2O5 demand growth in Latin America

1.2

0.9

0.7

7.5

6.0

0.6 Argentina

4.1

Mexico

Other

2020F

Brazil

5.3

0.3

2012E

0.3

65.0

654

589 0

1.3%

▪ Main driver – increase in area

harvested for wheat

CAGR ’12-’20

Percent

Demand growth by country

mn t Key drivers

29

348

313 6

1.3%

▪ Main driver – increase in soybean

area harvested

598

526

5,273

4,149

3.0% ▪ Main driver - increase in area

harvested for soybeans

▪ Secondary driver – increase in

P2O5 application rate

2012 2020 App. rate Area

kt

Source: McKinsey Fertilizer Demand Model 33

35 or

+11%

65 or

+11%

1,124 or

+27%

34

Key drivers of P2O5 demand growth in Europe

Poland

Germany

0.4

France

0.2

United Kingdom

0 0

0.2

Other

Italy

Czech Republic

0.5

0.3

0

2012E

0.5

3.1

0.2

0

0.4

Benelux

3.1

Spain

2020F

0.2

1.1

0.3

1.2

0.3 0.3

499.3

8.5

4.6

495.4 0.1%

CAGR ’12-’20

Percent

Demand growth structure

mn t

1

0

336

335

194.0

195.6

1.0

2.6 0.1%


Source: McKinsey Fertilizer Demand Model

0.0%

285.6

283.7 3.3

1.4

0.1%

3

8 377

382

0.2%

0

2.0

169.0

171.0

0.1%

CAGR ’12-’20

Percent

Demand growth

kt


France

Poland

United Kingdom

Germany

Spain

Italy

Demand growth

kt

34

35

Source: European Council, National Fertilizer and Environmental Research Center, Tennessee Valley; TUV

Priorities: trade restrictions vs. health

Apatit

2.05

billion tonnes of

apatite-nepheline ore

Sokli

Cadmium restrictions

Phophate

rock Cd As Pb

Russia (Kola) 0.05-0.09 0.2-0.3 0.6-0.8

South Africa 0.2 6 35

USA 11 12 12

Middle East 9 6 4

Morocco 30 11 7

Other N.Africa 60 15 6

Heavy metal content, mg/kg P2O5

Ura

ls

35

Siilinjärvi

European

countries grouped

by allowable

cadmium level

Maximum limits of cadmium

in national fertilizers

containing more than 5%

P2O5, mg/kg P2O5

Strict limits 20

Medium limits ~55

Mild limits 90

36

Singapore

Brussel

São Paulo

Domestic sales

platform

Set up local sales offices in São

Paulo and Brussels

− sales office in São Paulo will

cover Latin America markets

− sales office in Brussels will cover

Northern and Eastern Europe and

potentially Southern Europe

Our new sales strategy

Roadmap

Rationale

New sale offices

Existing sale offices

36

500 210 200

480 270 70

Latin America

Northern and Eastern

Europe

DAP/MAP NP/NPK/NPS Urea

+250

-80

+110

+670

+270

+330

2013 2020 2013 2020 2013 2020

New sales model to improve premium market access

Source: PhosAgro

High probability of selling entire

market volume

▪ Building a deep understanding of

end buyers and market tendencies

▪ Ability to promote PhosAgro

products (without cadmium,

ammonium NPK)

▪ Necessity of finding and hiring local

managers with a developed client

base

Sales volumes, kt

37

639

69

31

642

204

155

282

380

154

13

78

39

161

671

552

304

196

24

98

145

70

SDS-Group 720

Uralchem 742

Eurochem 992

Kuybishev 321

Rossosh 351

Acron 578

PhosAgro 1 204

Potassium Chloride Ammonium nitrate NPK

MAP/DAP Urea

Market share

Percent

2013 9M2014

Fertilizers sales in Russia, 9M2014

kt

2012

22 18 15

18 17 17

13 12 16

13 14 14

10 15 13

6 6 8

6 7 6

PhosAgro became the #1 overall supplier of fertilizers to the

Russian market in 2013, and continues to grow its market share

37 Source: RAPU – Russian association of fertilizer producers

38

Urea

Ammonium

nitrate

MAP/DAP

NPK(1)

2020

2,100

102 130

305

495

1,068

Other CIS

24

6

5 6

19

Ukraine

202

34

48 1 119

Russia

268

40

25 10 5

188

2014-2015

1,606

28 63

290

484

742

Other (APP)

2020 target for PhosAgro sales in Russia and CIS

Note: (1) Includes NPS, DAFK, NPK 8:20:30, NPK 15:15:15, NPK 13:19:19

Source: PhosAgro 38

kt

39

2% 10%

1%

16%

37%

33%

1%

48%

35%

16% 1%

Muuga

Kotka

Vyborg

Ust-Luga

Murmansk

St.Petersburg

Novorossiysk

2014

2015

Source: PhosAgro

Strengthening logistics advantage

Shipments breakdown by hubs

Vyborg Kotka

Muuga

Ust-Luga

Volkhov

Cherepovets

Kirovsk

Baltic

Sea

Saint-Petersburg

Murmansk

Balakovo

Novorossiysk

Major sea hubs

Current hubs

New hub in Ust-Luga

Production sites

Black

Sea

• Potential for 2 mn tonnes of bulk and container shipments

through new Ust-Luga hub

• Redirect shipments from more distant Muuga, Kotka and Vyborg

terminals

• Reduce shipments via more expensive St. Petersburg terminals

• Expected overall cost savings on shipments via Ust-Luga hub of

around $6 per tonne

39

Meeting global

demand through

capacity expansion

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

1.9

0.1

2.6

0.2 0.1 0.1

1.0

0.5

0.5

0.5

0.3 0.3

1,186 1,388

Capacity Consumption

68%

32%

Where we are in 2014

Source: PhosAgro

Phosphate rock

Strategy for fertilizer volume growth

15

External

sales

Internal

consumption

Ammonia

kt

41

Where we are headed (2017-2020)

Total: 7.5 mn t

Deficiency

covered by the

new ammonia

capacity

Excess for

future growth

77%

23%

Total: 7.1 mn t Overall 8.1 mn t

MCP

UREA prill

AN

MAP

DAP

NPS

APP

NPK

STPP SOP

UREA gran

Ammonia

MAP/DAP

NPK/NPS

Current deficit

1,186

760

Capacity

N

ew

pla

nt

Cu

rren

t cap

acit

y

Total: 1,946 kt

Current deficit

+25%

1.9

0.1

2.6

0.2 0.1 0.1

1.0

0.5

MCP

UREA prill

AN

MAP

DAP

NPS

APP

NPK

Overall 6.5 mn t

STPP SOP

PKS

Amm.sulph.

PKS

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

42

Cherepovets production complex - largest in Europe

Highlights

Largest standalone global producer of

high grade phosphate rock(3)

Standard grade – P2O5 content of 39%

Lowest hazardous element content

among the major phosphate rock

producing regions; benefits from low

levels of radioactivity

Apatit Resources(1)

Apatite-nepheline ore: 2,050 mt

Al2O3: 283 mn t

REO(2): 7.5 mn t

Capacity by product

Phosphate rock: 7.5 mn t

Nepheline: 1.7 mn t

PhosAgro-Region

(Domestic distribution) Owns and operates eight

distribution centres in Russia

located in proximity to major

agricultural regions of Russia

(processed over 1.2mn tonnes in

2012, largest distributor in Russia)

PhosAgro-Trans

(Transportation)

Operates around 7,000

railcars, of which the

majority are mineral

hoppers

PhosAgro-Cherepovets

Highlights

Largest standalone phosphate fertilizers producer

in Europe

Largest standalone producer of sulphuric and

phosphoric acids in Europe

One of the largest standalone producers of urea,

ammonia, AN/AN-based fertilizers in Russia

Agro-Cherepovets

Capacity by product

Urea: 480 kt

Highlights

One of the most modern urea capacities in Russia

Metachem

Highlights

Unique SOP granulating technology in Russia

Close proximity to St. Petersburg sea port

Capacity by product

MAP/DAP/NPS: 1.2 mn t

Feed phosphate (MCP): 240 kt

Highlights

Leading European producer of feed

phosphate MCP

Only Russian producer of MCP

Balakovo branch of Apatit

Capacity by product

MAP/DAP/NPK/NPS: 3.1 mn t

Ammonia: 1,150 kt

AN/AN-based: 450 kt

Urea: 500 kt

APP: 140 kt

AIF3: 24 kt

Capacity by product

Sulphuric acid: 215 kt

Phosphoric acid: 80 kt of P2O5

Sulphate of potash (SOP): 80 kt

Sodium tripolyphosphate (STPP): 130 kt

Our production assets

Source: PhosAgro (capacity as of December 31, 2011), CRU, European Commission

Note: (1) Measured and indicated, PhosAgro, IMC, JORC report June 2011

(2) Rare earth oxides

(3) Defined as phosphate rock with P2O5 content over 35.7%

Moscow

Balakovo

Cherepovets

Kirovsk

Novorossiysk

Baltic

sea St. Petersburg

Murmansk

Distribution hubs

Export ports

Volkhov

Top 15 regions of NPK

and MAP consumption

Distribution hubs opened in 2014

Black

sea

43

441

631

108 48

437

479

1,072

Total CAPEX Spent as of30-Sept-2014

Budgeted for2015

Remainder for2016 - 2017

43 Source: PhosAgro, Fertecon, US Energy Administration, World Bank

Note: (1) PhosAgro has signed a USD 440.6 million loan agreement, backed by a guarantee from the Nippon Export and Investment Insurance (NEXI), with the Japan Bank for International Cooperation (JBIC) and a group of banks

consisting of Bank of Tokyo-Mitsubishi (BTMU), Citibank Japan and Mizuho Bank. JBIC will provide USD 264.4 million with a tenure of 13 years, while the group of banks will lend USD 176.2 million with a tenure of 7 years.

The current 72%-90% level of self-sufficiency in ammonia will be significantly

improved after the launch of new ammonia plant with 760 kt capacity

Sensitivity analysis for construction of new ammonia and fertilizer facilities

Capacity development Capex breakdown

Price at the end of

October 2014

2017

Conservative scenario

2017

+15% to conservative scenario

Ammonia price, US$ per tonne (FOB Baltic) 610 451 519

DAP price, US$ per tonne (FOB Baltic) 470 466 536

NPK 15:15:15 price, US$ per tonne (FOB Baltic) 375 327 376

Urea, US$ per tonne (FOB Baltic) 320 315 362

IRR 19.1% 15.5% 18.8%

Discounted payback period, years 13 17 13

$US mn

Analysis of capacity expansion plans

Budgeted for 4Q 2014

RUB vs $US Capex

33%

67%

CAPEX in $US

CAPEX in

Roubles

RUB/$US rate applied: 45.00 RUB/$US rate applied: 45.00

44

395

12

27

25

68

90

185

407

Total CAPEX Spent as of30-Sept-2014

Budgeted for2015

Remainder for2016 - 2017

Open pits

Underground

2014E

volumes

mined, mn t

Target mining

volumes by

2017, mn t

2014E cash-

cost per tonne,

US$ (EXW)

Underground

mines 17.6 19.0 7.8

Open pits 8.0 4.6 20.0

Phosphate

rock 7.5 7.1 60.5

44

Our strategy

Resource base development Capex

General cash cost

Ore production dynamics

Cost optimisation through replacement of

more expensive ore extraction in open pits

with underground mining

Cost reduction at open pits by construction of

conveyor transportation system instead of

dump trucks

Source: PhosAgro

$US mn

Developing our resource base

mn t

Budgeted for 4Q 2014

Remainder for Main shaft #2

RUB/$US rate applied: 45.00

RUB/$US rate applied: 45.00

56% 56% 59% 62% 69% 77% 81% 81%

44% 44% 41% 38% 31% 23% 19% 19%

0%

20%

40%

60%

80%

100%

120%

0.0

5.0

10.0

15.0

20.0

25.0

30.0

2010 2011 2012 2013 2014 2015 2016 2017

Undeground mines Open pits

45

749 728

214

942

2013 9M 2014/Y 2014E

573

58

22

28

282

35 22

100

17 20

15

15

942

94

152

2014E 2015E - 2016E 2017E

45

EBITDA growth

Source: PhosAgro

Potential EBITDA effect

4Q 2014 estimated

$US mn

Overall 2015 – 2017

$US +246 mn

New NPK and ammonium sulphate production

RUB/$US

31.85

RUB/$US

9M 2014: 35.39

4Q 2014E: 42.00

Y2014E: 36.79

RUB/$US

36.79

RUB/$US

45.00

RUB/$US

45.00

+26%

Personnel optimisation

RUB devaluation

Prices

Logistics improvement

Resource base cost optimisation

New Urea production

New Ammonia production

New sales strategy

Q&A

Section 3

Financial performance: • Analysis of personnel costs

developments

• Strong balance sheet

• Financial risk management

• Our performance vs DAP

prices

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

39%

12% 13%

19%

8%

9%

43%

15%

13%

13%

5%

11% 36% 36% 29% 32%

13% 15%

15% 18%

4% 5%

5%

7% 6% 6%

6%

6% 3% 5%

5%

6% 8% 6%

4%

5% 5% 6%

5%

5% 11% 11%

11%

9%

11% 11%

10%

10%

3% 11%

2%

3Q 20142Q 20141Q 20142013

Change in stock of WIP and other expenses Depreciation

Natural gas Electricity

Sulphur and sulphuric acid Fuel

Potash Ammonia

Salaries and social contributions Materials and services

Recent 2014 COGS development

3Q developments

48 Source: PhosAgro

Note: (1) Phosphate-based fertilizers, MCP, STPP and nitrogen fertilizers

Cost of Goods Sold structure

$2,132 mn $499 mn $460 mn $473 mn

RUB/$US

31.85

RUB/$US

34.96

RUB/$US

35.00

RUB/$US

36.19

Ammonia cost decreased by 21% due to decline in purchase

volumes by 16% and purchase price by 6%

Sulphur cost increased by 34% as a result of a 33% increase in

purchase price

Potash cost increased by 10% driven by a 10% increase in purchase

price as a result of a 5% increase in NPK/PKS production

Fuel cost declined by 20% do to decrease in consumption as a

result of optimisation of open-pit operations

Personnel cost decreased by 2% as a result of headcount

optimisation programme

3Q 2013

RUB/$US

32.80

3Q 2014

RUB/$US

36.19

DAP Cash cost

293 235 US$/t

Phosphate rock

Ammonia

Sulphur

Personnel cost

Conversion cost

Selling cost at FOB

Sales (kt) 1Q 2014 2Q 2014 3Q 2014

Downstream

products(1)

1,679

1,464

1,551 -13% +6%

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

10,454

2,610 346

8,190

9M 2013 payroll Savings Payrollindexation

9M 2014 payroll

49

Payroll optimisation(1)

Payroll will decrease in both upstream and downstream in 2014

Note: (1) payroll data are provided for key production subsidiaries (Upstream: Apatit; Downstream: Agro-Cherepovets, PhosAgro Cherepovets, Balakovo and Metachem since 2013

Source: PhosAgro

RU

B m

n

... and optimisation is the key rationale behind payroll decreases

-18%

-24%

RU

B m

n

Average salaries have grown at a rate that is competitive for regional labour markets

Successful control over salary growth and social contributions

Personnel management – controlling costs

-22%

5,486 6,177 7,786 8,603 8,642 6,567

928 1,045

1,261

4,789 5,320

4,353

6,414 7,223

9,048

13,392 13,961

10,919

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2009 2010 2011 2012 2013 2014E

Upstream payroll, RUB mn Downstream payroll, RUB mn

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

10,7

83

10,8

00

10,7

53

9,7

65

10,2

26

7,2

43

439 454 479

584 582

866

0

200

400

600

800

1,000

0

2,000

4,000

6,000

8,000

10,000

12,000

2009 2010 2011 2012 2013 2014E

Downstream headcount, ppl

Downstream productivity, t/capita

+49%

-29%

50

Headcount optimisation programme and employee productivity(1)

Headcount optimization programme started at Apatit

avera

ge n

um

ber

of em

plo

yees

t per

capita

... and continued at Cherepovets sites, BMF, Metachem

11,6

82

11,8

53

11,6

37

11,3

48

10,2

01

6,8

15

641

770 747 788

849

1,231

0

200

400

600

800

1,000

1,200

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2009 2010 2011 2012 2013 2014E

Upstream headcount, ppl

Upstream productivity, t/capita

avera

ge n

um

ber

of em

plo

yees

t per

capita

+43%

-33%

Outsourcing non-core services

Re-engineering of business processes

Scope of responsibility expansion/Job enrichment

Consolidation of service department functions at the Group-wide level/shared services

Our approach to personnel management

Note: (1) the data are provided for key production subsidiaries (Upstream: Apatit; Downstream: Agro-Cherepovets, PhosAgro Cherepovets, Balakovo and Metachem since 2013

Source: PhosAgro

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

51

Human resource management: talent management

Source: PhosAgro

Goals Ensure supply of highly skilled

employees at all levels of organization

Objectives

Become an

employer of choice

‘PhosAgro Classes’

programme (10-11 grade)

‘Young professionals’ (8-9

grade)

Sport activities ‘Drozd’ (1-7

grade)

Career classes in

schools

Talent pool programme

Khibiny Technical college

Apatity Polytehcnic College

Cherepovets College of

Chemistry and Technology

Balakovo Polytechnic

College

Volkhov Polytechnic

College

32

128

272

185

37

159

333

276

0

50

100

150

200

250

300

350

N-2 N-3 N-4 N-5

Key positions

Talent pool members

Identify key positions

Evaluate capable candidates to

step in

Trainings for high-potential

employees

Vocational education

in Colleges

Higher professional

education

Attract recent graduates and

provide successful participants

aggressive career profile

PhosAgro supports 57

students in 2013/2014

91 recent graduate participate

in High-Potential Graduates

Programme

Attract and develop high-potential

graduates and young professionals

125 pupils annually will join “PhosAgro

Classes” programme in 5 cities

We aim to recruit more than 50% of

these students annually starting from

2020

Over the last 3 years about 1,000 employees were assessed to join the

Talent Pool and 21% successfully joined

Recruit 10% (~130 employees) among graduates of sponsored colleges

3 years ago ”High Potential Graduates Program” launched. More than 100

graduates from the best universities across Russia joined the Group

80% 82% 43%

AccomplishedDevelopment

Plans

Implementedprojects

Promoted

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

Comfortable working

conditions programme

Upgrading facilities and promote employee productivity

Consistency across the Group

Human resource management: social policy

1

Housing programme

Social policy pillars

Collective agreement

Create a firm basis for employer-employees relations

Workforce motivation and social security

Responsible employer

Health programme

Maintain employee health

Prevention of occupational illness

Vocational rehabilitation

52

Additional benefits for Professionals, Talent and High-potential graduates

Reward for best employees

Additional support

Improve business performance by: Social policy

• Attracting best candidates • Continued workforce motivation • Reduction in highly-qualified employee turnover

Source: PhosAgro

4

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170

166

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166

225

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225

170

178

210

225

225

225

103

103

103

Total debt and net debt / annualised EBITDA

Debt overview

Comment

Dividends

Net debt to annualised EBITDA ratio

decreased to 1.5x as of 30 September

2014, from 1.8x as of 31 December 2013.

Excluding the effect of Phosagro-

Cherepovets buyout (under normal course

of business), net debt/EBITDA stood at

1.36x as of 30 September 2014.

Net debt at 30 September 2014 amounted

to RUB 52.7 billion, up from RUB 43.8

billion at 31 December 2013. Most of the

Company’s debt is denominated in USD as

a natural hedge against primarily USD-

denominated sales.

PhosAgro has completed acquisition of all

minority shares in its subsidiaries.

PhosAgro carefully manages its balance

sheet and cost of financing for all current

initiatives, including both the consolidation

of subsidiaries and growth projects

53 Source: PhosAgro

Public debt

Eurobonds issued on February 2013 (LPN)

Issue size $US 500 mn

Corporate ratings Baa3

Moody’s

BBB-

S&P

BB+

Fitch

Tenor 5 years

Coupon frequency Semi annually

Spread mid swaps+ 320 bps;

UST + 335.8 bps

Coupon rate 4.204%

Maturity Date 02/13/2018

0.91х 1.05х

2.20х 2.14х

0.77х

1.83х 1.54х

0.43х 0.45х

1.39х 1.36х

0.00х

0.50х

1.00х

1.50х

2.00х

2.50х

2011 2012 2013 9M2014

Total debt / EBITDANet debt / EBITDANet debt / EBITDA (excl. Apatit and PhosAgro-Cherepovets acquisition)

54

Audit Committee

Source: PhosAgro

Note: (1) as of 31 October 2014

Committee members(1):

Marcus Rhodes Committee Chairman

Independent Non-Executive

Director

Sven Ombudstvedt Committee Member


Director

Jim Rogers Committee Member


Director

• Integrity and transparency of IFRS financial statements

• Accounting and financial reporting processes and financial statement audits

• The Group's compliance with legal and regulatory matters

• The external auditor's qualifications, performance and independence

• The performance of the Corporate audit function

• The Group's internal controls over financial reporting

The role of the Audit Committee is to oversee:

54

55

Corporate audit principles

Source: PhosAgro 55

• Risk-oriented approach to annual audit plan

• Reports directly to Audit Committee and CEO

• Purchase and procurement business process audits

• Efficiency and effectiveness of business processes/internal controls

• Annual assessment of performance of Head of Corporate Audit

• Compliance audits

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225

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210

225

225

225

103

103

103

Net Profit

395 765 788

269

16%

22% 23%

8%

2010 2011 2012 2013

Net profit Net profit margin

288 177

11% 7%

9M 2013 9M 2014

30.37 29.39

31.09 31.85 31.62

35.39 Average RUB/USD exchange rate

Revenue, EBITDA, gross profit and net profit

Note: Applied average USD/RUB exchange rates: 30.37 (2010), 29.39 (2011); 31.09 (2012); 31.85 (2013); 31.62 (9M 2013); 35.39 (9M 2014)

(1) Phosphate-based fertilizers, MCP, STPP and nitrogen fertilizers

(2) Phosphate rock

56

Revenue Gross profit

EBITDA

903 1,020

35%

42%

9M 2013 9M 2014

964

1,508 1,453 1,144

38%

44% 43%

35%

2010 2011 2012 2013

Gross profit Gross margin

498

620

535

443

Average DAP FOB Tampa, $US/t

$U

S m

n

466 476

674

1,204 1,123 752

27%

35% 33%

23%

2010 2011 2012 2013

EBITDA EBITDA margin

629 728

24%

30%

9M 2013 9M 2014

$U

S m

n

498

620

535

443 466 476

Average DAP FOB Tampa, $US/t

-3% +6%

113

1,905 2,713 2,572 2,479

457

493 626 530 171

215 190 161 2,534

3,420 3,387 3,283

4,692 4,953 5,338 6,056

3,712 3,153

3,542 2,921

2010 2011 2012 2013

Tripolyphosphate Chemical fertilizers Phosphate rock

Other sales Downstream sales Upstream sales

82 93

1,937 1,929

429 306 122 124

2,571 2,452

2,316 1,886

4,499 4,694

9M 2013 9M 2014

$U

S m

n

kt

CAGR: 9%

(1) (2)

-17% +2%

+2% +12% +24% -14%

Gross profit

-17% +2%

+24% -14%

$U

S m

n

Section 4

•Stock/GDR performance

•Our sustainable

advantage in a changing

environment

Stock / GDR

performance

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0

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170

166

166

166

225

235

225

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210

225

225

225

103

103

103

0

2

4

6

8

10

12

14

16

0

2

4

6

8

10

12

Jul-11 Oct-11 Dec-11 Mar-12 Jun-12 Sep-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Jan-14 Apr-14 Jul-14 Oct-14

trade volumes, GDRs mn PhosAgro GDRs, $US

59 Source: Bloomberg (as of October 21, 2014)

PhosAgro GDR performance

$U

S

GD

R m

n

$US 14

Announcement of GDRs inclusion into the FTSE Global Equity

Index Series and the FTSE All World Equity Index Series

ADTV $US1.7 mn

or GDR 141 k

Uralkali announced split with BPC

Geopolitical unrest

ADTV $US3.5 mn

or GDR 351 k

ADTV $US2.0 mn

or GDR 168 k

Capital markets day

ADTV $US4.1 mn

or GDR 306 k

SPO

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53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

0

5

10

15

20

25

30

35

40

45

50

75

95

115

135

155

175

195

Daily

Turn

over,

$U

S m

n

Daily Turnover PhosAgro GDRs MSCI Russia MICEX FTSE IOB Russia

Global political and economic instability

Source: Bloomberg (data as of 21 October 2014), PhosAgro analysis

Reb

ase

d to

10

0

Ukraine crisis development:

Malaysian Airlines flight shot down

60

% Performance PhosAgro FTSE IOB Russia MSCI Russia MICEX

Since Russia-Crimea unification 7.8% (5.4%) (6.3%) 7.0%

1 month (6.2%) (6.8%) (8.1%) (2.7%)

1 week 1.4% (1.7%) (1.6%) (0.1%)


Russia-Crimea unification European debt crisis development:

Greek debt restructuring

4

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0

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170

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166

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235

225

170

178

210

225

225

225

103

103

103

30

40

50

60

70

80

90

100

110

120

Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14

PHOR LI URKA LI MOS US POT US DAP, FOB US Gulf

PhosAgro GDR performance vs Peers and DAP prices

Source: Bloomberg (data as of 21 Oct 2014), Argus-FMB, PhosAgro analysis

%

Re

ba

sed

to

100

28 Nov 2013:

GDR: US$ 9.83

DAP FOB US Gulf: US$ 345/t

Current:

GDR: US$ 10.91


Nov

2014

61

Uralkali split from BPC

1st sharp Indian rupee

devaluation

IPO:

GDR: US$ 14


4

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0

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170

166

166

166

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235

225

170

178

210

225

225

225

103

103

103

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

Mosaic EV/EBITDA PhosAgro EV/EBITDA Peer EV/EBITDA average

Potash Corp EV/EBITDA Uralkali EV/EBITDA

62 Source: Bloomberg (data as of 30 Sep 2014), PhosAgro analysis

EV/EBITDA performance relative to peers

Current discount to peer EV/EBITDA

average: 35%

Discount to

peer EV/EBITDA

average:43%


35%

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Consensus evolution

9 63

# Bank\ Investment company Date 12M Target price,

$US

1 Bank of America - Merrill Lynch 21-Aug-14 14.0

2 BMO 2-Oct-14 12.0

3 Citi 15-Jan-14 14.0

4 Credit Suisse 2-Oct-14 14.0

5 Deutsche Bank 24-Apr-14 17.0

6 Gazprombank 29-Oct-14 14.6

7 HSBC 31-Oct-14 14.0

8 JP Morgan 3-Oct-14 14.0

9 Otkritie 18-Apr-14 15.7

10 Sberbank CIB 11-Jul-14 15.8

11 Morgan Stanley 13-Nov-14 12.9

12 VTB Capital 29-Sep-14 12.8

13 IFC Metropol 10-Apr-14 14.1

14 BCS 3-May-14 15.8

Consensus as of 14

November 2014 14.3

Price as of 14 November 2014 10.45

Upside potential 37%

2014 EV/EBITDA 6.7x

2014 EBITDA RUB 33,502 mn

# Bank\ Investment company Date 12M Target price,

$US

1 Bank of America - Merrill Lynch 1-Aug-13 12.0

2 BMO 22-Aug-13 9.0

3 Citi 18-Sep-13 14.0

4 Credit Suisse 19-Aug-13 9.0

5 Deutsche Bank 2-Aug-13 12.0

6 Renaissance Capital 13-Nov-13 12.0

7 HSBC 4-Nov-13 13.0

8 JP Morgan 2-Apr-13 15.9

9 Otkritie 15-Aug-13 14.7

10 Sberbank CIB 1-Oct-13 14.9

11 UBS 19-Sep-13 16.0

12 VTB Capital 29-Oct-13 10.5

13 Raiffeisen 2-Apr-13 18.2

14 BCS 7-Aug-13 11.5

Consensus as of 22

November 2013 13.1

Price as of 22 November

2013 10.00

Upside potential 31%

2013 EV/EBITDA 5.8x

2013 EBITDA RUB 26,488 mn

Source: Companies’ data, PhosAgro analysis

Our

sustainable

advantage in

a changing

environment

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170

166

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225

170

178

210

225

225

225

103

103

103

Recent industry developments

Source: CRU, USGS

- Greenfield - Brownfield - Reserves

Net addition to phosphate rock production capacities

(excl. China) of 14 mn t

with 0.8% CAGR

RUSSIA +1 mn t

1.3

bln

FINLAND +0.5 mn t

USA -10 mn t

1.4

bln MOROCCO +5.9 mn t

50

bln

BRAZIL +2.5 mn t

PERU +3 mn t

0.24

bln 0.31

bln

SYRIA +1.8 mn t

1.8

bln 1.5

bln

SAUDI ARABIA +5 mn t

CHINA +50 mn t

3.7

bln

AUSTRALIA +1.2 mn t

0.25

bln

VIETNAM +1.7 mn t

JORDAN +1.5 mn t

Morocco controls most of world phosphate ore reserves

Morocco and

Western Sahara

70%

Iraq 8%

China 5%

Algeria 3%

Syria 3%

Jordan 2%

USA 2% Russia 2% Others 5%

65

CF sold its phos business to Mosaic in 2013

Missphos filed for bankruptcy in 2014

Potash Corp and OCP announced JV in 2014

Mosaic and Ma’aden announced JV in 2013

4

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225

170

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225

225

225

103

103

103

Estimated MAP/DAP business cash cost curve $US/t FOB(1)

Morocco

in Q4 2014

66

MAP/DAP Capacity, mn t

Source: PhosAgro estimates, CRU, Fertecon, Integer, Argus-FMB, PhosAgro

Note: (1) MAP/DAP business cash cost est. are based on feedstock prices in Q4 2014, on site's specific location relative to FOB Morocco and its product nutrient content relative to DAP

USD/RUB exchange rate of RUB 45 applied for calculation MAP/DAP business cash cost

DAP FOB Tampa: $455/t

Cash

co

st,

$U

S/t

Estimated with feedstock prices set forth below:

Ammonia: US$ 655/t, CFR, Tampa

US$ 600-620/t, CFR, N.Africa

Sulphur: US$ 129/t, CFR, Tampa

US$ 150-165/t, CFR, N.Africa Weighted by capacity avg. cost : $418/t

4

160

53

0

79

170

166

166

166

225

235

225

170

178

210

225

225

225

103

103

103

0

50

100

150

200

250

0

200

400

600

800

1000

1200

1400

DAP, $/t, FOB Tampa Corn price, $US/t Spread relative to basket price, % (rhs)

Source: Fertecon, Argus-FMB, FAO, USDA, IFA

DA

P a

nd

ce

rea

ls b

aske

t p

rice, $

US

/t

DA

P

sp

rea

d r

ela

tive

to

baske

t p

rice,%

67

Cereals basket to DAP price spread

High correlation between cereals basket and DAP

prices

Food inflation drives DAP prices up

0

200

400

600

800

1,000

1,200

1,400

0 200 400 600

10 year correlation

R2=0.86

New Big

Capacities:

- China +5200

- India +1700

- Australia +980

- Morocco +740

- Low DAP

import in

India

- Potash

BPC

break up

DAP $US 538 DAP $US 591

DAP $US455

DAP $US508

2008/09

Financial Crisis

DAP FOB Tampa prices referring to corn

price of $US 4.47/bu are set forth below

Thank

you!

Q&A

Documents

Capital Markets Day - phosagro.ru · SAFETY COMMITTEE Chairman – Igor Antoshin Independent non-executive director ... PHOSAGRO MANAGEMENT 14 Source: PhosAgro BOARD OF DIRECTORS